SEBI Bars Jane Street Group Over Market Manipulation Probe

The Securities and Exchange Board of India (SEBI) has taken a landmark enforcement action by banning the US-based quantitative trading firm Jane Street Group from participating in the Indian securities market. This decision, announced on July 3, 2025, includes an extensive investigation into allegations of market manipulation in the equity derivatives segment, specifically involving the Nifty 50 and Bank Nifty indices. 

SEBI’s probe revealed that Jane Street engaged in sophisticated trading strategies that artificially influenced benchmark indices to generate unlawful gains amounting to approximately Rs. 4,843.57 crore.

According to SEBI’s interim order, Jane Street and its related entities are prohibited from buying, selling, or dealing in securities in India, either directly or indirectly. The regulator has directed Indian banks to freeze any debits from accounts linked to Jane Street entities unless prior approval is obtained from SEBI. Furthermore, the unlawful gains are to be deposited by the firm in an escrow account under SEBI’s lien, ensuring the funds cannot be withdrawn without regulatory consent.

The investigation uncovered that Jane Street exploited large positions in index options combined with corresponding trades in the physical market to manipulate prices. They have laid out examples such as, on January 17, 2024, when Jane Street allegedly purchased over Rs. 4,370 crore worth of Bank Nifty constituent stocks and futures early in the trading session, only to reverse these positions later aggressively. This trade at the start made put calls cheaper, and then they pushed down the Bank Nifty index, thus inflating the value of put options they held while causing call options to collapse. Such trading manipulated the market’s true price signals, misleading other participants and generating massive profits for Jane Street. The group reportedly earned around Rs. 43,289 crore in profits from Indian equity derivatives between January 2023 and March 2025.

SEBI’s order highlights that these manipulative practices continued even after the regulator issued explicit warnings to Jane Street in February 2025. The regulator’s action signals a firm stance against algorithmic and high-frequency trading strategies that may undermine market integrity, especially in India’s rapidly expanding derivatives market. 

The implications of SEBI’s ban on Jane Street for the Indian market are significant. Jane Street has been a major liquidity provider in the equity derivatives space, and its sudden exclusion is expected to impact market liquidity and potentially increase volatility, particularly around index options expiry days. Market participants may face wider bid-ask spreads and less efficient price discovery in the short term. However, this action also underscores SEBI’s commitment to maintaining a fair and transparent market environment, which is crucial for sustaining investor confidence, especially among retail investors.

Moreover, SEBI’s decisive move sends a strong message to other foreign institutional investors and proprietary trading firms operating in India. It highlights the regulator’s readiness to bring down manipulative practices and enforce stringent governance standards. This could lead to tighter compliance requirements and greater scrutiny of algorithmic trading strategies across the market. In the long run, improved regulatory oversight may help to bring a healthier trading ecosystem.