In July 2025, the Securities and Exchange Board of India (SEBI) took decisive action against Jane Street Group, a global trading firm, for allegedly engaging in large-scale market manipulation within India’s financial markets.

This blog explains the case in clear and simple language, using facts and examples directly drawn from SEBI’s official interim order dated 3rd July 2025.

What is Jane Street?

Jane Street is a global proprietary trading firm founded in 2000, renowned for its expertise in high-frequency and quantitative trading. Headquartered in New York, it operates in major financial markets worldwide, including London, Hong Kong, Singapore, and Amsterdam. The firm uses advanced technology and mathematical models to trade equities, bonds, ETFs, derivatives, and currencies. 

Jane Street employs over 2,600 professionals, many with backgrounds in mathematics, engineering, and computer science. Known for its collaborative culture and innovation, Jane Street is a leading market maker and liquidity provider, shaping modern electronic trading with its sophisticated, technology-driven strategies

What Happened in India?

SEBI found that Jane Street and its related entities engaged in manipulative trading practices in India’s derivatives markets, with a particular focus on the BANKNIFTY and NIFTY indices. These indices represent groups of prominent Indian shares and are widely used in financial contracts.

The Manipulative Strategies Explained

SEBI identified two main strategies employed by Jane Street:

1. Intraday Index Manipulation

Jane Street would aggressively purchase large quantities of BANKNIFTY constituent shares and futures early in the trading day, artificially driving prices upwards.

Simultaneously, they would take substantial bearish positions in BANKNIFTY index options (effectively betting that the index would fall).

Later in the day, they would sell off the shares and futures just as aggressively, causing prices to decline.

This pattern allowed them to generate significant profits from their options positions, as the price movements they orchestrated increased the value of those options.

Example:

On 17th January 2024, Jane Street purchased over ₹4,370 crore worth of BANKNIFTY shares and futures in the morning, then reversed and sold these positions later in the day. This sequence enabled them to earn a profit of ₹734.93 crore in BANKNIFTY options that day, despite incurring losses on the share trades themselves.

2. Extended Marking the Close

On certain expiry days, Jane Street placed large buy or sell orders during the final hour of trading, deliberately influencing the closing price of the index.

This was done to benefit their sizeable existing options positions.

For example:

  • On 10th July 2024, they drove the BANKNIFTY index down near the close to profit from bearish options.
  • On 15th May 2025, they pushed the NIFTY index up at the close to profit from bullish options.

Why is This a Problem?

Jane Street’s trading strategies are a serious problem because they undermine the very foundation of fair and transparent markets. By aggressively buying and selling large volumes of stocks and futures to influence index prices, Jane Street created artificial price movements that did not reflect genuine supply and demand.

This misled retail investors and other market participants, who often suffered losses by trading at distorted prices. When sophisticated firms can manipulate prices, it erodes trust in the market’s integrity and discourages ordinary investors from participating. With India’s derivatives market being the largest in the world, ensuring fairness and transparency is crucial. SEBI’s action highlights the urgent need for stronger oversight to protect investors and uphold confidence in the financial system

The scale of Profits and Losses

Jane Street earned over ₹36,500 crore in profits from Indian markets between January 2023 and March 2025, primarily from index options.

They incurred losses in cash and futures markets, which SEBI concluded were an integral part of their manipulative scheme.

SEBI identified total unlawful gains exceeding ₹4,843 crore, which have been ordered to be impounded.

SEBI’s Actions

SEBI has:

  • Banned Jane Street and its entities from trading in Indian securities markets.
  • Frozen all related bank and demat accounts.
  • Issued a detailed interim order outlining the manipulative patterns and supporting evidence.
  • Directed stock exchanges to closely monitor Jane Street’s activities to prevent any further manipulation.

What Can Investors Learn?

  • Market manipulation can occur even in large, liquid markets.
  • Regulators remain vigilant and take strong action to protect market integrity and investors.
  • Retail investors should be especially cautious around derivatives expiry days when such manipulation is more likely.

Conclusion

The Jane Street case is a landmark example of how sophisticated trading strategies can be misused to manipulate markets. SEBI’s strong action sends a clear message: market fairness and investor protection are paramount priorities. Understanding this case helps investors appreciate the importance of regulation and vigilance in financial markets.

This blog is based entirely on the Securities and Exchange Board of India’s interim order dated 3rd July 2025 and is an original summary of the case with no content copied from external sources.