Stocks of brokerages and market infrastructure institutions (MIIs) witnessed selling pressure after the Securities and Exchange Board of India’s (Sebi’s) crackdown on proprietary trading firm Jane Street.
Photograph: Shailesh Andrade/Reuters
The weakness was attributed to concerns that debarment of the US firm — a prominent player in the futures and options (F&O) segment — will lead to a further decline in volumes, which are already down over 30 per cent from the peak.
Among MIIs, shares of BSE fell around 6.5 per cent to Rs 2,639 per share while CDSL declined by nearly 2.5 per cent, closing at Rs 1,763 apiece.
Meanwhile, shares of Nuvama Wealth, the local trading partner of Jane Street, fell over 11 per cent.
Other brokerage firms like Angel One, Motilal Oswal Financial Services, and 5Paisa declined between 1 per cent and 6 per cent.
“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 (around 35 per cent) could take a hit too.
“So, this could be bad news for both exchanges and brokers,” Zerodha founder Nithin Kamath wrote on his social media handles.
Kamath added that the next few days may reveal the reliance on such giants for F&O volumes.
“There should not be any major market impact from this enforcement action. In any case, delta-based (future equivalent) limits are now in place in index options, to curtail excessive risk taking without impacting regular participants.
“In the long run, the growth in market confidence, and a free and fair market, should aid responsible investing and capital formation,” said a source.
From the peak of Rs 537 trillion in September, the average daily turnover for the equities F&O segment are down 35 per cent to Rs 346 trillion.
The drop comes amid regulatory tightening by Sebi to curb market manipulation and excessive speculation.
According to the data from NSE Market Pulse, algorithmic trading contributed to over 69 per cent of the volumes in the derivatives market while the cash market volumes in 2025-26 (FY26) stood at 55 per cent.
As per Sebi data for FY24, out of 11,219 FPIs registered with the market regulator, only 2.5 per cent were engaged in algo trading.
Jane Street is part of this small segment. Sebi has barred Jane Street from the Indian markets and directed impounding alleged illegal gains of Rs 4,843.5 crore.
Further, stock exchanges have been directed to closely monitor any future dealings and positions of the group on an ongoing basis to ensure that they do not indulge in any kind of manipulative activity.
The market regulator has given three months to the entities to close out or square off their open positions.
Interestingly, at the behest of Sebi, a caution notice was sent by the National Stock Exchange (NSE) to Jane Street in February, asking it to refrain from taking large positions and undertaking certain trading patterns.
Following the notice, the firm had halted trading for a few weeks.
Sources said that during that period, the volumes did not see any major dip, indicating that the influence on the volumes due to the debarment may be limited.
“If the markets are dependent on only one such player, then it is not a right sign for the ecosystem.
“Overall, volumes should hold up,” said another source.
