Zerodha founder and CEO Nithin Kamath has cautioned that retail trading activity could be impacted if proprietary trading firms like Jane Street, which contribute nearly 50 per cent of options trading volumes, scale back their participation in the market.

“Prop trading firms like Jane Street account for nearly 50 per cent of options trading volumes. If they pull back, which seems likely, retail activity (~35 per cent) could take a hit too. So this could be bad news for both exchanges and brokers,” Kamath said on X.

“The next few days will be telling. F&O volumes might reveal just how reliant we are on these prop giants,” he added.

The number of retail traders, or individual traders, has almost doubled in two years from 51 lakh in FY22 to 96 lakh in FY24.

Although they contribute only 30 per cent of the total turnover in the derivatives segment in FY24, individual traders constitute 99.8 per cent (by volume) of the total traders in the equity futures and options segment.

In an order released in the early hours of Friday, the market regulator found Jane Street (JS), a New York-based hedge fund, guilty of manipulating the indices by taking bets in the cash, futures and options markets simultaneously to make handsome gains.

It has barred the hedge fund from accessing the market and impounded over ₹4,843 crore in gains.

The probe has found that JS made a profit of ₹36,671 crore on a net basis during the probe period from January 2023 - May 2025.

Kamath said that if the allegations against Jane Street are true, it’s “blatant market manipulation” and despite warnings from the exchange, it continued.

“With millions of active retail traders and deepening institutional activity, India’s market opportunity is structural, not cyclical and certainly not dependent on any one firm,” Dinesh Thakkar, founder, chairman and MD, Angel One said on Saturday.

Thakkar added that when one player exits, others step in and that often happens fast.

“Over the years, India has consistently evolved as a market built on transparency and investor protection. Sebi’s clampdown will bring sharper compliance and more robust governance thus, strengthening market integrity and raising the bar for all,” he said.

Banking industry veteran Uday Kotak on Saturday rued that money power helps an investor, and reminded that the primary role of the market is to facilitate capital formation and fair price discovery.

Taking to the microblogging site X, the billionaire also seems to flag concerns on the business model of exchanges and brokerages, where there is a lot of reliance on volumes to generate the fees, and less focus on fundamentals.