SEBI probe in Jane Street not over, will focus on other indices, exchanges, patterns

Mumbai: Capital markets regulator SEBI's investigations into the Jane Street matter are set to continue even after the interim order, sources said on Friday.

Stating that SEBI has only gone into 18 days of prima facie Banknifty and three days of Nifty index manipulations on expiry days till now, the sources said the probe will now focus on other expiry days, other indices including trades on other exchanges and other potential patterns.

The sources, however, did not give any timeline on how long would the investigation take, and added that "scope (of investigation) is quite large".

In an order released in the early hours of Friday, the market regulator has found Jane Street, a New York-based hedge fund, guilty of manipulating the indices by taking bets in the cash, and, futures and options markets simultaneously for making handsome gains.

It has suspended the hedge fund from accessing the market and impounded over Rs 4,843 crore in gains. The probe has found that JS made a profit of Rs 36,671 crore on a net basis during the probe period from January 2023-May 2025.

The SEBI sources seemed to be pitching for avoiding a reaction where the revelations lead to more regulations and instead pitched for better enforcement.

"Better enforcement of existing regulations can in fact pave the way for optimal regulation. On the flip side, more regulations cannot make up for poor enforcement," they said.

The regulator will continue to monitor the futures and options space from the perspective of ensuring investor protection, market stability, and support for sustained capital formation, the sources said.

SEBI actions on the derivatives space following studies pointing to higher losses suffered by retail investors have "somewhat moderated" retail activity on expiry days, 90 per cent of the trades continue to lead to losses, they said.

"There appears to be still too much of concentration in short-term expiries and short-term trading. Extending maturities and nudging more long-term trading, hedging, and investments would be ideal for our ecosystem," they said.

Even though the stocks of brokerages like Nuvama and Angel One, and also the equity bourse BSE witnessed an impact on Friday, the sources said they do not expect any major impact of this enforcement action.

They explained that the revised rules set in recently on the delta-based (future equivalent) limits are now in place in index options to curtail excessive risk taking without impacting regular participants.

"In the long run, the growth in market confidence, and a free and fair market, should aid responsible investing and capital formation," they said.

Ahead of what is expected to be a protracted legal tussle, the SEBI sources also made it clear that every user of an algorithm is responsible for the output of the algo.