19 ms·
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 Ind
by cs702 1y ago
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.
- stefan_ 1y agoHardly a sophisticated high tech HFT operation. Totally illegal of course, except in places that maybe don't have the regulatory rigeur.
- cs702 1y agoHardly a sophisticated strategy, indeed, but Jane Street was earning like $1B/year of profit on it, according to https://news.ycombinator.com/item?id=44483691 https://news.ycombinator.com/item?id=44483691
- whatever1 1y agoSomeone has to pay for the OCAML maintenance
- ldjkfkdsjnv 1y agoall that OCAML we only hire the smartest is often a veil for what is really a simpler operation that is borderline illegal. probably alot of employees dont even really understand the systems they work on
- senderista 1y agoWe just send the rockets up, where they land isn’t our department
- udev4096 1y agoMost of them are willing to look the "other way". So much for innovation and brainwashing the brightest minds with capitalism brainrot
- naveen99 1y agoOk, but what moron was selling them the puts , and not seeing the pattern after a couple of days of this ? Sebi logic seems questionable.
- lopatin 1y agoPresumably retail options traders and less sophisticated firms
- naveen99 1y agoYeah, I think volatility in the indian market was way too low, and Jane street just juiced it. normally that would be a losing proposition, but too many existing players were short volatility habitually… answer is not to kick Jane street out, but to enjoy the taxes Jane street pays on the gains…
- lumost 1y agoLow volatility is good for everyone engaged in long term asset management. Jane Street just found a way to make everyone else less money while making a small amount for themselves.
- MichaelZuo 1y ago> Low volatility is good for everyone engaged in long term asset management. According to who? There are plenty of pension funds nowdays that have people specialized in picking up mid sized companies after big drops.
- mrcode007 1y agoit’s a known effect. Without going into details here, you can calculate first crossing time of a barrier in a stochastic process and observe that often the first crossing time decreases as the volatility increases. From there you can set one barrier at 0 (default) and draw your own conclusion.
- Horffupolde 1y agoSo why can’t other players detect this behavior and trade with JS, removing their edge?
- cwmoore 1y agoPoint taken, but maybe gov’s a player too?
- steveBK123 1y agoThe other firms compliance departments
- Horffupolde 1y agoThe other firms are not manipulating the market. They are just riding along the manipulator.
- anticensor 1y agoIt is a crime to assist a crime.
- Horffupolde 1y agoYou are not assisting. If anything you are making it less profitable.
- posnet 1y agoMost 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.
- londons_explore 1y agoDoesn't matter - see a pattern, exploit it - and in doing so, make profit yourself whilst reducing the pattern.
- Den_VR 1y agoMaybe, but given the reputation of Indian regulators I’m skeptical Jane Street’s only sin was the alleged market manipulation. People may recall the matter involving Adani Group. https://hindenburgresearch.com/adani-update-sebi/ https://hindenburgresearch.com/adani-update-sebi/
- dyauspitr 1y agoSeems 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.
- sealeck 1y agoThere's a difference between "letting" something happen and actively doing something – it shows very different intentions. The events of 2008 were also caused by a cascading system failure involving lots of different components, which are hard for a single human to fully understand. The actions of the Indian regulator in the Adani case are much simpler, and their motivation is straightforward.
- dyauspitr 1y agoOne rotten regulator doesn’t mean you get to view the entire Indian regulatory environment as unreliable though. It’s the 4th/5th largest financial market in the world.
- Den_VR 1y agoIs SEBI not the key regulator in this area? To say it plainly, SEBI has been exposed for their selective enforcement on high-profile entities. If Jane Street’s in trouble with SEBI then it’s only because they failed to secure the same privileges as Adani, or Karvy, or Ramkrishna, or Sapre, or Kamath.
- fastball 1y agoDoes the size of a market have some positive impact on the reliability of its regulatory body that I am not aware of?
- conditionnumber 1y agoDon't know about Jane Street, but that sounds like a general problem. 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.
- ivape 1y agoI 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.
- pclmulqdq 1y agoAt least one of those stocks tends to have a comparatively thin order book.
- artemisyna 1y agoOh?
- throwaway2037 1y agoGoogle tells me: > Coined in 2023, the group consists of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. Which one?
- theirjehdirhdij 1y agoUnsurprising 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".
- futevolei 1y agoI’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.
- tyre 1y agoBoth can be true: - They were taking a substantial risk. - They were manipulating the market.
- futevolei 1y ago“Manipulation” is what? You want to create a rule that says a firm can’t buy more than x shares/dollars/% in a certain amount of time? Or if it does it has to hold onto those shares for a minimum time? A firm should be able to buy as much as it wants, subject to its margin requirements, and then sell whenever it wants, be it one second, one minute, one hour, one day…later.
- salawat 1y agoI disagree. I don't think transacting for transacting sake is a good thing. If anything I just see it as a vehicle for both obfuscation, and a means with which to arbitrage info asymmetry against retail investors. And no, I don't think merely adding liquidity is worth that being practicable and nigh-impossible to unwind.
