“With a landscape ripe for growth and innovation, foreign firms find India irresistible.The remarkable success of local high-frequency trader Graviton Research Capital since its 2014 inception, coupled with India’s ambitious drive to shape GIFT City, speaks volumes.The reasons to scale up in India are as diverse as they are promising.”
Amidst the legal battle between US hedge fund firm Jane Street and rival Millenium Management over an alleged theft of a ‘highly valuable, unique, and proprietary’ trading strategy, all eyes are now turning to the Indian derivatives markets. This high-profile lawsuit is stirring up fresh interest and intrigue in the world of trading.
Courtroom Clash: Jane Street vs. Millenium Management
Claimed Earnings: In a high-stakes lawsuit, Jane Street reveals it raked in a staggering $1 billion in the past year.
Allegations: Accusing former employees of stealing their trading strategy, Douglas Schadewald and Daniel Spottiswood face the legal heat.
Profit Plunge: March 2024 saw a sharp 50% dip in profits, adding more intrigue to the courtroom drama.Stay tuned as the battle between these financial giants unfolds.
The focus of the strategy became apparent when lawyers for Millennium unintentionally revealed India as the target market during a hearing at the US District Court in Manhattan on Friday, as per the report.
“Defendants’ lawyers point to lucrative opportunities in derivatives trading in India, noting that the Indian government actively promotes such ventures,” as highlighted by Bloomberg. Andrew Levander, the lawyer representing Millennium, further underscored the thriving landscape for traders in the region.
US District Judge Denies Jane Street’s Request to Prevent Millenium and Traders from Using Strategy.
In a recent hearing, US District Judge Paul Engelmayer ruled against Jane Street’s request to block Millenium and traders from utilizing a mysterious trading strategy. The case sheds light on the lucrative world of high-speed trading, where profits have skyrocketed in the last decade.
Despite Jane Street’s efforts, the judge set a trial date for July, leaving the details of the strategy shrouded in secrecy. The courtroom drama underscores the fierce competition among secretive trading firms such as Optiver, Citadel Securities LLC, IMC Trading BV, and Jump Trading, all of which have been expanding their operations in India.
Options market-making in India has intensified into a high-stakes competition measured in nanoseconds. Anant Jatia, CIO at Greenland Investment Management, describes it as a “winner takes all game,” where milliseconds no longer cut it in the race for dominance.
Amidst this backdrop, concerns are rising that the extraordinary profits reaped by major players like Jane Street may be impacting small, individual traders adversely. Reports indicate that retail investors constitute a significant 35% of option trades in India, with a staggering 90% of active retail traders reportedly facing losses on derivatives.
The battle for supremacy in the Indian options market is heating up, as strategies evolve and speed becomes a critical factor in determining success. As the landscape continues to evolve, the dynamics between market makers and retail traders will be pivotal in shaping the future of options trading in India.
“Retail participation in derivatives has surged in the post-Covid era. Watch out for potential confusion among traders due to intricate market-maker strategies,” warns Tejas Shah, head of derivatives trading at Equirus Securities Pvt, as reported by Bloomberg.
Unwavering Love for India’s Market: Amidst global turmoil, the love for India’s market stands strong among both domestic and foreign market makers.
Scaling Up in India: Foreign firms are increasingly drawn to India for various reasons, with local success stories like high-frequency trader Graviton Research Capital since 2014 and India’s GIFT City development leading the way.
Rich Liquidity: “The driving force is the liquidity now available in India,” says Vaibhav Sanghavi, hedge fund manager at ASK Investment Managers in Mumbai. India has emerged as one of the few markets, besides the US, offering such tremendous opportunities.