Jane Street vs Millennium case: What we know so far about their Indian operations

Both Jane Street and Millenium Management have arms operating out of India.

Global investment management firms Jane Street Group and Millennium Management Global Investment have crossed swords in a New York court over a highly profitable options trading strategy with Jane Street accusing two of its former employees of stealing it before taking up jobs at Millennium.

During the court hearing, it emerged that the strategy was being used by both the firms in the Indian derivatives market.

According to publicly available information on database sites Tofler and Zauba Corp, both Jane Street and Millenium Management have arms operating out of India.

Millennium Management’s India operation is housed under Millennium Consulting India Private Limited (MCIPL). It was incorporated in February 2011, and Mark Meskin, the chief trading officer, and a member of Millennium’s senior management team has been a director on the board right from inception. Gil Raviv, global general counsel at the parent company, is also on the board of MCIPL.

The company’s detailed financials are yet to be accessed by Moneycontrol. According to Toefler, MCIPL’s operating revenues for the year ending March 31, 2023 was in the range of Rs 1 crore-Rs 100 crore, and operating profit jumped 433 percent year-on-year.

Millennium Management’s global website lists the address of its India operations as Bengaluru, though MCIPL’s corporate headquarters is out of Mumbai.

Jane Street’s India operation is named JSI Investments Private Limited. Compared to MCIPL, it is a recent entrant to the Indian market having set up shop in March 2020. Directors on the board include Edward James Weiser and Jeffrey Nanney, brokers employed with Jane Street Capital.

While the exact financials for JSI could not be accessed, the Tofler website shows its FY23 operating revenues for the year ended March 31, 2023 being in the range of Rs 1 crore-Rs 100 crore. Operating profit for that year jumped 649 percent year-on-year.

Even assuming the upper end of the Rs 100-crore range, annual revenues of MCIPL and JSI Investments pale in comparison to the numbers generated by firms like Graviton (Rs 3,500 crore) QE Securities (Rs 2,775 crore) Jump Trading (Rs 1,732 crore) and Alphagrep (Rs 1,291 crore).

Even if the base is low, the jump in revenues and operating profits for both JSI and MCIPL has been the sharpest, compared to its bigger rivals.

During the court hearing, Jane Street claimed it earned about $1 billion in revenues from the strategy in calendar 2023, according to a Bloomberg report. It is not clear if the entire $1 billion (around Rs 8200 crore at current exchange rate) was earned from India and all of it from equity derivatives.

If all of it came from India, then JSI Investments would easily rank as the biggest profit-making algorithmic trading firm operating out of India.

India’s equity derivative market, the weekly options segment in particular, has become a favourite hunting ground for algo trading firms because of the massive turnover fuelled by retail traders.

This has resulted in derivative volumes being around 400 times of the underlying cash market, compared to 5-15 times in most other markets.

This has also turned out to be immensely profitable to algo trading firms, which have seen their revenues and profits more than treble over the last three years.

Also read: Algo trading firms rake in big bucks; Graviton top dog with Rs 3,500-cr revenue