In a revelation that is sending ripples across India’s financial markets, Mayank Bansal, president of a leading Dubai based hedge fund, has accused Jane Street Group of using a mere Rs 750 crore margin to create massive volatility in the Nifty index. According to Bansal, this amount was sufficient to take Rs 5,000 crore exposure on the expiry day of index derivatives and move the Nifty by up to 2 percent. This comes at a time when SEBI has already issued an interim order barring Jane Street and its affiliated entities from the Indian securities market, citing index manipulation and unlawful gains.
Bansal’s claims are based on firsthand monitoring and direct communication with SEBI since December 2024. He says he had been in contact with the regulator’s officials for several months, submitting detailed presentations and email evidence to highlight repeated expiry day distortions in the derivatives market. In one of his emails to SEBI’s whole time member Ananth Narayan, Bansal flagged that the unusual pre move changes in implied volatility were a classic sign of manipulation. He emphasized that in no legitimate market do such volatility changes precede a directional move with such consistency, indicating a clear attempt to rig the system.
What makes this case especially concerning is how efficiently the manipulation was carried out. Bansal explained that by taking long positions in in the money call options and avoiding puts, Jane Street could create directional moves without exhausting margin capacity. This allowed them to exert significant influence on the index with limited capital. Moreover, the expiry day pattern often involved creating small up moves through forward contracts or futures to trigger stop loss orders from retail traders holding short call positions. This would lead to panic exits, further amplifying the price swings.
Over time, Jane Street’s tactics evolved. Initially, they targeted relatively illiquid indices like the Nifty Midcap Select to test their strategy. With growing confidence, the focus shifted to the more liquid Bank Nifty and eventually to the benchmark Nifty index. Bansal claims the strategy was used on dozens of expiry days since 2023 and became a routine practice, with either extremely quiet or abnormally volatile sessions carefully engineered for maximum profit.
In the case of quiet expiries, Bansal points out, Jane Street would use futures and forwards to maintain prices close to a specific strike until the final minutes. But settling at a precise strike in a quiet expiry often required last minute action in the cash market. This meant entering the equity segment post 3 PM to achieve the desired close. This kind of calculated expiry day behavior is precisely what SEBI highlighted in its interim order.
The most telling outcome of these tactics has been the financial toll on retail investors. According to SEBI’s findings, of the three major market segments in options trading retail, proprietary, and foreign portfolio investors only the retail segment ended up with losses. Bansal estimates that Indian retail traders lost a staggering Rs 55,000 crore during FY 2024. Of this, at least Rs 25,000 crore can be directly attributed to Jane Street’s operations, he alleges.
Bansal also notes that the interim disgorgement of Rs 4,843 crore by SEBI is likely just the beginning. The final order, he believes, could impose far steeper penalties once the full extent of the manipulation and its consequences are quantified. The May 15 expiry, which Bansal classifies as a textbook example of such manipulation, was explicitly cited in SEBI’s order as a trigger for the investigation.
This unfolding saga represents one of the most significant challenges SEBI has faced in safeguarding India’s capital markets from global hedge funds exploiting derivative loopholes. Bansal’s inputs, backed by data and real time observation, have brought attention to the urgent need for tighter surveillance and stronger deterrents against such strategies. With retail investors absorbing the bulk of the impact, regulatory accountability and structural reform have never been more critical.
As SEBI’s investigation continues, this case serves as a wake up call to the risks lurking in high frequency trading and complex options strategies. It also reminds investors and regulators alike that in an interconnected world, it only takes one powerful player to tilt the balance of an entire market.
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