BSE shares drop 6% as SEBI bans Jane Street for manipulating derivatives

Shares of BSE fell over 6% to Rs 2,647.30 on Friday due to SEBI's action against US-based trading firm Jane Street for alleged manipulation in equity derivatives. SEBI accused Jane Street of using high-frequency trading strategies to distort benchmark indices like Nifty 50 and Bank Nifty, misleading retail traders and making massive profits in India's options market. SEBI impounded Rs 4,840 crore as 'unlawful gains' from the misconduct.

One highlighted strategy was 'Intra-day Index Manipulation,' where Jane Street allegedly bought Rs 4,370 crore worth of Bank Nifty stocks in the morning to push up the index and then reversed the trade, making a profit of Rs 734.93 crore in a day. SEBI found this tactic used on 15 out of 18 trading days reviewed.

Despite warnings, Jane Street continued these trades. Only 1% of BSE's direct trading volumes are from Jane Street, with foreign portfolio investors accounting for 4% of BSE's volumes.

Technical analyst Kunal Kamble noted that BSE had been trading in a narrow range but Friday's drop indicated profit-booking and a reversal. The stock is below key moving averages and may correct further. A sustained move above Rs 2,870 is needed for short-term buying interest to revive.

According to the source: The Economic Times.