Jane Street barred from Indian markets as regulator freezes $566M

>While these actions were not a breach of any regulation, 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.

I don't get the basis for regulatory action if they weren't in "breach of any regulation." Not a fan of financial skullduggery, but it does seem important for government agencies to play by explicit, non-arbitrary rules. (Or maybe this article just got it wrong?)

"market manipulation" in general is hard to define. The working definition in the US is something along the lines of "placing orders in the hopes that the price of the security will change in response to those orders existing, with no intention of actually executing the orders". There may be some specific regulations about specific types of market manipulation that are more clearly defined, but oftentimes not. There's lots of grey area, because the definition of market manipulation makes it seem like any order that's canceled instead of executed might be market manipulation. But in fact a majority of orders do get canceled before they trade!

So the real difference between market manipulation and a canceled order is just intention, so regulators have to make judgment calls sometimes.

Honestly, there's a good case to be made that it doesn't matter. A government has every right to say "don't manipulate our market and try to fuck our economy" and not need to specify every tiny little loophole, especially to foreign companies. The fact that they must be reactive means they are always behind, and guarantees their country will be screwed and untold damage done before the problem can be addressed.

There is absolutely zero illusion that Jane Street is acting in good faith. They know what they're doing is wrong.

After all the manipulation, all the crashes, all the exploitation - maybe it is appropriate to just say "I don't care if we wrote it down, we've had enough of this shit".

In finance, regulation has two major flavours: prescriptive (specific) and "in spirit" (broad). US is mostly prescriptive, but the Howey test is a good example of "in spirit". Singapore is basically the inverse. Both can work well.

    > A government has every right to say "don't manipulate our market and try to fuck our economy"

Friendly reminder: The stock market is not the economy.

> "market manipulation" in general is hard to define. The working definition in the US is something along the lines of "placing orders in the hopes that the price of the security will change in response to those orders existing, with no intention of actually executing the orders".

No, what you defined is "spoofing" - a much narrowed subcategory of market manipulation (which itself is gray, as you note). Market manipulation is broader and basically amounts to intentionally trying to affect the price of the security - even grayer.