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Every once in a while, a big name quietly crosses the line and suddenly, the entire market sits up.
Most days, the stock market runs on routine. Trades go through, prices move, and everything looks normal on the surface.
But once in a while, something feels… off.
Unusual price moves. Perfectly timed trades. Patterns that don’t make sense until someone connects the dots.
This week, SEBI did just that. And at the centre of it is Jane Street, a global trading powerhouse accused of bending the market to its will.
On July 3, 2025 SEBI barred four entities of the US-based Jane Street Group from accessing Indian securities markets, alleging fraud and manipulation in the derivatives segment.
The derivatives segment is where people bet on the future price of stocks or other things instead of buying them directly.
SEBI has named the trades a textbook case of “marking-the-close,” where a company holding big bets that were about to expire pushed the market prices around to help those bets make money.
What exactly happened: the company bought a bunch of Bank Nifty contracts to make prices look strong, but at the same time sold bets that prices wouldn’t go up too high, so they could make money both ways. Later in the day, after noon, their other companies would suddenly sell huge amounts of those contracts to push prices down.
In laymen terms, they sold deals saying, “I bet prices won’t rise much.” If prices stayed low, they’d make money from those deals.
SEBI then found this pattern getting repeated and alleged that these were not normal trades but were manipulation and against the SEBI Prohibition of Fraudulent and Unfair Trade Practice (PFUTP) Regulation.
As per the SEBI, this firm was bending the rules to make extra profits while making it tough for genuine market participants.
SEBI report revealed that the real gains came from the options market despite the company booking a trading loss of over ₹61.6 crore in the cash and futures segment.
Jane Street is accused of manipulating trades by buying large amounts of Bank Nifty stocks like HDFC Bank, ICICI Bank, Axis Bank, SBI, Kotak Mahindra Bank, IndusInd Bank, Federal Bank, Bank of Baroda, IDFC First Bank, AU Small Finance Bank, PNB, Canara Bank, and Bandhan Bank early in the day, and then dumping big volumes of these shares later in the afternoon.
SEBI is moving to recover $560 million in alleged illegal profits from Jane Street, which has around ₹15,000 crore kept as margin money in government bonds.
For example, on January 17, 2024, the firm traded ₹4,370 crore worth of stocks and made ₹673 crore just from options. Between January 2023 and March 2025, Jane Street earned ₹36,502 crore in total profit, mainly from index options, while also racking up ₹7,687 crore in losses in other trades.
The how: Jane Street, a big trading company, set up a special way to get around India’s rules that stop foreign investors from trading too much in one day. They did this so they could make money using trades that India’s market watchdog says were unfair.
The firm used its India-based entity, JSI Investments Pvt Ltd, to execute large-scale, same-day trades in the cash market which is an activity explicitly prohibited under the FPI regime.
SEBI said this trading made no sense on its own because buying and selling like this was so big and costly that it would have lost money. But at the same time, Jane Street had a huge side bet (options) that ended up making them ₹36,502 crore in profit.
‘The artificial price’: the company’s practices created artificial price signals for traders while it continued to book profits in its derivatives portfolio. SEBI made this assessment based on “preponderance of probability,” that Jane Street had full knowledge that it would unwind its morning purchases by day’s end.
The effect: while the July 4 order is an interim cease-and-desist directive, SEBI sources indicate that more detailed enforcement actions may follow, including further findings related to manipulation in other index derivatives and possible disgorgement of unlawful gains.
Moreover, India's capital market stocks including Nuvama Wealth Management, Angel One, BSE & CDSL declined up to 8% on Friday, July 4 reacting to the manipulation news.
