SEBI Bans Jane Street for Index Manipulation: ₹4,000 Cr Gains Frozen, Expiry-Day Tactics Exposed
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SEBI Cracks Down: Jane Street Entities Banned, ₹4,000 Crore Gains Frozen for Index Manipulation
India’s market regulator, the Securities and Exchange Board of India (SEBI), has fired a big warning shot at aggressive expiry-day traders. In a rare action, SEBI has banned four Jane Street Group entities from accessing the Indian securities market and frozen over ₹4,000 crore in alleged illegal gains.
The interim order, released on July 4, 2025, outlines what SEBI calls a carefully designed strategy to distort index levels and profit from options trades. Here’s a clear breakdown for investors.
Who is Jane Street and What Did SEBI Find?
Jane Street is a well-known global proprietary trading firm. It’s one of the world’s biggest players in algorithmic and high-frequency trading, especially in ETFs and derivatives.
In India, Jane Street operates through foreign and domestic portfolio investor (FPI) entities. According to SEBI, these entities were not acting in good faith. Instead, they allegedly ran repeated expiry-day trading tactics that manipulated the Nifty and Bank Nifty indices for huge profits.
SEBI’s 105-page order says this went on for at least 18 expiry days — 15 involving Bank Nifty and 3 with Nifty.
How Did the Alleged Manipulation Work?
SEBI uncovered two specific trading strategies Jane Street used to push index levels in their favour.
Intra-day Index Manipulation
On expiry days, Jane Street entities would aggressively build long positions in key index stocks like Bank Nifty constituents early in the day. At the same time, they’d take large short positions in index options — buying puts, selling calls.
Later that same day, they’d reverse their positions in the cash and futures market, driving down the index level. This would make their options bets profitable.
For example, on 17 January 2024, they lost ₹61.6 crore in cash and futures trades but earned ₹735 crore from index options. SEBI called this a classic sign of manipulative intent — large moves, sudden reversals, no genuine economic rationale.
Extended Marking the Close
This tactic involved holding big options positions and then making large trades in the last hour to shift the day’s closing level. The goal: to settle expiry levels exactly where their options book gained the most.
Why Did SEBI Take Such Strong Action?
SEBI says Jane Street’s pattern was not random but part of a premeditated, systematic plan to mislead other market participants.
The order shows that the group earned over ₹3,900 crore from Bank Nifty expiry-day trades alone. Including Nifty expiry days, the total alleged illegal profit crossed ₹4,000 crore.
These trades did not stand alone. SEBI pointed out how the trades involved high volumes, big orders, rapid reversals and perfect alignment with options exposure. This is why the regulator has frozen these profits under its powers.
NSE Had Already Warned Jane Street
One more detail stands out. The National Stock Exchange (NSE) issued a caution letter to Jane Street in February 2025. It warned the group to avoid taking large expiry-day positions and trading patterns that could appear manipulative.
Despite that, SEBI’s data shows Jane Street allegedly repeated the same tactics on May 15, 2025, with a similar bullish strategy in Nifty options. This defiance strengthened SEBI’s case.
Entities Banned and What’s Next
The four entities banned are:
Jane Street Singapore Pte. Ltd.
Jane Street Asia Trading Ltd.
JSI Investments Private Ltd.
JSI2 Investments Private Ltd.
SEBI says they form a “single economic group” through common control and coordinated trading. For now, these firms cannot access the Indian market or run similar strategies. A final order will come after Jane Street files replies and requests a hearing.
Why Does This Matter for You?
This is not just a big headline for pros. It matters for average retail investors too — especially those who trade expiry-day index options.
Expiry Manipulation is Real: The final minutes on expiry days can see big index moves. Some traders push levels to benefit from options books. SEBI’s crackdown shows this is illegal if done deliberately at scale.
Retail Impact: When index levels get artificially pushed up or down, small traders can lose big money — especially those running tight stop-losses or short-term strategies.
Regulator’s Message: SEBI wants all big FPIs and prop desks to know that repeated expiry-day tactics will face scrutiny. This can make the market cleaner in the long run.
Lessons for Retail Traders
If you trade Nifty or Bank Nifty options:
Always watch for sudden large moves in the last hour.
Read open interest data and big delivery trades.
Avoid chasing expiry-day volatility without a plan.
Use clear stop-losses. Small players cannot match the scale of large prop desks.
Key Figures at a Glance
Total profit from alleged index options manipulation: over ₹4,000 crore
Profit only from Bank Nifty expiry trades: about ₹3,914 crore
Overall profit in index options (Jan 2023–Mar 2025): ₹43,289 crore
Losses in stock futures, index futures, and cash: about ₹7,687 crore
What Happens Next?
Jane Street entities can respond to SEBI’s findings and request a hearing. The final order will decide any further penalties or directions.
Source
SEBI Interim Order, July 4, 2025 – www.sebi.gov.in
Market reports: Mint, Economic Times, Business Standard.
Disclaimer
This story is for information only. It is not investment advice. Always read official filings and consult a trusted advisor before trading or investing.
Quick Recap
Q. What did SEBI find in the Jane Street index manipulation case?
SEBI found Jane Street used aggressive expiry-day strategies to distort Nifty and Bank Nifty index levels for unfair gains, booking over ₹4,000 crore in profits.
Q. How did Jane Street allegedly manipulate index prices?
They used two methods: intra-day index manipulation with big stock moves and rapid reversals, and “marking the close” trades in the final hour to push settlement levels in their favour.
Q. Was Jane Street warned before?
Yes. NSE had issued a caution letter in February 2025 asking Jane Street to avoid large expiry-day positions. But the same patterns continued.
Q. Which Jane Street entities were banned by SEBI?
The banned firms include Jane Street Singapore Pte. Ltd., Jane Street Asia Trading Ltd., JSI Investments Private Ltd., and JSI2 Investments Private Ltd.
Q What can retail traders learn from this?
Watch expiry-day moves, manage risk with clear stop-losses, and understand that index manipulation can affect options trades. Always verify big index swings with real open interest and delivery data.