Jane Street Ban a Watershed for India’s Market Watchdog

In a rare regulatory thunderclap, India’s SEBI has barred Jane Street, a global titan of high-frequency trading. Accused of manipulating trades in the Indian stock market, Jane Street’s ouster marks a bold assertion of Indian oversight in the face of Wall Street sophistication.

Where there are the jargons and mystery of high frequency trading and complex financial products and where there is dominance of a world player of renown, it is the exception to have a regulator, even as market-related, to make such a clear, prima facie and public condemnation of a global veteran. But that is exactly what India has done with its Securities and Exchange Board (SEBI) board banning New-York based Jane Street Group, a global giant in quantitative trading. This is a watershed moment in Indian financial regulation.

Over the years, the high-velocity and dense nature of operations of such firms as Jane Street, trading in the often-murky regions of derivatives, has, at times, been perceived as running ahead of regulation. However, the action of SEBI, which was based on the expert investigation that employed data thoroughly, augers to a new era of financial governance across the world where a too big to fail may more often translate to the too manipulative to conduct.

The Accusations

What exactly provoked this intervention? The gist of the allegation against Jane Street and other connected companies, namely JSI Investments Private Ltd., JSI2 Investments Private Ltd., Jane Street Singapore Pte. Ltd., and Jane Street Asia Trading Ltd., is index manipulation, and the range of indices so manipulated includes the BANKNIFTY and NIFTY. As the SEBI probe into the matter found out, there were two such scheming methods instituted; the Intra-day Index Manipulation and the Extended Marking the Close.

This was not rough-and-tumble trading, this was, as it was claimed, a two-act play finely planned with all details observed. The Intra-day Index Manipulation strategy is as follows:

• Act I – Artificial Uplift (09:15 AM to 11:46.pm): During this period, it is alleged that Jane Street launched a vicious purchasing spree of the BANKNIFTY component stocks and futures and went long with positions worth almost ₹4,370 crore. At the same time they were selling options – both Calls and Puts – in an artificial effort to cause the index price to rise, causing the Call options to be lower in price and the Put options higher.

This is done in a bid to inflate the index temporarily so that it can be seen to be really strong as opposed to what it is. This leads to the value of Call options, which are bets on the index to rise, to be lowered since the rise has already occurred, and hence to be offered at a lower price as well. Meanwhile, Put options — which protect against a fall — become more expensive since the higher index level makes a drop seem more likely or more severe. In a nutshell, it is a market distortion that makes betting bullish appear safer and protection against bearish trades more expensive.

• Act II – The Reversal and Profit Harvest (11.49.00 AM to 15.30 PM): After enough influence was gained in the market they allegedly made the profit by reversing their positions, selling the constituents and buying the options which they had earlier sold or engineered to be advantageous. This allowed them to reap the benefits of the price manipulations caused by them. Their strategic options raked in a whopping ₹734.93 crore in profits.

The “Extended Marking the Close” strategy involved similar intent but focused on the final minutes of trading, again to influence closing prices for derivatives profits. Across just three such days, Jane Street allegedly generated profits of ₹560 crore. These aren’t minor discrepancies; they represent substantial, calculated gains derived from what SEBI views as manipulation – identified across several days, amounting to 48.4 billion rupees, or over $565 million.

SEBI’s Iron Fist

The surveillance mechanism utilized by SEBI, often underestimated, has proved rather robust. They are not just analyzing trade numbers, they are peeling back layers – tracking the whole flow of transactions from initial positions to final profits, across segments. This is not simple, particularly in the maze of massive financial firms trading in international markets. The single-minded stance of SEBI is visible through the step-by-step chronology of their case, indicating that their investigation began as early as April 2024, leading up to their interim order in July 2025.

These actions, carried out through the creation of artificial demand and supply, price distortion, and use of information asymmetry, constitute a “fraudulent and manipulative” practice. The interim order specifically refers to breach of SEBI Act and Prevention of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.

Such a move carries great weight in Indian financial markets. India has been making concerted efforts over past years to develop its global image as a reliable transparent place to invest. The very fact a vigorous regulatory authority is taking up arms against a savvy foreign establishment sends a clear positive message to the global investor community. SEBI said it planned to impound both the ill-gotten gains and the “egregious behaviour” of Jane Street.