Jane Street complies with Sebi directive, deposits $564 million in escrow

US-trading firm Jane Street Group has deposited ₹4,843.5 crore (roughly $564 million) in an escrow account, complying with a directive issued by India’s securities regulator earlier this month. The move comes after Jane Street grabbed the limelight following a July 3 interim order by the Securities and Exchange Board of India (Sebi), which accused the firm of manipulating domestic markets, particularly through ‘unlawful’ trades in index options.

The deposit, first reported by Moneycontrol citing sources, clears a path for Jane Street to resume trading activity in India. However, according to Moneycontrol, the firm has no immediate plans to re-enter the equity options segment, where the alleged manipulation took place.

Internally, reports from Reuters suggested Jane Street has rejected the regulator’s claims. In a communication to staff on July 6 accessed by Reuters, the firm reportedly expressed strong disagreement with both the premise and the substance of Sebi’s order. Further, as per Moneycontrol, Jane Street is currently preparing a formal response and is evaluating legal options, including a potential appeal before the Securities Appellate Tribunal. Under Sebi’s guidelines, the firm also retains the right to respond to the allegations within a 21-day window from the date of the order.

The Sebi order alleged that Jane Street leveraged its high frequency trading strategies to distort price discovery in India’s markets. Specifically, the regulator claims that the firm influenced pricing in the cash and futures segments on weekly index options expiry days to benefit its own options positions. The resulting gains, which Sebi labelled ‘illegal profits,’ were at the heart of the sum now deposited in escrow.

In addition, Sebi also instructed stock exchanges to keep a close watch on any future dealings by Jane Street or its affiliates, with the intent of preventing any recurrence of alleged manipulative behaviour.

While the firm has adhered to the order by depositing the funds, the broader implications of Sebi’s action are still unfolding. Jane Street has not publicly commented on its future in India.

The case has drawn attention not only for its scale but for the regulatory precedent it may set in governing algorithmic and high-frequency trading practices in India, especially for bick-pocketed players, including foreign institutional investors.