Summary
- SEBI lifts Jane Street’s trading ban after Rs 4,844 crore escrow deposit.
- Investigation into alleged Bank Nifty manipulation continues.
- Trading volumes in India’s F&O segment dropped 20% during ban.
SEBI Clears Jane Street for Re-Entry
High-frequency trading (HFT) powerhouse Jane Street is back in the Indian markets after complying with the Securities and Exchange Board of India’s (SEBI) directive to deposit Rs 4,844 crore into an escrow account. SEBI confirmed the deposit before the July 14 deadline, officially lifting the ban last week via email.
The firm, based in New York and renowned for its aggressive index options strategies, had faced a trading suspension earlier this month over allegations of index manipulation. SEBI has now allowed Jane Street to resume operations, but under tight regulatory oversight. Both the National Stock Exchange (NSE) and BSE have been instructed to closely monitor the firm’s trading activities, ensuring compliance with rules designed to prevent manipulative practices.
Industry experts suggest this move marks a turning point for the Indian derivatives market, which saw trading volumes drop nearly 20% during Jane Street’s absence.
You’ve got to hand it to SEBI for going after Jane Street. If the allegations are true, it’s blatant market manipulation.
— Nithin Kamath (@Nithin0dha) July 4, 2025
The shocking part? They kept at it even after receiving warnings from the exchanges. Maybe this is what happens when you're used to the lenient U.S.… pic.twitter.com/pZGEnfnDXl
Allegations of Index Manipulation
- SEBI’s probe focuses on Jane Street’s alleged two-part strategy involving Bank Nifty stocks.
- The firm reportedly boosted prices through bulk buying in the cash and futures markets, then profited from subsequent declines via short index options.
- Jane Street defends the trades as legitimate index arbitrage tactics.
The market watchdog’s interim order on July 3 had flagged suspicious trading patterns, which Jane Street denies as being manipulative. Representatives of the firm recently held meetings with SEBI officials, maintaining that their strategies are standard within global HFT practices.
Despite regaining access to the market, Jane Street is reportedly hesitant to immediately restart its index options trades, possibly to avoid further regulatory scrutiny. SEBI’s investigation into both Jane Street and other HFT players is ongoing and could extend beyond Bank Nifty indices.
Market Impact and Future Outlook
- Jane Street earned Rs 43,289 crore in profits from index options between January 2023 and March 2025.
- Rival firms may capitalize on Jane Street’s cautious return, reshaping competitive dynamics in India’s F&O segment.
- SEBI is tightening oversight to ensure market stability and investor confidence.
The temporary suspension of Jane Street’s operations not only dented trading volumes but also triggered broader conversations about the role and influence of high-frequency traders in Indian markets. Market insiders suggest the firm may scale back its risk-intensive strategies to rebuild trust.
For SEBI, this episode underlines the importance of rigorous monitoring as India’s derivatives market continues to expand in both scale and sophistication.
A Controlled Comeback for Jane Street
Jane Street’s re-entry into the Indian markets marks both a victory and a warning. While the firm has regained access by fulfilling SEBI’s conditions, its future operations will be under a magnifying glass. The Rs 4,844 crore escrow deposit and strict monitoring of its trades underscore SEBI’s growing intolerance of opaque high-frequency strategies that risk market integrity.
The case highlights the regulator’s intent to balance innovation with fairness in India’s rapidly expanding derivatives market. With trading volumes already impacted during Jane Street’s absence, its cautious comeback may level the playing field for competitors, but also signals that aggressive arbitrage models will face increasing regulatory hurdles.
Ultimately, the final verdict lies in whether Jane Street can adapt to this new era of transparency and compliance while maintaining its profitability, or if SEBI’s ongoing investigation will lead to deeper restrictions that reshape the F&O landscape entirely.
