Explained: How Jane Street Bought Bank Nifty Stocks To Manipulate Share Market And Earn Rs 36,500 Cr With 100x F&O Leverage?

A US-based trading giant, Jane Street, has landed at the centre of one of India’s biggest market manipulation scandals. In a 105-page order released on July 03, 2025, SEBI revealed how the global trading giant Jane Street Group earned over Rs 36,500 crore between January 2023 and March 2025.

The regulator described the profits as “unlawful gains” from strategies that misled other investors and created a false picture of market activity.

SEBI’s investigation found that Jane Street earned most of its profits by trading index options, especially Bank Nifty options. The order said, “Profits from Index Options alone accounted for over Rs 43,289 crore, whereas losses in stock futures, index futures, and cash cumulatively amounted to Rs 7,687 crore.”

Just Bank Nifty options alone brought in about Rs 17,319 crore, nearly 40% of all profits.

Also Read: SEBI vs. Jane Street: Why Did Nithin Kamath Applaud and Should Retail Traders Worry?

SEBI’s investigation showed that Jane Street bought large amounts of Bank Nifty stocks and futures early in the day, pushing the index higher when traders least expected it. While the index climbed, the firm quietly built huge short positions in options—financial contracts that rise in value if the index falls.

Later, Jane Street reversed its trades by selling those stocks aggressively, which dragged the index down again. As prices dropped, the value of the put options soared. For example, on January 17, 2024, a Bank Nifty put option that cost Rs 70 in the morning closed at Rs 734 by the end of the session.

SEBI called this behaviour “prima facie fraudulent and manipulative,” explaining, “The trading patterns observed created a false or misleading appearance of trading and price movement… and allowed the Jane Street Group to generate substantial profits.”

One reason this worked is that options allow huge bets with very little money. SEBI explained, “The underlying cash-equivalent economic exposure of this long-call ATM option… with an outlay of just Rs 1, representing a 100-times leverage.”

In simple words, Jane Street could control massive positions while risking only a fraction of the amount needed in stocks.

SEBI showed that the options market is now enormous. On January 17, 2024, the traded turnover in Bank Nifty options was over Rs 1.03 lakh crore, 353 times bigger than the cash market of the same stocks. There were over 16 lakh traders in options, compared to just about 4,600 in cash trading.

Jane Street made Rs 36,500 crore in profits mainly by trading Bank Nifty options using very high leverage, which SEBI said was “100-times leverage,” meaning they might have needed as little as Rs 365 crore at any one time to control positions that generated those profits.

However, this is only a theoretical estimate to illustrate the power of leverage—SEBI has not confirmed the actual amount spent, and the real capital deployed was likely much higher due to rolling positions, losses in cash and futures segments, and trading across multiple expiry days.

According to SEBI, the firm “bought large quantities of stocks and futures to push the index up” and then reversed their trades to bring prices down, making their put options shoot up in value.

The order called this “a false or misleading appearance of trading and price movement” and said Jane Street’s strategy was designed to “generate substantial profits” while other investors were misled by the artificial moves.

Even after being warned in February 2025 to stop this kind of trading, Jane Street continued. The order said, “In disregard of the caution letter… Jane Street Group was observed to continue to run very large ‘cash-equivalent’ positions in index options.” This defiance led SEBI to issue its interim ban.

SEBI has temporarily banned Jane Street and its related companies from trading in India’s stock markets. This means they are not allowed to buy, sell, or deal in any securities until the investigation is over and a final decision is made.

SEBI has also seized about Rs 4,840 crore, which it says are illegal profits the firm made by manipulating the Bank Nifty index. The money has to be kept in a separate escrow account and cannot be moved without SEBI’s permission.

In addition, all their banks have been told to freeze any fund transfers. Jane Street has been ordered to share complete details of all its trading and client accounts in India.

This action is not the final punishment yet—Jane Street has 21 days to respond to SEBI’s findings or challenge the ban in the Securities Appellate Tribunal, after which SEBI will decide whether to impose further penalties.