Jane Street banned in India! How US trading entity allegedly manipulated index closing on expiry days

Mint

7 hours ago

The Securities and Exchange Board of India (SEBI) has barred US-based trading firm Jane Street and three of its affiliated entities from accessing Indian securities markets, citing allegations of large-scale manipulation in the derivatives trading.
The entities named in SEBI's interim order include JSI2 Investments Private Ltd, Jane Street Singapore Pte. Ltd, and Jane Street Asia Trading Ltd. SEBI has also directed the entities to deposit ₹ 4,843.5 crore — alleged to be illegal gains — into an escrow account maintained by the regulator. Additionally, a debit freeze has been imposed on their bank accounts.
According to SEBI's Whole Time Member Ananth Narayan G, the Jane Street Group is alleged to have engaged in manipulative trades on at least 21 occasions involving securities forming part of the Nifty and Bank Nifty indices.
'Such actions have compromised market fairness and integrity, allowing the group to unlawfully profit from their trading activities and positions in the index options market,' the Sebi order dated 3 July 2025 said.
SEBI's order outlines a recurring trading pattern allegedly used by the Jane Street entities, particularly on index expiry days. The strategy involved large-scale purchases of Bank Nifty futures and equities in the morning, paired with aggressive selling of Bank Nifty options. This would be followed by significant selling in the futures market post-noon, thereby impacting the closing level of the index.
For instance, on January 17, 2024, Jane Street reportedly bought Bank Nifty futures worth ₹ 4,370 crore and sold Bank Nifty options worth ₹ 32,115 crore in the morning session. Later in the day, it sold Bank Nifty futures worth ₹ 5,372 crore. These trades resulted in a peak short position of ₹ 46,620 crore in the options segment.
Jane Street allegedly booked a profit of ₹ 735 crore in options while incurring a loss of ₹ 61.6 crore in futures and cash segments, leading to a net gain of ₹ 673.4 crore on that day.
SEBI also highlighted another strategy wherein Jane Street allegedly created large short positions in Bank Nifty futures and constituent stocks during the final hours of trading on expiry days to influence index closing.
On July 10, 2024, the firm reportedly sold Bank Nifty futures worth ₹ 2,800 crore and created short positions in Bank Nifty options worth ₹ 44,154 crore, leading to a softer index close and a profit of ₹ 225 crore.
The regulator observed a consistent pattern across multiple trading sessions, concluding that these were not routine transactions but instances of manipulation in violation of SEBI's Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.
Despite being aware of SEBI's ongoing investigation, Jane Street allegedly continued to deploy similar strategies. On May 15, 2025, and on two other occasions in the same month, the firm reportedly purchased Nifty futures and underlying stocks worth ₹ 4,911 crore in the final hours of trade to influence expiry-day closing levels.
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