By Anurag Kumar
The Indian market is no Wall Street, and Jane Street has found this out the hard way, as market regulator SEBI impounded Rs 4,843.57 crore in unlawful gains, accusing the US firm of manipulating the market. Furthermore, the SEBI in its 105-page order imposed comprehensive interim restrictions on Jane Street pending a detailed investigation. The US-based quant firm has been banned from accessing the Indian market till the probe is on. Zerodha Founder and CEO Nithin Kamath has lauded the Indian market for its tough measures against Jane Street, but with a warning. Kamath highlighted that it could impact the stock exchanges, as these big proprietary trading firms account for nearly 50% of options volumes. “…there鈥檚 a flip side. Prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back鈥 which seems likely 鈥攔etail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers,” Kamath said in a tweet. Also Read: How US Firm Jane Street Manipulated Dalal Street To Earn Rs 36,500 Crore, And Got Caught – EXPLAINED Kamath also pointed out some key differences between the Wall Street and Dalal Street citing this case. “You鈥檝e got to hand it to SEBI for going after Jane Street. If the allegations are true, it鈥檚 blatant market manipulation. The shocking part? They kept at it even after receiving warnings from the exchanges. Maybe this is what happens when you’re used to the lenient U.S. regulatory regime. Think about the structure of U.S. markets: dark pools, payment for order flow, and other loopholes that allow hedge funds to make billions off retail investors. None of these practices would be allowed in India, thanks to our regulators,” he noted. “The next few days will be telling. F&O volumes might reveal just how reliant we are on these prop giants. I鈥檒l share more data as and when anything interesting turns up,” he further added. How US Firm Jane Street Manipulated Dalal Street To Earn Rs 36,500 CroreThe Wall Street quant trader allegedly made Rs 43,289 crore in options profits while deliberately losing Rs 7,208 crore in futures and equities. SEBI has accused Jane Street Group of orchestrating a sophisticated scheme to manipulate stock prices for massive profits in derivatives trading. The fallout: Rs 4,844 crore in alleged illegal gains frozen, a sweeping market ban, and one of the toughest actions ever taken against a foreign player in India鈥檚 financial markets. Additionally, Jane Street has been ordered to deposit this amount in an escrow account with a lien in favor of SEBI. All bank, demat, and custodial accounts linked to Jane Street have been frozen, with no debit transactions permitted without prior SEBI approval, although credit inflows are allowed. Additionally, the entities are barred from selling or transferring any assets in India until the alleged unlawful gains are fully deposited into a SEBI-linked escrow account. Jane Street has been granted 21 days to file objections and may request a personal hearing. The interim restrictions will remain in effect until further notice from SEBI. In the meantime, stock exchanges have been instructed to closely monitor any future activity by Jane Street to ensure there鈥檚 no recurrence of the manipulative trading patterns flagged in SEBI鈥檚 order. Jane Street’s Response鈥淛ane Street is committed to operating in compliance with all regulations in the regions we operate around the world,鈥 the firm said in an emailed response to Reuters. 鈥淛ane Street disputes the findings of the SEBI interim order and will further engage with the regulator.鈥 Get Latest News live on Times Now along with Breaking News and Top Headlines from Business, Companies and around the world.