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Business Standard
07-07-2025
- Business
- Business Standard
Sebi cracks down on Jane Street, halts India trading over manipulation
By Anto Antony, Chiranjivi Chakraborty and Tom Redmond Until late 2024, one of the most profitable pockets of global finance was a 24-storey tower in Gurugram, southwest of New Delhi. Home to several high-speed trading firms, the blue-glass building — complete with a rooftop helipad and a bronze bull sculpture in its plaza — stood at the heart of a trading frenzy that made India the world's largest equity derivatives market by volume. In the 12 months to March 2024, foreign funds and proprietary traders using algorithmic strategies earned over Rs 60,000 crore in profits. That run, however, may be nearing an end. On Friday, nearly nine months after India's markets regulator tightened rules on options trading to protect retail investors, Sebi accused Jane Street Group — one of the market's largest players — of manipulating prices to pocket illegal profits running into hundreds of millions of dollars. Sebi imposed a temporary trading ban on the US-based firm and ordered the seizure of Rs 4,840 crore, citing 'an intentional, well-planned and sinister scheme'. Jane Street, which reportedly made over Rs 33,000 crore from India in just over two years, has disputed the regulator's findings. 'Sebi's action against Jane Street is a watershed moment,' said Sonam Srivastava, fund manager at Wright Research. 'It signals an aggressive stance against sophisticated global players potentially gaming the system.' A chilling effect High-speed trading firms such as Jane Street use a variety of strategies — from market making and arbitrage to directional bets that last from microseconds to days. But Sebi's clampdown may spook other foreign players, many of whom were ramping up local investments and hiring in India. Jane Street, Citadel Securities, Jump Trading and Optiver had all expanded their India operations in recent years, drawn by the explosive growth in the country's options market. Even before the latest order, global trading executives were reconsidering plans amid rising regulatory uncertainty. Trading activity, meanwhile, has already taken a hit — volumes fell by 70 per cent in the first five months of 2025. News of the crackdown quickly rippled across global trading floors. Some traders speculated whether other foreign firms would be targeted, while others welcomed the move as a levelling of the playing field. 'It's a landmark order that puts all high-frequency traders on watch,' said Anant Jatia, founder and CIO at Greenland Investment Management. 'The regulator has made it clear: you're welcome in the market, but you must play by the rules.' Profits and concerns Jane Street inadvertently exposed how lucrative Indian markets had become during a court case against Millennium Asset Management last year. It reportedly earned Rs 8,300 crore in 2023 from a secret options strategy — and more than Rs 19,000 crore the following year. India's options market is particularly attractive for high-frequency trading firms because of its structure — small trade sizes, high retail participation, and relatively low costs. Traders can place bets for as little as Rs 10. Speed traders currently account for about 60 per cent of the volume in India's equity derivatives market, which sees Rs 2.5 crore crore (Rs 25 trillion) in notional value traded daily. They also account for around 40 per cent of all stock trading, according to data from the National Stock Exchange. 'India is a bit of a victim of its own success,' said Theodore Morapedi, founder of Onyx Alpha Partners, a London-based quant recruitment firm. 'US and European trading firms saw India as a high-growth alternative to crowded Western markets.' But that success came at a cost. According to a Sebi paper released in September 2024, nine in ten retail traders lost money in derivatives markets. Between 2021 and 2024, retail investors lost around Rs 1.75 trillion. During the same period, foreign algorithmic traders and proprietary firms made more than Rs 61,000 crore in profits. A tower of traders Jane Street was not alone in tapping India's market boom. In Gurugram, a city just outside New Delhi, trading giants including Citadel Securities, Tower Research Capital, Quadeye and Graviton Research Capital operate out of the iconic Two Horizon Center — a curved tower favoured for its top-tier infrastructure. Citadel Securities, the firm founded by billionaire Ken Griffin, employs over 10 people in India, trading local equities and options. The company reported net income of Rs 1,470 crore in the year to March 2024 and recently made key hires to expand operations. 