Jane Street's India run: From windfall to roadblock

UNTIL LATE 2024, one of the most lucrative corners of global finance was a 24-story tower southwest of New Delhi.

- ANTO ANTONY, CHIRANJIVI CHAKRABORTY & TOM REDMOND

Home to at least a half dozen high-speed trading firms, the blue-glass building with a rooftop helipad and a bronze bull sculpture in its plaza has been the centre of a trading boom that made India the world's biggest equity derivatives market by volume.

Foreign funds and proprietary traders using algorithms made $7 billion in the 12 months to March 2024 alone.

That bonanza may be coming to an end. On July 4, nine months after markets regulator Sebi tightened restrictions on options trading to protect retail investors, it accused Jane Street Group — one of the market's biggest players — of manipulating prices to generate hundreds of millions of dollars in ill-gotten profits.

The Securities and Exchange Board of India (Sebi) imposed a temporary trading ban on Jane Street, an extraordinary move that became the talk of dealing rooms from New Delhi to Amsterdam. It also ordered the seizure of ₹4,840 crore from the US trading giant, citing illegal gains from "an intentional, well-planned and sinister scheme."

Jane Street, which made more than $4 billion from India in just over two years, has disputed Sebi's findings.

"Sebi's action against Jane Street is a watershed moment," said Sonam Srivastava, a fund manager at Wright Research. "It signals an aggressive stance against sophisticated global players potentially gaming the system."

Even before Sebi's latest announcement, several international market makers were mulling whether to proceed with planned hires and technology investments, or to put those plans on hold if their profit-making potential is severely crimped by regulatory risks.

That's according to executives at global trading firms and people familiar with their plans who asked not to be identified discussing confidential matters. The move is also expected to put a further damper on trading, which slumped 70% in the first five months of this year.