After paying a massive margin of $564 million, Jane Street has been allowed to resume trading in the Indian market.

The Indian securities regulator will continue to investigate Jane Street's trading in derivation, Spot, and futures markets.

Written by: Zhang Yaqi

Source: Wall Street Journal

The standoff between quantitative trading giant Jane Street and Indian regulators has taken a turn, but is far from over. After depositing a large sum of money, the company has been allowed to resume trading in the country's market.

According to media reports on Monday citing unnamed sources, the Securities and Exchange Board of India (SEBI) has allowed the U.S. quantitative trading giant Jane Street Group LLC to resume trading in the Indian stock market after it deposited 48.4 billion rupees (approximately 564 million dollars) of so-called "illegal gains" into a custodial account.

The Securities and Exchange Board of India notified Jane Street of this decision via an email last week. On July 14, the regulator had stated in a statement that it was reviewing the request made by this American company to relax restrictions. However, according to media reports, even if the ban is lifted, Jane Street does not intend to immediately return to India's options market.

As this progress occurs, the Securities and Exchange Board of India continues to investigate what it calls manipulation. This case, which has attracted significant attention from the financial industry, has evolved into an intense game between this Wall Street giant and the regulator of the world's largest stock derivation market (measured by contract volume).

The investigation is far from over, and legal battles may escalate.

According to Wall Street Journal on July 4, Indian regulators pointed out that Jane Street is long on the Indian bank stock index BANKNIFTY through futures and the stocks themselves, but has established a short position seven times larger through options.

Regulators detailed Jane Street's manipulation tactics in a 105-page temporary injunction: first, they bought a large amount of bank stock index components to drive up the index, and then they shorted options to gain huge profits, making 86 million dollars in just one day on January 17, 2024.

Although the trading ban has been temporarily lifted, the regulatory scrutiny facing Jane Street is far from over. The Indian Securities and Exchange Board stated that its investigation into the company's trading in options, Spot, and futures markets will continue. The scope of the investigation will include activities involving the National Stock Exchange of India and the flagship index of the Bombay Stock Exchange.

The next move of Jane Street remains unclear. The company may appeal to the Securities Appellate Tribunal in Mumbai regarding the allegations from the Securities and Exchange Board of India. At the same time, the company also faces a deadline this week to submit a written response to the regulatory agency for self-defense and to obtain the opportunity for a personal hearing.

Core Controversy and Huge Profits

The core of this case lies in the fundamental disagreement between the two parties regarding the qualitative nature of Jane Street's trading strategy. A few days after the Indian Securities and Exchange Board issued the ban, Jane Street expressed to its internal employees that the company strongly opposed the premise and substantive content of the temporary order from the Indian Securities and Exchange Board, stating that the regulator's so-called "intraday index manipulation" is actually a common practice of "fundamental index arbitrage trading" in financial markets.

However, the allegations from the Securities and Exchange Board of India are quite severe. According to its investigation, Jane Street made a total profit of approximately 365 billion rupees (about 4.3 billion dollars) by trading in India's derivation and Spot markets from January 2023 to March 2025. According to the order, the company participated in local Spot and stock futures trading through a local subsidiary and an overseas registered entity before the ban.

Currently, neither party has made a public response to the latest developments.