According to Indian regulators, every trading day Jane Street would:
1) buy large volumes of stocks and/or stock futures that are part of an index tracking India’s banking sector, early in the day,
2) subsequently place large options trades, betting that the index would decline or volatility would spike later in the day, and
3) later in the day, cash out of the large long positions, dragging the index lower, making far more money on the options trades than on the long positions.
Jane Street can and likely will claim the firm was only arbitraging away pricing inefficiencies, nothing more, nothing less. It was just business as usual, etc., etc.
However, given the scale of the operation, Jane Street's actions sure look like textbook market manipulation. Calling it like I see it.
I assume the moron in question was using Black-Scholes or some similar formula to price those options, and refused to update their prior when they lost money day after day. This happens quite a bit in derivatives markets.
I think the point is that retail investors were selling the puts, they predictably sold every day (or more likely, they predictably bought calls which is almost equivalent), and there were no other sophisticated market makers in the market.
That changes the description of part 2 to "subsequently experience retail investors placing large options trades with them" which is much more defensible market making behaviour - their early buying was in anticipation of later demand and really did involve taking a risk.
Yeah that seems like it should push the premium higher. Even if it's some institution with very bad quantitative models eventually the careless put writers should run out of shares/capital to secure the puts with and get liquidated.
> If options & futures are more liquid than the underlying, someone will be tempted to nudge the underlying.
This is a weird statement. Why would liquidity matter here? As a point of reference there are generally two types of options: (1) options that depend directly upon the underlying, like a Tesla stock option, or (2) options that depend indirectly upon the underlying, like options on S&P 500 index futures. The liquidity in category 2 is normally tiny. Cat 1 normally has far less liquidity than the underlying.
Why is the adjective "more" important here? Even if less, the opportunity to profit is still good, assuming that one chooses the path of market manipulation.
I have a suspicion this has been happening with a particular MAG7 stock these last few months, but I can't fully convince myself such a large stock can be manipulated like that.
When I worked at Scotttrade in 2010, I vividly remember my coworker telling me that this is what they did with the money too. I remember being surprised to hear that it flowed out in the morning and flowed back in in the evening. I never understood why that would make sense till I read your comment here.
It’s all hearsay; I’m just reporting what I heard. I don’t know the implications of it, but maybe this isn’t exactly uncommon behavior, even if it’s market manipulation.
The coworker said that the money flowed overseas too, if that helps contextualize it. No SEC, no problem, right?
Looks like Jane Street is an American firm, so, this all lines up and corroborates what you’re saying. What we’re seeing is probably the first time a government other than the US has reacted to this behavior.
I'm sure they're doing it domestically too, but due to the relative size of the markets and currency conversions what amounts to a serious disruption in the Indian stock market would just be background noise that gets ignored in a US market.
I also worked at Scottrade in 2010 and I can assure you that Scottrade wasn't doing arbitrage or marking markets in this manner. I'm dubious of your coworker.
Seems pretty straightforward depending on what large means here. When I worked in an algorithmic execution business of a broker, we had to always cap our order size as a percentage of average trade size and also cap our participation so we couldn’t ever be more than a certain % of the total market volume. This was precisely so that we wouldn’t ever push the market in the way JS are accused of doing here.
If you’re trading a large % of the market volume or your orders are large relative to anyone else, you can’t claim to be arbitraging as you are executing way beyond the capacity of any kind of arb. You’re just doing the old fashioned abusive market corner in fancy clothing.
Seems presumptive to slander an entire nations regulatory group on a single/couple of examples. By that metric the regulatory group in the US is completely bought out since they let 2008 happen.
Brightest minds in the world from what I can tell. They are particularly sickening in the way they specifically target certain demographics to come and leech for them.
Imagine becoming highly educated and then just using that ability to cream off the output of people who labour every day producing things that are actually useful. The tragedy is all the signals from society are saying this ok. Nobody questions the money. I got excited thinking we would 15 years ago, but nobody cares.
