NSE, Sebi dithered for a year as Jane Street allegedly manipulated the market

Indian Express

10-07-2025

Jane Street, the US-based proprietary trading firm that deployed a high-stakes strategy in Indian F&O markets — later labelled 'manipulative' by Sebi — should have faced immediate regulatory action when it got embroiled in a US lawsuit in April 2024, yet both Sebi and the NSE hesitated and dragged their feet say market experts. Despite coming under regulatory watch in July 2024 in India, as per the Sebi order, Jane Street continued to trade unhindered for nearly a year, before Sebi finally passed its order on July 3 restraining Jane Street from accessing the securities market and also to impound Rs 4,843 crore that the Sebi termed as unlawful gains by JS Group.
As per the Sebi order, Jane Street had filed a lawsuit in April 2024 in the Southern District of New York against Millennium Management and two of its former traders, Douglas Schadewald and Daniel Spottiswood, accusing them of stealing a highly confidential trading strategy. What made this case significant was that the disputed strategy was tied to the Indian options market — something that should have immediately prompted red flags at Sebi and NSE. The nature of the case demanded urgent scrutiny.
However, it took over a year for NSE and Sebi to uncover the manipulation and respond with any concrete action.
Which raises the obvious question — did the surveillance arms of Sebi and NSE ever alert their leadership about the suspicious conduct by Jane Street? Why did it take such a long time for the Sebi to take action against the US proprietary trading firm? As Jane Street rigged the market, the NSE and the Sebi moved too slow.
Shockingly, it took more than a year for Sebi to act. According to the markets regulator's own order, it only began its probe after reading media reports in April 2024 that highlighted Jane Street's claims of stolen India-based strategies being deployed without authorisation. The Sebi then launched a preliminary investigation to check for possible market abuse.
The Sebi formally asked NSE in July 2024 to look into the trades executed by Jane Street Group. But instead of treating the matter with urgency, NSE, astonishingly, took almost four months to submit its findings — in November 2024. This delay allowed the alleged manipulation to continue in the meantime.
Even after receiving the report, it took NSE another two months to respond. On February 6, 2025, NSE finally issued a cautionary letter to Jane Street Singapore and its Indian entity. The letter noted that Jane Street had been consistently engaging in trading patterns that threatened market fairness, especially around index expiry days.
NSE said that Jane Street was taking large delta positions in index options while simultaneously manipulating prices of key index stocks through quick and forceful trades in both the cash and futures markets. This conduct, NSE noted, appeared aimed at influencing the index artificially. Despite these serious findings, NSE merely issued a warning and failed to take any enforcement action and Jane Street continued to game the market.
The NSE report submitted in November 2024 concluded that Jane Street's actions were 'fraudulent and manipulative,' involving trades in index heavyweights timed to distort expiry-day pricing. During this period, Sebi was still headed by Madhabi Puri Buch.
Though Jane Street's questionable trades had started early in 2024, Sebi took no decisive action throughout Buch's tenure, which ended in February 2025. A veteran market expert said Sebi shouldn't have waited until July to ask NSE for a report — it should have moved swiftly to ban the firm.
Buch, however, pushed back against accusations of delay. In a statement, she claimed that Sebi had already begun its investigation by April 2024 and had taken several actions — including ordering Jane Street to cease and desist from certain trades. She added that Sebi had formed a multi-disciplinary team to examine the case thoroughly, and the final order was a result of that extensive internal effort. Buch's term ended in February 2025, and she was succeeded by Tuhin Kanta Pandey on March 1.
The Sebi and NSE eventually acknowledged that the market had been deeply compromised. Unlike past instances, where individual stocks were manipulated, this case involved simultaneous distortion of multiple liquid stocks, which were used to alter index prices. This led to massive profits for Jane Street, but at the expense of retail traders and other market participants. The Sebi itself called it a 'serious breach of fairness and market integrity.'
Even after being warned in February, Jane Street didn't stop. According to Sebi's order, the firm resumed its alleged manipulative behaviour as recently as May 2025. It once again executed aggressive trades near to market close on expiry days, a tactic known as 'extended marking the close,' seemingly aimed at skewing index prices for options payoffs. The Sebi and NSE had enough evidence by then to act, but chose not to.
In February 2025, NSE — under the Sebi's directive — had issued a formal warning to Jane Street Group, advising them to steer clear of high-risk, expiry-day index strategies that could suggest manipulation. Jane Street ignored the warning. The Sebi continued to watch from the sidelines. Only in July 2025 did the markets regulator finally clamp down. By then, the damage was done. Jane Street had already reaped enormous profits from its trading operations.
The net profits Jane Street reportedly booked through its alleged manipulative strategies in Nifty futures alone amounted to Rs 32,681 crore. These were not paper profits — they came at a real cost to Indian investors. The Sebi finally acted on July 3, 2025, barring Jane Street from the Indian markets and impounding Rs 4,843 crore in what it called unlawfully gained profits. For a regulator that prides itself on being proactive, the delay raises disturbing questions.
July 23, 2024: NSE was asked to examine the trading activity of the JS Group to ascertain if there was any market abuse involved.
August 2024: The Sebi interacted with JS Group and JS Group on August 20, 2024 and they provided a written submission dated August 30, 2024 to the Sebi explaining their trades.
October 1, 2024: Separately, the Sebi issued a circular announcing a series of policy steps in order to address what was seen as overtrading in index options on expiry day.
November 13, 2024: NSE examination report on JS Group's trading activity was submitted.
December 2024: The Sebi observed what appeared to be abnormally high or low volatility on weekly index options expiry days. Further, it noted that there were certain entities consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O particularly on expiry days. The Sebi constituted a team of officials to further examine the issue in a more detailed and comprehensive manner.
February 04, 2025: The team of officials noted that prima facie, JS Group appeared to be engaging in activities in violation of the Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
February 6, 2025: While the detailed examination was ongoing, with a view to ensure that JS Group desisted from undertaking trading patterns that were prima facie fraudulent and manipulative, on SEBI's instructions, NSE as a first line regulator issued a caution letter to Jane Street Singapore Pte Limited and its related entity, JSI Investments Pvt Ltd. advising them to refrain from taking large (cash-equivalent) positions and to refrain from undertaking certain trading patterns.
February 2025: JS Group sent their replies to the caution letter on February 6 and 21, 2025.
May 15, 2025: In disregard of the caution letter from the NSE issued in February 2025, and JS Group's own commitments to the Exchange, Jane Street Group was observed to continue to run very large 'cash equivalent' positions in index options.