 "Sebi, Jane Street, market manipulation, Ananth Narayan, Bank Nifty, index options, PFUTP regulations, high-frequency trading, securities market ban, Rs 4844 crore disgorgement")
The Securities and Exchange Board of India (Sebi) has temporarily barred US trading firm Jane Street from accessing the domestic market for allegedly manipulating the popular Bank Nifty index.
In an interim order on early Friday, Sebi announced the impounding of ₹4,844 crore it said the firm made “unlawfully”. This is the highest-ever impounding order by the regulator.
The ban is a major blow for the firm, which made over $20 billion in net trading revenue globally last year.
Experts said this rare action by Sebi against a foreign trading entity sends a strong signal to global market-making firms that have expanded their presence in India — the world’s largest derivatives market by volume — to capitalise on the derivatives boom.
In a statement, Jane Street said it disputes the findings of the Sebi interim order and will further engage with the regulator.
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“Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world,” it said.
The Sebi order alleges that Jane Street influenced the underlying cash market during weekly index expiries to benefit its options position.
This was allegedly done by placing excessively large orders at increasingly high prices. Simultaneously, the trading firm placed bets in index options to benefit from the manipulation of index levels, Sebi said.
“I am also convinced that interim cease-and-desist directions are warranted in the facts of this case. Until the completion of the investigation and the related proceedings, it is imperative that exchanges monitor any future dealings and positions of Jane Street group closely on an ongoing basis, to ensure that they do not, either directly or indirectly, indulge in any kind of manipulative activity. This is crucial to preserve the overall faith in the ecosystem and to protect investors,” wrote Ananth Narayan, whole-time member of Sebi, in the 105-page order.
A final order in the matter is expected in a few months, as the regulator is still probing other indices and market segments where Jane Street could have deployed similar strategies. While the present order is limited to a few strategies undertaken by the high-frequency trading firm in Bank Nifty, Sebi is investigating activities in more indices, such as Nifty, and on the BSE.
The current order is based on only 18 days of Bank Nifty index manipulation and three days of Nifty index manipulation on expiry days.
“Investigations into other expiry days, other indices (including across exchanges), and other potential patterns, besides the two highlighted in the order, will need to continue. It is difficult to estimate how long all this could take – the scope is quite large,” said a source privy to the developments.
The regulator said trying to “engineer the closing of the market on expiry day in a manner that benefits enormous index option positions that they may be running to expiry... would prima facie be in violation of PFUTP regulations.”
PFUTP stands for Prohibition of Fraudulent and Unfair Trade Practices, a serious violation under the Sebi Act.
Jane Street’s domestic activity had previously grabbed attention during a court battle with Millennium Management, which revealed the firm earned $1 billion trading in Indian equity derivatives.
According to the Sebi order, between January 2023 and March 2025, Jane Street gained ₹44,358 crore in options, and lost ₹7,208 crore in stock futures. It also lost ₹191 crore in index futures and another ₹288 crore in cash. Pocketing an overall gain of ₹36,671 crore during this period. Not all of these gains have been declared illegal.
Sources added that while Sebi has enhanced surveillance on other high-frequency traders, no other major player is currently under the regulatory scanner.
The market regulator has asked stock exchanges to closely monitor any future dealings and positions by Jane Street.
Jane Street’s FPIs have small holdings in equities but over ₹15,000 crore of domestic government securities, which served as cash-equivalent liquid margin enabling them to trade in the F&O market.
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