Latest news with #BankNiftyIndex
Business Recorder
09-07-2025
- Business
- Business Recorder
Why did India's securities regulator bar Jane Street?
MUMBAI: Jane Street has been barred from the Indian securities market by its markets regulator, which has said the U.S. firm used its trading strategies to 'manipulate' a key stock market index, leading to losses for millions of retail investors, allegations Jane Street has rejected. What exactly is SEBI accusing Jane Street of doing? The Securities and Exchange Board of India (SEBI) in its interim order said Jane Street accumulated large volumes of constituent stocks of the Bank Nifty index, which comprises the 12 top Indian bank stocks, in the cash and futures markets, thus pushing up the index prices. Simultaneously, Jane Street took short positions in the derivatives segment by buying cheap 'put' options and selling expensive 'call' options linked to the Bank Nifty, the regulator said. The SEBI order said that during the second half of most days in which Jane Street's positions were studied, the U.S. firm reversed the first leg of its trade, selling the constituents in the cash and futures markets, thereby pushing down the price of the index and its constituents. This, in turn, led to a rise in value for the 'put' options and a drop in value for 'call' options, earning Jane Street large profits, which outweighed any losses that were incurred during the first leg of the trade. Jane Street to challenge India ban, says it engaged in basic arbitrage SEBI said this trading pattern created 'a false or misleading appearance of market activity' and attracted 'unsuspecting' investors to trade at levels that were 'artificial and temporary'. What is Jane Street saying about its India trading strategy? Jane Street, in an internal email to its employees, said the activities in question were what is known as an 'arbitrage trade', which is commonly used by large trading firms in financial markets. In an arbitrage trade, firms simultaneously buy and sell the same asset in different markets and pocket the profits from the difference in prices. In its internal memo, Jane Street argued there was a large gap between the price of the Bank Nifty index in the options markets and the price implied by the level at which the stocks were trading. This divergence, it said, was clearly observed and Jane Street traded in a direction consistent with closing that gap. Arbitrage trading is legal in India. India market regulator to widen probe into Jane Street, source says What factors were crucial to Jane Street's India strategy? According to details in the SEBI order, the first is size. In the first leg of the trade, where Jane Street was buying shares of constituents of the Bank Nifty Index, it was doing so in volumes large enough to move the index. Its trades made up 15%-25% of the entire market's traded value in the constituents of the banking index, SEBI said. The second is the distortions between the cash and derivative markets in India. India's derivatives-to-cash market ratio in terms of volume is the highest in the world, SEBI said. In 2024, this ratio was 400 times. In its order, SEBI highlighted Jane Street's trading activities on January 17, 2024 - one of the trading days under investigation - saying the U.S. firm traded roughly $1.2 trillion (103 trillion rupees) worth of cash-settled options on the Nifty Bank index. That amount equates to roughly 353 times the trading volumes of the bank stocks in the index. India bars Jane Street from its securities market, citing manipulation of stock indexes Who are the losers in India's derivatives market? Proprietary trading giants such as Jane Street have made hefty profits from India's derivatives market, which accounts for roughly 61% of equity options contracts that are currently traded worldwide, according to data from the Futures Industry Association. In the 12 months to March 2024, proprietary traders and foreign investors made gross profits of 330 billion rupees and 280 billion rupees, respectively, a SEBI study in September 2024 showed. During that same period, retail traders lost 524 billion rupees. On Monday, SEBI said retail investor losses on derivative trades widened by 41% to 1.06 trillion rupees in the subsequent year. It did not blame proprietary traders for the widening losses of retail investors and nor did it provide fresh data on gains made by proprietary traders. What are the next steps for Jane Street and SEBI? SEBI has seized $567 million of Jane Street's funds, equivalent to the amount of what it calls 'unlawful gains'. The U.S. firm can deposit that amount and regain access to the Indian markets. It also has 21 days to file its reply or any objections to the order, and can also challenge the order judicially via the Securities Appellate Tribunal. SEBI, meanwhile, is working on a final order and also expanding its investigation into Jane Street's trade on indexes other than the Bank Nifty.
