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Informist, Friday, Jul. 4, 2025
--SEBI source: To continue Jane Street probe, scope quite large
--SEBI source:Tough to estimate how long Jane Street probe takes to conclude
--SEBI source: Jane Street probe to look into other expiry days, indices
--SEBI source: Algo user is responsible for output of algo
--SEBI source: More regulations cannot make up for poor enforcement
--SEBI source: Still too much concentration in short-term expiries in F&O
--SEBI source: Retail F&O trading down, but 90% still continue to lose money
By Anshul Choudhary
MUMBAI – The Securities and Exchange Board of India will continue its investigation into trading in equity index derivatives and underlying stocks by the Jane Street group and enlarge the scope substantially to include other expiry days and indices, including across exchanges, according to a source aware of the development. SEBI had Thursday issued an interim order against two foreign portfolio investors, Jane Street Singapore Pte. Ltd. and Jane Street Asia Trading Ltd., and two other Jane Street group entities, seeking disgorgement of illegal profit of INR 48.44 billion for alleged index manipulation and debarred them from the Indian securities market till further notice.
The interim order, which is not a show-cause notice, looked mainly at 18 days of the Jane Street group's derivatives trades in the Nifty Bank and 12 stocks of the sectoral index, and three days of similar trades in the benchmark Nifty 50. The probe will also look into other potential patterns besides the ones highlighted in the interim order, the source said.
Since the scope of SEBI's investigation is quite large, it is difficult to estimate how long it will take to complete, the source said. SEBI does not foresee any major market impact from its interim order, as delta-based or futures equivalent limits were recently put in place in index options to curtail excessive risk-taking without affecting regular participants.
The SEBI interim order had noted that the Jane Street group was part of the short-term algorithmic trading community. Any trading firm using an algorithm is responsible for the output of the algorithm, the source said. The Jane Street case highlights the need for better enforcement of existing regulations, as compared to just adding more regulations. Regulations cannot make up for poor enforcement, the source said.
SEBI will continue to monitor the equity derivatives market, particularly the continuing case of excessive concentration in short-term expiries and short-term trading, the source said. The regulator will nudge investors to long-term trading, hedging, and investments. Retail participation in index options trading on expiry day has moderated since SEBI implemented stringent measures in Oct-Nov, but the source said around 90% of retail investors continue to lose money. End
With inputs by Rajesh Gajra
Edited by Saji George Titus and Rajeev Pai
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