Rs 43,289 Crore Gameplan: How Jane Street Tried to Hijack India’s Derivatives Market Page 1: Executive Summary Between January 2023 and March 2025, U.S.-based quantitative trading firm Jane Street Capital manipulated India’s index derivatives market by inflating and crashing prices of Nifty and Bank Nifty through sophisticated algorithmic expiry-day strategies. SEBI’s July 4, 2025, order bans Jane Street and its Indian trading entities (JSATL, JSITPL, JSALLC) and demands the return of Rs 4,843.81 crore in gains, making this the most significant regulatory crackdown in Indian market history. Page 2: Introduction to Jane Street and its India Presence Jane Street is globally known for high-frequency trading (HFT) and proprietary quantitative models. Its India-linked FPIs used powerful co-located servers and AI-driven strategies to exploit expiry-day weaknesses in India’s derivatives market. The firm operated silently through: These entities used vast financial muscle and ultra-fast servers to dominate expiry-day volumes, especially in Bank Nifty options. Page 3: SEBI’s Crackdown – Timeline and Action SEBI Statement: “This case threatens the foundational integrity of price discovery.” Page 4: The Master Trick: Expiry-Day Pump and Crash Jane Street played a high-stakes game of pump-and-dump on expiry days: This trick trapped retail call buyers and gave them massive gains from crashing premiums. Infographic Suggestion: A timeline flowchart showing early stock spike (9:30 AM), OTM call premium spike (11:00 AM), and steep index drop (2:45 PM). Page 5: Mirror Trading Exposed Jane Street used mirror trading to build fake volume and influence prices: Infographic Suggestion: Split-screen graphic showing two FPI accounts placing buy/sell orders at the same timestamp with matching prices and volumes. Page 6: Impacted Stocks and Their Use in Manipulation Stock Manipulation Method Result HDFC Bank Pumped in early trades Index push ICICI Bank Volume game at open OI build-up SBI Spike before reversal Bank Nifty support Axis Bank Short build-up Triggered panic fall Kotak Bank Used for intraday reversals Retail trapped IndusInd Bank Fast rise & fall Stop-loss hunting Page 7: Affected Broking and Financial Stocks The scam may hurt revenue of broking companies: Stock Impact Zerodha (unlisted) Loss of retail trust, lower expiry trades Angel One Drop in options turnover volume ICICI Securities Derivative volume cutbacks IIFL Securities Revenue hit from lower active traders 5paisa Capital Reduced expiry-day engagement Investors are now shying away from high-risk expiry trades, hurting brokers’ earnings. Infographic Suggestion: Bar graph showing drop in expiry-day retail trades from Jan 2024 to July 2025. Page 8: Financial Impact Breakdown Metric Value Total Profit Rs 43,289 Cr Gains Frozen Rs 4,843.81 Cr Losses in Cash Segment Rs 7,687 Cr Retail Loss Ratio 90-93% Daily Profits (Avg) Rs 40-50 Cr on expiry Page 9: Timeline of Major Expiry Manipulations Page 10: Public Impact and Retail Reaction Infographic Suggestion: Pie chart comparing pre- and post-ban retail participation in Bank Nifty options. Page 11: How SEBI Detected the Scam Page 12: Understanding Mirror Trading for Beginners Mirror Trading = Buy & sell same stock at same price, time, and volume using two separate accounts (but same owner). Used to: Jane Street mastered this with ultra-speed bots. Page 13: Why Bank Nifty was the Target Jane Street could control 40-50% of expiry-day volume using this strategy. Page 14: Regulatory Loopholes Used Page 15: Reactions from Experts Page 16: Global Comparisons Page 17: What Happens Next Page 18: Advice for Retail Investors Page 19: Gujju Traders Warnings Page 20: Conclusion and Final Punchline The Jane Street case exposes the vulnerabilities of India’s retail-dominated expiry-day trading culture. However, SEBI’s strong action is a message to all global manipulators – India is no longer a playground for rigged trades. “Expiry ka Sikka, Retail ka Jhatka – Jab Jane Street Ne Khela Crorepati Ka Khel!” Stay Smart. Stay Informed. Follow Gujju Traders.