On Friday, the markets regulator, SEBI, passed an interim order banning US-based Jane Street from trading in the Indian market due to charges of manipulation in Nifty derivatives.
Jane Street is a US trading firm with more than 3,000 employees across five global offices. It trades a broad range of asset classes across 45 countries. It is a major player in equities, bonds, and options markets. It started operations in India in 2020 and operates through four entities – two in India and two offshore.
According to SEBI, between January 2023 and March 2025, the Jane Street Group made a profit of $5 billion by trading in equity options in India
SEBI’s interim order against Jane Street Group accuses the global trading firm of executing a sophisticated, two-stage strategy to manipulate Bank Nifty index levels and profit from options trades over the past two years.
The regulator observed a repeated pattern called ‘intraday index manipulation’, primarily executed on expiry days when index option contracts are settled and pricing is especially sensitive. SEBI said Jane Street’s strategy misled these participants by temporarily moving the index to manipulate option prices, allowing the firm to “engineer” expiry-day outcomes in its favour.
Another strategy called the ‘extended market-the close’ was also observed on a few sessions, with activity concentrated towards the end of the session.
On expiry days, Jane Street would begin by taking large long positions in Bank Nifty’s 12 constituent stocks — both in cash and futures markets.
On January 17, 2024, the firm aggressively bought over ₹4,370 crore worth of stocks and futures between 9.15 a.m. and 11.46 a.m. These were not passive trades. A significant number of the orders were placed above the last traded price, which pushed stock prices higher. This, in turn, lifted the Bank Nifty index itself, which is a weighted average of these stocks.
Simultaneously, it built massive short positions worth ₹32,115 crore in Bank Nifty call options and long positions in put options. This options strategy profits when the index falls. Because their own stock buying temporarily pushed the index up, put options became cheaper and call options more expensive. Jane Street allegedly used this artificially inflated environment to enter the options trade at a more favourable price.
Once the options positions were in place, the firm began unwinding its stock and futures holdings. These sell orders, worth ₹5,372 crore on January 17, created downward pressure on the same Bank Nifty stocks they had lifted earlier. As the index fell, the puts rose in value and the calls lost value.
The firm then booked losses of ₹61.6 crore in the cash and futures segments and made a net profit of ₹735 crore in the options market on one expiry day. The US-based firm deployed such strategies for around 20 expiry days earning a total profit of ₹36,502.12 crore between January 2023 and March 2025. It made over ₹43,289.33 crore in index and stock options, lost ₹7,208 crore in stock futures, lost ₹190.81 crore in index futures, and another ₹288.17 crore in the cash market during the period.
India’s markets regulator SEBI has barred US trading giant Jane Street from the securities markets, alleging manipulative trading in Bank Nifty derivatives between 2023 and 2025. The firm reportedly made ₹36,671 crore in net profit, with ₹4,844 crore identified as unlawful gains and now frozen. Despite warnings from NSE, Jane Street continued aggressive expiry-day trades to influence index levels. Four India-linked entities are affected. Markets opened flat as investors weighed the fallout.Video Credit: Businessline
On expiry days, the number of traders in index options is far greater than in cash markets. Most retail and small traders take cues from index movements, without realising those signals may have been artificially influenced. SEBI said Jane Street’s strategy misled these participants by temporarily moving the index to manipulate option prices, allowing the firm to “engineer” expiry-day outcomes in its favour.
While this pattern was the most used, another strategy called the ‘extended market-the close’ were observed on a few sessions. The trading activity in Bank Nifty constituent stocks and futures is concentrated almost entirely in the final phase of the trading session to profit from a favourable index closing price.
SEBI has barred Jane Street and three affiliated entities from accessing the market and ordered impounding ₹4,844 crore made as unlawful gains from the alleged market manipulation.
Published on July 4, 2025
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