Jane Street shows dangers of finance as shampoo
The Securities and Exchange Board of India has accused the New York-based quantitative trader of running ‘an intentional, well-planned and sinister scheme’ of market manipulation
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INDIAN consumer businesses have long understood that the key to making poor people buy more shampoo is to put a little bit in small, affordably priced plastic sachets. In the past few years, high-frequency traders have used the same formula – risk packaged for as little as US$0.12 – to reap billions of dollars in profits from unsuspecting masses.
The whole experiment succeeded beyond anyone’s imagination, and India became the world’s largest options market by volume. Then all hell broke loose last Friday (Jul 4).
By imposing a temporary trading ban on Jane Street Group, one of the biggest names in algorithmic trading, and freezing 48.4 billion rupees (S$720 million) of its past profits, the market regulator in Mumbai has sent shock waves through the corridors of global finance.
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