U.S.-based proprietary trading firm Jane Street is preparing to legally challenge a ban imposed by the Securities and Exchange Board of India (SEBI), which accused the company of manipulating India’s derivatives market through arbitrage trading. Jane Street has denied wrongdoing and claims its trades were lawful and standard market practice.
U.S.-based high-frequency proprietary trading firm Jane Street has announced plans to contest a ban imposed by the Securities and Exchange Board of India (SEBI), India’s financial market regulator headquartered in Mumbai, Maharashtra. The firm faces allegations of manipulating the derivatives segment of the Indian equity market.
On July 5, 2025, SEBI issued an order prohibiting Jane Street from participating in India’s securities market and froze assets worth $567 million USD. According to the regulator, Jane Street executed trades in the Bank Nifty index—buying large quantities of constituent stocks while simultaneously shorting index options—creating what SEBI described as “artificial support” for the index’s performance in morning trades.
In an internal email to employees over the weekend, Jane Street rejected the accusations, calling them “extremely inflammatory.” The firm emphasized that the trades in question were examples of basic index arbitrage, a routine practice in global financial markets.
“Arbitrage is a core and commonplace mechanism of financial markets,” Jane Street stated in the email, adding that SEBI’s interpretation fails to recognize the legitimate role of liquidity providers and arbitrageurs.
Despite SEBI’s claims that Jane Street failed to adequately respond to regulatory concerns, the firm said its executives had held several discussions with SEBI and exchange officials and had adjusted trading behavior based on feedback. “Since February, we have made ongoing efforts to communicate with SEBI and have been consistently rebuffed,” the email said.
Jane Street is reportedly seeking legal representation in India and may appeal the SEBI order before the Securities Appellate Tribunal (SAT).
India’s equity derivatives market has grown rapidly, attracting retail investors and becoming the world’s largest by volume. However, retail traders in the country suffered losses amounting to $12.4 billion USD in the last financial year, prompting heightened regulatory scrutiny.
SEBI Chairman Tuhin Kanta Pandey confirmed on July 8 that surveillance in the derivatives space is being intensified, although he suggested there may not be many more cases like Jane Street’s.
Other foreign proprietary trading firms active in India include Citadel Securities, IMC Trading, Millennium Management, and Optiver, all of which are closely watching the developments.
SEBI has declined further comment beyond its official July 5 order.
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