Another HFT firm is shoring up compliance after Jane Street's "muppet" allegations
It's an awkward time to be a high-frequency trading firm (HFT) other than Jane Street in India right now. The Securities and Exchange Board of India (SEBI) has been battling the electronic trading firm, accusing it of market manipulation. Other HFTs have been quietly continuing their business in India, and shoring up their compliance divisions to prepare for the worst.
Susquehanna International Group (SIG), one of the largest HFT firms by headcount, has hired Ameya Paranjape as its new head of compliance for India. He spent the past four and a half years as head of complaince for IMC Trading (another HFT), but also spent multiple years working at various exchanges in India, including the Metropolitan Stock Exchange, an exchange covered by SEBI.
Jane Street's controversy has stemmed from how it traded options of the Nifty Bank Index fund. It's alleged to have bought large amounts of stock for its components while shorting the index, then selling its position to drive the price down at the time of expiry. Jane Street maintains that it has done nothing wrong.
Rival leaders of electronic market making firms pointed to Jane Street's Indian compliance department as a source of fault in its SEBI saga. Alex Gerko of XTX Markets alleged that their controls function was "intentionally staffed with muppets."
Jane Street's performance in India has been hurting other firms. XTX Markets dropped out of the region earlier this year after its Sharpe ratio supposedly went from 10 to 0 overnight. Paranjape's arrival at SIG suggests that other HFT firms are continuing to fight to remain in the region, albeit now with a bit more caution.
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