• Jane Street has been banned by SEBI from the Indian securities market for alleged manipulation.
• The Securities and Exchange Board of India has impounded $567 million from Jane Street.
• The regulatory body accuses Jane Street of orchestrating price fluctuations for profits.
• Jane Street disputes the findings and plans to respond to SEBI's order.
• This is a significant regulatory action marking one of the strictest measures against a foreign trading firm in India.

India's Securities and Exchange Board of India (SEBI) has officially banned the U.S.-based trading firm Jane Street from accessing its securities market due to alleged market manipulation. The ban was imposed following an extensive investigation, which concluded that Jane Street had manipulated stock indices through its trading activities. SEBI's interim order, issued on July 3, prohibits Jane Street from buying, selling, or engaging in any securities transactions in India, and specifies that the ban will last until investigations are completed, according to IndiaTimes and Reuters.

SEBI's decision is described as its most stringent action against a foreign trading entity, involving the seizure of approximately $567 million, which the regulator claims are "unlawful gains" from Jane Street's trading practices. Jane Street is accused of taking large derivative positions to manipulate the Bank Nifty index, causing misleading market appearances that benefitted their trading positions. The firm has disputed these findings and vowed to engage further with the regulator, stating, "Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world," according to IndiaTimes and TRT Global.

The regulatory action follows SEBI's investigation that revealed Jane Street had manipulated market prices to create profits from significant index options holdings. During their trading activities, Jane Street allegedly bought large quantities of stocks to artificially elevate the index before selling these at profit-generating price points. This pattern of trading, described as "marking-the-close," was identified as a systematic manipulation strategy aimed at extracting profits at the expense of smaller investors who were misled by inflated market conditions, according to Reuters and IndiaTimes.

In its findings, SEBI reported that Jane Street's actions reflected a pattern of extensive and aggressive trading designed to affect index calculations deliberately. This involved maintaining large risk exposures when the derivatives were due to expire, hence influencing market prices in their favor. Analysts have noted that while Jane Street's operations have contributed significantly to the Indian financial landscape, such allegations could raise concerns about compliance among foreign trading firms in India. SEBI's strong stance serves as a warning to other market participants about the seriousness of regulatory compliance, according to TRT Global and IndiaTimes.