Sebi Action on Index Manipulation:

Sebi Action on Index Manipulation: ₹4,000 Crore Gains Impounded from Jane Street Entities

In a major crackdown, the Securities and Exchange Board of India (SEBI) has taken decisive action against the global proprietary trading giant, Jane Street Group. The Sebi action on index manipulation has rocked the Indian financial markets, as the regulator impounded over ₹4,000 crore in alleged unlawful gains. This move marks one of the most significant regulatory clampdowns in recent years.

Sebi Action on Index Manipulation: What Triggered the Investigation?

The Sebi action on index manipulation began after unusual trading patterns were observed around the expiry days of index options. According to a detailed 105-page interim order released by SEBI, Jane Street entities executed a series of aggressive trades that allegedly distorted the prices of key indices such as Bank Nifty and Nifty.

Over 18 trading days—15 involving Bank Nifty and 3 involving Nifty—the firm reportedly executed large-scale trades in the cash and futures markets that were quickly reversed, thereby influencing index levels to their benefit in the options market.

Two Key Strategies Behind the Sebi Action on Index Manipulation

SEBI’s interim order identified two main strategies behind the manipulative behavior: the “Intra-day Index Manipulation” and the “Extended Marking the Close” strategy. These were at the core of the Sebi action on index manipulation.

Intra-day Index Manipulation

This strategy was allegedly used on 15 occasions. Jane Street began by buying large positions in Bank Nifty component stocks during the morning session. Simultaneously, it shorted the index through options—buying puts and selling calls. Later in the day, the firm offloaded its stock and futures positions, driving the index lower and reaping huge profits from the options trades.

One striking example occurred on January 17, 2024. Jane Street reportedly suffered a ₹61.6 crore intraday loss in the cash and futures segments but made a massive ₹734.93 crore profit in options trading—raising red flags about market manipulation.

Extended Marking the Close

This strategy was reportedly used on July 10, 2024, and two other days. Jane Street held large options positions and executed significant directional trades during the last hour of the trading day. This tactic allegedly engineered a favorable closing price for the expiry settlement, thereby maximizing profits from their options positions.

Impact and Financial Magnitude Behind Sebi Action on Index Manipulation

The financial figures cited in the SEBI order are staggering. According to SEBI, the Jane Street entities generated ₹3,914 crore in profits from Bank Nifty manipulation days alone. Across all 18 days of alleged manipulation, their total unlawful gains exceeded ₹4,000 crore.

From January 2023 to March 2025, Jane Street reportedly earned ₹43,289 crore from index options trading. However, the firm also recorded ₹7,687 crore in losses from stock futures, index futures, and the cash segment. The Sebi action on index manipulation was largely triggered by the scale and consistency of these manipulative patterns.

Entities Named in the Sebi Action on Index Manipulation

The four entities involved in the Sebi action on index manipulation include:

• Jane Street Singapore Pte. Ltd.
• Jane Street Asia Trading Ltd.
• JSI Investments Private Ltd.
• JSI2 Investments Private Ltd.

SEBI classified them as a “single economic group” based on coordinated trading and common control. These firms have now been barred from accessing the Indian securities market until further notice.

SEBI’s Regulatory Response and Legal Grounds

The Sebi action on index manipulation is rooted in SEBI’s mandate to ensure fair and transparent markets. The regulator used its powers to impound unlawful gains and restrict the involved entities from participating in future trades.

In addition to financial penalties, SEBI has directed the Jane Street entities to refrain from employing any strategy similar to those identified until the investigation concludes. The order emphasized that their strategies appeared to be “pre-mediated and carefully executed” with no real economic basis—designed solely to mislead the market.

Jane Street’s Response and Next Steps in the Sebi Action on Index Manipulation

Jane Street has not issued an official response to the allegations as of now. However, SEBI has granted the entities an opportunity to present their case, file replies, and seek personal hearings. A final decision will follow based on their responses.

The Sebi action on index manipulation will remain in effect during this interim period. SEBI has also stated that it will continue monitoring existing positions held by the accused entities.

The NSE’s Prior Warning: A Missed Red Flag?

Interestingly, this is not the first time concerns were raised. The National Stock Exchange (NSE) had issued a caution letter to Jane Street in February 2025. The letter advised the firm to avoid trading patterns that might appear manipulative. Despite this, the group allegedly persisted in executing similar strategies, prompting the Sebi action on index manipulation.

SEBI’s whole-time member, Ananth Narayan G, described the behavior as a clear defiance of regulatory warnings. He stated that the firm’s conduct demonstrated it was not a “good faith actor” and could not be trusted like other market participants.

Why Sebi Action on Index Manipulation Matters

The Sebi action on index manipulation sends a strong message to global and domestic market participants. It underscores that no matter how large or powerful a trading entity may be, it cannot escape scrutiny or accountability.

The episode also raises important questions about algorithmic and high-frequency trading in Indian markets. Jane Street, known for its expertise in these areas, may now face increased regulatory pressure globally, not just in India.

Conclusion: A Defining Moment for Market Regulation

The Sebi action on index manipulation involving Jane Street is a landmark case in India’s financial regulatory history. With over ₹4,000 crore impounded and a leading global trading firm barred, it serves as a powerful deterrent against market abuse.

As the final hearing approaches, all eyes will remain on SEBI and the outcome of this high-profile investigation. For now, the crackdown has reaffirmed SEBI’s resolve to protect market integrity and hold even the biggest players accountable.

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