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Time of India
23-07-2025
- Business
- Time of India
Jane Street probe: SEC seeks Sebi details as investigation continues; Rs 4,843 crore gains under lens
Representative image The US Securities and Exchange Commission (SEC) has asked the Securities and Exchange Board of India (Sebi) for details on its ongoing investigation against Jane Street, a New York-based proprietary trading firm accused of manipulating India's derivatives market. People familiar with the development were quoted by ET as saying that Sebi has already responded to specific queries raised by the SEC. Under Articles 6 to 8 of the IOSCO multilateral agreement, regulators who are signatories are obliged to share information with one another. According to ET, Sandeep Parekh, who is managing partner of Finsec Law Advisors, said, 'As both are signatories, the SEC can seek any information required and Sebi would be obliged to give it for regulatory action or investigation'. He noted this framework had earlier been used by Sebi in its probe into UBS. On July 3, Sebi issued an interim order barring Jane Street from trading and directed it to deposit Rs 4,843.57 crore, the alleged illegal gains from manipulation. The firm complied, placing the full amount in an escrow account. Following this, Sebi conditionally lifted the trading ban on July 21. As per news agency ANI, the decision drew appreciation from legal and market experts who saw it as a fair balance between due process and investor protection. Jane Street, which deploys complex high-frequency algorithms and operates across major global markets, has not legally contested Sebi's findings yet. However, the firm has maintained that it reserves the right to pursue legal and equitable remedies. According to sources cited by ET, Jane Street has been informed of the hearing dates and its lawyers are preparing a formal rebuttal. Sebi's order alleged that Jane Street used its 'trading, financial and technological prowess' to manipulate the Bank Nifty Index through aggressive morning buying and late-day selling patterns. The manipulation allegedly impacted index levels near expiry and harmed retail investors on the opposite side of the trade. The regulator has invoked the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations and used Jane Street's trading data from about 20 profitable days to quantify illegal gains. Legal experts argue that Sebi's methodology focused only on a few profitable days, rather than evaluating a full set of trades. 'It picked the winning days out of many days of winning and losing trades,' a securities lawyer said, as per ET. Sebi's investigation is ongoing and could be expanded to include the NSE Nifty Index and other stocks. It has also asked exchanges to monitor Jane Street's future trades closely. A confirmatory order will be issued after the hearing process concludes. Corporate lawyer HP Ranina, speaking to ANI, called Sebi's move 'objective and fair,' stating that if the firm is cleared, the deposited money would be refunded. Market expert Sunil Shah praised Sebi for protecting retail investors, adding, 'I hope they will monitor these things further so that in future, no big institution can take advantage of small investors Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Economic Times
23-07-2025
- Business
- Economic Times
Sebi shares Jane Street probe details with SEC
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: The US Securities and Exchange Commission (SEC) has sought details from its counterpart in India about the Jane Street probe over allegations of manipulating the derivatives market. Sebi has replied to the specific queries of the SEC , said people familiar with the SEC and Sebi didn't respond to queries."A regulator that's a signatory to the International Organization of Securities Commissions (IOSCO) pact is obliged to share any info requested by any other signatory under articles 6 to 8," said Sandeep Parekh, managing partner of Finsec Law Advisors."As both are signatories, the SEC can seek any information required and Sebi would be obliged to give it for regulatory action or investigation," Parekh is a grouping of national securities regulators."This has been used multiple times by Sebi, most notably in the UBS matter two decades ago to get information about the Swiss company from the US regulator," Parekh Securities and Exchange Board of India had on July 3 imposed a trading ban on the firm in an interim, ex-parte order and directed it to return Rs 4,844 crore, quantifying this as illegal gains from market manipulation. Jane Street, which has denied any wrongdoing, deposited the entire amount stipulated by Sebi in an escrow account. Following this, Sebi lifted the trading ban on the firm, albeit with conditions, on July Street, which has offices in all the key financial centres of the world, uses complex algorithms developed in-house to execute high-frequency trades. It isn't challenging Sebi's findings in court for the time being. But it has told Sebi that it reserves the right to seek legal and equitable rights and regulator has informed the trading company's law firm about the dates for hearings into the case, said one of the persons cited above. Jane Street had been given 21 days to respond to the interim findings. Its legal representatives are preparing a formal reply to the regulator, rebutting the allegations, said people with knowledge of the said the NSE's Bank Nifty Index - comprising the stocks of India's top dozen lenders - had been manipulated in a complex and illegal manner, aided by the Jane Street Group's trading, financial and technological prowess. Jane Street would drive up prices with heavy buying in the morning and send them down through a selling spree later in the day, according to Sebi. It also sought to push index levels down with heavy sell orders close to the option expiry, the regulator said. This caused losses to those at the other end of the trade, mostly retail investors, it invoked the prohibition of unfair trade practices (PFUTP) regulations for market manipulation, which covers any act or practice. It focused on Jane Street's trading data of about 20 random days showing the highest profits.
