QUICK FACTS
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Fine Amount: ₹4,843,57,70,168 ($566.3m)
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Date: 7 July 2025
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Primary Violations: Market manipulation, including influencing the reference price of securities
Overview
The Securities and Exchange Board of India (SEBI) has issued an interim ex-parte order against four entities collectively known as the Jane Street Group. The order follows a preliminary examination initiated after media reports in April 2024 concerning the firm's proprietary trading strategies in Indian markets.
SEBI's findings allege that the Jane Street Group engaged in fraudulent and manipulative trading patterns designed to distort index levels for profit, particularly on derivative expiry days. As a result, SEBI has directed the group to impound unlawful gains amounting to ₹4,843.58 crore and has imposed several other interim restrictions, including preventing them from accessing the securities market.
Details of the CASE
SEBI's investigation into the trading activity of Jane Street Group entities from January 1, 2023, to March 31, 2025, identified two primary manipulative strategies. The examination found that the group's profits from Index Options exceeded ₹43,289 crore ($5,194,680,000), while they incurred significant losses in stock futures, index futures, and cash segments amounting to over ₹7,687 crore ($922,440,000). The alleged manipulative schemes were observed on 21 separate trading days.
The activity was found to be a violation of a caution letter issued by the National Stock Exchange (NSE) on February 6, 2025, which had advised the group to refrain from such trading patterns. Despite this warning, the manipulative activity was observed to have continued into May 2025.
WORKED EXAMPLES
SEBI's order provides a detailed analysis of the two primary strategies employed by the group.
"Intra-day Index Manipulation" Strategy
This strategy, analysed in depth for the trading day of January 17, 2024, involved a two-patch process:
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Patch I (Morning Session, 09:15 AM - 11:46:59 AM): The Jane Street Group aggressively purchased BANKNIFTY constituent stocks and futures, becoming the single largest net buyer with a net traded value of ₹4,370.03 crore. This buying pressure supported or artificially inflated the BANKNIFTY index. Simultaneously, the group built massive bearish positions in BANKNIFTY index options (buying Puts and selling Calls) with a cash equivalent value of ₹32,114.96 crore, taking advantage of the artificially influenced prices.
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Patch II (Rest of Day, 11:49 AM - 15:30 PM): The group reversed its morning activity, aggressively selling its holdings in the underlying constituents. This "dumping" created downward pressure on the index, causing it to fall. While the group incurred an intraday trading loss of ₹61.6 crore on these underlying trades, the fall in the index led to immense profits of ₹734.93 crore from the much larger index options positions established in Patch I.
This pattern was identified on 15 different days, resulting in a total profit of ₹3,914 crore in BANKNIFTY index options against an intraday trading loss of ₹199.7 crore in the underlying assets
"Extended Marking The Close" Strategy
SEBI's examination also uncovered a different pattern, which it terms an "extended marking the close strategy". This involved concentrating aggressive, large-scale, and directional trades in the final phase of the trading session to influence the closing price of an index, thereby benefiting large, pre-existing options positions set to expire.
This strategy was observed on a total of six days, observed on days like July 10, 2024. This strategy involved:
- Main Session (09:15 AM - 14:30 PM): The group maintained low-volume, largely passive positions.
- Final Hour (14:30 PM - 15:30 PM): Holding significant pre-existing positions in index options, the group would unleash aggressive and large-scale directional trades in the underlying index constituents and futures. On July 10, 2024, this involved selling approximately ₹2,800 crore worth of BANKNIFTY stocks and futures to depress the index's closing price. This action favored their large bearish options position, which had a cash-equivalent value of ₹44,153.87 crore at the close of the market.
fines and Penalties
SEBI issued an interim ex-parte order with the following directions, effective immediately:
- Impounding of Unlawful Gains: The total alleged unlawful gains of ₹4,843,57,70,168 ($581,229,242) are to be impounded, jointly and severally, by the entities into a designated escrow account.
- Market Restraint: The entities are restrained from accessing the securities market and prohibited from dealing in securities, directly or indirectly. This restraint will cease upon compliance with the impounding direction.
- Asset and Account Freeze: Banks are directed not to permit debits from the entities' accounts without SEBI permission. Custodians and Depositories are also directed to prevent debits from their assets and demat accounts. The entities are barred from disposing of any assets in India until the gains are deposited.
- Monitoring: Stock exchanges are directed to closely monitor any future dealings of the Jane Street Group.
- Cease and Desist: The entities are directed to cease and desist from any fraudulent or manipulative trade practices
Key quotes
- "An intentional trading for loss per se, is not a genuine dealing in securities. The platform of the stock exchange has been used for a non-genuine trade. Trading is always with the aim to make profits. But if one party consistently makes loss and that too in preplanned and rapid reverse trades, it is not genuine; it is an unfair trade practice."
- "Such trading activity, prima-facie, raises concerns for market integrity on account of large delta positions in index derivatives, combined with concurrent act of taking and then reducing positions in the top constituents of the index through cash market / derivatives over a short period, to artificially influence the price of the index."
- "The integrity of the market, and the faith of millions of small investors and traders, can no longer be held hostage to the machinations of such an untrustworthy actor. Investor protection forms the core of SEBI’s regulatory mandate."
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