The Securities and Exchange Board of India (SEBI) is taking a firm stance against market manipulation, as evidenced by its recent actions against Jane Street Group, a U.S.-based proprietary trading firm. SEBI Chairman Tuhin Kanta Pandey has emphasized that such misconduct will not be tolerated, sending a clear message to both domestic and foreign investors.

The case against Jane Street involves alleged manipulation of the Bank Nifty index, with SEBI estimating the firm's unlawful gains at ₹4,843.57 crore. In response, SEBI has directed Jane Street to return the allegedly illegal gains and has barred the firm from participating in the Indian securities market until the funds are recovered. SEBI has stated that “JS Group is not a good faith actor that can be, or deserves to be, trusted”.

Pandey addressed the issue on the sidelines of the 77th Foundation Day celebration of the Bombay Chartered Accountants' Society (BCAS). When asked about the Jane Street case and whether SEBI was looking into the practices of other foreign portfolio investors (FPIs) setting up local offices, Pandey reiterated, "Market manipulation will not be tolerated".

The SEBI chief also confirmed that surveillance mechanisms have been tightened at both the regulator's end and within stock exchanges. He described the Jane Street situation as "basically a surveillance issue" and assured that SEBI is "keeping track of (it) more closely". According to Pandey, SEBI is "now tracking the markets more closely. We are looking at everything". The ongoing investigation is expected to set a precedent for how India handles aggressive and opaque trading strategies in the derivatives and index options space.

SEBI's order against Jane Street has led to increased scrutiny of the firm's trading activities, with reports indicating that the regulator may broaden the scope of its investigation to include other indices. SEBI alleges that between January 2023 and March 2025, Jane Street entities generated over ₹43,289 crore in profits from index options, primarily Bank Nifty (BANKNIFTY), with alleged illicit profit still totaling a staggering ₹36,502 crore.

In addition to the enforcement actions, SEBI is also focusing on investor education and corporate governance. Pandey announced a large-scale public awareness campaign to educate investors about cyber fraud and the risks associated with futures and options trading. He stressed that corporate governance is not optional but "an imperative," emphasizing the need for ethical conduct and robust compliance frameworks. He urged chartered accountants to act as the "first line of defense" against financial irregularities, upholding the principles of financial integrity.

The Jane Street case is considered a critical test of SEBI's ability to regulate sophisticated trading strategies and its outcome could significantly influence the future of index-based trading and derivatives regulation in India.