SEBI Bans Jane Street, Orders ₹4,850 Crore Disgorgement in India’s Biggest Trading Crackdown

Introduction:

In a historic crackdown, the Securities and Exchange Board of India (SEBI) has barred U.S.-based trading giant Jane Street and its affiliates from accessing the Indian securities market. The firm has been accused of manipulating expiry-day index trades and ordered to disgorge over ₹4,843 crore in alleged illegal gains — the largest such penalty in SEBI’s history.

What SEBI Found:

According to SEBI’s 97-page interim order:

• Jane Street used a “pump-and-dump” strategy on Bank Nifty and Nifty expiry days.
• Trades were timed to inflate index prices during the morning session and then offload for profits later in the day.
• This strategy was executed across 21 expiry sessions between January 2023 and March 2025.

Entities Involved:

• Jane Street India (JSI Investments & JSI2)
• Jane Street Singapore
• Jane Street Asia Trading
• Parent firm: Jane Street Capital (U.S.)

Financial Impact:

• Total alleged manipulated profits: ₹4,843.57 crore
• SEBI’s interim order: Immediate ban + full disgorgement
• This marks the largest-ever disgorgement in SEBI’s regulatory history.

SEBI’s Charges:

• Violation of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.
• Misuse of algorithmic trading patterns to create false market movement.
• Breach of Sections 12A(a–c) of the SEBI Act, 1992.

Market Fallout:

• BSE, Angel One, CDSL, and other brokerage stocks dropped 3%–9% post-announcement.
• SEBI announced tighter norms for expiry-day surveillance and algorithmic trading going forward.

Industry Reactions:

• Other global HFT firms like Citadel, Jump Trading, and IMC are now reassessing their India operations.
• SEBI is expected to examine all major F&O expiry trades from 2023–2025 under similar scrutiny.

Jane Street’s Response:

Jane Street has denied any wrongdoing, calling the SEBI order “unfounded and inflammatory.”
They intend to challenge the decision before SAT (Securities Appellate Tribunal) within the legal 21-day window.

Why This Matters:

This case has shaken confidence in India’s derivatives ecosystem. SEBI’s strong stance sends a message: foreign trading firms are welcome, but manipulation is not. With over ₹4,800 crore in suspected ill-gotten profits, the outcome of this case could reshape how algo firms operate in India.