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Economic Times
4 days ago
- Business
- Economic Times
Jane Street deposits Rs 4,844 crore in escrow account following SEBI derivatives market probe
Following a Sebi probe into alleged manipulation in the derivatives market, Jane Street has deposited ₹4,844 crore in an escrow account, complying with an interim order. Sebi is reviewing the firm's request to lift the trading ban, which has impacted the derivatives market. Despite compliance, Jane Street reserves the right to challenge Sebi's findings. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: Jane Street has complied with an interim regulatory order and deposited ₹4,844 crore in an escrow account , after the Securities and Exchange Board of India (Sebi) probe into the New York trading firm revealed alleged instances of manipulation in the local derivatives market The decision came as a surprise to market participants, as it is rare for firms accused of violations to deposit such a large sum to comply with an ex-parte, interim order. "Jane Street's action in depositing this amount could be with the intention to establish its bona fides," said a senior Supreme Court lawyer, who declined to be is examining the firm's request to lift the trading ban on it. The regulator will issue directions to intermediaries, including stock exchanges and depositories, to lift restrictions of the interim order, said people aware of developments, adding that Jane Street deposited the money on Friday. This was verified by the regulator on days after the curbs were imposed, Jane Street had told its staff that Sebi's order reflects a "misunderstanding of standard hedging practices and the interrelationships between derivative and underlying markets."It had then said Sebi's claim that the firm's activity is "prima facie manipulative" disregarded the role of liquidity providers and arbitrageurs in had barred Jane Street from trading in Indian markets after its order alleged index manipulation, involving bank shares and Bank Nifty index futures and high-frequency trader was told it would be allowed to restart trading if it deposited Rs 4,844 crore, which the regulator had estimated to be "unlawful gains" from the allegedly manipulated said that even though Jane Street complied with Sebi's interim order, the firm would still provide a formal reply to the regulator, rebutting the allegations. Jane Street also has the option to challenge Sebi's findings at the Securities and Appellate Tribunal (SAT).Sebi confirmed that despite Jane Street's action, the firm reserves its legal and equitable rights and remedies."Based on a reading of the Sebi order, the trading ban would be lifted on the deposit of the amount mentioned. However, trades would be subjected to accentuated scrutiny by the exchanges and also subject to the no-fraud rule," said Sandeep Parekh, managing partner at law firm Finsec Law Advisors. "On an operational basis, Sebi may have to instruct the exchanges and depositories to lift the previous ban, but that would simply be the plumbing of the order."The derivatives market has been impacted by Jane Street's absence. After the July 3 Sebi order, the National Stock Exchange (NSE) saw a significant drop in daily average turnover for index options trading, of about 17%, in the previous investigation showed that the trading firm was engaged in manipulative trades on the expiry days of Bank Nifty derivatives that pushed the outcome in their to the probe, the manipulation by Jane Street occurred on expiry days of index options. Sebi has accused Jane Street of manipulating shares and futures prices to make outsized profits through options on these invoked the prohibition of unfair trade practices regulation for market manipulation, which covers any act or practice. It focused on Jane Street's trading data of about 20 days showing highest legal experts said Sebi didn't analyse Jane Street's full data, involving millions of trades. "It picked the winning days out of many days of winning and losing trades," said a regulator will issue a final order after concluding its investigation and hearing Jane company has made over Rs 43,289 crore profit in index options and Rs 7,687 crore in losses across stock futures, index futures and cash markets on the NSE between January 2023 and March 2025, according to Sebi.
Time of India
4 days ago
- Business
- Time of India
Jane Street deposits Rs 4,844 crore in escrow account following SEBI derivatives market probe
Following a Sebi probe into alleged manipulation in the derivatives market, Jane Street has deposited ₹4,844 crore in an escrow account, complying with an interim order. Sebi is reviewing the firm's request to lift the trading ban, which has impacted the derivatives market. Despite compliance, Jane Street reserves the right to challenge Sebi's findings. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: Jane Street has complied with an interim regulatory order and deposited ₹4,844 crore in an escrow account , after the Securities and Exchange Board of India (Sebi) probe into the New York trading firm revealed alleged instances of manipulation in the local derivatives market The decision came as a surprise to market participants, as it is rare for firms accused of violations to deposit such a large sum to comply with an ex-parte, interim order. "Jane Street's action in depositing this amount could be with the intention to establish its bona fides," said a senior Supreme Court lawyer, who declined to be is examining the firm's request to lift the trading ban on it. The regulator will issue directions to intermediaries, including stock exchanges and depositories, to lift restrictions of the interim order, said people aware of developments, adding that Jane Street deposited the money on Friday. This was verified by the regulator on days after the curbs were imposed, Jane Street had told its staff that Sebi's order reflects a "misunderstanding of standard hedging practices and the interrelationships between derivative and underlying markets."It had then said Sebi's claim that the firm's activity is "prima facie manipulative" disregarded the role of liquidity providers and