Since 2021, India’s equity derivatives market has exploded, driven by millions of inexperienced retail
investors attracted by low-cost trading apps and highly-leveraged weekly index options. At the
same time, U.S.-based quant firm Jane Street quietly built a large India desk (operating from late
2020) and generated outsized profits from index futures and options on the NSE’s NIFTY-50 and
Bank NIFTY indices. Jane Street’s high-frequency, directional trading strategies effectively
“bankrupted” many small Indian traders. Regulators have since launched a formal probe into
whether Jane Street’s algorithmic positions – especially in Bank NIFTY stocks – were used to sway
index prices. This report examines these claims, explains how Indian retail F&O trading works, and
reviews supporting data on retail participation, losses, and Jane Street’s market role.
Trading Accounts Opened
Retail Derivatives Boom and Trader Losses
India is now the world’s largest equity index derivatives market, with the National Stock Exchange (NSE) accounting for roughly 97% of global index options volume. By 2023, the number of demat accounts on NSE topped 85million, many used for trading index futures and options. Technological changes – zero-day expiries, synchronized daily expiries, small lot sizes and UPI/Aadhaar payments – have “sachetised” trading and made weekly NIFTY and Bank NIFTY options as cheap to buy as lottery tickets Charting NIFTY’s long-term rise (below) underscores the recent speculative euphoria:
NIFTY roughly tripled from 10,000 in 2018 to over 30,000 by 2024.
Figure: Long-term growth of India’s NIFTY 50 stock index. Lower capital requirements and new weekly/same- day option contracts have fueled record retail trading volumes in India (data via Wikimedia Commons).
...As a result, Indian derivatives turnover has surged – in March 2024 monthly notional was over
$100 trillion, double the year-earlier level. Young, low-income traders now dominate this “online casino” of expiry-day betting. SEBI data confirm the outcome has been disastrous for most amateurs: over 90% of retail F&O traders lost money in recent years. In FY2024 alone, 91.1% of retail accounts incurred losses, totaling ₹524 billion (gross). By contrast, institutional “prop” desks and foreign funds (using sophisticated algorithms) each made net profits (about ₹330 billion and ₹280 billion, respectively) over the same period. SEBI found that roughly 97% of those institutional profits came via automated trading. As one regulator noted, nine out of ten individual F&O traders lost money (avg. ₹110,000). Retail losses have been staggering: SEBI estimates ₹1.81 trillion ($21.7 billion) lost by small traders in 2021–2024. Another study found 9.25 million investors lost ₹51,689 crore (~$6.6 billion) in index-derivatives trading during FY2024.
FY 2024 Net Loss : ₹74,812 (Crore)
Jane Street’s Entry and Growth in India
Jane Street is a global quantitative market-maker known for high-frequency ETF trading. In late 2020 it opened an India desk (through affiliate JSI Investments) to exploit the booming index options market. Within two years Jane Street’s India revenues soared to unprecedented levels. Regulators now report that in 2024 Jane Street made about ₹200 billion ($2.34 billion) from Indian derivatives trading, roughly 11% of its global $20.5 billion revenue that year. This was “nearly five times the earnings of the next-largest trading firm” in India. The firm’s India strategy became so lucrative that
Jane Street even sued hedge fund Millennium in the U.S., alleging theft of its billion-dollar India options algorithm (the case revealed Jane Street earned $1 billion profit in 2023 from that strategy)
Jane Street Revenue From Indian Options
Jane Street’s growing role is confirmed by media and regulator reports: in mid-2025 SEBI launched one of its largest-ever investigations into a global trading firm, probing three Jane Street entities (U.S., Singapore, India) for potentially manipulating India’s NIFTY and Bank NIFTY indices. Complaints from other institutional traders helped trigger the probe, suggesting Jane Street’s activity was unusually influential. The investigation is focused on whether Jane Street repeatedly took outsized index- derivative positions (especially in bank-heavy Bank NIFTY constituents) and then executed offsetting trades in the cash market to profit from those positions. In short, regulators are examining if the firm’s algorithms were moving markets to enrich itself, at the expense of others.
Trading Mechanics and Alleged Manipulation
To understand the allegations, one must grasp how index options trading and hedging can move
prices. When Jane Street sells (or buys) large blocks of NIFTY or Bank NIFTY call/put options, it typically
hedges its net delta by trading underlying stocks. If done on a big scale intraday, this can nudge the
index up or down. SEBI officials say they will scrutinize patterns of “repeated positions in excess of
₹10 billion” taken by Jane Street. For example, taking a very large long position in Bank NIFTY calls
and then aggressively buying bank shares could lift the index, directly profiting an offsetting index
futures bet. Critics claim such strategies would “suck” money from directional retail bets.
