SEBI has banned Jane Street and seized ₹48.4 billion for manipulating expiry-day prices using stocks like HDFC Bank. Learn how this global trading firm gamed Indian markets—and what it means for investors.
In a significant move that has sent shockwaves across global financial circles, the Securities and Exchange Board of India (SEBI) recently took strict action against a major global trading firm—Jane Street. The firm has been barred from trading in Indian markets and SEBI has seized ₹48.4 billion for alleged market manipulation. But what really happened? And how does it affect everyday Indian investors?
Let’s break down the entire episode in simple, easy-to-understand language for our readers at Easy Gyaan.
Who is Jane Street and Why Are They Important?
Jane Street is a global proprietary trading firm based in New York. They specialize in high-frequency trading (HFT), using advanced algorithms to buy and sell stocks and derivatives at lightning speeds. They operate in more than 50 countries and handle billions of dollars in trades every day.
In India, Jane Street was active in index derivatives—mainly in Nifty 50 and Bank Nifty—trading through its Indian affiliate, Jane Street Capital India Private Ltd.
On the surface, they looked like any other foreign institutional investor. But behind the scenes, SEBI noticed something unusual.
What Exactly Did SEBI Discover?
SEBI started noticing a pattern. Jane Street was allegedly using its massive financial muscle to influence expiry-day prices of indices like Nifty 50 and Bank Nifty.
The alleged strategy was as follows:
- Near the expiry of index options, Jane Street would buy large volumes of index stocks and futures—especially during the last 30–45 minutes of the trading session.
- This would artificially push up the index, leading to a favorable movement in the options they held.
- Once the price was manipulated, they would exit the trades, making massive profits in a short span.
This is a classic case of “marking the close”—a tactic used to manipulate closing prices, especially on expiry days when options are settled.
According to SEBI, this was done repeatedly over several months between January 2023 and March 2025, helping Jane Street earn unlawful gains estimated between ₹32,000 crore and ₹44,000 crore.
The May 8th Incident: A Key Example
One of the clearest examples of this manipulation occurred on May 8, 2025—a volatile day in Indian markets. That day saw India’s armed forces conduct “Operation Sindoor”, a high-impact military strike. The market was expected to drop due to geopolitical tension.
But surprisingly, Nifty didn’t fall as expected.
SEBI’s investigation found that in the last 45 minutes of trading, Jane Street pushed up the index, helping their short options avoid losses. They made a quick profit of ₹3.1 crore in just that short time.
Such behavior raised red flags, prompting SEBI to take urgent action.
HDFC Bank Also Targeted in Jane Street’s Strategy
Beyond index manipulation, SEBI uncovered that Jane Street’s strategy included deliberate manipulation of individual heavyweight stocks, such as HDFC Bank, Reliance, TCS, Infosys, and SBI.
Here’s how they did it:
- On expiry days, Jane Street would buy large quantities of HDFC Bank shares and other blue-chip stocks in the cash market and futures market during morning hours.
- This artificially pushed up the Bank Nifty index, since HDFC Bank has significant weightage.
- Once the index rose, their short put options gained value, allowing them to profit.
- Later in the day, Jane Street would offload the positions, sometimes pushing the market down again.
A particularly revealing case was on January 17, 2024, where Jane Street reportedly made a staggering ₹734.93 crore in profits in a single day using this strategy.
SEBI’s forensic analysis showed that these trades were not based on fundamentals or market trends—they were designed specifically to manipulate expiry prices and benefit their derivatives positions.
This confirms that the manipulation extended beyond just the index—it also affected blue-chip Indian stocks, which many retail investors hold in their portfolios.
How Did SEBI Crack Down?
SEBI issued an interim order on July 3, 2025, with the following major actions:
- Banned Jane Street Capital India Pvt. Ltd. and its affiliates from accessing Indian markets.
- Ordered a seizure of ₹48.4 billion (₹4,840 crore) from the firm’s Indian accounts.
- Initiated a deeper probe into expiry-day trading patterns.
- Warned other high-frequency trading firms to avoid similar strategies.
The regulator gave Jane Street 21 days to respond to the charges.
Role of NSE: How It All Came to Light
It was the National Stock Exchange (NSE) that first noticed suspicious activity. NSE’s surveillance team noticed that on expiry days, certain trades were influencing index movement unnaturally.
They provided SEBI with:
- Time-stamped trading data
- Delta and option exposure summaries
- Price impact analysis
- Detailed expiry-wise forensic reports
This collaboration helped SEBI build a strong case against Jane Street.
In fact, back in February 2025, NSE had already warned Jane Street about their trading behavior and asked them to refrain from strategies that could hurt market integrity.
Why Is This Serious for Indian Investors?
This incident isn’t just about one foreign firm. It reflects something deeper and more important:
Market Integrity
If big players can move the market in their favor, retail investors suffer. They enter or exit trades based on manipulated prices.
Expiry Day Volatility
Many Indian retail traders participate in weekly option expiries. If prices are being manipulated near the close, they face unfair losses.
Trust in Indian Markets
SEBI’s strict action is a signal to global firms—India will not tolerate manipulation. This builds confidence for Indian investors, both big and small.
What Is SEBI Planning Next?
SEBI is now planning larger reforms to reduce manipulation risks:
- Reducing expiry frequency – There’s talk of ending weekly expiries to prevent expiry-day strategies.
- Increasing lot sizes – To reduce retail over-participation and excessive speculation.
- Algorithmic trading review – New rules are being considered to monitor HFT firms more closely.
- Extending surveillance – SEBI is now examining similar trading behavior on other indices, even commodities and currency markets.
Is Jane Street the Only One?
As of now, the action is focused on Jane Street. But SEBI’s statement suggests this could be just the beginning.
Other foreign firms using complex algorithmic strategies are likely being investigated too.
This event could lead to stricter compliance rules for all foreign institutional investors (FIIs), especially those active in derivatives.
Lessons for Indian Traders and Investors
Whether you’re a seasoned trader or a regular mutual fund investor, here are some key takeaways:
- Expiry-day trading can be risky. Be cautious of unnatural movements, especially in the last 30 minutes.
- Don’t blindly follow big moves in the market—often, they are driven by institutional strategies that retail investors don’t fully understand.
- SEBI is working for you. These kinds of crackdowns are good for the long-term health of our financial system.
- Diversify your investments—don’t put all your money in high-risk derivatives.
Conclusion: A Bold Step Towards a Fairer Market
SEBI’s action against Jane Street is a milestone moment in Indian market regulation. It sends a clear message—no matter how big or global you are, if you manipulate Indian markets, you will face the consequences.
As Indian investors, we should feel reassured. The regulators are alert. The exchanges are vigilant. And steps are being taken to ensure that every investor—small or big—gets a fair chance.
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