Jane Street ran the biggest Nifty Bank options bets, SEBI says after Rs 4,840 crore freeze order
ADVERTISEMENT Responding to market concerns following its interim order, SEBI told CNBC-TV18 that Jane Street 'by far, had the largest positions in the Nifty Bank options market.' The regulator added that no further similar investigations or actions are currently expected, though it remains alert to new risks.
SEBI's July 4 order alleged that Jane Street Group engaged in systematic manipulation of the Nifty Bank and Nifty 50 indices, making unlawful profits in the process. The regulator ordered the impounding of Rs 4,840 crore in alleged gains and directed banks to freeze any debit transactions from the accounts of Jane Street's Indian affiliates.
'The entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly,' the 105-page interim order said.Jane Street generated over Rs 36,500 crore in net profits between January 2023 and March 2025 from its Indian trades, including Rs 43,289 crore from index options alone, SEBI said, citing data from the National Stock Exchange (NSE).SEBI's order detailed how Jane Street's exposure was built 'during the first eight minutes of the trading day,' particularly through selected Nifty Bank put and call options.
ADVERTISEMENT 'The trading pattern of JS Group in both Nifty Bank Call and Put options reflects a clear bearish sentiment in cash-equivalent terms,' the order said.In call options, the group's net cash-equivalent short exposure surged by Rs 3,661.16 crore during this brief window. On the put side, the resulting net delta exposure was even more bearish, totalling negative Rs 5,084 crore.
ADVERTISEMENT Net delta reflects the portfolio's directional exposure, taking into account long and short positions across option contracts and their underlying securities.According to SEBI, Jane Street manipulated index levels through trades in cash equities, futures, and options, primarily on expiry days, to profit from its massive derivatives positions.
ADVERTISEMENT On January 17, 2024, for example, the firm allegedly bought Rs 4,370 crore worth of Nifty Bank constituents in the morning to artificially boost the index. It later reversed those trades while holding larger bearish positions in options, earning Rs 734.93 crore in a single day, SEBI said.Jane Street allegedly used this 'Intra-Day Index Manipulation' strategy on 15 out of 18 trading days examined, with a separate 'Extended Marking the Close' strategy deployed on the remaining days.SEBI wrote that Jane Street was 'consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O particularly on index option expiry days.'
ADVERTISEMENT 'What sets apart the trading pattern of the JS Group as prima facie being manipulative, is the intensity and sheer scale of their intervention in the underlying component stock and futures markets,' the order stated.The regulator alleged that Jane Street's conduct misled retail options traders, who typically rely on index levels to make trading decisions. The firm 'was aware that Nifty Bank was almost certainly likely to fall again by the end of the day, given their intent to aggressively sell back all of their morning purchases (and more),' SEBI said.'Meanwhile, other traders were unaware of all this, and were hence enticed to deal at a time that the Nifty Bank itself was being artificially and temporarily propped up,' the order said.The National Stock Exchange had earlier closed its investigation into the trades following a response from Jane Street's local trading partner, Nuvama Wealth. However, SEBI opted to proceed with regulatory action, citing continued violations 'in disregard of the caution letter from the Exchange… and JS Group's own commitments.'As of Friday, accounts of Jane Street's Indian arms, including JSI Investments, JSI2 Investments, Jane Street Singapore, and Jane Street Asia Trading, are under debit freeze, pending further proceedings.
Also read | Sebi bars U.S. trading firm Jane Street from Indian markets, orders Rs 4,840 crore freeze over alleged Nifty manipulation
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