The Securities and Exchange Board of India (SEBI) has lifted its trading ban against US-based high-frequency trading market maker Jane Street, allowing the brokerage to trade once more in the Indian stock markets. The ban came after Jane Street deposited ₹4,844 crore into an escrow account, fulfilling an important compliance requirement.

The ban was initiated back in July 2025 for alleged manipulation of market positions, mostly in the derivatives space. After many months, Jane Street can only trade again with strict provisions by SEBI to monitor them and watch for suspicious trades. This case could have implications for how regulators will supervise market malfeasance as the financial market in India continues to grow, and algorithmic strategies and online trading app platforms play a larger role.

SEBI’s Conditional Approval of Jane Street

SEBI’s lifting of the trading restrictions on Jane Street is a cautious but significant step. The regulator weighed effective enforcement against market stability, given that Jane Street is a significant liquidity provider in index options and other derivatives.

Why The Ban Was Lifted

Jane Street complied with SEB’s order to deposit ₹4,844 crore into an escrow account as “illegally made profits” identified during the investigation. Jane Street also agreed to refrain from any trading in the options and cash segments until Jane Street provided a full breakdown as to how they traded.

Further, SEBI instructed the large exchanges, like NSE and BSE, to examine Jane Street’s trades in real-time. They now have an additional level of scrutiny as a high-frequency trader has compliance issues, with any deviation or unintended violation of the compliance potentially resulting in the original sanctions reinstated.

Timeline: Ban to Reinstatement

• July 3, 2025: SEBI releases an interim order banning Jane Street in Indian markets
• Mid-July: Jane Street meets escrow requirements.
• July 24, 2025: The ban is lifted, but under a strict regulatory framework.

In the early weeks of July, there was a significant loss of volume in derivatives trading for Nifty and Bank Nifty options. After Jane Street’s presence was established, market participants were hopeful for the return of some liquidity, but this time within a regulated environment.

Financial Compliance via Escrow Deposit

Jane Street’s central condition for return was its ₹4,843.57 crore escrow deposit. This money is placed in escrow and cannot be accessed by the company without Sebi’s permission, so it stands as a financial guarantee while the investigation is ongoing. 

It is SEBI’s approach to allow international financial institutions to operate in India, but not without having financial assurances to maintain the integrity of the markets.

Allegations of Market Manipulation

Underlying the allegations are claims that Jane Street involved itself in unjust trading practices to manipulate the Nifty and Bank Nifty indices.

Key Points from the Allegation: 

• The firm engaged in large expiry-day trades that distorted index prices
• They employed high-frequency trading techniques to pick off arbitrage opportunities in an unjust manner
• Some of the trades might have given false signals to other market participants, which can disrupt normal price discovery

If these acts apply on a global scale, they invite scrutiny, and SEBI’s decision has indicated a level of tough regulatory precedent.

Actions for Compliance Following Reinstatement

While Jane Street can, again, trade, its trading is contingent on certain restrictions. Jane Street is:

• Restricted from options and cash trading until further notice.
• Required to provide SEBI and exchanges with daily trade reports.
• Required to hire compliance officers and be audited.

These restrictions are in place to make sure that similar wrongdoings are not repeated and that the capital markets in India continue to function in an open and salient manner.

What This Means for the Indian Online Trading App Market

This is not just a reinstatement of one firm–it is a stress test for India’s regulatory regime.

Positive implications:

Market integrity: SEBI’s robust approach is a great boost to investor confidence.

Deterrent effect: Other high-frequency firms may tread a bit more cautiously.

Rule adjustments: Potential updates to trading rules, most notably with reference to expiry-day positions, may develop.

But perhaps the most important takeaway is the message this sends to domestic and foreign participants alike: Indian markets are open–but only to those who stick to the rules.

Industry and Media Reaction

Reuters Reporting

According to Reuters, weekly equity index options trading activity fell off a cliff in the wake of Jane Street’s ban, falling by 30-35%. This exemplifies Jane Street’s contributions to liquidity and arbitrage, where their absence can remove significant trading from the marketplace. If allowed back into the active trading community, it would help boost this section back to life albeit under a greater microscope.

Industry Response

The vast majority of brokers and financial professionals reacted to SEBI’s balanced approach positively. In contrast, some believe that strict penalties should be imposed to deter similar behaviour in the future. Janel Street must not only build back the trust it lost, but also demonstrate that it will employ more transparent methods moving forward.

Establishing New Benchmarks for Fair Play

Using escrow mechanisms, trading bans, and extensive surveillance may become the new norm in India for dealing with market misconduct, and SEBI is not just responding to a single situation but influencing the future of financial regulation in India. 

This case is being monitored globally as a potential template for how emerging markets could manage to take advantage of growth while dealing with governance issues in a complicated financial environment.

Tradex.live: A transparent alternative in Indian trading

The Jane Street incident illustrates the drawbacks of a non-transparent high-frequency trading system, and Indian traders are looking for platforms that value transparency, control, and compliance.

One platform that shares this vision is Tradex.live—a next-generation platform that is quickly establishing itself as the best online trading app in India due to its user-first framework and full-stack ecosystem.

What are the key differentiators?

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Up to 500x Margin: Catering to the risk-taking high-leverage trader, this product comes with tools to manage risk effectively.

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No KYC Required: Start trading immediately with minimal onboarding.

Tradex.live is built for the modern trader who wants power and freedom without compromising trust. At a time when traditional financial institutions are tightening their grip on advanced, complex trading strategies, Tradex.live provides a simple yet sophisticated solution. Substituting complex trading for email and text, the process can be confusing, hard to track and not always accessible.

Conclusion

The case with Jane Street is a watershed moment at the nascent stage of Indian capital markets. While India exemplifies an attitude of hospitality to global financial giants, it exemplifies that it will act decisively to maintain the integrity of the marketplace.

For traders—both retail and institutional—the lesson is clear: transparency and accountability in their operations will be expected. And for those seeking to participate in India’s vibrant markets without seeking to avoid regulatory implications, consider online trading app options such as Tradex.live, which integrates sophisticated tools with a compliance orientation.
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