- They were taking a substantial risk.
- They were manipulating the market.
And no, I don't think merely adding liquidity is worth that being practicable and nigh-impossible to unwind.
If options & futures are more liquid than the underlying, someone will be tempted to nudge the underlying.
Bond ETFs and their options chains seem like another locale where this could happen.
> Coined in 2023, the group consists of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.
I have the same initial reluctance to believe it that you do, but less so when I remind myself that we live in a world where the Social Security Administration sent out a mass email praising the passing of the "big beautiful bill".
I think our built-up understanding of how the US government functions at a baseline has not caught up to recent events. Especially in regards to how much regulatory bodies are doing their traditional jobs vs being forced to sit on their hands, or in some cases just not even existing anymore.
We got email from a government agency that is weakened by the passage of a new law celebrating the passage of said law, so yeah that's not looking great.
> If options & futures are more liquid than the underlying, someone will be tempted to nudge the underlying.
Why is the adjective "more" important here? Even if less, the opportunity to profit is still good, assuming that one chooses the path of market manipulation.
https://www.nasdaq.com/articles/what-gamma-squeeze-understan...
> What matters is the volume rather than the liquidity per se
> The exception is when there's a derivative market that has more volume than the underlying
You're the one asking "Why would liquidity matter here?", you tell me. Like I said, they're correlated well enough that it doesn't really matter as far as I can see.
> This is wildly rare in public markets.
Yes, but it's what happened here.
Retail folks use options to gamble. Apps gamify access/trading. It's really odd like that.
Black-Scholes is just a customer-facing description of the option (i.e, it provides greeks that everyone can understand). But it isn't used as a starting point.
In practice, MM will back out what the implied volatility is from current prices. Then a stochastic volatility model is calibrated against that.
The market takes money from people with incorrect beliefs about economics and gives it to people with correct beliefs. ~~What is the problem here?~~
On second read, I think the parent was just intending a factual statement, which I am willing to agree with.
Edit: Reading more about this, it looks like the counterparty is often a bunch of retail investors doing quick trades hoping the stock swings one way or the other, and that's not bullying that's gambling.
According to who?
There are plenty of pension funds nowdays that have people specialized in picking up mid sized companies after big drops.
(one of the Yes Minister irregular verbs: I am providing liquidity to the market, you are long vega, he is a degenerate gambler)
> what moron
That changes the description of part 2 to "subsequently experience retail investors placing large options trades with them" which is much more defensible market making behaviour - their early buying was in anticipation of later demand and really did involve taking a risk.
The truth is probably somewhere in between.
If the SEC did investigate you for this, an important part of the case would turn on the extent to which your actions were "bona fide market making". And the regulator would also be more introspective about the market structure that allowed this to happen - why is there only one market maker? How did we allow a derivatives market much more liquid than the underlying?
People may recall the matter involving Adani Group. https://hindenburgresearch.com/adani-update-sebi/
Examples of the 2023-2025 activities of the Indian securities regulator SEBI seem pretty relevant to current news involving SEBI here in 2025. Which is the topic of discussion. Whatever US regulators were doing in 2008 has nothing to do with this.
To say it plainly, SEBI has been exposed for their selective enforcement on high-profile entities. If Jane Street’s in trouble with SEBI then it’s only because they failed to secure the same privileges as Adani, or Karvy, or Ramkrishna, or Sapre, or Kamath.
But even then (and as seems to be the case in this instance), the market might have large participants because they are the ones doing the gaming, and are therefore happy to participate (even if trust is low).
Not sure that makes the point you think it makes.
> Seems presumptive to slander an entire nations regulatory group on a single/couple of examples.
But maybe Jane Street only traded like this on some days, so you would need to know whether they had done so before you could hope to exploit them.
I know your question was sarcastic, but not everyone is able to see patterns. And not every trader is as good as the other. Hence winners and losers.
How would you have identified that there's even such a thing as a manipulation day? Do you have a model that tells you the objectively correct number of days a non-manipulated index should be lower at close?