I guess if you're bright enough to come up with a solution you could be like Satoshi, or you could just work for Jane Street and suck as much as you can before you die.
people who get stuck in finance - especially trading - are not that bright IMHO compared to the hopelessly curious stubborn ones who go into philosophy or hard sciences or other areas of research.
Most exchanges do not reveal counter-party information smaller than the broker level. So you wouldn't know just from looking at market activity the same person causing the large futures move was also taking large options positions.
Bloombergs Matt Levine does a good analysis of this and comes to the conclusion that the example the SEBI gives looks a lot more like arbitrage than manipulation. They were selling zero day options to customers and hedging with the underlying stock, which reduced the cost of the options to customers (whilst making a ton of money).
> The difference can be subtle, and I often joke that the difference between legitimate trading and manipulation is whether you send your colleagues an email saying “lol I sure manipulated that market.”
> However, given the scale of the operation, Jane Street's actions sure look like textbook market manipulation. Calling it like I see it.
I am unsure that the US SEC would agree with you. Buying and selling "a lot" is not clearly market manipulation in the US.
Finally, in my view the India SEBI rules are insanely vague and are written to grant a lot of leeway to the regulator.
The real problem that no one is talking about: Why is India allowing its derivatives markets to explode? An estimated NINETY percent of retail derivs "investors" (I prefer the term "gamblers") lose money in India. Lots of these loses are gains for foreign banks and hedge funds. India: What the hell are you doing!?
It’s legal gambling (same as the retail crypto and stock trades in the US). I’d expect that the legalisation of sports markets in the US has meaningfully moved exploitable punters out of the markets and into the bookmakers.
I think the SEC would say it's about intent. If your intent for buying/selling is to impact the price rather than buying/selling the asset in question, then you are trying to manipulate the market.
The size question is important here due to the fact that large quantities are likely to influence price (and everyone knows this) so you might need an strong alternative explanation for your actions.
My understanding is you need to be able to actually the market to be called market manipulation (e.g. pump-and-dump). If Jane Street alone can move the market in 1), it seems like the Indian stock market is not really liquid...
Irony is that jane street hires from prestigious Indian schools too, for pretty obscene salaries. These salaries get hyped and celebrated over newspapers.
I’m not sure you are seeing it clearly..or have any trading experience whatsoever. They took substantial risk. There is always someone bigger so if they were wrong they could have been buried. Then they reversed. If there are allegations of insider trading or collusion or something else then I’m ready to pile on but I don’t see anything here.
> However, given the scale of the operation, Jane Street's actions sure look like textbook market manipulation.
Everything is public. How is Jane Street manipulating the markets? Feels more like the Indians are sore losers because they couldn't see the patterns that Jane Street did and they lost some money. They should up their game, not punish the winner.
Unsurprising that unethical but "righteous" crooks like SBF and his pals came out of that place.
I imagine Jane Street will also justify this with some EA bullshit, or like Soros during the 97 crisis just say "someone would do it ; may as well me".
I never quite understood why market manipulation is illegal. If market participants make emotional or irrational decisions detached from fundamentals, it should be on them.
While markets are used as a form of gambling, they also have a prosocial purpose, namely to allocate capital which improves the economy and society at large. Market manipulation increases market volatility and hence hurts efficient capital allocation, without some other benefit for the market. Besides that, it requires large amounts of capital to do, and hence can be effectively regulated.
> Jane Street sued Millennium, Schadewald and Spottiswood in April [2024], claiming the two traders had taken an “immensely valuable” trading strategy with them. It later emerged at a court hearing that the strategy involved India options and had generated $1 billion in 2023 profits for Jane Street.
I'm amazed they managed to move firms. Suppose you know how the strategy works, and it's like what SEBI says.
1) How do you approach mlp? They don't just give you an account, they have risk officers, compliance officers, and general strategy due diligence.
2) If you manage to get past it, what then? Say mlp just asks some superficial questions and sees the dollar signs. Are you going to do the same thing? You have to think the compliance people will complain, surely?
