How Sebi's crackdown on Jane Street unfolded: A 15-month trail of scrutiny and ignored warnings
Sebi's first look into Jane Street's trades came in April 2024, triggered by media reports referencing a legal dispute in the US
Market regulator Sebi on Friday barred Jane Street Group from India's securities market and ordered a freeze on Rs 4,840 crore in alleged unlawful gains. But the move was not sudden; it followed a 15-month-long trail of regulatory scrutiny, caution letters, and what Sebi described as repeated disregard by the U.S.-based trading firm. Here is how the events unfolded leading up to the July 4 order.
Sebi's first look into Jane Street's trades came in April 2024, triggered by media reports referencing a legal dispute in the US. The matter involved the alleged unauthorised use of Jane Street's proprietary strategies in Indian markets, prompting Sebi to begin an internal review.
On July 23, 2024, SEBI asked the National Stock Exchange to examine the trading activity of the Jane Street Group (JS Group) to determine whether there was market abuse involved.
Sebi officials met with the firm on August 20, and Jane Street submitted a written explanation of its trades on August 30. Amid rising concerns over aggressive expiry-day trading in index options, Sebi issued a circular on October 1, 2024, announcing policy steps to curb overtrading on expiry days, a structural issue the regulator was beginning to link to the strategies deployed by large trading firms.
On November 13, the NSE submitted its examination report on JS Group's trading patterns to SEBI.By December, Sebi had observed what was described as 'abnormally high or low volatility on weekly index options expiry days.' It flagged certain entities, including Jane Street, for 'consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O, particularly on expiry days.'A team of Sebi officials was constituted to conduct a deeper, more comprehensive investigation.
On February 4, 2025, SEBI's internal team found prima facie evidence of a violation of its PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations by Jane Street. Two days later, NSE, acting on SEBI's instruction, issued a caution letter to Jane Street Singapore Pte Ltd and JSI Investments Pvt Ltd. The entities were 'advised to refrain from taking large (cash-equivalent) positions and to refrain from undertaking certain trading patterns.'Jane Street responded to the letter on February 6 and again on February 21.Despite the caution, Jane Street 'was observed to continue to run very large 'cash-equivalent' positions in index options,' Sebi said. These positions appeared similar to the ones flagged earlier, prompting the regulator to prepare enforcement action.
On Friday, Sebi issued an interim order barring Jane Street and its affiliates from accessing India's securities market and directed the impounding of Rs 4,840 crore in alleged illegal gains. The regulator also instructed banks to freeze withdrawals from accounts linked to Jane Street Singapore, JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, and Jane Street Asia Trading Ltd.
Sebi alleged that Jane Street repeatedly used high-volume, cross-segment strategies to distort index levels of Bank Nifty and Nifty 50 during weekly expiry days, misleading large numbers of retail traders and booking enormous profits. One such 'Intra-day Index Manipulation' strategy involved buying Rs 4,370 crore worth of Bank Nifty stocks on the morning of January 17, 2024, to inflate the index, only to unwind the trades later while holding bearish options bets — earning Rs 734.93 crore that day alone.The regulator has ordered the impounding of Rs 4,840 crore in alleged unlawful gains, directing banks to freeze any debit transactions from Jane Street-linked accounts without its permission.According to Sebi's order, Jane Street made Rs 36,500 crore in net profits from Indian markets between January 2023 and March 2025, with Rs 43,289 crore coming from index options.The firm allegedly deployed these manipulative strategies on all 18 expiry days SEBI examined, using 'intra-day manipulation' on 15 days and 'extended marking the close' tactics on the rest.Sebi said the firm's strategy misled retail traders into dealing at distorted prices. 'What sets apart the trading pattern of the JS Group as prima facie being manipulative is the intensity and sheer scale of their intervention in the underlying component stock and futures markets,' the order said.
