India’s Market Regulator to Strengthen Oversight of Derivatives Trading, SEBI Chief Says

The Securities and Exchange Board of India (SEBI) is enhancing its surveillance mechanisms to better detect and address potential manipulation in the country’s fast-growing derivatives market, the regulator’s chairman said on Monday, Reuters reports.

SEBI Chairman Tuhin Kanta Pandey made the remarks just days after the agency barred US-based trading firm Jane Street from participating in Indian markets. An investigation found the firm had engaged in index manipulation through trades involving Bank Nifty constituents.

“There may not be many more such cases,” Pandey said, without providing further details.

India currently hosts the world’s largest equity derivatives market, accounting for nearly 60% of the 7.3 billion equity derivatives contracts traded globally in April, according to the Futures Industry Association. The rapid growth in trading volumes—partly fueled by an influx of retail investors—has prompted SEBI to introduce tighter controls, including limiting contract expiries and increasing lot sizes to make derivatives trading costlier and more regulated.

On Friday, SEBI announced that it had seized $567 million from Jane Street and banned the firm from buying or selling securities in Indian markets. The regulator alleged that Jane Street had purchased large volumes of Bank Nifty stocks in both cash and futures markets to boost the index artificially during morning trading sessions. At the same time, the firm allegedly built significant short positions in options, profiting from subsequent intraday reversals.

A source told Reuters that SEBI now plans to expand its investigation into Jane Street’s trading activity, examining transactions across multiple exchanges and stock indexes.

SEBI’s increased focus on market integrity and derivatives oversight comes amid growing complexity in market activity and rising foreign participation, underlining its efforts to maintain transparency and protect investor confidence.