Sebi Investigation to Focus on Index Options Strategies of Jane Street

The index options strategies of Jane Street, the global algo trading giant, are the main focus of the investigations being carried out by the Securities and Exchange Board of India (Sebi), said sources.

- NESIL STANEY

The probe is based on complaints from institutional investors.

Headquartered in New York City, Jane Street is a quantitative trading firm and market maker, known for its sophisticated algorithmic trading strategies. It entered the Indian market in March 2020.

One such algo strategy caused sharp reversals in index option prices after Jane Street had taken positions. "It misled other investors to profit from induced volatility and price reversals," said a hedge fund manager, adding that at least nine institutional investors had written to Sebi on this matter.

The market regulator's probe extends to activities of JSI Investments, Jane's India business and Jane Street Singapore. The latter is also actively involved in India's F&O markets and uses similar strategies.