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The Hindu
2 days ago
- Business
- The Hindu
Jane Street's $5 Billion Derivatives Scam Rocks SEBI
Published : Jul 18, 2025 19:32 IST - 5 MINS READ July brought into the open one more alleged scandal in India's financial markets. While speculation around the actions that constitute the 'scandal' has been rife for some time, the story went viral when India's market regulator, the Securities and Exchange Board of India (SEBI), decided to investigate and then ban a little known and oddly named foreign financial firm, Jane Street. It turns out that not only is Jane Street a major player in international financial markets but also—going by the likely conservative estimates of SEBI—involved in derivatives trading in Indian markets that allegedly delivered it around $5 billion in profits between January 2023 and March 2025. Charging the firm with manipulating the stock index derivatives market to earn profits of Rs.4,843 crore, SEBI banned it. From the arcane reporting on and discussion of the 'strategy' that Jane Street adopted, what emerges is that the firm managed to profit from operations involving simultaneous acquisition of differing quantities of options linked to market indices like Nifty and underlying stocks, which it traded in ways that yielded profits. To guarantee itself high returns, the firm is alleged to have engaged in and sequenced trades of large magnitude to move market indicators in directions that delivered enormous profits. The gain for Jane Street, being from futures contracts, involved losses for those who were the counterparties to the options they bought (which gives the holder the right to buy or sell the instrument at a guaranteed price within a specified time frame). If the holder of either is making a gain, the counterparty must be making a loss. SEBI has known for some time now that retail traders or individuals trading in markets were the ones suffering much of the losses in the options segment. In a September 2024 study, SEBI reported that while there had been a 150 per cent increase in retail investor participation in the market for index-linked options, 9 out of 10 individual traders in the Futures and Options (F&O) segment had incurred losses in 2022-23. Also Read | Will SEBI's supervisory dysfunction jeopardise financial stability of Indian banks? However, it appears that it is not the knowledge of these losses suffered by small retail investors that moved SEBI to ban Jane Street. Despite evidence of a surge in retail investor involvement and knowledge of odd and asymmetric trends in the F&O market, SEBI had only been issuing repeated warnings to retail investors to be cautious or just stay out of these markets. But it is when other larger and more significant market players burnt their fingers and started alleging manipulation by some actor in the F&O segment that SEBI started paying serious attention. It realised that Jane Street was the primary driver of the market only when the firm filed a lawsuit in a Manhattan court against Millennium Management. Jane Street alleged that Millennium, which had poached two traders from it, was using a proprietary trading strategy they had stolen from their original employer. In the course of that trial, it was revealed more than a year back that this strategy was one that had been put to profitable use by Jane Street in Indian markets. Taking a cue from that revelation, larger traders who had suffered losses in the F&O space alerted SEBI. That led to SEBI's investigation and conclusions. There are two sets of arguments, among others, that SEBI's charges seem to be based on. The first is the pattern and sequencing of the large trades that Jane Street had been undertaking, which pointed to the firm influencing market movements and benefitting from them. The second is evidence that the firm had been waiting until the final strike date to close its deals to ensure that its manipulation resulted in maximum returns. As was to be expected, Jane Street has denied the allegations, arguing that it was merely adopting hedging strategies—the very purpose for which the derivatives markets were instituted. The firm is keen on continuing with that strategy in the Indian market. This is evident from its decision to exercise the option of depositing in an escrow account a penalty of Rs.4,843 crore—payable to SEBI if the charges are established—and request that the ban be lifted even while the investigation is ongoing, so it can resume trading. It also possibly hopes to persuade SEBI in the course of the investigation that there was no manipulation involved and that it was pursuing a legitimate trading strategy. Also Read | India's lawless financial capitalism fosters a culture of scams For all its public display of anger, SEBI and Jane Street seem to be on the same page. The market regulator has said it does not want to ban index futures and will only seek to regulate them better to prevent disruption by rogue players. What this implies is that SEBI's problem with Jane Street is that it was 'rogue' and not just exploiting opportunities for profit that a liberalised market offers. This also suggests that cosmetic regulation of trading volumes or exposures, as opposed to doing away with the instruments concerned and keeping out players with deep pockets who could move markets, is all that SEBI wants to resort to. This ignores the larger issue of why, if at all, such instruments are needed. They do not contribute to mobilising funds for actual physical investments, nor do they help smaller players use them to hedge against risk. Rather they attract retail and small investors looking to supplement their regular earnings with incomes from financial investments, who end up burning their fingers as a result of market movements beyond their control. It is the usefulness of these markets and instruments that are in question. If their role is to support speculation and little else, we may be better off doing away with them. C.P. Chandrasekhar taught for more than three decades at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. He is currently Senior Research Fellow at the Political Economy Research Institute, University of Massachusetts Amherst, US.
