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Indian Express
20 hours ago
- Business
- Indian Express
Jane Street defied NSE red flag, kept engaging in manipulative trading actions
US-based Jane Street, which was barred from the securities market by regulator Sebi for making 'unlawful gains' in the stock market, had ignored a prior warning from the National Stock Exchange four months earlier and continued with alleged manipulative trading activities. When concerns regarding allegedly manipulative trading practices by JS Group, a global proprietary trading firm, surfaced in early 2025, the NSE, acting under Sebi's direction, issued a clear and formal warning to JS Group in February 2025. The notice advised them to avoid high-risk activity in index options and refrain from any trading behaviour that could indicate manipulation. In response, JS Group informed NSE in February 2025 of its assurance to fully comply with applicable regulations. However, in May 2025, the group again executed what appeared to be manipulative 'extended marking the close' strategies—entering large, aggressive trades in index and stock markets around expiry closing—to move the index in their favour. These trades, carried out in May 2025, blatantly disregarded the warning letter issued on February 06, 2025, as well as the group's own formal assurance made to NSE that same month, according to the Sebi order. On Thursday, Sebi ordered the impounding of Rs 4,843.57 crore in alleged unlawful gains made by Jane Street through alleged manipulative trading practices and restrained it from accessing the securities market. The net profits booked in the FPIs in the JS Group amounted to Rs 32,681 crore, Sebi had said. The NSE letter noted that the Jane Group had been consistently engaging in trading patterns that raised serious concerns over market integrity, particularly around the expiry of index derivatives. 'It was observed that you along with your related entity, Jane Street Group Investments Pvt Ltd, were running abnormally high delta positions in the index derivatives segment and correspondingly small net sentimental OI (open interest). Such large directional OI (delta) can cause risk to market stability and raises concern for market integrity especially around expiry of contracts wherein your related entity has traded in the cash market to favour large open positions in options,' NSE said. Delta is a measure of how much the price of an option is expected to change based on a change in the price of the underlying stock or index. Jane Street's trading activity, prima-facie, raises concerns for market integrity on account of large delta positions in index derivatives, combined with concurrent act of taking and then reducing positions in the top constituents of the index through cash market / derivatives over a short period, to artificially influence the price of the index, NSE said. It also creates an information asymmetry for other investors / traders in those constituents or derivatives contracts on index, who are not aware about such artifice and repeated occurrences of such instances cannot be considered as coincidence, NSE said. 'The above trading activity prima facie appears to be fraudulent and manipulative in terms of dealing in top constituents of index in cash market / futures segment and taking relatively large size contra position in options expiring on that day on the same index,' NSE said. 'It is further advised to refrain from the aforementioned trading pattern and unwind such positions in a non-disruptive manner and report on a daily basis to us till further notice,' NSE told Jane Street. Despite the NSE letter, JS group has been seen to be running very large net cash-equivalent positions in index options. Disturbingly, on days such as on May 15, 2025 (an expiry day for NIFTY weekly options), JS group was seen not only running very large effective cash-equivalent long positions via NIFTY index options, it was also seen to be intervening heavily in NIFTY futures and NIFTY constituent stock futures at close to expiry. The timing, scale, and construction of Jane Street Group's positions and the trading on May 15, 2025, suggest that it continued deploying a weekly expiry-centric extended marking-the-close strategy even after all the regulatory red flags that had been shown prominently to them, Sebi said. This activity was absent in the cash segment, giving an impression of complying with regulatory caution (issued in February 2025) but actually manipulating the market through futures segment. Jane Street's trading in index futures alongside its stock-level trades appears to be part of a coordinated approach to support the NIFTY index level near expiry. JS, vide its letter to Sebi dated August 30, 2024, suggested that these trades were to 'remove unwanted delta' or to 'manage overall delta'.
