SEBI Bans US Firm Jane Street from Indian Markets Over Alleged Index Manipulation

On July 3, 2025, the Securities and Exchange Board of India (SEBI) issued an interim order barring U.S. quant trading firm Jane Street and its affiliated entities—JSI Investments, JSI2, Jane Street Singapore, and Jane Street Asia—from trading in India’s securities market. The prohibition remains until the conclusion of an ongoing investigation into alleged market manipulation

📉 Allegations & Financial Penalty

• SEBI alleges Jane Street manipulated the Bank Nifty and Nifty 50 indices via large-scale futures and options trades—allowing the firm to artificially inflate or deflate these benchmarks to gain option profits
• The regulator has impounded ₹4,843–4,844 crore (≈ $566 million) of alleged unlawful gains, ordering firms to deposit these funds into an escrow account
• Jane Street reportedly earned ₹36,671 crore (~$4.5 billion) net from this trading strategy between January 2023 and March 2025, including ₹734 crore profit from a single expiry day on January 17, 2024

📊 Market Impact

• Shares of Jane Street’s local partner Nuvama Wealth fell over 10%, while Angel One and BSE dropped around 6–7% in reaction to the ban
• Analysts predict short-term volatility and declining volumes in derivatives trading—but see the move as strengthening market integrity long-term

👥 Jane Street’s Response

Jane Street formally disputes SEBI’s findings and stated it “remains committed to operating in compliance,” and will continue engaging with the regulator during the investigation

🔎 Why It Matters

1. Strong Regulatory Stand: SEBI’s action is one of the most aggressive by a foreign authority and underscores India’s strict stance on protecting retail investors and market fairness reuters
2. Algorithmic Trading in Focus: The case draws attention to algorithm-driven strategies in India’s booming derivatives market, where institutional profits far outstrip retail returns
3. Global Precedent: With Jane Street generating billions in India, regulators worldwide may scrutinize such quant-heavy trading models more closely.

🔮 What to Watch

• Final SEBI Order: Will the ₹4,843 crore amount be upheld or adjusted? Will Jane Street be permanently expelled?
• Potential Appeal: Jane Street may appeal at the Securities Appellate Tribunal.
• Derivative Market Response: Will this reduce excessive volatility and keep retail participation more sustainable?