New York-based trading firm Jane Street Group is expected to argue that its controversial Indian options trades were motivated by strong demand from retail investors, according to a Bloomberg News report citing sources familiar with the matter.
The Securities and Exchange Board of India (SEBI) issued an interim order on July 3 barring Jane Street from trading in Indian securities, alleging manipulative strategies that caused losses for retail investors.
SEBI claimed that Jane Street manipulated the Bank Nifty index by purchasing large volumes of constituent stocks in the cash and futures markets to artificially boost the index in early trading—while simultaneously building short positions in index options.
However, SEBI lifted the ban last week after Jane Street placed $567 million in escrow. The firm said on Monday it had requested more time to formally respond to the interim order.
Jane Street is likely to argue that it was fulfilling demand from Indian retail investors for index options, even while operating with limited hedging. The firm reportedly spread its hedging activity across several hours on January 17, 2024—its most profitable trading day during the regulatory review period—to minimize market disruption.
Reuters could not independently verify Bloomberg’s report. Jane Street has not yet issued a public comment.