Jane Street’s India arm saw six-fold surge in trading gains before SEBI clampdown: Report

Jane Street Group LLC’s Indian unit reported a sharp surge in trading profits in the financial year ended March, just months before its operations were halted by the Securities and Exchange Board of India (SEBI) over allegations of market manipulation, according to a Bloomberg report. 

JSI Investment Pvt., the India arm of the New York-based proprietary trading firm, recorded net trading gains of ₹4,700 crore ($517 million) after transaction costs, nearly six times higher than the ₹790 crore posted in the previous financial year. After-tax profit jumped 494% year-on-year to ₹2,840 crore, Bloomberg reported, citing government filings. 

The strong financial performance came ahead of SEBI’s July 3 interim order accusing Jane Street and its related entities of manipulating Indian equity and derivatives markets. The regulator alleged that the firm made more than $4 billion in profits over a little more than two years through trading in stocks, futures and options. 

A s part of the preliminary investigations, SEBI barred the firm and its group entities from buying, selling or dealing in securities, either directly or indirectly, and ordered the impounding of alleged unlawful gains worth ₹4,843 crore. The regulator directed the entities to deposit the amount in an escrow account with a scheduled commercial bank in India. 

According to a Reuters report, SEBI has since allowed Jane Street to resume trading in the Indian equity market after the firm deposited $567 million, or ₹4,843.50 crore, into the escrow accounts in compliance with the interim order. 

Despite the partial relief, SEBI has asked stock exchanges to closely monitor all future trades and positions taken by Jane Street entities to ensure they do not engage in manipulative practices, including those resembling the patterns identified in the interim order, until the investigation and related proceedings are completed. 

Jane Street operated in India both as a Foreign Portfolio Investor (FPI) and as a trading member, with exposure to cash equities as well as derivatives. SEBI’s preliminary findings focused on alleged manipulation in the Bank Nifty index, which tracks major Indian banking stocks. The regulator said its initial observations pointed to a complex and unlawful trading strategy, allegedly enabled by the firm’s sophisticated trading infrastructure.