Jane Street banned in India: Why SEBI cracked down on the Wall Street giant

India’s markets regulator has delivered one of its most dramatic enforcement actions in recent memory, banning US-based trading giant Jane Street from accessing Indian markets over what it reportedly calls “manipulative” and “fraudulent” trading in one of the country’s most-watched indices. The Securities and Exchange Board of India (SEBI) issued an interim order on July 3 that temporarily bars Jane Street’s India entities and reportedly seeks to recover over ₹4,840 crore ($580 million) in what it describes as illicit profits. The move has ignited debate about the vulnerability of India’s retail investors, especially in the booming derivatives market.

According to SEBI’s 105-page order, Jane Street used aggressive, high-frequency trading strategies to push up the price of the Nifty Bank index on weekly expiry days, then reversed those moves to profit from options positions that benefited from the engineered volatility, as per reports.

Who is Jane Street?

Jane Street is a giant of global finance, reportedly known for its secretive and highly sophisticated trading operations. Founded in New York in 2000, the firm now has over 2,600 employees worldwide and is active in more than 45 countries. It’s reportedly renowned for its proprietary trading, using its own capital, rather than client money, to place enormous algorithmic bets on everything from stocks to bonds to currencies.

As per reports, Jane Street only entered the Indian market in 2020, operating through multiple local subsidiaries and a local brokerage partner to comply with India’s rules. In 2024 alone, the firm is reported to have earned a stunning $20.5 billion in net income globally, an amount comparable to the annual profit of Wall Street giants like Citi and Bank of America combined.

Why did SEBI take action?

According to reports, SEBI alleged that Jane Street entities exploited the structure of India’s derivatives market, particularly the Bank Nifty index options, to carry out what it calls a classic “pump and dump” scheme. According to SEBI, Jane Street would reportedly aggressively buy certain bank stocks in the morning session on weekly expiry days, especially heavyweights like HDFC Bank, ICICI Bank, and Kotak Bank, which together make up over 60% of the index weighting. These purchases reportedly pushed up the Bank Nifty index itself, inflating the prices of options the firm already held.

Once prices hit desired levels, Jane Street allegedly reversed its cash trades, taking profits on its options while leaving other market participants, particularly retail investors, reportedly facing sharp losses when the index fell back. Over a two-year period between January 2023 and March 2025, as per reports, SEBI claims this strategy earned Jane Street’s India entities over ₹43,000 crore ($5.16 billion) in options profits, with around ₹36,500 crore ($4.38 billion) of that coming from just 21 trading days.

What triggered this?

One day in particular appears to have set off regulatory alarm bells. On January 17, 2024, Jane Street reportedly made ₹735 crore ($88 million) in profit from Bank Nifty options in a single session, following extreme volatility in the index. According to reports, the index plunged by over 2,200 points in the first seven minutes of trade, prompting SEBI to launch closer surveillance of the firm.

SEBI alleges that even after being warned to stop in February 2025, Jane Street reportedly resumed the strategy on weekly expiries in May 2025. As per reporting by The New Indian Express, SEBI officials described this as “the last nail in the coffin” that forced them to act.

The scale of retail investor losses

This crackdown also reportedly exposes uncomfortable questions about India’s booming retail participation in derivatives. According to SEBI’s own 2023 study, 93% of retail traders lose money in the options market, with the average loss exceeding ₹1.25 lakh ($1,500) per trader in FY24.

SEBI argues that this dynamic reportedly made retail investors especially vulnerable to manipulation of the sort it alleges Jane Street carried out. The Nifty Bank index is reportedly among the most actively traded derivatives in the world. The National Stock Exchange (NSE) handles around 60% of global equity derivative trading volumes, making India the largest derivatives market on earth.

Why was it only an interim order?

SEBI has reportedly described its order as interim, meaning the ban will remain in force until a final order is issued or courts decide otherwise. According to reports, the regulator has defended this urgency on the grounds that delaying action would allow Jane Street to continue extracting illicit gains at the expense of retail investors.

Reports say that SEBI had to process massive volumes of trade data from the NSE and other intermediaries to establish patterns of manipulation. The complexity of Jane Street’s alleged strategies required extensive forensic work to ensure the case was robust enough to withstand legal challenges.

What happens next?

Jane Street can contest SEBI’s order before India’s Securities Appellate Tribunal (SAT), the High Court, or even the Supreme Court. The order itself notes that the firm has the right to a hearing before any final decision is taken.

Meanwhile, SEBI has reportedly impounded over ₹4,840 crore ($580 million) in what it claims are unlawful profits. Reports suggest the regulator is seeking to recover these gains from Jane Street’s government securities holdings in India.

(With inputs from the agencies)