🏦 How Jane Street outran SEBI (for a while)

Good morning and a Happy Independence day. Hope you all get to enjoy your long weekend 🇮🇳 🫡 

Ruchirr Sharma & Shatakshi Sharmaa  

TABLE OF CONTENTS

• 🏦 How Jane Street beat India’s market watchdogs - until it didn’t

• Bite-sized summaries

  • 🥇 India plans global ‘Gold Standard’ for data quality

  • 📈 S&P upgrade set to cut overseas borrowing costs for Indian firms

• 🧑‍🍳 What else is cookin’?

MARKETS

🇮🇳 India

• Indian equities closed virtually flat. Investors remained cautious ahead of the US-Russia summit and the long weekend. IT and consumer durables sectors saw modest gains, while metals, oil & gas, and realty lagged due to oversupply fears and weak global cues.

🌍️ International

• US markets were mixed. Hotter-than-expected producer price inflation tempered hopes for Federal Reserve rate cuts, leaving investors cautious amid persistent inflation and volatile rate-cut expectations.

FINANCE

🏦 How Jane Street beat India’s market watchdogs - until it didn’t

For years, India’s booming derivatives market was the Wild West. Retail traders, many with modest incomes, piled into complex options trades, lured by low entry costs and high potential payouts. By 2023, derivatives trading in India was a staggering 422x larger than the regular stock market, with minimal guardrails.

Enter Jane Street, a U.S. trading giant famous for lightning-fast, data-driven strategies. Regulators suspected the firm was “marking the close,” moving prices in the cash market to benefit its derivatives bets. Between Jan 2023 and Mar 2025, Jane Street made $4.23B in Indian derivatives, with $567M deemed “unlawful gains” by SEBI, the market regulator.

Here’s the catch: SEBI had early warnings from the National Stock Exchange in late 2023, but the investigation dragged.

Why? The trades were enormously complex, spread across global entities, and regulators feared heavy-handed action might spook markets. Meanwhile, retail investors lost $21B over three years.

SEBI finally lowered the boom in July 2025, banning Jane Street and forcing the $567M into escrow. But Jane Street denies wrongdoing, calling it “basic index arbitrage,” and is fighting to clear its name.

The bigger picture: This saga spotlights the tension between encouraging market growth and protecting everyday investors. India wants to be a global financial hub, but without strong, nimble oversight, the smartest players can outpace the rulebook — and leave retail traders holding the bag.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

🥇 India plans global ‘Gold Standard’ for data quality - India aims to set global benchmarks for data quality, said Chief Economic Adviser V. Anantha Nageswaran, citing growing concerns over unreliable statistics in developed nations. Speaking at a Ministry of Statistics and Programme Implementation (MoSPI) meeting, he stressed the need for timely, credible, and accessible data to guide decision-making. The move comes as the US and UK face scrutiny over flawed labour and economic statistics. MoSPI plans to launch a Service Production Index, similar to the Index of Industrial Production, to better track services output. Officials see technology-driven reforms as key to making India’s data systems a global “gold standard.”

📈 S&P upgrade set to cut overseas borrowing costs for Indian firms - S&P Global has upgraded India’s sovereign credit rating from “BBB-” to “BBB,” citing strong economic resilience and fiscal discipline. The move is expected to lower overseas borrowing costs for top-rated Indian companies and non-bank lenders, with potential savings of 10-20 basis points on external commercial borrowings, currently around 7.75%. Non-banking finance firms could see spread benefits of 15-40 basis points as their global investor base expands. In FY25, ECB registrations hit a record $61 billion, with NBFCs taking a 43% share. The upgrade strengthens access to cheaper foreign funding, though benefits will mainly accrue to highly rated borrowers.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• US, India will rise to modern challenges together: Secretary Rubio in Independence Day message for India.

• 46 dead, 100-odd injured, many missing as cloudburst wipes out pilgrims' camp in J&K's Kishtwar.

• Apple Watch gets a new (old) add-on.