Regulatory Crackdown: Jane Street Barred from Indian Markets

In a significant move, the Indian securities regulator has barred U.S. firm Jane Street from participating in Indian markets. The Securities and Exchange Board of India (SEBI) accuses the firm of manipulating the Bank Nifty index, consequently causing millions of retail investors to lose money.

According to SEBI, Jane Street accumulated substantial shares in both cash and futures markets, elevating the index prices. It simultaneously shorted derivatives, through cheap 'put' options and expensive 'call' options. The second leg of the trade involved selling these shares to depress index prices, thus profiting from the options market.

Jane Street maintains its strategy was a standard arbitrage, legal under Indian law, citing gaps in derivatives and cash markets pricing. The ongoing SEBI investigation remains a critical situation for Jane Street, with an upcoming opportunity to present its case against the allegations.

(With inputs from agencies.)