Regulation 3 July of the Indian Council for Securities and Exchange (SEBI) draws on detailed market data and emphasizes the formulas in banking skill shops, impact on prices and rapid reversal, claiming that Jane Street’s behavior has crossed the boundary of aggressive arbitration into manipulation.
Experts believe that Jane Street could face accusations of sebi with transparent logic and data. After repeated warnings, it can also rely on regulatory dialogue. They believe that this case could redefine the legal threshold of the “manipulative intention” under Indian law and the razor thin boundary between legal arbitration and market abuse.
On July 3, the regulatory body banned four entities of a business company based in the USA from access to the securities market and is waiting for the imposition of alleged illegal profits to the custody account.
The 105-page order of the regulatory body carefully describes in detail how Jane Street allegedly used the dynamics of expiration in index derivatives-in-charge of large positions and then moving prices in cash and futures to benefit her book book.
According to Sebi, the company’s behavior, especially in bank stores, included rapid reversal and price impacts that meant “manipulation of prima facie”.
On January 17, 2024, Jane Street trading at Bank Nifty Stocks and derivatives was unusually high and unique, showing a coordinated formula.
According to the temporary order Sebi, the total gross value of the traded Jane Street in cash, futures on stocks and bank nifty index Futures born £10 657 crore – five times at the previous day level.
During the morning meeting, Jane Street was the largest buyer to a clean buyer £4 370 crore, far bearing others. Its shops represented 15-25% of market value in key shares, with a significantly aggressive price impact.
Defense of Jane Street
Jane Street was forcibly pushed back. In an internal note sent after the order, the company said: “We want to be obvious that we will reject the assumption and essence of the order in the strongest possible conditions.”
The memorandum called the regulator the language of “extremely inflammatory” and insisted that the business activity that SEBI marked – especially the first eight minutes of trading 17 January 2024 – was nothing but “basic arbitration trading that many of you will know as a core and a common financial market mechanism that maintains related tools.”
The company claimed that such an activity is “clearly good for the health of financial markets” and stated that the command “ignores the role of liquidity and referees in the markets”.
The case has launched a debate between legal experts on where the border lies between legitimate arbitration and market abuse – a problem that, under Indian law, could redefine the legal threshold of the “manipulative plan”.
Legal specialists say this defense is facing a steep climb.
Ravi Prakash, an associated partner in corporate specialists, notes that the arbitration proceedings are not universal shields: “Only the claim for arbitration will not be enough. Sebi’s own data on large banking baths, delta exhibitions and rapid reversals that are not designed on Missie were not designed for missions that were not designed to be intended to move. They move, “they were not available to move,” they were moving, “” Mose, “were not available to move,” there were no moves that had that were not designed, “they were moving,” “They were moving,” “they did not understand.” to move.
He adds that Sebi has already exceeded Prima Facia’s obstacle according to the civic level of prevalence; The burden is now moving to the merchant to “analyze the same chorus again and offer a benign explanation.
Prakash also warns that the regulator dialogue reduces both ways. Sebi has quoted a warning letter of the National Stock Exchange (NSE) since February 2025, which has marked the formula itself, which is still visible in May. “The dialogue only helps when a visible change is followed,” he says, suggesting that Jane Street must show what has changed after the warning and why these improvements eliminate the risks of market integrity.
Evidence
The company indicated that it could withhold certain algorithmic details of proprietary reasons, but the courts could enforce publication if transparency was considered essential.
While Prakash focuses on evidence of obstacles, other lawyers suggest that the alleged Jane Street strategy resembles a manipulative trick of the “textbook” and questioning economic justification.
Akshaya Bhansali, partner of Mindspright Legal, Homes in On Motive. “Crux is whether the shops have created a fake and misleading look,” Bhansali said, adding that the defense must give a sufficiently robust justification to survive the forensic control.
In her view, the pragmatic first step would be to impose 5% of the contested profits and seek a stay before the Court of Appeal for securities, a step that “exert pressure on the regulatory body without admitting liability”.
Over the past three years, the Court of Appeal (SAT) has turned 15-22% of SEBI orders annually and sent back 8-18% for review, which means that most of them are followed. Remarkable twists are computers with a broker of the carva and Satyam.
Legal experts also indicate that the case suggests subjectivity in ‘incorrect price’ and potential geopolitical undertones.
Chirag M. Shah leads lens for markets with microstructure. He admits that the “arbitration of simple vanilla” may look dramatic on expiry days, but emphasizes that incorrect prices are subjective. “What I say badly valuable, maybe not. The directional tone penetrates,” he says. Large expiry stores could only disrupt the price level for a short time, but the damage-options for options to the option-beyond being permanent.
If Jane Street algorithms were really vanilla, Shah jokes, “Everyone on the planet would be rich”. It also indicates geopolitical support: Cross -border friction can increase control heat when the foreign company is connected. “Sometimes, when things between countries are sour, businesses in jurisdiction of others become damage to collateral,” he notes, suggests that international business dynamics and even geopolitics can complicate regulatory measures.
Finally, the model evidence exceeds rhetoric; Shah only said granular, time -marked data that now surrounds the strategy surrounding the strategy, Shah said.
Smithi Nair, a partner of Juris Corp, emphasizes the focus of Sebi on apparently irrational cash losses, which served a greater payment of possibilities. Regulatory bodies, she said, may consider these losses as the “malfid costs” for the fraudulent scheme. Therefore, Jane Street must show not only the absence of a project, but also a coherent strategic document that shows how each leg supported legitimate prices.
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