US firm Jane Street files case against Sebi's market manipulation charge

US trading firm Jane Street has filed an appeal before SAT against Sebi's allegations of market manipulation

US trading firm Jane Street on Wednesday filed a case against India’s markets regulator, the Securities and Exchange Board of India (Sebi), arguing that it has not been granted access to crucial documents in its defence against allegations of market manipulation.

 

According to filings reviewed by Reuters, in the case filed before the Securities Appellate Tribunal (SAT), the firm has asked the tribunal to direct Sebi to share material that the market watchdog says is essential to rebut the charges.

 

“These documents are undeniably relevant,” Jane Street stated in its appeal.

 

What are Sebi's allegations against Jane Street?

Sebi, in an interim order on July 3, had accused Jane Street of manipulating the Nifty Bank index, and barred it from trading in India.

 

According to Sebi, the firm executed a two-stage strategy:

• First, buying constituent stocks in both cash and futures markets to artificially push up the index.
• Then unwinding positions while holding large short bets in index options, thereby profiting from the decline.

Jane Street, however, has rejected the claims, insisting its actions were standard “index arbitrage”. This is a trading practice aimed at exploiting price discrepancies across markets to enhance liquidity and efficiency.

 

In an internal note to employees days after the order, the firm described Sebi’s findings as “fundamentally mistaken”.

 

The interim ban was later lifted on July 18 after Jane Street deposited ₹4,843 crore into an escrow account. The amount Sebi claimed the company had gained from the disputed trade.

 

While the ban was revoked, the firm has not resumed trading in index options and remains under adjudication proceedings that could stretch over six to eight months.

 

Jane Street had initially been given 21 days to respond to the order but missed the deadline of July 26. Two days later, it requested an additional six weeks to prepare its defence.