India is intensifying its oversight of Wall Street trading firms, with its securities regulator adopting a more assertive stance within the country's $5 trillion equity market, now even targeting prominent international institutions like JPMorgan Chase & Co.
The Securities and Exchange Board of India (SEBI) recently accused a Mauritius-based subsidiary of JPMorgan of executing manipulative stock trades. This follows a move last year when SEBI charged US financial powerhouse Jane Street with market manipulation, marking one of its most forceful actions against a foreign entity. Jane Street has denied these allegations.
Insiders suggest SEBI has internally signaled a shift towards more proactive reviews of trading activities by both domestic and overseas institutions, aiming to bolster protections for retail investors. This year alone, other international heavyweights including Bank of America and investment giant Capital Group have also come under the regulator's microscope.
This marks a significant departure from past decades when foreign securities firms in India rarely faced penalties. Now, the Indian regulator is aligning its expectations with those of its US and European counterparts. "The message from SEBI is clear: scale, reputation, and global standing are no shield against violations of India's market conduct rules," said Pradyun Chakravarty, a partner at New Delhi law firm King Stubb & Kasiva.
Neither JPMorgan nor Jane Street opted to comment on the matter. The SEBI order specifically names a Mauritius entity that operates independently of JPMorgan's Indian arm, J.P. Morgan India Pvt. Consequently, the directive against this offshore unit does not immediately impact the bank's Indian operations, which primarily run through its local subsidiary.
The regulatory body, led by Tuhin Kanta Pandey who took over as SEBI chairman last year, is placing greater emphasis on leveraging technology. Sources indicate the regulator has begun tracking trades more closely amid instances of sharp or unexplained market volatility. These individuals requested anonymity as the specifics are not public.
The Indian watchdog's actions are not exclusively aimed at foreign corporations. A domestic brokerage, Mansi Share and Stock Broking, is being investigated alongside the JPMorgan subsidiary. However, international financial giants previously appeared to enjoy greater latitude within the market.
The underlying intent, according to insiders, is for SEBI to demonstrate that while it welcomes global institutions to India, no violator will be exempt from penalties. SEBI did not respond to emailed requests for comment.