SEBI Cracks Down on Jane Street: ₹4,000 Cr Impounded for Index Manipulation; Market Reacts Sharply

In a move that’s sent shockwaves through India's capital markets, the Securities and Exchange Board of India (SEBI) has barred two entities of Jane Street, the global proprietary trading giant, for allegedly manipulating index closing prices on expiry days. The regulator has also impounded over ₹4,300 crore—one of the largest enforcement actions in India’s market history.

Following the news, shares of Nuvama Wealth Management, whose client accounts were reportedly used in the transactions, tumbled over 6% intraday. Broader market sentiment also took a hit, with the Capital Market Index down nearly 2%, as investors weighed the potential systemic implications.

What Did Jane Street Do According to SEBI?

At the heart of SEBI’s case is a complex derivatives expiry-day strategy used by Jane Street India Pvt Ltd and Jane Street Capital India LLP. According to SEBI's interim order, the entities allegedly manipulated the closing prices of Nifty and Bank Nifty through a series of coordinated trades executed via client accounts held at Nuvama.

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Here's how the alleged manipulation worked:

• On derivatives expiry days, Jane Street placed large trades in futures and options (F&O) during the final 30 minutes—known as the "closing window".
• Simultaneously, they executed small-value trades in the cash segment, timed to influence the VWAP (Volume Weighted Average Price) used for index settlement.
• Because index closing prices directly impact F&O settlement values, even minor moves could result in outsized profits on pre-positioned derivatives.

SEBI termed this a "scheme of manipulation" that undermined market integrity and distorted fair price discovery during one of the most sensitive trading windows of the month.

The Financial Trail: ₹4,300+ Crore in Gains

SEBI’s probe, covering trades from 2022 and 2023, found that the Jane Street entities earned over ₹4,300 crore through these strategies. Of this, SEBI has ordered the impounding of ₹1,217 crore from Jane Street India Pvt Ltd and ₹3,127 crore from Jane Street Capital India LLP.

The funds have been directed to be held in an escrow account, pending further investigation and adjudication.
While Jane Street has not issued a public statement yet, industry observers expect the firm to mount a legal challenge. Globally, Jane Street is considered one of the most sophisticated trading houses, known for high-frequency and quantitative strategies.

Fallout in the Markets

The crackdown has rattled sentiment across the financial services sector, particularly among brokerages and wealth management firms catering to institutional and HNI clients. Nuvama Wealth, which provided Jane Street access to Indian markets, saw its stock decline sharply, as investors questioned internal compliance controls and due diligence on client flows.

Nuvama, in a clarification to the exchanges, said it is “fully cooperating with SEBI” and that the trades in question were executed within the regulatory framework at the time. However, the damage to investor confidence was already visible.

What Happens Next?

SEBI’s order is interim in nature but imposes serious restrictions: the Jane Street entities are barred from trading in Indian markets, either directly or indirectly, until further notice. The regulator has also hinted at further action, potentially against intermediaries, brokers, and compliance officials who facilitated or failed to flag these trades.

Legal experts believe this could be a test case for SEBI’s newly sharpened enforcement toolkit, especially in the post-Hindenburg era where market watchdogs are under pressure to demonstrate agility and deterrence.

The Bigger Picture

This development comes at a time when Indian markets have seen a surge in foreign institutional interest. But it also highlights the vulnerability of Indian benchmarks to sophisticated global trading strategies, especially during high-impact trading windows like expiry sessions.

SEBI’s action, while disruptive, is also being seen as a signal of intent—that even the most well-resourced global players will be held accountable if they breach market norms. For now, market participants will be watching closely: not just to see how Jane Street responds, but also whether this sparks broader scrutiny of expiry-day volatility—and who exactly might be pulling the strings behind the scenes.