Hans India
a day ago
- Business
- Hans India
Sebi bans US-based Jane Street from securities market
Markets regulator Sebi has barred US-based Jane Street Group (JS Group) from the securities markets and directed the group to disgorge unlawful gains of Rs4,843 crore for allegedly manipulating stock indices through positions taken in derivatives segment. This could be the highest disgorgement amount ever directed by the Securities and Exchange Board of India (Sebi). In its interim order, the regulator has debarred JSI Investments, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading -- entities collectively referred to as the Jane Street Group -- from trading until further notice, while continuing its investigation. Established in 2000, Jane Street Group LLC is a global proprietary trading firm in the financial services industry. It employs more than 2,600 people across five offices in the US, Europe, and Asia, and conducts trading operations in 45 countries. The Jane Street (JS) Group has come under Sebi's scrutiny for allegedly manipulating index levels in the stock market to earn illegal profits, primarily through the highly liquid Bank Nifty and Nifty index options segments. Meanwhile, shares of Nuvama Wealth Management, which is the trading partner of JS Group for Indian stock market, fell over 10 per cent to Rs7,280.50 on NSE. An investigation by Sebi revealed that over 21 expiry days between January 2023 and May 2025, the group executed large trades in the underlying cash and futures markets to influence index movements and profit from massive positions in the options market. Two key strategies were identified-- one involved buying heavily in Bank Nifty stocks and futures in the morning and selling them aggressively in the afternoon to create a softer close, while the other involved concentrated selling or buying in the last two hours of the expiry day to sway index levels. These actions helped the group earn illegal profits of about Rs4,843 crore, even as they incurred smaller losses in cash and futures trades, the regulator said. Sebi also noted that between January 2023 and March 2025, the JS Group recorded substantial trading activity across various segments of the market. The group made gains of Rs44,358 crore from index options trading, which formed the bulk of their profits. However, these were partially offset by losses of Rs7,208 crore in stock futures, Rs191 crore in index futures, and Rs288 crore in the cash market. After accounting for all gains and losses, the JS Group reported a net total profit of Rs36,671 crore during this period, Sebi noted. The case stems from media reports in April 2024, which suggested that Jane Street and its related entities may have used unauthorised proprietary trading strategies in the Indian options market. Sebi noted that the JS Group continued to carry out suspicious trading activities, mainly near market closing on expiry day, by making large and aggressive trades to unfairly influence the index, even after receiving a warning in February and making promises to the NSE to stop such practices. 'Such egregious behaviour, in clear disregard/ defiance of the explicit advisory issued to them by NSE in February 2025, amply demonstrates that unlike the vast majority of Foreign Portfolio Investors and other market participants, JS Group is not a good faith actor that can be, or deserves to be, trusted. In the face of such a strong prima facie case that allowing the JS Group to continue as before may severely compromise investor protection on an extraordinary scale, Sebi has a duty to directly intervene,' Sebi added. Accordingly, Sebi said, 'the total amount of unlawful gains earned by the JS Group from the alleged violations, Rs4,843.57 crore, shall be impounded jointly and severally.' The entities have been restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly. Additionally, banks where the entities are holding accounts have been directed to ensure that no debits are made, without Sebi's permission, except for the purpose of complying with this order.
Indian Express
2 days ago
- Business
- Indian Express
Market manipulation: Why has Sebi impounded Rs 4,843 crore unlawful gains by US firm Jane Street
The Securities and Exchange Board of India (Sebi) has ordered the impounding of Rs 4,843.57 crore in alleged unlawful gains made by Jane Street, a US-based global proprietary trading firm, through manipulative trading practices. Additionally, Sebi has prohibited the firm from engaging in any securities transactions until the recovery of the alleged illegal gains is completed and stated that 'JS Group is not a good faith actor that can be, or deserves to be, trusted'. The regulator ordered the firm to provide a full inventory of all their assets in India whether movable or immovable, or any interest or investment or charge in any of such assets, including property, details of all their bank accounts, demat accounts, holdings of shares/securities if held in physical form and mutual fund investments and details of companies in which they hold substantial or controlling interest immediately but not later than 15 days of the order. 'Entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly,' the Sebi order issued by its Whole-time Member Ananth Narayan said. New York based JS Group is a multinational entity, controlled by managers residing outside of India. In several key NIFTY constituents (futures segment), Jane Street's trades were disproportionately skewed towards at or above LTP (last traded price), consistent with an attempt to create upward price pressure, Sebi order said. 