Jane Street Back on Street, but Under Leash

The Securities and Exchange Board of India has clarified that Jane Street group is back in the market, but not without strings. Following a sweeping interim order on index manipulation earlier this month, the US-headquartered trading giant has fulfilled a critical condition by depositing ₹48.44 billion into an escrow account under SEBI’s oversight. This single move has unlocked partial regulatory relief, allowing Jane Street to resume certain activities that were previously frozen.

Yet, SEBI hasn’t fully loosened the reins. The group remains bound by a stringent “cease and desist” directive: it cannot engage in any conduct resembling the patterns of market manipulation cited in the July 3 order. More crucially, stock exchanges have now been tasked with tracking Jane Street’s every market move, creating a parallel surveillance mechanism while SEBI’s own investigation continues.

The regulator has signalled no rush to final closure. Underlining the balance of convenience detailed in its order, SEBI maintains that while some restrictions have been lifted, investor protection and market integrity remain paramount. The message is clear: Jane Street may be back in the arena, but the spotlight is still squarely on its trades.

FAQ 
1. What was SEBI's allegation against Jane Street?
SEBI accused the Jane Street group of index manipulation and engaging in fraudulent and unfair trade practices.

2. What immediate actions did SEBI take?
On July 3, 2025, SEBI issued an interim order imposing trading restrictions and compliance directions, including the creation of an escrow account with a lien in SEBI’s favour for ₹48.44 billion.

3. Has SEBI granted any relief to Jane Street?
Yes, per clause 62.11 of the interim order, once Jane Street complied by setting up the escrow account, certain restrictions—outlined in clauses 62.2 to 62.10—ceased to apply.

4. Are there any ongoing restrictions?
Yes. Under clause 62.12, Jane Street entities are still directed to cease and desist from engaging in any fraudulent or manipulative practices, especially those described in the order. The entities have confirmed compliance with this directive.

5. Is Jane Street under surveillance now?
Yes. Stock exchanges have been directed to closely monitor all future dealings and positions of the Jane Street group to ensure no manipulative activities are undertaken until SEBI’s investigation concludes.

6. What’s the rationale behind SEBI’s actions?
SEBI has cited the "balance of convenience" outlined in paragraphs 59–61 of the order to justify the combination of partial relief and continued surveillance.

7. Is SEBI’s investigation still ongoing?
Yes. SEBI’s investigation is ongoing, and any further proceedings or enforcement actions will be based on its outcome.

8. What was the alleged modus operandi used by Jane Street in the index manipulation case?
According to SEBI’s interim findings, the Jane Street group is alleged to have engaged in a sophisticated form of index manipulation through coordinated trading strategies that exploited structural aspects of the Indian derivatives and options markets. The core allegation revolves around the group executing large volumes of synchronised or pre-arranged trades with affiliated entities, thereby creating artificial market movements and influencing the closing prices of specific index components.

SEBI observed that the Jane Street entities placed large options and futures trades in near-identical quantities and at similar timestamps across multiple affiliated accounts. These trades were often executed in ways that lacked economic rationale and suggested circularity, indicating that they may not have been intended for genuine price discovery or risk management. Instead, they appeared designed to create an illusion of demand or supply at critical moments, particularly during the closing sessions that determine index values.

Such conduct, SEBI argues, could distort the pricing of index-linked products and affect the fair valuation of funds or instruments benchmarked to these indices. The regulator stressed that this behaviour undermines market integrity and investor trust and falls under the category of unfair trade practices and market manipulation as defined by Indian securities law.

While these findings are preliminary and part of an ongoing investigation, SEBI’s interim order presented detailed transaction-level analyses suggesting a pattern of orchestrated trading across Jane Street-controlled entities that warranted urgent intervention and regulatory scrutiny.