Jane Street has told staff it will contest a ban by India's financial regulator which has accused the U.S. high-frequency trading giant of market manipulation, adding that its practices in question were "basic index arbitrage trading".

Jane Street's email sent to its employees said it was "beyond disappointed" by the regulator's "extremely inflammatory" accusations and was working on a formal response

At the heart of the controversy is Jane Street’s aggressive trading in the derivatives (futures) segment, where the firm executed trades designed not just to profit, but to sway the market itself. Here's how.