The stock market is no stranger to manipulation, but few cases are as brazen as what unfolded in India involving US-based trading giant Jane Street. The firm, which started operations in India in December 2020, allegedly orchestrated a scheme that netted illegal profits of over Rs 36,000 crore between January 2023 and March 2025. The Securities and Exchange Board of India (Sebi) has since cracked down, imposing a temporary ban and demanding the transfer of Rs 4,843 crore of illicit gains into an escrow account.
So how did Jane Street pull this off? The strategy was surprisingly straightforward yet devastatingly effective. The firm would aggressively buy select Bank Nifty index stocks in the morning, only to sell them with equal force later in the day. This triggered sharp drops in share prices, which, while resulting in losses on the stock trades themselves, allowed Jane Street to profit massively from pre-established short positions in index options.
Sebi’s investigation revealed that the firm executed this scheme over 21 expiry days between January 2023 and May 2025. Two key strategies were identified. The first involved heavy buying in Bank Nifty stocks and futures early in the day followed by aggressive selling in the afternoon to artificially soften closing prices. The second strategy involved concentrated buying or selling in the last two hours of trading on expiry days to manipulate index levels.
The numbers are staggering. Jane Street reportedly made Rs 44,358 crore from index options trading during this period. After accounting for losses in other segments like stock futures (Rs 7,208 crore) and the cash market (Rs 288 crore), the net illegal profit stood at Rs 36,671 crore.
What makes this case particularly interesting is how Jane Street structured its operations to evade regulatory scrutiny. The group used four entities across different jurisdictions. Two were registered Foreign Portfolio Investors (FPIs) based in Singapore and Hong Kong, while two others were Indian subsidiaries incorporated in Mumbai. This structure allegedly helped bypass FPI regulations prohibiting intraday cash market transactions.
Sebi noted that most of the profits were booked by the FPIs within the group, totaling Rs 32,681 crore during the examination period. These profits were likely repatriated, as they far exceeded the average assets held by these FPIs in India.
The case has sent shockwaves through India’s financial markets, raising serious questions about the vulnerability of derivatives markets to manipulation by sophisticated players. While Sebi has taken swift action, the scale of the alleged manipulation suggests systemic challenges in detecting and preventing such schemes in real time.
As the investigation continues, market participants are left wondering how many more such operations might be lurking beneath the surface of India’s rapidly growing financial markets. The Jane Street case serves as a stark reminder that even in highly regulated markets, determined players can find ways to exploit loopholes for massive gains.