NSE’s vigilance cracks Jane Street’s ₹43,000-crore index scam

In a stunning vindication of its surveillance capabilities, the National Stock Exchange (NSE) played a pivotal role in unearthing a sophisticated manipulation scheme by global trading firm Jane Street Group, leading to a major regulatory crackdown. The entire operation hinged on NSE’s ability to detect and trace a high-frequency trading pattern that artificially inflated and crashed the prices of Bank Nifty constituent stocks—generating outsized profits in the options segment while damaging market integrity.mThe Securities and Exchange Board of India (SEBI), in its interim order, credited NSE’s infrastructure and vigilance for identifying what it termed “intra-day index manipulation.” This strategy involved aggressively purchasing large positions in select stocks early in the day, only to reverse them with equal force later—causing price distortions that benefited Jane Street’s parallel short positions in index options. While the stock trades often led to losses, the group reportedly earned over ₹43,000 crore through index option profits, an anomaly that NSE’s systems were the first to flag.

NSE as the First Line of Defence

NSE’s involvement began formally when SEBI directed the exchange on July 23, 2024, to examine Jane Street’s trading activity following red flags raised in media reports. In less than four months, NSE submitted a detailed examination report on November 13, 2024. This swift turnaround illustrated the exchange’s high-speed surveillance capability and efficient coordination with the regulator. On February 6, 2025—well before any formal SEBI order—NSE issued a cautionary letter to Jane Street, advising them to desist from taking large cash-equivalent positions and engaging in disruptive patterns. This proactive step reflected the exchange’s role as more than just a passive observer; it was actively enforcing surveillance-based deterrents.

A Technological Powerhouse

What truly distinguished NSE’s contribution was its superior surveillance architecture. The SEBI order is replete with references to minute-by-minute tracking, order book depth analytics, and cross-segment analysis—tools that only NSE, and not any other Indian exchange, appeared to possess at this level of sophistication.

NSE was able to:

• Perform trade-level and order-level analysis
• Monitor Last Traded Price (LTP) impacts across time patches
• Attribute market distortions directly to Jane Street’s trades
• Flag expiry-day manipulations in real time

These feats required advanced data pipelines, high-frequency computation, and enormous processing power, underscoring the institutional edge NSE holds in capital markets surveillance.

Exposing the Anomaly

The most damning clue came from profit-mapping. NSE’s backend analytics showed that Jane Street made massive profits solely in index options—while suffering losses in other segments. This disproportionate profitability, unusual for a diversified trading desk, triggered deeper investigations. The exchange’s systems also identified recurring price moves in Bank Nifty stocks that were not in sync with broader market sentiment—another red flag supported by trade sequencing and volume-concentration data. The order extensively cites NSE’s contribution, pointing to specific expiry days like January 17, 2024, and July 10, 2024, where manipulative “patches” of trading activity were traced to Jane Street. These manipulations were particularly risky as they occurred during final hours of settlement—a period known for market sensitivity.

The BSE Silence

What makes NSE’s role stand out even more starkly is the absence of any reference to similar activity or support from the Bombay Stock Exchange (BSE) in the SEBI order. Despite being a major stock exchange, BSE is not mentioned in the context of either identifying irregularities or aiding the investigation. This silence highlights the gap in surveillance capabilities and reiterates NSE’s dominance as the country’s frontline regulator in practice as well as structure. SEBI has now directed all stock exchanges to monitor Jane Street’s future activities. But in reality, it is NSE that has been entrusted—implicitly and explicitly—with the responsibility of leading that charge. Given its track record, the market seems assured that it’s in capable hands.

The Jane Street case underscores not just the threat posed by high-frequency and cross-segment manipulations but also the critical importance of technological vigilance in modern capital markets. NSE’s timely detection and consistent coordination with SEBI reflect the kind of regulatory architecture needed to maintain investor trust and market stability. Proactive monitoring, real-time analytics, and advanced surveillance tools helped the National Stock Exchange (NSE) expose one of the largest instances of market manipulation in recent years. This episode is also a clarion call for all exchanges to upgrade their surveillance capabilities. As algorithmic strategies become more complex and global players operate across time zones and asset classes, Indian markets need robust and anticipatory safeguards. NSE’s actions in this case may well serve as the new benchmark.