SEBI just dropped a bomb. And it wasn’t just any crackdown.
On July 4, SEBI barred global trading giant Jane Street and its Indian arm from trading. The charge? Market manipulation on expiry day. They allegedly misused cash, futures, and options to rig prices and made over ₹4,800 crore doing it.
Sounds like a win for market fairness, right?
Yes—but not so fast, says Nithin Kamath, founder of Zerodha.
The Praise and the Problem
Kamath praised SEBI’s guts. “If true, it’s blatant manipulation,” he posted on X. He even pointed out how Jane Street ignored warnings from Indian exchanges.
“That’s shocking. Maybe this is what happens when you’re used to the lenient US system,” he said, slamming how US hedge funds use tricks like dark pools and payment for order flow to profit off small investors—tactics that are banned in India.
You’ve got to hand it to SEBI for going after Jane Street. If the allegations are true, it’s blatant market manipulation.
The shocking part? They kept at it even after receiving warnings from the exchanges. Maybe this is what happens when you’re used to the lenient U.S.… pic.twitter.com/pZGEnfnDXl
— Nithin Kamath (@Nithin0dha) July 4, 2025
India’s rules are stricter. And SEBI, Kamath notes, deserves credit for acting strong.
But here comes the conflict: What happens when you remove a key player from the game?
The Reliance No One Talks About
Jane Street isn’t just any trader. It’s a massive liquidity provider. Kamath pointed out that prop trading firms like Jane Street make up nearly 50% of all options volume. That’s huge.
And with them gone, things might get rough.
Retail traders make up about 35% of that volume. If liquidity dries up, bid-ask spreads could widen. That means worse prices for everyone. More volatility. Less participation. And trouble for brokers and exchanges too.
“This could be bad news for both exchanges and brokers,” Kamath warned.
What the Data Might Reveal
Kamath urged everyone to watch the numbers in the coming days. If F&O volumes dip sharply, it’ll show just how dependent the market is on these big players.
And he’s not alone in sounding the alarm.
Capitalmind’s Deepak Shenoy called Jane Street’s tactics “a massive version of GameStop on India.” Trader Piyush Chaudhry added, “No genius here—just Money Muscle.”
It’s not just about punishing bad behavior. It’s about what’s next.
The SEBI action feels like a warning shot. Yes, cleaning up the market is good. But the Indian derivatives market has to now ask itself—can it survive without the muscle of big prop firms?
The answer won’t come overnight.
But Kamath’s message is clear: celebrate fairness, but don’t ignore the structural risks. The next few trading days will show if India’s F&O market can stand on its own two feet—or if it’s been riding a liquidity wave we barely understood.
Also Read Jane Street Used India Arm to Break FPI Rules and Move Markets for Big Gains: SEBI
