Jane Street Ban May Hit F&O Traders, Says Zerodha’s CEO Nithin Kamath

Zerodha CEO Nithin Kamath has said that action by the Securities and Exchange Board of India (Sebi) against Jane Street could disrupt the futures and options (F&O) ecosystem.

“Prop trading firms like Jane Street account for nearly 50 per cent of options trading volumes. If they pull back – which seems likely – retail activity (~35 per cent) could take a hit too. So this could be bad news for both exchanges and brokers,” he wrote on social media platform X (formerly Twitter) shortly after Sebi released its order barring Jane Street from the Indian stock market.

The Sebi order, which landed in the early hours of Friday, detailed how the New York-based hedge fund manipulated Indian stock indices through a series of coordinated trades across cash, futures, and options markets. Sebi accused Jane Street of extracting unlawful gains of Rs 4,843 crore, which has now been impounded. The probe tracked trades from January 2023 to May 2025 and pegged net profits at Rs 36,671 crore.

He added: "The next few days will be telling. F&O volumes might reveal just how reliant we are on these prop giants.”

Incidentally, India is the biggest equity derivatives market. According to data from the Futures Industry Association, Indian exchanges handled 7.30 billion derivative trades in April, nearly 60 per cent of the global volume. 

Kamath also lauded Sebi for the crackdown.

“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 US regulatory regime. Think about the structure of US markets: dark pools, payment for order flow, and other loopholes that allow hedge funds to make billions off retail investors. None of these practices would be allowed in India, thanks to our regulators. You've got to hand it to SEBI for going after Jane Street.”

Incidentally, prop trading firms, unlike institutional funds managing third-party money, use their own capital to trade. They are fast, algorithm-driven, and they thrive on volatility. Firms like Jane Street known for operating globally often dominate volumes.