Jane Street files appeal in SAT, says Sebi probe 'biased, pre-determined'

Jane Street has appealed to the Securities Appellate Tribunal against Sebi's July 3 order, alleging denial of crucial documents and bias in the Nifty Bank manipulation probe

US-based trading firm Jane Street Group on Wednesday filed an appeal in the Securities Appellate Tribunal (SAT) against the Securities and Exchange Board of India (Sebi) in the alleged market manipulation case, according to documents reviewed by Business Standard. 

Jane Street has argued that Sebi denied it access to crucial and relevant documents needed for its defence. The firm has further alleged “bias and pre-determination” by the regulator, accusing Sebi of allegedly “abandoning and reversing” an earlier finding that showed no price manipulation. 

In its appeal, Jane Street has sought the full report of Sebi’s Integrated Surveillance Department (ISD), along with correspondence between the National Stock Exchange (NSE) and Sebi related to the trades. 

The trading group claims the Sebi-ISD report had concluded that Jane Street entities did not influence market prices in their favour. It alleges that Sebi directed NSE to discard the “objective criteria” used earlier and adopt another methodology “so as to be able to contend that there was some alleged manipulation”. 

Jane Street added that the ISD’s findings were contradictory, which is why they were not referred to in Sebi’s July 3 order.

 

The firm had approached Sebi in August seeking these reports and related information, which were allegedly withheld. 

 

In its ex-parte interim order on July 3, Sebi had temporarily barred Jane Street and group entities from trading in India, citing alleged manipulation. The ban was later revoked after the entities deposited ₹4,840 crore, which Sebi identified as gains from disputed trades involving the Nifty Bank index.

 

The high-frequency trading firm submitted to SAT that the Sebi-ISD report found that in over 90 per cent of patches, it could not be established that the group’s trading activity influenced prices of index constituents or the index itself in a way that benefited its derivatives positions.

 

The firm claims the ISD “was unable to ascertain that Jane Street influenced Bank Nifty prices in a favourable direction to maximise profit”.

 

The appeal also states that Sebi formed an “inter-departmental team” in December 2024 after a United Arab Emirates-based hedge fund manager complained that implied volatility levels on expiry days were higher or lower than on non-expiry days in the previous six months. Jane Street argues that the creation of this team was “unexplained”, especially after the ISD report.

 

Following an NSE caution notice, Jane Street said it met exchange executives to seek clarity on its positions.

 

According to Sebi’s order, Jane Street pursued a two-part strategy: first, aggressively buying Bank Nifty constituent stocks in both cash and futures markets to push up the index; and then unwinding those positions while holding large short bets in index options, profiting from the subsequent decline. Jane Street, however, maintains its trades were conventional index arbitrage — exploiting price differences across instruments to provide liquidity and improve market efficiency.

 

Sources said Jane Street has not taken fresh positions in the Indian market, except for squaring off earlier ones.

 

Sebi did not respond to emailed queries until the time of going to press.

 

According to a Bloomberg report, the firm posted net trading revenue of $10.1 billion in the April–June 2025 quarter, more than double the year-ago period. It also reported a record first-half (January–June 2025) trading revenue of $17.3 billion.

 

Meanwhile, Jane Street’s India trades have drawn scrutiny from tax authorities over possible violations of tax treaties. 

Claiming clean

*  Jane Street’s appeal says Sebi refused access to information critical for defence     *  The trading firm has sought a prior report by Sebi’s integrated surveillance department (ISD), details of correspondence with NSE  *  Firm claims that Sebi-ISD report ‘concluded’ that Jane Street entities did not influence market prices in their favour  *  Sebi formed another ‘inter-departmental team’ to probe the same dates of trades investigated earlier, says Jane Street  *  Sebi had alleged market manipulation by Jane Street group entities in an ex-parte interim order dated July 3, lifted trading ban after the US-based firm deposited of ₹4,840 crore