The Securities Appellate Tribunal (SAT) has reserved its order until October 21 on an appeal by US-based market maker Jane Street, bringing an end to verbal arguments in its ongoing legal battle with the Securities and Exchange Board of India (Sebi) over access to key evidence. According to Mint, the dispute stems from Sebi's July 2025 ex-parte interim order, which barred Jane Street from the Indian securities market and directed it to disgorge ₹4,843 crore in alleged unlawful gains. The regulator accused the hedge fund of manipulating the Bank Nifty index by using trades in cash and futures markets to artificially support the index while building large short positions in index options.
US hedge fund Jane Street has rejected SEBI's market manipulation allegations and is seeking additional documents to mount a comprehensive defense against the capital markets regulator. According to Mint, Jane Street contended that Sebi has withheld crucial documents and data used to build its case, including trade and order logs with counterparty details such as trade quantity, price, and execution time, along with correspondence between Sebi and NSE. The Wall Street trading firm has requested redacted counterparty details included in SEBI's trade logs, which formed part of the regulator's July 2025 interim ruling against the firm. Jane Street is also seeking additional information from SEBI about the origins and conduct of the investigation, questioning why officials pursued the firm after earlier reviews found no wrongdoing. Jane Street argued that these documents are essential to its defence against market manipulation charges, as they could clarify why Sebi launched a fresh investigation after two previous reviews cleared the firm.
Sebi has detailed how Jane Street purchased stocks worth more than ₹4,370 crore ($444 million) in the cash market over two hours and simultaneously sold options worth over ₹32,114 crore, as reported by Business Standard. According to Business Standard, within a few hours, Jane Street dumped the shares, which benefited its derivatives position, which SEBI cited as evidence of intent to manipulate the market. The trades are central to the regulator's allegation that Jane Street influenced the pricing of stocks in the NSE Nifty Bank Index, one of India's most closely watched gauges and the basis for heavily traded options contracts. According to CNBC TV18, SEBI's allegation centers on the firm influencing prices of stocks in the NSE Nifty Bank Index, with the outcome of the dispute potentially shaping global trading firms' perception of how high-frequency traders would be regulated in one of the world's largest derivatives markets.
Lawyers representing the market regulator have argued that counterparty trades and order data are not relevant to the allegations against Jane Street, and that at this stage of the investigation, Sebi is legally bound to only share information it relied upon to pass the interim order. As reported by Mint, a lawyer representing Sebi said at the hearing: "Where it is relevant and where it has a meaning, we give. But we also have to understand that the data we are sharing here is huge, because these are huge trades. Also, the counterparty has no relevance." "They want the data of counterparties with whom they have traded, which is irrelevant because that is absolutely not the allegation here. That is why in the responses that we have given to their demands, we have said that counterparty data has no relevance in the precedence," the Sebi lawyer added. Jane Street's counsel argued that Sebi had never clarified what 'large' positions meant after the NSE caution notice of February 2025, even though its own interdepartmental team report used a notional ₹500 crore delta limit.
The appeal highlights a November 2024 probe by the NSE and a December 2024 review by Sebi's Integrated Surveillance Department (ISD), both of which reportedly found no proof that Jane Street's trades influenced index prices to profit its options positions, recommending against further action. According to The Economic Times, Jane Street's counsel Darius Khambata told SAT: "Why on earth would I want to adopt dilatory tactics? My money is at stake. My reputation is on the line." He emphasized that the firm had deposited the money sought by Sebi even before being given an opportunity to be heard, describing the action as an ex-parte order. Khambata accused Sebi of changing the 'goal posts' post facto in its case against the global trading firm, stating: "Don't change the rule post facto. What is so secret about the communication between Sebi and NSE? That's part of my defence. You have changed the goal post now." According to Khambata, Jane Street had explained its strategy to Sebi and the National Stock Exchange before the exchange and investor surveillance department reports were prepared, with multiple calls with NSE and Sebi officials to explain the strategy. The senior counsel also argued that Sebi's order had significant civil consequences because Jane Street was directed to stop trading unless it deposited money, stating that any order which has civil consequences is adjudication.
