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India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has taken one of its toughest actions yet against a foreign trading firm.
In a detailed order issued in July 2025, SEBI accused US-based Jane Street of manipulating the Bank Nifty index through aggressive futures and options trading strategies that earned the company an estimated Rs 36,500 crore in profits.
SEBI Action Against Jane Street
According to SEBI, Jane Street systematically bought large amounts of Bank Nifty stocks and futures during morning trading to artificially lift the index. While the index was rising, the firm built massive short positions in options contracts that would gain value if the index later fell.
After accumulating these positions, Jane Street reversed its trades by dumping the stocks, dragging the index down again and making its put options surge in price.
The regulator called this pattern a “false or misleading appearance of trading and price movement,” stating that it undermined trust in fair price discovery. SEBI ordered a ban on Jane Street and its affiliated entities from trading in Indian markets until further notice.
It also impounded Rs 4,840 crore from the firm’s accounts, which has been moved into an escrow account where it cannot be accessed. Jane Street has 21 days to file a response or appeal the decision before the Securities Appellate Tribunal.
The action comes at a time when India has emerged as the world’s largest derivatives market, with volumes more than 40 times larger than the underlying cash market.
What Market Expert Said?
According to market veteran Deven Choksey, this rapid growth has created both opportunities and new challenges for regulation.
“This is a good example that SEBI has set,” Choksey said, pointing out that any player abusing the market must be shown discipline. He explained that India’s derivatives market is now a mix of high-frequency and algorithmic traders, institutional investors hedging large portfolios, and retail traders who are not using algorithms.
“It’s like bullock carts running on an expressway or autobahn,” he said, highlighting how all types of participants currently trade on the same platform despite having very different capabilities and speeds.
Choksey believes that while price discovery should remain common for everyone, the infrastructure for executing trades needs to evolve. “In my view, the execution platform should be created separately for customised requirements of risk and speed management of HFT and algo traders, institutions, and retail traders,” he added.
At the same time, he clarified that SEBI’s crackdown should not be seen as an attack on all foreign investors. “SEBI’s decision to impound the accounts of Jane Street is unlikely to impact other foreign players. We are not worried about that,” Choksey said.
“If someone abuses the market, they cannot be spared in whichever part of the world. Not all the foreign players are abusing the market. We do not see other foreign investors either unwinding any positions or being nervous because of this.”
No Effect On Normal Trading Activity
This enforcement action against Jane Street marks one of the largest interventions by SEBI involving a foreign trading firm.
While the outcome will depend on Jane Street’s response and any appeals, the case underscores the regulator’s focus on preventing practices that can distort price discovery in India’s fast-growing derivatives markets.
SEBI has stated that its measures are targeted specifically at suspected manipulation and are not intended to disrupt normal trading activity by legitimate investors, whether domestic or foreign.