Securities Appellate Tribunal Directs SEBI to Justify Denial of Documents to US Algo Trading Firm Jane Street

Securities Appellate Tribunal (SAT), a statutory body established under the provisions of Section 15K of the Securities and Exchange Board of India Act, 1992 ordered the markets regulator on Tuesday to explain within three weeks why it cannot share further documents with U.S. algo trading firm Jane Street, which was temporarily banned from markets in July on allegations that it had manipulated indexes.

The order from SAT was in response to an appeal filed by Jane Street last week that sought more documents from the Securities and Exchange Board of India.

The tribunal also effectively directed SEBI to pause any personal hearings with the trading firm until the matter is heard again on November 18.

A pause on a personal hearing will delay a confirmatory order from the regulator until after November 18 as the process followed by it mandates a hearing before passing an order.

In one of the strongest regulatory actions taken against a foreign investor, SEBI on July 4 suspended Jane Street from trading in the local securities market saying that the firm had manipulated India's indexes. The U.S. firm has denied the charge.

Jane Street has sought more information about a December 2024 internal report by SEBI's surveillance department, which had studied the firm's trading patterns and found no reason for further investigations.

On Tuesday, Jane Street questioned the differing conclusions reached by two SEBI departments on the same trading data, and requested the release of all related documents in SEBI's possession.

Jane Street's counsel also asked for communications between the National Stock Exchange of India and SEBI leading up to the interim order and trade logs with name of counterparties on trades executed by it.

In response, SEBI's counsel said it cannot provide information that has not been used in the passing of the order.

The regulator accused Jane Street of engaging in a "fishing enquiry" instead of explaining its conduct.

SEBI said in court that its investigation into Jane Street was at a "critical juncture" and still ongoing, noting that the final order could be "much wider" in scope.

The regulator imposed a $567 million penalty on Jane Street, which the company has paid. Although Jane Street is now allowed to resume trading in India, it continues to refrain from doing so, Reuters reported last month.

Jane Street has said the regulator's actions were affecting its international reputation.