Trading on the NSE’s derivatives segment plunged 21% to ₹476.39 lakh crore in the week following SEBI’s decision to ban Jane Street. The sharp decline highlights how reliant the market was on the U.S.-based firm’s high-frequency trading activities.
How Big Was the Drop?
On Thursday, July 10, NSE’s total F&O turnover fell from ₹605.23 lakh crore (July 3) to ₹476.39 lakh crore, a 21.29% slide. The number of contracts also fell 21%, marking the lowest expiry-day activity since May
What Triggered the Decline
SEBI issued an interim order on July 3 banning Jane Street and freezing $567 million of its Indian assets over alleged derivative manipulation. The ban prompted proprietary and high-frequency traders to stay cautious, causing “persistently low volumes” in options trading
Impacts on Options and Bank Nifty
The plunge was most visible in index options, which fell 21.4% in notional turnover to ₹472.54 lakh crore. Transactions in the Bank Nifty index and its 12 constituent stocks were halved over five sessions, reflecting Jane Street’s dominant presence in that segment
Market Reaction & What’s Ahead
Equity intermediaries such as Angel One, BSE, and CDSL saw sharp share price drops—down between 3.5% and 6.4%—on investor concerns over liquidity. However, analysts expect volumes to bounce back within 4–6 weeks if regulatory clarity improves
Why It Matters
- 📉 Liquidity loss: A 21% decline in turnover shows how thin the market can get without key players.
- ⚖️ Market concentration: The episode highlights overreliance on a few high-volume traders.
- 🔄 Regulatory balance: SEBI aims to curb manipulation but must manage reduced participation carefully.
Summary
Since SEBI’s ban on Jane Street on July 3, NSE derivatives turnover has dropped over 21%, driven by a sharp fall in index options, especially in Bank Nifty. While the market has lost liquidity, analysts anticipate a rebound once regulatory uncertainty clears and larger players re-enter.
