US-based trading giant Jane Street is facing a global regulatory spotlight following allegations of derivatives market manipulation in India. The US Securities and Exchange Commission (SEC) has officially requested details from the Securities and Exchange Board of India (SEBI) regarding its ongoing probe into Jane Street’s trading activities, particularly related to India’s index derivatives markets.
Key Developments
Alleged Market Manipulation: SEBI has accused Jane Street of engaging in sophisticated schemes to manipulate the Indian derivatives market—primarily focusing on index products like Nifty and Bank Nifty—by using aggressive “pump-and-dump” trading tactics and sizable options positions. SEBI alleges that Jane Street moved underlying stocks to benefit their derivatives bets, resulting in significant profits for the firm and large losses for retail participants.
Magnitude of the Probe: The Indian regulator’s investigation suggests Jane Street made more than ₹36,500 crore in net profits from January 2023 to March 2025, of which ₹43,289 crore came from index options—described as “unlawful” by SEBI.
Enforcement Actions by SEBI:
A freeze was placed on over ₹4,800 crore of Jane Street’s assets, with the sum to be held in escrow.
Jane Street was banned from Indian securities markets in early July 2025 for alleged manipulative trading.
Following the deposit of frozen funds, SEBI recently lifted the trading ban under strict conditions, pending further hearings and Jane Street’s detailed response.
US SEC Involvement: The SEC has invoked information-sharing protocols under international regulatory agreements (IOSCO), seeking specifics from SEBI to assess potential regulatory action in the US or other relevant jurisdictions. Both regulators have declined to comment publicly on the ongoing investigations.
Alleged Modus Operandi
Jane Street reportedly:
Bought large positions in index constituent stocks and futures in the morning to drive up prices.
Maintained significant bearish options positions.
Sold underlying positions aggressively later in the day, causing sharp index declines and profiting from options trades.
SEBI’s analysis showed these patterns were especially prevalent and damaging on monthly and weekly options expiry days.
Jane Street’s Response
Jane Street has denied any wrongdoing and indicated its intention to challenge SEBI’s interim findings. The firm has complied with interim asset freeze orders but asserts that its trading was legal and within established norms.
Systemic Impact and Industry Reactions
Market Impact: Jane Street’s ban led to a marked decline in index options volumes and market volatility during expiry days, highlighting its significant role in Indian markets.
Broader Implications: The case has sparked debates over regulatory surveillance, oversight of global trading firms, and the need for real-time market abuse detection. Rival market participants are calling for broader probes into similar activities by other large international players.
What’s Next?
The investigation remains active, with SEBI and the SEC continuing to exchange information under global regulatory frameworks.
Hearings and further regulatory actions are expected as Jane Street prepares a formal rebuttal to SEBI’s charges.
The episode underscores the heightened focus on cross-border regulatory cooperation and market integrity.
Summary Table: Jane Street-SEBI-SEC Investigation
Aspect
Details
Accused firm
Jane Street (US-based)
Alleged wrongdoing
Market manipulation of index derivatives (Nifty, Bank Nifty)
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