In an internal letter to staff, the US-based trading company Jane Street slammed the Securities and Exchange Board of India (SEBI), calling its recent ruling accusing market manipulation “fundamentally mistaken.”
The company rejected SEBI’s description of its trading approach as manipulative and instead described it as “basic index arbitrage.” According to Jane Street, it is considering its legal options and is getting ready to respond formally.
Additionally, it asserted that since February, many attempts to communicate with the market’s regulator have been “consistently rebuffed.”
Jane Street accused Sebi of using “inflammatory language” and demonstrating a lack of grasp of typical hedging procedures and the connections between derivative and underlying markets in its July 3 order in a letter distributed to staff members over the weekend.
Deeply Upsetting of Being Mischaracterised: Jane Street
The letter went on to say that seeing the company misrepresented in this manner is really distressing. Jane Street is proud of the part it plays in global markets; therefore, it hurts to have a study that contains so many false or unsubstantiated claims damage its reputation.
In addition to prohibiting Jane Street and its group companies from engaging in the Indian market, Sebi’s ruling ordered the disgorgement of INR 4,834 crore in claimed “unlawful gains.” Additionally, the regulator stated that it was still looking into the group’s other trading tactics.
The market’s watchdog responded to Jane Street’s allegations by stating that the July 3 ruling, like all SEBI orders, is a speaking order that lays out SEBI’s prima facie case and answers all pertinent issues.
SEBI has nothing more to contribute to what has already been included, clarified, and rationalised in that order at this point. When Sebi initially asked for information about its trading in August 2024, Jane Street claimed to have responded quickly and openly.
Jane Street’s senior officials from the company’s headquarters in Hong Kong and New York had gone to Mumbai to meet with the National Stock Exchange (NSE), it further stated.
Why did Sebi Issue the Order?
Several examples of what SEBI claimed was index manipulation by Jane Street were highlighted in the 105-page study.
It claimed that on January 17, 2024, the day that weekly index options linked to the NSE Nifty Bank Index were about to expire, the company had engaged in aggressive trading to raise the values of the underlying cash and futures markets.
According to the report, Jane Street piled up a lot of bearish options transactions and then made a lot of money by closing some of them and letting others expire.
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