“Recent stock market actions signify 3 aspects: money power, low liquidity in single stocks vs. index derivatives, exchange, broker business models linked to volume, less to fundamentals. Primary role of market is to promote capital formation, fair price discovery,” Kotak posted on X (formerly Twitter) on Saturday, July 5.
Recent stock market actions signify 3 aspects: money power, low liquidity in single stocks vs.index derivatives, exchange, broker business models linked to volume, less to fundamentals. Primary role of market is to promote capital formation, fair price discovery.
— Uday Kotak (@udaykotak) July 5, 2025
Kotak’s remarks come a day after the Securities and Exchange Board of India (Sebi) barred Jane Street Group and four affiliated entities from India’s securities market and ordered a freeze on Rs 4,840 crore in alleged unlawful gains.
A crackdown on expiry-day manipulation
In a 105-page interim order issued Friday, Sebi accused Jane Street of deploying high-volume, cross-segment strategies to manipulate the Nifty and Bank Nifty indices, misleading retail traders and booking massive profits from index options. The regulator said the firm generated more than Rs 36,500 crore in net profits in India between January 2023 and March 2025, of which Rs 43,289 crore came from index options alone.
The order said Jane Street used a strategy called “Intra-day Index Manipulation” on 15 of the 18 expiry days Sebi examined, which involved buying large quantities of index constituent stocks in the morning to artificially push up prices, while holding large bearish bets in the derivatives market. These trades were later reversed to drive down prices, profiting from the fall.
On January 17, 2024, a day Sebi described in detail, the firm allegedly bought Rs 4,370 crore worth of Bank Nifty stocks in the morning, creating a misleading sense of strength. At the same time, it built Rs 32,114.96 crore worth of bearish options positions. By the afternoon, it reversed its cash market trades, pushing the index lower and booking Rs 734.93 crore in profit from derivatives, its biggest single-day gain in Indian markets.
“The sales are aggressive, in a manner that pushes down prices in the component stocks and hence index. JS Group books losses in intraday cash/futures market trading,” the order said. “Profits in index options more than compensate for the JS Group’s losses.”
Also read | Rs 735 crore in 1 day! Jane Street’s most profitable day on Dalal Street was built on Nifty Bank’s fall
Repeated warnings, mounting concerns
Sebi said it first began reviewing Jane Street’s trades in April 2024, and issued a cautionary letter in February 2025 through the National Stock Exchange (NSE), warning the firm to avoid such patterns. Despite this, “JS Group continued with similar trades, in disregard of the caution letter from the Exchange… and JS Group’s own commitments,” the regulator noted.
On three other expiry days, the firm allegedly deployed an “Extended Marking the Close” strategy, placing large sell orders in the final minutes of trading to depress index levels, thereby benefiting short-call or long put positions.
Sebi wrote that the firm was “consistently running what appeared to be by far the largest risks in ‘cash equivalent’ terms in F&O particularly on index option expiry days,” and that other traders were “unaware of all this, and were hence enticed to deal at a time that the Nifty Bank itself was being artificially and temporarily propped up.”
Jane Street responds
Jane Street has denied any wrongdoing. “Jane Street disputes the findings of the SEBI interim order and will further engage with the regulator,” the firm said in an emailed response to Reuters. It added that it is committed to operating in compliance with regulations globally.
The company, which began its India operations in December 2020, has 21 days to respond to the Sebi order or challenge it before the Securities Appellate Tribunal.
As of Friday, four Jane Street-linked entities — JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd — have been prohibited from buying, selling, or dealing in Indian securities, and their accounts have been placed under a debit freeze.
How Sebi’s crackdown on Jane Street unfolded: A 15-month trail of scrutiny and ignored warnings
Kotak’s post echoes broader concerns raised by Sebi in its investigation: that the market has tilted too far in favour of high-frequency, algorithmic strategies, while retail investors trade on distorted signals. The regulator pointed to a growing imbalance, where foreign and proprietary traders made over Rs 610 billion in FY24 through such strategies, nearly matching the losses absorbed by retail participants.
