Another Stock Market Scam? Are We Ever Safe?

₹36,000+ crore in profit. ₹1.85 lakh crore lost by retail traders.

This isn’t bad luck. This is alleged market manipulation, uncovered by SEBI. Global trading giant Jane Street and its India-registered FPIs (Foreign Portfolio Investors) are accused of manipulating index expiry levels across 18 days, specifically 15 BANKNIFTY and 3 NIFTY50, using high-speed algorithms and massive capital.

Their method was systematic. Predictable. And deeply unfair. Here’s how it allegedly worked in just 3 steps:

Step 1: Pump the Index in the morning session

They bought large quantities of BANKNIFTY stocks and index futures.
This pushed the index up, creating fake bullishness.
Retail traders mistook it for strength and entered long positions.

Step 2: Set the Trap in the Midday session

Once the index was inflated, they quietly built bearish positions: Short Call Options and Long Put Options
These positions benefit when the market falls.

Step 3: Dump in Final Hour

In the last hour, they dumped the same stocks and futures they had bought in the morning.
The index fell sharply.
Their bearish options made massive profits.

The Outcome:

Jane Street allegedly earned ₹36,500–₹36,700 crore.
Over 90% of retail BANKNIFTY traders lost money.

Additionally, SEBI investigation revealed that on Jan 17, 2024, Jane Street allegedly made ₹734.93 crore in just one trading session using the same expiry-day manipulation strategy. Here’s how it worked:

Multiple FPIs under Jane Street’s control made trades that looked unrelated.
In reality, they were executing mirror trades — one FPI buying while another sold.
This created the illusion of real market activity, but it was circular trading.

The goal?

Inflate volumes. Move prices. Profit from options based on those fake moves

SEBI also found that this setup helped bypass rules that ban intraday cash trading by FPIs.

This wasn’t a one-off. SEBI says this pattern repeated month after month, distorting expiry prices and fooling retail traders every time.

What’s troubling is that SEBI had already issued a caution letter to Jane Street in February 2025 via the National Stock Exchange. But despite that regulatory warning, the firm continued using the same tactics, further amplifying its profits. This points to regulatory deficiencies in early detection and enforcement.

It raises a bigger question—how many such manipulations go undetected?

And how many retail investors are paying the price?

Let’s now talk about the true victims of this scheme: retail investors.

Throughout this alleged manipulation, it is estimated that retail traders in BANKNIFTY options collectively lost between ₹1.75 to ₹1.85 lakh crore. That’s over 21 billion dollars in cumulative losses.
SEBI and market participants estimate that more than 90%; in some cases even 93% of retail traders ended up on the losing side.
These traders, enticed by the high return potential of options, often traded on margin and intraday expiry bets, unaware that the expiry levels were being actively manipulated by an institution with far superior access to technology, capital, and strategy.
This wasn’t just a case of bad luck. It was a structural disadvantage that most retailers didn’t even know existed.

So, what should retail investors learn from this?

Stay away from F&O trading.
It’s not a strategy. It’s a gamble.
It’s not a skill game. It’s a poison.
It won’t just wipe out your capital, it will destroy your peace of mind.
The odds are always against you.
In the long run, it’s almost impossible to win in F&O trading.

Warning after warning… yet retail investors keep walking into the F&O trap — until it’s too late. Retail investors don’t learn from advice. They learn from losses. And F&O teaches the hard way.

So, Are We Safe?

This entire episode serves as a brutal reminder: the market is not always a level playing field.

Retail participants trade with emotion, borrowed capital, and hope.
Institutional players trade with strategy, precision, and power.
The “house”, in this case Jane Street, had the best algorithms, data, knowledge, insider information, and huge liquidity.
Retailers were competing with emotion-driven trades and often blind optimism.
And as with any casino, the house always wins.

This case is not about instilling fear. It’s about raising awareness.

It’s a signal to every retail investor: Futures and Options are not investment tools; they are speculative instruments best left to professionals with risk buffers and institutional discipline.

If you're not equipped to play this game at that level, the smarter move is to step away and focus on building wealth through safer, long-term investing avenues like mutual funds, SIPs, and diversified portfolios.

So let this case be your wake-up call. The market is a powerful tool to build wealth, but only if you use it wisely. Avoid the noise, protect your capital, and play the long g ame, and play it safe.

Defend Your Capital. Or Lose The Game.