Sebi action on Jane Street highlights 3 aspects of market: Uday Kotak
ADVERTISEMENT 'Recent stock market actions signify 3 aspects: money power, low liquidity in single stocks vs. index derivatives, exchange, broker business models linked to volume, less to fundamentals. Primary role of market is to promote capital formation, fair price discovery,' Kotak posted on X (formerly Twitter) on Saturday, July 5.
blockquote class="twitter-tweet"p lang="en" dir="ltr"Recent stock market actions signify 3 aspects: money power, low liquidity in single stocks vs.index derivatives, exchange, broker business models linked to volume, less to fundamentals. Primary role of market is to promote capital formation, fair price discovery./p— Uday Kotak (@udaykotak) a href="https://twitter.com/udaykotak/status/1941359058482774409?ref_src=twsrc%5Etfw"July 5, 2025/a/blockquote script async src="https://platform.twitter.com/widgets.js" charset="utf-8"/script
Link to the post: https://x.com/udaykotak/status/1941359058482774409?t=fmmOsN5mNzjw4Mbg1LtwxQ&s=08
Kotak's remarks come a day after the Securities and Exchange Board of India (Sebi) barred Jane Street Group and four affiliated entities from India's securities market and ordered a freeze on Rs 4,840 crore in alleged unlawful gains.In a 105-page interim order issued Friday, Sebi accused Jane Street of deploying high-volume, cross-segment strategies to manipulate the Nifty and Bank Nifty indices, misleading retail traders and booking massive profits from index options. The regulator said the firm generated more than Rs 36,500 crore in net profits in India between January 2023 and March 2025, of which Rs 43,289 crore came from index options alone.
ADVERTISEMENT The order said Jane Street used a strategy called 'Intra-day Index Manipulation' on 15 of the 18 expiry days Sebi examined, which involved buying large quantities of index constituent stocks in the morning to artificially push up prices, while holding large bearish bets in the derivatives market. These trades were later reversed to drive down prices, profiting from the fall.On January 17, 2024, a day Sebi described in detail, the firm allegedly bought Rs 4,370 crore worth of Bank Nifty stocks in the morning, creating a misleading sense of strength. At the same time, it built Rs 32,114.96 crore worth of bearish options positions. By the afternoon, it reversed its cash market trades, pushing the index lower and booking Rs 734.93 crore in profit from derivatives, its biggest single-day gain in Indian markets.
ADVERTISEMENT 'The sales are aggressive, in a manner that pushes down prices in the component stocks and hence index. JS Group books losses in intraday cash/futures market trading,' the order said. 'Profits in index options more than compensate for the JS Group's losses.'
Also read | Rs 735 crore in 1 day! Jane Street's most profitable day on Dalal Street was built on Nifty Bank's fall
ADVERTISEMENT Sebi said it first began reviewing Jane Street's trades in April 2024, and issued a cautionary letter in February 2025 through the National Stock Exchange (NSE), warning the firm to avoid such patterns. Despite this, 'JS Group continued with similar trades, in disregard of the caution letter from the Exchange… and JS Group's own commitments,' the regulator noted.On three other expiry days, the firm allegedly deployed an 'Extended Marking the Close' strategy, placing large sell orders in the final minutes of trading to depress index levels, thereby benefiting short-call or long put positions.
ADVERTISEMENT Sebi wrote that the firm was 'consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O particularly on index option expiry days,' and that other traders were 'unaware of all this, and were hence enticed to deal at a time that the Nifty Bank itself was being artificially and temporarily propped up.'Jane Street has denied any wrongdoing. 'Jane Street disputes the findings of the SEBI interim order and will further engage with the regulator,' the firm said in an emailed response to Reuters. It added that it is committed to operating in compliance with regulations globally.The company, which began its India operations in December 2020, has 21 days to respond to the Sebi order or challenge it before the Securities Appellate Tribunal.As of Friday, four Jane Street-linked entities — JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd — have been prohibited from buying, selling, or dealing in Indian securities, and their accounts have been placed under a debit freeze.How Sebi's crackdown on Jane Street unfolded: A 15-month trail of scrutiny and ignored warnings
Kotak's post echoes broader concerns raised by Sebi in its investigation: that the market has tilted too far in favour of high-frequency, algorithmic strategies, while retail investors trade on distorted signals. The regulator pointed to a growing imbalance, where foreign and proprietary traders made over Rs 610 billion in FY24 through such strategies, nearly matching the losses absorbed by retail participants.
