Ex-trader Ananth Narayan, who led Jane Street probe, ends term at Sebi

By Chiranjivi Chakraborty and Ruchi Bhatia

 

Ananth Narayan, who led a high-profile probe into Jane Street Group LLC as a senior official at India’s securities regulator, will hand over the investigation as his three-year term ends on Thursday.

 

The former trader’s scheduled departure as a member of the Securities and Exchange Board of India’s board comes as the regulator faces the US proprietary trading firm in the nation’s appeal court. Narayan, the only person on Sebi’s board with a trading background, was thrust into the spotlight in July after signing an order that accused the US trading giant of manipulating India’s stock and derivatives markets — often at the expense of millions of retail investors.

 

Narayan, who has spent more than two decades at global banks including Standard Chartered Plc, has been a driving force behind the charges against Jane Street, with a team comprising officers from the regulator’s surveillance and derivatives departments. Sebi is confident the team will see the probe through even after his departure, according to people familiar with the matter, who asked not to be identified as they aren’t authorized to speak publicly. 

 

The case, one of the largest ever brought by Sebi against an overseas firm, has captured global attention. It pits the regulator of the world’s largest equity options market by contracts against one of Wall Street’s most profitable traders. The dispute also stoked fears that Sebi could further tighten rules, following curbs introduced late last year to damp retail speculation. 

 

Sebi and Jane Street did not respond to emails requesting a comment. 

 

The Indian government, which appoints members to Sebi, had sought applications for the post through Oct. 6, according to a notification issued last month on the website of the Department of Economic Affairs. 

 

In addition to market supervision, Narayan is also responsible for departments including enforcement and foreign portfolio investors, according to the regulator’s website.

 

In its July order, the market regulator accused Jane Street of using its “immense trading, financial and technological prowess” to manipulate markets, particularly index options on expiry days. The findings mainly focused on trades in cash and derivatives involving Indian bank stocks and the National Stock Exchange of India Ltd.’s index tracking the sector. Jane Street has denied the allegations and pledged to fight them.

 

The firm deposited ₹4,840 crore ($545 million) in an escrow account to comply with the July ruling, which prompted the regulator to lift a temporary trading ban.  

 

Jane Street, which pulled in a record $10.1 billion in net trading revenue in the second quarter, has accused the regulator of withholding documents crucial to its defense and asked the court for a pause in legal proceedings till its appeal is heard.

 

At a Sept. 9 hearing, Jane Street told the Securities Appellate Tribunal that it had not resumed trading in India since the July order. The tribunal is now set to hear the case on Nov. 18 and directed Sebi to defend itself through a written reply.