#ArbitrageTradingStrategy

SEBI has banned Jane Street from Indian markets and frozen ~$567 million, alleging that its index arbitrage trades in Bank Nifty manipulated prices and misled retail investors .

Jane Street defends the strategy as standard arbitrage that enhances liquidity, not manipulation .

The ban has already led to a ~50% drop in index options turnover; trading volumes may recover in 4–6 weeks once regulatory clarity returns .

The case underscores growing regulatory scrutiny on arbitrage strategies, particularly those used by high-frequency and proprietary trading firms .