Jane Street barred from Indian markets as SEBI alleges massive derivatives manipulation

The Securities and Exchange Board of India (SEBI) has taken sweeping action against US high-frequency trading firm Jane Street Group, banning it and three affiliated entities from accessing Indian securities markets amid serious allegations of large-scale manipulation in derivatives trading. In a damning 105-page interim order, SEBI has accused the firm of manipulating key Indian indices, including Nifty 50 and Bank Nifty, to generate illicit gains totalling nearly ₹36,500 crore ($4.4 billion) between January 2023 and March 2025.

The markets regulator has directed the firm to deposit ₹4,843.5 crore (approximately $566 million) into an escrow account and imposed a debit freeze on its bank accounts. The ban will remain in place until the allegedly illegal gains are recovered. SEBI named JSI2 Investments Private Ltd, Jane Street Singapore Pte. Ltd, and Jane Street Asia Trading Ltd among the barred entities. “Unlike the vast majority of foreign portfolio investors and other market participants, [Jane Street Group] is not a good faith actor that can be, or deserves to be, trusted,” SEBI stated in the order.

‘Engineered expiry day trades’

According to SEBI, Jane Street repeatedly executed aggressive trades on index expiry days to influence the closing levels of the Bank Nifty and Nifty 50 indices, a practice that significantly impacted the broader market. The firm allegedly bought large volumes of Bank Nifty stocks and futures in the morning to push prices up while simultaneously creating short positions in the more liquid options market. Later in the day, it would offload those positions, dragging the index down and turning a profit on the short options bets.

SEBI highlighted similar trades across 21 trading sessions, noting that Jane Street routinely placed “disproportionately high” buy orders at or above market price to artificially move prices. The firm’s strategies showed “no plausible economic rationale” beyond benefiting their options positions, the order stated.

Disregarding warnings and market integrity

What has alarmed regulators further is that Jane Street allegedly continued the practice even after being explicitly warned by the National Stock Exchange (NSE) in February 2025. Despite the advisory, the firm went on to influence expiry-day trading on multiple occasions in May 2025, including May 15, by deploying similar high-volume strategies in both futures and spot markets.

SEBI concluded that Jane Street’s conduct violated its Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations and that its persistent manipulation compromised market fairness and investor trust.

“The integrity of the market, and the faith of millions of small investors and traders, can no longer be held hostage to the machinations of such an untrustworthy actor,” SEBI noted.

Jane Street responds

In response to the charges, Jane Street has disputed SEBI’s findings. A spokesperson for the firm told CNBC that it intends to engage further with the regulator and emphasised that Jane Street is committed to regulatory compliance across all markets in which it operates.

Market observers say the action could set a strong precedent. “Any player who is abusing the market requires to be shown the discipline,” said Deven Choksey, founder of DRChoksey FinServ. “The regulator is doing their job for keeping intact the market integrity.”