I’d say that those claiming it’s a simple or classic strategy have very little idea of how stock exchanges operate in second and third-world countries. Getting permission to trade as a foreign institutional investor requires a significant amount of legal work and, umm, bureaucratic investment. Almost all stock exchanges out there use off-the-shelf trade surveillance software, which means the exchange will flag this, and so will the SEC-equivalents, on every trade they make. There’s also a proactive element to this in the form of writing reports and asking for explanations regarding the trades. There’s no way these trades happen without someone noticing.
The thing is, Jane Street still consists of some of the smartest people in the room. Getting into markets like this and making large-volume trades is no easy feat. We often equate algorithmic prowess with investment intelligence, but in reality, navigating the legal and regulatory requirements is the only edge you have in trading these days. It’s very hard to figure this out as an international firm. Jane Street did it, and they deserve kudos for it. Trust me, if it were an Indian firm making the same moves, you wouldn’t have heard about it.
You’ll see Jane Street will pay a fine and come out on top. This is because they plan for these things with the expectation that regulators will make a scene about it.
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