Time of India
08-07-2025
- Business
- Time of India
Sebi Plans to Heighten Derivatives Surveillance
Live Events The Securities and Exchange Board of India (Sebi) is planning to enhance its surveillance system to check manipulation in the derivatives market, chairman Tuhin Kanta Pandey said on Monday. This follows the regulator barring US-based proprietary trader Jane Street from the securities market for allegedly generating illegal profits by manipulating indices through large derivatives positions.'This (Jane Street case) is essentially a surveillance issue,' Pandey said on the sidelines of an event. 'Surveillance mechanisms will be upgraded further to strengthen oversight.' He added that monitoring will continue at Sebi's as well as stock exchange levels.'Manipulative practices can be worked out by different players in different ways,' Pandey said. 'There is no one particular way in which you have to assess. Our regulations clearly mention that manipulative and fraudulent practices are not allowed in the market, and within the regulations, Sebi has all powers to investigate and act.'The chairman appeared to be of the view that such practices aren't widespread. 'There may not be many more such cases,' he said in response to a question on whether other funds may have manipulated the markets in a similar week, Sebi ordered the seizure of what it said were 'illegal gains' made by Jane Street to the tune of Rs 4,844 crore ($570 million) in one of the toughest punitive actions against an international trader. It's likely the largest amount thus impounded by the entities tied to Jane Street Group — JSI Investments, JSI2 Investments, Jane Street Singapore and Jane Street Asia Trading — have been prohibited from dealing in securities, directly or Street, which started its India operations in 2020, made a profit of about $4.3 billion between January 2023 and March 2025, the period under review, on its India regulator's finding is that the NSE's Bank Nifty Index — comprising stocks of India's top dozen lenders — was manipulated in a complex and illegal manner aided by JS Group's immense trading, financial and algorithmic Street would drive up prices with heavy buying in the morning and send them down through a selling spree later in the day, according to Sebi. It also sought to push index levels down with heavy sell orders close to the option expiry, the regulator found that Bank Nifty options alone contributed Rs 17,319 crore, amounting to 40% of the total index option's profits.
Economic Times
08-07-2025
- Business
- Economic Times
Sebi plans to heighten surveillance to check manipulation in derivatives market
Securities and Exchange Board of India will upgrade its surveillance to curb derivatives market manipulation. This follows action against Jane Street for alleged illegal index manipulation. Tuhin Kanta Pandey said monitoring will be strengthened at Sebi and stock exchange levels. Sebi had barred Jane Street and seized illegal gains of Rs 4,844 crore. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: The Securities and Exchange Board of India (Sebi) is planning to enhance its surveillance system to check manipulation in the derivatives market, chairman Tuhin Kanta Pandey said on Monday. This follows the regulator barring US-based proprietary trader Jane Street from the securities market for allegedly generating illegal profits by manipulating indices through large derivatives positions."This (Jane Street case) is essentially a surveillance issue," Pandey said on the sidelines of an event. "Surveillance mechanisms will be upgraded further to strengthen oversight." He added that monitoring will continue at Sebi's as well as stock exchange levels."Manipulative practices can be worked out by different players in different ways," Pandey said. "There is no one particular way in which you have to assess. Our regulations clearly mention that manipulative and fraudulent practices are not allowed in the market, and within the regulations, Sebi has all powers to investigate and act."The chairman appeared to be of the view that such practices aren't widespread. "There may not be many more such cases," he said in response to a question on whether other funds may have manipulated the markets in a similar week, Sebi ordered the seizure of what it said were "illegal gains" made by Jane Street to the tune of Rs 4,844 crore ($570 million) in one of the toughest punitive actions against an international trader. It's likely the largest amount thus impounded by the entities tied to Jane Street Group - JSI Investments, JSI2 Investments, Jane Street Singapore and Jane Street Asia Trading - have been prohibited from dealing in securities, directly or Street, which started its India operations in 2020, made a profit of about $4.3 billion between January 2023 and March 2025, the period under review, on its India regulator's finding is that the NSE's Bank Nifty Index - comprising stocks of India's top dozen lenders - was manipulated in a complex and illegal manner aided by JS Group's immense trading, financial and algorithmic Street would drive up prices with heavy buying in the morning and send them down through a selling spree later in the day, according to Sebi. It also sought to push index levels down with heavy sell orders close to the option expiry, the regulator found that Bank Nifty options alone contributed Rs 17,319 crore, amounting to 40% of the total index option's profits.
