Jane Street, one of the largest quant trading firms in the world, has been temporarily barred from the Indian securities market following an order from the Securities and Exchange Board of India (SEBI). SEBI, India’s market regulator, had been investigating Jane Street for the past three years.
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“(JS Group) entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly,” said SEBI. The regulator has impounded 48.4 billion rupees, or $566.71 million, from the quant firm, equivalent to the amount of alleged illegal gains.
SEBI Accuses Jane Street of Market Manipulation
The bar stems from the investigation’s conclusion that Jane Street manipulated Indian indexes, like the Nifty 50. One of its strategies involved buying large amounts of stocks and futures contracts of companies within the Bank Nifty index. Afterward, Jane Street would take on bets that would benefit if the Bank Nifty fell and then sell the positions it had bought earlier in the day.
“As an options trader, I could see the manipulation happening live on the screen, and so could other traders on every expiry day,” said the president of a hedge fund in the UAE who requested anonymity.
The First Trust India Nifty 50 Equal Weight ETF (NFTY) is having a solid year and has similar gains to the S&P 500 ETF (SPY) on a year-to-date basis.
