Jane Street resumes operations in India; BSE, CDSL and other capital market stocks rally

Shares of capital market service providers BSE, Central Depository Services, and others rallied on Monday, July 21, amid reports of Jane Street being allowed to re-enter Indian markets after depositing alleged unlawful gains of ₹4,844 crore in an escrow account before a July 14 deadline.

SEBI has directed the National Stock Exchange (NSE) and BSE to closely monitor the firm’s future positions and trading activity. Jane Street and its associates have also been instructed to avoid any manipulative trading patterns flagged in SEBI’s interim order dated July 3, the report stated.

Jane Street Group and its associated entities had been barred by the market regulator from accessing the securities markets, as per the July 3 interim order in the alleged matter of index manipulation by the group.

SEBI had said that the entities are prohibited from buying or selling securities, directly or indirectly.

SEBI’s investigation had revealed that on 14 separate expiry days, Jane Street entities followed a consistent strategy. In the morning, they would aggressively buy Bank Nifty futures and stocks in the cash segment, while simultaneously selling large volumes of Bank Nifty options.

Post-noon, the strategy reversed—Jane Street would aggressively sell Bank Nifty futures, which SEBI alleges was aimed at dragging the index lower ahead of the day’s close.

The aim, SEBI suggested, was to engineer a softer index close, allowing the firm to book gains on their short positions in options.

On January 17, Jane Street bought Bank Nifty futures worth ₹4,370 crore in the morning and simultaneously sold options worth ₹32,115 crore. In the second half of the trading day, they reversed their futures position, selling ₹5,372 crore worth of Bank Nifty futures.

This activity resulted in a peak short options position worth ₹46,620 crore.