Jane Street files case against SEBI before SAT on market manipulation charges

Jane Street files case against SEBI before SAT on market manipulation charges

Pleads the tribunal to direct the market regulator to share documents that were essential for its defence

Jane Street has filed a case against the Securities and Exchange Board of India (SEBI), before the Securities Appellate Tribunal (SAT), stating that it has not been granted access to crucial documents in its defence on market manipulation allegations.

The US firm requested the tribunal to direct the market regulator to share materials that were essential to rebut the charges. It appealed, “These documents are undeniably relevant.”

In its 3 July interim order, SEBI accused Jane Street of manipulating the Nifty Bank index, and barred it from trading in India.

The market watchdog maintained that the firm executed a two-stage strategy. First, buying constituent stocks in cash and futures markets to artificially push up the index. Second, unwinding positions while holding large short bets in index options, thereby profiting from the decline.

However, Jane Street rejected the claims. It insisted, the actions were standard ‘index arbitrage’. It was a trading practice to exploit price discrepancies across markets to enhance liquidity and efficiency.

Days after the order, the firm sent an internal note to employees describing SEBI’s findings as ‘fundamentally mistaken’.

However, on 18 July, SEBI had lifted the ban after Jane Street deposited Rs.4,843 crore into an escrow account. The regulator claimed the company had gained from the disputed trade.

Even though the ban has been revoked, the firm has not resumed trading in index options and remains under adjudication proceedings that could stretch over six to eight months.

SEBI gave Jane Street 21 days to respond to the order but the firm missed the 26 July deadline and requested an additional six weeks to prepare its defence.