SEBI Tightens Derivatives Surveillance After Barring Jane Street Over Index Manipulation
India’s market regulator, the Securities and Exchange Board of India (SEBI), is intensifying its oversight of derivatives trading following its recent action against U.S.-based trading firm Jane Street. SEBI Chairman Tuhin Kanta Pandey stated on Monday that there may not be many more such cases, but emphasized the need for stricter scrutiny in light of increasing concerns around market manipulation. India, which accounts for nearly 60% of the 7.3 billion equity derivatives traded globally as of April, has witnessed a surge in derivatives activity, particularly from retail investors.
On Friday, SEBI barred Jane Street from participating in Indian markets and seized $567 million of its funds. The regulator accused the firm of manipulating the Bank Nifty index by purchasing large volumes of its constituents in both cash and futures markets to artificially prop up the index during morning trade. Simultaneously, Jane Street allegedly built large short positions in index options, profiting later in the day by reversing the trades once the index stabilized.
In response to such tactics, SEBI has moved to curb excessive speculative activity by limiting the number of contract expiries and increasing lot sizes in derivatives trading. A source familiar with the matter told Reuters that SEBI plans to widen its investigation into Jane Street across multiple exchanges and indexes, signaling the regulator’s ongoing efforts to ensure market integrity and transparency.
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