Also read | Sebi bars U.S. trading firm Jane Street from Indian markets, orders Rs 4,840 crore freeze over alleged Nifty manipulation While the NSE had closed its probe after reviewing a response from Jane Street's local trading partner Nuvama Wealth, SEBI decided to pursue enforcement action, culminating in Friday's ban.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
34 minutes ago
- Hans India
Rajasthan youth murder: Tazia procession cancelled amid rising tensions in Bhilwara
Jaipur: Protests continue in Jahazpur town of Bhilwara district in Rajasthan on Saturday following the murder of a youth by a mob. The victim's family has demanded Rs 1 crore in compensation and bulldozer action on the houses of the accused, while the local administration, in view of rising tensions, has imposed restrictions and cancelled the Tazia procession scheduled for July 5 and 6 during Muharram. The family has been staging a protest outside the government hospital in Jahazpur since Saturday. The Sub-Divisional Magistrate (SDM) of Jahazpur has officially withdrawn permission for the Tazia processions, citing law and order concerns. A complete ban has now been enforced on carrying out processions on both days. According to the police, the incident occurred on Friday around 7:30 PM in the Takiya Masjid area of Jahazpur. Four youths - Sitaram, Sikandar, Dilkhush, and Deepak - residents of the Chhavni area in Tonk, had come to Jahazpur in a car to attend a function at the home of Sikandar's sister. While leaving the main market, their car accidentally hit a handcart. An argument broke out with the cart owner, and soon, around 20 people gathered and began assaulting the group. Sitaram (25) was pulled out of the vehicle, beaten severely, and thrown onto the road. He succumbed to his injuries on the spot. In protest, Jahazpur town observed a complete shutdown on Saturday. A murder case has been registered against 16 named individuals and 20 unidentified others. Police forces from 10 nearby stations have been deployed to prevent any further unrest. Hari Nand Kahar, state chief of the Kewat Kahar Samaj, said that Sitaram was brutally murdered. 'We strongly condemn this heinous act. The accused must receive strict punishment. The victim's family is poor - his father has passed away, and his elderly mother was entirely dependent on him,' he said. Nand Kahar pointed out that the family must receive Rs 1 crore compensation and a government job for one member, adding that the case should be investigated by an SIT and tried in a fast-track court. Bhilwara MP Damodar Agarwal said that the incident is serious, and there is anger in society. 'Police are arresting the criminals. A situation of agitation has arisen. People must maintain peace,' he said.
&w=3840&q=100)
Business Standard
36 minutes ago
- Business Standard
India-US trade deal awaits Trump's nod ahead of July 9 tariff deadline
The first stage of the India-US Bilateral Trade Agreement (BTA) is now ready and awaiting final approval from US President Donald Trump, according to a LiveMint report quoting sources. The interim deal has been cleared by US Trade Representative (USTR) Jamieson Greer and could be signed as early as July 8 -- a day before Trump's reciprocal tariff deadline. The development comes after Indian negotiators, led by chief negotiator Rajesh Aggarwal, extended their stay in Washington beyond their initial schedule to bridge gaps over sensitive sectors, particularly agriculture. A key government official told LiveMint, 'Indian negotiators did their best to convince their US counterparts about the domestic sensitivities involved in these sectors. To some extent, the USTR has agreed to India's position on not fully opening up the agriculture sector. Now, it's up to the US President to take the final call.' Agriculture, dairy, genetically modified (GM) seeds, and medical services remain points of contention, with the US seeking greater market access while India looks to protect its vulnerable sectors, as per the report. India-US trade deal: Options on tariffs The US, as per the report, has offered two alternatives on tariff reductions. If India agrees to the US's demands in agriculture and related sectors, its exports could face an additional 10 per cent tariff. 'If India agrees to US demands for greater market access in agricultural goods, dairy and seeds, then Indian goods may face only a 10 per cent additional tariff -- which, while not ideal, is still much lower than what other countries in the Asian region are facing,' a person aware of the talks told LiveMint. If India refuses, tariffs could go up to 20 per cent, which includes the existing 10 per cent baseline and an extra 10 per cent under earlier US measures. Still, this would represent a 6 per cent relief from the earlier proposed 26 per cent duty. Trump's deadline nears The US President, speaking to reporters on July 4, confirmed he had signed multiple letters informing countries of upcoming reciprocal tariffs. 