SEBI Bars Jane Street, Freezes ₹4,843 Crore for Market Manipulation

India’s securities regulator, SEBI, has issued its toughest-ever interim order against U.S.-based high-frequency trading firm Jane Street and its four entities—including two Indian and two based in Singapore and Hong Kong—accusing them of manipulating the Bank Nifty index through aggressive cash, futures, and options trading.

Key Allegations & Tactics:

• Between January 2023 and March 2025, Jane Street allegedly ran a “marking-the-close” strategy: aggressively buying Bank Nifty shares and futures in the morning to inflate the index, triggering bullish moves by retail investors, then unloading in the afternoon to depress the index—profiting from large options positions.

• On 14 expiry days, the firm executed conspicuous trades worth tens of thousands of crores, including Rs 4,370 crore buys followed by Rs 5,372 crore sales on a single day, netting Rs 673 crore in profits.

• The manipulative pattern extended to normal expiry days in May 2025, despite prior caution letters from NSE in February, evidencing a sustained, deliberate scheme.

Financial Scale:

• Alleged net gains total approximately ₹36,671 crore (~$4.3 billion), mainly from ₹44,358 crore generated in index options—offset by losses in futures and cash trades.

• SEBI has impounded ₹4,843.57 crore (~$567 million) as unlawful gains and mandated escrow placement; banks have been instructed to freeze related accounts pending compliance.

Regulatory Measures Taken:

• Jane Street and its entities are barred from all securities transactions in India—cash, futures, and options—until the investigation concludes and illegal gains are deposited.

• They must close existing positions within three months or by contract expiry, and are prohibited from disposing of any assets in India until escrow is funded.

• SEBI continues to closely monitor all their accounts and market activity.

Market Impact & Response:

• Indian equity benchmarks showed little reaction overall, as the action was seen as targeted; broader derivatives liquidity remains strong .

• Stocks of brokers and exchanges—Angel One, Nuvama, BSE, CDSL—dipped 5–7% due to their linkage or exposure to Jane Street.

Jane Street's Position:

• The firm disputes SEBI’s interim findings and says it will engage with the regulator and may appeal, emphasizing its commitment to compliance.

Bottom Line:

By depositing ₹4,843 crore, Jane Street has met SEBI’s key condition and cleared the path to resume trading. However, the broader question—whether its trading tactics were manipulative—remains unresolved.

Update: U.S.-based high-frequency trading powerhouse Jane Street Group has taken a pivotal step to re-enter Indian markets. On July 14, 2025, the firm deposited approximately ₹4,843.5 crore (~US $564–567 million) into a SEBI mandated escrow account, meeting the core requirement of an interim order issued on July 3, 2025.

With the escrow now funded, SEBI’s interim ban on trading has expired, theoretically enabling Jane Street to resume operations—albeit under a strict regulatory watch and a clear restriction: no repetition of the flagged trading strategies. Notably, Jane Street has stated it will avoid trading in Indian options until the dispute is fully resolved.

What’s next?

• SEBI and Indian exchanges will tightly monitor Jane Street for any recurrence of manipulative trading tactics.
• Months of further investigation lie ahead; SEBI has extended probes into other indices and exchanges.
• Jane Street may either cautiously re-enter markets or press SEBI for a full clearance before resuming normal operations.