Why SEBI Banned Jane Street: ₹36,671 Crore Profit Under Scrutiny

What Is Jane Street?

Jane Street is a private trading firm based in New York. It started in the year 2000 and works across the globe. The firm is known for using smart technology and math-based methods to trade. Unlike hedge funds, Jane Street uses its own money to make trades. It has more than 3,000 employees and operates in over 45 countries.

Key Facts About Jane Street

Detail	Info
Founded	2000
Headquarters	New York, USA
Employees	3,000+
Global Operations	45+ countries
Revenue (2024)	$20.5 billion
Main Strategy	High-frequency, algorithmic trading

How Jane Street Trades

Jane Street focuses on quantitative trading, which means using computer models to make fast trading decisions. The firm is also known for using a rare programming language called OCaml. It helps them write error-free code, which is important for handling large and fast trades.

Jane Street’s Entry into India

In December 2020, Jane Street entered the Indian market through four companies:

• JSI Investments Pvt Ltd
• JSI2 Investments Pvt Ltd
• Jane Street Singapore Pte Ltd
• Jane Street Asia Trading Ltd

Some of these were registered as Foreign Portfolio Investors (FPIs). Their main activity in India was trading index options like Bank Nifty and Nifty 50.

Huge Profits in India

From January 2023 to March 2025, Jane Street made a net profit of ₹36,671 crore in India. Most of this came from index options trading. However, the firm also lost money in other areas like stock futures, index futures, and cash market, with total losses of ₹7,687 crore.

India Earnings Overview

Segment	Profit / Loss (₹ Crore)
Bank Nifty & Nifty 50 options	+43,289
Stock futures, index futures	-7,687
Net Profit	+36,671

Alleged Trading Tricks Used by Jane Street

SEBI (India’s market regulator) claims Jane Street used two main strategies to profit unfairly:

1. Intraday Index Manipulation

• Jane Street bought large volumes of Bank Nifty stocks and futures early in the day to push the index up.
• At the same time, they took short positions in Bank Nifty options (buying puts and selling calls).
• Later in the day, they sold off the stocks, causing the index to drop.
• This made their options highly profitable.

Example: On January 17, 2024, this method earned them ₹673 crore in just one day.

2. Expiry Day Marking the Close

• On the day options expired, Jane Street made big trades late in the session to move the closing price.
• These trades affected the value of their options positions.

Example: On July 10, 2024, they traded Bank Nifty futures worth ₹2,800 crore and shorted options worth ₹44,154 crore. This gave them a profit of ₹225 crore.

Bypassing Trading Rules

SEBI says Jane Street used its India-based firms to avoid rules that stop FPIs from day trading in cash markets. This helped them pull off these strategies more easily.

SEBI Bans Jane Street in India

On July 3, 2025, SEBI issued an interim order banning Jane Street and its affiliates from trading in India. This included all four companies linked to the group. SEBI accused them of fraud and market manipulation.

What SEBI Found

• Jane Street manipulated Bank Nifty and Nifty 50, especially on expiry days.
• They used a “pump-and-dump” method:
  • In the morning: Bought heavily to inflate the index.
  • In the afternoon: Sold aggressively to drop the index.
• This gave a false view of the market, which SEBI says misled small investors.

Money SEBI Is Holding Back

SEBI says Jane Street made illegal profits of ₹4,843 crore. They’ve ordered this amount to be frozen in a special bank account. All four Jane Street companies’ Indian accounts are also frozen—no withdrawals allowed without SEBI’s okay.

Impact on Retail Investors

According to SEBI, 93% of retail traders lose money in options. Jane Street’s large-scale trades may have worsened the situation. Retail investors, with smaller amounts and less information, couldn’t match up with Jane Street’s fast and large trades.

SEBI’s Warnings Ignored

In February 2025, the National Stock Exchange (NSE) warned Jane Street. The firm said they would stop, but SEBI claims they kept going until May 2025. That’s one of the main reasons for the strict ban.

Ongoing SEBI Investigation

SEBI first looked into trades on 18 Bank Nifty expiry days and 3 Nifty expiry days. Now the investigation is getting bigger. SEBI is checking more days, more indexes, and other exchanges to see if there’s a bigger pattern.

What Jane Street Needs to Do

To get the ban lifted, Jane Street must:

• Deposit ₹4,843 crore into an escrow account.
• Respond to SEBI’s findings within 21 days.
• Exit existing trades in a slow and non-disruptive way, within three months or before expiry.

Jane Street’s Response

Jane Street has denied the charges. They say they follow all rules in every country they operate in. They also plan to work with SEBI and may challenge the order legally, saying their trading actions were not manipulative.

Reaction from Market and Public

Industry Concerns

Jane Street is one of the biggest players in India’s derivatives market. They and firms like them account for about 50% of options trading. If they pull back, it could hit the market hard.

Expert Views

• Nithin Kamath (Zerodha co-founder): Said SEBI did the right thing but warned about possible disruptions.
• Other traders: Called Jane Street’s methods “brute-force” and not very clever.
• Deepak Shenoy: Compared the incident to a bigger version of the GameStop drama.

Public Sentiment

On social media, many users expressed anger:

• @nakulvibhor: Called out Jane Street’s “dirty game.”
• @aakankshalovely: Said the firm “looted” Indian retail investors.

What This Means for the Future

SEBI’s Big Move

This may be one of SEBI’s toughest actions against a foreign trader. It could lead to:

• New rules for expiry-day trades
• More transparency for algorithmic trades
• Limits on co-location access (where firms place servers near exchange systems)

Protecting Retail Investors

SEBI wants to protect small traders, especially since they form a big part of India’s trading activity. But this case also raises questions:

• Are retail traders too exposed to risky markets?
• Should there be stronger entry rules for them?

Global Impact

Some experts praise SEBI. Others worry it may scare off foreign investors if there’s no solid proof. This could affect India’s image as a fair and open market.

Why Jane Street Is in the News

Here’s why this case is trending:

Reason	Description
Big Profits	₹36,671 crore made in India
Huge Amount Frozen	₹4,843 crore held by SEBI
Expiry-Day Tactics	Alleged market tricks hurt small investors
Social Media Buzz	Public anger, expert debate, trending topics
Policy Impact	May change trading rules in India

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Frequently Asked Questions (FAQs)

What does Jane Street do?

Jane Street is a private trading firm that uses computers and math models to trade stocks, options, and other assets quickly and in large volumes.

Why did SEBI ban Jane Street?

SEBI accused Jane Street of manipulating the market on expiry days by inflating and then crashing the index to profit from options trades.

How much profit did Jane Street make in India?

They made a net profit of around ₹36,671 crore between January 2023 and March 2025.

Will Jane Street return to India?

Maybe. They can come back if they deposit the frozen amount and respond to SEBI’s notice. They may also go to court to fight the ban.

Final Thoughts

Jane Street’s case is a major moment for Indian markets. It raises serious questions about how high-frequency firms operate, how rules are enforced, and how retail investors can be protected. While the firm says it did nothing wrong, SEBI’s ban shows that India is ready to act tough on what it sees as unfair practices.

This case is still developing, and the final outcome will likely shape how India handles foreign traders and fast-moving market players in the future.

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