There’s no questioning that India has become the global bullseye for HFT firms. It has the highest number of equity options contracts traded globally. On expiry days, derivatives turnover regularly crosses ₹100 trillion, dwarfing cash market volumes that hover around ₹30,000 crore.
For HFT firms, this is GOLD.
Weekly index expiries deliver predictable volatility. Retail flows bring in behavioral consistency and unsophisticated counterparties. Regulation, until recently, left sufficient room to manoeuver. The result has been a market where speed could be monetized at scale. And Jane Street was playing the game like any other HFT firm would.
Until SEBI called time.
A couple days back, SEBI issued an interim order against the U.S.-based trading giant alleging that it manipulated index expiry levels on multiple occasions, booking approximately ₹36,500 crore ($4.4 billion) in profits from January 2023 to March 2025.
On January 17, 2024 alone, the firm is said to have purchased ₹4,370 crore worth of Bank Nifty stocks early in the session, nudging the index upward while holding bearish option positions. Once the expiry level was locked in, it reversed the stock positions, netting a single-day gain of ₹734 crore ($88 million).
This, according to SEBI, wasn’t a one-off. The same “Intra-Day Index Manipulation” was allegedly employed on 15 out of the 18 expiry days SEBI examined. Even after prior warnings from exchanges, the firm has continued.
SEBI has now barred Jane Street from accessing Indian securities markets and ordered a clawback on ₹4,840 crore (~$570 million) in what it calls “unlawful gains.” It has also banned its participation in the market until then.
Jane Street, for its part, disputes the findings and has indicated it will contest the order.
Now, let’s get certain things clear - Jane Street didn’t invent this strategy. It simply executed it at scale in a market that was practically engineered to reward it.
India’s derivatives ecosystem has exploded over the past five years. Turnover has grown more than 40-fold since 2019, powered largely by Nifty and Bank Nifty weekly expiries. Unlike U.S. markets, where index options expire monthly and single-stock options dominate, India’s structure provides a recurring rhythm of volatility - a quant trader’s dream.
Retail investors added fuel to the fire. Between 2019 and 2024, demat accounts swelled from 40 million to 150 million. Retail traders now comprise 99.8% of F&O participants - basically they’re the counterparties to the HFTs. Their performance, however, is abysmal. More than 93% of them lose money.
By contrast, the gains racked up by HFTs and proprietary desks are striking. In FY2024, these firms booked ₹610 billion (~$7.1 billion) in profits. Jane Street alone generated $2.3 billion in India in 2024 and another $1 billion in 2023. Millennium and others have disclosed similar windfalls. These are not passive market-making returns, primarily they are volatility-driven strategies.
So why the crackdown? And why now?
What these HFT firms deploy is not infrastructure abuse for a greater speed. India already tackled that in the NSE co-location scandal.
The Jane Street episode is different. SEBI isn’t arguing that the trades were technically illegal. It’s asserting that the outcomes compromise market integrity. What’s notable is how surgically SEBI has built its case. The order reads like a forensic audit. Trade timelines have been reconstructed, cross-segment positions have been mapped and gains have been quantified down to the rupee.
Link to interim order here.
SEBI has indicated that it’s not enough for your trades to be legal, they must also be fair in effect.
For global HFTs still operating in India, this changes the calculus. The country remains an attractive venue. Liquidity is deep. Latency is low. Expiry dynamics are transparent. Co-location remains permitted. But firms will now need to assess not just their strategies, but their footprints. Are you consistently on the right side of last-minute expiry moves? Are your profits too neatly mirrored by retail losses? If so, SEBI may come knocking.
If your trading outcomes corrode market trust, even unintentionally, you’re now in the danger zone. The market’s undergoing maturity cycle means firms must balance sophistication with accountability to preserve market integrity.
And to wrap it up, let’s catch up with the sentiments of retail traders in India when they read the news of Jane Street’s windfall profits last month.
Link to Reddit thread - Jane Street Capital made $2.3 Billion from India Operations 🤯
That’s it for now folks. Let us know your thoughts in the comments.
We're getting bombarded with such good explanations for the Jane Street Case.
Adding them all here:
https://x.com/kirubaakaran/status/1940954539802480899
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https://www.linkedin.com/posts/vihan13singh_sebi-vs-jane-street-4328933-cr-in-profits-activity-7346770563706572800-IqfG?utm_source=share&utm_medium=member_desktop&rcm=ACoAABqF2WoBiKrh6RcYwSu3AiqF7qWXj3CLt8I
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