Douglas Schadewald and Daniel Spottiswood weren’t ordinary traders. They architected and ran Jane Street’s India Index Options Desk, which reportedly earned over $1 billion in profits in 2023 alone.
They built an ultra-profitable machine, suddenly quit in early 2024, and unknowingly left a trail that would lead to a full-scale regulatory crackdown. Today, Jane Street is banned from Indian markets, ₹4,844 crore in assets frozen, and SEBI is investigating what may be the most sophisticated expiry-day manipulation in Indian market history.
2024: The Silent Exit That Sparked a Storm
In early 2024, Schadewald and Spottiswood resigned without warning and joined Millennium Management. Jane Street swiftly filed a lawsuit, accusing them of stealing confidential trading strategies. After their departure, Jane Street’s India earnings reportedly fell by more than 50%.
Though the lawsuit was quietly settled by December 2024, the real unraveling was yet to begin.
Enter Mayank Bansal — The Whistleblower
While legal proceedings were ongoing, Mayank Bansal, head of a UAE-based hedge fund, began noticing disturbing trading patterns on monthly expiry days.
Starting mid-2023, he saw Jane Street repeatedly buy into heavyweight stocks like HDFC and ICICI just before expiry, pushing up the Nifty index. Retail investors would chase call options, only for the index to reverse sharply as Jane Street sold calls, bought puts, and profited from the plunge.
Bansal identified two key tactics:
-
“Silent Expiries” – flooding the market with options, crushing volatility, and eroding premiums
-
“Volatile Expiries” – inflating premiums by triggering sharp moves just before expiry
“It was orchestrated like a performance,” Bansal told The Hindu and CNBC Awaaz.
By December 2024, he submitted a detailed report to SEBI. A high-level meeting followed with SEBI Wholetime Member Ananth Narayan. Weeks later, SEBI froze Jane Street’s funds and barred it from participating in Indian markets, citing manipulative expiry-day trading.
Alexander Gerko: "This Wasn't Genius—It Was Distortion"
Meanwhile, in London, Alexander Gerko, founder of global trading giant XTX Markets, saw the fallout firsthand. “Our India options Sharpe ratio dropped from 10 to 0 overnight,” he shared in a viral LinkedIn post.
For months, even seasoned professionals were puzzled by Jane Street’s abnormal gains. SEBI’s intervention suddenly made it clear.
“This explains everything,” Gerko wrote. “It wasn’t brilliance. It was market distortion.”
He estimated 90% of Jane Street’s India revenues were tied to the now-exposed expiry-day manipulation. “It smelled bad. And it wasn’t even subtle,” he added.
From Masterstroke to Market Manipulation
The traders exited. Competitors collapsed. The regulator acted.
What was once hailed as strategic brilliance now appears to be a carefully engineered expiry playbook—timed, executed, and repeated until it triggered regulatory alarms.
The illusion of dominance has faded. What remains is a hard lesson for global firms betting big on Indian markets: exploiting the system may pay for a while, but it doesn’t last forever.
About Money99
Parag Patil is a technical analyst and trading system designer with stock excel programmer. I hope the articles and live chart of nse future and mcx on this Website will be as helpful and profitable to you . I try to update and post new articles tips everyday. My motto is to encourage the traders, so that they should able to understand the technique views behind the moment of stocks. I have deeply analyzed with many technical indicator with parameter and added to my amibroker afl. And even taken backtest report which is never being implemented. Any of the analyst expect me. Seeing all this you may understand that my views is more technical than commercial. If you are profited by my views I fill happy.
0 comentários:
Post a Comment