Algorithmic Trading and India’s SEBI Allegations Against Jane Street

On July 3, 2025, India’s Securities and Exchange Board (SEBI) imposed a trading ban on Jane Street, and froze $565 million of its assets, alleging that the US-based proprietary trading firm manipulated India’s markets through algorithmic strategies.

FTCI Consulting reports that India’s investigation into Jane Street was triggered by a 2024 US trade-secrets lawsuit, Jane Street Group, LLC v. Millennium Management LLC, Douglas Schadewald, Daniel Spottiswood, in the Southern Federal District of New York.

The SEBI’s follow-on litigation has prompted a global debate over the boundary between legitimate high-frequency trading and market abuse in highly liquid but structurally imbalanced derivatives markets.

The trading ban centers on India’s unique market environment.

As of April 2025, India accounted for 61% of global equity options contracts, with India’s Bank Nifty index a dominant driver.

On certain days during weekly options expiry periods, turnover in Bank Nifty options reached a 350:1 ratio compared to underlying stock trades. This imbalance provided fertile ground for strategies that linked the deep options market to a relatively shallow cash market.

SEBI’s inquiry focused on 18 expiry-period trading days in 2024.

The board’s interim order alleged Jane Street used large intraday stock and futures trades to temporarily move the index, then reversed those trades to benefit its short options positions.

The regulator also cited sustained late-day selling designed to depress settlement prices, so-called “extended marking the close” tactics.

Together, these patterns allegedly generated $565 million in unlawful gains.

Jane Street denies wrongdoing, asserting its conduct was standard index arbitrage providing liquidity, and that multi-entity trading was lawful tax structuring.

Attorneys involved with trading entities and publicly traded companies with vulnerable stock should anticipate heightened global scrutiny and prepare for regulators to reconstruct multi-entity trading strategies by employing advanced data analytics.

FTCI anticipates “heightened global regulatory scrutiny on algorithmic and high-frequency trading.” Proactive engagement of forensic analysts and regulatory counsel will become increasingly essential.