MUMBAI: The markets watchdog Sebi has reportedly lifted the trading ban it had on July 3 imposed on the New York-based proprietary trading giant Jane Street after it had last week deposited Rs 4,843.5 crore that the regulator had sought to disgorge from it.
“Jane Street is back in action in the market and has resumed trading,” a market source told the TNIE on Monday.
“After all it was logical for the trading ban to be lifted as the Sebi’s interim order clearly mentioned that if the company paid up the designated amount on or before July 14, the ban would be lifted,” the source explained.
While Sebi did not respond to calls to confirm or deny whether it has formally lifted the ban or not, and Jane Street India could not be contacted.
On July 3, the Sebi in a 105-page interim order along with 500-odd pages in annexures had banned the algo trading giant for gaming the market, especially the index derivatives.
At Rs 4,843.5 crore in penal charges or disgorgement, this is the largest ever penalty that the Sebi has imposed on any entity under its watch.
According to the order issued by the whole-time member Anantha Narayan G, Jane Street had made huge illicit gains by its pumping and dumping strategy in Bank Nifty component stocks on 21 expiry days falling between January 2023 and May 2025 and had made a whopping Rs 36,005 crore in net income from these trades alone. Of this Sebi considers Rs 4,843.5 crore are illicitly gained therefore has to be disgorged.
Its strategy was to jack up prices of Bank Nifty stocks in the morning and by afternoon bring the prices down and in the wake also pull down the Bank Nifty and pocket huge gains from short positions in the derivatives.
Sebi while imposing trading ban had frozen Jane Street’s local assets and ordered banks to freeze its accounts and also halted all securities transactions.
The interim order made it clear that the trading could resume only if Jane Street deposited an equivalent amount into a dedicated account under Sebi control.
On Jul 14, Sebi has issued a statement saying Jane Street had as directed the deposited amount in an escrow account opened in the name of Sebi.
Despite the move, both Sebi and Jane Street have yet to make any public comments.
The classic pump-and-dump strategy was carried out by four local units of Jane Street. According to Sebi, the move misled retail investors and resulted in an unlawful gain of Rs 36,005 crore
Jane Street while paying up said legal remedies were on its table and denied all the charges that Sebi had made on them in a note to employees but has not come out officially. It defended its trades as standard index arbitrage, a legal and widely accepted strategy in global markets.
The matter may head for a legal showdown at the Securities Appellate Tribunal, where the firm can challenge the Sebi’s interim order which had also warned of additional penalties if the gains were proven illegitimate, including fines up to three times the amount earned.