Jane Street barred from Indian markets as regulator freezes $566 million over Nifty 50 manipulation claims

The Securities Exchange Board of India (SEBI) has temporarily barred Jane Street Group from accessing India's securities market, after it accused the U.S. steadfast of wide marketplace manipulation.

According to an interim bid posted connected the regulator's website connected Thursday, Jane Street's "entities are restrained from accessing the securities marketplace and are further prohibited from buying, selling oregon different dealing successful securities, straight oregon indirectly."

SEBI besides issued an interim bid to frost implicit 48.4 cardinal Indian rupees ($566.3 million) from Jane Street successful alleged amerciable gains. It further stated that banks person been directed to guarantee that "no debits are made, without support of SEBI," for accounts held by Jane Street's entities either jointly oregon individually.

Jane Street disputed the findings of SEBI's interim bid and said it volition further prosecute with the regulator, successful effect to queries from CNBC. A Jane Street spokesperson added that the steadfast "is committed to operating successful compliance with each regulations successful the regions we run astir the world."

Jane Street allegedly utilized assorted strategies to artificially power India's benchmark Nifty 50 scale — which tracks the country's apical 50 companies — and nett from importantly larger positions successful scale options.

According to SEBI's 105-page interim order, Jane Street would aggressively bargain ample amounts of stocks and futures that are portion of the BANKNIFTY index, which tracks the show of India's banking sector, aboriginal successful the trading day. The quantitative trading steadfast would past spot ample bets that the scale would diminution aboriginal successful the day.

Jane Street would past merchantability disconnected the positions it had bought earlier, dragging the scale little and making their earlier bets successful the options marketplace acold much profitable.

While Jane Street would incur immoderate losses, SEBI contended that it was portion of a "deliberate strategy to manipulate indices to the vantage of the trading and positions," and the losses were offset by the firm's overmuch larger and profitable options trade.

While these actions were not a breach of immoderate regulation, SEBI said that the "intensity and sheer scale" of their intervention, and the accelerated reversal of their trades "without any plausible economic rationale, other than the concurrent enactment successful and interaction connected their positions successful the BANKNIFTY scale options markets," was manipulative.

Options trader Mayank Bansal noted that Jane Street's actions had been ongoing since July 2023, and their alleged manipulations were expanding earlier peaking successful 2024.

"As an options trader, I could spot the manipulation happening unrecorded connected the screen, and truthful could different traders connected each expiry day,' added the president of a UAE-based hedge fund, who declined to disclose the sanction of his company.

While helium lauded SEBI's actions, Bansal said that the regulator should retrieve immoderate unlawful gains, and a prohibition connected Jane Street "is the bare minimum."

SEBI noted that repeated instances of manipulative trading continued connected the broader Nifty 50 benchmark adjacent aft an "explicit advisory" was issued to the steadfast successful February 2025 by the National Stock Exchange of India.

"Such egregious behaviour, successful wide disregard/ defiance of the explicit advisory issued to them by NSE successful February 2025, amply demonstrates that dissimilar the immense bulk of Foreign Portfolio Investors and different marketplace participants, [Jane Street] Group is not a bully religion histrion that tin be, oregon deserves to be, trusted," the regulator said.

"The integrity of the market, and the religion of millions of tiny investors and traders, tin nary longer beryllium held hostage to the machinations of specified an untrustworthy actor," SEBI added.

Deven Choksey, laminitis and managing manager of wealthiness absorption steadfast DRChoksey FinServ, said SEBI's crackdown connected Jane Street sets a "good example."

"Any subordinate who is abusing the marketplace requires to beryllium shown the discipline. The regulator is doing their occupation for keeping intact the marketplace integrity," helium told CNBC.

While the execution of trades tin beryllium customized based connected the needs and illustration of the trader, terms find successful the marketplace should beryllium "universal for all," Choksey added.

Kranthi Bathini, manager of equity strategy astatine WealthMills Securities, noted that immoderate companies whitethorn "get into the marketplace with originative and innovative strategies to exploit investors." Therefore, SEBI needs "to support the interests of retail investors," helium added.

Any interaction connected markets arsenic a effect of this determination volition beryllium short-term, Bathini said.

SEBI's determination comes arsenic respective different planetary trading firms, from Citadel Securities and IMC Trading to Millennium and Optiver, person been stepping up their beingness successful India, to thrust connected its booming derivatives markets, which is the world's largest by contracts traded.

The Indian regulator had antecedently expressed concerns implicit practices specified arsenic algorithmic trading, which SEBI said successful a September 2024 study allowed proprietary traders and overseas portfolio investors to marque 610 cardinal Indian rupees successful profits successful FY 2024, portion retail investors and different marketplace participants mislaid the aforesaid magnitude during that period.

 — CNBC's Aparajita Saxena contributed to this report