INSUBCONTINENT EXCLUSIVE:
dependence on proprietary trading firms and their domestic partners
What began as targeted enforcement against alleged market manipulation by the US-based trading giant quickly spilled over, impacting the
Shares of stock exchange BSE and Angel One dropped around 6% each, while CDSL fell over 2%
The combined erosion in market capitalisation was nearly Rs 12,000 crore.The regulatory action targeted Jane Street and its affiliates for
manipulating prices in Bank Nifty index options and underlying stocks, resulting in an order to disgorge unlawful gains of Rs 4,844
when they face no direct allegations
So this could be bad news for both exchanges and brokers."Also Read | Explained: What is Jane Street and how it made Rs 36,500 crore profit
When a single entity controls half of the options volume, its potential exit creates significant uncertainty about future market liquidity
and trading activity."Jane Street is one of the largest traders contributing to Indian markets," said Siddarth Bhamre, Head of Institutional
"When big players are banned for wrongdoing, others become cautious and reduce activity, leading to lower volumes
Traders may also face fewer counterparties, potentially causing a further drop in F&O volumes ahead."The concerns extend beyond immediate
Ashish Nanda, President & Chief Digital Business Officer at Kotak Securities, outlined the broader implications: "HFTs will surely be
Many will be re-assessing their strategies
Will they slow down? The fact is that HFT firms provide a lot of liquidity in the markets
pricing in a potential decline in volumes across Indian capital markets
Analysts warn that the regulatory action could put pressure on the revenue of intermediaries heavily dependent on derivatives trading, with
referencing global trading giants like Citadel Securities, IMC Trading, Optiver, Jump Trading, and Millennium, which are already expanding
into India, setting up local entities, hiring talent, and investing in infrastructure.Despite this optimism, the immediate challenge is
gauging the actual impact on trading volumes
The Rs 12,000 crore selloff on Friday reflects investor concerns over volume contraction and revenue pressure, particularly for
intermediaries with direct exposure to the banned firm.As the market adjusts to this new reality, attention will turn to whether other
sustain revenue in a changing regulatory landscape.Also Read | Make $1 billion loss in stock futures to earn $5 billion profit in options:
Sebi exposes Jane Street's Baazigar strategy
