Following its unprecedented action against US-based trading firm Jane Street, SEBI Chairman Tuhin Kanta Pandey has reiterated the regulator’s zero-tolerance policy for market manipulation. Speaking at an industry event in Mumbai, Pandey emphasized that robust surveillance systems and expanded teams are in place to protect market integrity, and investigations into similar practices by other entities are ongoing.
The statement comes in the wake of SEBI’s interim order dated July 3, barring Jane Street and group firms from accessing Indian markets and impounding ₹4,844 crore—the largest such action in SEBI’s history.
Background and Context
SEBI’s 105-page interim order accuses Jane Street of engaging in manipulative trades in Bank Nifty index options and underlying stocks, primarily on weekly expiry days. The firm allegedly:
Pushed index prices in the morning session
Held directional options positions that benefited from volatility
Reversed trades by afternoon to pocket profits, distorting market movement
SEBI stated that these tactics allowed unlawful gains over just 18 trading days on the Bank Nifty and 3 expiry-day trades in the Nifty index. Investigations now extend to additional indices like Nifty 50 and BSE Sensex, and possibly across multiple expiry cycles.
Chairman Pandey’s Statement: Full Accountability Ahead
“Market manipulation will not be tolerated. Surveillance is in place, and we have effectively increased manpower at both the exchange and SEBI levels,”
— Tuhin Kanta Pandey, SEBI Chairman
Speaking at the Bombay Chartered Accountants’ Society, Pandey underlined that the regulator is conducting real-time, deeper surveillance and hinted at broader probes into other high-frequency trading firms (HFTs), especially those establishing Indian subsidiaries to bypass Foreign Portfolio Investor (FPI) norms.
Regulatory Enhancements Underway
According to sources and recent disclosures:
Intraday surveillance systems are being upgraded to detect positioning anomalies and expiry-day concentration
SEBI is now evaluating position limits, algorithmic strategy disclosures, and order book behavior in greater detail
Foreign institutional activity, particularly from HFTs and proprietary trading desks, is being scrutinized for compliance and intent
SEBI is also reviewing corporate structures of firms like Jane Street that may have used Indian entities to avoid AIF/FPI regulatory caps.
Industry and Market Reactions
@IndiaEquityLaw
“SEBI’s stand is firm. Jane Street order is just the beginning—look out for more action in the derivatives space. #MarketManipulation #SEBI”
@FinTechTraderIN
“If 18 days of manipulation led to ₹4,800+ cr in gains, imagine what else is lurking in expiry trades. #OptionsScam #BankNifty”
Rajiv Mehta, Market Strategist at Axis Securities:
“The magnitude of the case shocked the ecosystem. This isn’t just a one-firm issue—it’s a wake-up call on how vulnerable expiry-day options trades are to engineered volatility.”
Global Implications and Systemic Concerns
India’s derivatives market is the largest in the world by volume, contributing over 60% to global equity derivatives trades, according to the Futures Industry Association (FIA). With rising retail participation and increasing FPI activity, the system is now more exposed than ever to sophisticated manipulation.
Jane Street’s case has drawn international attention:
Foreign regulators and exchanges are watching closely
Compliance departments in FPIs are reassessing India-linked strategies
Potential for cross-border enforcement cooperation if similar manipulation is detected elsewhere
Next Steps and Final Order Pending
SEBI is expected to issue a final order within the next few months
Additional expiry days and instruments are under forensic review
Other firms with high-frequency expiry trades may also be questioned
Sources suggest SEBI is working with exchange surveillance teams and tech partners to deploy machine learning-based pattern detection to catch manipulative algorithms in real time.
Conclusion
SEBI’s action against Jane Street is not just punitive but transformative—marking a new era of intraday surveillance, foreign entity accountability, and market integrity enforcement. With ₹4,844 crore impounded and a clear message from the regulator, this case sets a precedent for aggressive monitoring of derivative markets, particularly around index expiry manipulation. More importantly, it aims to protect retail participants, who remain the most vulnerable in the high-leverage, high-risk world of options trading.
