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Economic Times
2 hours ago
- Economic Times
Jane Street saga: Nilesh Shah gives 3 reasons why no HFT will do it in China
India's capital markets may be vulnerable to sophisticated derivatives manipulation because, unlike China, they lack key deterrents that would dissuade high-frequency traders (HFTs) from attempting similar schemes, according to Nilesh Shah, managing director of Kotak Mahindra Mutual Fund. ADVERTISEMENT In a sharply-worded opinion piece published in the Financial Express, Shah drew a stark contrast between Indian and Chinese markets, highlighting three structural deterrents that he believes make such manipulative conduct nearly impossible in China. 'First, Chinese markets are largely closed to foreign speculators for such activities, limiting access,' Shah wrote. 'Second, Chinese regulators wield formidable power, employing tactics akin to sam, dam, dand, bhed (persuasion, fines, punishment, or division) to enforce deterrence and compliance. Third, the memory of a well-known hedge fund being squeezed by the China Investment Corporation in a short renminbi trade serves as a powerful deterrent.' Shah argued that while the Securities and Exchange Board of India's (Sebi) recent action against Jane Street showcases its surveillance and forensic capabilities, more needs to be done to make India's market enforcement truly effective. He pointed to the persistence of unresolved cases from the 1992 securities scam and drew comparisons with the U.S. legal system, where mechanisms exist to recover investor losses, citing the Bernie Madoff likened the Indian F&O markets to a village derivatives bazaar where a powerful trader repeatedly exploits a rigged cycle, drawing a parallel to Jane Street's alleged behaviour. He cautioned that India's institutional investors, constrained by regulation and trading strategies such as volume-weighted average price (VWAP), lack the aggression and agility to act as a counterforce to such entities. ADVERTISEMENT 'A new institutional mechanism equipped with advanced data analytics, high-speed connectivity, and access to leverage is needed,' Shah said, 'as is the ability to act decisively to neutralise HFT dominance.' Sebi on July 3 barred U.S.-based Jane Street and four affiliated entities from accessing Indian markets, accusing them of manipulating index levels on 18 expiry days over a two-year period and profiting disproportionately from index options trades. The regulator has ordered the impounding of Rs 4,840 crore in alleged illegal gains. ADVERTISEMENT Also read | Rs 735 crore in 1 day! Jane Street's most profitable day on Dalal Street was built on Nifty Bank's fallShah proposed five systemic reforms that he believes are essential to restore integrity, protect retail investors, and ensure India doesn't become 'a playground for manipulative merchants.' ADVERTISEMENT Shah called for fortifying Sebi's enforcement ability with a sharper legal toolkit. While praising the regulator's data-driven action against Jane Street, he pointed out that India's justice system lacks the speed and power required to address modern financial frauds.'Commercial crimes, like market manipulation, often cause greater societal harm but face lenient treatment due to the absence of a 'dead body',' Shah said. 'Empowering Sebi with robust legal tools and fostering a fear of swift punishment are critical to deterring future violations.' ADVERTISEMENT Shah warned that India's institutional investors, constrained by rules and low-risk strategies like volume-weighted average price (VWAP), cannot counterbalance aggressive HFTs like Jane Street.'A new institutional mechanism equipped with advanced data analytics, high-speed connectivity, and access to leverage is needed,' he said, 'as is the ability to act decisively to neutralise HFT dominance.'Drawing parallels with past regulatory failures, Shah said Sebi must go beyond monetary recovery and impose deterrent penalties. He cited the Bhopal gas tragedy as a cautionary tale of limited consequences for catastrophic wrongdoing.'Sebi's order against Jane Street… must go beyond recovering manipulated profits,' Shah wrote. 'An exemplary penalty is needed to deter future manipulations.'Addressing the surge in retail F&O trading, Shah likened the speculative frenzy to addiction fuelled by greed and social media hype.'In our F&O markets, a massacre occurs every week, where millions of Indians get killed economically, not by bullets but by their greed,' he said. He compared quick-profit seekers to drug addicts and the mythological demon Raktabij: 'Slay one, and a hundred more emerge.'Shah advocated statutory warnings on derivatives trading, tighter restrictions on promotion, and possibly a levy on F&O trades to fund investor education and education the ultimate antidote to retail vulnerability, Shah urged regulators to scale up literacy efforts and implement tougher gatekeeping for risky products. 'The anti-dote to greed is financial education,' he said, recommending that traders be required to pass qualifying exams before being allowed to engage in leveraged trades. While Sebi's action has stirred much-needed conversation, Shah's central message is that enforcement alone is not enough.'Unchecked financial muscle and speculative frenzy can destabilise markets leaving retail investors vulnerable,' Shah said. 'Only by addressing these issues head-on can India prevent its markets from becoming playgrounds for manipulative merchants.' Also read | Jane Street clampdown raises big questions for Sebi: Can the regulator stop another derivatives fraud? (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
India.com
21 hours ago
- India.com
This Indian king had maximum gold at time of independence, gave 425 kg gold to govt for..., his name was..., he ruled...
New Delhi: India got independence on 15 August 1947. At the time of independence, there was a king in the country who had the most gold at that time. It is said that he had so many pearls that if he wanted, he could have covered all the pavements of Piccadilly Circus in London with those pearls. We are talking about the Nizam of Hyderabad, Mir Osman Ali Khan, who was called the richest man not only in India but in the world. Today we are going to tell you some facts related to Mir Osman Ali Khan. Trucks full of gold According to a report by Financial Express, Mir Osman Ali Khan had more than 100 million pounds (45359 tons) of gold. Apart from this, there were diamonds, pearls, rubies and other jewels worth around 400 million pounds. Famous historians Dominic Lapierre and Larry Collins write in their book 'Freedom at Midnight' that the Nizam of Hyderabad had so much gold that dozens of trucks filled with gold bricks used to stand in the mud in his garden. Because of the weight of these trucks, their wheels had sunk. Apart from this, the Nizam had so many pearls at that time that if he wanted, he could cover all the pavements of London's famous Piccadilly Circus with them. 425 kg gold was handed over to the government Historians tell that in 1965, when the war between India and Pakistan broke out, the then Prime Minister Lal Bahadur Shastri started a campaign to raise funds. During this time, the government started the National Defense Gold Scheme. According to the information, the Nizam had invested 4.25 lakh grams (425 kg) of gold in this scheme. This is also mentioned in a speech of Lal Bahadur Shastri. According to a report of The Hindu dated 11 December 1965, when Lal Bahadur Shastri came to Hyderabad, the Nizam welcomed him at the airport. Later on the same day, Lal Bahadur Shastri addressed a rally and congratulated Nizam Mir Osman Ali Khan for investing 4.25 lakh grams of gold in the National Defense Gold Scheme. According to the information, the value of that gold at that time was around 50 lakhs. India's first billionaire Nizam Mir Osman Ali Khan is also called India's first billionaire. Osman Ali, who took over the Nizam's throne in 1911 at the age of just 25, had a total wealth of two percent of America's GDP at that time.
Business Standard
a day ago
- Business Standard
R Jagannathan
R Jagannathan is a Journalist with over 47 years of experience in journalism. Currently he is a Editorial Director of Swarajya and Chairman of Indian Institute of Mass Communication (IIMC). He has been a part of many launch teams, including Business Today, DNA and Firstpost. He has also helped revamp many business publications as Editor of Financial Express, Indian Management and Business World. He started his career with the Financial Express as a reporter/sub-editor in 1976 in Mumbai. His recent focus has been on digital commentary and journalism while being associated with and He was awarded the Shriram Sanlam Lifetime Achievement Award in 2016.
