strugglesfaced by SEBI in governing Jane Street's profitable venture
In a significant development, the Securities and Exchange Board of India (SEBI) has accused Jane Street, a prominent high-frequency trading firm, of manipulating India's derivatives market. The investigation, which began with surveillance alerts in November 2023, has culminated in a detailed interim order issued on July 3, 2025, barring Jane Street from the local market [1][2][3].
SEBI's allegations centre around a sophisticated expiry day trading strategy executed by Jane Street on 18 derivative expiry days between January 2023 and March 2025. This strategy, according to the regulator, manipulated the Bank Nifty index levels to profit from options positions [2].
The interim order, spanning 105 pages, accuses Jane Street of manipulating intraday prices of Bank Nifty constituent stocks and futures, artificially inflating the index in the morning, then driving it down later in the day to profit from large short positions in options [2][3]. As a result, SEBI has directed Jane Street to deposit ₹4,843.57 crore (about $565 million) in an escrow account and has temporarily banned the firm from trading in Indian markets [2][3].
Jane Street has complied with the order, depositing the full escrow amount on July 14, 2025. On July 21, 2025, SEBI lifted certain restrictions like trading bans and account freezes, conditional on ongoing compliance, while continuing proceedings with a final hearing scheduled for August 2025 [2][4].
The timeline of SEBI's investigation began with the first surveillance alerts in November 2023, when SEBI’s market surveillance detected abnormal trading patterns associated with Jane Street [1]. SEBI initiated an informal, preliminary investigation in the second half of 2023, analyzing voluminous and complex high-frequency trading data well before formally beginning a full investigation in April 2024 [1].
During the period of manipulation, Jane Street is said to have accumulated large volumes of the constituent stocks of an index of Indian banks in both cash and futures markets, pushing index prices higher [2]. On the mornings of days it engaged in such trades, Jane Street used derivatives to short the index, according to the regulator [2].
SEBI's allegations suggest that these manipulations resulted in "massive profits for the manipulators, at the cost of other participants and retail traders" [1]. The regulator also alleges that $567 million of Jane Street's profits were "unlawful gains" [2].
This investigation marks one of the strongest actions SEBI has taken against a foreign investor. The National Stock Exchange (NSE), the host of the index traded by Jane Street, reported 135 billion rupees in transaction fees for its latest fiscal year, up 32% from the year to March 2023, with 76% of the transaction fees related to options trading [1].
In addition to the ongoing investigation, probes have emerged around Jane Street’s use of offshore units to shift profits out of India and possible unfair advantages gained from enriched market data sold by an NSE subsidiary [5].
Key Dates:
| Date | Event | |--------------------|------------------------------------------------------------------------------------------------| | November 2023 | SEBI’s market surveillance detects abnormal trades; informal investigation begins | | Second half 2023 | SEBI’s informal preliminary investigation analyzing complex trading data | | April 2024 | Formal SEBI investigation launches | | January 2023–March 2025 | Period during which expiry day manipulation occurred on 18 derivative expiry days | | July 3, 2025 | SEBI issues interim order accusing Jane Street of expiry day manipulation and bans trading | | July 14, 2025 | Jane Street deposits ₹4,843.57 crore into escrow as per SEBI order | | July 21, 2025 | SEBI lifts some restrictions on Jane Street with ongoing compliance conditions | | August 2025 | Final hearing on SEBI’s directions scheduled |
References:
- The Economic Times
- The Wall Street Journal
- Reuters
- Bloomberg
- The Hindu BusinessLine
In light of SEBI's findings, it appears that Jane Street's business strategies in India's finance sector, such as investing in the stock-market and derivatives, have been under scrutiny, with allegations of manipulating the Bank Nifty index levels for profit [1][2][3]. As a result, SEBI has ordered Jane Street to deposit a substantial amount in an escrow account and has temporarily suspended their trading activities in the local market [2][3].
Before the formal investigation commenced in April 2024, SEBI initiated an informal preliminary investigation in the second half of 2023, focusing on complex high-frequency trading data associated with Jane Street [1]. The period under investigation spans from January 2023 to March 2025, involving 18 derivative expiry days during which manipulation is suspected [2].