'This reveals a consistent behavioural pattern – Jane Street was not trading neutrally, but was placing trades in a manner that propped up the prices of index stocks during the final 2 hours of trading,' Sebi said. 'This pattern was not limited to constituent stock future alone. The Group was also observed to be actively trading in NIFTY index futures, particularly in the final hour of trading. Trading in index futures plays a strategic role in such expiry-day activity. Since index futures closely track the index and are highly liquid, they serve as an effective tool to amplify market sentiment, mirror or reinforce spot movement, and influence short-term index direction,' the order said. Additionally, the settlement value of NIFTY options is ultimately tied to the closing index value, which itself is influenced by underlying constituent prices and index-linked futures sentiment, it said. 'JS Group's trading in futures segment of all constituents in NIFTY with significant volume and LTP contribution suggests a deliberate approach to impact the broader index,' the order said. Notably, this activity was absent in the cash segment, giving an impression of complying with regulatory caution (issued in February 2025) but actually manipulating the market through futures segment. 'Thus, Jane Street's trading in index futures alongside its stock-level trades appears to be part of a coordinated approach to support the NIFTY index level near expiry,' it said. According to the Sebi order, much of the enormous amount of trading and position taking in F&O by the JS Group have been undertaken by the FPIs (foreign portfolio investors) in the JS group, and much of the profits arising from the prima facie manipulative schemes as identified in the 21 instances elaborated in the Sebi order have also been booked by them. In fact, during the examination period, the net profits booked in the FPIs in the JS Group amounted to Rs 32,681 crore, Sebi said. The magnitude of this profit is significantly higher than the average quantum of assets held by these FPIs in India as of the month ends between January and May, 2025, indicating that these profits have been repatriated. The Sebi order has made the case that prima facie, the demonstrably large and aggressive intraday activities undertaken by the Indian entity in index constituent stocks have no economic rationale other than to manipulate the underlying indices, to benefit the significantly larger index options positions created or carried by the JS Group FPI entities. At least to the extent of this coordination across JS Group, the activities of the Indian entities are also clearly being overseen by the JS group as a whole. FPIs are free to repatriate their profits and exit Indian markets at their discretion. As recently as May 2025, JS Group again resorted to undertaking prima facie manipulative 'extended marking the close' trading patterns of large and aggressive intervention in index and constituent markets towards the expiry day closing, so as to influence and manipulate the index to their illegal advantage, the order said. The impugned trades in May 2025 are a cynical violation of the caution letter issued to the JS Group on February 06, 2025, and of their own declarations made to NSE in the same month. 'Such egregious behaviour, in clear disregard/ defiance of the explicit advisory issued to them by NSE in February 2025, amply demonstrates that unlike the vast majority of foreign portfolio Investors and other market participants, JS Group is not a good faith actor that can be, or deserves to be, trusted,' Sebi said. Jane Street Group LLC is a global proprietary trading firm operating within the financial services sector. It was founded by a small group of traders and technologists in a tiny New York office in 2000. Today, it has more than 3000 employees across five global offices and trades in a broad range of asset classes on more than 200 venues in 45 countries. In the US, its services are offered through Jane Street Capital, LLC and Jane Street Execution Services, LLC—both of which are SEC-registered broker-dealers and members of the Financial Industry Regulatory Authority (FINRA). it was observed that Jane Street Europe Limited and Jane Street Group, LLC (supra) were disclosed as the holding company and ultimate holding company of JSI Investments Private Limited, respectively, Sebi said.
Economic Times
2 days ago
- Business
- Economic Times
Rs 735 crore in 1 day! Jane Street's most profitable day on Dalal Street was built on Nifty Bank's fall
Jane Street Group, the U.S.-based quant trading giant barred from Indian markets on Friday, pocketed a staggering Rs 735 crore in a single trading session in January 2024, its most profitable day on Dalal Street, according to explosive findings in a SEBI order released the same day. ADVERTISEMENT The profit was part of a larger Rs 36,502.12 crore that Jane Street earned across segments in India between January 2023 and March 2025. But SEBI's forensic probe zeroes in on January 17, 2024, when the firm allegedly executed an elaborate "Intra-day Index Manipulation" strategy in the Bank Nifty index and its constituents, leading to a windfall in index options. On January 17, 2024, the Bank Nifty index opened sharply lower at 46,573.95, compared to the previous close of 48,125.10. 'Media reports claimed that this fall may be attributed to the market's apparent disappointment with the results announced by HDFC Bank after market close on January 16, 2024,' SEBI noted. What followed was a two-part strategy that SEBI said helped Jane Street generate a net profit of Rs 734.93 crore in a matter of hours. In the morning session—'Patch I'—the firm aggressively bought Rs 4,370 crore worth of Bank Nifty constituent stocks and futures, a volume SEBI described as significant in relation to the trading volumes in these markets. The purchases pushed prices upward and misled market participants into believing a recovery was underway. 