On July 3, 2025, India’s Securities and Exchange Board (SEBI) barred U.S.-based Jane Street Group from trading in Indian securities markets, alleging the firm manipulated the Nifty 50 and Bank Nifty indices to secure $567 million in unlawful gains. SEBI’s 105-page interim order accused Jane Street of using aggressive buying and selling strategies to artificially influence index prices, particularly on expiry days, netting over ₹36,500 crore ($4.3 billion) in profits between January 2023 and March 2025. The regulator froze ₹4,843 crore of the firm’s funds, prompting a sharp decline in options trading volumes by 13-17%.
Jane Street, a global high-frequency trading firm, denied the allegations, calling them “inflammatory” and describing its actions as standard arbitrage to align prices between related instruments. The firm, which earned $20.5 billion in global revenue last year, is preparing to challenge the ban at the Securities Appellate Tribunal, arguing that SEBI’s interpretation overlooks the role of liquidity providers in markets.
The decision has stirred debate about SEBI’s regulatory approach. Some market participants view the ban as a necessary step to protect retail investors, who faced losses of ₹1.06 trillion ($12.4 billion) in derivatives trading in the financial year ending March 2025. Others, including analysts, argue that SEBI’s actions risk stifling legitimate trading strategies, potentially deterring foreign investment in India’s derivatives market, which accounts for nearly 60% of global equity derivative volumes.
Concerns have emerged about the clarity of SEBI’s regulations on algorithmic trading. Legal experts note that the case, relying heavily on trading patterns rather than direct evidence of intent, could set a precedent that conflates efficient trading with manipulation. The outcome of Jane Street’s appeal may shape how India regulates high-frequency trading, balancing market integrity with the need to maintain liquidity in its rapidly growing financial ecosystem.
Published in SouthAsianDesk, July 18th, 2025
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