In the wake of market regulator Sebis sweeping crackdown on U.S.
trading firm Jane Street, billionaire lender and creator of Kotak Mahindra Bank, Uday Kotak, has actually flagged three key concerns about the structure of Indias stock markets.
He cautioned versus the increasing supremacy of cash power, the expanding space between single-stock and index derivatives liquidity, and company models that prioritise volumes over fundamentals.Recent stock market actions signify 3 aspects: cash power, low liquidity in single stocks vs.
index derivatives, exchange, broker organization models linked to volume, less to basics.
Primary role of market is to promote capital development, fair cost discovery, Kotak published on X (formerly Twitter) on Saturday, July 5.
Kotaks remarks come a day after the Securities and Exchange Board of India (Sebi) disallowed Jane Street Group and four affiliated entities from Indias securities market and purchased a freeze on Rs 4,840 crore in supposed illegal gains.A crackdown on expiry-day manipulationLive EventsIn a 105-page interim order released Friday, Sebi accused Jane Street of deploying high-volume, cross-segment strategies to manipulate the Nifty and Bank Nifty indices, misinforming retail traders and booking huge benefit from index choices.
The regulator said the company created more than Rs 36,500 crore in net revenues in India in between January 2023 and March 2025, of which Rs 43,289 crore originated from index options alone.The order stated Jane Street used a method called Intra-day Index Manipulation on 15 of the 18 expiry days Sebi analyzed, which involved buying big amounts of index constituent stocks in the morning to synthetically push up prices, while holding big 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 company presumably bought Rs 4,370 crore worth of Bank Nifty stocks in the morning, producing a deceptive sense of strength.
At the same time, it built Rs 32,114.96 crore worth of bearish choices positions.
By the afternoon, it reversed its money market trades, pressing the index lower and booking Rs 734.93 crore in benefit from derivatives, its greatest single-day gain in Indian markets.The sales are aggressive, in a manner that pushes down rates in the element stocks and hence index.
JS Group books losses in intraday cash/futures market trading, the order stated.
Earnings in index options more than make up for the JS Groups losses.|Rs 735 crore in 1 day! Jane Streets most rewarding day on Dalal Street was developed on Nifty Banks fallRepeated warnings, installing concernsSebi stated it first started evaluating Jane Streets trades in April 2024, and released a cautionary letter in February 2025 through the National Stock Exchange (NSE), alerting the firm to avoid such patterns.
Despite this, JS Group continued with comparable trades, in disregard of the caution letter from the Exchange and JS Groups own dedications, the regulator noted.On 3 other expiry days, the company presumably deployed an Extended Marking the Close technique, putting big sell orders in the final minutes of trading to depress index levels, thereby benefiting short-call or long put positions.Sebi composed that the company was regularly running what seemed by far the largest risks in cash comparable terms in F&O especially on index alternative expiry days, and that other traders were uninformed of all this, and were hence lured to deal at a time that the Nifty Bank itself was being artificially and temporarily propped up.Jane Street respondsJane Street has denied any misdeed.
Jane Street disputes the findings of the SEBI interim order and will even more engage with the regulator, the firm stated in an emailed action to Reuters.
It added that it is dedicated to running in compliance with guidelines globally.The company, which began its India operations in December 2020, has 21 days to respond to the Sebi order or obstacle it before the Securities Appellate Tribunal.As of Friday, 4 Jane Street-linked entities JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd have actually been prohibited from purchasing, selling, or handling Indian securities, and their accounts have actually been put under a debit freeze.How Sebis crackdown on Jane Street unfolded: A 15-month path of analysis and neglected warningsKotaks post echoes more comprehensive issues raised by Sebi in its investigation: that the marketplace has slanted too far in favour of high-frequency, algorithmic techniques, while retail financiers 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 techniques, almost matching the losses taken in by retail individuals.