SEBI intensifies surveillance after Jane Street ban
India’s markets regulator is tightening oversight of derivatives trading following allegations of manipulation involving U.S.-based trading firm Jane Street. Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey announced on Monday that surveillance efforts are being enhanced to address manipulation risks in one of the world’s most active derivatives markets.
“There may not be many more such cases,” Pandey said, without offering further details.
India leads globally in equity derivatives volume, representing nearly 60% of the 7.3 billion global trades in April, according to the Futures Industry Association. Much of this volume is driven by retail participation, which has prompted SEBI to take steps to curb speculative excesses. These include reducing contract expiries and increasing lot sizes to raise trading costs.
Jane Street barred and fined for index manipulation
On Friday, SEBI took decisive action by banning Jane Street from participating in Indian markets and freezing $567 million of the firm’s assets. The regulator accused Jane Street of manipulating the Bank Nifty index by executing large trades in both the cash and futures markets to artificially support the index during early trading hours.
At the same time, Jane Street allegedly built substantial short positions in Bank Nifty index options, later unwinding its initial trades to benefit from the resulting price movement. SEBI detailed the scheme in a 105-page enforcement order, citing it as a serious violation of market integrity.
Investigation to widen across exchanges
Sources told Reuters that SEBI is preparing to broaden its investigation into Jane Street’s activities across additional indexes and exchanges. The move reflects the regulator’s commitment to maintaining transparency and stability in India’s fast-growing derivatives market.
The crackdown follows a broader regulatory push to ensure that India’s markets remain resilient and trustworthy amid rapid growth. Derivatives trading, while offering liquidity and risk management tools, also opens the door to sophisticated strategies that can distort price discovery when misused.
India’s derivatives boom draws global attention
The Jane Street case has drawn global attention to India’s booming derivatives ecosystem. As international players look to tap into India’s capital markets, SEBI is reinforcing its stance on ethical trading practices and market discipline.
Market observers expect the regulator to implement additional controls and surveillance mechanisms to deter similar behavior and protect investor confidence.