Jane Street Banned in India Highlights: Strategies, profits and other details of Jane Street's alleged manipulation

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Speaking at an event organised by the Bombay Chartered Accountants Society, SEBI chairman Tuhin Kanta Pandey told attendees that transparency in disclosing related party transactions, managing conflicts of interest and presenting material developments in a timely manner are “non-negotiable responsibilities” for the CAs.

“You have a critical responsibility to ensure that corporate governance is not reduced to a checklist,” he advised the CAs.

SEBI chairman Tuhin Kanta Pandey told reporters on July 5 that market manipulation is not going to be tolerated. He was speaking a day after an interim order against New York-based hedge fund manager Jane Street, PTI reported.

Pandey said surveillance has been increased by SEBI and the exchanges, and when asked about possibility of similar behaviour by other foreign portfolio investors, he added, “All what I can say that market manipulation is not going to be tolerated.”

In its interim order, the markets watchdog has debarred the Jane Street Group, comprising of entities JSI Investments, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading, from trading until further notice, while uunder investigation.

The Jane Street Group has come under scrutiny by SEBI for allegedly manipulating index levels in the Indian stock market to earn illegal profits, primarily through the highly liquid Bank Nifty and Nifty index options segments.

Jane Street made ₹36,500 crore profit from alleged manipulation, as per SEBI's order.

The SEBI order stated, “the Entities have violated section12A(a), (b) and (c) of the SEBI Act,1992; regulations 3(a), (b), (c), (d), 4(1)and 4(2) (a) and (e) of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.”

The market regulator, in its interim order, has prohibited JSI Investments, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading, collectively known as the Jane Street Group, from trading until further notice.

Jane Street Group was founded in 2000 as a global proprietary trading firm within the financial services sector. According to the company's website, it employs over 3000 staff across five international offices. We trade a wide array of asset classes on more than 200 venues in 45 countries.

SEBI noted 18 trading sessions, including 15 Bank Nifty and 3 Nifty 50, where the group purportedly engaged in “sharp, large, and aggressive interventions' across cash and derivatives markets. SEBI stated that these activities distorted market prices and undermined market integrity.

 Nifty 50 stocks allegedly used to influence index levels included Reliance Industries, Infosys, HDFC Bank, ICICI Bank, Tata Consultancy Services (TCS), HDFC Life Insurance Company, Axis Bank, ITC, Larsen & Toubro, and Kotak Mahindra Bank, according to SEBI's order.

Jane Street's alleged manipulation mainly consisted of aggressive morning buying of Bank Nifty stocks such as HDFC Bank, ICICI Bank, Axis Bank, State Bank of India, Kotak Mahindra Bank, IndusInd Bank, Federal Bank, Bank of Baroda, IDFC First Bank, AU Small Finance Bank, Punjab National Bank (PNB), Canara Bank, and Bandhan Bank, followed by afternoon sell-offs.

Jane Street challenged the regulator's findings in an emailed statement, saying that it is “committed to operating in compliance with all regulations” in the regions it operates in around the world, reported Bloomberg.

SEBI's 105-page order detailed a complex, expiry-day trading strategy by Jane Street Group, which manipulated index levels through aggressive buying and selling in Bank Nifty and Nifty 50 stocks to influence options prices and secure profits.

Here are the gains made by Jane Street as per the SEBI order.

India represents the world's largest derivatives market, handling nearly 60% of the 7.3 billion global equity derivative trades in April, according to a Reuters report citing the Futures Industry Association. Additionally, India's retail investors are the most susceptible to high-risk derivative trading, with 93% experiencing losses, as highlighted by a SEBI study.

"The findings of an earlier research report by SEBI, which inter alia states that 93% of retail investors made losses when trading in the options market, now gain additional context. Such losses, when juxtaposed with the abnormally high profits made by JS Group entities as a result of the prima facie manipulation of the cash, futures and options markets, are reflective of the deep damage that the group has inflicted through their illegal activities," SEBI said in its order.

A look at the recent instance of extended marking-the-close (as observed on May 15, 2025 - being weekly expiry of NIFTY option contracts).

Between January 2023 and March 2025, the four entities cumulatively made a profit of $5 billion by trading in equity options in India, the country's market regulator SEBI said in its order.

Jane Street's large India presence first gained prominence last year when the firm sued a rival hedge fund, Millennium Management, accusing it of stealing a valuable in-house trading strategy.

At a court hearing in the U.S., it was revealed that the strategy involved India options and had generated $1 billion in profits for Jane Street in 2023. The two firms settled the case in December.

(Source: Reuters)

‘Extended marking the close’ refers to a manipulative trading practice where an entity aggressively places large buy or sell orders in the final moments of a trading session, with the specific intent of influencing the closing price of a security or index to its advantage.

This practice is particularly concerning on derivative expiry days, as the closing price directly affects the settlement value of index-based contracts, thereby impacting payoffs for all market participants.