'We are committed to building a strong and long-lasting business in India,' said Vikesh Kotecha, head of Asia at Citadel Securities. Tower Research, which entered India in 2006, employs over 100 staff including a crypto market making team. Israeli firm Futures First and others also occupy offices in the same tower. Though Gurugram once offered tax advantages over Mumbai, that arbitrage has since ended. Still, the city remains a magnet for engineering and tech talent. Entry-level recruits earn upwards of Rs 40 lakh per annum, while senior staff can make over Rs 25 crore annually, according to recruiters. Some trading teams even enjoy party budgets of up to Rs 8 lakh per month. On Friday morning, shortly after Sebi's order became public, a fire drill at Two Horizon Center drew employees into the plaza. Traders huddled outside, speculating on the future of the business — though none were willing to speak on record. The rise and pause of high-speed trading High-frequency trading in India gained momentum after the 2008 financial crisis. The NSE introduced colocation services that allowed firms to place servers close to the exchange's matching engine, enabling faster data access and execution speeds. Initially, Indian tech talent dominated the landscape. But the pandemic ushered in a second wave. With millions of retail investors entering the market, volumes surged. Offshore-based firms like Jane Street significantly ramped up their India exposure. Index options were a particular favourite, especially when exchanges offered daily expiries. Retail investors piled in, seeking quick gains — often with little understanding of the risks. Sebi has since moved to rein in excesses. It has fixed weekly expiry days, raised minimum investment thresholds, and introduced tighter contract duration rules. In July 2025, a new valuation method for outstanding options and futures was implemented, despite industry pushback. The regulator isn't finished. Officials are now reviewing Jane Street's trades across the Nifty 50 and Sensex indexes to assess the full extent of its alleged manipulation. 'People were very excited about India's capital markets, but the tide has turned,' said Morapedi. 'The regulatory headwinds have brought pessimism. Some firms now feel the best days may be behind them.' (With assistance from Alex Gabriel Simon and Preeti Soni)
Time of India
18-06-2025
- Politics
- Time of India
Mountaineer stranded on Mt Denali, MP seeks MEA's aid
Kottayam: Pathanamthitta MP Anto Antony wrote to external affairs minister S Jaishankar requesting him to issue an urgent directive to the mission in the US to intervene in the matter of Shaikh Hasan Khan, a mountaineer from Kerala, reportedly trapped on Mount Denali. The MP, in his letter, said that Khan, a Pandalam native, was on a mission to hoist the national flag to congratulate the Indian Army over Operation Sindoor when he was stranded due to a severe storm. "He sent messages requesting urgent rescue and assistance due to a shortage of water and food," wrote Antony in the letter. The MP also mentioned Khan's satellite phone number. Meanwhile, Khan's relatives said that he had gone to Denali accompanied by a Tamil Nadu native. Khan, son of M A Ali Ahammed Khan and J Shahida from Poozhikkad in Pandalam, started his journey from Chennai on June 4 night. According to his family members, he reached the US on June 6. He spoke via video call with his parents before beginning his mountain hike on June 10. Khan is an assistant section officer in the finance department at the Secretariat. He had taken one month leave for the journey. Khan, an avid mountaineer, has conquered several mountains across continents. Deputy speaker Chittayam Gopakumar wrote to chief minister Pinarayi Vijayan to intervene in the matter to ensure Khan's safe return.
Time of India
18-06-2025
- Business
- Time of India
Pinarayi Vijayan on Aranmula project: Let files move, we'll take a rational call
T'puram/Kottayam: Chief minister on Saturday sought to distance himself from the ongoing administrative processing of a new industrial project proposed on the now-defunct Aranmula airport land. Tired of too many ads? go ad free now He stated the files were moving "without his knowledge" and that no final decision was taken yet. "Files may be moving, but not with my knowledge. Let them move — we will examine and take a rational decision," Vijayan told reporters when asked about the Rs 600-crore electronics manufacturing cluster proposed by a private firm linked to the original promoters of the airport project. "I'm not aware of this project. I'm not against any project, but decisions can be made only after proper examination," he said, indicating that the project has not yet received political clearance. The CM's comments come amid mounting questions on whether the same LDF govt that scrapped the Aranmula airport project in 2016 — citing its location on paddy and wetland — was now considering a fresh project on the very same 335.25-acre plot. Make it a reality: P'thitta MP Pathanamthitta MP Anto Antony urged the state govt to make the project a reality. The Congress functionary said the project would lead to a comprehensive development of the district and its adjoining regions. He also termed the project the biggest in the district, with an investment of Rs 5,000 crore, providing jobs for thousands. "The project is being implemented as a joint venture between Centre and the state govt. If it becomes a reality, it will be a great relief for the people of Pathanamthitta who migrate for work," the MP said. Instead of welcoming a project that will provide employment opportunities to the new generation, pseudo-environmentalists are trying to destroy it, he said.
