As the Securities and Exchange Board of India (SEBI) cracks down on US-based trading firm Jane Street over alleged index manipulation, several investors and market experts have raised sharp questions about the conduct of Indian exchanges and the regulator itself.
“Key question: how come the Stock Exchanges never sanctioned Jane Street?” investor Shankar Sharma asked in a post on Sunday. “They are the very first to get such alerts. Will tell you why: simple conflict of interest. I have long held that Exchanges should NEVER get listed. They are a regulator. Profit motive creates endless conflict of interest. How can they sanction JS when it drives FO volume massively, hence SE profits. SEs should be a utility, not for-profits. Simple as that. Nahi to, suffer all this hanky panky.”
Finazenn founder Hemang Jani pointed to what he said was a lack of follow-through even after SEBI’s own report flagged media alerts. “SEBI report says there were media reports flagging off manipulation and then it asked the exchange to investigate,” he wrote. “Exchanges & Sebi have the best of surveillance mechanism, but for some reasons it chose to ignore & just sent a warning letter. Why this was allowed to continue for more than 2 years?”
SEBI’s interim order has barred four Jane Street entities from accessing Indian securities markets and directed them to disgorge Rs 4,843.57 crore in alleged unlawful gains. The order said that Jane Street entities manipulated index levels on expiry days to gain a significant edge in the index options segment.
Zerodha CEO Nithin Kamath also reacted to the action: “You’ve got to hand it to SEBI for going after Jane Street. If the allegations are true, it’s blatant market manipulation. The shocking part? They kept at it even after receiving warnings from the exchanges.”
He added that “prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back—which seems likely—retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers.”
SEBI’s order reveals that Jane Street was cautioned by the NSE in February 2025 after being flagged for manipulative behaviour. Jane Street responded, promising compliance. But by May, the regulator said, they were again engaged in “egregious behaviour” aimed at shifting the index in their favour.
SEBI whole-time member Ananth Narayan G stated: “Unlike the vast majority of Foreign Portfolio Investors and other market participants, JS Group is not a good faith actor that can be, or deserves to be, trusted.”
CA Anshul Garg noted that India’s high volume of options trading itself needed scrutiny. “F&O is a legal gamble. Now imagine who to make money from F&O. SEBI, NSE, BSE, Brokers, Big Private players and who are losing—retailers. It is pit digged by its own people.”
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