Market manipulation or legit short-selling?

The Jane Street episode is not about hedging, as it claims, but manipulation. The profits it made clearly indicate that the purpose was to pump and dump the stocks

- K YATISH RAJAWAT

THE BIGGEST SHORT-SELLER in Indian markets, Jane Street, is back after it deposited a fine according to an interim order of the Securities and Exchange Board of India (Sebi). This raises a critical question about market manipulation and legitimate short-selling. There is a fine line between the two, and the regulator is unable to make the distinction.

Jane Street, Hindenburg Research, and Viceroy Research are foreign entities that profit from declining stock prices. While the last two use information as a momentum to bring down prices, Jane Street uses brute volume in the derivatives to do so in the cash market. The crucial question the regulator should ask when distinguishing between market manipulation and legitimate short-selling is who is affected the most. The companies, of course, are concerned, but the most severely impacted are the investors.