India’s financial regulator just dropped the hammer on Jane Street. The Securities and Exchange Board of India issued a full trading ban and froze $566 million in alleged illegal gains. The order came down July 3 after a two-year investigation into Jane Street’s activity on the Nifty 50 and Bank Nifty indices. The firm is accused of manipulating index levels through aggressive intraday trades and options positioning. This is not a slap on the wrist. It is the largest enforcement action SEBI has ever taken against a foreign trading firm.
The strategy was textbook institutional muscle. Jane Street would flood the open with massive buys in futures and cash stocks tied to the Bank Nifty index. At the same time, they loaded up on puts and dumped calls. Then came the reversal. Later in the day, they dumped the stocks they had just bought. That dragged the index down and made their puts explode in value. The calls they sold earlier expired worthless. The net result was a profit spike in options while taking a controlled loss in equities. SEBI called it deliberate distortion. The scale was not small. The firm booked over $4.3 billion in profit from India trades between January 2023 and March 2025.
Options markets in India are thin. Liquidity is shallow. That is why big players stand out. SEBI tracked Jane Street’s trades across multiple expiry days and found concentrated activity in the final hour before close. The regulator said the firm was marking the close to influence settlement prices. That tactic is banned under SEBI rules. The manipulation was not subtle. On March 6, 2024, Jane Street allegedly made $88 million in one session using this method. Similar trades were flagged in August, September, and May of 2024. The regulator said the firm ignored a formal warning issued in February 2025 and continued the same behavior.
The order blocks Jane Street and its affiliates from buying or selling any securities in India. Banks have been told to freeze all accounts linked to the firm. No withdrawals allowed without SEBI’s approval. The regulator also ordered the firm to deposit the frozen funds into an escrow account. Jane Street has disputed the findings and says it will engage with SEBI. The firm has 21 days to respond or appeal through the Securities Appellate Tribunal.
India’s derivatives market is the largest in the world by contract volume. Over 60% of global equity derivatives trades now flow through Indian exchanges. That is why firms like Citadel, Optiver, and Millennium are expanding in Mumbai. SEBI’s crackdown sends a message. The regulator is watching options first. That is where manipulation leaves the clearest trail. The liquidity gap between stocks and options makes it easier to spot distortions. Jane Street’s strategy relied on that gap. It worked for two years. Now it is under lock.
Sources:
https://economictimes.indiatimes.com/topic/jane-street-sebi-ban