SEBI to continue probing Jane Street's trades in other indices, expiries, patterns

The Securities and Exchange Board of India's (SEBI) investigation into Jane Street is expected to be a long-drawn affair as it continues to probe into the US-based firm's trading activities in other indices across exchanges, more patterns and expiry days, according to SEBI sources.

Investigations into other expiry days, other indices, including across exchanges, and other potential patterns besides the two highlighted in the order will need to continue. This interim order is not a show cause Notice, and it clearly indicates that investigations into Jane Street will continue, a source, aware of the matter, said.

Expiry scrutiny

The interim order, passed early morning on Friday, has only looked into trades on 18 major expiry days of the Bank Nifty index from January 2023 to March 2025. Meanwhile, it observed 3 days of Nifty 50's expiry days in May 2025.

However, the final order or show cause notice could take anywhere from six months to a year as it requires analysing a substantial amount of data. It is difficult to estimate how long all this could take the scope is quite large, the source said.

The algorithms used by the firm are also being looked at, as every user of an algo is responsible for the output of the algo.

Market impact

Regulatory sources said they don't expect any major market impact from this enforcement action, especially since delta-based limits have been in place since July 1 in index options to curtail excessive risk-taking without impacting regular participants.

In fact, even after an order of this magnitude, the regulator is keen on better enforcement through surveillance rather than tighter regulations to curb systemic risks, sources said.

However, the regulator will continue to monitor Indian F&O markets from the perspective of ensuring investor protection, market stability, and support for sustained capital formation, as around 90 per cent of retail investors continue to make losses, as per the latest data, the source said.

There appears to be still too much concentration in short-term expiries and short-term trading. Extending maturities and nudging more long-term trading, hedging, and investments would be ideal for our ecosystem, SEBI sources said.

Once the investigation is complete and Jane Street replies to SEBI's show cause, the regulator will move ahead with a confirmatory order.

www.thehindubusinessline.com, dt. 05-07-2025