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22-07-2025
Bureau Report
NEW DELHI: Indian tax authorities and market regulator are considering widening their probe of United States trading giant Jane Street Group to investigate it for tax evasion in addition to an earlier charge of price rigging in the Bombay Stock Exchange’s benchmark Sensex, according to media reports.
The tax evasion charge comes on the heels of market regulator, the Securities and Exchange Board of India (SEBI), seizing 48.43 billion rupees ($570m) and banning four Jane Street-related entities from operating in the market for alleged price manipulation in the National Stock Exchange (NSE).
SEBI’s order has roiled the Indian markets, raising questions about regulator surveillance and investor protection in the world’s largest options trading market. Trading in India’s weekly equity index options has slumped by a third on the ban on Jane Street, the Reuters news agency reported on Thursday.
Trading of equity options lets investors buy or sell a stock at a predetermined price and date. As the Indian market rapidly grew to handle more than half of all global options trades, retail investors entered the market too.
Questions of price manipulation have dogged this rapid rise but remained vacuous until a New York court case in April 2024, where Jane Street alleged that its rival, Millennium Partners, had stolen its algorithms that helped it make in the Indian options market. A whistleblower, Mayank Bansal, then made presentations to SEBI showing Jane Street’s trading patterns. Bansal had agreed to speak to media about his interaction with SEBI on the matter, but then backtracked.
On July 3, in a detailed interim order, the regulator said that “by preponderance of probability, there is no economic rationale that can account for this sudden burst of large and aggressive activity … other than the intent to manipulate the price of securities and index benchmark”.
SEBI has alleged that Jane Street accumulated large long positions in stocks that are a part of the NSE’s Bank Index and built large short positions in index options at the start of trade. Around market closing time, it would reverse its trades in the cash and futures segments, pushing down the index and earning large profits in the options segment.
This activity was blurred by its offshore entities making some of these trades.
“Lawyers (can) push back with SEBI on jurisdiction-related issues but when underlying (Indian) securities are issued, SEBI can take action,” Joby Mathew, managing partner at the law firm Joby Mathew and Associates and a former legal officer at SEBI, told media.
Jane Street has disputed SEBI’s findings and has hired lawyers to represent it before SEBI in the case. It has deposited the 48.43 billion rupees ($563m) of allegedly ill-gotten gains in an account pending the investigation and final report.
“Such processes typically take eight to 24 months,” especially in “complex manipulation cases”, Sumit Agarwal, a former SEBI officer and cofounder of Regstreet Law Advisors, told media in an emailed response but the investigation can only be part of a broader questioning of Jane Street and the regulator’s role in identifying and curbing such trades sooner and protecting retail investors.
‘Highly speculative and volatile’
As India’s options market grew, retail investors were drawn to it, enticed by the growing volumes, the prospect of quick gains and less fettered trades than the equities market, where a rapidly rising stock could hit circuit breakers, leading to a halt in trading to prevent manipulation.
