Crores in minutes: All about the expiry trick that got Jane Street banned from Indian markets

A Wall Street trading giant. Billions in algorithmic firepower. And a closing-bell strategy that flipped near-worthless options into jackpot profits—minutes before market shut. That’s the alleged playbook behind Jane Street’s dramatic fall in India, where regulators have now banned the firm and frozen over ₹4,800 crore in alleged illegal gains.

What is ‘Marking the Close’?

It’s a manipulation tactic where traders deliberately push prices up or down in the final minutes of trading to influence the day’s closing price. This matters—because the closing price is used to value portfolios, settle derivatives, and benchmark fund performance. Move it strategically, and you can flip entire positions into profit.

Here’s how it works:

Large buy or sell orders—executed seconds before close—nudge prices just enough to swing the outcome of options and futures contracts. It’s subtle. It’s fast. And when you’re sitting on leveraged positions, even a half-point move can mean crores.

What did Jane Street allegedly do?

According to reports, Jane Street allegedly executed a systematic version of this strategy:

Step 1: Accumulate OTM Options – Before 3 PM on expiry days, the firm would buy huge volumes of cheap, out-of-the-money index options. These are contracts that are worthless unless the index moves significantly by market close.

Step 2: Move the Index – Near the closing bell, Jane Street would unleash massive trades—using algorithms to flood the market with buy/sell orders on heavyweight index stocks or futures. The goal: nudge the index just enough to bring those OTM options into profit.

Step 3: Profit – As the index closed at or near the strike price, the formerly worthless options turned profitable—netting the firm massive gains.

This wasn’t a one-off. Jane Street, it is reported, repeated this tactic multiple times in what has been dubbed “Extended Marking the Close.”

SEBI action was blunt: a market ban on Jane Street and three affiliates, and orders to impound over ₹4,800 crore in alleged gains. The regulator’s July 3 order accuses the firm of distorting index expiry prices and misleading the market.

Jane Street has denied wrongdoing and vowed to fight the charges.

But the fallout is real—and the message is clear: even the most sophisticated quant firms aren’t immune when the trades start to move the system itself.