Time of India
08-07-2025
- Business
- Time of India
Sebi plans to heighten surveillance to check manipulation in derivatives market
Mumbai: The Securities and Exchange Board of India (Sebi) is planning to enhance its surveillance system to check manipulation in the derivatives market, chairman Tuhin Kanta Pandey said on Monday. This follows the regulator barring US-based proprietary trader Jane Street from the securities market for allegedly generating illegal profits by manipulating indices through large derivatives positions. "This (Jane Street case) is essentially a surveillance issue," Pandey said on the sidelines of an event. "Surveillance mechanisms will be upgraded further to strengthen oversight." He added that monitoring will continue at Sebi's as well as stock exchange levels. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like These Photos Captured the Exact Wrong Moment Read More Undo Agencies Assessment from Various Angles "Manipulative practices can be worked out by different players in different ways," Pandey said. "There is no one particular way in which you have to assess. Our regulations clearly mention that manipulative and fraudulent practices are not allowed in the market, and within the regulations, Sebi has all powers to investigate and act." The chairman appeared to be of the view that such practices aren't widespread. "There may not be many more such cases," he said in response to a question on whether other funds may have manipulated the markets in a similar manner. Live Events Last week, Sebi ordered the seizure of what it said were "illegal gains" made by Jane Street to the tune of Rs 4,844 crore ($570 million) in one of the toughest punitive actions against an international trader. It's likely the largest amount thus impounded by the regulator. Four entities tied to Jane Street Group - JSI Investments, JSI2 Investments, Jane Street Singapore and Jane Street Asia Trading - have been prohibited from dealing in securities, directly or indirectly. Jane Street, which started its India operations in 2020, made a profit of about $4.3 billion between January 2023 and March 2025, the period under review, on its India trades. The regulator's finding is that the NSE's Bank Nifty Index - comprising stocks of India's top dozen lenders - was manipulated in a complex and illegal manner aided by JS Group's immense trading, financial and algorithmic prowess. Jane Street would drive up prices with heavy buying in the morning and send them down through a selling spree later in the day, according to Sebi. It also sought to push index levels down with heavy sell orders close to the option expiry, the regulator said. Sebi found that Bank Nifty options alone contributed Rs 17,319 crore, amounting to 40% of the total index option's profits.
Time of India
05-07-2025
- Business
- Time of India
Sebi Bars Global Trading Giant Jane Street for ‘Manipulation'
The Securities and Exchange Board of India (Sebi) has barred New-York based trading firm Jane Street from the securities market for allegedly manipulating stock indices through large derivative positions mostly on the Bank Nifty, leading to losses for retail investors caught on the other side of these trades. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The Securities and Exchange Board of India Sebi ) has barred New-York based trading firm Jane Street from the securities market for allegedly manipulating stock indices through large derivative positions mostly on the Bank Nifty , leading to losses for retail investors caught on the other side of these one of the toughest punitive actions against an international trader of this size, Sebi has ordered the seizure of what it said were 'illegal gains' made by the company to the tune of ₹4,844 crore ($570 million). This is likely the largest amount thus impounded by the regulator till entities tied to Jane Street Group (JS Group)—JSI Investments, JSI2 Investments, Jane Street Singapore and Jane Street Asia Trading —have been prohibited from dealing in securities, directly or Street has 21 days to file a response.'JS Group is not a good faith actor that can be, or deserves to be, trusted,' Sebi whole-time member Ananth Narayan said in his 105-page, ex-parte, interim order issued on July 3. 