3) So maybe the strategy they actually approached with was a parasitical strategy? If you know which stocks will be bought and sold by JS, maybe you do jump in first? Especially as you'll know particulars like when it happens, which stocks are selected, and how to spot them.
A more straightforward explanation could be that the strategy is not market manipulation by conventional SEC thinking, and that this SEBI enforcement action is an unwelcome surprise rather than “damn they got us.”
I could vaguely believe that you could hide some of the details by virtue of coming from a prop shop and saying it's some new angle for mlp.
Maybe they do have teams running prop style strategies but I would guess that if you snapped the book at a given second you'd probably miss the alleged secret sauce.
I remain bemused that they described this as an "unintuitive strategy which required significant back testing etc".
As I read it they were just smashing underlyings to move the close price and profit from larger derivative positions... which is the most intuitive strategy I ever heard. There must be something more here right?
One thing to factor in is someone seeing you make this play & starting to buy up & sell high in morning shortly before you come in. So you need to factor in price points where you go through with this & where you don't
Also need to keep an eye on where you predict price is going naturally, don't want to be left fighting price uphill on wrong day
I know someone that made 10 million a year for a long time on wall street. They said, generally you can assume anyone making a large amount of money is a criminal. Any large deviations from the typical returns you would see in an asset class was suspicious
Having formerly worked for an NYSE Specialist firm the role of market making is incredibly important, but many large-scale HFTs today operate in ways that either stretch the legal boundaries or exploit regulatory gaps. Many practices arguably amount to market manipulation in spirit, even if technically legal. Candidly, the regulators are either too lazy, stupid, ill equipped or uninterested to do anything about it.
SEBI’s bold move, at the expense of appearing unfriendly to foreign institutions, is commendable. I really hope that the SEC will wake up from its slumber and start investigating the tactics used by Citadel and its kind.
SEBI wasn't bold at all. They saw them do this in January, told them in February to stop, and they persisted until they finally shut the operation off. They were tipped off as early as November 2024 that this was happening. If anything SEBI was incredibly slow at reacting lol
Who makes the markets in India? Is it the big Indian banks, or do these multinational trading firms act as market makers? If so, how do they distinguish between their trading and market making activities? It seems like it'd be relatively easy to rig a market (control the price) with enough capital and management over the trading.
>but many large-scale HFTs today operate in ways that either stretch the legal boundaries or exploit regulatory gaps. Many practices arguably amount to market manipulation in spirit, even if technically legal.
That's sort of the very definition of arbitrage in today's modern markets - its not just the text book definition of "borrow money at a low interest rate and invest at a higher interest rate": there's latency arbs, regulatory arbs, microstructure arbs... They belong to the firms who can research and benefit from them before others figure it out.
Does it really matter? I've done nothing but buy and hold at reasonable prices, and market manipulation has never affected my trades. This seems like finance bros fucking finance bros, which is solidly in the "who cares" category of my life.
Trades on this scale move the big indexes, and everybody in the market is exposed to the passive investing ETF complex.
Even if you are purely a stock picking buy and hold value investor, you will feel the reverberations. The modern market is deeply interconnected, and what Jane Street is doing here is literally moving the entire index volatility complex to pick up a modest billion a year. Let's say your small cap value stock issues some converts. A hair of that trading strategy will be embedded in the pricing model for the converts, and it will slightly change the cost of the debt for the company. Once you get out to 3rd 4th 5th order effects, it becomes a very faint influence, but when you consider that some of these market making/HFT trading practices at the core of the market are so deeply interlinked to just about everything that prints a price on a screen, it should be apparent that there is value in keeping the core areas of the market like the index volatility complex as clean as possible. Now weather Jane street's trading is just Irving price differences and improving the efficient market, or market manipulation, well that's another question, but the general rule of thumb is if you're using gigantic size to force bids and asks around, that's at high risk of being considered market manipulation that is toxic to market function.
