What was JS’ manipulative strategy?
According to a Sebi order dated July 3, on 14 expiry days, Jane Street used to heavily buy Bank Nifty futures in bulk as well in the cash segment and sell Bank Nifty options in big numbers–all in the morning. After noon, the Jane Street entities used to aggressively sell large amounts in Bank Nifty futures and influence the closing of the index on expiry days.
Instances of Manipulation
For example, in the morning of January 17, 2024, Jane Street aggressively bought Bank Nifty futures worth Rs 4,370 crore and sold Bank Nifty options for Rs 32,115 crore. By afternoon, it aggressively sold large amounts in Bank Nifty in the underlying futures for Rs 5,372 crore.
This created a peak short position of Rs 46,620 crore in the Bank Nifty index options segment. This led to a softer closing of Bank Nifty and JS made a profit of Rs 735 crore in the options segment, and made an intraday loss of Rs 61.6 crore in cash and futures. Thus, it made a clear-cut gain of Rs 673.4 crore on that expiry day.
Sebi has also found another JS strategy, under which huge short positions were created in Bank Nifty futures and its constituents in the cash segment in the last two trading hours to manipulate the index expiry closing.
On July 10, 2024, JS aggressively sold Bank Nifty futures for Rs 2,800 crore and created a short position in the options for Rs 44,154 crore. Hence, the closing was softened and a profit of Rs 225 crore was made.
Repeated Patterns
Sebi probe has found a repeated pattern in the trades and alleged that these were not normal trades but were market manipulation in violation of its prohibition of fraudulent and unfair trade practice (PFUTP) regulations.
Despite the news of Sebi’s likely investigation against Jane Street, the entities continued to play the market. According to the Sebi order, on May 15, 2025, and two other days in May 2025, in the last two hours of Nifty expiry, JS aggressively bought Nifty futures and underlying stocks for Rs 4,911 crore to influence the closing.
Meanwhile, following the Sebi ban, JS disputed the Sebi findings but said it is committed to operating in compliance and that it will further engage with the regulator.
Jane Street told Reuters that it disputes the Sebi findings but is willing to further engage with the regulator as it “is committed to operating in compliance with all regulations in the regions we operate around the world.”
JSI Investments, JSI2 Investments, Jane Street Singapore, and Jane Street Asia Trading have been prohibited from the markets and the ban will be in force till the final order is passed.