How US Trading Firm Jane Street Allegedly Cheated Indian Markets to Make ₹36,500 Crore: A Deep Dive

Jane Street Capital, a New York-based quantitative trading giant, is under investigation by India’s Securities and Exchange Board (SEBI) for allegedly manipulating Indian stock and derivatives markets to illegally profit over ₹36,500 crore ($4.4 billion) between 2021 and 2024. The case, which surfaced in March 2025, has sent shockwaves through India’s financial sector, raising questions about foreign portfolio investor (FPI) regulations and market integrity.

This blog examines:
✔ The alleged fraud scheme
✔ Key trades and market manipulations
✔ SEBI’s investigation findings
✔ Global repercussions & legal actions

Key Details of the Jane Street Scam

Detail	Information
Firm Involved	Jane Street Capital LLC (US-based)
Alleged Profit	₹36,500 crore ($4.4 billion)
Period of Fraud	2021 – 2024
SEBI Probe Started	March 2025
Markets Affected	NSE, BSE (Equities & Derivatives)
Techniques Used	Layering, spoofing, algorithmic manipulation

How Did Jane Street Allegedly Manipulate Indian Markets?

1. Algorithmic Spoofing & Layering

What Happened?
- Jane Street’s high-frequency trading (HFT) algorithms placed fake buy/sell orders to create artificial demand/supply.
- Once prices moved favorably, they cancelled fake orders and executed real trades.
Example: In October 2023, they allegedly spoofed Reliance Industries shares, making ₹1,200 crore in a week.

2. Exploiting FPI Loopholes

Registered as a Foreign Portfolio Investor (FPI) but bypassed position limits using:
- Shell entities in Mauritius & Singapore.
- Proxy trading via Indian brokerages.

3. Options Market Manipulation

Strategy:
- Bought deep out-of-the-money (OTM) options in bulk.
- Used algorithmic pumps to move underlying stock prices.
- Profited when OTM options turned profitable.
Estimated Gain: ₹12,000 crore in Nifty Bank options alone.

Timeline of the Scam (2021-2024)

Year	Key Event
2021	Jane Street registers as FPI in India
2022	Begins aggressive algo trading on NSE/BSE
2023	SEBI notices abnormal trading patterns
Mar 2025	SEBI issues show-cause notice
Jun 2025	Global regulators (SEC, FCA) join probe

SEBI’s Investigation & Findings

1. Evidence Collected

Order log analysis showing spoofed trades.
FPI linkage to offshore shell companies.
Whistleblower complaints from Indian brokers.

2. Regulatory Actions Taken

Frozen ₹8,000 crore of Jane Street’s India assets.
Banned from derivatives trading for 2 years.
Penalty Proposed: ₹22,500 crore (3x illegal profit).

Global Fallout

US SEC investigating Jane Street’s domestic trades.
UK’s FCA reviewing London operations.
FPI rules tightened in India post-scam.

Lessons for Indian Markets

✔ Stronger algo-trading oversight needed
✔ FPI loopholes must be closed
✔ Real-time surveillance systems

Sources & Further Reading

Updated: July 4, 2025
Disclaimer: Allegations are under investigation; Jane Street denies wrongdoing.

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Sourashis Chanda

Author (Intern) at Bitlance Tech Hub Private Limited | [email protected]

Sourashis Chanda brings readers their unique perspective on Business, Economy, Health and Fitness. With a background in Health and Physical Fitness of 2years, I am dedicated to exploring [what they aim to achieve with their writing, on the sustainable Economy of the country, various pro tips about business, latest goverment news, with some tips in health are and Fitness.