Jane Street Probe: SEBI Shares Key Info with SEC Over Market Manipulation

As per news reports, India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has shared detailed information with the US Securities and Exchange Commission (SEC) regarding its ongoing investigation into Jane Street’s alleged manipulation of the derivatives market. 

The development comes under the purview of international cooperation norms, following SEBI’s July 3 ex-parte interim order banning the firm from trading. Jane Street, however, has deposited ₹4,844 crore in an escrow account and had its trading ban lifted on July 21, albeit with conditions.

Cross-Border Co-Operation and Legal Framework 

SEBI’s response to the SEC was in accordance with Articles 6 to 8 of the International Organisation of Securities Commissions (IOSCO) agreement, which mandates signatories to provide regulatory support.

Neither SEBI nor the SEC responded to queries on the matter, but officials familiar with the case confirmed that SEBI had submitted replies to specific queries raised by the SEC.

Nature of Allegations and SEBI's Findings

SEBI has alleged that Jane Street manipulated the NSE’s Bank Nifty Index using sophisticated algorithms and high-frequency trades. According to the regulator, the firm executed large-scale morning purchases to drive prices up, followed by aggressive selling to push them down, causing losses largely to retail investors. 

The regulator also accused the firm of dumping heavy sell orders near option expiry to influence index levels. These activities, covering about 20 high-profit trading days, were deemed violations under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.

Jane Street’s Legal Position and SEBI Proceedings 

Jane Street, which operates in major financial centres globally, is not challenging SEBI’s interim findings in court for now but has formally reserved its right to pursue legal or equitable remedies. The company has been given 21 days to respond to SEBI’s order, and its legal representatives are reportedly preparing a detailed rebuttal. 

Hearing dates have already been communicated to Jane Street’s legal counsel. Meanwhile, SEBI has reiterated that the group’s trading, financial, and technological capabilities played a significant role in the alleged market manipulation.

Also Read: SEBI Rolls Out Centralised Compliance Reporting for Brokers from August 1!

Conclusion

SEBI’s probe into Jane Street marks one of the most high-profile regulatory crackdowns in India’s derivatives market. By actively engaging with the US SEC and invoking global cooperation norms under IOSCO, SEBI has signalled its seriousness in addressing complex cross.

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