I hear this defence of NYSE specialists now and again. Why do other markets, including the NASDAQ, not require them? It makes little sense to me in 2025 where the vast majority of trading is electronic.
> India retail investors make up 35% of options trades. Institutions, seeking to hedge their risk or profit for their companies’ accounts, handle the rest. Regulators are alarmed that regular folk are bypassing the tried-and-true way to build wealth: buying and holding stocks and mutual funds.
> Instead they’re engaging in pure speculation. The average time an Indian trader holds an option is less than Instead they’re engaging in pure speculation. The average time an Indian trader holds an option is less than 30 minutes, according to data from mutual fund provider Axis Asset Management Co. “If you want to gamble, if you need diabetes and high blood pressure, then go into this market,” Ashwani Bhatia, a board member on the nation’s top stock market regulator, said last year.
India has had a history of market manipulation and stock market crashes. One specially high profile one was 1992 after which SEBI got it's powers.
While what JS did would likely be allowed (borderline) in many other markets, it would be looked at highly suspiciously in India. The underlying narrative is clear, where Indian retail traders are green and need more protection to invest their wealth rather than simply earn interest (India's saving interest is 3.5% and a fixed deposit pays at 7.5%). SEBI also banned shortselling in India for a similar reasons of protecting retail investors. Even institutional investors who can short are not allowed naked shorts or closing their positions in short period (within a day). SEBI values market stability.
Overall, Indian traders are inexperienced and not as aware when it comes to options, so expect a regulator to be extra strict here. Free market is a good argument, but that has never been an explicit prerogative for the regulator. When SEBI cautioned against options, they cited speculative bets and disadvantage against institutional investors.[1]
There were fools in size in that market, and they got fleeced. What were they doing ? If anything, JS was teaching them a lesson - and now, with this action, they will be bolder in their foolishness, and someone else will separate them from their money. Index options markets are not for the unsophisticated to play in except as a casino.
India has one (https://en.wikipedia.org/wiki/Securities_Transaction_Tax). Retail investors don't choose to day trade options because of some rigorous financial analysis, so they aren't going to be discouraged by any feasible transaction tax rate.
They probably run every sort of strategy available in various markets. The indian one they probably played a much riskier hand thinking they could get away with it.
Tower got caught doing the same thing about 10 years ago. Apparently the strategy was literally called "the hammer" or something that was far too on-the-nose, but it was exploiting other strategies at the firm that bought a ton in the morning and hammered the close - "the hammer" made that leg profitable.
I assume Jane Street's version of this may have been unintentional: get your big position to do a bunch of intraday trading without worrying about being too short, then exit at the end of the day. This can work because markets tend to go up or stay flat intraday, meaning you get to use typical strategies in a jurisdiction that doesn't like when you go short via superposition. Then along the way, someone figured out this options trade and didn't realize their own behavior was influencing the price of the option (oops, I guess it wasn't superposition all along).
I’d say that those claiming it’s a simple or classic strategy have very little idea of how stock exchanges operate in second and third-world countries. Getting permission to trade as a foreign institutional investor requires a significant amount of legal work and, umm, bureaucratic investment. Almost all stock exchanges out there use off-the-shelf trade surveillance software, which means the exchange will flag this, and so will the SEC-equivalents, on every trade they make. There’s also a proactive element to this in the form of writing reports and asking for explanations regarding the trades. There’s no way these trades happen without someone noticing.
The thing is, Jane Street still consists of some of the smartest people in the room. Getting into markets like this and making large-volume trades is no easy feat. We often equate algorithmic prowess with investment intelligence, but in reality, navigating the legal and regulatory requirements is the only edge you have in trading these days. It’s very hard to figure this out as an international firm. Jane Street did it, and they deserve kudos for it. Trust me, if it were an Indian firm making the same moves, you wouldn’t have heard about it.
You’ll see Jane Street will pay a fine and come out on top. This is because they plan for these things with the expectation that regulators will make a scene about it.
That’s such a STEM thing to say. In finance, this is considered a badge of honor.
