The Morning Brief Nightmare on Jane Street
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Jul 8, 2025 Sugata Ghosh, a finance guru from ET, and Reena Zachariah, a keen tracker of Indian market regulations, dive into the controversial ban on Jane Street. They discuss SEBI's aggressive crackdown on the trading firm over alleged market manipulation strategies. The conversation sheds light on the complexities of options trading in India and the implications for investors. Listeners will learn about the challenges regulators face and the potential future landscape of algo trading in India.
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Classic Manipulation with Modern Algorithms
- Jane Street's algorithmic trading used classic market manipulation to rig prices for offshore profit.
- Its India-based entities moved prices benefiting foreign arms while absorbing local losses.
Whistleblower Sparks SEBI Action
- Mayank Bansal detected unusual option expiry patterns signaling manipulation in 2024.
- He alerted SEBI with detailed evidence, prompting their investigation and enforcement action.
Tax Arbitrage Behind Price Moves
- Jane Street used Indian entities to move prices, making foreign arms immense untaxed profits.
- This tax arbitrage exploited India's tax on local entities versus zero tax on FPIs in tax treaty countries.