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Product cover image for Jane Street and SEBI: Regulating a Critical Market Participant

Jane Street and SEBI: Regulating a Critical Market Participant

Shalini Talwar, Amandeep Dhir, Anubhav Roy

Product #:W48836
Supplier:Ivey
Discipline:Finance
Setting:India, 2025
Details:Case (PDF) • 12 pages • 2026-08-17

Subjects:

Finance and investing

Industries:

Financial service sector

Geography:

IndiaAsia
Your Price:$10.54

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In July 2025, India’s market regulator, the Securities and Exchange Board of India, imposed a high-profile trading restriction on Jane Street Group, a leading high-frequency trading firm. The firm was accused of deploying manipulative derivatives strategies, including the “Intra-Day Index Manipulation Strategy” and the “Extended Marking the Close Strategy,” causing losses to counterparties and retail investors. The interim order directed Jane Street Group to deposit into an escrow account ₹48.4 billion, which amounted to unlawfully gained profits from the alleged manipulation. The ban disrupted trading volumes and exposed the Indian stock market’s reliance on liquidity from sophisticated algorithmic traders. Jane Street Group denied wrongdoing, defending its stock trading as standard index arbitrage and calling the investigation flawed. The regulator was facing a challenging dilemma. How could it ensure and maintain market integrity while preserving critical liquidity from major traders in India’s growing derivatives market.

Learning Objectives

This case is suitable for courses in securities analysis, portfolio management, derivatives trading, financial or capital markets, and market regulation at the undergraduate, graduate, and executive or professional development levels. After working through the case and assignment questions, students will be able to do the following:

  • Distinguish between legitimate arbitrage and manipulative trading by deconstructing trading mechanics, incentive structures, and market conditions that can blur the line between efficiency-enhancing strategies and market abuse.
  • Assess the institutional, market, and systemic constraints that create tensions in regulatory decision-making, particularly when enforcement actions involve large systemically critical market participants.
  • Evaluate structural vulnerabilities in derivatives and other high-leverage markets that enable technologically sophisticated traders to influence prices, and analyze how differences in regulatory frameworks can facilitate or deter manipulative practices.
  • Deliberate on potential policy initiatives and regulatory measures that balance liquidity, market integrity, fairness, and market efficiency in forward-looking market design.
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Case Study: Jane Street and SEBI: Regulating a Critical Market Participant (English version) | Ivey Publishing