Jane Street Gets SEBI Nod to Resume Operations in India

Shares of BSE, Central Depository Services, and others were up on Monday, July 21 as capital market company Jane Street Capital was given a go-ahead to re-enter Indian markets after depositing alleged unlawful gains of ₹4,844 crore in an escrow account before a July 14 deadline.

As per a Business Standard report, market regulator Securities and Exchange Board of India (SEBI) informed Jane Street last week via email that the trading ban imposed earlier this month had been lifted.

BSE shares went up by 2.87% to reach an intraday high of ₹2,519 apiece. Motilal Oswal Financial Services and Angel One surged by 1.4% and 1.59%, respectively. Central Depository Services Limited (CDSL) also went up by 1%.

Previously, Jane Street was barred from participating in the securities market by the market regulator.

How did Jane Street manipulate Bank Nifty on expiry days?

SEBI’s investigation detailed a similar pattern observed during 14 expiry days by the Jane Street Entities. In the morning, the company would buy Bank Nifty futures and stocks in the cash segment, while simultaneously selling large volumes of Bank Nifty options.

This strategy reversed post-noon as Jane Street would aggressively sell Bank Nifty futures. SEBI alleged that this move was aimed at dragging the index lower ahead of the day’s close. A softer index close allowed SEBI to book huge profits on their short positions in options.

On January 17, Jane Street bought Bank Nifty futures worth ₹4,370 crore in the morning and simultaneously sold options worth ₹32,115 crore. During the second half of the trading day, it reversed its futures position, selling ₹5,372 crore worth of Bank Nifty futures. Jane Street built short options positions worth ₹46,620 crore.