Typically, extended marking the close involves aggressive and large-scale buying or selling of securities just before market close to push the price up or down. The goal is to ensure that the reference stock or index closes at a level more favorable for the trader's larger derivative positions that are being settled on that day.

Shares of Nuvama Wealth Management tanked 11.26 per cent to settle at ₹7,263.10 on the BSE after Sebi barred Jane Street from Indian stock market. The BSE sought clarification from Nuvama Wealth Management Ltd on Friday, with reference to news quoting "Jane Street effect: Nuvama shares slump 7 per cent after Sebi order. What's the connection?"

This is what the firm said:

No event has occurred that requires the Company to make any disclosure under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) at this time.

Further, we would like to state and confirm that the Company is compliant with the provisions of Regulation 30 of the Listing Regulations and has been regularly submitting necessary disclosures with the Stock Exchanges, as required thereunder, from time to time. The Company shall continue to do the same in accordance with the provisions of the Listing Regulations, as may be required from time to time.

Past instances of securities market violations have mostly involved individual stocks or specific segments. However, this is an unusual case where, prima facie, multiple liquid stocks with high retail participation were manipulated collectively to influence the index options market. This led to massive profits for the manipulators, at the expense of other participants and retail traders.

Zerodha founder and CEO Nithin Kamath has warned that retail trading activity may decline if proprietary trading firms like Jane Street, which contribute nearly half of the options trading volume, reduce their market involvement. He noted that such a development could negatively impact both stock exchanges and brokerage firms.

"Prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back – which seems likely – retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers," Kamath said on X.

Here are the details of illegal gains made by the entities in the index options segment on the impugned days.

“SEBI alleges that Jane Street manipulated the BANKNIFTY index by making aggressive trades in the morning to push up the index, only to reverse those trades later, while holding option positions that profited from these moves. On 17th January 2024 alone, the firm allegedly made a massive ₹735 crore profit using this strategy,” said Gaurav Goel, Founder & Director at Fynocrat Technologies.

Over a 2-year period, they are said to have made ₹43,289 crore in gains from options — a significant chunk of which SEBI believes came through unfair means. This kind of manipulation, if proven true, not only distorts the market but also harms retail investors who trade with trust and limited capital, says Gaurav Goel added.

Out of the four entities involved in this case, two entities — Jane Street Singapore Pte Ltd and Jane Street Asia Trading Ltd — are registered FPIs, incorporated in Singapore and Hong Kong respectively. 

One entity, JSI Investments Private Limited, was incorporated in India in December 2020 and is located in Mumbai. It is wholly owned by Jane Street Europe Limited, a company incorporated in the United Kingdom. JSI2 Investments Private Limited was incorporated in India in September 2024 and is also located in Mumbai. It is wholly owned by JSI Investments Private Limited.

Notably, an email sent by Jane Street to SEBI dated August 30, 2024, and a letter from Jane Street to NSE dated February 21, 2025, both indicate that all Jane Street Group entities operating in Indian markets act collectively and are overseen by senior personnel based overseas.

“The recent action by SEBI against Jane Street, one of the world’s leading proprietary trading firms, marks a pivotal moment for India’s capital markets. By barring the firm from participating in the securities markets and ordering the disgorgement of ₹4,844 crore, SEBI has made it clear that market manipulation will not be tolerated. The alleged manipulation of the Bank Nifty index, involving structured trades across multiple instruments, is a stark reminder of the importance of maintaining integrity in financial markets. This intervention is not merely a regulatory measure; it sets a precedent for the way India will approach market behavior, particularly in the increasingly complex derivatives space. As India continues to expand its footprint in global financial markets, this decisive action reinforces the country's commitment to fostering a fair and transparent trading environment,” Harshal Dasani, Business Head, INVasset PMS.

The operations of Jane Street in India drew global attention last year after a legal dispute with Millennium Management revealed it had earned $1 billion from trading Indian equity derivatives. Additional disclosures from the case prompted SEBI to launch an investigation, which remains ongoing—even as the National Stock Exchange of India Ltd. closed a separate probe into the firm’s irregular trades earlier this year.

JS Group made a total profit of ₹36,502.12 crores across all segments. Within this, it is notable that the JS Group made profits of ₹43,289.33 crores in index and stock options, while they net lost ₹7,208 crores in stock futures, lost ₹191 crores in index futures, and lost ₹288 crores in trading in the cash equities segment.

The strategy was straightforward - aggressively buy select Bank Nifty index stocks in the morning and sell them just as forcefully later in the day, triggering a sharp drop in share prices. While this often resulted in losses on the stock trades, the firm profited heavily from large parallel short positions in index options, which gained value as the market declined.

Jane Street disputed the findings of the regulator in an emailed statement and said it is “committed to operating in compliance with all regulations” in the regions it operates in around the world. (Source: Bloomberg)

Jane Street operates in India through four group entities, two of which are based in India, with the other two in Hong Kong and Singapore.

