On July 3, 2025, India’s market regulator SEBI delivered a landmark ruling: it barred Jane Street and related entities from trading in Indian markets and directed the impounding of ₹4,843–4,844 crore in alleged proceeds from expiry-day manipulations of indices like Bank Nifty and Nifty 50.
What Sparked the Crackdown?
Investigations revealed that Jane Street used a dual‑entity setup: domestic arms (e.g., JSI Investments) and foreign FPIs in Singapore/Hong Kong. This allowed them to bypass intraday derivatives restrictions and execute a coordinated strategy:
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Take large buy positions in index stocks early in the day.
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Hold bearish options positions.
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Reverse stock positions late, manipulating closing prices for option payoffs.
This course of action—repeated over 18 expiry days—earned them billions in alleged illicit gains.
Global HFT Firms on Alert
Several Wall Street quant firms—Citadel, IMC, Jump Trading, and Optiver—have adopted similar dual-entity structures. Jane Street’s ban has caused a global ripple:
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Firms are rethinking algorithmic overlap between FPI and domestic arms to avoid regulatory pitfalls.
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Brokerages and exchanges are adjusting algo monitoring systems and tightening compliance protocols.
Domestic Market Implications
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Traders warn of a potential liquidity shortfall, given Jane Street’s dominance in expiry-day options trading (~50% of volume).
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ZERODHA’s Nithin Kamath cautioned that retail volumes (~35%) could dip in the firm’s absence.
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Meanwhile, SEBI Chairman Tuhin Pandey confirmed that surveillance upgrades are underway to prevent similar manipulations.
Enforcement: A Strong Message
SEBI’s actions deliver a clear warning:
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No tolerance for expiry-day manipulations—₹4,843 cr seized is the largest ever.
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Even global giants are not beyond scrutiny.
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Heading into court, Jane Street is contesting the ruling—but regulatory eyes have sharpened.
Long-Term Outlook
Experts like Rahul Ghose suggest SEBI may introduce:
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Real-time algo surveillance
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Stricter reporting for large proprietary desks
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Revisions to expiry cycles and margins.
These changes aim to strengthen market integrity, reduce volatility, and restore investor trust.
Final Takeaway
SEBI’s decisive move against Jane Street marks a global turning point—signaling that India won’t tolerate cross-border market manipulation. The fallout is prompting quant firms worldwide, brokers, and exchanges to overhaul structures, compliance, and algorithmic strategies. For Future Ready readers, this is a powerful reminder: market fairness demands transparency, oversight, and vigilance—even for the most sophisticated players.
Read more on our website: Future Ready, your go-to platform for the best educational content and latest updates.
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