Indias National Stock Exchange has emerged as the unsung enforcer behind the Securities and Exchange Board of Indias (Sebi) sweeping clampdown on Jane Street, after its early detection of suspicious expiry-day trades and forensic data submissions laid the groundwork for the market manipulation case against the U.S.-based quant trading giant.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 Sebis 105-page interim order, issued on July 3.The Sebi order records that on July 23, 2024, the regulator directed NSE to examine Jane Streets 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 exchanges inputs, which included expiry-wise patterns, trade structures, and potential distortions, were instrumental in shaping Sebis subsequent investigation.The exchanges alertness did not stop at the analytical stage.
On February 6, 2025, months before Sebis formal action, NSE issued a caution letter to Jane Streets 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 Sebis instructions, reinforcing NSEs role as a frontline surveillance body.Live Events | Rs 735 crore in 1 day! Jane Streets most profitable day on Dalal Street was built on Nifty Banks fallSurveillance tools and data depthThe Sebi order credits NSEs 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 exchanges 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.NSEs technical capability in providing granular order-level trade dataspanning cash, futures, and options markets, formed the analytical core of Sebis 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.
| How Sebis crackdown on Jane Street unfolded: A 15-month trail of scrutiny and ignored warningsSystemic implications and market reformWhile Sebis action has stirred debate on the vulnerability of Indian derivatives markets to algorithmic manipulation, the episode has also brought to the fore the NSEs role in safeguarding market integrity.The exchange initially closed its probe after receiving a response from Jane Streets 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 Indias securities market.Nevertheless, the NSEs 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 NSEs technological capacity and proactive compliance are likely to become central pillars of the countrys 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 Streets future trading activity closely, while specifically highlighting NSEs role in ongoing surveillance.
The regulators 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, NSEs 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.
| Jane Street clampdown raises big questions for Sebi: Can the regulator stop another derivatives fraud?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.
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