The American company Jane Street, known for its trading strategy and dominance in global markets, has been embroiled in controversies in India.
India’s market regulator SEBI has banned this firm on charges of being involved in deceptive and manipulative trading activities. It is alleged that Jane Street illegally earned profits worth thousands of crores of rupees in the Indian stock market.
The main reason for this controversy is Jane Street’s aggressive trading strategy in the derivatives (futures) segment, where the firm made several trades with the aim of not only making profits but also influencing the market. SEBI says that these strategies were not fair, they were deliberately designed moves to influence prices and make huge profits.
SEBI recently completely banned Jane Street from the Indian stock market. However, Jane Street has called this ban wrong and has decided to challenge this move of SEBI.
What is Jane Street?
Jane Street is a proprietary trading firm, which means that it trades with its own capital, not with the client’s funds.
It is being said that using this freedom, this foreign firm allegedly made a profit of thousands of crores of rupees and sent it abroad.
However, Jane Street has rejected the allegations against itself.
According to the Business Standard report, Jane Street has written in an email sent to its employees that they are very disappointed with this allegation and consider it to be false and exaggerated. They are preparing a response to it soon.
SEBI alleged that the American firm has made a profit of thousands of crores of rupees by manipulating index options.
What are index options?
To understand this story properly, first of all, let us know what are index options?
You can understand it this way… Index options are not just about the news related to the stock market, but are also related to your luck. Let’s assume that you place a bet of Rs 2 on Bank Nifty crossing the 50,000 mark on a particular trading day. (The condition is that the deal will be valid till the market closes at 3:30 pm on that day)
If Bank Nifty closes at 50,001, then you have hit the jackpot. If a ‘miracle’ happens, your Rs 2 bet can get you Rs 30-40 and sometimes even more. And Jane Street was also placing thousands of similar bets.
But if Bank Nifty closes at 49,999, then you lose Rs 2.
So you see how one number will completely change your luck.
In the language of the market, this figure of 50,000 is called the strike price. If your bet (in this example Bank Nifty above 50000) is correct then it is called ‘in the money’ and the profit can be huge.
If the index closes below your target then your bet will be called ‘out of the money’ and everything will go waste. Meaning either you will suffer a huge loss or you will lose the entire amount you had staked.
‘Out of the money’ options are often very cheap, so cheap that they can be bought for 2-3 rupees and sometimes even cheaper. Because those who are betting on it are completely dependent on luck and do so in the hope of some ‘miracle’ in the last minutes.
What did Jane Street do in the ‘game’?
Market analyst Asif Iqbal says that here you should keep in mind that this whole game (index options) is of ‘chance’, meaning you need the help of luck to win.
Even if you are entering this ‘game’ with a lot of study patterns or are doing this on the advice of people who claim to be experts, even then you cannot win continuously in this game.
But in the case of Jane Street, the story is somewhat different. According to SEBI, Jane Street did not wait for any ‘miracle’, but did something that seemed like a ‘miracle’.
Asif explains, “On the day of options expiry, people associated with Jane Street used to buy shares included in Bank Nifty in large quantities as soon as the market opened. The result of this was a jump in Bank Nifty.”
On the other hand, Jane Street was working on another strategy. Asif explains, “They would sell call options on the same day and tell the market that they are expecting a fall in Bank Nifty. At the same time, they would buy put options, which means that they believe that Bank Nifty is in a downward trend.”
In the last minutes of the trading session, Jane Street would place a series of sell orders in Bank Nifty. The aim was to bring Bank Nifty down. The result would be that Jane Street’s put options would give them a ‘jackpot’.
Now the question arises that why did Jane Street do this only in the last half hour of the trading session?
Asif explains, “In India, the expiry price of the index is not the last trade price, but the average value of trading in the index in the last half hour. In this way, he was repeatedly earning a profit of Rs 40 or more from options on his value of Rs 2.”
What is wrong or illegal in this?
SEBI believes that what Jane Street was doing was more than smart trading and was deliberately inflating or lowering the price of stocks or influencing the index.
SEBI argues that Jane Street’s trades were not linked to news of any company or sector, neither fundamentals nor investment. They were done purely to artificially influence the index and make profits.
In addition, SEBI also found that Jane Street is a foreign institutional investor (FPI) and has also violated a special rule related to FPIs. According to Indian law, FPIs are not allowed to do intraday trading in the cash market. That is, a stock cannot be bought and sold on the same trading day. But Jane Street allegedly violated this rule.
According to SEBI, Jane Street made these trades through India-based JSI Investment to circumvent this rule.
SEBI estimates that Jane Street earned a total of Rs 36,500 crore from trading through this manipulation, but SEBI has focused its attention on the earnings from options, SEBI has currently frozen the amount of profit of Rs 4843 crore and banned Jane Street from trading.
Losses in futures and options
India had 19.7 crore stock trading accounts as of May 2025, five times more than at the beginning of 2020, and many of these investors are venturing into relatively risky futures and options.
According to the latest SEBI data, 90 percent of retail account holders actively trading in equity futures and options suffered losses in their derivative trades, while more than 40 percent of such traders were under 30 years of age and nearly three-fourths had annual income of less than Rs 5 lakh.
According to recently released data, retail investors lost Rs 1.05 lakh crore in the 12 months till March 2025, which is 41 percent more than the previous year. Data for the year till March 2024 shows that proprietary traders and foreign investors made profits worth billions of rupees.
Politics also started
Politics has also started on this issue. Congress has surrounded the Finance Ministry, Stock Exchange and SEBI on this issue. Congress leader Supriya Srinet has asked on social media X that who allowed Jane Street to bring money?
She asked many questions, if Jane Street was making illegal profits, then who allowed it to take the profit back to America? Under whose supervision was Jane Street working? What will happen to the illegal profit that Jane Street sent out of the country?
Not only this, Supriya also asked many more questions. He asked, why did it take 4 years for SEBI to wake up, why did it take 5 months to ban the company – why did they not take action? Why did agencies like ED, CBI, IT not get a clue? Did Narendra Modi, Amit Shah, who give share market tips to the country, have any information about this? When Jane Street was sending illegal profits out of the country, why was no action taken against it?
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