MUMBAI: The Securities Exchange Board (SEBI), which has debarred Jane Street Group from accessing the securities markets and impounded as much as Rs 4,843 crore of illegal gains from manipulating the Bank Nifty index, is probing the other indices apart from both the exchanges.
It means that it is only the tip of the iceberg and that the ongoing probe, which is likely to take at least six more months to complete, will unearth much bigger negative surprises.
SEBI sources who are aware of the ongoing probe said,"the current interim order is based on the probe into just three -- HDFC Bank, ICICI Bank and Kotak Bank, which constitute as much as 65 per cent of the index weighting -- of the 12 Bank Nifty stocks. For a more meaningful and conclusive outcome, the regulator is continuing to probe the trading patterns in the other nine bank nifty stocks as well as all other indices as well as both exchanges.”
However, the sources quickly added that the regulator does not suspect that there are many other likely culprits.
“The interim order is not a show cause notice, and it clearly indicates that investigations into Jane Street will continue."
On the timing of the order, a source said the regulator wanted to ensure that the market was not jolted on a normal day, so they chose the day after the expiry.
On why SEBI rushed an interim report and not a final order, the source said that his underlying is that the SEBI felt that any delay would have lead to more losses for the harried retail investors as on each index expiry day, they were tricked to buying at a higher price and then forced to sell at a deep loss.
"So, had they waited for a final order, it would have led to more losses, as they could easily take another six months at least, due to the kind of data mining they would have to do," the source added.
A SEBI paper has found that on average, a retail trader in the derivatives space lost a whopping Rs 1.25 lakh in FY25. This interim order has only looked at the 18 major days of prima facie Bank Nifty index manipulation on expiry days during the examination period ( January 1, 2023 to March 2025 ), and three days of Nifty index manipulation on the expiry days in May 2025.
“Investigations into other expiry days, other indices (including across exchanges), and other potential patterns besides the two highlighted in the order will need to continue. It is difficult to estimate how long all this could take – the scope is quite large,” the source told TNIE.
According to SEBI calculation, Jane Street and its three associated entities made a whopping Rs 36,671 crore in profits between January 1, 2023 and mid-May 2025, said in the 105-page interim order passed by the whole-time member Anantha Narayna G.
The report was made available to the public only around 5.30 am Friday, which the source attributed to the humongous amount of data mining needed.
The SEBI officials worked the whole of July 3 and the intervening nights of July 3 and July 4 to finalise the report which runs into 105 pages and close to 500 pages in annexures.
Of the total gain of Rs 36,671 crore pocketed between just 21 days of manipulative trades between January 1, 2023 and mid-May 2025, SEBI considers as much as 566.3 million dollars or Rs 4843.5 crore to be illegally gained from gaming the price and volume of just three stocks in the Bank Nifty.
According to the interim order, between January 1, 2023 and March 25, 2025, JS made Rs 44,358 crore in options, lost just Rs 7,208 crore in stock futures, lost Rs 191 crore in index futures and Rs 288 crore in cash. But, its overall net profit stood at Rs 36,671 crore.
What JS Group used to do was on the expiry days, it aggressively bought large amounts in BankNifty underlying stocks/futures to the tune of Rs 4,370 crore on Jan 17, 2024 and sold these index options for Rs 32,115 crore.
By afternoon it aggressively sold large underlying stocks/futures worth Rs 5,372 crore. Peak short position in the index options segment was Rs 46,620 crores. Thus, it made a clean profit of Rs 735 crore from index options, while its intraday loss from cash/futures was only Rs 61.6 crore.
