Jane Street’s India Revenue Shrank Amid Misconduct Allegations

(Bloomberg) — Jane Street Group generated just 3% of its first-half net trading revenue from India, where it’s fending off allegations of misconduct by that nation’s securities regulators and exchange operators.

The roughly $500 million haul from India was on pace to total less than half the $2.3 billion Jane Street pulled in from that nation for all of 2024, according to people familiar with the matter, who asked not to be identified discussing non-public information. India contributed more than 10% of the total last year.

The Securities and Exchange Board of India temporarily banned the New York-based firm from the country’s securities market in an interim order dated July 3, accusing it of manipulative transactions involving local options and shares — allegations that the firm has denied.

In a memo to staff that month, Jane Street said it stopped trading in India after receiving letters from the National Stock Exchange of India and its rival BSE Ltd. in February, “until we could better understand the exchanges’ concerns.”

In its 105-page bombshell order, SEBI said that Jane Street in May was seen taking large index options positions and continued deploying a weekly “expiry-centric extended marking-the-close strategy” even after all the regulatory red flags the firm had been made aware of.

The allegations against Jane Street have gripped global finance, pitting one of the world’s most successful and secretive trading firms against regulators in the largest equity-derivatives market by volume. The case has implications for other high-frequency trading firms, which have flocked to the South Asian nation amid a retail trading boom in equity options.  

Even with the revenue decline in India, Jane Street still pulled in a record $10.1 billion in net trading revenue in the second quarter globally, beating out all of Wall Street’s biggest banks as the market-making giant reaped the benefit of trade war volatility. The revenue figure more than doubled from a year earlier, according to people with knowledge of the matter.

Jane Street has filed an appeal in Indian court to contest SEBI’s allegations. The firm claimed that SEBI has denied it access to crucial documents needed to defend against market manipulation accusations, and asked the court to order the Indian regulator to grant “full and free” inspection of the related materials. 

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