Securities and Exchange Board of India (SEBI) today banned the US-based trading firm, Jane Street, and this took a toll on the capital market players in India, such as BSE, CDSL, Angel One, and others. The Jane Street Group and its subsidiaries or affiliates will not be allowed to assess the Indian securities market from now onwards. This ban has been imposed due to illegal profit-making by Jane Street, as indicated by SEBI.
What does SEBI say about Jane Street in its 105-page interim order?
SEBI has announced that Jane Street and its affiliates have raked in around ₹4840 crore of illegal gains from manipulating market indices in India. SEBI has already directed the banks to freeze all accounts of Jane Street so that they cannot withdraw any amount without permission from the regulator and other authorities.
The market watchdog also mentioned that until further notice, Jane Street will be prohibited from any market participation and activities. It is not a decision taken within a day, but after months of scrutiny, SEBI has concluded the report and the ban order.
SEBI has asked Jane Street to deposit the amount they have raised, which is ₹4843.5 crore.
Jane Street’s Manipulation Technique
SEBI has found out that Jane Street used index manipulation techniques for the Bank Nifty, especially, and also for the Nifty 50 index. It has already identified 18 such trading sessions in which these indices were manipulated. In 15 instances, Bank Nifty was manipulated, while in the other three, Nifty 50 was manipulated. Jane Street Group and its affiliates used an aggressive buying and selling method to manipulate the indices.
On the expiry days of Bank Nifty, the US-based trading firm used to buy an exponential quantity of stocks and futures of Bank Nifty or Nifty 50, which used to push the stock prices upward in the morning session. Then in the second half, they used to sell these stocks and futures in heavy quantities, raking profits in between using options positions.
Share Market Impact
This ban by SEBI on Jane Street has caused some of the capital market players to fall during today’s trading session. Bombay Stock Exchange (BSE), Central Depository Services Limited (CDSL), Angel One, Motilal Oswal Financial Services, Edelweiss Financial Services, and a few others stumble today.
The BSE share price dropped by 7.07% to ₹2620.80 per share at around 3 p.m. Angel One share price dropped by 6.20% to ₹2767.60 per share, followed by CDSL share price dipping around 2.57% to ₹1758.50, followed by Motilal Oswal, which dropped 1.35% to ₹916.55, and so forth.
Source: Mint
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