US trading firm Jane Street deposits ₹4,844 crore in escrow account

Urges Sebi to lift certain curbs; may not resume trading soon

US-based high-frequency trading giant Jane Street has deposited ₹4,844 crore into an escrow account in compliance with the markets regulator’s July 3 interim order invoking anti-fraud provisions against it.

 

The trading firm has also urged the Securities and Exchange Board of India (Sebi) to lift “certain conditional restrictions” imposed under the order. The request is under review in accordance with the directions of the interim order, the regulator said.

 

Jane Street told the regulator that the deposit was made “without prejudice” to legal rights and remedies, “which remain available to them in law and equity”. 

 

 

People privy to the development said the firm did not plan to resume trading in options at this time. Jane Street plans to contest the interim order, they said, without specifying a timeline.

 

According to legal experts, substantial relaxations from the regulator in such matters are rare, particularly when an investigation is ongoing. Further clarity, they said, could come when Sebi issues a showcause notice to the trading firm, a step that could take a few months.

 

 

In its initial order where it had invoked provisions under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations, the regulator stated that the investigation into the firm’s trades in the options, cash and futures market would continue.

 

According to sources, the markets regulator is examining related entities and trading strategies across exchanges and indices, expanding the current probe, which is limited to only 15 expiries of Nifty Bank and three for the Nifty 50 index.

 

The investigation, which involves sophisticated forensic tools, could stretch beyond six months, said people with knowledge of the matter.

 

Jane Street is estimated to have made ₹43,289 crore in equity options through index-based trades between January and March 2025. Sebi has not deemed the entire sum illegal. 

 

In a 105-page interim order, Sebi temporarily barred Jane Street for allegedly manipulating the Bank Nifty index and ordered the largest ever impounding of “unlawfully” gained profits (₹4,844 crore) in India’s securities markets. The firm was given 21 days to respond to the allegations.

 

In an internal communication, Jane Street described Sebi’s order as “fundamentally mistaken”.

 

The New York-based firm is expected to soon file an appeal before the Securities Appellate Tribunal (SAT).

 

Shares of BSE Ltd, India’s only listed stock exchange, rose nearly 4 per cent following the announcement. The stock had dropped 15 per cent earlier this month after Sebi’s ban on Jane Street triggered a 20 per cent plunge in futures & options turnover.

 

The sources said any return by Jane Street to the Indian markets would be closely monitored by both Sebi and the exchanges. The regulator has directed exchanges to track the firm’s positions and trades on an ongoing basis until the probe concludes.

 

“Sebi remains committed to following due process and ensuring the integrity of the securities market,” said the regulator in a statement.

 

Jane Street’s strategy involved aggressively buying the Bank Nifty constituent stocks in both cash and futures segments, to artificially inflate the index. Later in the day, it offloaded those positions, while holding large short positions in index options, profiting from the index’s decline.

 

Jane Street said these trades were part of a standard “index arbitrage” strategy — trading on the price differences between related instruments to provide liquidity and maintain market efficiency. In internal communications, the firm had described Sebi’s order as “extremely inflammatory” and argued that the order disregarded the legitimate role of arbitrageurs in modern markets.