Jane Street to challenge Sebi's market manipulation charges, email shows

Jane Street plans to contest a finding by India's financial regulator that the U.S. trading firm engaged to manipulate the country's markets, according to the company's internal email seen by Reuters.

Jane Street's email sent to its employees said it was "beyond disappointed" by the regulator's "extremely inflammatory" accusations and was working on a formal response.

On Friday, the Securities and Exchange Board of India barred the firm from buying and selling securities in the Indian market and also seized $567 million of its funds.

Sebi has widened an investigation into alleged market manipulation by Jane Street to include other indexes and exchanges, a source told Reuters last week.

"It's deeply upsetting to see the firm mischaracterised this way," the Jane Street email read. "Once again, we left this process feeling that we had reached an understanding of the concerns and reflected them in modifications to our trading behaviour."

"Since February, we have made ongoing efforts to communicate with Sebi and have been consistently rebuffed."

The regulator alleged that Jane Street bought large quantities of constituents in India's Bank Nifty index in the cash and futures markets to artificially support the index in morning trade, while simultaneously building large short positions in index options.

The regulator's investigation tracked Jane Street's trading patterns over more than two years.

Sebi did not immediately respond to Reuters requests for comment outside regular hours.

India's markets regulator is enhancing its surveillance to scrutinize manipulation in derivatives trading, its chairman said on Monday.

India is the world's largest derivatives market, accounting for nearly 60% of global equity derivative trading volumes of 7.3 billion trades in April, the Futures Industry Association says.

Financial Times was the first to report the news about Jane Street's plan to contest the finding.