Sebi Chairman Tuhin Kanta Pandey hints at increasing surveillance on derivatives trading after Jane Street action

Soon after market regulator Sebi barred US investment firm Jane Street from dealing in securities in India and also seized ₹4,843.57 crore of its funds as alleged unlawful gains, Chairman Tuhin Kanta Pandey today hinted that the regulator is increasing its surveillance to deeply analyse manipulation in derivatives trading, as per news agency Reuters.

"There may not be many more such cases," Pandey told the news agency, without divulging too many details. His comments bear significance as the country boasts the world's largest derivatives market.

Friday last week, the capital markets regulator, the Securities and Exchange Board of India (Sebi), in its interim order issued on Thursday, barred US-based investment firm Jane Street Group entities in India and said it applied two manipulative strategies—Intra-day Index Manipulation and Extended Marking The Close—to "distort" prices during market hours and expiry close.

The Sebi enforcement action marks its most stringent since Pandey took charge as the new Sebi chief in February 2025. It also underscores the regulator's resolve to crack down on manipulative practices in order to protect retail investors and the overall integrity of the capital market in India.Zerodha Founder & CEO Nithin Kamath, reacting to the development, termed Jane Street's action as "blatant market manipulation".

"The shocking part? They kept at it even after receiving warnings from the exchanges. Maybe this is what happens when you're used to the lenient U.S. regulatory regime. Think about the structure of U.S. markets: dark pools, payment for order flow, and other loopholes that allow hedge funds to make billions off retail investors. None of these practices would be allowed in India, thanks to our regulators."

He, however, flagged a flip side to the Sebi action, saying that prop trading firms like Jane Street account for nearly 50% of options trading volumes. "If they pull back— which seems likely —retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers."

E-Voting App Adds Proxy Advisory Feature

Pandey, meanwhile, today launched a proxy advisory recommendations feature on the e-voting system integrated within the unified investor app of depositories, which will help investors participate in shareholders’ resolutions with ease and also contribute to strengthening the corporate governance ecosystem, thus marking yet another milestone in investor empowerment and ease of access for shareholders.

"With this move, retail investors can not only cast their votes easily but also access the recommendations of registered proxy advisors in respect of resolutions proposed by the companies. While the system will provide investors an additional option of voting as per selected proxy advisor’s recommendation, it will give full control to them to modify any of the recommendations on any resolution before submission of their vole," Pandey said.

He said proxy advisory firms play an important role by offering independent, research-based recommendations on shareholder resolutions; they facilitate investors — especially those lacking the resources for in-depth analysis — to make informed decisions. "These firms aid in enhancing transparency, accountability, and corporate governance standards by analysing proposals in the light of global best practices, regulatory frameworks, and long-term shareholder value. Insights from proxy advisors support informed voting and nudge companies toward more responsible governance practices."

Over the years, SEBI has taken several initiatives to make it easier for shareholders to access and participate in voting on resolutions proposed by listed companies. Earlier, exercising voting rights by shareholders — either through physical participation in the meeting or through postal ballot — was a cumbersome process, but setting up of an e-voting system allowed investors to vote remotely and securely, overcoming logistical and geographic barriers, and reducing paperwork and administration cost for the companies.

He also talked about the latest initiative of a common contract note, which he said highlights another significant step taken to promote "ease of doing business" for market participants. Recently, SEBI facilitated the issuance of a Common Contract Note (CCN), which will provide a single volume-weighted average price (VWAP) per security across exchanges, eliminating the need to process multiple contract notes.

This mechanism would reduce the compliance burden for brokers and custodians, lower reconciliation and administrative overheads for investors, and ensure consistent trade reporting aligned with the latest interoperability framework.