Your genius physicist hedge fund operator who "broke the game" in the investment world ended up paying $7 billion in a tax settlement [0]. There’s no algorithm—it’s all about regulations and manipulation. In the investment world, fines, "bureaucratic investments," and similar costs are just operating expenses. Guess what? Everything is a line item in a financial report.
You hire STEM researchers from Ivy League schools—why? You hire these guys, not just because they’re smart, but because they come with "back home connections" —maybe a multi-millionaire businessman for a father or a politician for an uncle. Nobody makes it to these colleges or financial institutions by merit alone. You need those connections. That’s entirely how finance works.
The blog from Financial Times has a much better write-up, including a link to the official 100+ page legal order from SEBI: "The details of Jane Street’s alleged ‘sinister scheme’ in India": https://www.ft.com/content/41c4789a-afa6-462c-a6ea-9704c2ba7...
> SEBI said that the “intensity and sheer scale” of their intervention, and the rapid reversal of their trades “without any plausible economic rationale, other than the concurrent activity in and impact on their positions in the BANKNIFTY index options markets,” was manipulative.
> "without any plausible economic rationale..."
I had a bit of a laugh at this. I thought the rationale was to fuck the counterparties as hard as possible?
It would seem like Jane Street being allowed to operate in this market is like bringing an anti-material rifle to a pillow fight.
Readit News
1) buy large volumes of stocks and/or stock futures that are part of an index tracking India’s banking sector, early in the day,
2) subsequently place large options trades, betting that the index would decline or volatility would spike later in the day, and
3) later in the day, cash out of the large long positions, dragging the index lower, making far more money on the options trades than on the long positions.
Jane Street can and likely will claim the firm was only arbitraging away pricing inefficiencies, nothing more, nothing less. It was just business as usual, etc., etc.
However, given the scale of the operation, Jane Street's actions sure look like textbook market manipulation. Calling it like I see it.
That changes the description of part 2 to "subsequently experience retail investors placing large options trades with them" which is much more defensible market making behaviour - their early buying was in anticipation of later demand and really did involve taking a risk.
The truth is probably somewhere in between.
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If options & futures are more liquid than the underlying, someone will be tempted to nudge the underlying.
Bond ETFs and their options chains seem like another locale where this could happen.
Why is the adjective "more" important here? Even if less, the opportunity to profit is still good, assuming that one chooses the path of market manipulation.
It’s all hearsay; I’m just reporting what I heard. I don’t know the implications of it, but maybe this isn’t exactly uncommon behavior, even if it’s market manipulation.
The coworker said that the money flowed overseas too, if that helps contextualize it. No SEC, no problem, right?
Looks like Jane Street is an American firm, so, this all lines up and corroborates what you’re saying. What we’re seeing is probably the first time a government other than the US has reacted to this behavior.
If you’re trading a large % of the market volume or your orders are large relative to anyone else, you can’t claim to be arbitraging as you are executing way beyond the capacity of any kind of arb. You’re just doing the old fashioned abusive market corner in fancy clothing.
People may recall the matter involving Adani Group. https://hindenburgresearch.com/adani-update-sebi/
But is it really? Is buying a lot of stock and selling it later really something that takes a genius?
Imagine becoming highly educated and then just using that ability to cream off the output of people who labour every day producing things that are actually useful. The tragedy is all the signals from society are saying this ok. Nobody questions the money. I got excited thinking we would 15 years ago, but nobody cares.
I guess if you're bright enough to come up with a solution you could be like Satoshi, or you could just work for Jane Street and suck as much as you can before you die.
people who get stuck in finance - especially trading - are not that bright IMHO compared to the hopelessly curious stubborn ones who go into philosophy or hard sciences or other areas of research.
> The difference can be subtle, and I often joke that the difference between legitimate trading and manipulation is whether you send your colleagues an email saying “lol I sure manipulated that market.”
https://www.bloomberg.com/opinion/newsletters/2025-07-07/jan... (https://archive.ph/20250708012725/https://www.bloomberg.com/...)
