How US-Based Jane Street Manipulated Indian Markets To Make Illegal Gains Of Over ₹36,000 Crore

New Delhi: The strategy was straightforward - aggressively buy select Bank Nifty index stocks in the morning and sell them just as forcefully later in the day, triggering a sharp drop in share prices. While this often resulted in losses on the stock trades, the firm profited heavily from large parallel short positions in index options, which gained value as the market declined.

US trading firm Jane Street, which started its India operations in December 2020, is said to have made Rs 36,671 crore in alleged "egregious" market manipulation between January 2023 and March 2025 on its India trades.

The capital market regulator Sebi temporarily banned Jane Street from dealing securities in India and ordered it to transfer Rs 4,843 crore of "illegal gains" in an escrow account.

Jane Street and its related entities have been accused by Sebi of deploying two key strategies to manipulate Indian derivatives markets and amassing illegal gains to the tune of Rs 36,671 crore over a two-year period.

What is Jane Street?

Established in 2000, Jane Street Group LLC 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.

How Jane Street manipulated Indian derivatives markets? The Jane Street (JS) Group allegedly manipulated index levels in the stock market to earn illegal profits, primarily through the highly liquid Bank Nifty and Nifty index options segments. Jane Street and its related entities have been accused of deploying two key strategies to manipulate Indian derivatives markets and amassing illegal gains to the tune of Rs 36,671 crore over a two- year period.

An investigation by Sebi 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.

These actions helped the group earn illegal profits of about Rs 4,843 crore, even as they incurred smaller losses in cash and futures trades, the regulator said.

Sebi also noted that between January 2023 and March 2025, the JS Group recorded substantial trading activity across various segments of the market. The group made gains of Rs 44,358 crore from index options trading, which formed the bulk of their profits.

However, these were partially offset by losses of Rs 7,208 crore in stock futures, Rs 191 crore in index futures, and Rs 288 crore in the cash market. After accounting for all gains and losses, the JS Group reported a net total profit of Rs 36,671 crore during this period, Sebi noted.

It was noted that four entities --JSI Investments, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading --collectively referred to as the Jane Street Group -- were involved in such market maipulation.

Out of the 4 entities involved in this case, 2 entities -- Jane Street Singapore Pte Ltd and Jane Street Asia Trading Ltd are registered FPIs, incorporated in Singapore and Hong Kong, respectively.

JSI Investments, located in Mumbai, was incorporated in India in December 2020. It was wholly owned by Jane Street Europe Ltd, a company incorporated in the UK. JSI2 Investments was incorporated in India in September 2024 and located in Mumbai. It was wholly owned by JSI Investments. "It appears that the incorporation of the JSI Investments Private Limited in India enabled the JS Group to work around the regulatory prohibition in FPI Regulations against FPIs undertaking intraday cash market transactions, and thereby execute the manipulative scheme without specifically flouting the FPI regulations," Sebi said.

" Much of the enormous amount of trading and position taking in F&O by the JS Group have been undertaken by FPIs in the JS Group, and much of the profits arising from the prima facie manipulative schemes as identified in the 21 instances ...have also been booked by them," it said.

During the examination period, the net profits booked in the FPIs in the JS Group amounted to Rs 32,681 crore.

"The magnitude of this profit is significantly higher than the average quantum of assets held by these FPIs in India as of the month ends between January and May 2025, indicating that these profits have been repatriated," it added.

(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)