Jane Street: Understanding Market Manipulation and Sebi’s Response

Who is Jane Street?

Jane Street is a global trading firm. It started in New York in 1999. The firm has offices around the world. In 2025, one of its co-founders faced accusations. He was said to fund a coup in South Sudan. The co-founder claimed he was tricked. Notably, Sam Bankman-Fried, a famous crypto figure convicted of fraud, once worked there.

Sebi’s Recent Actions Against Jane Street

Jane Street had four entities in India. They were registered as foreign portfolio investors. The Securities and Exchange Board of India (Sebi) took action. They banned these entities from the market. Sebi also asked them to return illegal gains. The amount was nearly Rs 4,850 crore.

Why Did Sebi Take Action?

Sebi found that Jane Street used two main strategies. These strategies manipulated the domestic stocks and futures & options (F&O) markets. The strategies helped them make illegal gains over several years.

How Did Jane Street Manipulate the Market?

Strategy One: Aggressive Trading

Jane Street used aggressive trading tactics. Here’s how it worked:

• They bought stocks and futures of Bank Nifty in the morning.
• At the same time, they bought put options on the index.
• In the afternoon, they sold the stocks bought earlier.
• This selling pushed up the prices of the options on Bank Nifty.
• They then sold the put options to make huge profits.

Strategy Two: Concentrated Trading

The other strategy involved concentrated trading. Here’s what they did:

• They focused on selling or buying Nifty index options.
• They did this in the last two hours of the expiry day.
• This trading swung the index levels.
• They profited from these trades.

What’s Next for Jane Street?

Sebi has asked Jane Street to present their side. They have 21 days to do so. Sebi is expected to expand its investigations. The current order focuses on the period from January 2023 to March 2025. The regulator may also investigate other indices and BSE’s segments.