The firm started its first India unit in December 2020. The other two Asian entities operate as foreign investors registered with India.

India’s investigation of alleged manipulative trades by Jane Street Group will expand to include other major stock indexes over the coming months, a Securities and Exchange Board of India official told Bloomberg, without providing a timeline of when the probe will end.

The market regulator in its interim order has prohibited JSI Investments, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading, the entities collectively known as the Jane Street Group, from trading until further notice.

There has been no clarification on how long the investigation would take, and "the scope (of investigation) is quite large,” PTI reported, citing people aware of the development. 

So far, Sebi has only probed 18 days of Bank Nifty and three days of Nifty index manipulations on expiry days. The investigation will now focus on other expiry days, other indices, including trades on other exchanges, and check for other patterns, it added.

The interim order against Jane Street Group by the market regulator is not a show cause notice, ANI reported, citing people aware of the development. The probe into the US-based firm will continue, it added.

In India, Jane Street operates through four group entities, two of which are based domestically and two in Hong Kong and Singapore. The company established its first Indian branch in December 2020. The remaining two Asian divisions are registered as foreign investors in India, as reported by Reuters.

Shares of stockbroking companies like Nuvama Wealth, Angel One, BSE, and CDSL declined sharply on Friday amid worries about the possible impact of a regulatory crackdown on Jane Street, reported PTI.

Jane Street Group was founded in 2000 as a global proprietary trading firm within the financial services sector. According to the company's website, it employs over 3000 staff across five international offices. We trade a wide range of asset classes on more than 200 venues in 45 countries.

The market regulator has barred Jane Street Group from trading in Indian markets until further notice and directed it to deposit ₹4,843.5 crore.

According to SEBI, Jane Street first aggressively bought large quantities of constituent stocks and futures on 15 Bank Nifty expiry days, artificially pushing up or supporting the index in the morning. In the second half of the session, it systematically unwound these positions, selling in large volumes and exerting downward pressure, profiting from options positions aligned with this engineered movement.

 SEBI identified 18 trading sessions, including 15 Bank Nifty and 3 Nifty 50, where the group allegedly carried out “sharp, large, and aggressive interventions” in both cash and derivatives markets. According to SEBI, these actions distorted market prices and compromised market integrity.

SEBI's 105-page interim order revealed a complex, expiry-day-focused trading method used by the US-based proprietary trading firm. The order explains how the Jane Street Group manipulated index levels by aggressively buying and selling major Bank Nifty and Nifty 50 constituent stocks, thereby affecting options prices to achieve significant profits.

According to SEBI, Nifty 50 stocks allegedly used to influence index levels included Reliance Industries, Infosys, HDFC Bank, ICICI Bank, Tata Consultancy Services (TCS), HDFC Life Insurance Company, Axis Bank, ITC, Larsen & Toubro, and Kotak Mahindra Bank.

The alleged manipulation by Jane Street primarily involved aggressive morning purchases of Bank Nifty constituents, including HDFC Bank, ICICI Bank, Axis Bank, State Bank of India, Kotak Mahindra Bank, IndusInd Bank, Federal Bank, Bank of Baroda, IDFC First Bank, AU Small Finance Bank, Punjab National Bank (PNB), Canara Bank and Bandhan Bank followed by afternoon sell-offs.

The findings of an earlier research report by SEBI, which inter alia states that 93% of retail investors made losses when trading in the options market, now gains additional context. Such losses, when juxtaposed with the abnormally high profits made by JS Group entities as a result of the prima facie manipulation of the cash, futures, and options markets, is reflective of the deep damage that the group has inflicted through their illegal activities.

Past instances of securities market violations have mostly involved individual stocks or segments. However, this is an unusual case where, prima facie, multiple liquid stocks with high retail participation have together been manipulated to facilitate the manipulation of the index options market, resulting in massive profits for the manipulators, at the cost of other participants and retail traders, SEBI said in its order

As Jane Street's alleged manipulation in the Indian derivatives market, Vijay Kedia, a stock market expert, reshared his old tweet to highlight the risks of F&O trading for retail investors.

Prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back— which seems likely —retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers.

The next few days will be telling. F&O volumes might reveal just how reliant we are on these prop giants. I’ll share more data as and when anything interesting turns up.

–  Nithin Kamath, Zerodha CEO

“The implications of this move are far-reaching for global funds, PMS/AIFs, and proprietary trading desks. Market participants now face an evolved compliance landscape where aggressive expiry-day positioning and trades that manipulate market prices will come under greater scrutiny. While short-term liquidity disruptions may follow, the long-term benefits will be significant. By enforcing stricter regulations, SEBI is not only ensuring cleaner price discovery but also reinforcing institutional trust in India's capital markets. For global investors, the message is clear: India is open for business, but only on the terms of fair play and sound governance. This move could ultimately make India an even more attractive destination for long-term, rule-abiding capital,” said Harshal Dasani, Business Head, INVasset.