SEBI’s Jane Street Ban Hits Options Market Turnover, Dampens Trader Sentiment

Following the Securities and Exchange Board of India's (SEBI) prohibition of U.S.-based trading behemoth Jane Street for allegedly manipulating stock index contracts, the Indian derivatives market has experienced a noticeable slowdown. Experts point to institutional and high-frequency traders' anxiety as a major factor in the rapid and pervasive effects of the July 4, 2025, regulatory action on trading volumes on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Turnover Declines Across NSE and BSE

Data from NSE shows that index options premium turnover during the weekly expiry sessions has dropped sharply over the past three weeks. On June 26, 2025, the turnover stood at ₹80,731 crore. It fell to ₹61,511 crore by July 3—the day SEBI published the Jane Street order—and further declined to ₹45,884 crore on July 10. This marks a 43% drop in just two weeks.

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The overall derivatives premium turnover at NSE also slipped significantly, falling from ₹4.13 lakh crore on June 26, 202,5, to ₹1.61 lakh crore on July 3, 2025 and ₹1.38 lakh crore on July 10, 2025. For July's first eight sessions, total options turnover stood at ₹10.4 lakh crore, down from ₹15.22 lakh crore during the same period in April—a 30% drop over three months.

BSE saw similar declines. The index options premium turnover on June 24, 2025 (a weekly expiry) was ₹44,010 crore, but it plummeted to ₹19,683 crore by July 8, 2025—the first expiry after the SEBI ban.

Ripple Effects on Market Participation

The drop in volumes is especially significant because weekly options sessions typically rely on liquidity from large institutional and algorithmic traders, segments where Jane Street was highly active. Analysts note that this sudden exit has created a vacuum, causing risk aversion and reduced participation.

Proprietary traders have been largely absent since the order, leading to lower turnover and a decline in the number of unique clients in the derivatives space. Jane Street was notably active in Bank Nifty-related trades, and volumes in those stocks have also halved over the past five sessions, from 1.02 billion to 495.75 million shares.

Global and Political Factors Add to Pressure

Jane Street's departure is not solely to blame for the decrease. Traders have also retreated from aggressive positions, especially in Bank Nifty contracts, due to other considerations like the extended U.S. tariff deadline to August 1, 2025 and global trade concerns.

The decline in index options activity reflects growing market jitters, triggered by the Jane Street ban, global tensions, and shifting trade policies, said Experts in index options analysis.

Conclusion

In the short term, SEBI's action on Jane Street has had a major influence on India's options market. Trading volumes have dropped to multi-month lows as risk appetite has declined and liquidity has contracted.  Experts, however, are cautiously hopeful about a recovery as regulatory clarity develops and overall market conditions improve.