Jane Street, a notable financial firm, has not initiated trading operations in India despite the green light given by the Securities and Exchange Board of India (SEBI), according to a spokesperson.

Jane Street, a notable financial firm, has not initiated trading operations in India despite the green light given by the Securities and Exchange Board of India (SEBI), according to a spokesperson.

In a significant development for India's financial market, the Securities and Exchange Board of India (SEBI) has launched an investigation into U.S.-based proprietary trading firm Jane Street. The probe, which began in early 2023, was initiated following the detection of unusual trading activity by the firm on the National Stock Exchange (NSE).

Unusual Trading Activity and Alleged Market Manipulation

The investigation focuses on Jane Street's derivatives trading, specifically suspected market manipulation through a "marking-the-close" strategy on indices like Nifty and Bank Nifty between January 2023 and March 2025. The unusual activity involved Jane Street simultaneously placing large, aggressive bets in the cash segment (shares) along with futures and options on expiry days of derivatives contracts.

For instance, on January 17, 2024, Jane Street bought Rs 4,370 crore worth of Bank Nifty shares and futures to push the index up in the morning. The firm then held bearish options positions. In the afternoon, by reversing the trades, it caused the index to fall sharply, profiting massively from the options positions. SEBI described this pattern as "prima facie manipulative" due to the intensity and scale of Jane Street's intervention.

SEBI's Actions and Findings

SEBI's preliminary probe uncovered that Jane Street earned net profits of around Rs 36,671 crore during the probe period (January 2023 to May 2025). Based on these findings, SEBI barred Jane Street and its entities from all securities transactions in India and froze over Rs 4,800 crore of gains as unlawful. The Income Tax Department also conducted raids as part of concurrent investigations prompted by the SEBI action.

The Impact and Ongoing Investigation

The alleged manipulation resulted "in massive profits for the manipulators, at the cost of other participants and retail traders," SEBI said. Retail investors reportedly lost $21 billion trading derivatives over a period of three years to March 2024, according to SEBI data.

The investigation is ongoing, with SEBI continuing to examine the voluminous and complex data generated by Jane Street's activities in India. The firm is not currently resuming trade in India after getting the SEBI go-ahead for penalty payment.

This case highlights the challenges faced by SEBI in responding to the explosion of derivatives trading in India, as its dual obligations to police the market and develop India's financial system deterred it from quicker, bolder action. As the investigation continues, it is hoped that this will lead to greater transparency and regulation in India's derivatives market.

[1] The Economic Times

[2] The Hindu BusinessLine

[3] Business Standard

[4] The Mint

[5] CNBC-TV18

1. The Securities and Exchange Board of India (SEBI) is investigating alleged market manipulation by U.S.-based proprietary trading firm Jane Street, focusing on their derivatives trading and the use of a "marking-the-close" strategy.
2. SEBI is examining unusual trading activity by Jane Street on the National Stock Exchange (NSE), such as large, aggressive bets in both stocks and derivatives on expiry days, which affected indices like Nifty and Bank Nifty.
3. The probe has revealed that Jane Street earned net profits of approximately Rs 36,671 crore between January 2023 and May 2025, leading to SEBI barring the firm and its entities from all securities transactions in India.
4. Concurrently, the Income Tax Department conducted raids in connection with the SEBI investigation, freezing over Rs 4,800 crore of gains deemed unlawful.
5. Retail investors have reportedly suffered losses worth $21 billion trading derivatives over three years up to March 2024, as a result of the alleged manipulation.
6. The general-news outlets The Economic Times, The Hindu BusinessLine, Business Standard, The Mint, and CNBC-TV18 have reported on this significant development in India's financial market and the ongoing investigation into Jane Street's activities.

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