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

(www.cnbc.com)
518 points bwfan123 | 1 comments | 06 Jul 25 14:03 UTC | HN request time: 0.204s | source
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cs702 ◴[06 Jul 25 20:47 UTC] No.44483909[source]▶
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.

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olalonde ◴[07 Jul 25 01:29 UTC] No.44485830[source]▶
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.
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f33d5173 ◴[07 Jul 25 01:57 UTC] No.44486002[source]▶
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.
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olalonde ◴[07 Jul 25 02:22 UTC] No.44486141[source]▶
Most of the stock market activity is secondary trading, which has little to do with allocating capital. Trading existing shares just redistributes ownership.
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1. f33d5173 ◴[07 Jul 25 04:18 UTC] No.44486715[source]▶
The 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.