Jane Street In Trouble Again as US SEC Reportedly Seeks Details from Sebi on Derivatives Trade Probe

The US Securities and Exchange Commission (SEC) has reached out to India’s capital markets regulator, the Securities and Exchange Board of India (Sebi), seeking information on its ongoing investigation into global trading firm Jane Street, a report by The Economic Times said, citing people familiar with the matter.

Sebi has responded to specific queries from the US regulator, the report said, marking a rare instance of cross-border regulatory coordination in a derivatives market manipulation case.

Both the SEC and Sebi are signatories to the IOSCO Multilateral Memorandum of Understanding, a global framework that facilitates information-sharing among securities regulators. Under Articles 6 to 8 of the IOSCO agreement, signatories are required to cooperate when one regulator requests assistance from another.

The development follows Sebi’s interim order on July 3, which barred Jane Street from trading in Indian markets and directed it to return ₹4,844 crore of alleged ‘unlawful’ gains in an escrow. The regulator claimed this was the amount the firm made through alleged market manipulation.

Jane Street, a prominent US high-frequency trading (HFT) firm known for using advanced algorithms, has denied any wrongdoing. However, it did went ahead and complied Sebi’s order, having deposited the full amount in an escrow account. Following this, Jane Street was given a clean chit by the Sebi to re-enter the market on July 21, under certain conditions.

According to the report, Jane Street is currently preparing a formal response to Sebi’s allegations and has been given 21 days to do so. The firm has also informed the regulator that it reserves the right to pursue legal remedies in the future, though it is not challenging the order in court as of now.

Sebi has reportedly communicated hearing dates to Jane Street’s legal team.

In its order, Sebi alleged that Jane Street manipulated the Bank Nifty index. The firm allegedly bought large volumes in the morning to push prices higher, followed by heavy selling later in the day to drag prices down. Sebi further claimed that Jane Street placed large sell orders just before options expiry, causing significant losses for other traders, particularly retail investors.

The regulator invoked the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations, alleging that Jane Street used its technological and financial edge to distort the market in its favour. The case is built on trading data from about 20 specific days when the firm is said to have booked large profits.

While neither Sebi nor the SEC has issued official statements on the matter, the case highlights the growing global scrutiny over the unchecked influence of high-frequency and algorithmic trading firms.