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News18
3 days ago
- Business
- News18
Jane Street Likely To Cite Retail Frenzy Behind India Trades: Report
Jane Street Group is expected to argue that its contentious trades in India's options market were driven by strong demand from retail investors New York-based trading firm Jane Street Group is expected to argue that its contentious trades in India's options market were driven by strong demand from retail investors, Bloomberg News reported on Monday, citing sources familiar with the matter. Earlier this month, the Securities and Exchange Board of India (SEBI) issued an interim order barring Jane Street from participating in the Indian securities market. The regulator alleged that the firm used manipulative strategies to influence the Bank Nifty index—buying large volumes of constituent stocks in both cash and futures markets during early trading hours, while simultaneously shorting index options. SEBI claimed the approach resulted in losses for retail investors. Jane Street, however, had its trading ban lifted last week after depositing $567 million in escrow. On Monday, the firm confirmed that it has requested additional time to formally respond to the interim order. According to Bloomberg, Jane Street is likely to claim that it aimed to facilitate options bets from Indian retail investors, despite limited hedging opportunities. The firm reportedly plans to argue that it deliberately adopted a less aggressive hedging strategy in India than in other global markets. Specifically, it is expected to say it spread its hedging activity over several hours on January 17, 2024—its most profitable day during the two-year period under review—to minimize its impact on the market. US high frequency trading firm Jane Street has sought more time from Indian market regulator Securities and Exchange Board of India (Sebi). In its statement on Monday evening, Jane Street Group said, 'We are engaging constructively with SEBI and have sought an extension to respond to the interim order issued on July 3." In its July 3 interim order, Sebi had given 21 days to reply. It seems the extension has been sought after expiry of this timeline. Jane Street did not disclose how much extension in timeline it has sought to respond to Sebi's queries. In the same statement, Jane Street assured that the group is committed to the integrity of the market. The statement further said, : Jane Street is committed to conduct that upholds the integrity of India's capital markets and contributes to their continued development." Sebi, in its July 3 order, had alleged that Jane Street Group manipulated the trades on Bank Nifty and Nifty Index Options and made an illegal gain of Rs 4,843.5 crore as per the preliminary investigation. Sebi directed Jane Street Group to impound and deposit the alleged illegal gains in an interest-bearing escrow account with lien marked in favour of Sebi. Jane Street complied with the Sebi directions on impounding of alleged illegal gains on July 11. Later, On July 21, Sebi lifted the restrictions on Janes Street's trading in Indian markets, subject to conditions that it will not manipulate and exchanges will have a hawk eye on the trades of Jane Street Group. Sebi statement issued on July 21 noted the entities have been directed to cease and desist from directly or indirectly engaging in any fraudulent, manipulative or unfair trade practice or undertaking any activity, either directly or indirectly, that may be in breach of extant regulations, including by dealing in securities using any of the patterns identified or alluded to in the interim order. The entities have confirmed that they will comply with this. Stock exchanges were directed to closely monitor any future dealings and positions of Jane Street Group on an ongoing basis. So that entities do not either directly or indirectly indulge in any kind of manipulative activity, including by dealing in securities using any of the patterns identified or alluded to in the interim order, till the completion of the investigation by SEBI and the consequent proceedings, if any. Jane Street Group had earlier denied the allegations of Sebi and said its trading strategy has been misunderstood by the Indian capital market regulator. tags : sebi view comments Location : New Delhi, India, India First Published: July 29, 2025, 11:14 IST News business » markets Jane Street Likely To Cite Retail Frenzy Behind India Trades: Report Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Business Times
3 days ago
- Business
- Business Times
Jane Street to argue that retail demand drove its India trades
[HONG KONG] Jane Street Group is expected to argue that its controversial Indian options trades were a response to outsized demand from retail investors, sources familiar with the matter said. The trading giant has been working on its defence against market manipulation allegations from the Securities and Exchange Board of India (Sebi). The regulator in early July alleged Jane Street had taken large positions that artificially influenced prices in the country's stock and futures markets, moving them in favour of its options bets on multiple days. Jane Street said on Monday (Jul 28) that it has sought an extension to respond to the interim order. Last week, Sebi lifted Jane Street's temporary trading ban after the firm deposited 48.4 billion rupees (S$718 million) in alleged 'unlawful gains' into an escrow account. A 105-page order from Sebi detailing its preliminary findings devoted a long section to Jane Street's trading activity on Jan 17, 2024, which was the firm's most profitable day over a roughly two-year period that the regulator scrutinised. The New York-based firm is expected to argue it was eager to facilitate options bets from the country's retail investors, knowing it would be largely unhedged, said the sources familiar with the matter, who asked not to be identified discussing private information. The firm hedged less in India than in other markets and spread out its hedging activity over multiple hours on that day in January 2024 to reduce its market impact, the sources said it is likely to explain. On that morning, the NSE Nifty Bank Index dropped 3.2 per cent at the open and fell further during the day. Sebi alleged that Jane Street aggressively bought the index's constituent stocks in the cash and futures markets to manipulate the gauge's intraday levels, then reversed the trades in the afternoon to profit from a much larger bearish index options position. