What is SEBI and Why It Banned Jane Street?

 

What is SEBI and Why It Banned Jane Street?

📅 Published: July 2025

🏷 Tags: SEBI, Jane Street, Stock Market, Market Regulation, India News, Trading Ban

🏛 What is SEBI? 

SEBI (Securities and Exchange Board of India) is the regulatory authority for India’s securities markets. Established in 1992, SEBI is responsible for:

  • Regulating stock exchanges

  • Monitoring mutual funds and brokers

  • Preventing market manipulation and fraud

  • Protecting retail and institutional investors

SEBI operates under the SEBI Act, 1992 and is one of the most powerful financial regulators in India.

🌐 Who is Jane Street?

Jane Street is a global quantitative trading firm based in New York, with offices in London, Hong Kong, and Amsterdam. Known for high-frequency trading (HFT) and algorithmic strategies, Jane Street is one of the largest players in the global ETF and derivatives markets.

In India, Jane Street participated heavily in index options trading, especially in BANKNIFTY and NIFTY 50 contracts.

🔍 Why Did SEBI Ban Jane Street?

On July 3, 2025, SEBI issued an interim order banning Jane Street and its affiliates from the Indian stock market due to serious allegations of market manipulation.

⚠️ Key Allegations:

  • Jane Street allegedly manipulated index levels during weekly options expiry days.

  • They engaged in aggressive buy-sell trades to artificially impact index closing prices.

  • This manipulation helped them earn unfair profits worth ₹4,840 crore (~$567 million).

🧾 What Action Did SEBI Take?

SEBI used its powers to:

  • Bar Jane Street and its related entities from all forms of trading in India.

  • Order the company to deposit all illegal gains into an escrow account.

  • Give Jane Street 21 days to respond or appeal the order.

This action falls under the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, and is one of SEBI’s biggest regulatory moves against a foreign player.

📉 Market Impact

The announcement triggered panic in brokerage and fintech stocks:

  • Angel One fell by 6%

  • BSE Ltd dropped 6.4%

  • Nuvama Wealth plunged 9%

Traders worry about reduced market liquidity, as Jane Street was a major derivatives market maker.

⚖️ Can Jane Street Respond?

Yes. Jane Street can:

  • File a formal response with SEBI

  • Appeal the order in Securities Appellate Tribunal (SAT)

  • Take the case to higher courts if needed

The firm has already stated it denies all allegations and will defend its practices.

✅ Conclusion

SEBI's move sends a strong signal — India’s markets are not a playground for manipulation, no matter how big or global the player. This landmark action highlights SEBI’s role in safeguarding retail investors and maintaining market fairness.

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