SEBI’s Ban on Jane Street May Hold for Now, Say Legal Experts

Global high-frequency trading giant Jane Street, recently banned by SEBI from trading in Indian securities, may face a long legal road ahead before seeing any relief. According to legal experts, an immediate stay on SEBI’s interim order is unlikely, though the case could be expedited through a directive from the Securities Appellate Tribunal (SAT).

Last Friday, SEBI issued a strong interim order banning Jane Street and its Indian arms from participating in the Indian markets. The order also seeks to impound ₹4,843.5 crore, citing alleged manipulative expiry-day trading practices involving cash and futures segments to distort options pricing.

No Instant Relief, Say Legal Minds

Lawyers well-versed in securities market regulation believe that SAT may not grant a stay but could instead ask SEBI to issue a final order within a specific timeframe.

“At the appeal stage, the first outcome could be a direction to SEBI for a time-bound disposal in the form of a final order,” said Jayesh H, co-founder of Juris Corp Advocates & Solicitors.

This legal approach is not new. SAT has, in past cases, instructed SEBI to issue a conclusive ruling while ensuring the affected party gets a fair hearing.

Allegations of Manipulation and Market Distortion

SEBI’s order claims that Jane Street engaged in a manipulative trading pattern, especially around the expiry day close. It states that the firm’s trading activities were “prima facie manipulative” and aimed at artificially influencing index prices for unfair gains.

“The trading pattern reflects extended marking-the-close activity,” the order says, pointing toward intentional index manipulation.

Legal Threshold for Proof Still High

However, some legal experts feel that proving market manipulation under Indian law is not straightforward.

“The order leans heavily on circumstantial indicators like timing and market impact,” said Sumit Agrawal, founder of Regstreet Law Advisors and a former SEBI legal officer. “But without direct proof of intent or artificial price creation, the case may not hold strong in court.”

Jane Street’s Response: Denial and Disappointment

Jane Street has denied all allegations, stating in an internal communication that the disputed trades were part of “basic index arbitrage trading”. The firm expressed disappointment over SEBI’s “extremely inflammatory” accusations and said it is working on a formal legal response.

The company is likely to argue that its trading model was rule-based, transparent, and executed through proper exchange channels. It may also raise questions about procedural fairness, given the ex-parte nature of SEBI’s action.

If Jane Street can establish that the trades were lawful and lacked manipulative intent, it may be able to obtain relief from the SAT in due course.

Also Read:  Jane Street Hit with Rs. 4,800 Cr Penalty—No Relief Yet for Indian Investors

What’s Next?

As things stand, Jane Street is preparing to challenge the SEBI order, but the path to relief appears procedural and time-bound, rather than immediate. The legal battle ahead could set an important precedent for how algorithmic and high-frequency Indian regulators view trading in the future.

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