Jane Street seeks 6 more weeks to reply to Sebi in options trade case

Jane Street Group LLC has sought six more weeks from India’s securities regulator to prepare its defense against market manipulation allegations, though it may get fewer, according to a person familiar with the matter. 

The Securities and Exchange Board of India is considering granting about four more weeks to the US trading firm, said the person, asking not to be identified discussing a private matter. The regulator had previously given Jane Street 21 days to submit its arguments to the preliminary findings of an investigation into its controversial Indian options trades. The deadline expired last week. 

The situation remains fluid and Sebi board member Ananth Narayan could still decide to give the firm more time, the person said. Jane Street declined to comment while Sebi didn’t respond to a request for comment. 

Jane Street said in a statement on Monday it is engaging “constructively” with Sebi and has requested more time to respond to the regulator’s interim order dated July 3, without elaborating. Last week, Sebi lifted Jane Street’s temporary trading ban after the firm deposited 48.4 billion rupees ($556 million) in alleged “unlawful gains” into an escrow account.  

The clampdown has pitted the New York-based trading giant against the local regulator in the world’s largest equity derivatives market by contracts. The outcome of the case could carry implications for other global high-speed trading firms that have flocked to India in recent years, drawn by the explosive growth in the equity options space. 

Jane Street told its employees earlier this month that Sebi made “many erroneous or unsupported assertions” about its trading activity in the country, and the firm intends to defend itself against the accusations including exploiting thin liquidity in the cash and futures segments to manipulate prices. 

The firm is expected to argue that its trades were a response to outsized demand from retail investors, Bloomberg News reported Tuesday. 

Once Jane Street submits its response, Sebi’s Narayan — who signed the July 3 order — will review the arguments before likely issuing a new directive. That order could confirm the initial findings and set a time line for completing the investigation.