Jane Street to cite retail investor demand in defence of India trades: report
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New York-based trading firm Jane Street Group is reportedly preparing to argue that its contentious trading activity in India was driven by high demand from retail investors, according to a Bloomberg News report citing people familiar with the matter.
This comes in the wake of a July 3 interim order from the Securities and Exchange Board of India (SEBI), which accused Jane Street and its affiliated entities of manipulating the Bank Nifty index.
The regulator alleged that the firm purchased large volumes of Bank Nifty constituent stocks in both the cash and futures segments to artificially prop up the index during morning trading, while simultaneously taking short positions in index options — a move SEBI said harmed retail investors.
In response to the order, SEBI initially barred Jane Street from trading in Indian markets.
However, the restriction was lifted last week after the firm deposited $567 million in an escrow account.
Jane Street stated on Monday that it has requested more time to respond to SEBI’s interim order.
According to Bloomberg, the firm is expected to argue that its trades were designed to accommodate retail investors' interest in options trading, despite the resulting positions being largely unhedged.
The report adds that Jane Street may highlight its less aggressive hedging strategy in India compared to other markets.
On January 17, 2024 — reportedly the firm's most profitable trading day during the nearly two-year period under SEBI's review — Jane Street is expected to say it intentionally spread out its hedging activity over several hours to minimize its impact on the market.
