Jane Street, a top trading firm from the US, is pushing back after India’s market regulator SEBI banned it from trading in the country. The reason? SEBI says Jane Street manipulated Indian stock markets. But Jane Street says it was just doing basic index arbitrage — a normal trading practice used around the world.
The firm told its employees over the weekend that it will fight the ban. In an internal email seen by Reuters, Jane Street said the charges were not only false but also “extremely inflammatory.”
SEBI has blocked the firm from buying and selling in Indian markets and has also frozen $567 million of its funds. The regulator claims Jane Street bought stocks in India’s Bank Nifty index in both the cash and futures market to push prices up in the morning. At the same time, it placed short bets in options to make profits later. SEBI says this was done to manipulate the index.
But Jane Street sees it differently.
“We were just doing what all market players do — index arbitrage,” the firm said in its email.
The firm added that arbitrage helps markets stay fair by keeping prices of related securities in line. “This is a core part of how financial markets work,” Jane Street explained.
Jane Street Questions SEBI’s Process
The trading firm also denied SEBI’s claim that it didn’t respond properly. Jane Street said its top leaders had met SEBI and exchange officials many times. They believed they had reached an understanding after these meetings and even made changes to their trading style.
“Since February, we’ve tried to stay in touch with SEBI, but they kept pushing us away,” the firm said.
Jane Street also argued that SEBI’s view ignores the role of firms like them, who provide liquidity and price balance to markets.
Also Read Jane Street Used India Arm to Break FPI Rules and Move Markets for Big Gains: SEBI
Bigger Problem: Retail Losses & Fast Growth
SEBI has been tightening its watch over India’s booming derivatives market, which has seen record growth in recent years. As per data, India had 60% of global equity derivatives volume in May.
But the flip side? Retail investors — regular Indian traders — lost ₹1.06 trillion ($12.4 billion) in just one year. That’s one reason regulators are now going after big players like Jane Street.
SEBI Chairman Tuhin Kanta Pandey said they are boosting their systems to catch more such activity. However, he also said there may not be many cases like Jane Street.
Other global firms like Citadel Securities, IMC Trading, Millennium, and Optiver are also active in Indian markets. What happens next will tell if India becomes friendlier or tougher on these big trading houses.
Jane Street says it did nothing wrong. SEBI says it crossed a line. But in a fast-growing market full of retail losses, India is clearly taking no chances. One thing is certain — this fight is just beginning.
Also Read Jane Street Caught: Sebi’s Interim Crackdown Explained by Chairman Tuhin Kanta
