SEBI Takes Action Against Jane Street for Market Manipulation

The Securities and Exchange Board of India (SEBI) took action against Jane Street after alleged index manipulation, raising concerns about retail traders' vulnerability in derivatives trading.

SEBI temporarily barred Jane Street from the Indian stock market and impounded ₹4,840 crore, claiming it as 'unlawful gains.'

SEBI's 105-page order detailed manipulative and fraudulent trades by Jane Street in Nifty Bank Index's weekly options contracts and underlying constituents.

Jane Street allegedly manipulated the Bank Nifty index by aggressive trades to push up the index, then reversing them to profit from option positions, making ₹43,289 crore in gains over 2 years, believed to be through unfair means.

SEBI widened the investigation into alleged market manipulation to include other indexes and exchanges.

India's retail investors are at high risk in the derivatives market, with 93% facing losses, as per SEBI study.

SEBI aims to prevent such fraud by monitoring derivatives and cash markets together, ensuring transparency of foreign traders, tightening rules on expiry days, and acting promptly on unusual profits.

SEBI is expected to enhance monitoring capabilities for real-time pattern recognition to detect abnormal trading activities and introduce stricter guidelines for expiry-day positioning.

Stricter regulations and increased transparency are proposed to foster accountability among institutional investors and uphold the integrity of India's financial markets.

According to the source: Mint.