Jane Street Fights Back as SEBI Alleges $564 Million Index Manipulation in India
- SEBI barred Jane Street from Indian markets and ordered seizure of Rs 48.4 crore ($564 million) over alleged index manipulation.
- The firm strongly denied the charges, calling SEBI’s report 'erroneous' and based on a misunderstanding of standard arbitrage trading.
- Jane Street claims it engaged SEBI since August 2024 and is now preparing a legal response while assessing its options.
Jane Street Group LLC, a prominent US-based proprietary trading firm and global market maker, has strongly refuted allegations made by the Securities and Exchange Board of India (SEBI) accusing it of 'index manipulation'. In an internal email to employees over the weekend, the firm denounced SEBI’s interim order as 'erroneous' and 'unsupported', and said it intends to challenge the claims both legally and procedurally.
The dispute follows SEBI’s interim order issued last Friday, which temporarily barred Jane Street from participating in the Indian securities market and ordered the seizure of Rs 48.4 billion (approximately $564 million) in what it termed 'unlawful gains'. SEBI claims these profits were the result of manipulative trading activity between January 2023 and March 2025. According to the regulator, Jane Street made around $4.3 billion in overall trading gains during that period.
Jane Street, however, categorically denied the accusations. “We reject the premise and the substance of the Order in the strongest possible terms”, the firm stated in its communication to staff. “It’s deeply upsetting to see the firm mischaracterized in this way”. The company argued that SEBI’s report used inflammatory language and misrepresented its trading strategies, particularly its index arbitrage practices.
The core of SEBI’s case centers on trades conducted on January 17, 2024, when weekly options tied to the NSE Nifty Bank Index were due to expire. SEBI alleges Jane Street manipulated the index by trading aggressively in the cash and futures markets to influence prices, then capitalizing on those movements through options. In contrast, Jane Street claimed that this activity constituted standard index arbitrage commonly used to align prices across different financial instruments and was consistent with the market’s functioning.
“There was a large divergence between the price of the Nifty Bank Index in the options market and in the stock market on that day, and we traded in a direction consistent with closing that gap”, the firm said.
Jane Street further expressed frustration over SEBI’s characterization of its conduct, arguing that the regulator’s conclusions reflected “a fundamental misunderstanding of standard hedging practices and the interrelationships between derivative and underlying markets.” The firm asserted that its market activities enhance liquidity and efficiency. “In the absence of participants like Jane Street, there would be no economic link between the Indian derivatives market and the underlying economy”, it said.
The firm also pushed back against SEBI’s claim that it had ignored earlier warnings. Jane Street noted it had been in active dialogue with the regulator since August 2024 and had adjusted its trading strategies following concerns raised by Indian stock exchanges earlier this year. In February 2025, Jane Street temporarily halted trading in India after receiving inquiries from two exchanges, then made changes based on feedback following a meeting in Mumbai with officials from the National Stock Exchange of India.
“Since February, we have made ongoing efforts to communicate with SEBI and have been consistently rebuffed”, the firm said. It added that requests to further engage with the regulator had gone unanswered.
Jane Street is currently preparing a formal response to SEBI and is reviewing legal options to contest the allegations. SEBI has not issued an official comment in response to the firm’s statements.
Concluding its internal note, Jane Street reassured its employees of the integrity of their work and the firm’s global role in financial markets. “We take pride in the role we serve in markets around the world”, the message read. “You all deserve to feel proud of your work here”.
