India’s stock market is facing a serious probe as regulators investigate one of the world’s biggest trading firms, Jane Street.
Known for its secretive operations, the U.S.-based firm is accused of making billions from Indian markets while ordinary investors often lose money. Authorities are examining whether Jane Street and other high-frequency traders (HFTs) had an unfair advantage using special trading data.
Foreign Traders and Massive Profits
Jane Street entered India’s market in 2020. It operates mostly from overseas, with only a few staff in India. This model allowed the firm to make huge profits without being deeply involved locally. According to SEBI, Jane Street earned $4.3 billion from January 2023 to March 2025. On some days, the firm allegedly made more than $81 million in a single day.
High-frequency trading, or HFT, is the use of very fast computers to buy and sell stocks and options in milliseconds. Each trade may earn only a small profit, but repeated thousands of times a day, the earnings can become massive. Jane Street is accused of using a strategy called “banging the close,” where it places a large number of orders at the end of the trading day. This allegedly moves prices in a way that makes other bets in options markets more profitable.
Meanwhile, retail investors—the everyday people trading stocks—have not fared well. SEBI’s research shows that 9 out of 10 individual traders lost money in India’s options market last year. Regulators are concerned that foreign firms like Jane Street may have an unfair edge, leaving small investors at a disadvantage.
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Investigations and Allegations
The Securities and Exchange Board of India (SEBI) has temporarily banned Jane Street from trading in Indian equities and frozen $567 million of its funds. The probe covers multiple issues:
- Market Manipulation: The firm is accused of strategies like “banging the close” to manipulate the Bank Nifty index.
- Privileged Data Access: SEBI is examining whether Jane Street and rival firms used detailed market data, including client types, hidden order quantities, and stop-loss levels. Such data could allow traders to predict market movements and profit unfairly.
- Tax Concerns: Jane Street allegedly moved profits out of India through offshore units, raising questions about tax compliance.
Jane Street has strongly denied all allegations, calling them “erroneous.” Legal experts note that proving manipulation requires showing that a firm acted with intent to distort market prices. Simply earning profits from market inefficiencies is legal in most markets.
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The case also gained attention after Jane Street sued Millennium Management in New York, claiming a rival firm stole a profitable India-focused trading algorithm. In this case, Jane Street revealed that its India options market strategy alone made $1 billion in 2023—nearly 9% of its global profits.
Why India Attracts High-Frequency Traders
India’s fast-growing economy and deepening capital markets have attracted foreign HFT firms. NSE allowed algorithmic trading starting in 2010, enabling firms to use computers for rapid trading. Firms like Jane Street, Citadel, Millennium, and Susquehanna operate from hubs in New York, Hong Kong, or Singapore, taking advantage of technological expertise without large local offices.
A key factor is the National Stock Exchange’s drive to increase trading volumes, especially as it prepared for a public stock listing. While this helped NSE’s growth, it may have also created opportunities for select traders to profit disproportionately. Allegations of data access echo past controversies, like the co-location scam from the 2010s, where certain brokers got preferential access to exchange servers.
SEBI’s current probe into data use is critical. If enriched datasets were legally sold, firms may not have broken laws, but regulators are examining whether such access gave them an unfair market advantage. In mature markets like the U.S., strict rules prevent dissemination of client details and order strategies, highlighting how sensitive this issue is.