The controversy surrounding Jane Street emerged in July 2023 when trader Mayank Bansal alleged that the firm had attempted to keep the Nifty index within a strict range during expiry.
Allegations of market manipulation have once again surfaced in the Indian stock market. This time, the case involves Jane Street, an American trading firm, accused of manipulating the market through options trading since January 2024. The entire episode has been brought to light by Mayank Bansal, the chairman of a Dubai-based hedge fund, who has been continuously providing information about the alleged scam to the Securities and Exchange Board of India (SEBI), the Indian market regulator.
Suspicion Began in July 2023
The entire controversy began in July 2023, when Mayank Bansal first noticed that Jane Street was trying to keep the Nifty index within a fixed range during the expiry period. At the time, he observed sudden and significant fluctuations during the expiry of the Midcap Select index, which deviated significantly from the usual pattern.
Irregularities Observed in Options Trading
Subsequently, Jane Street's trading patterns were closely monitored starting from January 2024. Mayank Bansal found that the company was attempting to control the direction of Nifty and Bank Nifty through options. These irregularities were most evident on January 17th, the day of the Bank Nifty expiry, leading to significant market volatility.
Continuous Information Provided to SEBI
Mayank Bansal informed SEBI via emails and documents that Jane Street was continuously manipulating the Indian derivatives market. He also stated that this manipulation was not only harming investors but also affecting the transparency and fairness of the market. SEBI took immediate cognizance of the matter and initiated an investigation.
Direct Violation of Regulations
According to Bansal, Jane Street has violated several regulations of the Indian stock market. Citing the SEBI Act and the Securities Contracts Regulation Act (SCRA), he stated that such trading activities are considered entirely illegal. According to Bansal, this was not a simple technical glitch but a planned scheme aimed at steering the market in a specific direction.
Questions Raised on the Firm's Strategy
According to trading experts, high-frequency trading firms like Jane Street typically place and remove orders very quickly. This is not easy for ordinary investors to understand. However, when the activities of these firms are repeated in a determined pattern and influence the market direction, it becomes a serious matter.
Market Anxiety Spreads
As soon as news of the alleged scam spread in the media and the investor community, market anxiety increased. Especially investors and brokerage houses active in derivatives trading expressed skepticism about these activities. Although no formal statement has been issued by SEBI yet, sources indicate that the investigation is ongoing.
Mayank Bansal's Role Becomes Crucial
Mayank Bansal, the chairman of the Dubai-based hedge fund, has played a significant role in exposing the case. Bansal has been in contact with SEBI since December 2024 and has provided necessary documents, charts, and data. Bansal believes that if these activities are not curbed in time, the credibility of the Indian stock market could be severely damaged.
Investigation Ongoing, Decision Pending
The investigation into this case is currently underway. The data and trading patterns shared by Mayank Bansal are being studied. SEBI officials have given this case "priority" and have promised to take necessary action. It remains to be seen what action will be taken against Jane Street and whether the transparency of the Indian market can be restored.
