What happened?

The Securities and Exchange Board of India (SEBI) has taken action against Jane Street Capital, a leading U.S.-based trading firm, for manipulating the Bank Nifty index on options expiry days. SEBI has:

Banned Jane Street and its three related entities:

  • JSI2 Investments Private Limited

  • Jane Street Singapore Pte Ltd

  • Jane Street Asia Trading Limited

  • Ordered them to deposit ₹4,843.5 crore (illegal gains) in the SEBI account.

Freezed Their Bank Account

How Jane Street exploited the market?

  • Trading pattern on expiry days

  • According to SEBI, on 14 expiry days, Jane Street followed a typical pattern

Morning plan of action

  • Bought large volumes of Bank Nifty futures.

  • Sold large volumes of Bank Nifty options.

Sold Bank Nifty futures aggressively.

  • Targeting to influence the closing price of the Bank Nifty index.

Morning:

  • Bought Bank Nifty futures worth ₹4,370 crores.

  • Sold options worth ₹32,115 crores.

Afternoon plan of action

  • Sold Bank Nifty futures worth ₹5,372 crores.

Result:

  • Created a short position in options worth ₹46,620 crores.

  • Made a profit of ₹735 crores in options.

  • Loss of ₹61.6 crores in futures and cash.

  • Net profit: ₹673.4 crores in a single day.

  • Sold Bank Nifty futures worth ₹2,800 crores.

  • Created option short position of ₹44,154 crore.

  • Profit earned: ₹225 crore by underperforming index closing.

Allegations of Sebi

SEBI found that:

  • Jane Street's trades were not normal market activity.

  • They violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.

  • There was a clear intent to manipulate index closing prices.

After warning trading will not stop

  • Even after media reports about a possible SEBI probe, Jane Street continued to place such trades.
  • On May 15, 2025, and on two other expiry days in May.

  • Bought Nifty futures and shares worth ₹4,911 crore.

  • Allegedly tried to influence Nifty closing prices.

Conclusion

  • Identified a pattern of expiry-day manipulation.

  • Took serious steps to prevent the realisation of illicit profits and further market abuse.