How Jane Street targeted Over 40 Nifty, Nifty Bank Stocks In Expiry-Day Trades

July 5, 2025: In a sweeping enforcement action, the Securities and Exchange Board of India (SEBI) has barred US-based trading firm Jane Street Group and four of its affiliates from participating in India’s securities markets, after uncovering a sustained pattern of expiry-day manipulation that yielded illegal gains of ₹4,840 crore.

According to SEBI’s 105-page order, Jane Street used sophisticated intra-day strategies to manipulate index levels—particularly on days when Nifty and Bank Nifty options expired—impacting pricing and misleading other market participants.

A Systemic Strategy: “Intra-day Index Manipulation”

SEBI’s investigation reveals that Jane Street exploited expiry-day volatility by aggressively buying and selling both underlying stocks and futures contracts in early trading sessions. These trades created false signals of bullish momentum, artificially inflating index levels.

The firm would then reverse its positions by mid-day or late afternoon, triggering sharp drops in the indices and allowing it to profit heavily from put options—despite taking losses in cash and futures segments.

📌 Example: On January 17, 2024, Jane Street allegedly earned ₹735 crore in a single day, manipulating Bank Nifty stocks during morning trade and crashing the index later to benefit from short positions.

Continued Manipulation Despite Warnings

SEBI noted that Jane Street continued its manipulative practices even after being warned by the exchange in early 2025. In May 2025, the firm used a slightly modified strategy called “Extended Marking the Close”, again manipulating prices during the closing hours of expiry sessions.

“JS Group continued with similar trades in disregard of the caution letter from the Exchange… and their own prior commitments,” SEBI stated.

These manipulations distorted market perception, with investors believing indices were stabilizing, only for sharp reversals to be triggered by Jane Street’s trades.

Massive Profits from Options, Absorbed Equity Losses

Between January 2023 and March 2025, Jane Street reportedly earned:

• ₹43,289 crore in profits from index options
• While incurring ₹7,687 crore in equity cash and futures losses

SEBI noted this was a calculated trade-off, with equity losses deemed acceptable to fuel options profitability.

“The intensity and sheer scale of their intervention… set them apart,” the order observed.

Who’s Named in the Ban

SEBI has named four Jane Street affiliates:

• JSI Investments Pvt Ltd
• JSI2 Investments Pvt Ltd
• Jane Street Singapore Pte Ltd
• Jane Street Asia Trading Ltd

The regulator has also frozen debit transactions from these entities’ bank accounts and issued market access bans pending further investigation and enforcement actions.

Stocks & Markets Affected

The manipulation impacted 18 expiry-day sessions, including:

• 15 Bank Nifty expiries
• 3 Nifty 50 expiries

Heavyweight stocks involved:

• Banking stocks: HDFC Bank, ICICI Bank, SBI, Axis Bank, Kotak Mahindra, PNB
• Nifty giants: Reliance Industries, Infosys, TCS, ITC, L&T, HCL Tech, Adani Enterprises

Jane Street’s trades often dominated expiry-day trading volumes, influencing price discovery and undermining market fairness, SEBI said.

Market Reaction and Broader Concerns

This case has reignited debate over the influence of high-frequency traders (HFTs) and algorithmic strategies in India’s fast-growing derivatives markets, which have become among the largest in the world by volume.

Analysts and brokers say the disproportionate power wielded by a handful of institutional players on expiry days can lead to significant losses for retail investors, who rely on transparent market signals.

“This exposes deep flaws in how expiry days are structured and monitored,” said one trader at a domestic brokerage. “Retail traders stand no chance when index levels are being engineered like this.”

What’s Next?

SEBI’s crackdown signals a shift toward stricter surveillance and enforcement in India’s complex derivatives ecosystem. Regulatory observers expect follow-up actions including:

• Further scrutiny of expiry-day trades
• Algorithm audits and disclosures
• Tighter controls on institutional access and leverage

With expiry-day volumes continuing to rise and retail participation growing rapidly, market integrity will remain under the microscope