'I signed some letters and they'll go out on Monday, probably 12. Different amounts of money, different rates of tariff,' Trump said, without naming the countries. Although the reciprocal tariffs are scheduled to take effect from August 1, the letters are expected to be sent out on July 8, giving India a narrow window to seal the deal before being hit by new duties. India firm on agriculture, open on other fronts India is pushing for better access for its leather, textiles, and footwear sectors, while resisting demands to lift restrictions on GM seeds and crops. Only Bt cotton is currently approved for cultivation in India, and no GM food crops are commercially grown. US-India trade data Commerce ministry figures highlight the growing trade with the US. In FY25, India's exports to the US rose by 11.6 per cent to $86.51 billion, while imports increased by 7.42 per cent to $45.33 billion. However, US imports fell in May year-on-year, from $3.85 billion to $3.63 billion, while exports grew by 17.3 per cent, led by electronics and smartphones. In contrast, India's imports from China rose by 11.5 per cent in FY25 to $113.46 billion, while exports to China fell by 14.5 per cent, underscoring the trade imbalance. The deal, if finalised, is likely to mirror elements from recent US trade agreements with the UK and Vietnam. While the US retained its 10 per cent baseline tariff in both those cases, it offered some reductions in additional duties. Trade watchers see the India-US agreement as a limited deal focused solely on goods, with services and labour excluded for now. Despite the challenges, negotiators on both sides remain hopeful of concluding an agreement in time to avoid penalties. The ball now lies in Trump's court.
Mint
39 minutes ago
- Mint
Trump tariff ultimatum: These countries have struck trade deals as US Prez prepares ‘take it or leave it' letters
As the deadline for the 90-day pause on reciprocal tariffs nears, United States President Donald Trump stated that he has signed letters to 12 countries detailing the different tariff rates that will be imposed on exports to the US. These 'take it or leave it' offers enclosed in letters are scheduled to be sent out on Monday, July 7. With the letters set to go out Monday, here's a look at the countries that have already secured trade deals with the US, avoiding the 'take it or leave it' letters from Donald Trump. In May, the UK concluded a trade deal with the US that kept a 10 per cent tariff rate and secured preferential treatment for some sectors, including autos and aircraft engines. Under the US-Vietnam trade deal, tariffs on numerous Vietnamese goods have been reduced to 20 per cent, down from the previously threatened 46 per cent. Additionally, many US products will now be able to enter Vietnam duty-free. Japan's tariff negotiator Ryosei Akazawa held 'in-depth exchanges' with US Commerce Secretary Howard Lutnick on Thursday and Saturday, reported Reuters, citing the Japanese government, which intends to actively coordinate with the US over the tariff issue. Apart from India, the EU also could not conclude a trade deal with the US. On Friday, EU diplomats said they haven't achieved a breakthrough in trade negotiations with the Trump administration, Reuters reported. A trade deal with India was not finalised and the Indian negotiators returned from the US on Friday, according to the reports. Meanwhile, India has proposed retaliatory duties against the United States under World Trade Organisation (WTO) norms as a safeguard measure against American tariffs on the automobile sector. "The proposed suspension of concessions or other obligations would take the form of an increase in tariffs on selected products originating in the United States," PTI reported, quoting a notification of the WTO. While recognising the challenges of negotiating with more than 170 countries, Trump informed reporters that the letters would be sent to 10 countries at a time with tariff rates in the range of 20 per cent to 30 per cent. 'The letters are better ... much easier to send a letter,' Trump told reporters. Trump's letter, scheduled to be sent out on Monday, comes days before the reciprocal trade deadline on Tuesday, ending the 90-day pause on duties. In April, Trump announced a 10% base tariff rate and additional tariffs up to 50% for trading partners, significantly impacting the financial markets. However, he subsequently paused these tariffs for 90 days, giving time for negotiations with trading partners. Earlier, Trump said that after the July 9 deadline, tariffs may go even higher, up to 70%, effective from August 1 onwards. Trump and his top aides initially said they would launch negotiations with scores of countries on tariff rates, but the U.S. president has soured on that process after repeated setbacks with major trading partners, including Japan and the European Union.
