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

> India retail investors make up 35% of options trades. Institutions, seeking to hedge their risk or profit for their companies’ accounts, handle the rest. Regulators are alarmed that regular folk are bypassing the tried-and-true way to build wealth: buying and holding stocks and mutual funds.

> Instead they’re engaging in pure speculation. The average time an Indian trader holds an option is less than Instead they’re engaging in pure speculation. The average time an Indian trader holds an option is less than 30 minutes, according to data from mutual fund provider Axis Asset Management Co. “If you want to gamble, if you need diabetes and high blood pressure, then go into this market,” Ashwani Bhatia, a board member on the nation’s top stock market regulator, said last year.

https://economictimes.indiatimes.com/markets/options/indias-...

While what JS did would likely be allowed (borderline) in many other markets, it would be looked at highly suspiciously in India. The underlying narrative is clear, where Indian retail traders are green and need more protection to invest their wealth rather than simply earn interest (India's saving interest is 3.5% and a fixed deposit pays at 7.5%). SEBI also banned shortselling in India for a similar reasons of protecting retail investors. Even institutional investors who can short are not allowed naked shorts or closing their positions in short period (within a day). SEBI values market stability.

Overall, Indian traders are inexperienced and not as aware when it comes to options, so expect a regulator to be extra strict here. Free market is a good argument, but that has never been an explicit prerogative for the regulator. When SEBI cautioned against options, they cited speculative bets and disadvantage against institutional investors.[1]

[1]: https://blog.liquide.life/sebi-new-rules-options-trading-imp...