Jane Street disputes Sebi’s findings after Rs 4,840 crore freeze, vows to engage with regulator
Jul 4, 2025
Synopsis
SEBI stated that Jane Street earned an estimated ₹36,500 crore in profits between January 2023 and March 2025, with ₹43,289 crore generated from index options alone, based on National Stock Exchange data. The regulator has instructed banks to freeze ₹4,840 crore in alleged illegal gains held in the firm’s India-linked accounts, prohibiting any withdrawals without prior approval.
U.S. quant trading giant Jane Street on Friday disputed the findings of SEBI’s interim order that bars the firm from India’s securities market. The company said it plans to engage further with the regulator, as one of Wall Street’s most secretive firms comes under growing scrutiny in one of the world’s busiest derivatives markets.
SEBI has also ordered the impounding of Rs 4,840 crore in alleged unlawful gains, directing banks to freeze any debit transactions from Jane Street-linked accounts without its permission.
“Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world,” the firm said in an emailed response to Reuters. “Jane Street disputes the findings of the SEBI interim order and will further engage with the regulator.”
The SEBI order, issued earlier on Friday, bars Jane Street and four of its affiliates — JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd — from buying, selling or dealing in Indian securities, alleging they used sophisticated strategies to distort the Nifty and Bank Nifty indices, generating enormous profits from derivatives trades.
Rs 36,500 crore in profits under the lens
SEBI said Jane Street earned an estimated Rs 36,500 crore in profits between January 2023 and March 2025, with Rs 43,289 crore coming from index options alone, according to National Stock Exchange data. The regulator has ordered banks to freeze Rs 4,840 crore in alleged unlawful gains from the firm’s India-linked accounts, directing that no debits be allowed without its approval.
“The entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly,” the interim order said.
The company, which began operations in India in December 2020, has been granted 21 days to file objections or challenge the order before the Securities Appellate Tribunal.
Complex trades, massive profits
In a detailed 105-page order, SEBI accused the Jane Street Group (JS Group) of deploying high-volume, cross-segment strategies designed to mislead retail traders and manipulate index levels on expiry days. The alleged manipulation included simultaneous activity across the cash equity, futures, and options segments.
SEBI highlighted one key technique, the “Intra Day Index Manipulation” strategy, where Jane Street allegedly bought Rs 4,370 crore worth of Bank Nifty constituent shares on the morning of January 17, 2024, to artificially push the index up. The firm then reversed these trades by aggressively selling later in the day while holding substantial bearish positions in index options. On that day alone, Jane Street earned Rs 734.93 crore in profit from Bank Nifty options, the regulator said.
SEBI found that out of 18 closely examined trading days, the firm deployed the intra-day strategy on 15 and an “Extended Marking the Close” strategy on the remaining three.
Ignored warnings, regulator says
SEBI also flagged that Jane Street continued using these tactics even after receiving a cautionary letter via the NSE in February 2025. The firm acted “in disregard of the caution letter from the Exchange… and JS Group’s own commitments,” the order stated.
“What sets apart the trading pattern of the JS Group as prima facie being manipulative is the intensity and sheer scale of their intervention in the underlying component stock and futures markets,” SEBI said.
The regulator said the firm 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.”
Retail investors misled, says SEBI
According to the order, Jane Street's trades led retail traders to act on misleading index levels. “The JS Group entities were 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),” SEBI said, adding that other market participants “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.”
The firm also allegedly executed “extended marking the close” strategies, placing large sell-side orders in the final minutes of trade to depress index levels, thereby benefiting short Call or long Put positions.
SEBI presses ahead, even as NSE closed probe
While the National Stock Exchange concluded its own probe in May following a response from Jane Street’s local partner Nuvama Wealth, SEBI opted for stronger action amid rising global scrutiny of high-frequency foreign players in India's derivatives markets.
Jane Street’s India operations have already drawn attention after a legal dispute with Millennium Management in the U.S. revealed it earned $1 billion from Indian options in 2023 alone, Bloomberg had reported. Bloomberg subsequently reported the firm made $2.3 billion in equity derivatives revenue from India in 2024.
SEBI’s crackdown also lays bare the widening gap in outcomes between institutional and retail participants in the booming Indian options market. In FY24, foreign and proprietary traders earned more than Rs 610 billion through algorithms and high-frequency trades, a near mirror image of what retail investors collectively lost, the order said.
[The Economic Times]