Time of India
23-07-2025
- Business
- Time of India
Sebi shares Jane Street probe details with SEC
Mumbai: The US Securities and Exchange Commission (SEC) has sought details from its counterpart in India about the Jane Street probe over allegations of manipulating the derivatives market. Sebi has replied to the specific queries of the SEC , said people familiar with the development. The SEC and Sebi didn't respond to queries. "A regulator that's a signatory to the International Organization of Securities Commissions (IOSCO) pact is obliged to share any info requested by any other signatory under articles 6 to 8," said Sandeep Parekh, managing partner of Finsec Law Advisors. Agencies No Legal Action from Co for Now "As both are signatories, the SEC can seek any information required and Sebi would be obliged to give it for regulatory action or investigation," Parekh said. IOSCO is a grouping of national securities regulators. "This has been used multiple times by Sebi, most notably in the UBS matter two decades ago to get information about the Swiss company from the US regulator," Parekh said. The Securities and Exchange Board of India had on July 3 imposed a trading ban on the firm in an interim, ex-parte order and directed it to return Rs 4,844 crore, quantifying this as illegal gains from market manipulation. Jane Street, which has denied any wrongdoing, deposited the entire amount stipulated by Sebi in an escrow account. Following this, Sebi lifted the trading ban on the firm, albeit with conditions, on July 21. Jane Street, which has offices in all the key financial centres of the world, uses complex algorithms developed in-house to execute high-frequency trades. It isn't challenging Sebi's findings in court for the time being. But it has told Sebi that it reserves the right to seek legal and equitable rights and remedies. 21 days to submit response The regulator has informed the trading company's law firm about the dates for hearings into the case, said one of the persons cited above. Jane Street had been given 21 days to respond to the interim findings. Its legal representatives are preparing a formal reply to the regulator, rebutting the allegations, said people with knowledge of the matter. Sebi said the NSE's Bank Nifty Index - comprising the stocks of India's top dozen lenders - had been manipulated in a complex and illegal manner, aided by the Jane Street Group's trading, financial and technological prowess. Jane Street would drive up prices with heavy buying in the morning and send them down through a selling spree later in the day, according to Sebi. It also sought to push index levels down with heavy sell orders close to the option expiry, the regulator said. This caused losses to those at the other end of the trade, mostly retail investors, it said. Sebi invoked the prohibition of unfair trade practices (PFUTP) regulations for market manipulation, which covers any act or practice. It focused on Jane Street's trading data of about 20 random days showing the highest profits.
Business Recorder
09-07-2025
- Business
- Business Recorder
Why did India's securities regulator bar Jane Street?
MUMBAI: Jane Street has been barred from the Indian securities market by its markets regulator, which has said the U.S. firm used its trading strategies to 'manipulate' a key stock market index, leading to losses for millions of retail investors, allegations Jane Street has rejected. What exactly is SEBI accusing Jane Street of doing? The Securities and Exchange Board of India (SEBI) in its interim order said Jane Street accumulated large volumes of constituent stocks of the Bank Nifty index, which comprises the 12 top Indian bank stocks, in the cash and futures markets, thus pushing up the index prices. Simultaneously, Jane Street took short positions in the derivatives segment by buying cheap 'put' options and selling expensive 'call' options linked to the Bank Nifty, the regulator said. The SEBI order said that during the second half of most days in which Jane Street's positions were studied, the U.S. firm reversed the first leg of its trade, selling the constituents in the cash and futures markets, thereby pushing down the price of the index and its constituents. This, in turn, led to a rise in value for the 'put' options and a drop in value for 'call' options, earning Jane Street large profits, which outweighed any losses that were incurred during the first leg of the trade. Jane Street to challenge India ban, says it engaged in basic arbitrage SEBI said this trading pattern created 'a false or misleading appearance of market activity' and attracted 'unsuspecting' investors to trade at levels that were 'artificial and temporary'. What is Jane Street saying about its India trading strategy? Jane Street, in an internal email to its employees, said the activities in question were what is known as an 'arbitrage trade', which is commonly used by large trading firms in financial markets. In an arbitrage trade, firms simultaneously buy and sell the same asset in different markets and pocket the profits from the difference in prices. In its internal memo, Jane Street argued there was a large gap between the price of the Bank Nifty index in the options markets