New Delhi: United States-based trading giant Jane Street has come under serious regulatory scrutiny in India after the Securities and Exchange Board of India (SEBI) accused the firm of manipulating index levels on expiry days using a pump-and-dump strategy. In an explosive interim order released by SEBI, it has been alleged that Jane Street and four other entities engaged in unfair trade practices to influence the Nifty and Bank Nifty indices, leading to massive profits at the expense of retail investors.
The strategy employed by Jane Street involved inflating the prices of certain index-heavy stocks during the morning trading hours of expiry days. This “pumping” led to a rise in the overall index level. Later in the trading session, the same stocks were offloaded in large volumes—“dumping”—causing a price correction. The fluctuations created in the index levels through this tactic directly affected the settlement prices of options contracts, allowing Jane Street to reap significant profits from options positions taken in advance.
‘Earned nearly $5 billion in about 2 years’
SEBI noted that the method was executed with precision and repeated on multiple expiry days between January 2023 and May 2025. The regulatory body observed a pattern in which large trades were placed in Bank Nifty index stocks and futures in the first hour of trade, followed by heavy unwinding towards the close. These trades led to an artificial rise and fall in the index levels, and the firm allegedly positioned itself to profit from the exact opposite movements in its options trades, according to a Hindustan Times report. Between January 2023 and March 2025, it earned nearly $5 billion (about ₹36,671 crore) through index options trading. Out of this, ₹4,843 crore is now under investigation as unlawful gains, the report claimed.
The report highlights SEBI’s contention that the firm’s coordinated actions on 21 specific trading days caused distortions in the derivatives segment and eroded market integrity. The watchdog also remarked that 93% of retail option traders faced losses on these days, indirectly attributing their misfortunes to the manipulative strategies deployed.
“Such behavior is not in alignment with fair market practices,” SEBI stated in its interim order, noting that the actions violated the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, reported the Hindustan Times.
₹4,843 crore is now under SEBI investigation
While SEBI has ordered the freezing of over ₹4,843 crore of allegedly unlawful gains and barred Jane Street and its associated entities from trading in Indian markets, Jane Street has strongly disputed the regulator’s findings. In response to the allegations, the firm said it intends to fully cooperate and engage with SEBI to clarify its position.
Jane Street’s operations in India now hang in the balance as it prepares to appeal the order before the Securities Appellate Tribunal.