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Jane Street is expected to say that high retail demand for options on that index was a key driver behind its trading in the morning, according to the sources familiar with the matter. The firm will likely argue that individual traders bought about US$4 billion worth of the gauge's stocks using options in the first half hour of trading, and that Jane Street, which was acting as a market maker, facilitated about US$1 billion of that demand. Those numbers are based on net delta positions, which represent the value of cash equities, the options positions are equivalent to when taking into account the derivatives' sensitivity to the underlying assets' price moves. Partial hedging Sebi's order said that Jane Street's share purchases on that January 2024 morning represented between approximately 16 per cent and 25 per cent of the trading turnover for 10 of the 12 Nifty Bank Index stocks, making the firm by far the single largest net buyer. As Jane Street sold call options and bought puts, it amassed a bearish position that represented 7.3 times the size of its long cash and futures bets, according to the regulator. Jane Street is expected to argue that the high retail options demand created a gap between prices implied by the options and those reflected by the shares, and the firm sought to close it through a standard arbitrage trade, the sources familiar said. The retail demand was so large that only 10 per cent of it could have been hedged, partial hedging being a common practice among derivatives market makers internationally, the firm is expected to say. In the afternoon, Jane Street sold the stocks over more than three hours, spreading out its hedging to protect against settlement-price uncertainty as the options were about to expire, also a typical tactic globally, the sources said it will argue. Sebi did not respond to a request for comment. Huge turnover Retail traders' enthusiasm for options has helped turn India into the world's biggest market for listed derivatives by contracts traded, with turnover of more than 300 times that of cash equities. Global trading firms have used their capital and technological edge to profit from that large imbalance, but local investors have cumulatively incurred billions of US dollars in losses, leading the regulator to crack down on the trading frenzy. Critics of Jane Street say the sheer size of its positions built up over a short time would have given the firm market-moving power, even if the trades were within regulatory limits. Alexander Gerko, the billionaire founder of rival XTX Markets, has challenged Jane Street to show that its India trading strategy was 'legit' by proving it would work better after scaling it down by a factor of 100. 'Any 'normal' strategy works worse as it scales up, due to market impact, unless your strategy IS market impact,' he wrote in a LinkedIn post earlier this month. The regulator's interim order presented serious allegations and a 'compelling narrative', though it is not certain that Jane Street acted inappropriately based on the initial findings, said Abhiraj Arora, a Mumbai-based partner at law firm Saraf and Partners who once worked at Sebi's surveillance and investigations department. Arora, who is not involved in the case, said that too harsh a crackdown and excessive surveillance of market makers could lead to wider bid-ask spreads, poorer trade execution and increased price swings. The Jane Street case ultimately 'serves as a significant test for India's regulatory framework and its capacity to oversee increasingly complex global trading practices', he said. BLOOMBERG
Yahoo
3 days ago
- Business
- Yahoo
Jane Street likely to argue retail demand drove its India trades, Bloomberg News reports
(Reuters) -New York-based trading firm Jane Street Group is likely to argue that its controversial Indian options trades were a response to outsized demand from retail investors, Bloomberg News reported on Monday, citing people familiar with the matter. In an interim order on July 3, the Securities and Exchange Board of India barred the company from trading securities in the Indian market, citing that some of its trading strategies were manipulative and led to losses for retail investors. The Indian market regulator alleged that Jane Street and its related entities manipulated the Bank Nifty index by purchasing large quantities of constituent stocks in the cash and futures markets to artificially support the index in morning trade, while simultaneously building short positions in index options. However, SEBI lifted the trading restrictions on Jane Street last week after the firm deposited $567 million in escrow. Jane Street said on Monday that it has sought an extension to respond to the interim order. Jane Street is expected to argue it was eager to facilitate options bets from the country's retail investors, knowing it would be largely unhedged, Bloomberg News reported. The firm is likely to argue that it hedged less aggressively in India compared with other markets and deliberately spread its hedging activity over several hours on January 17, 2024 - its most profitable day during the roughly two-year period under regulatory scrutiny - to reduce market impact, the report said. Reuters could not immediately verify the report, while Jane Street did not immediately respond to Reuters' request for comment. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
3 days ago
- Business
- Reuters
Jane Street likely to argue retail demand drove its India trades, Bloomberg News reports
July 28 (Reuters) - New York-based trading firm Jane Street Group is likely to argue that its controversial Indian options trades were a response to outsized demand from retail investors, Bloomberg News reported on Monday, citing people familiar with the matter. In an interim order on July 3, the Securities and Exchange Board of India barred the company from trading securities in the Indian market, citing that some of its trading strategies were manipulative and led to losses for retail investors. The Indian market regulator alleged that Jane Street and its related entities manipulated the Bank Nifty index by purchasing large quantities of constituent stocks in the cash and futures markets to artificially support the index in morning trade, while simultaneously building short positions in index options. However, SEBI lifted the trading restrictions on Jane Street last week after the firm deposited $567 million in escrow. Jane Street said on Monday that it has sought an extension to respond to the interim order. Jane Street is expected to argue it was eager to facilitate options bets from the country's retail investors, knowing it would be largely unhedged, Bloomberg News reported. The firm is likely to argue that it hedged less aggressively in India compared with other markets and deliberately spread its hedging activity over several hours on January 17, 2024 - its most profitable day during the roughly two-year period under regulatory scrutiny - to reduce market impact, the report said. Reuters could not immediately verify the report, while Jane Street did not immediately respond to Reuters' request for comment.
Bloomberg
4 days ago
- Business
- Bloomberg
Jane Street Seeks Extension to Answer India Regulator's Probe
Jane Street Group asked regulators for more time to respond to accusations that its trading business manipulated the securities market in India. The Securities and Exchange Board of India earlier this month temporarily barred Jane Street from accessing the local securities market for alleged index manipulation, a severe hit to the US firm, which made $4.3 billion in trading gains in India over more than two years.