and the price implied by the level at which the stocks were trading. This divergence, it said, was clearly observed and Jane Street traded in a direction consistent with closing that gap. Arbitrage trading is legal in India. India market regulator to widen probe into Jane Street, source says What factors were crucial to Jane Street's India strategy? According to details in the SEBI order, the first is size. In the first leg of the trade, where Jane Street was buying shares of constituents of the Bank Nifty Index, it was doing so in volumes large enough to move the index. Its trades made up 15%-25% of the entire market's traded value in the constituents of the banking index, SEBI said. The second is the distortions between the cash and derivative markets in India. India's derivatives-to-cash market ratio in terms of volume is the highest in the world, SEBI said. In 2024, this ratio was 400 times. In its order, SEBI highlighted Jane Street's trading activities on January 17, 2024 - one of the trading days under investigation - saying the U.S. firm traded roughly $1.2 trillion (103 trillion rupees) worth of cash-settled options on the Nifty Bank index. That amount equates to roughly 353 times the trading volumes of the bank stocks in the index. India bars Jane Street from its securities market, citing manipulation of stock indexes Who are the losers in India's derivatives market? Proprietary trading giants such as Jane Street have made hefty profits from India's derivatives market, which accounts for roughly 61% of equity options contracts that are currently traded worldwide, according to data from the Futures Industry Association. In the 12 months to March 2024, proprietary traders and foreign investors made gross profits of 330 billion rupees and 280 billion rupees, respectively, a SEBI study in September 2024 showed. During that same period, retail traders lost 524 billion rupees. On Monday, SEBI said retail investor losses on derivative trades widened by 41% to 1.06 trillion rupees in the subsequent year. It did not blame proprietary traders for the widening losses of retail investors and nor did it provide fresh data on gains made by proprietary traders. What are the next steps for Jane Street and SEBI? SEBI has seized $567 million of Jane Street's funds, equivalent to the amount of what it calls 'unlawful gains'. The U.S. firm can deposit that amount and regain access to the Indian markets. It also has 21 days to file its reply or any objections to the order, and can also challenge the order judicially via the Securities Appellate Tribunal. SEBI, meanwhile, is working on a final order and also expanding its investigation into Jane Street's trade on indexes other than the Bank Nifty.
Time of India
08-07-2025
- Business
- Time of India
Sebi Plans to Heighten Derivatives Surveillance
Live Events The Securities and Exchange Board of India (Sebi) is planning to enhance its surveillance system to check manipulation in the derivatives market, chairman Tuhin Kanta Pandey said on Monday. This follows the regulator barring US-based proprietary trader Jane Street from the securities market for allegedly generating illegal profits by manipulating indices through large derivatives positions.'This (Jane Street case) is essentially a surveillance issue,' Pandey said on the sidelines of an event. 'Surveillance mechanisms will be upgraded further to strengthen oversight.' He added that monitoring will continue at Sebi's as well as stock exchange levels.'Manipulative practices can be worked out by different players in different ways,' Pandey said. 'There is no one particular way in which you have to assess. Our regulations clearly mention that manipulative and fraudulent practices are not allowed in the market, and within the regulations, Sebi has all powers to investigate and act.'The chairman appeared to be of the view that such practices aren't widespread. 'There may not be many more such cases,' he said in response to a question on whether other funds may have manipulated the markets in a similar week, Sebi ordered the seizure of what it said were 'illegal gains' made by Jane Street to the tune of Rs 4,844 crore ($570 million) in one of the toughest punitive actions against an international trader. It's likely the largest amount thus impounded by the entities tied to Jane Street Group — JSI Investments, JSI2 Investments, Jane Street Singapore and Jane Street Asia Trading — have been prohibited from dealing in securities, directly or Street, which started its India operations in 2020, made a profit of about $4.3 billion between January 2023 and March 2025, the period under review, on its India regulator's finding is that the NSE's Bank Nifty Index — comprising stocks of India's top dozen lenders — was manipulated in a complex and illegal manner aided by JS Group's immense trading, financial and algorithmic Street would drive up prices with heavy buying in the morning and send them down through a selling spree later in the day, according to Sebi. It also sought to push index levels down with heavy sell orders close to the option expiry, the regulator found that Bank Nifty options alone contributed Rs 17,319 crore, amounting to 40% of the total index option's profits.
