Sebi's expanded probe may tighten noose around US trading firm Jane Street

Sebi has broadened its probe into Jane Street beyond Bank Nifty to other indices, with early findings suggesting wider market manipulation than seen in the July order

As the Securities and Exchange Board of India’s (Sebi) probe into US-based trading firm Jane Street widens to cover more strategies and indices, early findings suggest a larger scale of alleged market manipulation, according to people familiar with the matter.

 

Since Sebi’s interim order in July, investigators have expanded their review to cover a broader set of securities and timeframes. The analysis has revealed additional suspicious trading patterns, indicating manipulation on a much wider scale, said sources with direct knowledge of the development.

 

An earlier report by the National Stock Exchange (NSE), which Jane Street has described as a “clean chit” in its appeal before the Securities Appellate Tribunal (SAT), had examined only trades in a handful of stocks during the opening hour of trading, sources said. 

“The regulator has carried out a far more extensive investigation, and the findings go well beyond what was captured in the interim order. Large volumes of data are under review, and other indices are being brought under similar scrutiny,” a person aware of the matter said.

 

Jane Street’s minute-by-minute trades were first flagged in a deeper review, which eventually led to Sebi’s July order. A final order is expected at a later stage.

 

“In the November 2024 report by NSE, trading in only three stocks was reviewed between 9:15 and 10:15 am. A more comprehensive assessment was carried out in February 2025, covering full-market trades across single-stock F&O, the cash segment, and index derivatives,” a source confirmed.

 

In the July order, Sebi observed abnormal bouts of volatility around weekly index option expiries, with certain entities consistently carrying the largest exposures in cash-equivalent F&O positions, particularly on expiry days. This prompted the regulator to form a dedicated team to examine Jane Street’s trades in detail.

 

While initial scrutiny focused on Bank Nifty, owing to its higher trading volumes, sources said the probe has since been extended to Sensex and other indices.

 

Emailed queries to Sebi and Jane Street remained unanswered until press time.

 

Meanwhile, in its appeal before SAT, Jane Street has sought disclosure of correspondence between Sebi and NSE, as well as a prior surveillance report by a department of the regulator, arguing that these are vital to its defence.

 

Last week, a three-member SAT bench led by Justice PS Dinesh Kumar directed Sebi to explain within three weeks why certain documents cannot be shared. The next hearing is scheduled for November 18. Sebi has told the tribunal that it has already provided 10 gigabytes of data, in addition to the NSE report.

 

Legal experts cautioned that full disclosure could present challenges, as Sebi would need to maintain confidentiality around ongoing investigations, names of counterparties, brokers, and third parties. The regulator also told SAT that the complaint lodged by a UAE-based hedge fund manager was “not relevant” to its July order, though it may review the strategies cited in the complaint at a later stage.

 

“The investigation is at a critical juncture. We cannot provide every single document. Much of what is being sought is either confidential, irrelevant, or premature at this point,” Sebi told the tribunal.

 

Jane Street’s temporary trading ban was lifted after the firm deposited around ₹4,844 crore, which Sebi has classified as profits derived from manipulative practices.  

Under magnifying glass

• Sources say a broader analysis has shown larger scale objectionable strategies
• More trading patterns under scanner, longer time frames under scrutiny
• The November 2024 report by NSE had only analysed first few hours of market trading in handful stocks
• Minute-by-minute analysis by Sebi across scrips, indices, and longer market hours showed alleged manipulation
• Jane Street appealed in SAT seeking disclosure of more information from Sebi 
• Sebi argued that further information sought were irrelevant or confidential