The Star
5 days ago
- Lifestyle
- The Star
Not too haute to handle: Hand fans are a must-have fashion accessory in Spain
This picture shows a hand fan by Olivier Bernoux. The Spanish must-have item has retained its relevance thanks to designer creativity and amid increasingly oppressive summer temperatures. Photo: AFP As passengers wilted in a packed Madrid metro, one traveller defied the summer heat by snapping open her handheld fan – a quintessential Spanish accessory enjoying undimmed popularity. The burst of coolness drew envious eyes to a must-have item that has retained its relevance thanks to designer creativity and increasingly oppressive summer temperatures, stoked by climate change. "Everyone uses a fan here in Spain – children, the elderly, young people, men," said Arturo Llerandi, owner of the Casa De Diego fan boutique in Madrid. "Why? Because it's hot... It's hotter across Europe and you see fans everywhere." Llerandi's bustling shop, which has been located in the centre of the Spanish capital for more than two centuries, boasts 10,000 different models of fans. Read more: Still obsessed with Labubu? Sorry, fashion did the bag charm trend first Bone and lace versions are aimed at women and smaller versions cater to men, all diminutive enough to slip into a jacket pocket, with the most luxurious costing up to €6,000 (approximately RM29,843). With temperatures close to 40 degrees Celsius (104 degrees Fahrenheit) regularly assailing Madrid in July, the idea of buying a fan as a gift was a no-brainer for customer Carmen Pulido. "It's something to have forever... Lately, it's become essential," said the 62-year-old legal assistant. For pensioner Rosa Nunez, 69, the "good old fan" has remained her best friend after the batteries of her electronic alternative died. "With handheld fans, the battery runs for a lifetime," she said with a smile. 'Very elegant' Olivier Bernoux, a designer who heads a luxury fan store in Madrid, acknowledged the accessory has a "heavy legacy". He said that it is perceived as an "old object for the elderly". But they are "not kitsch, nor for old women", insisted the man whose celebrity clients include pop idol Madonna and US actor Eva Longoria. "Even in New York you find fans due to climate change because you have to find a way to cool down," said Bernoux. His global customer base brings different expectations. "Men are more classic", while Spanish women "are more sensitive to the noise" made when fans are unfurled, he said. "For the 'Miami' American woman customer, large fans are a must-have, while the French are particularly attracted to all our linen creations," Bernoux continued. Read more: From runway to poolside, skimpy men's swim briefs make a stylish comeback At Madrid's Pride festival in July, some dancers snapped their fans to the rhythm of the music before spectators waving rainbow-coloured equivalents, illustrating how the humble object can also be used to convey messages. "The fan has always been fundamental for us and the community. It has always been a gay icon," said Pedro Pontes, a 31-year-old waiter. Ecuadoran journalist Erika Von Berliner, who lives in Madrid, sees her fan as a "very elegant" accessory. "You hold something very beautiful that goes with your clothes and if you know how to use it well, with elegance, so much the better," the 49-year-old enthused. Bernoux agreed, emphasising what he identified as the object's "sensuality". "The very opening and closing of a fan is a marvellous gesture that will attract attention," he said, advising users to sprinkle perfume on theirs. "On public transport, you take out your fan and it makes a tough moment an easier one," he concluded. – AFP
Hans India
15-07-2025
- Business
- Hans India
Jane Street urges Sebi to lift curbs
New Delhi US-basedhedge fund Jane Street, which allegedly made handsome gains through market manipulation, has deposited the mandated Rs4,843.57 crore in an escrow account in favour of Sebi and requested it to lift certain watchdog is examining the request, Sebi said in a statement on Monday. Indian capital market lost Rs1.4 lakh crore market capitalisation(Mcap) since Jane Street's index manipulation came to light seven days ago. In an interim order on July 3, the regulator found Jane Street (JS) guilty of manipulating indices by taking bets in cash and futures & options markets simultaneously for making massive gains. Sebi barred the hedge fund from accessing the market and impounded over Rs4,843 crore in gains. The probe found that JS made a profit of Rs36,671 crore on a net basis during the probe period from January 2023-May 2025. In compliance with the interim order, a sum of Rs4,843.57 crore has been credited to an escrow account with a lien marked in favour of Sebi, the regulator said. 'Jane Street has further requested Sebi that, following the creation of this escrow account in compliance with Sebi directions, certain conditional restrictions imposed under the interim order be lifted and that Sebi issue appropriate directions in this regard,' the statement noted. 'This request is currently under examination by Sebi in accordance with the directions of the interim order,' it added. The regulator said it remains committed to following due process and ensuring the integrity of the securities market. Sebi called it a case of 'intra-day index manipulation,' flagging what it described as aggressive, unhedged positions in Nifty Bank options and other Sebi investigation is expected to take another 6-9 months before a final report and show cause notice will be issued to Jane Street. The markets regulator described it as 'non-neutral trading behaviour', a strategic attempt to influence prices rather than simply engage with the market. And the tactic wasn't random; it followed a well-known play in the trading world, which is termed marking the close. Jane Street is a proprietary trading firm, which means it trades with its own capital rather than managing client funds. The firm allegedly made a staggering Rs32,681 crore in profits by manipulating the Indian stock market and repatriating the amount overseas. Jane Street disputed the findings of Sebi's interim order. In its response, Jane Street said:'We reject the premise and the substance of the order in the strongest possible terms'.
