The market watchdog of India, SEBI, has taken decisive action against the US-based trading firm Jane Street. The firm is held responsible for manipulating the Bank Nifty Index to make more than INR 43000 crore in profits via planned intra-day options strategies. This is one of the biggest market intervention cases and a sign of a strong stance against unfair trading practices.
How the Manipulation Worked
As per the reports SEBI has, Jane Street and related companies used the following method between January 2024 and March 2025.
Morning moves
Jane Street reportedly entered the markets in the morning with massive buy orders in Bank Nifty component stocks and futures. This activity created upward pressure on the index, giving the impression of a bullish market sentiment.
Afternoon Reversal
As the trading day progressed, the firm allegedly reversed the positions by aggressively selling the same stocks and futures it had bought earlier. This sudden shift helped the index to fall sharply.
Options profit
These movements resulted in minor losses in the cash and futures markets. Jane Street had already placed options positions that benefited from the rise and fall of the index. The swings created by their trading helped the trader to profit heavily from their derivatives.
SEBI stated that it was “marking the close,” which means trying to change the closing price to make profits from other trades.
The Numbers: A Single-Day Example
On 17 January 2024, the activities of Jane Street were noticeable:
- They purchased Bank Nifty futures worth INR 4370 crore and sold options with INR 32115 in the morning
- The company sold futures worth INR 5372 crore by the afternoon
- The result was an INR 735 crore profit from options in just one day, irrespective of the small losses.
Over two years, this kind of trading reportedly added around INR 43289 crore.
SEBI Acts: Quick and Decisive
To counter this, SEBI took major measures:
- Banned Jane Street and three associated firms from the Indian markets
- Froze their bank accounts and asked for an initial INR 4843 crore repayment
- Instructed exchanges to monitor for similar trading patterns shortly.
These actions protect the market fairness and investor trust.
Why It Matters
This case raised important questions:
- It shows how sophisticated and global firms can influence the Indian markets using advanced tools like algorithmic trading and high-speed execution.
- It shows the vulnerability of expiry-day trading. Small price changes can affect large-scale derivatives settlements.
- It underscores the risk faced by retail investors, who often do their trades as per the price movements they think are genuine.
The Jane Street case leads to strict surveillance of proprietary trading firms in India. It also opens up discussions on whether trading rules, particularly during expiry-day volumes and index movement, need tightening.
If major players like Jane Street select to exit and reduce their activity due to the increased scrutiny, there can be a short-term drop in market liquidity. As proprietary firms are responsible for around 50% of options trading volume, their absence results in wide bid-ask spreads and reduced efficiency.
From Harshad Mehta to Jane Street: A Legacy of Market Manipulation
The Indian stock market has witnessed multiple high-profile manipulation cases over the decades. Each reflects the tools and technology of the time. In 1992, Harshad Mehta used banking loopholes to increase stock prices, shaking investor confidence and prompting major reforms in the financial system of the country. A year later, Bollywood actor Arshad Warsi was linked to a pump-and-dump scam, where penny stocks were artificially hyped and then offloaded, which left small investors at a loss.
The Jane Street case was more sophisticated. It shared the same underlying theme – manipulating the markets for unfair gains. Apart from earlier scams, this was all about algorithm-based intraday trades and precise expiry-day tactics, which distorted index levels at scale.
Despite the difference in approach and scale, the impact on investor trust remains the same. These incidents remind us that whether scams are manual or tech-driven, market manipulation will be exposed by regulators like SEBI.
Conclusion: A Turning Point for Indian Markets
The Jane Street saga is more than just a high-profile penalty. It is a major move for the financial markets of the Indian subcontinent. The quick response of SEBI shows that even big international companies should follow the rules in India. As the dust arrives, India is committed to transparency, regulated trading, and investor protection to set a strong example for the global markets.
Download app: Android User | IOS User | Web Trader
Reach Tradex.live: https://tradex.live/links/