Wall Street firm may have colluded with other FPIs

Big Quants Under Lens

- NESIL STANEY

The Securities and Exchange Board of India's (Sebi) crackdown on Jane Street may just be the tip of the iceberg, with traders and fund managers alleging that multiple large algorithmic trading firms—both foreign and domestic—colluded to manipulate Indian indices, causing steep losses for investors. While Sebi has already taken stringent action against the US-headquartered market maker, sources said at least two other large algo-trading firms may have been practicing similar strategies.

"There was definitely collusion among two or more large algo-trading firms to move the Nifty in clear, predetermined directions," said the owner of one of India's largest proprietary trading desks.

Many domestic high-net-worth (HNI) traders and family offices (FOs) incurred heavy losses in options trading on May 15, when a sharp expiry-day move caught large traders off guard, he said, citing the episode as an example.