Finally, in my view the India SEBI rules are insanely vague and are written to grant a lot of leeway to the regulator.
The real problem that no one is talking about: Why is India allowing its derivatives markets to explode? An estimated NINETY percent of retail derivs "investors" (I prefer the term "gamblers") lose money in India. Lots of these loses are gains for foreign banks and hedge funds. India: What the hell are you doing!?
I think eToro disclosed that on their app, people using CFDs were losing money 76% of the time.
The size question is important here due to the fact that large quantities are likely to influence price (and everyone knows this) so you might need an strong alternative explanation for your actions.
Dead Comment
After reading the Matt Levine piece posted by https://news.ycombinator.com/item?id=44497566 , I'm no longer sure this is market manipulation.
The devil is in the details, and the details disagree with my initial take, so I'm changing my mind.
- They were taking a substantial risk.
- They were manipulating the market.
Everything is public. How is Jane Street manipulating the markets? Feels more like the Indians are sore losers because they couldn't see the patterns that Jane Street did and they lost some money. They should up their game, not punish the winner.
I imagine Jane Street will also justify this with some EA bullshit, or like Soros during the 97 crisis just say "someone would do it ; may as well me".
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> Jane Street sued Millennium, Schadewald and Spottiswood in April [2024], claiming the two traders had taken an “immensely valuable” trading strategy with them. It later emerged at a court hearing that the strategy involved India options and had generated $1 billion in 2023 profits for Jane Street.
1) How do you approach mlp? They don't just give you an account, they have risk officers, compliance officers, and general strategy due diligence.
2) If you manage to get past it, what then? Say mlp just asks some superficial questions and sees the dollar signs. Are you going to do the same thing? You have to think the compliance people will complain, surely?
3) So maybe the strategy they actually approached with was a parasitical strategy? If you know which stocks will be bought and sold by JS, maybe you do jump in first? Especially as you'll know particulars like when it happens, which stocks are selected, and how to spot them.
Maybe they do have teams running prop style strategies but I would guess that if you snapped the book at a given second you'd probably miss the alleged secret sauce.
Crazy eh
Need to ask my mlp friends lol
As I read it they were just smashing underlyings to move the close price and profit from larger derivative positions... which is the most intuitive strategy I ever heard. There must be something more here right?
Also need to keep an eye on where you predict price is going naturally, don't want to be left fighting price uphill on wrong day
I wonder to what degree the lawsuit is what got this on the radar of the Indian authorities. Maybe they should have listened to Stringer Bell.
Can you expand on this?
Or it's their friends doing it and they're not uninterested, they're very interested in ensuring it continues.
That’s absolutely not the textbook definition of arbitrage.
Arbitrage is buy something somewhere at a price and resell it in a different market at a higher price. It’s just price arbitration hence the name.
There are no other kind of arbitrage implied when people talk about arbitrage. That’s what the word means.
I can see how it would be awful in countries that have a common law system, but I am not sure I am completely against it in most of Europe.
Even if you are purely a stock picking buy and hold value investor, you will feel the reverberations. The modern market is deeply interconnected, and what Jane Street is doing here is literally moving the entire index volatility complex to pick up a modest billion a year. Let's say your small cap value stock issues some converts. A hair of that trading strategy will be embedded in the pricing model for the converts, and it will slightly change the cost of the debt for the company. Once you get out to 3rd 4th 5th order effects, it becomes a very faint influence, but when you consider that some of these market making/HFT trading practices at the core of the market are so deeply interlinked to just about everything that prints a price on a screen, it should be apparent that there is value in keeping the core areas of the market like the index volatility complex as clean as possible. Now weather Jane street's trading is just Irving price differences and improving the efficient market, or market manipulation, well that's another question, but the general rule of thumb is if you're using gigantic size to force bids and asks around, that's at high risk of being considered market manipulation that is toxic to market function.
