Imagine This…
You’re watching a cricket match. Suddenly, one team starts scoring in a way that seems almost magical. The crowd cheers, but you notice something odd: the team isn’t just playing well — they’re controlling the pitch itself. That’s what happened in India’s stock market, but instead of cricket, the game was Bank NIFTY, and the team was Jane Street — a Wall Street giant.
Who Is Jane Street and What Was It Doing in India?
Jane Street is a global trading powerhouse from the US, famous for using super-fast computers and sophisticated strategies to make money in markets worldwide. In India, Jane Street was trading in the derivatives market, making bets on whether big stock indices like Bank NIFTY and NIFTY 50 would go up or down.
But Jane Street wasn’t just making ordinary bets. SEBI, India’s strict market regulator, noticed Jane Street was making huge profits — sometimes ₹735 crore in a single day — by trading in a way that seemed to move the market itself.
Read Also: The Regulatory Backbone of India’s Capital Market
How Did Jane Street Manipulate Bank NIFTY?
Let’s break it down in simple steps, like a story:
Step 1: The Morning Pump
- On expiry days (the last day for options contracts), Jane Street would buy massive amounts of Bank NIFTY stocks and futures, sometimes worth up to ₹4,370 crore just in the morning.
- This buying spree made the index shoot up, like a sudden burst of runs in cricket.
- Other traders, especially retail investors (small traders), saw this and thought, “The market is recovering! Let’s buy more or sell puts.”
Step 2: Setting the Trap
- While the market looked strong, Jane Street quietly built huge bearish bets — buying put options (bets that the market will fall) and selling call options (bets that the market will rise).
Step 3: The Afternoon Dump
- Later in the day, Jane Street sold off all those stocks and futures aggressively, causing the index to crash.
- The fall made their put options extremely valuable and their call options worthless, leading to massive profits.
Step 4: The Result
- Jane Street’s profits from options dwarfed any losses from selling stocks. On January 17, 2024, this trick alone made them ₹735 crore in just a few hours.
Marking the Close: Jane Street’s Secret Endgame
Let’s imagine a cricket match where, for most of the game, one team plays quietly—just singles and doubles, nothing flashy. But in the last few overs, they suddenly started smashing boundaries, changing the entire outcome in minutes. That’s exactly what Jane Street did in the Indian stock market with a trick called “Marking the Close.”
Real Example
- On July 10, 2024, Jane Street waited until the last two hours, then aggressively sold Bank NIFTY futures worth ₹2,800 crore and created short positions in options worth ₹44,154 crore.
- This heavy selling softened the closing price, and Jane Street made a profit of ₹225 crore that day
Why Did SEBI Step In and Bar Jane Street?
SEBI watched this pattern repeat on at least 18 expiry days — not just in Bank NIFTY, but also in NIFTY 50 and over 40 major stocks. They realized Jane Street wasn’t just playing the game — it was controlling the scoreboard.
- SEBI called this “intra-day index manipulation.” Jane Street’s trades were so large and perfectly timed that they could push the index up or down at will, tricking other traders into making the wrong moves.
- Retail traders lost money because they trusted the market moves, not knowing they were being engineered by a giant.
- SEBI said this was unfair and illegal. It’s not wrong to trade big, but it is wrong to move prices just to profit from options, especially when it hurts millions of small investors.
SEBI also shared the details of how much profit Jane Street made on the index expiry days and what strategy was used on the day.
SEBI action against market manipulation
- Banned Jane Street and four related companies from all trading in India.
- Seized ₹4,840 crore in alleged illegal profits, freezing Jane Street’s Indian assets.
- Ordered banks to freeze Jane Street’s accounts — no money in or out without SEBI’s approval.
- Sent a strong warning: Even after a caution letter from the National Stock Exchange in February 2025, Jane Street kept going, so SEBI took tough action.
Impact of Jane Street on retail traders?
- Retail traders lost big: Over 90% of small traders in options already lose money. Jane Street’s strategy made it even harder for them.
- Broker and exchange stocks fell: Companies like Nuvama and BSE saw their shares drop because Jane Street’s trades made up a huge part of daily volumes.
- Market trust was shaken: If one giant can move the market, everyone else feels the game is rigged.
Read Also: Understanding Value Investing: A Simple Guide For Beginners
What Happens Next?
Jane Street insists it did nothing wrong and plans to fight SEBI’s order. They have 21 days to respond and can appeal if they disagree. But for now, they’re out of the Indian market.
Key Facts Table
The Takeaway
Jane Street tried to play the Indian market like a video game, but SEBI pulled the plug. This story is a warning: India’s markets are open for business — but not for manipulation. For every small trader, it’s a reminder: sometimes the biggest moves aren’t just luck or news, but the work of giants behind the scenes.
If you found this story interesting, share it with a friend who thinks the stock market is always fair. Sometimes, the real action happens where you least expect it!
FAQs
Jane Street allegedly moved the Bank NIFTY index on expiry days to profit from options, misleading other traders.
They pumped the index up in the morning, set bearish options bets, then dumped stocks later to crash the index.
SEBI says they made over ₹36,500 crore, including ₹735 crore in a single day.
SEBI banned Jane Street from Indian markets, froze ₹4,843.5 crore in assets, and blocked their bank accounts.
Because Jane Street repeatedly moved the index to benefit their options, violating fair trading rules.
Retail traders followed false signals and suffered heavy losses.
Yes, they can appeal to SAT, the High Court, and the Supreme Court.
Jane Street’s ₹735 crore gain on January 17, 2024, raised red flags.
It shows how big players can exploit expiry days, hurting small investors.
Ans: Yes, SEBI warned that similar manipulation could target other indices or major stocks.
