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US-based Jane Street, which was barred from the securities market by regulator Sebi for making ‘unlawful gains’ in the stock market, had ignored a prior warning from the National Stock Exchange four months earlier and continued with alleged manipulative trading activities.
When concerns regarding allegedly manipulative trading practices by JS Group, a global proprietary trading firm, surfaced in early 2025, the NSE, acting under Sebi’s direction, issued a clear and formal warning to JS Group in February 2025. The notice advised them to avoid high-risk activity in index options and refrain from any trading behaviour that could indicate manipulation.
In response, JS Group informed NSE in February 2025 of its assurance to fully comply with applicable regulations.
However, in May 2025, the group again executed what appeared to be manipulative “extended marking the close” strategies—entering large, aggressive trades in index and stock markets around expiry closing—to move the index in their favour.
These trades, carried out in May 2025, blatantly disregarded the warning letter issued on February 06, 2025, as well as the group’s own formal assurance made to NSE that same month, according to the Sebi order.
On Thursday, Sebi ordered the impounding of Rs 4,843.57 crore in alleged unlawful gains made by Jane Street through alleged manipulative trading practices and restrained it from accessing the securities market. The net profits booked in the FPIs in the JS Group amounted to Rs 32,681 crore, Sebi had said.
The NSE letter noted that the Jane Group had been consistently engaging in trading patterns that raised serious concerns over market integrity, particularly around the expiry of index derivatives. “It was observed that you along with your related entity, Jane Street Group Investments Pvt Ltd, were running abnormally high delta positions in the index derivatives segment and correspondingly small net sentimental OI (open interest). Such large directional OI (delta) can cause risk to market stability and raises concern for market integrity especially around expiry of contracts wherein your related entity has traded in the cash market to favour large open positions in options,” NSE said.
Delta is a measure of how much the price of an option is expected to change based on a change in the price of the underlying stock or index.
Jane Street’s trading activity, prima-facie, raises concerns for market integrity on account of large delta positions in index derivatives, combined with concurrent act of taking and then reducing positions in the top constituents of the index through cash market / derivatives over a short period, to artificially influence the price of the index, NSE said.
It also creates an information asymmetry for other investors / traders in those constituents or derivatives contracts on index, who are not aware about such artifice and repeated occurrences of such instances cannot be considered as coincidence, NSE said. “The above trading activity prima facie appears to be fraudulent and manipulative in terms of dealing in top constituents of index in cash market / futures segment and taking relatively large size contra position in options expiring on that day on the same index,” NSE said.
“It is further advised to refrain from the aforementioned trading pattern and unwind such positions in a non-disruptive manner and report on a daily basis to us till further notice,” NSE told Jane Street.
Despite the NSE letter, JS group has been seen to be running very large net cash-equivalent positions in index options. Disturbingly, on days such as on May 15, 2025 (an expiry day for NIFTY weekly options), JS group was seen not only running very large effective cash-equivalent long positions via NIFTY index options, it was also seen to be intervening heavily in NIFTY futures and NIFTY constituent stock futures at close to expiry.
The timing, scale, and construction of Jane Street Group’s positions and the trading on May 15, 2025, suggest that it continued deploying a weekly expiry-centric extended marking-the-close strategy even after all the regulatory red flags that had been shown prominently to them, Sebi said.
This activity was absent in the cash segment, giving an impression of complying with regulatory caution (issued in February 2025) but actually manipulating the market through futures segment. Jane Street’s trading in index futures alongside its stock-level trades appears to be part of a coordinated approach to support the NIFTY index level near expiry.
JS, vide its letter to Sebi dated August 30, 2024, suggested that these trades were to “remove unwanted delta” or to “manage overall delta”.
