US-based trading firm Jane Street has deposited approximately $567 million into an escrow account in India as part of efforts to comply with an order from the Securities and Exchange Board of India (SEBI), which temporarily banned the firm from trading in the country earlier this month over allegations of market manipulation.
According to SEBI, the funds — described by the regulator as “illegal gains” — were credited to an escrow account with a lien marked in SEBI’s favor. The deposit is a prerequisite for SEBI to consider lifting the trading ban, though the investigation remains ongoing.
The restriction followed allegations that Jane Street engaged in manipulative trading activity involving India’s Bank Nifty index. SEBI accused the firm of buying large quantities of index constituents in the cash and futures markets to influence prices, while simultaneously building short positions in index options. The alleged activity was tracked over a two-year period and may now be part of a broader investigation involving other indexes and exchanges.
A source familiar with the situation said Jane Street continues to dispute the allegations and intends to “strenuously contest” SEBI’s findings. The deposit, according to the company, was made “without prejudice” to its legal rights and should not be seen as an admission of guilt.
Despite the potential for the ban to be lifted as early as this week, Jane Street does not plan to resume options trading in India until the matter is fully resolved, another source said. Options have been a major part of the firm’s operations in India, reportedly accounting for five to seven times more exposure than its activity in regular equities.
The trading ban has put pressure on Jane Street’s Indian operations, a region where it has reportedly earned over $4 billion in profits over the past two years. While SEBI considers the firm’s request for reinstatement, it is also expected to direct exchanges to monitor Jane Street’s activity closely if trading is allowed to resume.
The case comes amid broader concerns about the rapid growth of India’s equity derivatives market, which now accounts for around 60% of global volume. Losses for Indian retail investors in this segment rose 41% last year to $12.3 billion, prompting increased scrutiny from regulators.
With input from the Financial Times, Reuters, and Bloomberg.
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