arbitrageurs in had barred Jane Street from trading in Indian markets after its order alleged index manipulation, involving bank shares and Bank Nifty index futures and high-frequency trader was told it would be allowed to restart trading if it deposited Rs 4,844 crore, which the regulator had estimated to be "unlawful gains" from the allegedly manipulated said that even though Jane Street complied with Sebi's interim order, the firm would still provide a formal reply to the regulator, rebutting the allegations. Jane Street also has the option to challenge Sebi's findings at the Securities and Appellate Tribunal (SAT).Sebi confirmed that despite Jane Street's action, the firm reserves its legal and equitable rights and remedies."Based on a reading of the Sebi order, the trading ban would be lifted on the deposit of the amount mentioned. However, trades would be subjected to accentuated scrutiny by the exchanges and also subject to the no-fraud rule," said Sandeep Parekh, managing partner at law firm Finsec Law Advisors. "On an operational basis, Sebi may have to instruct the exchanges and depositories to lift the previous ban, but that would simply be the plumbing of the order."The derivatives market has been impacted by Jane Street's absence. After the July 3 Sebi order, the National Stock Exchange (NSE) saw a significant drop in daily average turnover for index options trading, of about 17%, in the previous investigation showed that the trading firm was engaged in manipulative trades on the expiry days of Bank Nifty derivatives that pushed the outcome in their to the probe, the manipulation by Jane Street occurred on expiry days of index options. Sebi has accused Jane Street of manipulating shares and futures prices to make outsized profits through options on these invoked the prohibition of unfair trade practices regulation for market manipulation, which covers any act or practice. It focused on Jane Street's trading data of about 20 days showing highest legal experts said Sebi didn't analyse Jane Street's full data, involving millions of trades. "It picked the winning days out of many days of winning and losing trades," said a regulator will issue a final order after concluding its investigation and hearing Jane company has made over Rs 43,289 crore profit in index options and Rs 7,687 crore in losses across stock futures, index futures and cash markets on the NSE between January 2023 and March 2025, according to Sebi.
Mint
5 days ago
- Business
- Mint
Jane Street hires Khaitan in index manipulation case
US high-frequency trader (HFT) Jane Street has hired top law firm Khaitan & Co. to defend itself in the case of alleged index manipulation, two people aware of the matter said. The Securities and Exchange Board of India (Sebi) alleged in an Interim order last week that Jane Street had manipulated the Bank Nifty and Nifty indices over two years by taking outsized trading positions, relative to other market participants, in their cash and derivatives constituents. According to the regulator, this enabled Jane Street to make unlawful profits of ₹4,844 crore from trades in weekly Bank Nifty and Nifty options. Also Read: Jane Street's woes may have only just begun. Sebi is now checking Sensex options 'The HFT is very close to closing the loop and is expected to pay the amount as asked by Sebi," said a senior executive aware of the development. Khaitan & Co and Jane Street did not respond to Mint's late night queries sent on Sunday. "The two options before Jane Street are to challenge Sebi's interim order or to respond to it," said Sandeep Parekh, founder of Finsec Law Advisors. "A challenge would mean it goes before the Securities Appellate Tribunal (SAT), and from thereon to the Supreme Court, depending on which way the tribunal rules. A response means they pay the amount and continue to trade in the market, reserving a right to seek legal redress as the Sebi investigation is ongoing." Sebi flags expiry-day strategy in January A key episode cited in the Sebi order occurred on 17 January 2024, the weekly expiry day for Bank Nifty options. The index opened 3.2% lower at 46,574 after HDFC Bank reported disappointing quarterly results. Sebi alleges Jane Street responded by purchasing Bank Nifty index futures and constituent stocks worth ₹4,370 crore, helping the index recover to a high of 47,212.75 and giving 'an impression of recovery" in the index. Also Read: Sebi's Jane Street crackdown sparks debate over arbitrage and manipulation As the index recovered, call option prices surged while put options slumped. Sebi claims Jane Street proceeded to then sell the costlier call options to and buy the cheaper put options from other participants in this phase, taking total bearish exposure in Bank Nifty options worth ₹32,114.96 crore. In the second leg, Jane Street allegedly unwound its positions, pushing down the index and its constituent stocks, which boosted the value of the purchased puts manifold while eroding the value of the sold calls, enabling them to rake in ₹735 crore in options that day as the Bank Nifty plunged 4.28% to close at 46,064.45. Firm denies wrongdoing Sebi alleges that through such strategies, Jane Street profited illegally to the tune of ₹4,844 crore over 21 days between August 2023 and May 2025. The regulator has ordered seizure of the alleged gains and barred Jane Street from the capital market until the money is deposited in an escrow account. Sebi also said Jane Street entities made a total profit of ₹36,502.12 crore between January 2023 and March 2025 through its trading strategies. Also Read: Buch slams 'false narrative' of delay in Jane Street probe In an internal staff communication after the Sebi order, Jane Street said it was 'deeply upsetting" to see the firm " mischaracterised." The note added, 'We are working on a formal response to Sebi." Addressing the specific allegation regarding 17 January 2024, Jane Street said, 'The strategy termed manipulation by Sebi was in fact a commonplace practice to align the large divergence in prices between the Bank Nifty index options and the price levels implied by its constituent stocks on that day. Priyanka Gawande contributed to this report
