India’s market regulator has banned US-based trading firm Jane Street, alleging manipulation and “unlawful gains,” while a new study reveals retail traders continue to face significant losses in the equity derivatives market.
Regulatory Crackdown on Jane Street
The Securities and Exchange Board of India (Sebi) recently barred Jane Street from the Indian securities market. Sebi claims the US-based proprietary trading firm manipulated stock indices, making “unlawful gains” of approximately Rs 4,844 crore.
This action comes amidst a stark contrast in fortunes within India’s financial markets. While firms like Jane Street saw massive profits, retail traders have been experiencing heavy losses.
Retail Traders Still Bleeding Money
A recent Sebi study, based on data from the top 13 stockbrokers, highlights the severe challenges faced by individual traders. In the fiscal year 2024-25 (FY25), retail traders’ losses in equity derivatives surged by 41 percent, reaching Rs 1.06 lakh crore. This is a significant increase from Rs 74,812 crore in the previous fiscal year (FY24).
For perspective, proprietary trading firms saw their gross profits from equity derivatives climb to Rs 33,037 crore in FY24. This amount represents 44 percent of the losses incurred by retail traders in the same period.
The number of unique traders also decreased by 20 percent year-on-year between December 2024 and May 2025. This contrasts sharply with a 24 percent growth recorded in the same period a year prior.
Although the final quarter of FY25 (January-March 2025) saw a slight reduction in net losses for individual traders, the situation remains challenging. Losses fell by 26 percent to Rs 24,745 crore from the previous quarter, but a high 86.4 percent of traders still reported losses.
Even more concerning, the average loss per retail trader in the January-March 2025 quarter jumped to Rs 57,920. This is a significant increase compared to Rs 34,606 in the first quarter of FY25 (April-June 2024), suggesting that those who remained in the market faced even larger financial setbacks.
Decline in Futures and Options Trading
Trading activity in India’s futures and options (F&O) market has seen a substantial decline in recent months. From a peak of 1.29 lakh crore contracts in October 2024, the total number of F&O contracts traded on the National Stock Exchange (NSE) plummeted nearly five times to 262 crore in May 2025.
The impact of Sebi’s interim order against Jane Street was immediate. On July 8, 2025, F&O contract trading was down 6 percent from the previous week. Compared to the same day a year prior (July 9, 2024), the number of contracts traded dropped by 88 percent, and turnover was 74 percent lower.
- Sebi has banned Jane Street for alleged stock index manipulation and “unlawful gains.”
- Retail traders’ losses in equity derivatives widened by 41% in FY25 to Rs 1.06 lakh crore.
- Proprietary trading firms, including Jane Street, saw significant profits during the same period.
- F&O trading volumes on the NSE have declined sharply since October 2024.
This downturn in F&O trading could have broader implications for the market. Nithin Kamath, CEO of Zerodha, noted that proprietary trading firms account for nearly 50 percent of options trading volumes. Their pullback could significantly affect retail activity, potentially impacting both exchanges and brokers. The coming days will be crucial in understanding the full extent of this shift.
