2 days ago
Jane Street Shows Dangers of Finance as Shampoo
Indian consumer businesses have long understood that the key to making poor people buy more shampoo is to put a little bit in small, affordably priced plastic sachets. In the past few years, high-frequency traders have used the same formula — risk packaged for as little as 12 cents — to reap billions of dollars in profits from unsuspecting masses. The whole experiment succeeded beyond anyone's imagination, and India became the world's largest options market by volume. Then all hell broke loose Friday.
By imposing a temporary trading ban on Jane Street Group, one of the biggest names in algorithmic trading, and freezing 48.4 billion rupees ($570 million) of its past profits, the market regulator in Mumbai has sent shock waves through the corridors of global finance. The Securities and Exchange Board of India's interim order, which has been disputed by Jane Street, accuses the firm of running 'an intentional, well-planned and sinister scheme' of market manipulation.
