‘Buys heavily in bank stocks and futures in morning, sells them aggressively in afternoon’

The Securities and Exchange Board of India (Sebi), with effect from July 3, 2025 banned the US-based trading firm Jane Street from dealing securities in the Indian market for allegedly manipulating stock indices through positions taken in derivatives segment.

According to Sebi’s interim order, Jane Street Group made profits of Rs 43,289.33 crore in index and stock options. An investigation by the regulator revealed that over 21 expiry days between January 2023 and May 2025, the group executed large trades in the underlying cash and futures markets to influence index movements and profit from massive positions in the options market. Two key strategies were identified—one involved buying heavily in Bank Nifty stocks and futures in the morning and selling them aggressively in the afternoon to create a softer close, while the other involved concentrated selling or buying in the last two hours of the expiry day to sway index levels.

Established in 2000, Jane Street Group is a global proprietary trading firm in the financial services industry. It employs more than 2,600 people across five offices in the US, Europe, and Asia, and conducts trading operations in 45 countries.

According Sebi’s interim order, the decision was based on media reports titled ‘Jane Street-Millennium Suit: ‘Secret’ Strategy Concerns India, Hearing Reveals’ and ‘Ex-Jane Street trader pillories claims he stole trade secrets’, published during April 2024 wherein it was inter-alia mentioned that Jane Street and its associated entities alleged unauthorised use of their proprietary trading strategies in Indian options markets, Sebi initiated preliminary examination into trading activity of Jane Street and associated entities to ascertain any market abuse.

FPIs Regulations, 2019 do not allow FPIs to undertake intraday trades, instead, all of their trades must be settled.

Sebi noted that the JS Group continued to carry out suspicious trading activities, mainly near market closing on expiry day, by making large and aggressive trades to unfairly influence the index, even after receiving a warning in February and making promises to the NSE to stop such practices.

“The specific pattern of trading undertaken by the JS Group on January 17, 2024, exhibits that the Group is seen buying Bank Nifty component stocks and futures aggressively, and in large sizes, to move up Bank Nifty index. Through the rest of the day, it is seen reversing and aggressively selling all of its large purchased positions (and more), thereby pushing down the Index. “Unsurprisingly, given the sheer volumes involved as a percentage of total market trading volumes, it booked a significant trading loss of Rs 61.6 crore in the cash and futures segment in the process. There is no economic rationale possible to justify such trading activity on a standalone basis; in fact, given the sheer sizes, manner of trading and transaction costs involved, such activities would invariably tend to end with net trading losses,” Sebi added. With inputs from Sebi’s order & Agencies

The temptation of price rigging & illegal profit of `36,502 cr

“During the entire examination period across all their trades, Jane Street Group/JS Group made a total profit of Rs 36,502.12 crore across all segments. Within this, it is notable that the JS Group made profits of Rs 43,289.33 crore in index and stock options, while they net lost Rs 7,208 crore in stock futures, lost Rs 191 crore in index futures, and lost Rs 288 crore in trading in cash equities segment. The trading of the JS Group in BANKNIFTY and other indices on other days (i.e. other than the 18 days within the examination period and the recent instances of alleged manipulation on 3 days) during the examination period and beyond remain to be investigated,” Sebi said in its order issued on July 3, 2025.

Committed to operating in compliance: Jane Street

Jane Street on July 4 said it disputes the findings of the Sebi interim order barring it from securities market, and will further engage with the regulator. The ban will stay in place till a final order on completion of investigations is issued. Jane Street, in an emailed response to Reuters, said it disputes the findings of the Sebi’s interim order and will further engage with the regulator. “Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world,” the firm said.