Traders watch expiry day moves after Sebi ban on Jane Street Group

By Chiranjivi Chakraborty and Ashutosh Joshi 

Traders scrutinizing India’s derivatives market watched for signs of unusual trading on the first major expiration day following a ban on Jane Street Group. 

The benchmark NSE Nifty 50 Index opened little changed, with its biggest components — HDFC Bank Ltd., Reliance Industries Ltd. and ICICI Bank Ltd. — barely moving.  While it closed down 0.5%, the India NSE Volatility Index ended at its lowest level since April 2024. Nifty 50 options trading was the lowest for an expiration day since May 29 but in line with the average volume for this year’s expiries, data compiled by Bloomberg show.  

Investors have been waiting for this day to see if the Securities and Exchange Board of India order released last Friday would have any impact on the market. It’s on Thursdays that about half of the nation’s equity-derivatives expire — a day at the center of Jane Street’s lucrative strategy that SEBI called market manipulation. The US giant has denied the allegations, saying it was deploying common arbitrage trades. 

Investors are being careful given SEBI’s “strong vigilance,” said Tejas Shah, head of equity derivatives at Equirus Securities in Mumbai. “No players would want to enter their bad books,” he added. 

More clarity on the impact of the Jane Street ban may emerge when the nation’s leading bourse, the National Stock Exchange of India Ltd., releases its daily report on options prices later.  Nimish Maheshwari, an analyst with Beat The Street who publishes on the Smartkarma platform, said he expected a 20% to 30% drop in options volume on weekly contracts relative to previous expiries as large trading firms are holding off deploying strategies similar to Jane Street’s.  

On Tuesday, when the less liquid options on the BSE Sensex Index expired, volume remained in line with previous expirations.  That said, the cost of the contracts traded on the BSE Ltd. exchange was 4% below the previous expiration and 28% lower than the eight-week average excluding month-end Tuesdays, according to a note from brokerage Ambit Capital. 

SEBI has been cracking down on derivatives trading after a 40-fold growth turned India into the world’s biggest market for the contracts, with retail investors losing billions of dollars on the bets. While the cubs have tamed down trading, their losses have worsened, a report from the regulator showed earlier this week.