SEBI imposes highest ever penalty of Rs 4843.57 crore on Jane Street Group for index manipulation

India Gazette

6 hours ago

Mumbai (Maharashtra) [India], July 4 (ANI): The Securities and Exchange Board of India (SEBI) has passed an interim order in the matter of index manipulation by the Jane Street Group, and imposed one of the highest penalty so far of recovering Rs 4,843.57 crore which was gained through illegal means.
The order targets four key entities under the Jane Street Group umbrella: JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd.
SEBI in its order noted that the Group used a profit maximising scheme to manipulate the market and booked substantial profits in index options, while incurring smaller losses in the cash and futures segments.
The order stated 'The total amount of unlawful gains earned by the JS Group from the alleged violations as provided, i.e. Rs 4,843,57,70,168/- shall be impounded, jointly and severally'.
SEBI's 105-page order said that the interim action follows a detailed investigation into manipulative trading practices by the Group, especially around the weekly expiry of index options on the NSE.
The case stems from media reports in April 2024, pointing to legal disputes involving Jane Street's proprietary strategies in Indian markets.
SEBI in its order stated that its findings indicate that the Group executed a highly coordinated and strategic manipulation of the BANKNIFTY index on expiry days.
A notable example was January 17, 2024, when the Group allegedly bought over Rs 4,370 crore worth of Bank Nifty constituent stocks and futures in the first half of the trading session.
Later in the day, Jane Street reversed its earlier stock purchases, aggressively sold off its positions and pushing down the BANKNIFTY index. This movement made the previously acquired put options significantly profitable, while call options collapsed in value.
This action reportedly gave a false bullish signal to the market. Simultaneously, the Group built massive bearish positions of Rs 32,115 crores in index options and later sold stocks/futures worth Rs 5,372 crores by selling calls and buying puts. This led to a peak short position of Rs 46,620 crores in options and a profit of Rs 735 crores, against an intraday loss of Rs 61.6 crores (cash futures).
SEBI observed that this 'Intra-day Index Manipulation' strategy was not isolated. It was repeated on multiple expiry days, affecting market sentiments and misleading a large number of retail investors who traded based on manipulated price signals in the underlying index.
In Strategy B (3 BANKNIFTY expiry days), they sold Rs 2,800 crores of futures in the last two hours and held a short position of Rs 44,154 crores, earning Rs 225 crores.
On 3 NIFTY expiry days in May 2025, they bought Rs 4,911 crores in NIFTY futures and held a long position of Rs 38,297 crores in options.
SEBI found illegal profits of Rs 4,843 crores across these 21 days. Profits are to be escrowed with SEBI, with restrictions in place to prevent future violations.
SEBI further stated that Jane Street Group entities, despite caution letters from NSE in February 2025 and their own commitments to refrain from certain trading behaviours, continued to deploy the same high-risk and market-distorting strategies.
Given the gravity of violations and ongoing disregard for regulatory warnings, SEBI concluded that urgent intervention was necessary to protect market integrity and investor interest.
Hence, it directed the impounding of gains worth Rs 4,843.57 crore, to be jointly and severally recovered from the entities involved. (ANI)