'The integrity of the market, and the faith of millions of small investors and traders, can no longer be held hostage to the machinations of such an untrustworthy actor.'The firm disputed the findings of the Sebi interim order and said it will engage with the regulator on the matter. 'Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world,' the company spokesperson said in an emailed regulator examined Jane Street's trades in India between January 1, 2023, and March 31, 2025. During this period, it made over ₹43,289 crore ($5.07 billion) profit in index options and ₹7,687 crore ($900 million) in losses across stock futures, index futures and cash markets on the in New York in 2000, Jane Street is a prominent quantitative trading firm with offices in all the key financial centres of the world. It uses complex algorithms developed in-house to execute high-frequency regulator's finding is that the NSE's Bank Nifty Index —comprising the stocks of India's top dozen lenders—had prima facie been manipulated in a complex and illegal manner aided by the JS Group's immense trading, financial and technological prowess. Jane Street would drive up prices with heavy buying in the morning and send them down through a selling spree later in the day, according to Sebi. It also sought to push index levels down with heavy sell orders close to the option expiry, the regulator found that the Bank Nifty options alone contributed Rs 17,319 crore, amounting to 40% of the total index option's profits.'This is an unusual case where prima facie, multiple liquid stocks with high retail participation have together been manipulated to facilitate the manipulation of the index options market, resulting in massive profits for the manipulators, at the cost of other participants and retail traders,' Sebi said.A detailed investigation is still underway. It would cover other major stock indexes including NSE's Nifty.'It is important to note, however, that this examination has so far been limited to select high-profit expiry days in the Bank Nifty index. There may exist similar patterns in other indices or trading behaviours reflecting alternate strategies which have not yet been analysed. Accordingly, many more trading days may merit detailed investigation to assess the full scope and recurrence of such conduct,' Sebi said in its regulator found at least 15 instances of the JS Group undertaking large and aggressive trades in the underlying Bank Nifty component stocks and futures that wasn't for investment or for any standalone economic rationale. In fact, it said, given the sheer size and aggressive nature of the intervention in cash and futures markets and the immediate reversal the same day, the standalone trades in the cash and futures were more likely to end up showing a large net loss.'These trades were undertaken only to distort Bank Nifty index option prices in the interim and entice market participants in Bank Nifty index options to trade at such distorted levels, while the JS Group would take advantage of this and run much larger opposite side positions in the index options market,' Sebi Street, in an August 30, 2024, letter to Sebi, had argued that these trades were to 'remove unwanted delta' or to 'manage overall delta.'The regulator didn't accept these statements. 'JS Group was undertaking an intentional, well-planned, and sinister scheme and artifice to manipulate cash and futures markets and hence manipulate the Bank Nifty index level, to entice small investors to trade at unfavourable and misleading prices, and to the advantage of the JS Group,' it said. The regulator alleged that the Jane Street Group appeared to be most active on expiry days of index said that by incorporating entities in India, JS Group also managed to 'work around' foreign portfolio investor (FPI) regulations that prohibit such overseas entities from undertaking intraday cash market transactions.'Thereby (Jane Street executed) the manipulative scheme without specifically flouting the FPI regulations," it of the 11,219 FPIs registered with Sebi as of March 31, 2024, only 2.5% are engaged in algorithmic trading, as per regulatory data. JS Group is part of this short-term, algorithmic trading aggressive dumping of Bank Nifty component stocks and futures in sharp reversal of the heavy pumping purchases done in the morning was immensely profitable for the large Bank Nifty option positions being run by the JS Group, and to the detriment of all those that had traded in the morning against JS Group at artificially boosted prices, Sebi said. This was a classic case of 'marking-the-close,' where an entity with huge options exposures that are expiring shortly, is moving the underlying market aggressively in its favour, Sebi Kamath, the founder of discount broker Zerodha, posted on X: 'You've got to hand it to Sebi for going after Jane Street. If the allegations are true, it's blatant market manipulation. The shocking part? They kept at it even after receiving warnings from the exchanges.'He also highlighted that such firms are key to the derivatives market.'Prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back— which seems likely —retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers,' Kamath posted.
