Crores in Minutes: The Expiry Day Strategy That Got Jane Street Banned in India


Crores in Minutes: The Expiry Day Strategy That Got Jane Street Banned in India





Crores in Minutes: The Expiry Day Strategy That Brought Down Jane Street in India

A global trading powerhouse. Billions in algorithmic tools. And an expiry-day strategy that turned nearly worthless options into gold—just moments before the market closed. That’s the explosive allegation behind SEBI’s action against Jane Street, which now faces a ban in India and the seizure of over ₹4,800 crore in alleged unlawful profits.


 What Is ‘Marking the Close’?

"Marking the Close" refers to a price manipulation strategy where traders place heavy buy or sell orders just before the market shuts. This artificially moves the index or stock price, impacting derivatives settlement, portfolio values, and fund benchmarks. Even a fractional shift can swing huge profits—especially when large leveraged positions are in play.


The Alleged Strategy Jane Street Used

According to reports, Jane Street didn’t just do this once—it allegedly built a pattern of what’s being called "Extended Marking the Close." Here's how it reportedly worked:

Step 1: Buying Cheap OTM Options
Before 3 PM on expiry days, the firm would purchase huge volumes of out-of-the-money (OTM) index options. These contracts only become valuable if the index makes a significant move before close.

Step 2: Moving the Index at the Bell
As the market neared closing time, the firm would reportedly flood the market with high-volume algorithmic trades—buying or selling index heavyweights or index futures—to push the index toward the desired level.

Step 3: Instant Profit
If the index landed near or beyond the strike price of those OTM options, they would suddenly become profitable—generating crores in minutes.


SEBI’s Crackdown

The Securities and Exchange Board of India (SEBI) responded with force. In a July 3 order, SEBI:

  • Banned Jane Street and three affiliated entities from Indian markets
  • Froze ₹4,800 crore in alleged illegal gains
  • Accused the firm of manipulating index expiry prices and distorting market integrity

Jane Street has denied any wrongdoing, stating that its trades were legitimate and that it plans to contest the allegations.


Why This Matters

This case signals a turning point: even the most advanced quantitative trading firms are now under regulatory lens. In a market where milliseconds matter, tactical expiry-day trading has become a powerful—but dangerous—tool.

With this action, Indian regulators are making it clear: when market stability is threatened—even global giants aren’t untouchable.

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