Rs 1.4 Lakh Crore Blow To Investors As Jane Street Scandal Shakes BSE, NSE | Markets News

Last Updated:July 14, 2025, 13:08 IST

BSE and NSE investors have lost Rs 1.4 lakh crore in market value amid the Jane Street scandal, regulatory crackdown on F&O trading

BSE and NSE investors have lost Rs 1.4 lakh crore in market value amid the Jane Street scandal

Jane Street Scandal: Since last month, investors in BSE and NSE have seen a combined Rs 1.4 lakh crore wiped out in market capitalisation. The steep sell-off has been triggered by the Jane Street scandal, regulatory clampdowns in the derivatives segment, plunging turnover, and a wave of analyst downgrades. BSE shares are now in bear territory with a 22% drop from their June peak, while NSE shares are down 18%, teetering near a bear market.

SEBI’s Ban on Jane Street Triggers Market Shock

The sell-off gained momentum after SEBI’s explosive interim order on July 3, which barred US-based quant trading firm Jane Street from Indian markets and froze Rs 4,840 crore of its assets. The regulator accused the firm of orchestrating a “sinister” manipulation of Nifty Bank. The fallout was swift—derivatives volumes collapsed, and brokerages turned bearish on exchange stocks.

BSE shares fell from Rs 3,030 on June 10 to Rs 2,376, erasing Rs 26,600 crore in market cap. NSE’s valuation dropped by Rs 1.15 lakh crore, with shares falling from Rs 2,590 on June 21 to Rs 2,125, per WWIPL data.

Brokerages Cut Ratings, Flag Near-Term Headwinds

IIFL Capital downgraded BSE to ‘ADD’, citing uncertainty from regulatory actions and falling volumes. “The risk of more regulations, scrutiny on other players, and rising retail losses will pressure exchange volumes,” it noted. Earlier, Motilal Oswal had also downgraded BSE, citing potential market share erosion post expiry shift.

The ban’s impact was visible on the first weekly expiry following the order. NSE’s notional index options turnover dropped 21%, falling to Rs 472.5 trillion from Rs 601 trillion. Premium turnover fell nearly 40%, hitting the lowest expiry-day level since March. BSE’s Option Premium ADTO in July’s first 8 sessions fell 25% versus June.

Retail Traders Face Mounting Losses

SEBI’s fresh data reveals retail investors lost Rs 1.05 lakh crore in F&O trading in FY25. Individual traders grew from 86.3 lakh in FY24 to 96 lakh in FY25, but average losses rose from Rs 86,728 to Rs 1,10,069—a 27% spike.

The expiry-day reshuffle—SEBI’s May 26 directive limiting expiry to Tuesdays or Thursdays—has further strained volumes. NSE moved expiries to Tuesday (from September 1), while BSE shifted to Thursday. IIFL expects BSE to lose 10–12% of volume due to the shift, revising its valuation to 45x from 50x and assigning a fair value of Rs 2,200, indicating 11% downside.

Option Premium ADTO across the market fell 19% month-on-month in July to Rs 510 billion, 28% lower than Q1 FY26. India VIX cooled to 12 in July, from 14 in June and 16 in Q1 FY26, contributing to the subdued activity.

High-frequency traders, who execute trades via colocation servers, account for 55–60% of derivative volumes. IIFL cautioned that scrutiny on such members could extend volume weakness in the near term.

Regulatory curbs introduced in November 2024 are beginning to take effect. SEBI’s latest report shows index options turnover declined 9% YoY (premium terms) and 29% YoY (notional terms) between December 2024 and May 2025. The number of individual traders fell 20% year-on-year.

Jefferies estimated Jane Street accounted for just 1% of BSE’s turnover. A 100bps decline in FY26 premium estimates would dent earnings by only 60–70bps. But the expiry shift and volume pressure present a broader threat.

Despite long-term earnings potential, near-term headwinds persist. IIFL maintained a cautiously optimistic stance, citing the possibility of a 15–20% earnings upgrade over time, but advised caution amid regulatory and volume risks.

With retail losses piling up and SEBI closely monitoring the F&O segment, further tightening seems likely. As India’s derivatives clean-up continues, the pain for exchange shareholders may not be over yet.

Aparna Deb

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More

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