Sebi bars Jane Street entities, impounds over ₹4,000 cr for index manipulation

The Securities and Exchange Board of India (Sebi) has barred four entities of the Jane Street Group from accessing the Indian securities market and impounded ₹4,000 crore in what it termed as illegal gains from prima facie fraudulent and manipulative trades in index options.

In a detailed 105-page interim order, Sebi accused the global proprietary trading firm of deploying large-scale, expiry-centric strategies on at least 18 trading days—15 involving Bank Nifty and three involving Nifty—where the group allegedly distorted market prices through “sharp, large and aggressive interventions” in the cash and derivatives segments.

Two-pronged play

According to the order, the Jane Street Group—through its Indian and foreign affiliates—ran two distinct strategies: the “Intra-day Index Manipulation” strategy and the “Extended Marking the Close” strategy.

In the former, observed on 15 occasions, the group allegedly accumulated significant long positions in constituent stocks of the Bank Nifty index during the morning—using “aggressive and large” trades—and simultaneously built large short positions in index options by buying puts and selling calls.

Later the same day, it reversed its earlier trades in the cash and futures segments, pushing down the index and benefiting from its options exposure. On 17 January 2024, for instance, Jane Street entities booked an intraday loss of ₹61.6 crore in the cash and futures segments, but earned a profit of ₹734.93 crore in Bank Nifty index options.

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Sebi described their trading pattern as “prima facie being manipulative,” citing the “intensity and sheer scale of their intervention in the underlying component stock and futures markets,” and the “rapid reversal of these large and aggressive trading in cash and futures without any plausible economic rationale.”

The regulator concluded that these patterns were “not standalone trades,” but rather “part of a deliberate strategy to manipulate indices to the advantage of positions in index options.”

The “Extended Marking the Close” strategy—observed on 10 July 2024, and two other days—involved building or holding large options positions and then executing significant, directional trades in index constituents during the last hour of trading to influence the closing level. Sebi noted that this behaviour was “designed to engineer a soft close” or a settlement level favourable to their open positions on expiry.

Numbers that stun

Sebi observed that the group’s profits in index options over the 15 Bank Nifty manipulation days alone were ₹3,914 crore. Across all 18 days examined in the order, including Nifty expiry days, the total alleged gains exceeded ₹4,000 crore. These have been “impounded” as illegal gains under the regulator’s powers.

The entities named in the order—Jane Street Singapore Pte. Ltd., Jane Street Asia Trading Ltd., JSI Investments Private Ltd., and JSI2 Investments Private Ltd.—were described as forming a “single economic group” based on common control and coordinated trading activity.

The group’s total profit from January 2023 to March 2025 was ₹36,502 crore, and ₹43,289 crore came from index options. Sebi noted that the group had cumulative losses in stock futures, index futures, and the cash segment amounting to ₹7,687 crore.

Despite a caution letter issued by the National Stock Exchange in February 2025—advising Jane Street entities to refrain from taking large open positions and to avoid trading patterns that appear to be fraudulent and manipulative—the group allegedly continued its activity. On 15 May 2025, it was seen executing a similar bullish expiry-day strategy in Nifty options.

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Sebi stated that the trades showed a “pre-mediated and carefully executed trade design” that misled other market participants and “creating a false or misleading appearance of market activity.”

“Such egregious behaviour, in clear disregard/defiance of the explicit advisory issued to them by NSE in February 2025, amply demonstrates that unlike the vast majority of Foreign Portfolio Investors and other market participants, JS Group is not a good faith actor that can be, or deserves to be, trusted,” whole time member Ananth Narayan G said in the order.

The regulator has directed that the entities shall desist from undertaking any strategy that is similar to or a variant of the identified strategies until further orders.

A final decision will follow after considering responses from the entities, which have been granted the opportunity to file replies and seek a personal hearing.

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