Jane Street Barred from Indian Markets as SEBI Freezes $566 Million Over Nifty 50 Manipulation Claims

India's SEBI bans Jane Street from securities markets and freezes $566 million in alleged illegal profits, citing manipulation of the Nifty 50 and BANKNIFTY indices. Here's what happened and why it matters.

SEBI Cracks Down on Jane Street Over Alleged Market Manipulation

India’s market watchdog, the Securities and Exchange Board of India (SEBI), has issued a temporary trading ban against Jane Street Group, a U.S.-based quantitative trading firm, accusing the company of widespread manipulation of India’s benchmark indices — including the Nifty 50 and BANKNIFTY.

In a detailed 105-page interim order, SEBI also froze over ₹48.4 billion ($566 million) in accounts linked to Jane Street, identifying the funds as illegally obtained profits from manipulative trading strategies.

How Jane Street Allegedly Manipulated Nifty and BANKNIFTY

According to SEBI, Jane Street used a complex "buy-high, sell-low" strategy:

The firm allegedly purchased large volumes of BANKNIFTY stocks and futures at the start of the trading day.

Simultaneously, they placed substantial options bets predicting a market decline.

After influencing the market with early trades, Jane Street liquidated its positions, pushing the index downward.

This boosted the value of their options trades, resulting in massive profits.

Though these actions may not have violated specific technical rules, SEBI argues that the scale and speed of trades, combined with a lack of clear economic rationale, clearly pointed to intentional market manipulation.

SEBI: Jane Street Is “Not a Good Faith Actor”

SEBI emphasized that Jane Street had been explicitly warned by the National Stock Exchange (NSE) in February 2025. Despite the advisory, the company allegedly continued its manipulative practices.

“Unlike the vast majority of foreign investors, Jane Street is not a good faith actor that deserves to be trusted,” SEBI stated.
“The integrity of the market and the trust of millions of investors cannot be held hostage to such behavior.”

Jane Street Responds: “We Operate in Compliance”

A Jane Street spokesperson told CNBC that the firm disputes SEBI’s conclusions and plans to cooperate fully with the investigation.

“Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world,” the company said in its official response.

Impact on India’s Growing Derivatives Market

This enforcement comes at a time when global trading giants — including Citadel Securities, Optiver, Millennium, and IMC Trading — are expanding aggressively into India’s booming derivatives market, now the world’s largest by volume.

Analysts say the SEBI move sends a strong message about India’s intent to preserve market integrity amid growing foreign participation.

SEBI Eyes Algorithmic Trading Risks

In a 2024 report, SEBI warned that algorithmic and high-frequency trading allowed proprietary traders and foreign portfolio investors to generate ₹610 billion in profits, while retail investors lost an equivalent amount. The regulator expressed concerns that unchecked practices could undermine fair price discovery.

Industry Experts Support SEBI's Action

Deven Choksey, Managing Director at DRChoksey FinServ, praised SEBI’s stance:

“Anyone abusing the market must be disciplined. The regulator is doing its job in protecting market integrity.”

Choksey added that while execution strategies can differ among investors, price discovery must remain universal and transparent.

Why This Matters for Global Firms Operating in India

The Jane Street case highlights the risks of aggressive strategies in regulated emerging markets. It also serves as a wake-up call to foreign investors that India’s regulators are watching closely — and willing to act.

SEBI’s actions reflect a growing commitment to fair play, transparency, and investor protection, crucial for the long-term growth and credibility of Indian capital markets.