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Mint
21-07-2025
- Business
- Mint
Jane Street to resume trading on NSE, BSE from Tuesday
Jane Street will be allowed to resume trading on the National Stock Exchange and BSE from Tuesday, nearly three weeks after the US hedge fund was barred from operating in India due to alleged market manipulation. The development follows an update from the Securities and Exchange Board of India late Monday clarifying that Jane Street could resume trading in the country's stock exchanges subject to stipulations laid out in its 3 July interim order, said two people aware of the matter. Jane Street entities will also be allowed to trade on the highly popular index options segment on both the exchanges provided they abide by Sebi's conditions. 'Jane Street will be allowed to trade on NSE effective Tuesday, per Sebi's directions in its interim order, which precludes them (Jane Street entities) from engaging in any manipulative trades alluded to in the order,' said one of the persons mentioned above. Sebi in its interim order barred four Jane Street entities for alleged manipulation of indices such as Bank Nifty and Nifty to make ₹ 43,289 crore on index options between January 2023 and March 2025. Sebi also directed the four Jane Street entities to 'cease and desist from directly or indirectly engaging in any fraudulent, manipulative, or unfair trade practice that may be in breach of its regulations'. In a statement issued 'Jane Street entities have confirmed that they will comply with this,' the regulator said in a press release issued on Tuesday. On 11 July, Jane Street deposited ₹ 4,843.5 crore in an escrow account to be able to resume trading in India, as directed by Sebi, although it has hired law firm Khaitan & Co. to contest the regulator's interim order. Jane Street has said that its trades were in the nature of arbitrage, exploiting price differences in the same underlying index across futures and options on Nifty and Bank Nifty. 'Not all the four entities were active on BSE, but those that were will be enabled to trade on the exchange from tomorrow (Tuesday) under the heightened monitoring surveillance stipulated by Sebi's interim order,' said the person quoted above. NSE, BSE and Sebi didn't immediately reply to Mint's queries. Shares of the listed BSE Ltd jumped almost 3% to ₹ 2,521.3 apiece on Monday before the Sebi update. NSE's unlisted shares rose 2.5-5% to ₹ 2,150-2,200, per Narinder Wadhwa, managing director at SKI Capital, who said demand for the shares had spurted. Mint had reported on 16 July that although Jane Street had met a key requirement to resume operations in Indian markets by depositing over ₹ 4,843 crore, its immediate return to trading wasn't certain amid multiple regulatory hurdles and unprecedented scrutiny. Legal experts cited in the report had said the deposit only served as a safeguard so the alleged illegal gains don't leave the Indian jurisdiction or get dissipated while the investigation continues. In a statement on 21 July, Sebi clarified that its interim order barring Jane Street from trading in the securities market shall cease to apply as the quant trading firm had deposited the alleged illegal gains in an escrow account. Sebi has also directed the stock exchanges to closely monitor any future dealings and positions of Jane Street Group to ensure it does not directly or indirectly indulge in any kind of manipulative activity. Sebi's probe into Jane Street trading is continuing with a final order expected to take months, per one of the people mentioned above.
Mint
23-05-2025
- Business
- Mint
Boom in unlisted NSE shares strains grey market trades
Mumbai: A sharp rally in the unlisted shares of the National Stock Exchange (NSE) over the past two weeks has thrown a wrench into deals, with some sellers backing out from their commitments to deliver shares, leaving buyers empty-handed. The unexpected surge in prices for the country's dominant stock exchange is fuelled by hopes of an imminent listing and attractive valuations, creating huge demand among investors and a significant supply crunch. Declaration of a rich dividend by NSE and its chief executive saying that its market share loss to rival BSE had 'run its course" further boosted the demand for its shares. NSE's shares in the unregulated unlisted market, where firms bound for prospective listing are traded between residents and non-residents, rallied as much as 9-10% to a record high of ₹1,680-1,700 apiece since 6 May when the company released its earnings for the quarter ended March. Also read: Indian defence firms skyrocket after Pakistan skirmish 'I had a deal to acquire shares at a certain price to down-sell the same but was unable to get delivery as the seller backed out after the steep jump in the share price from around ₹1,550 to ₹1,700 levels now," said Narinder Wadhwa, managing director of SKI Capital Services. 'Consequently, I was unable to meet my commitment to deliver to my buying counterparty." Wadhwa said deals for NSE shares had been 'falling through" in the past two weeks as retail and HNI (high net-worth individual) demand for the unlisted shares had spurted for reasons like 'imminent listing, attractive valuation and big shareholders holding on to their stocks, which had created a supply shortfall". 'Such reneging can happen only where a delivery instruction slip (DIS) has not been issued," a person aware of the issue said. 'Once a DIS is issued, the shares compulsorily get credited to the buyer's account. But if two parties get into an agreement without a DIS and if prices move significantly, trades fall through. That's what we are seeing now." An executive from a broking company who requested anonymity said: 'It's quite possible that some deals which were outstanding might have fallen through as this is an unregulated, over-the-counter market where counterparty risk cannot be insured, unlike on an exchange where the clearing corporation stands guarantee to all settlements being honoured." A query to NSE on share deals falling through in the unlisted market remained unanswered till press time. Factors fuelling the NSE rally The demand spike among investors was facilitated by ease of transferring of NSE shares after March this year per a regulatory circular, which reduced transfer time to one day from six months earlier. This resulted in the investor base rising from 22,000 levels in March to more than 100,000 currently. Also read: FPI assets regain $800 bn level after four months as markets rebound Viral Mehta, product lead for private equity at IIFL Capital, agreed that a huge supply-demand gap had arisen in recent weeks. 'There is a spurt in demand for unlisted NSE shares in the past two weeks since the company announced the dividend of ₹35 a share," Mehta said. 'The huge supply-demand gap, which is driving up prices, is because institutional shareholders are not selling in desired quantities in anticipation of listing announcement, and also because the stock is available at attractive multiples of 35 times forward earnings." NSE's listed competitor, BSE, trades at a forward price-to-earnings multiple of 52.75 times despite its market value ( ₹0.95 trillion) being less than a fourth of NSE's ₹4.2 trillion, per Bloomberg and exchange data. This is also partly resulting in demand for the shares of NSE, which despite being the leader, was trading at a lower multiple than its rival, said Wadhwa. Interestingly, BSE stock has also rallied 12% from ₹6,245 on 6 May to ₹6,996.50 on Thursday after it recommended a dividend of ₹23 per share. NSE's operating profit margin jumped to 74% in Q4FY25 from 66% a year ago despite the operating profit shrinking 8% year-on-year to ₹2,799 crore, reflecting the operating leverage the bourse enjoys. The company additionally declared a dividend of ₹35 per share with a face value of ₹1, which has yet to be approved by shareholders. This should reduce the price proportionately on the ex-dividend date, but the share price surged as hopes grew of Sebi's approval for the IPO, which has been hanging fire since 2016 because of prior governance lapses by former management. Also read: If this market veteran had ₹100 now, 70% wouldn't go to equity After its Q4 results, NSE chief executive Ashishkumar Chauhan said the market share loss to BSE in the equity options segment had run its course and that further losses are unlikely. Data from NSE shows its market share in equity options (stock and index) fell from 96.9% in FY24 to 87.4% in FY25 after Sebi restricted exchanges to launching a single weekly index option expiry from November last year against multiple weekly expiries earlier. The share was captured by BSE, which ran a single liquidity index weekly expiry.
