Think of a busy airport where one key airline suddenly gets grounded. Flight schedules are disrupted, travelers get stranded, and everything slows down. That’s what happened in India’s futures and options (F&O) market when SEBI temporarily banned quantum trading giant Jane Street. And now, traders across the nation are dealing with flight delays—and rerouting their strategies.
What Happened with Jane Street?
On July 3, 2025, SEBI issued an interim ban on U.S.-based quantum trading firm Jane Street for alleged index manipulation—specifically targeting Bank Nifty index options. The regulator described a “sinister scheme” involving buying index component stocks and futures early in the day, then selling them to profit through large short positions in options.
In response, Jane Street deposited approximately Rs 4,843 crore (about $564 million) into an Indian escrow account to comply with SEBI’s directives. It has asked SEBI to lift the ban, claiming its trades were standard arbitrage. The investigation is ongoing.
How It Impacted F&O Trading Volumes
The impact was immediate and stark:
- Average daily index options turnover on NSE plunged about 17–20% in the week following the ban.
- On options expiry day, a typically high-activity period—total derivatives turnover dropped roughly 21%, sliding from Rs 601 lakh crore to Rs 472 lakh crore. Source:
- BSE and NSE lost a combined Rs 1.4 lakh crore in market capitalization, driven by fears of lower F&O revenues and tighter liquidity. Source:
This disruption hit high-frequency trading and arbitrage players hardest, reducing market depth and execution efficiency .
Why These Cracks Appear—and What Traders Can Learn
1. Large Players Can Skew Prices: Companies like Jane Street run powerful algorithms and can move markets—especially with weaponized strategies like “pump-and-dump” on expiry days.
2. Regulatory Watchdogs Are Watching: SEBI’s tough action signals future scrutiny over algorithmic and high-frequency trading, making it clear that most strategies must be fair and transparent.
3. Liquidity Is Fragile: When a big player exits, even temporarily, volatility and transaction costs jump, and the entire system feels it.
Latest Development: Jane Street Puts Up $564 Million
In a major move to regain market access, Jane Street placed Rs 4,843 crore (~$564 million) into a SEBI-controlled escrow earlier this week. While trading is still paused, this deposit could be their ticket back—pending SEBI’s review.
Lessons for Traders
Lesson | What It Means for You |
Avoid over-reliance on F&O | Even deep market segments can shift fast—diversify across stocks, bonds, or mutual funds. |
Stay nimble and observant | Watch for changes in liquidity and spreads, especially on expiry days. |
Use reliable platforms | Thanks to Indira Securities, you can open a Demat account and use their mobile app to track such macro developments. |
Follow regulations closely | Regulatory shifts are likely in F&O—stay educated and cautious. |
Key Takeaways
- SEBI’s crackdown on Jane Street underscores its commitment to fair and transparent markets
- F&O volumes dropped ~20%, hurting liquidity and increasing costs temporarily
- Traders must adapt: diversify, monitor expiry dependencies, and use trusted platforms like Indira Securities
- With Jane Street’s hefty deposit, a rebound is possible—but volatility may linger
Ready to invest smarter? Click here to open a demat account with Indira Securities, download the mobile app, and stay ahead with trusted insights and easy execution.
Disclaimer
This blog is purely for educational purposes and should not be considered investment advice. Please do your own research or consult a registered financial advisor before making any investment decisions.