Jane Street bordered on curbs in India after $4.3 billion in trading profit

India’s Securities and Exchange Commission said it would seize Rs 48.4 crore ($570 million) from Jane Street, according to Page 105. Provisional order on its website by Anant Narayan, a board member of the regulatory authority. Jane Street said it challenges the findings.

Jane Street is one of India’s most active foreign players, the world’s largest derivatives market by contract, and contracts that have become magnets for high frequency trading companies. Retail Investment Boom It was caused by the pandemic. Sebi’s orders provide a rare example of such behavior against foreign entities.

The US-based market maker’s business in India has been in the global spotlight last year after a court battle with Millennium Management. It was revealed It won a billion dollar deal on Indian stock derivatives. Other details revealed in this incident helped trigger Sebi investigationcontinued even if the National Stock Exchange of India was closed earlier this year. Individual probes Involving irregular transactions by the company.

According to the SEBI order, Jane Street has won approximately Rs 365 billion ($4.3 billion) in overall profits in the Indian derivatives and cash markets during the period from January 2023 to March 2025.

“Sebi has sent the Global HFT Giants that it is welcoming to trade here, but we also hold the stick if we take on unfair practices,” said Tejas Shah, director of derivatives trading at Equirus Securities Pvt. “The other HFTs are sitting a little behind, so I’m hoping for a temporary effect on the volume.”

Shares of Jane Street’s local trading partner, Nuvama Wealth Management Ltd., have surpassed 11% in Mumbai trading. The Indian benchmark NSE NIFTY 50 index had little change, but the wider gauges of Asian stocks fell by 0.3%.

Sebi claimed that Jane Street will use a large amount of funds to impact future price actions and cash markets at the expiration date of the weekly index options. This has “has been able to “have a very large and profitable position by misleading and seducing many small traders.”

Regulators had already warned Jane Street to avoid such transaction practices as early as January this year, according to people familiar with issues that were asked not to identify that they would not discuss personal information. The survey showed that the trading strategy continues to be used since May, the person said.

Restrained curb

With detailed investigations pending, the Jane Street Group Entities immediately “will suppress access to the securities market and are further prohibited from buying and selling securities or otherwise trading them directly or indirectly,” Sebi said. Banks are instructed not to create debits without SEBI permission for accounts held individually or jointly by the entity. Provisional order.

Sebi also said that the restrictions can be lifted if Jane Street deposits the amount in an escrow account of a designated bank in India.

Jane Street has challenged the findings of the SEBI interim order and will further engage with regulators, a representative from the US-based market maker said in a statement. Sebi said the company could challenge the regulator’s “primarily observing” within 21 days of receiving the order.

“We are pleased to announce that we are committed to providing support for our customers with a wide range of investment strategies,” said Charu Chanana, chief investment strategist for the SAXO market in Singapore.

Derivative Boom

Ken Griffin’s Citadel Securities LLC to Optiver’s global high-frequency trading and market production company has been rushing to expand its operations in India in recent years as the retail investor-led boom is 11x premium over five years starting in March 2025.

According to a SEBI study, the retail frenzy has pocketed $7 billion in gross profit in the 12 months ended March 2024, supporting foreign funds and local proprietary companies using the algorithm. Meanwhile, retail investors lost $21 billion worth of trading futures and options in the three years leading up to March 2024. According to regulators.

To protect them, Sebi has imposed November Some limitations About trading options including higher minimum investment limits and increased lot sizes to protect retailers. There is in the measures It was coolly helpful Trade this year.

The actions of the regulator “create a level playing field for everyone, especially local players who have lost a lot of money,” said Shah of Equirus.

Sebi has also directed the Jane Street entity to close or close open trade derivative contracts either within three months of the order date or any prior to the expiration date of such contract.

Jane Street is “promising to operate in all regulations” in areas operating around the world, the company said in a statement.

“This is a good move by SEBI, but we need more corrective action to protect the integrity of the market,” said Deven Choksey, managing director of Drchoksey Finserv Pvt. “Mechanisms such as Argo, HFT, and others are creating inequality in the market. Institutions have an advantage.”