SEBI Bars Jane Street From Securities Market, Freezes ₹48 Billion In Gains

The Securities and Exchange Board of India has barred the global proprietary trading firm Jane Street Group from participating in the Indian securities market, citing “deliberate and large-scale index manipulation.” The interim order, issued today, freezes ₹48.44 billion in alleged illegal gains and accuses Jane Street of systematically exploiting the structure of India’s options markets, particularly around the Nifty and Bank Nifty indices.

SEBI’s 105-page order details a sophisticated trading strategy employed by Jane Street to profit from index options by manipulating underlying cash and futures markets, particularly on weekly expiry days. The firm, through its Indian and offshore affiliates, would aggressively buy stocks in the Bank Nifty index early in the day to artificially push prices up — thereby making call options expensive and put options cheap.

Having induced upward price movement, Jane Street would allegedly build massive short positions by selling those inflated call options and buying undervalued puts. Later in the day, the firm would reverse its stock purchases, depressing index prices, and allowing it to profit from its bearish options positions. This cyclical pattern--termed “Intra-day Index Manipulation” by SEBI ---was allegedly executed across multiple expiry sessions despite an explicit caution from the National Stock Exchange in February 2025.

SEBI’s investigation identified 18 such trading days during January 2023–March 2025, where Jane Street earned ₹432.89 billion in profits from index options while simultaneously incurring losses in cash and futures, losses SEBI says were part of a calculated plan to profit indirectly from options trades.

On January 17, 2024, for example, Jane Street booked ₹7.35 billion in profit using this strategy. Its share of traded value in key banking stocks often exceeded 20%, and its trades accounted for the majority of upward price movement in the Bank Nifty index — despite the broader market trend being negative.

SEBI stated that Jane Street’s activities “misled a vast number of retail participants,” who form the bulk of the options market, into taking positions based on manipulated index levels. The regulator emphasised that while the firm’s trades were technically within legal limits, the "intensity and scale" of activity lacked any plausible economic rationale beyond options profit.

“This is regulatory arbitrage on an industrial scale,” said SEBI Whole-Time Member Ananth Narayan, adding that Jane Street’s actions "pose a serious threat to the integrity of India’s capital markets."

The probe has exposed deeper structural vulnerabilities in India’s booming derivatives ecosystem--particularly the lopsided leverage and the ability of a few players to distort index levels for expiry-day gains. SEBI’s move may now prompt tighter oversight of algorithmic and high-frequency trading strategies and signals a shift from volume-driven growth to market stability and fairness.

With global players like Citadel, Millennium, and Optiver expanding in India, the Jane Street case could serve as a turning point--from permissive surveillance to proactive regulation that prioritizes small investor protection over headline volumes.

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