Market manipulation will not be tolerated: Tuhin Kanta Pandey

Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey commenting on Jane Street issue, said market manipulation will not be tolerated.

Speaking at an event of Bombay Chartered Accountants Society (BCAS) Pandey said, “What I can say is that Market manipulation is not going to be tolerated”. Pandey, further said that SEBI has strengthened its surveillance system and manipulators will not be able to go free.  On the questions of, if any other entities have been under SEBI radar, he said, “We are keeping track of it, more closely” through surveillance. SEBI had passed an order on July 3rd against Jane Street and 3 of its related entities alleging manipulation.

SEBI directed for impounding of Rs 4843.5 crore alleging it as illegal, earned through manipulative trades. Regulator has also directed for debit freeze on bank accounts of such entities.

On July 3rd SEBI whole time member Ananth Narayan G, passed an interim order against the Jane Street and three other group entities, alleging manipulation in the indices on expiry days. SEBI alleged that Jane Street group to misled the market by taking huge positions in cash and futures market sometimes even in falling market. And then, when market participants were under impression that it will go up, Jane Street used to create huge bearish positions in Bank Nifty and hence made profits. Such positions were created mostly on expiry days. As per SEBI Jane Street made a profit of Rs 36,671 crore during January 2023 and March 2025.

What was Jane Street’s Strategy?

In a depressed market, Jane Street group would usually purchase Bank Nifty constituents in the cash and futures markets in significant quantities. This, in turn, would send the prices soaring.

For example, on January 17, 2024, Jane Street accumulated positions of Rs 4,370.03 crore in Bank Nifty constituents across both the cash and stock futures markets. Further, in all the scrips Jane Street contributed 15–25 percent of the entire market’s traded value, which according to SEBI is a remarkably dominant share/ concentration. As a result, in the options market, Bank Nifty index’s Put options became cheaper, while Call options became expensive.

As traders and other investors pile into the rising trend, Jane Street would purchase cheap Put options and sell expensive Call options, building a bearish position in the index. On the same day, January 17, 2024, Jane Street built Rs 32,115 crore in a bearish position.

Following this, Jane Street would reverse its position and sell all of its cash/futures position in Bank Nifty constituent stocks. According to SEBI, the sales would be aggressive, in a manner that pushes down prices in the component stocks and hence index.

Ultimately, Jane Street would have to book losses in intraday cash/futures market trading. However, it would profit from the Bank Nifty index options. SEBI noted that the profits in index options more than compensated for Jane Street’s losses in intraday cash and futures trading.

Jane Street strategy on Expiry Days

This was Jane Street’s lesser used strategy, used in six of the 21 sessions detailed by SEBI. The trading firm would remain quiet for the most part on these days, between 9:15 a.m. to 2:30 p.m., making small trades to avoid drawing attention.

Then, in the last hour of trade, they make big moves, building large positions in index options, while also aggressively buying in cash and futures markets of index constituents. This sudden activity pushes the market in the direction Jane Street wanted, allowing them to book a tidy profit.

Though Jane Street group has disputed the SEBIs findings in the interim order.