Dead Comment
> India retail investors make up 35% of options trades. Institutions, seeking to hedge their risk or profit for their companies’ accounts, handle the rest. Regulators are alarmed that regular folk are bypassing the tried-and-true way to build wealth: buying and holding stocks and mutual funds.
> Instead they’re engaging in pure speculation. The average time an Indian trader holds an option is less than Instead they’re engaging in pure speculation. The average time an Indian trader holds an option is less than 30 minutes, according to data from mutual fund provider Axis Asset Management Co. “If you want to gamble, if you need diabetes and high blood pressure, then go into this market,” Ashwani Bhatia, a board member on the nation’s top stock market regulator, said last year.
https://economictimes.indiatimes.com/markets/options/indias-...
While what JS did would likely be allowed (borderline) in many other markets, it would be looked at highly suspiciously in India. The underlying narrative is clear, where Indian retail traders are green and need more protection to invest their wealth rather than simply earn interest (India's saving interest is 3.5% and a fixed deposit pays at 7.5%). SEBI also banned shortselling in India for a similar reasons of protecting retail investors. Even institutional investors who can short are not allowed naked shorts or closing their positions in short period (within a day). SEBI values market stability.
Overall, Indian traders are inexperienced and not as aware when it comes to options, so expect a regulator to be extra strict here. Free market is a good argument, but that has never been an explicit prerogative for the regulator. When SEBI cautioned against options, they cited speculative bets and disadvantage against institutional investors.[1]
[1]: https://blog.liquide.life/sebi-new-rules-options-trading-imp...
Though usually short sell bans are not done to protect investors but companies, to protect companies from investors who might know something.
I assume Jane Street's version of this may have been unintentional: get your big position to do a bunch of intraday trading without worrying about being too short, then exit at the end of the day. This can work because markets tend to go up or stay flat intraday, meaning you get to use typical strategies in a jurisdiction that doesn't like when you go short via superposition. Then along the way, someone figured out this options trade and didn't realize their own behavior was influencing the price of the option (oops, I guess it wasn't superposition all along).
Jane Street's version of this was absolutely intentional.
[1] https://www.reuters.com/article/business/high-frequency-trad...
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The thing is, Jane Street still consists of some of the smartest people in the room. Getting into markets like this and making large-volume trades is no easy feat. We often equate algorithmic prowess with investment intelligence, but in reality, navigating the legal and regulatory requirements is the only edge you have in trading these days. It’s very hard to figure this out as an international firm. Jane Street did it, and they deserve kudos for it. Trust me, if it were an Indian firm making the same moves, you wouldn’t have heard about it.
You’ll see Jane Street will pay a fine and come out on top. This is because they plan for these things with the expectation that regulators will make a scene about it.
Maybe, but the stain on their reputation is hard to wash off. They will forever be known as a manipulator.
What was a geeky ocaml wielding quant shop is now viewed as plain-old manipulating crooks with a nerdy veneer.
Your genius physicist hedge fund operator who "broke the game" in the investment world ended up paying $7 billion in a tax settlement [0]. There’s no algorithm—it’s all about regulations and manipulation. In the investment world, fines, "bureaucratic investments," and similar costs are just operating expenses. Guess what? Everything is a line item in a financial report.
You hire STEM researchers from Ivy League schools—why? You hire these guys, not just because they’re smart, but because they come with "back home connections" —maybe a multi-millionaire businessman for a father or a politician for an uncle. Nobody makes it to these colleges or financial institutions by merit alone. You need those connections. That’s entirely how finance works.
[0] https://www.wsj.com/articles/james-simons-robert-mercer-othe...
Non-paywalled FT article: https://archive.is/2025.07.06-105811/https://www.ft.com/cont...
> "without any plausible economic rationale..."
I had a bit of a laugh at this. I thought the rationale was to fuck the counterparties as hard as possible?
It would seem like Jane Street being allowed to operate in this market is like bringing an anti-material rifle to a pillow fight.
I think the intend was to convey that there was no economic or market situation in India that makes it a necessity.
Probably they were not speaking about profit motive.
Since when making money is not an economic rationale?