'At a time when participants in index options markets are misled by the above support for Nifty Bank, JS Group builds effectively Rs 32,114.96 crores of bearish positions in the much more liquid Nifty Bank index options by buying cheap Put options and selling expensive Call options,' the order said. ADVERTISEMENT In the second leg—'Patch II'—Jane Street reversed nearly all of its long positions. 'The sales are aggressive, in a manner that pushes down prices in the component stocks and hence the index. JS Group books losses in intraday cash/ futures market trading,' the SEBI order the losses in equities were dwarfed by the gains from index options. As the Bank Nifty index fell from the morning highs, the put options soared in value while call options lost steam. 'Profits in index options more than compensate for the JS Group's losses in intraday cash/futures trading,' SEBI said. This was not a one-off. SEBI's investigation found Jane Street used the same 'Intra-day Index Manipulation' strategy on 15 of the 18 days it examined in detail. On the other three, the firm deployed a separate 'Extended Marking the Close' strategy, which was again seen on three more days in May 2025, after SEBI had already issued a cautionary letter. ADVERTISEMENT Despite a February 2025 warning issued through the National Stock Exchange, 'JS Group continued with similar trades, in disregard of the caution letter from the Exchange… and JS Group's own commitments,' the regulator the NSE closed its own probe into the matter, SEBI opted for a more aggressive stance. On Friday, it barred Jane Street and four affiliated entities from accessing the Indian securities market and ordered banks to freeze withdrawals from their accounts. The regulator also moved to impound Rs 4,840 crore in alleged illegal gains. ADVERTISEMENT Also read | Explained: What is Jane Street and how it made Rs 36,500 crore profit by gaming Dalal Street The findings further underline concerns about the structure of India's derivatives markets, where sophisticated global players deploy algorithmic and high-frequency strategies against a sea of retail options traders. SEBI said Jane Street was 'consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O particularly on index option expiry days.'The regulator noted the 'intensity and sheer scale' of Jane Street's interventions in cash and futures markets, adding that the firm 'was aware that Nifty Bank was almost certainly likely to fall again by the end of the day, given their intent to aggressively sell back all of their morning purchases (and more).' ADVERTISEMENT Other traders, however, 'were unaware of all this, and were hence enticed to deal at a time that the Nifty Bank itself was being artificially and temporarily propped up,' SEBI said. Also read | Sebi bars U.S. trading firm Jane Street from Indian markets, orders Rs 4,840 crore freeze over alleged Nifty manipulation (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
New Indian Express
2 days ago
- Business
- New Indian Express
How Jane Street gamed Bank Nifty on expiries, made Rs 36,500 crore
According to the Sebi findings, Jane Street used to heavily buy Bank Nifty futures as well in the cash segment and sell Bank Nifty options in big numbers--all in the morning of the expiry days. By the afternoon of the same day, its related entities used to aggressively sell large quantities of Bank Nifty futures and pocket hefty profit. According to Sebi calculation, JS and three of its associated entities made a whopping Rs 36,671 crore in profits between January 2023 and May 2025. Of the total gain, Sebi considers as much as $566.3 million or Rs 4,843.5 crore of illegal gains. The group's total illegal profits identified across 15 days in May 2025 was Rs 4,843 crore. Between January 2023 and March 2025, JS made Rs 44,358 crore in options, lost just Rs 7,208 crore in stock futures, lost Rs 191 crore in index futures and Rs 288 crore in cash. Overall its net profit stood at Rs 36,671 crore. What JS Group used to do was on the expiry days, it aggressively bought large amounts in Bank Nifty underlying stocks/futures (to the tune of Rs 4,370 crore on Jan 17, 2024 and sold this index options Rs 32,115 crore. By afternoon it aggressively sold large underlying stocks/futures worth Rs 5,372 crore. Peak short position in the index options segment was Rs 46,620 crores. Thus it made a clean profit of Rs 735 crore from index options, while its intraday loss from cash/futures was only Rs 61.6 crore. Narayan stated the US trading firm's 'four entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly.' Sebi also noted that JS Group again resorted to undertaking prima facie manipulative 'extended marking the close' trading patterns of large and aggressive intervention in index and constituent markets towards the expiry day closing, so as to influence and manipulate the index to their illegal advantage in May 2025, despite a caution letter in February and its own declarations to the NSE. "Such egregious behaviour, in clear disregard/defiance of the explicit advisory issued to them by the NSE in February 2025, amply demonstrates that unlike the vast majority of foreign portfolio investors and other market participants, JS Group is not a good faith actor that can be, or deserves to be, trusted. "In the face of such a strong prima facie case that allowing the JS Group to continue as before may severely compromise investor protection on an extraordinary scale, Sebi has a duty to directly intervene," Narayan said in the order.
