Income Tax Department Raids Nuvama In Jane Street Case; NSE Volumes Plunge After Ban Impact

Mumbai: The Income Tax Department on Thursday launched search operations at the offices of Nuvama Wealth and Investment Limited, formerly known as Edelweiss Broking, in connection with the ongoing probe into the Jane Street matter.

As per multiple reports, the raids were ongoing at the offices; however, the company is yet to respond to the matter. Nuvama was Jane Street’s on-ground trading partner in India. The case is being seen as one of the biggest enforcement actions in India’s capital markets in recent years.

Earlier this month, market regulator SEBI barred New York-headquartered Jane Street from trading, accusing it of manipulating the market in a way that disrupted the derivatives segment.

Since Jane Street’s suspension, market activity in index options has taken a hit. On July 17, turnover in index options premiums on the NSE fell to Rs 39,625.77 crore -- about 35 per cent lower than the June average of Rs 60,605 crore.

Volumes have remained weak through July, especially on expiry days -- underlining the impact of the firm’s absence.

Following news of the raids, shares of Nuvama Wealth Management slipped 1.98 per cent or Rs 147, trading at Rs 7,270.50 on the Bombay Stock Exchange (BSE).

Jane Street, which operated in both the cash and derivatives segments as a foreign portfolio investor and trading member, had earlier faced regulatory action from SEBI over allegations of manipulating the Bank Nifty index -- a key benchmark of major banking stocks.

Initial findings pointed to a complex trading strategy, allegedly aided by the firm’s advanced systems, which SEBI suggested could be unlawful.

In its interim order, SEBI banned Jane Street and its related entities from buying, selling, or dealing in Indian securities, directly or indirectly.

The regulator also ordered the impounding of alleged illegal gains worth Rs 4,843 crore, to be kept in an escrow account with a scheduled commercial bank in India.

SEBI further instructed stock exchanges to closely monitor all trades and positions linked to Jane Street Group to ensure there is no manipulation until the investigation and any follow-up proceedings are complete.

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