How did Jane Street saga, with roots in Madhabi Puri Buch's SEBI era, hurt retail investors? UAE-based hedge fund's Mayank Bansal explains
After the recent Jane Street fiasco seen to start during the tenure of Madhabi Puri Buch's tenure as SEBI's Chairperson had come to light and rattled Dalal Street, Zee Business Managing Editor Anil Singhvi noted that the market watchdog has conducted the biggest scrutiny against the US-based entity. So, as Jane Street continued to make big gains through illicit transactions for years now, here is a quick lowdown on how retail investors suffered amid the Jane Street blow and what retail investors should be doing to stay clear of these entities that engage in such large-scale market manipulation. But beforehand, here is in brief about the Jane Street fiasco.
In converstaion with market guru Singhvi, whistleblower Mayank Bansal, President of a UAE-based hedge cautioned SEBI about what abnormalities facing issues specially in case of the options trading.
ALSO READ: Buch-led SEBI's Lapses and Loopholes: Jane Street scandal unearths more than what meets the eye
Jane Street, a US-based firm has landed in trouble in India after the market watchdog SEBI has barred the company due to the firm's manipulative trading strategies that allegedly led to unlawful profits in the Indian stock market.
The company with a dominance in global markets and known for its high-frequency trading strategies, was involved in aggressive trading in the futures market that not only yielded high profits for them but also swayed the market itself.
The trades were orchestrated in such a way that influenced prices in such a way that helped them make large enough gains.
Bansal said that the whole saga of manipulation began in July 2023 and by July 2024- there was no doubt left and it was quite certain that a big institution is attempting to deliberately manipulate the market.
The expert pointed out to the IV or implied volatility that is one of the metrics in the options segment.
Further, the market participant said that he was awaiting that there is auto-correction i.e. the NSE's or BSE's surveillance measures identify of the manipulation on their own. He added that as the scale of manipulation was at its peak in December 2024 and there was no scrutiny till then, Bansal wrote a letter to SEBI. And on the same a prompt response was received from SEBI’s whole-time SEBI Ananth Narayan.
Thereafter, Narayan decided on a presentation on the same which was executed in January 2025 at SEBI's BKC Bhawan.
On the fine being levied of Rs 4,800 crore on the entity, Bansal said that until now the SEBI has unearthed just 21 days of manipulation -18 for Bank Nifty and 3 for Nifty trades. And if we take the timeline from July 2023 to until now, a period of 500 trading days has completed.
The expert added that in this period of 2 years, Jane Street through its illicit practices has realised a profit figure of Rs 36,500 crore.
He pointed that the entire profit has been made out of manipulation and the expert has rationales backing the analysis.
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