India bars US trading firm from accessing securities market, seizes $567 million
In its most stringent action ever against a foreign trading firm in the country, the Securities and Exchange Board of India (SEBI) in an interim order dated July 3 said that Jane Street and its related entities (JS Group) would no longer be able to participate in the domestic securities market.
SEBI also impounded an unprecedented 48.4 billion rupees ($566.71 million) from Jane Street, which it said were the 'unlawful gains earned' from the alleged misconduct.
"(JS Group) entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly," SEBI said. It said the ban will stay in place until a final order is issued after the completion of investigations.
SEBI has asked Jane Street to deposit the impounded funds in an escrow account and asked its bankers to ensure that no debits are made without the regulator's permission.
Its action comes at a time when about half a dozen global trading firms, from Citadel Securities and IMC Trading to Millennium and Optiver, are ratcheting up their presence in India's booming derivatives markets.
India is the world's largest derivatives market, accounting for nearly 60% of global equity derivative trading volumes of 7.3 billion in April, the Futures Industry Association says.
A blow for Jane Street
Jane Street, in an emailed response, said it disputes the findings of the SEBI interim order and will further engage with the regulator. "Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world," the firm said.
The regulator's action is a blow for Jane Street, which started its India operations in December 2020 and, according to SEBI, made a profit of about $4.3 billion for the period between January 2023 and March 2025 on its India trades.
The company can file its reply or any objections to the order within 21 days, SEBI said. It can also challenge the order judicially via the Securities Appellate Tribunal.
SEBI, in its 105-page order, alleged that Jane Street and its India incorporated entities took large derivative positions to manipulate the Bank Nifty index, a grouping of 12 financial sector firms and a favourite in the derivative markets.
The investigation tracked Jane Street's trading patterns over more than two years and found two key strategies that were designed to manipulate stock indexes, the regulator said.
It said Jane Street and its related entities bought large quantities of constituents in the Bank Nifty index in the cash and futures markets to artificially support the index in morning trade, while simultaneously building large short positions in index options.
Later in the day, they reversed these trades to profit from their options positions, SEBI said.
"By moving the BANKNIFTY index with large and aggressive buying followed then by large and aggressive selling, JS Group was creating a false or misleading appearance of market activity. In the bargain, it was enticing unsuspecting entities trading in BANKNIFTY index options to trade at interim levels that were artificial and temporary," SEBI said.
The regulator said Jane Street's trades revealed a pattern of "highly concentrated activity" in the final hour before market close on expiry days to influence the index settlement price in favour of their large options positions.
SEBI said the trading practices employed by Jane Street represent manipulation under its regulations. The trading patterns amounted to "egregious manipulation of the prices of securities and benchmark indices for their own illegal gains, to the detriment of several lakhs of small market participants," it said.
SEBI also said that by incorporating entities in India, Jane Street managed to "work around" Indian regulations that prohibit foreign portfolio investors from undertaking intraday positions in the cash market.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Etihad
2 hours ago
- Al Etihad
Shares steady, dollar firms on US tariff letters; oil dips
8 July 2025 09:15 TOKYO (REUTERS)Stock markets in Asia took in stride the latest twist in US President Donald Trump's tariff roll-out on Tuesday, as the dollar held onto gains and oil on Wall Street fell after Trump sent letters to 14 countries, including Japan and South Korea, unveiling sharply higher tariffs on imports into the US, while also postponing their implementation to August Nikkei stock gauge opened lower but then turned positive after Trump described that deadline as "firm, but not 100% firm" and said tariffs may be adjusted for some Aussie dollar surged after the Reserve Bank of Australia left policy rates unchanged, defying expectations for a April, Trump capped all of the so-called reciprocal tariffs with trading partners at 10% until July 9 to allow for negotiations. Only two agreements, with Britain and Vietnam, have been June, Washington and Beijing agreed on a framework covering tariff rates, restoring a fragile truce in their trade on Japan and South Korea are now due to go up to 25% on August Prime Minister, Shigeru Ishiba, called the hike deeply regrettable and said his nation would continue negotiations with the US. Thailand's finance minister, Pichai Chunhavajira, said his country is preparing a back-up plan to deal with the 36% tariff imposed on its European Union will not be receiving a letter setting out higher tariffs, EU sources familiar with the matter told Reuters on Monday. The EU still aims to reach a trade deal by Wednesday after European Commission President, Ursula von der Leyen, and Trump had a "good exchange," a commission spokesperson broadest index of Asia-Pacific shares outside Japan rose 0.3%. Japan's Nikkei stock index added 0.4%, while South Korea's KOSPI jumped 1.5%.The dollar appreciated 0.1% to 145.88 yen, after touching a two-week high. The euro rose 0.3% to $1.1744. The Aussie dollar rose 0.8% to $ RBA left its cash rate steady at 3.85%, a shock for markets that had confidently priced in a cut, saying the majority of the board wanted to wait for more information to confirm inflation was crude dipped 0.5% to $67.61 a barrel after surging nearly 2% on Monday. Spot gold slid 0.2%. Pan-region Euro Stoxx 50 futures were down 0.2%, German DAX futures were also down 0.2%, and FTSE futures slid 0.4%.
