In a stunning move against a major global player, India’s market regulator has temporarily barred Jane Street Group LLC from the local securities market, alleging index manipulation.
The Securities and Exchange Board of India (SEBI) is also seeking to seize what it claims are “unlawful gains” totaling approximately $570 million, dealing a severe blow to the US trading giant that has reaped billions from India’s booming derivatives market.
The action, detailed in a 105-page interim order published on the regulator’s website by board member Ananth Narayan, marks a rare and forceful intervention against a prominent foreign entity.
Jane Street, a highly active participant in India—the world’s largest derivatives market by contracts traded—has become a magnet for high-frequency trading (HFT) firms amidst a retail investing boom sparked by the pandemic.
The firm, for its part, has stated that it disputes the regulator’s findings.
Jane Street’s operations in India were thrust into the global spotlight last year after a court battle with hedge fund Millennium Management revealed that it had earned a staggering 1 billion from trading in Indian equity derivatives.
Details that emerged from that case helped trigger SEBI’s investigation, which continued even after the National Stock Exchange of India Ltd. had closed a separate probe in to irregular trades by the firm earlier this year.
According to the SEBI order, Jane Street made an overall gain of about 365 billion rupees (4.3 billion) from trading in Indian derivatives and the cash market between January 2023 and March 2025.
“SEBI is sending a message to global HFT giants that you are welcome to trade here but if you undertake unfair practices then we also hold a stick,” said Tejas Shah, head of derivatives at Equirus Securities Pvt.
I would expect some temporary impact on volumes as other HFTs sit back a little.
The market reaction was swift: shares of Nuvama Wealth Management Ltd., Jane Street’s local trading partner, plunged 11% in Mumbai trading, their most significant drop in over three months.
India’s benchmark NSE Nifty 50 Index was down 0.2%, while a broader gauge of Asian equities fell 0.3%.
The allegations: ‘misleading and enticing’ small traders
SEBI’s core allegation is that on weekly index options expiry days, Jane Street deployed a large amount of funds to influence price action in both the futures and the cash markets, where volumes are relatively low.
The regulator claims this allowed the firm “to put on significantly larger and profitable positions in the highly liquid index options market by misleading and enticing a large number of smaller individual traders.”
According to a person familiar with the matter, who asked not to be identified while discussing private information, the regulator had warned Jane Street to avoid such trading practices as early as January of this year.
The investigation found that the trading strategy allegedly continued to be used into May, the person said.
The curbs: a market ban and a path to re-entry
Pending a detailed investigation, SEBI’s order immediately restrains Jane Street Group entities “from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly.”
Banks have been directed to ensure no debits are made from accounts held by the entities without SEBI’s permission.
The regulator also directed Jane Street to close out or square off any open positions in exchange-traded derivative contracts within three months or at the expiry of such contracts, whichever is earlier.
However, SEBI also provided a path for the restrictions to be lifted: if Jane Street deposits the impounded amount of 48.4 billion rupees ($570 million) into an escrow account at a designated bank in India.
A representative for the US-based market maker said in a statement that “Jane Street disputes the findings of the SEBI interim order and will further engage with the regulator.”
SEBI has given the firm 21 days from the receipt of the order to contest its “prima facie observations.”
Jane Street added in its statement that it is “committed to operating in compliance with all regulations” in the regions where it operates.
A vigilant regulator in a booming market
This move is seen by some as a sign of SEBI’s increasing vigilance over the activities of foreign institutions that are making hefty gains in its burgeoning derivatives market.
“This may signal SEBI’s growing vigilance and willingness to assert control over foreign institutional activity… particularly where such strategies blur the line between smart trading and market distortion,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.
Global high-frequency trading and market-making firms, including Ken Griffin’s Citadel Securities LLC and Optiver, have rushed to expand their operations in India in recent years.
The retail investor-led boom saw options premiums surge an incredible 11-fold in the five years leading up to March 2025.
This frenzy has been highly profitable for foreign funds and local proprietary firms using algorithms, who pocketed a combined $7 billion in gross profits in the 12 months ending March 2024, according to a SEBI study.
In stark contrast, the regulator found that retail investors lost an equivalent of $21 billion from trading futures and options in the three years to March 2024.
To protect these smaller investors, SEBI has, since November, imposed several restrictions on options trading, including higher minimum investment limits and an increase in lot sizes.
These measures have helped to cool some of the speculative trading this year. The action against Jane Street “will also create a level playing field for everyone especially the local players who were losing a lot of money,” said Shah of Equirus.
Deven Choksey, managing director at DRChoksey FinServ Pvt., also praised the move but called for more, stating, “This is a good move by SEBI, but we need more corrective measures to protect market integrity. Mechanisms like Algos, HFTs are creating inequalities in the markets. Institutions have an edge.”
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