After Rs 36,500 Cr Jane Street Scam Saga, Can SEBI Plug The Gaps In Derivatives Market?

News18

9 hours ago

Jane Street, a US-based algo trading company, was alleged by the Securities Exchange Board of India (SEBI) in its 115-page report for market manipulation and misleading investors. The company was alleged to make profits in billions through unethical strategies.
SEBI has now barred Jane Street from accessing the Indian stock market and ordered to pay Rs 4,840 crore in alleged unlawful gains.
Gaurav Goel, Founder and Director at Fynocrat Technologies told The Economic Times that the damage isn't just financial – it erodes faith in the system. 'This kind of manipulation, if proven true, not only distorts the market but also harms retail investors who trade with trust and limited capital," he added.
Goel told ET that several regulatory gaps need to be filled in. He said 'manipulators often trade in both stock and options markets to create fake price moves. Sebi should build systems that track both markets together and raise alerts when something looks suspicious."
Dinesh Thakkar, Managing Director, Chairman and the Founder of Angel One while sharing his PoV on the future of India's proprietary trading, said India's market opportunity is ????????????????????????????????????????, ???????????? ???????????????????????????????? ???????????? ???????????????????????????????????? ???????????? ???????????????????????????????????? ???????? ???????????? ???????????? ????????????????.
He said that India's macroeconomic foundation remains solid. ???????????????????????????????????? ????????????????????????????????????, ???????????????????????????????????????? ????????????????????????????????????????????????, ???????????????????????? ???????????????????????????????? ????????????????????????????????????????????, ???????????????????????? ???????????????????????????????? ???????????????????????????? ???????????????????? ???????????? ???????????? ???????????????????????????????????? continue to support high liquidity and sustained market participation
Siddhart Bhamre, head of institutional research at Asit C Mehta said Jane Street is one of the largest traders contributing to India markets. He added that when big players are banned for wrongdoing, others become cautious and reduce activity, leading to lower volumes.
The impact may extend beyond SEBI's jurisdiction, with tax authorities expected to examine Jane Street's structure under India's General Anti-Avoidance Rules (GAAR). A large chunk of profits was reportedly routed through its Singapore-based FPI arm, leveraging treaty-based tax benefits, while Indian entities allegedly carried out intraday trades—something FPIs are not allowed to do.
'Considering the observations in the interim order, GAAR could potentially be applied to shift profits to entities liable to pay tax in India," said Harshal Bhuta, partner at PR Bhuta & Co, in a statement to The Economic Times.
Jane Street Fraud Saga: Full Explained
The regulatory action comes after an extensive investigation into alleged manipulation of the Indian stock market through index derivatives, particularly Bank Nifty options, which earned the company massive profits of over Rs 36,500 crore between January 2023 and March 2025.
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In India, it operated through four firms — JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd.
How Did Jane Street Earn Rs 36,500 Crore By Allegedly Tricking Indian Stock Markets?
Between January 2023 and March 2025, Jane Street entities made over Rs 43,289 crore in profits from index options, particularly Bank Nifty (BANKNIFTY) using various strategies that allegedly manipulated markets. These profits were partly offset by losses in other segments like stock futures and cash equity, resulting in a net gain of Rs 36,502 crore.
In a 105-page order, Sebi highlighted two key manipulative strategies — 'Intraday Index Manipulation Strategy' and 'Extended Marking the Close Strategy'.
Read Those Market Manipulation Strategies : Explained: What Is Jane Street, How It Earned Rs 36,500 Cr From F&O Trades In India, Why Has Sebi Banned It?
Sebi noted the following:
A staggering Rs 17,319 crore was earned from BANKNIFTY options alone.
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Profits were disproportionately high on expiry days, when options contracts expire and price influence can be most potent.
Trades were concentrated in short bursts, often aligned with expiry timings.
'JS Group made a total profit of Rs 36,502.12 crores across all segments," Sebi said in the order.
SEBI has accused Jane Street of:
Violating the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations
Misleading market participants, especially retail traders who rely on index movements