India’s market regulator SEBI has dealt a major blow to US trading firm Jane Street Group, restraining them from accessing Indian securities markets and seizing ₹Rs 4800 Crores in alleged unlawful gains.
Key Details:
Jane Street generated over $2.3 billion in net revenue from equity derivatives in India last year
SEBI claims the seized amount represents total unlawful gains made by the fund
The firm is now prohibited from buying, selling, or dealing in securities directly or indirectly
Banks have been directed to freeze accounts without SEBI’s permission
Background: SEBI launched this investigation after market participants alleged manipulation by the US firm. This comes as India has become the world’s largest derivatives market by contracts traded, attracting global high-frequency trading firms like Citadel Securities and Optiver.
The retail investor boom has seen options premiums surge 11-fold in the five years to March 2025, making India an attractive market for these international players.
This action raises important questions about market manipulation and regulatory oversight in India’s rapidly growing derivatives market.
From the report it seems that heavy cross-segment trades with the sole goal to profit from speculation will be deemed manipulative. By that logic even simple cross-segment strategies like cash-secured puts can also be called manipulative if done at sufficient scale - buying underlying to support prices so that leveraged short option positions make money on the expiry day
SEBI Evaluating Jane Street’s Request to Lift Conditional Restrictions.
SEBI has confirmed that Jane Street has requested the removal of certain conditional restrictions imposed under its interim order dated July 3, 2025, and asked the regulator to issue appropriate directions following its compliance. In a statement, SEBI noted that this request is currently under examination, by the directions outlined in the interim order.
However, the specific relief sought by Jane Street in relation to future trading activity remains unclear**, and SEBI has yet to provide clarity on the scope of restrictions it is currently evaluating.
Importantly, the only restriction that continues to remain in effect pertains to manipulative trading behavior. The order directs that all concerned entities shall cease and desist from directly or indirectly engaging in any fraudulent, manipulative, or unfair trade practice or from undertaking any activity that may violate existing regulations, including those involving trading patterns referenced in the order.
Trillions worth of India’s capital market capitalization is being sacrificed, encouraging such forces of derivative market manipulation to participate for generating few millions of yearly indirect tax revenue.
“derivatives in India have become the main event rather than a hedge for cash market positions. Bank Nifty volumes dwarf the combined turnover of underlying equities. On some expiry days, notional options trading is nearly 100 times the cash-market transactions. The government earns hefty tax revenues from this frothy turnover; but the imbalance leaves a shallow, fragile market ripe for manipulation.”
In our markets the ‘tail wags the dog’ with around 300:1 derivatives to cash mkt ratio. This heavy skew doesnt happen anywhere else in the world. Such a market with relatively poor cash mkt volumes needs some regulator protection (against manipulatons) to safeguard integrity of mkts… JS style price distortions cannot be allowed in a market such as ours (with relatively poor cash mkt liquidity). What good are ‘free mkts’ if its unfair to most. I’d prefer a not-so-free but fair(er) mkts anyday.
The regulator is now talking of cash market liquidity concerns. One way to improve cash market liquidity is by abolishing STT in the cash market (keep it in derivatives if its a MUST) That would make the market more resiliant against index manipulations. I myself would have traded stocks much more if not for the high STT. If you want to enhance cash-market liquidity and improve overall market integrity, dont stifle short-term trading of stocks, simple!
So disingenuous. Cash secured puts will become obvious, the way its done, especially in their ratios wrt derivatives. Please read Sebi order, JS actions looked sinister. And the interim order is made on the basis of ‘preponderence of probability’. If JS can prove to normal sane human beings that the intent was more likely to hedge and arbitrage rather than otherwise (create deliberate price distortions), they will be let off. In financial dealings, burden of proof is on the defendent.
Honestly if my life depended on judging JS intent correctly, I’d say their motive was to mislead and side-step the market with price distortions using pure money muscle, with their only intent being to further their very short term derivative positions.
Note: JS did go bat-shit crazy in July 2024, the month before Sebi started seriously looking into JS. On one particular day in July 2024 BN moved -2% down, then +1.5% up, then 1% down and then up, all in ONE day There were few more days like this in that month, less severe, but mad enough
- buying underlying to support prices so that leveraged short option positions make money on the expiry day 
