Mumbai: New York-headquartered trading major Jane Street Group has reportedly deposited Rs 4,843.50 crore in an escrow account in favour of Securities and Exchange Board of India (SEBI) — as directed by the capital markets regulator after it barred the US firm from Indian stock market for indulging in manipulative trading practices that allegedly enabled the company to make unlawful profits.
Earlier this month, the market regulator banned the Wall Street firm from trading in the Indian market till it deposits the Rs 4,843.5 crore in an escrow account.
The firm has now deposited the amount, according to multiple reports on Monday. SEBI or Jane Street were yet to comment on reports.
In an interim order, the SEBI alleged that global trading firm Jane Street was deliberately manipulating the index through a series of trades that it said lacked “plausible economic rationale.”
SEBI called it a case of “intra-day index manipulation,” flagging what it described as aggressive, unhedged positions in Nifty Bank options and other instruments.
The SEBI investigation is expected to take another 6-9 months before a final report and show cause notice will be issued to Jane Street.
The markets regulator described it as “non-neutral trading behaviour”, a strategic attempt to influence prices rather than simply engage with the market. And the tactic wasn’t random; it followed a well-known play in the trading world, which is termed “marking the close.”
Jane Street is a proprietary trading firm, which means it trades with its own capital rather than managing client funds. The firm allegedly made a staggering Rs 32,681 crore in profits by manipulating the Indian stock market and repatriating the amount overseas.
The US firm is understood to have used an extended ‘marking the close’ strategy — placing large and aggressive buy or sell orders near the end of the trading session, with the intention of artificially driving up the closing price of a stock or index. It later allegedly dumped these stocks with aggressive selling to rake in a quick profit, which caused the price to crash and losses to those holding the stocks.
Jane Street disputed the findings of SEBI’s interim order. In its response, Jane Street said ”We reject the premise and the substance of the order in the strongest possible terms”.
