How Jane Street Manipulated Share Market by Buying Bank Nifty Stocks

Jane Street, a prominent US trading company, has recently come under scrutiny for allegedly engaging in market manipulation in India, resulting in massive profits. According to a detailed 105-page report from SEBI, the Securities and Exchange Board of India, Jane Street was found to have earned a staggering Rs 36,500 crore between January 2023 and March 2025 through what the regulator deemed to be deceptive and unlawful practices.

The crux of Jane Street’s purported wrongdoing lies in its strategic trading of Bank Nifty options with exceptionally high leverage, a practice that allowed the company to control positions worth billions of rupees with only a fraction of the capital required upfront. SEBI described this leverage as being as high as 100 times, which meant that Jane Street could command a substantial market presence with relatively little financial exposure, requiring only around ₹365 crore to oversee positions valued at Rs 36,500 crore.

The investigation conducted by SEBI revealed that Jane Street’s profits were predominantly concentrated in trading index options, particularly Bank Nifty options. In fact, profits generated from index options alone accounted for a significant portion of the gains, totaling over Rs 43,289 crore, whereas losses in other market segments, such as stock futures and index futures, resulted in a cumulative deficit of Rs 7,687 crore. Notably, Bank Nifty options emerged as the primary revenue source for Jane Street, contributing approximately Rs 17,319 crore, nearly 40% of the total profits.

SEBI’s inquiry further disclosed that Jane Street’s modus operandi involved orchestrating artificial movements in the market by engaging in large-scale purchases of Bank Nifty stocks and futures to inflate the index prices. Subsequently, the company strategically entered into substantial short positions in options contracts that would appreciate in value as the index declined. By swiftly executing sell orders to drive down stock prices, Jane Street was able to profit from the resulting surge in the value of these put options, leading to substantial gains. SEBI characterized this trading pattern as deceptive and manipulative, citing that it created a misleading impression of market activity while enabling Jane Street to amass significant profits at the expense of other investors.

One key factor that enabled Jane Street’s trading strategy to succeed was the utilization of extreme leverage provided by options contracts. SEBI highlighted the staggering leverage of 100 times, emphasizing that this allowed Jane Street to wield considerable market influence with minimal capital outlay. Notably, the options market, particularly in Bank Nifty options, was revealed to be significantly larger than the corresponding cash market, underscoring the substantial impact of derivative trading on market dynamics.

Despite warnings from SEBI to cease such trading practices, Jane Street persisted in its activities, prompting the regulatory body to impose a temporary ban on the company and its affiliates from trading in India’s stock markets. SEBI has also seized approximately Rs 4,840 crore in purported illegal gains, which are to be held in a segregated account pending further investigation. Additionally, Jane Street has been instructed to furnish comprehensive details of its trading activities and client accounts in India, with the firm having a 21-day window to respond or challenge the ban before potential additional penalties are imposed.