Jane Street deposits $560mn in step to elevate India buying and selling ban | USAEMALL.com

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Jane Street has deposited more than $560mn of what India’s markets regulator has called “illegal gains” in an escrow account to comply with an order that temporarily banned the company from trading securities over alleged market manipulation.

The Securities and Exchange Board of India said on Monday that Jane Street had informed the regulator that Rs48.4bn ($564mn) had been “credited to an escrow account with a lien marked in favour of Sebi”.

The deposit is a precursor to lifting a trading ban imposed by Sebi on the New York-based firm this month over what the regulator called a “sinister scheme” to manipulate stocks and derivatives in the country.

The order threatened Jane Street’s lucrative trading business in India, where it has netted more than $4bn in profits over the past two years.

The company has denied any wrongdoing and told staff in an internal memo last week that it would contest Sebi’s findings, arguing that its activity in India’s stock and options markets was “basic index arbitrage”, the Financial Times reported.

Sebi said the trading firm had asked the regulator to lift the ban and that the request was under consideration.

Jane Street said the deposit was “undertaken by them without prejudice to their rights and remedies which remain available to them in law and equity”, according to Sebi.

Sebi’s order focused largely on Jane Street’s activity around the National Stock Exchange’s banks index and its corresponding options. The regulator argued that Jane Street was manipulating the index through stocks to earn a profit on options tied to the benchmark.

Under Indian law, the US trader could face a fine up to three times the $560mn of “illegal gains” if Sebi’s findings are proven true.

The regulator has pressed ahead with investigations into Jane Street’s activities in other indices and exchanges, which could unearth more “illegal gains”, said a Sebi official close to the probe.

Sebi has been concerned about a frenzy of activity in the country’s derivatives market over the past few years. It noted in a report last week that the number of retail investors in the market had more than doubled in the past three years to 9.6mn.

More than 90 per cent of the investors have lost money, according to the regulator, with cumulative losses topping $33bn.