In an unprecedented crackdown, India’s capital markets regulator SEBI has fined the global trading giant Jane Street over ₹4,800 crore, accusing it of systematically manipulating the Indian equity options market. The penalty—one of the largest ever imposed by SEBI—stemming from an investigation into just 21 trading days, could expand significantly, with potential illicit gains estimated between ₹30,000 and ₹40,000 crore still under review.

First reported by Anand Kalyanaraman, The Ken’s finance editor, the case centres on Jane Street’s alleged use of “violent expiry” tactics: buying large positions in call or put options and then executing disproportionate trades in the cash segment of the Sensex or Nifty to sway index levels in their favour. On other days, they profited from “quiet expiry” strategies by offloading options to retail investors, extracting premiums in a manner which signals towards “telltale manipulation” devoid of any economic rationale.

The fallout strikes at the core of India’s derivatives-heavy market. With over 80% of global equity options contracts (by volume) traded daily in India, the segment has become a high-risk zone for retail participants—90% of whom reportedly lost money between FY2021 and FY2024, racking up collective losses of ₹1.8 lakh crore. The lottery-like appeal of low-cost, high-reward bets has turned into a trap for many.

Jane Street has defended its actions as “basic index arbitrage”. The firm is likely to challenge the ban, even as SEBI continues to scrutinise a broader timeline of trades.

Hosts Rohin Dharmakumar and Praveen Gopal Krishnan are joined by Anand Kalyanaraman, The Ken’s finance editor and Mayank Bansal, President of a UAE-based hedge fund, who helped break the story, to discuss how all of this played out and what happens next.

Welcome to episode 51 of Two by Two.

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Additional reading

Is Jane Street the all-powerful hidden hand in India’s stock market? – https://the-ken.com/story/is-jane-street-the-all-powerful-hidden-hand-in-indias-stock-market/

The mystery fund playing god and wreaking havoc on the stock market – https://the-ken.com/story/the-mystery-fund-playing-god-and-wreaking-havoc-on-the-stock-market/

Did NSE sleep at the wheel in the Jane Street Saga? – https://the-ken.com/long_and_short/did-nse-sleep-at-the-wheel-in-the-jane-street-saga/

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This episode of Two by Two was produced by Hari Krishna. Rajiv CN, our resident sound engineer, mixed and mastered this episode.

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