Latest news with #arbitrage
Bloomberg
a day ago
- Business
- Bloomberg
Arb Trades Are Back in Vogue in Latest Ether Push
David Pan takes a deeper look at the how traders are trying to shake Ether from its doldrums. Bitcoin's record-breaking rally has hedge funds dusting off a tried-and-true arbitrage strategy for the market's second-largest digital asset, Ether.
Khaleej Times
2 days ago
- Business
- Khaleej Times
Jane Street deposits $567 million so it can resume India trading
U.S. high-frequency trading giant Jane Street, which has been accused of market manipulation by Indian authorities, has deposited $567 million in an escrow account so that it can resume trading in the country. The Securities and Exchange Board of India (SEBI) barred the firm this month from buying and selling securities in the Indian market and put a freeze on $567 million of its funds. Jane Street was only to be allowed to resume trading if an equivalent amount was deposited in an account that gives the regulator rights over the money until its investigation is complete. SEBI said in a statement on Monday that the money had been transferred and it was examining the company's request that restrictions placed on it be lifted. "The money has been deposited in good faith. The firm continues to contest the order and will send a formal response rebutting the allegations in coming weeks," said a source with direct knowledge of the matter. Jane Street did not immediately respond to a Reuters request for comment. It has told its staff it plans to contest SEBI's allegations and that the practices in question were "basic index arbitrage trading". Even with the ban lifted, the tussle with SEBI is expected to have a huge impact on its business in India, which is the world's biggest derivatives market. According to a separate source with direct knowledge of the matter, Jane Street does not intend to trade in Indian options while the dispute is unresolved. Options have been Jane Street's main line of business in India with its exposure to equity derivatives here roughly five to seven times its exposure to regular stocks, said the first source. SEBI could send instructions to India's exchanges to lift the ban sometime this week, said a third source, adding that the bourses will be directed to monitor Jane Street's trades very closely. The sources were not authorised to speak to media and declined to be identified. SEBI has alleged that Jane Street bought large quantities of constituents in India's Bank Nifty> index in the cash and futures markets to artificially support the index in morning trade, while simultaneously building large short positions in index options which were exercised or allowed to expire later in the day. The regulator, which tracked Jane Street's trading patterns for more than two years, has also widened its investigation to include other indexes and exchanges, a source has previously said. Bourse operator BSE gained 3.2% on Monday on the view that a lifting of the ban could bring more liquidity into the market. Explosive growth in Indian derivatives trading over the past three years has prompted much consternation among authorities about the fallout for retail investors. The South Asian country accounted for roughly 60% of the world's equity derivative trading volume in May, and in the past financial year equity derivative losses for India's retail traders widened by 41% to 1.06 trillion rupees ($12.3 billion).
Zawya
3 days ago
- Business
- Zawya
Jane Street deposits $567mln so it can resume India trading
U.S. high-frequency trading giant Jane Street, which has been accused of market manipulation by Indian authorities, has deposited $567 million in an escrow account so that it can resume trading. The Securities and Exchange Board of India (SEBI) barred the firm this month from buying and selling securities in the Indian market and put a freeze on $567 million of its funds. It was only to be allowed to resume trading if an equivalent amount was deposited in an account that gives the regulator rights over the money until its investigation is complete. SEBI said in a statement on Monday that the money had been transferred and it was examining Jane Street's request that restrictions placed on it be lifted. The company has told its staff it plans to contest SEBI's allegations and that the practices in question were "basic index arbitrage trading". "The money has been deposited in good faith. The firm continues to contest the order and will send a formal response rebutting the allegations in coming weeks," said the source with direct knowledge of the matter. It was not immediately clear when Jane Street might resume trading. The firm does not intend to trade in Indian options while the dispute is unresolved, said a separate source. The sources were not authorised to speak to media and declined to be identified. Jane Street did not immediately respond to a Reuters request for comment. SEBI alleges that Jane Street bought large quantities of constituents in India's Bank Nifty> index in the cash and futures markets to artificially support the index in morning trade, while simultaneously building large short positions in index options which were exercised or allowed to expire later in the day. The regulator, which tracked Jane Street's trading patterns for more than two years, has also widened its investigation to include other indexes and exchanges, a source has previously said.
