Indian Stock Market Derivatives Activity Drops 36% Since Jane Street Trading Ban

Indian stock exchange derivative activity has dropped by a third since Jane Street, a US high-frequency trading giant, was banned by the country's market regulator. NSE saw a 36% drop in index options premium turnover, while BSE also saw a 36.4% decline. Traders attribute the decline to Jane Street's withdrawal and a broader lull in volatility.

Indian stock exchange derivative activity has experienced a significant decline, with a 36% drop in index options premium turnover at the National Stock Exchange of India (NSE) since the country's market regulator banned U.S. high-frequency trading giant Jane Street. The Securities and Exchange Board of India (SEBI) imposed the ban on July 4, citing manipulation of stock indexes through derivatives positions taken by Jane Street.

The NSE, the world's largest derivatives exchange by number of contracts traded, saw its options premium turnover plummet to 396.26 billion rupees ($4.6 billion) on Thursday, the day of weekly options expiry. This represents a nearly 36% drop over two weeks. The rival exchange, Bombay Stock Exchange (BSE), also saw its options premium turnover drop by 36.4% below the July 3 levels, with BSE index options expiring on Tuesdays [1].

Osho Krishan, senior analyst of technical and derivatives research at brokerage Angel One, attributes the decline to the abrupt withdrawal or reduction of activity by Jane Street, a primary liquidity provider within the options market. Unless new market-makers step in or volatility rises materially, turnover is unlikely to bounce back soon, Krishan said [1].

Traders also point to a broader lull in volatility as a factor dragging volumes. The Nifty volatility index (.NIFVIX) has fallen in nine of the 13 sessions in July so far, hovering near a more than one-year low [2].

In the 10 sessions since the ban, turnover has declined in six on a week-on-week basis across both the exchanges [1]. The decline in derivative activity highlights the significant role Jane Street played in the Indian markets and underscores the potential impact of high-frequency trading on market liquidity and volatility.

References:
[1] https://www.reuters.com/world/india/india-stock-exchange-derivative-activity-slips-by-third-since-jane-street-2025-07-17/
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3TE0V3:0-india-stock-exchange-derivative-activity-slips-by-a-third-since-jane-street-trading-ban/