
Jane Street vs Sebi case places Rs 6 lakh crore multibagger corner of Dalal Street on edge
's explosive crackdown on American hedge fund
Jane Street
has sent tremors through India's Rs 6.2 lakh crore capital market infrastructure, with the regulatory action targeting alleged market manipulation worth Rs 36,500 crore in profits threatening to reshape Dalal Street's
derivatives
landscape.
The Nifty Capital Market index, comprising 15 stocks with a combined market capitalization of Rs 6.2 lakh crore, traded flat on Monday after Friday's selloff as investors grappled with the implications of Sebi's interim order barring Jane Street from India's securities market.
Capital market infra-related stocks have been giving multibagger returns on the back of surge in retail as well as institutional participation in India's growth story. In the last 3 years, BSE shares are up over 1,100%, while others like MCX India, Anand Rathi Wealth, Motilal Oswal, 360 One WAM, CDSL and others have also been multibaggers.
Jefferies
said as Jane Street "participated in the cash & derivatives markets as an FPI as well as a member, hence, its contribution in market volumes would be included in FPI as well as prop categories." The brokerage estimates that Jane Street's contribution to BSE would be around 1% of the exchange's business.
According to Jefferies' analysis of exchange data, "FPIs form 3-8% of equity derivatives turnover and prop traders form 60-65% of total; rest by individuals & others," highlighting the critical dependence of India's derivatives market on proprietary trading firms.
The global brokerage noted that Jane Street can "contest the claim or settle it and continue participation in the market," while observing that "given that the inquiry was already underway, we understand its activity levels have declined over the past few months."
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Jefferies' detailed impact assessment shows stark differences across market participants. "For BSE, derivatives drive ~58% of FY26E revenues. In this segment, FPIs drive ~3-4% of turnover, and we estimate that contribution from JS would be a smaller subset of that (~1% as per JEFe). Hence, we see a limited impact of JS on BSE's earnings," the brokerage stated.
However,
Nuvama
faces significantly higher exposure. "In the case of Nuvama, asset services form ~26% and IB & IE form ~20% of our FY26E revenues, while contribution to profits is higher given lower C/I ratios.
We understand that JS could be an important client for Nuvama and assuming ~15-20% of asset services and IE revenues come from it, we expect an impact of ~5-6% on overall revenues and ~7-8% on earnings," Jefferies warned.
Jefferies' conversations with market participants reveal mixed signals about the fallout. "Prop traders/ HFTs see a manageable impact from JS' exit as the fall in its turnover may be made-up by props/ HFTs as manipulative factors potentially reduce," the brokerage noted, adding that "there should not be a counterparty risk on JS' contracts as trades are covered by the clearing corporations and JS has 3 months to unwind open positions."
The brokerage emphasized that "the key unknown is whether this instance can lead to a knock-on impact on trading vols, and we feel that trends over the next week on derivatives volumes will be key to watch, especially the index derivatives expiries on Tuesday & Thursday."
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Explained: What is Jane Street and how it made Rs 36,500 crore profit by gaming Dalal Street
Interestingly, Jefferies observed that "index options premium turnover was a tad higher week-on-week (Wow) for both exchanges (i.e. this Friday vs. last Friday) and a tad lower than 2-month averages," suggesting immediate market resilience despite the regulatory shock.
Industry voices echo concerns
"Prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back— which seems likely —retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers," warned Nithin Kamath, CEO of Zerodha.
Dinesh Thakkar, Managing Director, Chairman and Founder of Angel One, emphasized the structural nature of India's market growth: "Retail participation in equity derivatives has surged from just 2% in 2018 to over 40% in 2025. India's market opportunity is structural, not cyclical and certainly not dependent on any one firm."
"Jane Street is one of the largest traders contributing to Indian markets," explained Siddarth Bhamre, head of institutional research at Asit C Mehta. "When big players are banned for wrongdoing, others become cautious and reduce activity, leading to lower volumes."
Regulatory ramifications
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, observed: "The regulatory action on Jane Street and its implications will be closely watched by the market. The volume of derivative trading is likely to take a hit impacting stock exchanges and some brokerages."
Ashish Nanda, President & Chief Digital Business Officer at Kotak Securities, outlined broader implications: "HFT's will surely be feeling the heat. Many will be re-assessing their strategies. The fact is that HFT firms provide a lot of liquidity in the markets. If there is reduction in activity by HFT's, it will also impact retail volumes."
Veteran market expert Ajay Srivastava struck a defiant tone: "Let us be honest, every market in the world, including the US market, had these problems of being the bad guys... Just catch the guy, penalise him, show him this thing, who the brokerages who are part of it penalise them heavily, does not matter. Make them an example that no one dares do it again."
As Jefferies noted, "What is unclear & how to judge impact," with the next derivatives expiry cycles on Tuesday and Thursday set to reveal whether India's Rs 6 lakh crore capital market infrastructure can absorb the shock or if Jane Street's exit marks the beginning of a broader algorithmic trading exodus from Dalal Street.

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