Hans India
05-07-2025
- Business
- Hans India
Sebi bans US-based Jane Street from securities market
Markets regulator Sebi has barred US-based Jane Street Group (JS Group) from the securities markets and directed the group to disgorge unlawful gains of Rs4,843 crore for allegedly manipulating stock indices through positions taken in derivatives segment. This could be the highest disgorgement amount ever directed by the Securities and Exchange Board of India (Sebi). In its interim order, the regulator has debarred JSI Investments, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading -- entities collectively referred to as the Jane Street Group -- from trading until further notice, while continuing its investigation. Established in 2000, Jane Street Group LLC is a global proprietary trading firm in the financial services industry. It employs more than 2,600 people across five offices in the US, Europe, and Asia, and conducts trading operations in 45 countries. The Jane Street (JS) Group has come under Sebi's scrutiny for allegedly manipulating index levels in the stock market to earn illegal profits, primarily through the highly liquid Bank Nifty and Nifty index options segments. Meanwhile, shares of Nuvama Wealth Management, which is the trading partner of JS Group for Indian stock market, fell over 10 per cent to Rs7,280.50 on NSE. An investigation by Sebi revealed that over 21 expiry days between January 2023 and May 2025, the group executed large trades in the underlying cash and futures markets to influence index movements and profit from massive positions in the options market. Two key strategies were identified-- one involved buying heavily in Bank Nifty stocks and futures in the morning and selling them aggressively in the afternoon to create a softer close, while the other involved concentrated selling or buying in the last two hours of the expiry day to sway index levels. These actions helped the group earn illegal profits of about Rs4,843 crore, even as they incurred smaller losses in cash and futures trades, the regulator said. Sebi also noted that between January 2023 and March 2025, the JS Group recorded substantial trading activity across various segments of the market. The group made gains of Rs44,358 crore from index options trading, which formed the bulk of their profits. However, these were partially offset by losses of Rs7,208 crore in stock futures, Rs191 crore in index futures, and Rs288 crore in the cash market. After accounting for all gains and losses, the JS Group reported a net total profit of Rs36,671 crore during this period, Sebi noted. The case stems from media reports in April 2024, which suggested that Jane Street and its related entities may have used unauthorised proprietary trading strategies in the Indian options market. Sebi noted that the JS Group continued to carry out suspicious trading activities, mainly near market closing on expiry day, by making large and aggressive trades to unfairly influence the index, even after receiving a warning in February and making promises to the NSE to stop such practices. 'Such egregious behaviour, in clear disregard/ defiance of the explicit advisory issued to them by NSE in February 2025, amply demonstrates that unlike the vast majority of Foreign Portfolio Investors and other market participants, JS Group is not a good faith actor that can be, or deserves to be, trusted. In the face of such a strong prima facie case that allowing the JS Group to continue as before may severely compromise investor protection on an extraordinary scale, Sebi has a duty to directly intervene,' Sebi added. Accordingly, Sebi said, 'the total amount of unlawful gains earned by the JS Group from the alleged violations, Rs4,843.57 crore, shall be impounded jointly and severally.' The entities have been restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly. Additionally, banks where the entities are holding accounts have been directed to ensure that no debits are made, without Sebi's permission, except for the purpose of complying with this order.
Barnama
26-05-2025
- Business
- Barnama
CPO Futures End Slightly Higher On Firmer Crude Oil Prices
Palm oil trader David Ng said CPO prices are recovering from previous losses, driven by better-than-expected export figures that have boosted market sentiment. KUALA LUMPUR, May 26 (Bernama) -- The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives closed marginally higher on Monday, supported by stronger crude oil prices. 'We see support at RM3,800 per tonne and resistance at RM3,950 per tonne,' he told Bernama. According to independent inspection company AmSpec Agri Malaysia, exports of Malaysian palm oil products for May 1-25 rose 7.3 per cent to 991,702 tonnes from 923,893 tonnes shipped during April 1-25. At the close, the spot month June 2025 contract rose by RM11 to RM3,835 per tonne, July 2025 increased by RM7 to RM3,843 per tonne, and August 2025 went up RM6 to RM3,833 per tonne.
