After taking motion towards US-based proprietary buying and selling agency Jane Avenue for allegedly utilizing manipulative buying and selling methods, market regulator Sebi has now turned its focus to different international high-frequency buying and selling (HFT) companies working in India. The regulator is carefully inspecting their buying and selling patterns within the home inventory markets to find out whether or not comparable questionable methods had been used, based on sources.
This transfer indicators the regulator’s intent to tighten oversight of advanced algorithm-driven buying and selling, particularly by international gamers who account for a major chunk of the volumes in India’s derivatives market. The regulator has requested NSE and BSE to analyse trades of those international HFT and quant companies, a supply mentioned.
“Sebi is wanting into the transactions of different massive international high-frequency buying and selling (HFT) corporations and quantitative buying and selling companies to establish if additionally they behaved in an analogous method. It’s troublesome to say when, whether or not and what motion shall be taken,” mentioned the supply.
Emails despatched to the Sebi, NSE and BSE didn’t elicit any response.
On July 3, Jane Avenue group was barred by the Securities and Change Board of India (Sebi), for allegedly indulging in buying and selling patterns which raised critical issues over market integrity, significantly across the expiry of index derivatives.
Among the huge algo buying and selling companies working within the home market embrace Millennium Administration, US-based Citadel Securities, Alphagrep Securities and Tower Analysis Capital.
Final week, Sebi Chairman Tuhin Kanta Pandey mentioned that the Jane Avenue case was a surveillance situation and the markets regulator was retaining a observe of it.
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Market contributors, nevertheless, consider that the Sebi would tread fastidiously as it will not wish to scare away international HFT and quant companies, who play an vital function in offering liquidity available in the market.
“They should act in a balanced method, as any stern motion would imply volumes will dry up. There may very well be an affect on the liquidity or depth of the Indian market, which will not be good from the perspective of inviting international gamers,” mentioned a dealer.
Sebi examined the mixture revenue/loss made by the Jane Avenue group for the interval January 1, 2023 to March 31, 2025. In its investigation, Sebi discovered that the Financial institution Nifty index — a significant index of the securities market comprising 12 shares of India’s main banks — has prima facie been manipulated in a posh and unlawful method aided by JS Group’s immense buying and selling, monetary and technological prowess.
JS group deployed two unauthorised proprietary buying and selling methods — intraday index manipulation and prolonged marking the shut, the regulator mentioned within the interim order. The group allegedly made a revenue of Rs 36,502.12 crore throughout the interval of investigation. The regulator has ordered the impounding of Rs 4,843.57 crore of illegal positive aspects made by the group by way of manipulative buying and selling.
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Quantity in F&O phase could dip
One of many fallouts of barring Jane Avenue group from the home securities market shall be a drop in F&O volumes, market contributors mentioned.
“Each occasion has a right away affect and so the quantity will get impacted,” mentioned a dealer.
The area left by Jane Avenue shall be crammed up by another participant. Merchants mentioned that whereas it’s troublesome to say whether or not the decline in quantity shall be absolutely recouped or not, the affect on buying and selling quantity will steadily change into much less.
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