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SEBI has banned the American trading firm Jane Street Group and 3 companies associated with it. The American trading firm has been accused of rigging prices on the day of index expiry. SEBI has also ordered to seize illegal earnings of Rs 4,843.57 crore.
Come, let us understand this whole matter through question and answer…
Question 1: What is Jane Street Group?
answer: Gen Street is an American trading company that uses high-technology and quantitative trading ie Mathematical models in the stock market. The company used to trade extensively in Derivatives Market, especially Bank Nifty and Nifty 50 index options in India.
SEBI has banned JSI2 Investments Private Limited, Jane Street Singapore Private Limited and Jane Street Asia Trading Limited from the stock market with Gen Street.
Question 2: What have SEBI alleged on Jane Street?
answer: SEBI says that Jane Street deliberately influenced the prices of index like Bank Nifty and Nifty 50 on expiry day. The company used two main methods:
- Intra-Day Index Manipulation: In the morning, Jane Street used to buy large amounts of bank Nifty futures and shares in the cash market. At the same time it used to sell put options. In put options, there is a profit on the fall of the index. Later in the afternoon, it used to sell the futures of the same index on a large scale, causing the index to come down. This benefited his position in options.
- Expended Marking the Close: In the last hours of trading on the day of expiry, Jane Street impressed the closing of the index for its benefit by buying and selling large quantities. All this used to be so fast and on such a large scale that even the common investors did not seem to be inkling.
Question 3: How did this rigging work?
answer: SEBI said that on the morning of 17 January 2024, Jane Street purchased Patch I i.e. 09:15:00 to 11:46:59 pm in Bank Nifty Futures and Cash Segment of Rs 4,370 crore. This accelerated the bank Nifty index and reduced the price of put options. Now Jane Street created a bearish position of Rs 32,114.96 crore in the bank Nifty options. He bought cheap put options and sold expensive call options.
Patch after noon. That is, between 11:49 AM -15: 30 PM, the company sold almost all its net positions in bank Nifty shares and futures purchased in Patch I. The sales were so aggressive that this led to a decline in bank Nifty shares and index. Jane Street suffered losses in intra-day cash and futures market trading.
But the value of put options had now increased. The Gen Street Group now earned a profit from the Bank Nifty Index Options very large positions (long puts and short calls), including the positions made during the Patch I. Jane shut down some positions and allowed the rest to expire with profits. The profit in index options was much higher than the compensation for Jane Street’s Intra-Day Cash/Futures Trading.
Jane Street made a profit of Rs 735 crore in the options, but cash and futures lost Rs 61.6 crore. Overall, that day the company earned a net profit of Rs 673.4 crore. Closing of bank Nifty was also weak due to this manipulation.
On 17 January 2024, the Bank Nifty Index initially saw a sharp decline, which opened from 48,125.10 of the previous day to 46,573.95. Media reports said that the results declared after HDFC Bank’s closure on January 16 may cause the market disappointment.
Question 4: How much profit did Jane Street make a total profit?
answer: According to SEBI investigation, from January 2023 to March 2025, Jane Street earned a total profit of Rs 44,358 crore from options trading. However, during this period, the company also suffered a loss of Rs 7,208 crore in stock futures, Rs 191 crore in index futures and Rs 288 crore in cash market. Overall, the company earned a net profit of Rs 36,671 crore, of which SEBI considered Rs 4,843.57 crore as “illegal earnings” and ordered to seize it.
Question 5: How did SEBI know this rigging?
answer: In April 2024, some media reports raised questions on Jane Street’s trading strategy. After this, SEBI asked the National Stock Exchange (NSE) to check the trading of Jane Street.
In February 2025, the NSE also issued a warning letter to Jane Street, forbidden to do such trading, but the company ignored it.
Question 6: What action did SEBI take?
answer: SEBI issued a 105 -page interim order on 3 July 2025, in which:
- Jane Street and its subsidiaries were barred from trading in the Indian stock market.
- SEBI has ordered Jane Street to seize illegal earnings of Rs 4,843.57 crore.
- Instructed banks that no debit transactions from Jane Street’s accounts should not be done without SEBI permission.
Question 7: What was the impact of this rigging on small investors?
answer: This strategy of Jane Street caused great damage to small and retail investors. These investors trades by looking at the prices of the index, but due to the rigging of Jane Street, the prices were giving false indications. This led to wrong trading decisions for retail investors and many times. Sebi described it as “the market transparency and fairness”.
Question 8: What did Jane Street respond to these allegations?
answer: Jane Street has dismissed SEBI’s allegations and said that she follows all the rules. The company said that it would talk with SEBI and place its side. SEBI has given the company 21 days.
Question 9: How will this action affect the Indian market?
answer: Banning of large trading firms like Jane Street can affect the trading volume in the stock market. This action is a warning for foreign investors that rigging will not be tolerated in the Indian market.
Question 10: What will happen next?
answer: SEBI has been asked to keep an eye on the activities of Jane Street to stock exchanges so that there is no other rigging. If Jane Street was found guilty in the investigation, more strict action may be taken. If she proves innocent, the ban may be removed and the seized amount can be returned.
