The US based global proper -torture trading firm Jane Street is still in the headlines. The firm is accused of allegedly manipulating the index level in the expiry days to earn huge profits in index options. Regarding this, the Capital Market Regulator SEBI has banned it from the Indian markets, as well as instructions to return the profit of Rs 4,843 crore in an illegal manner.
Many people concern that the Indian capital market may have a large -scale negative impact in the Indian capital market. But the data of February is saying something else.
What is this February connection
In February this year, the National Stock Exchange (NSE) gave a warning to Jane Street. It said that his trade seems to be fraud and manipulated. But a regulatory source says that at that time, Jane Street had almost closed the trading for 2-3 weeks. Data shows that when Jane Street temporarily stopped trading, there was no real impact on the volume in the equity derivative segment.
NSE data shows that the daily average number of the index option contract traded between 1-6 February was about 9.8 crore. Between 7-13 February, when Jane Street was not active, the average number rose to 12.01 crore contract. After this, between 14-20 February, this figure fell slightly to 10.2 crore contracts. But the volume was still more than the first week of February. The average number of the index option to be traded daily between 21 and 28 February was slightly more than 9.3 crore.
Nitin Kamat expressed concern
Nitin Kamat, co-founder of online broking platform Jirodha, had expressed concern that propa trading firms like Jane Street holds about 50% of the option trading volume. If they pull their hands and which can be, then the retail activity in option trading may be shocked by 35%. If this happens, it can be bad news for both exchanges and brokers. In the next few days, F&O (Future and Options) volume will tell how much we are dependent on these renowned Prop Trading Firms.
Market does not depend on any one entity
In the social media post, Angel One Managing Director, Chairman and Founder Dinesh Thakkar said that although the order of SEBI has debated the future of proprietary trading in India, but the arrival of millions of retail traders and increase in institutional activities of millions of retail traders has ensured that the market does not depend on any one entity.
Thakkar said, “When one player comes out, others also come and often, very fast … Sebi’s action will increase and governance will strengthen, which will strengthen the integrity of the market and increase standard for all … players can change, but India’s capital market will continue to be deep, diversified and developed.”