Key Takeaways
- • Jane Street has petitioned the Securities Appellate Tribunal to compel SEBI to disclose correspondence with the NSE regarding a study on the hedge fund's trading activity, arguing the documents are critical to its defense against market manipulation allegations.
- • SEBI barred Jane Street from Indian markets via ex-parte interim order in July 2025 and ordered the firm to disgorge ₹4,843 crore in alleged unlawful gains, accusing it of manipulating the Bank Nifty index through coordinated cash, futures, and options strategies.
- • Two prior investigations—an NSE review in November 2024 and a SEBI Integrated Surveillance Department review in December 2024—found no evidence of manipulation and recommended against further action, creating a discrepancy that Jane Street argues warrants disclosure of regulator communications.
- • Jane Street alleges a complaint from a UAE-based hedge fund prompted SEBI to initiate the inter-departmental investigation that ultimately led to the manipulation charges, raising questions about the investigation's origins and impartiality.
- • The NSE's prior review examined only 16 of 27 months covered by SEBI's order, while the ISD review covered 17 months, leaving substantial overlap gaps that Jane Street contends undermines the basis for the regulator's final enforcement action.
Summary
Jane Street, a US-based hedge fund, is pursuing legal relief before India's Securities Appellate Tribunal to obtain correspondence between SEBI and the National Stock Exchange regarding investigations into the firm's trading activities. The hedge fund argues that communications between the two regulatory bodies are essential to mounting an effective defense against allegations of market manipulation and could illuminate why SEBI proceeded with enforcement action despite two earlier reviews finding no evidence of wrongdoing.
SEBI's July 2025 ex-parte interim order represents a significant enforcement escalation. The regulator accused Jane Street of executing coordinated strategies designed to artificially support the Bank Nifty index while simultaneously building short options positions to profit from index price movements. The alleged scheme involved purchasing large quantities of Bank Nifty constituent stocks across cash and futures markets. SEBI's order barred the hedge fund from Indian market participation and mandated disgorgement of ₹4,843 crore in unlawful gains, claiming the manipulative trading harmed retail investors.
The procedural inconsistencies underlying SEBI's action form the crux of Jane Street's challenge. An NSE review completed in November 2024 examined trading data spanning 16 months of the 27-month period later encompassed by SEBI's July 2025 order. Subsequently, SEBI's Integrated Surveillance Department conducted its own review in December 2024, analyzing 17 months of the investigation period. Both reviews concluded that Jane Street's trades did not distort index prices to benefit the firm's options positions and recommended against pursuing the matter further. Despite these findings, SEBI initiated an inter-departmental investigation that ultimately produced the enforcement order.
Jane Street has additionally flagged that a complaint from a UAE-based hedge fund reportedly triggered SEBI's decision to constitute the inter-departmental team that conducted the investigation leading to the manipulation charges. The hedge fund's appeal emphasizes the temporal and evidentiary gaps between the NSE and ISD reviews and the final enforcement action, contending that disclosure of regulator-to-regulator communications is necessary to understand the investigation's trajectory and the reasons SEBI departed from its own surveillance department's earlier conclusions.
SEBI's July 2025 ex-parte interim order represents a significant enforcement escalation. The regulator accused Jane Street of executing coordinated strategies designed to artificially support the Bank Nifty index while simultaneously building short options positions to profit from index price movements. The alleged scheme involved purchasing large quantities of Bank Nifty constituent stocks across cash and futures markets. SEBI's order barred the hedge fund from Indian market participation and mandated disgorgement of ₹4,843 crore in unlawful gains, claiming the manipulative trading harmed retail investors.
The procedural inconsistencies underlying SEBI's action form the crux of Jane Street's challenge. An NSE review completed in November 2024 examined trading data spanning 16 months of the 27-month period later encompassed by SEBI's July 2025 order. Subsequently, SEBI's Integrated Surveillance Department conducted its own review in December 2024, analyzing 17 months of the investigation period. Both reviews concluded that Jane Street's trades did not distort index prices to benefit the firm's options positions and recommended against pursuing the matter further. Despite these findings, SEBI initiated an inter-departmental investigation that ultimately produced the enforcement order.
Jane Street has additionally flagged that a complaint from a UAE-based hedge fund reportedly triggered SEBI's decision to constitute the inter-departmental team that conducted the investigation leading to the manipulation charges. The hedge fund's appeal emphasizes the temporal and evidentiary gaps between the NSE and ISD reviews and the final enforcement action, contending that disclosure of regulator-to-regulator communications is necessary to understand the investigation's trajectory and the reasons SEBI departed from its own surveillance department's earlier conclusions.
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