I imagine Jane Street will also justify this with some EA bullshit, or like Soros during the 97 crisis just say "someone would do it ; may as well me".
> However, given the scale of the operation, Jane Street's actions sure look like textbook market manipulation. Calling it like I see it.
Finally, in my view the India SEBI rules are insanely vague and are written to grant a lot of leeway to the regulator.
The real problem that no one is talking about: Why is India allowing its derivatives markets to explode? An estimated NINETY percent of retail derivs "investors" (I prefer the term "gamblers") lose money in India. Lots of these loses are gains for foreign banks and hedge funds. India: What the hell are you doing!?
I think eToro disclosed that on their app, people using CFDs were losing money 76% of the time.
The size question is important here due to the fact that large quantities are likely to influence price (and everyone knows this) so you might need an strong alternative explanation for your actions.
Your first sentence is somewhat accurate, your second is not at all, specifically "just".
It’s all hearsay; I’m just reporting what I heard. I don’t know the implications of it, but maybe this isn’t exactly uncommon behavior, even if it’s market manipulation.
The coworker said that the money flowed overseas too, if that helps contextualize it. No SEC, no problem, right?
Looks like Jane Street is an American firm, so, this all lines up and corroborates what you’re saying. What we’re seeing is probably the first time a government other than the US has reacted to this behavior.
Jane street on the other hand is arbitraging against regular folks money, so they can distribute the gains to their select high value clients. There is no free office productivity suite and limitless "How to repair cell phones to start your own business" videos distributed to everyone for free.
In a way, they are doing opposite functions. Ad media takes from people who buy stuff and gives to people who don't (or cant't) buy anything. Jane street and their ilk take from regular people and give to those who have everything already.
the finance industry doesn't produce anything of value. it just turns $1 into $2 and liquidates productive industries.
Define buying a house.
an "information technology" degree that teaches React and stuff is not engineering.
This is the last website I would imagine people complaining they can't buy a house.
Lol, is that really what you think I meant by real engineering? You have tunnel vision for computer tech.
Even Senior+ level SWEs at FAANG's in Silicon Valley have trouble buying homes there. The costs are absurd.
You can buy an f'ing house. In places like Ukraine people make $100/month and apartments are $50k(and I'm talking before the war). There, it's LITERALLY impossible.
What people here are describing is that things should be better, and I agree, but words matter.
In 2021, the median annual salary for software engineers in Ukraine ranged from $30,000 to $48,175, depending on location and experience. Some specific figures include $30,000 in Kyiv, $29,000 in Lviv, and $24,000 in Kharkiv. Remote software engineers in Ukraine had a median salary of $48,175.
It's quite below the EU median, but definitely not $100 a day.
BTW $100 a day is $12.50 a hour, which is more than the federal minimum wage in the US ($7.50 or so), and only $4 below California's minimum wage, $16.50.
https://www.zillow.com/homedetails/1460-Latham-St-Mountain-V...
$1.6M 894 sqft 2b1ba
https://www.zillow.com/homedetails/4609-E-Mountain-View-Dr-S...
$1.1M 930 sqft 3b3ba
https://www.zillow.com/homedetails/1763-Fordham-Way-Mountain...
$3.5M 1527 sqft 3b2ba
That last one would be considered a small starter home in my MCOL city and is literally 10x the cost for 300 less sqft of my current home. It's a total joke.
2 FTE Sr SWEs at Google would struggle to even get the downpayment for that last one. The mortgage is like 80% of their after tax salary.
Average mechanical engineer salary (mid-career) = £45k Max mortgage based on salary = ~£200k Average house price = ~£292k
-> Most people with an engineering degree cannot buy a house
Most people with an engineering degree are probably in a relationship, so they don't need to buy a house on a single salary.
There are plenty of houses for sale below the average price, just as there are plenty above.
Buying isn't necessarily the best option anyway. House price returns in the UK are somewhat below stock market returns, so as a pure investment it doesn't make sense. Unfortunately, we have the narrative in the UK that we should aspire to own houses, but that doesn't mean it's necessarily correct!