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Business Standard
18-06-2025
- Business
- Business Standard
Standard Chartered faces RBI scrutiny over lapses in derivatives sales
The banking regulator has also flagged issues relating to Standard Chartered's maintenance of reserves and the accounting treatment of forward rate agreement trades in previous financial years Bloomberg By Anto Antony and Suvashree Ghosh Standard Chartered Plc is facing regulatory scrutiny in India after lapses were spotted in the sale of derivatives and problems identified in the bank's risk controls, according to people familiar with the matter. The Reserve Bank of India raised concerns about processes at the London-based lender following sales to small and medium-sized enterprises of target redemption forwards, a product that can cause significant losses, the people said. Buyers of those contracts were not adequately informed about the risks involved, they said, asking not to be identified discussing private information. The RBI's review of Standard Chartered is ongoing, with focus on derivative products and risk governance, according to the people. There is no indication of any formal enforcement actions at this time, they said. The banking regulator has also flagged issues relating to Standard Chartered's maintenance of reserves and the accounting treatment of forward rate agreement trades in previous financial years, the people said. 'The RBI conducts annual inspection of banks,' a Mumbai-based spokesman for Standard Chartered said in an emailed statement. 'While we don't want to comment on specifics, observations, if any, are highlighted and addressed as part of normal process.' It's part of the RBI's routine examination of all banks in India to ensure compliance and soundness of the financial system. While inspection reports are not made public, it's not too uncommon for the RBI to issue directives or actions on their findings. Standard Chartered has been operating in India for more than 165 years, making it one of the oldest foreign banks in the country, according to its website. It operates a network of 100 branches across 42 cities with its primary business segments in the country being corporate and investment banking, as well as wealth and retail banking.
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Business Standard
23-05-2025
- Business
- Business Standard
Jane Street nets $2.3 bn from booming India equity options trading
By Chiranjivi Chakraborty and Anto Antony Jane Street Group LLC generated more than $2.3 billion in net revenue from equity derivatives last year in India, where its lucrative trading strategies have sparked a probe by regulators. The trading haul was a sharp surge from 2023, underscoring the country's growing importance to the firm's global expansion, according to people familiar with the matter. India accounted for more than a 10th of the New York-based giant's record $20.5 billion in net trading revenue last year, the people said, asking not to be identified as the information is private. The Securities and Exchange Board of India is investigating the company's derivatives trades after some market participants alleged manipulation by the firm, Bloomberg reported last week. A separate probe by the National Stock Exchange was closed last month after a reply from the company's India trading partner. Jane Street declined to comment on its performance and revenue generated from India. The firm also declined to comment on the Sebi probe. The world's largest derivatives market by contracts traded has seen global high-frequency trading and market-making firms from Ken Griffin's Citadel Securities LLC to Optiver expand in recent years. A retail investor-led boom has seen options premiums surge 11-fold in the five years to March 2025. The options frenzy has helped foreign funds and local proprietary firms that use algorithms, as they pocketed $7 billion in gross profits in the 12 months ended in March 2024, according to a Securities and Exchange Board of India study. Jane Street's lawyers inadvertently revealed in a court battle with Millennium Management last year that it earned $1 billion in 2023 from trading options in India with the help of a 'secret' strategy. Jane Street's algorithmic and technology-driven approach — combined with its ability to deploy its own capital independently of banking regulations — likely gave it a competitive edge in India, where it mostly makes directional trades, the people said. India is one of the 18 countries in which Jane Street holds more than a 2% market share in derivatives volume, they said. Equity options trading in India has cooled this year after exponential growth since the pandemic. Fees from options traded on the NSE grew just 2% this year through April, sharply lower than the 92% growth in the same period last year, according to exchange data. The slowdown was triggered by Sebi, which imposed several restrictions on trading options including higher minimum investment limits and an increase in lot sizes since November to protect retail traders — 90% of whom lost money trading options. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
