SEBI Bans Jane Street | 07 Jul 2025

Source: TH 

US-based Jane Street, a prominent proprietary trading firm, has been banned by Securities and Exchange Board of India (SEBI) for engaging in manipulative trading practices that disrupted market integrity and resulted in massive illegal profits. 

• Manipulative Trading: Jane Street executed trades in the derivatives (futures) segment not to profit from market trends, but to manipulate prices.  
  • They used a "marking the close" strategy, placing large buy orders to inflate prices, then selling them later to maximize gains, employing a push-pull tactic. 
  • This intra-day manipulation misled small investors and created artificial volatility in the market. 
  • Jane Street used its Indian arm, JSI Investments Pvt Ltd, to bypass local regulations because foreign portfolio investors (FPIs) are restricted from engaging in certain cash market activities, such as intraday trading (purchasing and selling securities listed in a stock exchange on the same day).  
    • Using a domestic entity allowed the group to execute trades that would otherwise be prohibited under FPI norms. 
• SEBI’s Regulatory Actions: SEBI imposed a Rs 4,843 crore penalty on Jane Street and barred it from accessing the Indian securities market. 
• Impact on Proprietary Trading: The case has highlighted the need for stronger compliance and market safeguards. 
• SEBI: SEBI is the statutory regulator of India’s securities market under the Ministry of Finance, established under the SEBI Act, 1992. It aims to protect investor interests, promote fair practices, and regulate the securities market.  
  • Headquartered in Mumbai, it has regional offices in Ahmedabad, Kolkata, Chennai, and Delhi. Initially set up in 1988 as a non-statutory body, it gained statutory powers in 1992. 
  • SEBI is a quasi-legislative and quasi-judicial body with powers to frame regulations, conduct inquiries, and impose penalties.  
  • It regulates issuers by prohibiting insider trading and inspecting market entities.