This doesn't feel like a valid assumption.
Unless the demographics of those with engineering degrees is significantly skewed towards singles, this feels like a very valid assumption. Of course, you might have access to better statistics by profession.
[1] https://www.ons.gov.uk/peoplepopulationandcommunity/populati...
Also, it's 164k a year, not ever. So whether or not it can buy a home in SF kind of depends on how long and how fast you save.
Those with the power will use it. So much for the "invisible hand" making everything "fair and efficient".
Aligning incentives so that what's good for the individual is also good for society is a politician's job.
A hardworking and smart person in tech really doesn’t need to try hard or sacrifice much to live a comfortable life in terms of finances. Hard part is the rest of the things in life really.
When the incentive instead rewards "how much money can you extract from others without improving their lives at all" we've headed in a very dangerous direction. You get the "we can make more money by making our product more aggravating" motivation that leads to dark patterns and all sorts of problems.
This sort of market manipulation stuff is just a very clear example of this pattern. Smart people not building useful products but instead fighting to crank a machine so that it spits more money in their direction.
worse, those are the active smart people doing that.. for each one of them there are a hundred others trying to do everything and anything to become one of those.. its a pyramid. The competition between individuals is a feature. You bet it is on the lips of every one of those individuals their "top" credentials that sit them in that trading seat. In other words, for every quant geek on that trading group, there are a thousand other "almost top" people using their time, talent and effort to try to be one of those inner circle ones.
Imagine becoming highly educated and then just using that ability to cream off the output of people who labour every day producing things that are actually useful. The tragedy is all the signals from society are saying this ok. Nobody questions the money. I got excited thinking we would 15 years ago, but nobody cares.
I guess if you're bright enough to come up with a solution you could be like Satoshi, or you could just work for Jane Street and suck as much as you can before you die.
Huh. Interesting point. I guess I never thought about it when JS were the secretive OCAML hacking prop quant fund, but if they become just another use-size-to-win badguy I can see the angle.
the outcome is the same. you're sucking money out of people.
people who get stuck in finance - especially trading - are not that bright IMHO compared to the hopelessly curious stubborn ones who go into philosophy or hard sciences or other areas of research.
But is it really? Is buying a lot of stock and selling it later really something that takes a genius?
And doing so without being caught for market manipulation might require genius that surpasses the human limit.
Everything is public. How is Jane Street manipulating the markets? Feels more like the Indians are sore losers because they couldn't see the patterns that Jane Street did and they lost some money. They should up their game, not punish the winner.
^ quote from SEBI. Isn't market manipulation illegal pretty much anywhere?
If you’re trading a large % of the market volume or your orders are large relative to anyone else, you can’t claim to be arbitraging as you are executing way beyond the capacity of any kind of arb. You’re just doing the old fashioned abusive market corner in fancy clothing.
> The difference can be subtle, and I often joke that the difference between legitimate trading and manipulation is whether you send your colleagues an email saying “lol I sure manipulated that market.”
https://www.bloomberg.com/opinion/newsletters/2025-07-07/jan... (https://archive.ph/20250708012725/https://www.bloomberg.com/...)
After reading the Matt Levine piece posted by https://news.ycombinator.com/item?id=44497566 , I'm no longer sure this is market manipulation.
The devil is in the details, and the details disagree with my initial take, so I'm changing my mind.
1) buy large volumes of stocks and/or stock futures that are part of an index tracking India’s banking sector, early in the day,
2) subsequently place large options trades, betting that the index would decline or volatility would spike later in the day, and
3) later in the day, cash out of the large long positions, dragging the index lower, making far more money on the options trades than on the long positions.
Jane Street can and likely will claim the firm was only arbitraging away pricing inefficiencies, nothing more, nothing less. It was just business as usual, etc., etc.
However, given the scale of the operation, Jane Street's actions sure look like textbook market manipulation. Calling it like I see it.