NSE was the first to raise the alarm over suspicious expiry-day trading patterns by Jane Street and subsequently played a central role in the data analysis that underpinned Sebi’s 105-page interim order, issued on July 3.
The Sebi order records that on July 23, 2024, the regulator directed NSE to examine Jane Street’s trading activity following global media reports linking the firm to a legal dispute involving its proprietary strategies.
By November 13, 2024, NSE submitted a detailed analysis highlighting abnormal trading on expiry days in both Nifty and Bank Nifty contracts. The exchange’s inputs, which included expiry-wise patterns, trade structures, and potential distortions, were instrumental in shaping Sebi’s subsequent investigation.
The exchange’s alertness did not stop at the analytical stage. On February 6, 2025, months before Sebi’s formal action, NSE issued a caution letter to Jane Street’s local entities. The exchange advised them “to refrain from taking large cash-equivalent positions and to avoid trading strategies that could disrupt market fairness.” The order stated that this communication was sent on Sebi’s instructions, reinforcing NSE’s role as a frontline surveillance body.
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Surveillance tools and data depth
The Sebi order credits NSE’s real-time surveillance systems with identifying manipulative strategies executed on key expiry dates, including January 17, 2024; July 10, 2024; and May 15, 2025. The exchange’s detection of high-frequency trading patterns and intra-day price distortions was backed by granular data that captured LTP (last traded price) impacts, delta build-up trends, and abnormal volume activity.NSE’s technical capability in providing granular order-level trade data—spanning cash, futures, and options markets, formed the analytical core of Sebi’s investigation. These inputs included multiple tables and trade breakdowns that the regulator cited in building its case against Jane Street.
Crucially, the Sebi order makes no mention of similar alerts or data contributions from other Indian exchanges. This places NSE as the sole market infrastructure institution to have proactively flagged and escalated concerns, a role the regulator explicitly acknowledged when directing all exchanges to step up surveillance in the aftermath of the Jane Street case.
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Systemic implications and market reform
While Sebi’s action has stirred debate on the vulnerability of Indian derivatives markets to algorithmic manipulation, the episode has also brought to the fore the NSE’s role in safeguarding market integrity.
The exchange initially closed its probe after receiving a response from Jane Street’s local trading partner, Nuvama Wealth. But Sebi chose to go further, launching an in-depth forensic probe that led to the interim order barring Jane Street and four affiliated entities from accessing India’s securities market.
Nevertheless, the NSE’s early intervention and data support may prove critical in reinforcing investor confidence. As Sebi faces mounting pressure to tighten oversight of expiry-day trading and high-frequency strategies, the NSE’s technological capacity and proactive compliance are likely to become central pillars of the country’s evolving regulatory framework.
The case also reinforces the importance of a responsive and data-driven market infrastructure in an environment where 93% of retail options traders reportedly lose money and sophisticated global players deploy complex strategies at lightning speed.
Sebi has now instructed all exchanges to monitor Jane Street’s future trading activity closely, while specifically highlighting NSE’s role in ongoing surveillance. The regulator’s expectations point to a broader mandate for the exchange in preventing recurrence of such manipulation.
In a derivatives market that accounts for over 60% of global equity contracts, NSE’s conduct in this case may serve as a blueprint for the kind of institutional vigilance required to navigate the complexities of high-speed, cross-border market structures.
Also read | Jane Street clampdown raises big questions for Sebi: Can the regulator stop another derivatives fraud?
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