Reuters
3 days ago
- Business
- Reuters
Jane Street deposits $567 million so it can resume India trading, sources say
July 14 (Reuters) - Jane Street, which has been accused of market manipulation by Indian authorities, has deposited $567 million in escrow accounts which will allow the U.S. firm to resume trading, two sources with direct knowledge of the matter said on Monday. The Securities and Exchange Board of India (SEBI) this month barred the U.S. high-frequency trading giant from buying and selling securities in the Indian market and put a seize on $567 million of its funds. Jane Street would only be allowed to resume trading if an equivalent amount of funds were deposited in an escrow account. The company has told its staff it plans to contest SEBI's allegations and that the practices in question were "basic index arbitrage trading". "The money has been deposited in good faith. The firm continues to contest the order and will send a formal response rebutting the allegations in coming weeks," said one of the sources. Both sources were not authorised to speak to media and declined to be identified. Jane Street and the Securities and Exchange Board of India did not immediately respond to a Reuters request for comment. SEBI alleges that Jane Street bought large quantities of constituents in India's Bank Nifty (.NSEBANK), opens new tab> index in the cash and futures markets to artificially support the index in morning trade, while simultaneously building large short positions in index options which were exercised or allowed to expire later in the day. The regulator, which tracked Jane Street's trading patterns for more than two years, has also widened its investigation to include other indexes and exchanges, a source has said. Jane Street does not intend to trade in Indian options while the dispute is unresolved, said one of the sources.
Globe and Mail
4 days ago
- Business
- Globe and Mail
How Jane Street's $4.3 Billion Nifty Bank Strategy Triggered SEBI Ban
Jane Street's dramatic legal tussle over a secretive Indian options strategy has spilled into the open, revealing how the quantitative powerhouse extracted $4.3 billion from the world's most active equity‐options market. What began as an eyebrow-raising lawsuit against Millennium Management morphed into a far more consequential showdown with India's securities regulator, SEBI, after lawyers let slip that the trades centered on Nifty Bank options. Alarmed by reports of outsized gains in a market where weekly index options turnover dwarfs the underlying cash volume by hundreds of times, SEBI moved swiftly to freeze ₹48.4 billion ($570 million) in profits it deemed 'unlawful.' The interim order alleges Jane Street manipulated the Bank Nifty index by aggressively buying illiquid constituent stocks to push the index higher, then selling vast option positions into the artificially inflated prices. Market Overview: SEBI bars Jane Street from Indian markets, citing index manipulation; Interim seizure of ₹48.4 billion targets alleged 'unlawful gains'; Nifty Bank weekly options turnover exceeds cash market by 350×. Key Points: Jane Street disputes SEBI's findings, calling trades 'basic index arbitrage'; Excess retail demand for options had driven prices 1.6% above cash index; Regulator's focus on Jan. 17 expiry day—options implied index >47,300 vs. cash 46,574. Looking Ahead: SEBI to conclude probe by month-end; final sanctions possible; Global quant firms will watch India curb to gauge trading risk; Indian options market may see structural reforms to curb volatility. Bull Case: Jane Street's strategy, described as 'basic index arbitrage,' may have actually improved market efficiency by narrowing the premium between options and the underlying stocks, benefiting overall price discovery. The case highlights the sophistication and adaptability of global quantitative trading firms, demonstrating their ability to identify and capitalize on structural inefficiencies in rapidly growing markets. If Jane Street prevails or SEBI clarifies its stance, it could set a positive precedent for legitimate arbitrage activity, encouraging more liquidity provision and tighter spreads in Indian options markets. Increased scrutiny could prompt much-needed structural reforms in India's options markets, reducing volatility and creating a more robust environment for both domestic and international participants. The episode brings transparency to the scale and mechanics of index options trading, potentially attracting more institutional interest and accelerating the market's maturation. Global quant firms will closely monitor the outcome, and a favorable resolution could reinforce India's appeal as a destination for sophisticated trading strategies and capital flows. Bear Case: SEBI's interim order freezing ₹48.4 billion in profits and barring Jane Street from Indian markets signals heightened regulatory risk, which could deter global quant firms from participating and reduce market liquidity. Allegations of index manipulation—buying illiquid stocks to artificially move the Bank Nifty index—raise serious questions about the integrity of Indian options markets and may prompt further investigations into similar strategies. If SEBI's probe leads to final sanctions or stricter rules, legitimate arbitrageurs may be discouraged, potentially widening mispricings and increasing volatility in an already overheated options market. The dramatic legal battle exposes the fine line between market-making, arbitrage, and manipulation, increasing uncertainty for all participants and potentially leading to overregulation. Retail investors, who drove options prices 1.6% above the cash index, may face higher costs or reduced access to hedging and speculation tools if liquidity providers withdraw from the market. Protracted legal and regulatory uncertainty could tarnish India's reputation as an emerging financial hub, slowing the development of its capital markets and deterring foreign investment. Critics argue SEBI's intervention could deter legitimate arbitrageurs, potentially widening the very mispricings the regulator seeks to eliminate. Jane Street maintains its trades narrowed the premium between options and stocks, improving market efficiency. As both sides gear up for a protracted legal fight, the case underscores the delicate balance between market‐making, arbitrage, and the fine line regulators draw around perceived manipulation in thinly traded cash markets.
