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In a bold move, India’s market regulator SEBI has temporarily banned Jane Street, a major U.S. trading firm, from operating in the Indian securities market. SEBI accuses the company of manipulating index prices to mislead small traders and unfairly profit from India’s booming derivatives market.
The regulator claims that Jane Street used its large funds to influence prices in both the futures and cash segments, especially on weekly expiry days. This, according to SEBI, helped the firm secure big positions in the options market, at the expense of retail traders. These practices allegedly continued even after SEBI warned the firm earlier this year.
SEBI is now seeking to recover around $570 million in what it says are “unlawful gains.” Jane Street has denied the allegations and says it will challenge the order.
The company has become one of the biggest players in India’s derivatives market, where high-frequency trading (HFT) firms like it have thrived in recent years. A court case last year revealed that Jane Street had made over $1 billion from Indian equity derivatives, which partly triggered SEBI’s investigation.
As per SEBI’s interim order, Jane Street earned about ₹365 billion (roughly $4.3 billion) in profits between January 2023 and March 2025.
The regulator has now frozen Jane Street’s market access, banned it from trading, and told banks not to allow withdrawals from its accounts without SEBI’s permission. The firm has been ordered to close all open derivative positions within three months. However, SEBI has offered a way out; if Jane Street deposits the disputed $570 million into a special escrow account, the restrictions may be reconsidered.
The market responded swiftly. Shares of Nuvama Wealth Management, Jane Street’s local partner, fell 11% in Mumbai, and the Nifty 50 index dipped slightly.
Experts say this action is a strong signal to global firms that SEBI will not tolerate unfair practices, even from big international players. While foreign firms have made billions from India’s options trading boom, retail investors have lost over $21 billion in the same period, prompting SEBI to step up its oversight.
This move may cool aggressive trading strategies and help level the playing field for local investors and firms. However, many believe more action is needed to curb market manipulation and protect retail participants in India’s fast-growing financial markets.