(You can now subscribe to our ETMarkets WhatsApp channel)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
28 minutes ago
- Time of India
Palayam market revamp: Eviction nears completion
T'puram: With around 90% of traders now evicted from Connemara Market at Palayam, city corporation has cleared way for the long-delayed Rs 55 crore market redevelopment. The civic body, working with Smart City Thiruvananthapuram Ltd (SCTL), is in active talks with contractor RDS Projects Ltd, which expressed interest earlier in pulling out, citing cost escalations and demolition delays. The construction work is likely to begin in Aug. Originally awarded the project in 2020, the redevelopment and retention of the market's iconic heritage gate encountered repeated setbacks. Demolition of around 70% of the old stalls was stalled due to protests and regulatory hurdles. A temporary steel-block facility built behind the market now houses roughly 460 vendors, although many still lack power, sanitation, or finalized stall allotments. The situation escalated earlier this month when around 25 operational shops were razed with police assistance, triggering strong objections from trader groups and claims of high court violations. In mid-June, the corporation issued a two-day eviction ultimatum, prompting negotiations with stallholders to shift goods. Corporation secretary Jahamgeer S, coordinating the relocation push, commented on the impasse: "We are in constant dialogue with RDS and Smart City officials. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: One simple trick to get internet without a subscription Techno Mag Learn More Undo Our aim is to ensure all traders are properly moved within a week and to officially restart renovation within this financial year." He acknowledged the difficulties faced by fish vendors and stall owners but stressed that the project's success hinges on completing the phased relocation. Source documents reveal the corporation plans to finalize vendor stall assignments, complete power and sanitation hookups and convene a joint board meeting with SCTL and RDS within days. RDS Projects has officially flagged rising costs in cement and steel, as much as Rs 3,000–3,500 per tonne for steel and Rs 80–100 per cement bag, as key concerns, prompting fresh negotiations. Smart City officials have reportedly asked the finance department for exemptions to allow cost escalation, even as tender terms remain rigid. Despite the stalls, civic leaders are determined. The new four-storey complex, designed for enhanced safety, hygiene and foot traffic, will preserve the market's historic frontage.
Time of India
28 minutes ago
- Time of India
Seafood arrival and festive season impact chicken consumption in Andhra Pradesh
Visakhapatnam: Broiler chicken prices in parts of Andhra Pradesh have dipped due to an increase in production and a decrease in demand. Dressed chicken is currently selling for Rs 175 to Rs 180 per kg at various markets across the state. Around two months ago, dressed chicken was sold for Rs 260 to Rs 270 per kg due to a gap between demand and supply, as high temperatures had reduced production. K. Srinu, a poultry farmer in the Vizag region, expressed that chicken prices have crashed due to surplus supply and low consumption in Andhra Pradesh and neighbouring Odisha and West Bengal, owing to auspicious occasions. He added that the fall in prices in July is unusual, and the drop is more significant this time, causing concern within the poultry industry. Prices have dropped to Rs 40 to Rs 50 per kg against the Rs 100 cost of production. Srinu stated that if poultry farmers receive at least Rs 130 per kg for live birds, the trade would become profitable for them. He added that prices of chicken will likely drop again between October and November, owing to the auspicious Kartik month. Meat traders stated that the price of chicken has dropped by around Rs 60 to Rs 80 per kg compared to prices in May. With the arrival of seafood (fish and prawn) after the end of the deep-sea fishing ban, chicken consumption has decreased. On the other hand, country chicken prices have remained steady for the past two months. Dressed country chicken is selling for Rs 900 to Rs 1,200 per kg, depending on the size of the bird. Country (Naati Kodi) growers are reportedly earning good profits, selling live birds at Rs 700 to Rs 800 per kg due to limited supply and high demand, according to G. Ramu Naidu, a poultry farmer from North Andhra Pradesh. Limited supply struggling to meet high demand is being cited as the reason for increasing country chicken prices. Broiler chicks on the farm need 50 to 60 days to reach a harvestable state, whereas country chicks need at least four to six months.
Time of India
28 minutes ago
- Time of India
No more building plan approvals needed for small plots in Prayagraj
1 2 3 Prayagraj: Those planning to build houses in Prayagraj can breathe a sigh of relief. Thanks to the Uttar Pradesh Cabinet's approval of the new Building Construction and Development Byelaws 2025, individuals building houses on plots up to 100 sqm will no longer need to get building plans approved. This move aims to simplify the construction process and is set to be implemented across development authorities, including the Prayagraj Development Authority (PDA). The new Building Construction and Development Bylaws 2025 will be a huge relief for middle-class families in Prayagraj. They'll no longer have to shell out around Rs 1.25 lakh for map approval fees and go through a lengthy process with multiple clearances. This change will simplify and speed up the homebuilding process, making it more accessible and affordable for many. The new bylaws also allow more flexible use of buildings. For instance, shops can be opened in houses located along wide roads. If adequate parking space is available, professionals like doctors, lawyers, architects and designers will be permitted to operate offices from home. Schools without hostels or dormitories will be allowed to function on roads at least 9 metres wide, and shopping malls can be established on roads 18 metres wide. Group housing projects will also get easier approvals for plots up to 1,500 square metres. However, these changes will not apply to certain restricted areas like Mela zone, illegal colonies, and unauthorised plotted developments. In these areas, construction without map approval will still not be permitted. The new policy will also lead to the de-sealing of previously sealed structures, most of which were built on plots close to 100 square metres. Implementation of the new bylaws is expected to bring a major boost to housing and retail activities, while also increasing revenue for PDA. PDA vice-chairman Amit Pal Sharma said, "Although the Cabinet has approved the new bylaws, an official govt order is awaited. Once issued, the rules will be enforced across the city." "We will have training session of the staff regarding the provisions laid down under the new bylaws and the entire exercise is for the larger welfare of the houseowners and along with the training, the software will also be updated," added Sharma. Meanwhile, Jitendra Singh, the newly appointed town planner for PDA, officially assumed charge on Friday. Previously posted in Jhansi, Singh took over the role in the presence of Sharma and PDA secretary Ajit Singh. The position remained vacant for a week following the transfer of former chief town planner TP Singh.
