From ₹2,400 to ₹2,100 — NSE Feels Heat as Jane Street Gets the Boot

Image Source: MoneyLife

India's equities derivatives market is left shaken by the temporary ban imposed by the Securities and Exchange Board of India (SEBI) on Jane Street Group LLC, a segment leader. The spillover has caused a sharp correction in the preIPO pricing of the National Stock Exchange (NSE), raising fresh doubts over its highly anticipated listing.

Market Impact and Valuation Dip

Unlisted shares of NSE have fallen almost 10 percent from recent levels, trading between ₹2,100 and ₹2,150, from ₹2,400.
The exchange valuation, which had hit $69 billion, is now facing downward pressure as investors worry about declining derivatives volumes.
The slide is reflected in a broader market reaction, as shares in BSE Ltd. fell 12 percent and a Bloomberg index of capital market shares fell 3 percent.

Regulatory Overhang

SEBI charged Jane Street with index price manipulation, especially on expiry dates, through forceful trades.
The crackdown has also stoked speculation of tighter trading standards, which could also delay NSE's IPO plans further.
NSE's initial attempt to list in 2016 was foiled by a colocation server scandal, for which it was given a sixmonth market ban.

Liquidity and Sentiment

The Jane Street exit threatens liquidity in the derivatives market, which is dominated by proprietary trading firms.
F&O turnover has already declined by 21 percent, with retail as well as institutional players having turned defensive.
Experts further add that constant regulatory pressures can reshape India's derivatives landscape.

Sources: Business Standard, Economic Times, Financial Express, Zee Business, Outlook Business, Bloomberg.