Jane Street transfer ₹4,843.6 crore to SEBI, seeks lifting restrictions
Jane Street informed SEBI that this action was taken 'without prejudice to their rights and remedies which remain available to them in law and equity,' the statement read. The investment firm also requested that the conditions be relaxed as it had complied to the interim order, which the capital markets watchdog is examining, SEBI said.
'The deposit, while indicative of cooperation, does not preclude SEBI from concluding that the trades were in violation of the PFUTP Regulations. SEBI may also invoke Section 15HA to impose monetary penalties if it finds that the trades were fraudulent or manipulative in nature. Further investigative steps or proceedings before SAT could also follow, depending on whether the regulator is satisfied with the submissions made by Jane Street,' said Sonam Chandwani, Managing Partner at KS Legal & Associates.
'Jane Street may contend that its trading activity was a result of a legitimate algorithmic strategy based on publicly available information, devoid of any manipulative intent,' she added.
While Prevention of Unfair Trade Practices Regulations underline the violations, the trade strategies and the means that are considered manipulation are not mentioned. 'What needs to be determined is whether the concerned noticees have orchestrated transactions that was indicative of fraudulent and manipulative behaviour,' said Yogesh Chandhe, a securities lawyer and partner with Shardul Amarchand Mangaldas. Jane Street reportedly claimed that it was just the arbitrage that was being used and not manipulation.
While legally this might look open to interpretation, traders who deal with futures and options call it a clear case of manipulation. 'Arbitrage is an opportunity which exists in the market. It is not an opportunity that you create and then take it to your advantage. That is wrong,' said Preeti K Chabra, derivatives trader and founder of Trade Delta, a derivatives trading firm.
'SEBI's message, by preponderance of probability, is clear that, if any high frequency trader crosses the boundary and engages in manipulative tactic of this nature, then SEBI has the necessary expertise and infrastructure to investigate, no matter how sophisticated or a cutting-edge technology is being adopted by a high frequency trader,' Mr. Chandhe said.
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