Jane Street, SEBI & The Billion-Dollar Options Game!

General
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Just came across this article.

Jane Street, a US trading firm, made a $1 billion profit last year by trading Indian options. But during a court case with another firm, their strategy accidentally got exposed.
That slip opened the doors for SEBI to launch a broader investigation, not just into Jane Street, but several other foreign investors as well.

India now has the world’s largest options market, yet 90% of retail traders lose money, while global firms walk away with massive gains.

To add to the surprise, Jane Street’s 2024 trading revenue hit $20.5 billion, outpacing Citibank and Bank of America — and even beating the combined annual profits of Reliance and HDFC Bank.

In my opinion, it’s high time we bring more transparency to the F&O space. Retail traders can’t keep playing blind while big players move billions behind the scenes without clear data, disclosures, or accountability.

But then again, curious:
If big players are allowed to control the game like this, what chance do small investors have?
How exactly can they rig the markets?

If one player can do it, what’s stopping others from doing the same? At the end of the day, it’s a game of survival, where capital, resources, and muscle power decide the winners. Unless there’s clear evidence of insider trading or fraud, I don’t see why SEBI is digging deeper. Are retail investors and HNIs losing too much money to these big players?

Curious to see what SEBI pulls out of the hat.

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What is the expectation here? Jane street declare each of their trade before they make it? :stuck_out_tongue:

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Fair point :smile: — but it’s not about them announcing trades like influencers.
Just give retail a fair shot — clearer data, cleaner rules, and no shadow games. :ice_cube::bar_chart:

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Again I don’t understand what exactly you are asking for?
Can you give one example each of clearer data & Cleaner rules?

That is never going to happen. These trading firms have billions of dollar at their disposal, some of the world’s brightest mind with Masters and PHD in mathematics and data Science are working for them. Some of the world’s best programmers are employed there.
They invented derivatives and probably all of the financial products you are trading.

You seriously think retail can compete with them. Very few retailers with top notch skill maybe. But retail as a whole??
That is like saying to Casino that give a fair chance to punters playing slot machines :stuck_out_tongue:

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If the derivative limit per FPI is reduced, and it is not allowed for them to collude with other FPIs, then spending a lot of money to move the cash market to their desired point will no longer be profitable. I guess this is what SEBI may be looking at.

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Exactly, the market is like the woods, survival of the fittest.

Instead of crying,g work on your strategy with the changing market.

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True. Reports suggest firm placing reversal trades and creating artificial volumes at specific strikes.
In my view, there should be stricter rules — brokers shouldn’t be allowed to trade against their own clients, and compliance norms need to be a lot tighter.
That’s what I mean by fairer, cleaner rules.

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Jane street isn’t your broker :slight_smile:

Anyways, there is no point arguing on this. At the most SEBI will fine them couple of million dollars. FPI will happily pay the fine and continue with their strategies.

F&O is zero sum game, if someone is making money, someone else will be loosing it. And generally it would be Big institution making money at the expense of retailers
And if you think by having more rules will somehow change that equation, I am not sure what to say :slight_smile:

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Why are we concerned about retailer when they themselves are not. For most ,options are just like lottery where you buy CE if your guess is market will move up and PE if goes down. If someone actually tries to understand and learn the psychology behind trading, the numbers will be different. Even alcohol abuse is not good, people know that before they take a sip. Still they take it.
SEBI can initiate more awareness programmes, brokers can be asked to make their users more aware and there is lot of resources that can be shared for learning.
Rest, its upto the client who punches a trade. Stoppage is not an option. Its a good way to hedge portfolios during uncertainty. Mini futures can be something SEBI should allow, similar to GOLDM or CRUDEM. Atleast profitable client percentage will improve.

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In India, the Securities and Exchange Board of India (SEBI) has implemented intraday monitoring of position limits for index derivatives, starting April 1, 2025. Specifically, there are both net and gross intraday limits. For index options, the net limit is set at Rs 1,000 crore and the gross limit is Rs 2,500 crore. For index futures, the intraday limit is Rs 2,500 crore. These limits are designed to prevent excessive speculation and market manipulation

This is , if any one google it to know FNO intra day position limit , so on that basis i think 1000cr to 2500 cr is more then enough to shake or induce high volatility in the market during FNO expiry day ,legally by Jane street or any one else who are having more money , so SEBI is directly or indirectly not with the Retailers :slightly_smiling_face:

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Yes of course , i agree with you