The article discusses allegations surrounding Jane Street, a New York-based quantitative trading firm, which has been accused by India’s Securities and Exchange Board (Sebi) of manipulating the stock market. Sebi claims that Jane Street’s trading activities have adversely affected small investors by creating misleading stock prices.
The firm, which employs over 3,000 people and was responsible for more than 10% of North American stock trading in 2023, allegedly conducted dubious transactions in both cash and derivatives markets, particularly involving India’s Bank Nifty Index.
Regulators assert that Jane Street’s method involved buying large amounts of bank shares to inflate prices, while simultaneously betting on their decline, leading to losses for unsuspecting investors. Sebi described these actions as creating a “false or misleading appearance” and a temporary spike that lured investors into unfavorable trades.
In response to the allegations, Jane Street has voiced their disappointment and plans to challenge the order, claiming they were engaged in legal index arbitrage. Critics, however, argue that their actions go beyond legal trading practices.
The consequences of these actions are significant, with allegations stating Jane Street made $4.3 billion in India over two years, while retail investors suffered considerable losses. Sebi is reviewing Jane Street’s request to lift the trading ban, which remains in effect, pending further investigation into the allegations of market manipulation.
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