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US-based proprietary trading firm Jane Street has deposited the amount demanded by the Securities and Exchange Board of India (Sebi) into an escrow account to resume trading, but according to a person familiar with the matter, it will continue to contest the regulator’s order. Its options trading is on hold for now.

With the payment of ₹4,843.57 crore, Jane Street can recommence trading in the markets, per the Sebi's interim order of 3 July.

Sebi's investigation of Jane Street's trading on other indices is ongoing. The interim order on 3 July pertained to 21 instances of trading—18 on Bank Nifty and three on Nifty weekly contracts—between August 2023 and May 2025. According to the person aware of the development, Sebi's probe will continue on other popular weekly indices such as Sensex, Finnifty, and Nifty Midcap Select.

Mint reported on Monday that Jane Street has engaged leading law firm Khaitan & Co. to challenge Sebi’s interim order. An appeal before the Securities Appellate Tribunal (SAT) may follow.

Sebi, in an interim order last week, accused Jane Street of manipulating the Bank Nifty and Nifty indices over a two-year period by taking disproportionately large positions in both cash and derivatives segments compared to other market participants. The regulator claims this allowed Jane Street to make unlawful profits of ₹4,844 crore from trades in weekly Bank Nifty and Nifty options.

A senior executive aware of the developments said, “The HFT is very close to closing the loop and is expected to pay the amount as asked by Sebi."

Both Jane Street and Khaitan & Co. declined to comment on Mint’s queries sent on Monday morning.

Sandeep Parekh, founder of Finsec Law Advisors, explained, “The two options before Jane Street are to challenge Sebi's interim order or to respond to it. A challenge would mean it goes before the Securities Appellate Tribunal and possibly to the Supreme Court, depending on the outcome."

"Responding would mean paying the amount and continuing to trade, while reserving the right to seek legal redress as the investigation continues."

A pivotal episode in Sebi’s case occurred on 17 January 2024, the weekly expiry day for Bank Nifty options. Following disappointing results from HDFC Bank, the index opened 3.2% lower at 46,574. Sebi alleged that Jane Street bought Bank Nifty index futures and constituent stocks worth ₹4,370 crore, helping the index recover to 47,212.75 and creating “an impression of recovery."

As the index rebounded, call option prices surged and put options slumped. Sebi claims Jane Street then sold the now-expensive call options and bought cheaper put options, amassing a bearish exposure in Bank Nifty options worth ₹32,114.96 crore. In the second phase, Jane Street allegedly unwound its positions, pushing the index and its stocks lower, which increased the value of the purchased puts and decreased the value of the sold calls. This manoeuvre reportedly netted the firm ₹735 crore in options profits that day, as the Bank Nifty closed 4.28% lower at 46,064.45.

Overall, Sebi alleges that Jane Street profited illegally to the tune of ₹4,844 crore over 21 days between August 2023 and May 2025. The regulator has ordered the seizure of these gains and barred Jane Street from the capital market until the funds were deposited in escrow. Sebi also stated that Jane Street entities made a total profit of ₹36,502.12 crore between January 2023 and March 2025 through its trading strategies.

In an internal communication following Sebi’s order, Jane Street said it was “deeply upsetting" to see the firm “mischaracterised," and added, “We are working on a formal response to Sebi."

Addressing the specific allegation regarding 17 January 2024, Jane Street stated, “The strategy termed manipulation by Sebi was in fact a commonplace practice to align the large divergence in prices between the Bank Nifty index options and the price levels implied by its constituent stocks on that day."

Shares of BSE Ltd, which were down since Sebi ordered a ban on the US trading firm on 3 July, surged over 3% on Monday.

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