SEBI Expands Probe: Jane Street’s Sensex Options Trades Under the Scanner 🕵️‍♂️

Rabbit Research
Jul 11
2 min read

Date: July 11, 2025Time: 1:18 PM IST

Key Highlights

SEBI to Investigate Sensex Options:The Securities and Exchange Board of India (SEBI) is broadening its investigation into Jane Street, now including Sensex options contracts (BSE) alongside the ongoing scrutiny of Nifty 50 and Bank Nifty (NSE) indices.
Allegations of Index Manipulation:SEBI alleges that Jane Street, a major US trading firm, manipulated key Indian indices—especially on options expiry days—by executing large trades intended to sway closing prices. This, according to SEBI, resulted in significant illegal gains for Jane Street and related entities.

Regulatory Actions 🚫

Trading Ban: Jane Street and three associated entities are barred from Indian markets.
Deposit Order: SEBI has ordered the deposit of ₹4,843.5 crore, deemed illegal gains.
Bank Account Freeze: The government has frozen their Indian bank accounts, restricting withdrawals without regulatory approval.

Background & Investigation

Initial Focus: The probe began with NSE index derivatives.
Expanded Scope: Due to rising popularity and volumes, BSE’s Sensex options are now included.
SEBI’s Alleged Manipulation Tactics:
- Building large positions in index constituent stocks and futures to influence index levels.
- Aligning options positions with manipulated expiry prices for profit.
- Aggressive trading, particularly in the final hour of expiry days, to affect closing prices and maximize options payoffs.

Reported Gains & Jane Street’s Response

SEBI’s Claim: Jane Street reportedly made ₹36,671 crore between January 2023 and March 2025 using these methods.
Jane Street’s Stand: The firm denies all allegations, calling their trades “legitimate arbitrage,” and plans to contest the ban in court.

Market Impact & Broader Implications 📉

Trading Volumes: The ban has led to a noticeable decline in options trading on both NSE and BSE, as market participants reassess risk and regulatory clarity.
Market Integrity: The case has raised questions about the integrity of India’s rapidly growing derivatives markets, prompting SEBI to enhance surveillance and enforcement against potential manipulation.

What’s Next?

Ongoing Investigation: SEBI’s probe continues, with further scrutiny expected on Sensex options and possibly other segments.
Future Developments: More information is likely as the investigation progresses and as Jane Street contests the findings.

Note: This update is based on SEBI’s preliminary findings and recent news reports. The situation remains fluid and further updates are expected as the investigation unfolds.