Hi Dubai
2 hours ago
- Hi Dubai
Dubai Customs Strengthens Trade Ties with India to Boost Regional Logistics and Economic Corridor
Dubai Customs has deepened its trade cooperation with India following a high-level meeting aimed at accelerating regional logistics and developing the India-Middle East-Europe Economic Corridor (IMEEC). Led by Arti Agarwal Srinivas, Director General at India's Directorate General of Systems and Data Management, the Indian delegation met with Dubai Customs officials, including Director General Dr. Abdulla Busenad, to discuss advancing customs facilitation, digital data exchange, and supply chain efficiency. Representatives from DP World also joined the discussions. The talks focused on strengthening inter-MENA trade, streamlining clearance procedures, and expanding logistics services to boost the flow of goods between the two countries. Dubai highlighted its commitment to becoming a global trade and logistics hub as part of the Dubai Economic Agenda. A key initiative presented was the MAITRI platform, a single digital interface designed to integrate customs and port systems between the UAE and India. The platform aims to cut delays and costs, enhance data sharing, and unlock new logistics opportunities. Both sides reaffirmed their strategic partnership, with India recognizing Dubai's vital role as a trade gateway connecting Asia with the Middle East, Africa, and Europe. News Source: Dubai Media Office
Zawya
2 hours ago
- Zawya
China's rare earth export controls are good for Beijing, bad for business
China's export restrictions on rare earths brought parts of the global auto supply chain to a halt and U.S. President Donald Trump to the negotiating table. But at home, they're a big headache for companies already struggling with a slow economy. Beijing curbed rare earth and magnet exports in April in retaliation against U.S. tariffs, driving down magnet makers' offshore sales at the same time as they face pressure from a weak economy and tough times in one of their key markets - EVs. The pain for magnet makers is unlikely to ease soon, even after the U.S. announced a deal with China on June 27 to get rare earths flowing again. Any agreement would take time to implement, said Baotou Rare Earth Products Exchange, a state-backed trading platform, noting that inventory was piling up in warehouses, in a post on WeChat 12 hours after the deal was announced. The export curbs led to a 75% drop in magnet exports in the two months after the restrictions were imposed and forced several global auto makers to pause some production. The restrictions caused a "crisis" for some local magnet makers, the Baotou exchange, based in Inner Mongolia, one of China's rare earths hubs, said in May. While China produces 90% of the rare earth magnets used worldwide and consumes most of them, exports ranged from 18% to 50% of total revenue in 2024 among the 11 largest publicly listed magnet producers by capacity, public filings show. "Their sales are now being squeezed from both ends – disrupted exports and flagging domestic demand," said Ellie Saklatvala, head of metal pricing at commodities information provider Argus. "They have temporarily lost an important part of their customer base, with no certainty about when they will regain it." Rare earths are politically sensitive in China and few major listed rare earth companies have commented directly about how the controls will affect their business. However, two rare earth magnet producers told Reuters revenue is expected to fall this year, speaking on condition of anonymity given the issue's sensitivity. "It will have a huge impact on the export business, although it's hard to tell exactly how much of a loss we will suffer for now," said one of the rare earth magnet producers, requesting anonymity due to the sensitivity of the matter. Small- and medium-sized producers cut production by around 15% in April and May, according to another source with knowledge of the matter, who also declined to be named. EXPORT CURBS' IMPACT UNDERESTIMATED Much like U.S. chipmaker Nvidia, China's rare earth magnet makers are victims of their own importance. Caught in the geopolitical crossfire of Washington's tariffs and China's retaliation, share prices of the listed magnet makers slumped in April after the export curbs were announced. However, they have climbed off their lows over the past three months. The rebound does not appear to be based on any reasonable forecast of the industry's future, said Cory Combs, head of critical mineral research at consultancy Trivium China. "I can see various market outlooks, more or less negative depending on the assumptions, but none of them yield a sustainable rise in share price like we're seeing," he said. Many magnet makers are also private, so share prices only tell a limited story, he said. Many producers already faced weaker conditions at home, including a price war among electric vehicle makers, a key customer segment, that has seen manufacturers demand discounts from suppliers. In addition, the highly customised nature of many magnet products makes it hard to resell cargoes domestically, forcing magnet makers to store them during the wait for licenses, four sources said, also speaking anonymously. CHALLENGES MAY SPUR CONSOLIDATION Listed magnet maker Baotou Tianhe Magnetics Technology Co noted the export curbs in its annual report released in late April, and said its export revenue could decline if the international situation deteriorated. Yantai Zhenghai Magnetics said last week it had received export licenses and production was normal. It referred investors to its upcoming financial filings for specific operating results. However, a quick return to the previous status quo is unlikely if the rare earth controls are implemented in a manner similar to those on other critical minerals including germanium and antimony, according to Argus' Saklatvala. China imposed export controls on germanium and antimony over the course of 2023 and 2024. Despite being used mostly by civilian industries, which in theory should face few issues getting licenses, exports have still not recovered fully, customs data shows. Europe is receiving only a tiny fraction of the antimony it imported from China before export controls were imposed last September. The shortages are already causing major problems for lead-acid battery makers, commonly found in gasoline engines. "Looking at China's recent export controls on other critical minerals – such as antimony – it is clear that it can sometimes take longer than expected for exports to resume and normalise," Saklatvala added. The large amounts of information required by export license authorities are a permanent change for the industry that will add delays and costs for producers, said David Abraham, affiliate professor at Boise State University, in Idaho. "In some sense, there's no going back," he said. In an industry that has hundreds of manufacturers, the pressures could lead to consolidation, he said. "I do not know if Beijing sees that as a bad thing, because further consolidation is helpful for controlling and understanding where materials go."