- throwaway2037 1y ago> 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!?
- adw 1y agoIt’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.
- riffraff 1y agoIsn't the figure of retail losing money on daily trading similar in other markets? I think eToro disclosed that on their app, people using CFDs were losing money 76% of the time.
- throwaway2037 1y agoIn the UK, unlisted derivs (CFDs, etc) dealers that target retail are required to display in print and TV adverts what percent of customers lose money. It is always way more than 50%!
- bigbacaloa 1y ago[dead]
- joncrocks 1y agoI 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.
- dgfitz 1y agoJane Street called the bluff of that market. Occams razor.
- olalonde 1y agoI never quite understood why market manipulation is illegal. If market participants make emotional or irrational decisions detached from fundamentals, it should be on them.
- f33d5173 1y agoWhile 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.
- olalonde 1y agoMost of the stock market activity is secondary trading, which has little to do with allocating capital. Trading existing shares just redistributes ownership.
- f33d5173 1y agoThe stock market has a number of essential components without which it could not exist, all of which support it's role in allocating capital. If there was no secondary market to sell their stock to, someome might not invest in the first place. If there were or were not market manipulators cheating others out of money, that would make no difference as to whether someone invested in a company.
- mlrtime 1y agoSecondary trading enables risk transfer, which is important for allocating capital. Your first sentence is somewhat accurate, your second is not at all, specifically "just".
- olalonde 1y agoI didn't say stock markets don't serve a useful purpose. Regardless, my original point is simply that traders should focus on fundamental value, not try to guess what others are thinking. If they choose to play that game and get burned, that should be on them. There's no real necessity to regulate "market manipulation".
- deleted 1y ago[deleted]
- sillysaurusx 1y agoWhen 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.
- hotep99 1y agoI'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.
- FajitaNachos 1y agoI 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.
- Workaccount2 1y agoAnd this is what some of the brightest minds in the country are being harvested to develop. One of the biggest ongoing travesties.
- Ozzie_osman 1y agoWell that and increasing Daily Active Users and ad revenue on social media and video platforms.
- Workaccount2 1y agoBut those have a tangible return to society that people flock to. Almost the entirety of Google products is open to anyone on Earth to just open up an use because that ad model is so successful. People click high value ads and it covers to cost of video distribution to anyone with an cell phone and wifi. Jane street on the other hand is arbitraging against regular folks money, so they can distribute the gains to their select high value clients. There is no free office productivity suite and limitless "How to repair cell phones to start your own business" videos distributed to everyone for free. In a way, they are doing opposite functions. Ad media takes from people who buy stuff and gives to people who don't (or cant't) buy anything. Jane street and their ilk take from regular people and give to those who have everything already.
- objektif 1y agoYour "ad" people are rotting the brains of entire generations by addicting kids using many different tactics (insta, YouTube shorts, TikTok....) . Please spare us the moral judgement.
- dmonitor 1y ago"brain rot" is a subjective criticism. objectively speaking, the kids are making art and sharing it with each other. it's at worst an extension of the entertainment industry. you can not like the art, but it's at least art. the finance industry doesn't produce anything of value. it just turns $1 into $2 and liquidates productive industries.
- Gathering6678 1y agoMy 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...
- ExoticPearTree 1y ago> 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.
- immibis 1y agoThey didn't exploit a pricing pattern, they created one, which is market manipulation.
- ExoticPearTree 1y ago> "While these actions were not a breach of any regulation" ^ quote from SEBI. Isn't market manipulation illegal pretty much anywhere?
- never_inline 1y agoIrony is jane street hires from prestigious Indian schools too, for pretty obscene salaries. These salaries get hyped and celebrated over newspapers.
- never_inline 1y agoIrony is that jane street hires from prestigious Indian schools too, for pretty obscene salaries. These salaries get hyped and celebrated over newspapers.
- seanhunter 1y agoSeems 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.
- vovavili 1y agoIsn't this just reasonably informed arbitrage?
- Mo3 1y agoGiven the intraday patterns in the US and other stock markets I doubt this is limited to India
- helsinkiandrew 1y agoBloombergs 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.” https://www.bloomberg.com/opinion/newsletters/2025-07-07/jane-street-s-indian-options-trade-was-too-good https://www.bloomberg.com/opinion/newsletters/2025-07-07/jan... (https://archive.ph/20250708012725/https://www.bloomberg.com/opinion/newsletters/2025-07-07/jane-street-s-indian-options-trade-was-too-good https://archive.ph/20250708012725/https://www.bloomberg.com/...)
- cs702 1y agoThank you for sharing this. Levine is usually pretty accurate about this stuff. I've changed my mind. See my updated response here: https://news.ycombinator.com/item?id=44499330 https://news.ycombinator.com/item?id=44499330
- cs702 1y agoEDIT: After reading the Matt Levine piece posted by https://news.ycombinator.com/item?id=44497566 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.