Key Points

"This interim order is not a Show Cause Notice, and it clearly indicates that investigations into Jane Street will continue. This interim order has only looked at the 18 major days of prima facie BANKNIFTY index manipulation on expiry day during the examination period (January 2023 to March 2025), and 3 days of NIFTY index manipulation on expiry day during May 2025," sources said

Sources added that investigations into other expiry days, other indices (including across exchanges), and other potential patterns besides the two highlighted in the order will need to continue.

"It is difficult to estimate how long all this could take - the scope is quite large," the sources asserted.

Further, the sources said there should not be any major market impact from this enforcement action against the Group.

"In any case, 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," the sources supplemented.

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

The sources reassured that the markets regulator will continue to monitor Indian F&O markets from the perspective of ensuring investor protection, market stability, and support for sustained capital formation.

"While retail participation in index options trading on expiry day has moderated somewhat in recent times, around 90 per cent of them continue to lose money. 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," the sources noted.

SEBI in its 105-page interim order noted that the Group used a profit maximising scheme to manipulate the market and booked substantial profits in index options, while incurring smaller losses in the cash and futures segments.

SEBI interim order further stated that Jane Street Group entities, despite caution letters from NSE in February 2025 and their own commitments to refrain from certain trading behaviours, continued to deploy the same high-risk and market-distorting strategies.

- ANI