While investigations are ongoing, the scale of Jane Street’s trades is unprecedented for India. In 2024
it made roughly five times the profit of its nearest rival. Jane Street’s activities coincided with
unprecedented volatility: India’s NIFTY and Bank NIFTY indices saw sharp moves in mid-2024 and early
2025 as expiry days approached. (By way of context, global markets can move suddenly – for example,
a recent chart shows major U.S. indices plunging in early April 2025. Even if unrelated to Jane Street, it
illustrates the fragility faced by levered traders.)
Figure: Recent sharp swings in global stock indices (USA). Sudden index drops like this (April 2025) can
liquidate leveraged positions; similar dynamics hold in India’s index futures and options markets.
Retail investors – mostly novices – had little means to counter such flow. With average holding periods
of minutes and 95% of trades in near-expiry weekly options, retail players were essentially placing tiny
bets against oceanic algorithmic flows. SEBI data show that nearly all institutional profits in FY2024
came via algorithmic methods, highlighting the systematic edge of firms like JaneStreet. By contrast,
retail traders are “almost always on the wrong side,” experts say.
Impact on Indian Traders
The cumulative effect has been catastrophic for many small traders. The video’s claim that Jane Street
“bankrupted” Indian traders reflects this anger. In reality, SEBI’s own study reveals that 91% of retail
F&O accounts lost money in 2023–24. Millions of new traders who turned to Bank NIFTY and NIFTY
options have seen their slim capital erode. Stories abound of tech professionals and students who
made quick gains initially but were wiped out on a single expiry day. Industry data show the average
retail F&O trader lost about ₹110,000(~$1,320) in 2022. Overall losses of over ₹1.8 trillion in three
years suggests many are effectively ruined or forced to withdraw.
At the same time, firms like Jane Street booked multi-billion-dollar windfalls from these same markets.
Critics argue this is not coincidence but causation. They point out that whenever retail buying of calls
would push Bank NIFTY up, Jane Street’s hedging buys and sells amplified moves. While definitive
proof of intent is pending, SEBI’s probes imply they consider the patterns suspicious.
Data Snapshot: Retail Participation and Losses
Retail accounts: By 2023, over 85 million Indians held NSE trading accounts, many opened
since 2020. The number of people active in equity derivatives jumped fivefold from 2019 to
2022 (to ~2.8 million among major brokers)
Trading volumes: Index option contracts on NSE surged 153% to 84.3 billion traded in 2023.
Monthly notional Indian derivatives turnover hit ~$100 trillion in early 2024
Retail losses: Net losses to retail traders totaled ₹1.81 trillion (≈$22 billion) from 2021–2024.
In FY2024, 9.25 million traders lost ₹51,689 crore (~$6.6 b) in index derivatives. Only
about 7–10% of retail F&O traders ever turn a profit.
Jane Street profits: Jane Street’s India operations earned ~₹200 billion in 2024, vastly
outpacing any other firm in India’s derivatives business. Globally, Jane Street’s net revenue was
$20.5 billion in 2024
Algorithmic advantage: SEBI reports that 97% of foreign investors’ and 96% of proprietary
traders’ gains came via algorithms. In contrast, retail traders (often buying options manually)
had no such edge.
These figures make clear why regulators and pundits worry. One IIFL analysts warned that the F&O
market has become “so game-like” that losses are all but guaranteed for uninformed participants.
Preventive Measures for Retail Traders
The key lesson is that retail investors must treat these markets with extreme caution. Experts advise
strict risk management: strict risk management: use small positions, set hard stop-loss orders, and never trade on borrowed
funds. For example, Moneycontrol reports that top traders recommend always placing a personal stoploss and limiting bet sizes to what you can truly afford to lose. One risk manager counsels: “Have a
stop loss in play to limit losses ... Do not take loans to enter into derivatives”. Avoid speculative socialmedia tips (“WhatsApp group” schemes) promising quick money. Smaller lot sizes or simpler
strategies (like spreads or covered calls) can help temper the leverage and optionality that magnify
losses.
Retail traders should also recognize the institutional order flow. When vast algo programs are at
work, small punters have little chance to outguess them. Prudent traders focus on longer-term
investing instead, as regulators repeatedly advise. SEBI and brokers have urged investors to diversify,
educate themselves about derivatives, and assume that most short-term options trades will lose. Given
that 90% of individual F&O bets go sour, the onus is on each trader to enforce discipline.
