BSE shares tumble over 13% since Sebi action on Jane Street; down another 8% today

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Shares of BSE Ltd, Asia’s oldest stock exchange, plunged as much as 7.5% on Tuesday, extending their three-day decline to 13.5%, as investors continued to exit capital market stocks following Sebi’s order barring U.S. trading firm Jane Street from Indian markets. The regulator’s action has cast a shadow over the exchange’s lucrative derivatives segment and exposed vulnerabilities in India’s high-speed trading infrastructure.

The sharp correction in BSE shares comes after Sebi accused Jane Street of manipulating expiry-day moves in India’s benchmark indices, including the Sensex, to profit from its derivatives positions. The regulator barred the firm and four affiliates from the Indian market and ordered the seizure of Rs 4,840 crore in alleged unlawful gains.

Sebi’s 105-page order alleged that Jane Street “participated in the cash & derivatives markets as an FPI as well as a member” and had “engineered expiry-day moves” to mislead traders and benefit from its options positions. The case, involving an estimated Rs 36,500 crore in questionable profits, has jolted India’s Rs 6.2 lakh crore capital markets ecosystem and placed new scrutiny on index-linked derivatives trading.

Capital market stocks hit

The ripple effects were visible across the broader capital markets space. The Nifty Capital Market index fell 2.4% on the day, with Angel One, CDSL, and 360 ONE WAM among the worst performers, slipping up to 6%. While benchmark indices continued their sideways movement, capital market stocks faced sustained selling pressure as the fallout from Sebi’s order deepened.

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The impact has been particularly pronounced for BSE, where derivatives are expected to contribute nearly 58% of FY26 revenues. With foreign portfolio investors (FPIs) accounting for 3–4% of turnover in this segment, concerns have surfaced about the potential knock-on effects of Jane Street’s abrupt exit.

Jefferies sees limited direct earnings hit

International brokerage Jefferies attempted to temper investor anxiety, stating that Jane Street’s contribution to BSE’s overall business is likely marginal. “For BSE, derivatives drive ~58% of FY26E revenues. In this segment, FPIs drive ~3–4% of turnover, and we estimate that contribution from JS would be a smaller subset of that (~1% as per JEFe),” the brokerage said in a client note.The brokerage added that Jane Street’s activity would have been reflected under both FPI and proprietary trading volumes. “Jane Street participated in the cash & derivatives markets as an FPI as well as a member, hence, its contribution in market volumes would be included in FPI as well as prop categories.”

Still, Jefferies flagged ongoing uncertainty about the broader impact on market structure. “What is unclear & how to judge impact,” the brokerage said, pointing to the week’s derivatives expiry sessions on Tuesday and Thursday as a key test for how Dalal Street absorbs the shock.

Also read | Rs 735 crore in 1 day! Jane Street’s most profitable day on Dalal Street was built on Nifty Bank’s fall

Calls for deeper reform

Sebi’s action against Jane Street has triggered a wider conversation about the regulator’s ability to keep pace with the speed and complexity of modern-day derivatives trading. As the investigation widens to other entities and indices, the case has become a flashpoint for structural reform in India’s options market, a space where 93% of retail traders are already losing money.

With India now accounting for 60% of global equity derivatives volume, the episode has underscored the need for more sophisticated surveillance tools and risk controls. For BSE and its peers, the regulatory overhang may persist until the full extent of Sebi’s clean-up becomes clear.
Also read | Jane Street clampdown raises big questions for Sebi: Can the regulator stop another derivatives fraud?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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