China Checks Foreign ETF Trades After Jane Street India Case

(Bloomberg) — China is scrutinizing how Jane Street Group and other foreign firms participate in its $859 billion exchange-traded fund market, seeking information on such activities carried out by brokers, according to people with knowledge of the matter.

Chinese regulators are keen to understand trading patterns in the fast-growing industry, especially after a crackdown on Jane Street in India, said the people, asking not to be identified discussing a private matter. Indian regulators last year accused Jane Street of misleading retail investors through alleged index manipulation — claims the New York-based firm has denied.

Jane Street was the biggest foreign ETF market maker through the country’s qualified foreign investor program as of June 30, followed by the Amsterdam-based Optiver and US firms Susquehanna International Group and Hudson River Trading, according to Bloomberg Intelligence. Jane Street accounts for less than 2% of overall ETF trading in mainland China, according to a person briefed on the matter.

China’s queries led UBS Group AG to pause some trades from Jane Street via the QFI program late last year, the people said. UBS accounted for a relatively small portion of Jane Street’s China ETF transactions before the pause, according to one person. Barclays, another top broker for foreign ETF market makers, declined to comment when asked about its trading relationship with Jane Street in China.

Jane Street said in an emailed statement that the firm “is conducting business as usual with its counterparties globally, including UBS, across asset classes.” Representatives for Susquehanna, Hudson River and UBS declined to comment. Representatives for the China Securities Regulatory Commission and Optiver didn’t respond to requests for comment.

UBS’s move was a precautionary measure that didn’t impact Jane Street’s other strategies for China, the people said. No firm is accused of any wrongdoing. There’s no indication that trading relationships among Jane Street’s peers have been impacted by Beijing’s queries.

The increased scrutiny of foreign market makers underscores China’s sensitivity to the performance of its stock market, which is dominated by retail investors and is prone to swings. Beijing has long used a mix of regulations, pressure behind closed doors and occasional buying by state-owned investment funds to dampen volatility.

Some of the world’s largest firms have flocked to China’s market in recent years as ETFs become popular with investors. Yet few official numbers exist to show how active they are in real time. The Bloomberg Intelligence calculations are based on financial reports filed by the ETFs, which are required to disclose their top 10 holders on a semi-annual basis. The rankings don’t capture all volumes of foreign market makers.

It’s not unusual for brokers to temporarily pause trading with individual clients, as flows shift from one broker to another and firms constantly weigh up risk limits and regulatory feedback.

UBS has for years relied on China as an anchor of its business in Asia, earning private banking revenue from the country’s mega-rich and working on bonds and equity deals for big companies. It was one of the first foreign banks to get approval to set up a securities joint venture in China, and the first to win a Qualified Foreign Institutional Investor license. Barclays doesn’t own a securities firm in the country.

Foreign market makers can also trade China ETFs through so-called Stock Connect links between Hong Kong and the mainland. Their holdings through these channels aren’t publicly disclosed.

What Bloomberg Intelligence Says:

“Jane Street’s edge in mainland China — driven by its significant domestic-equity ETF holdings for market-making — is likely to come under strain in 2026 amid intensifying competition and regulations capping growth.”

-Rebecca Sin, Jack Wang

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The size of China’s ETF market rose by more than 60% last year, hitting a record of 6 trillion yuan ($860 billion), according to China Fund News, which cited data from Wind Information Co. The number of ETFs in the market hit 1,401, up just over a third year-on-year.

There has also been a big growth in cross-border ETFs, which allow local investors to get exposure to overseas assets. The number of such funds expanded about tenfold from 2021 to reach 137 in 2024, mainly driven by ETFs investing in Hong Kong and the US, according to the Shanghai Stock Exchange. Retail investors held 63.5% of the funds, while institutions owned the rest.

India Case

Jane Street is fighting market manipulation allegations in India, which led to a temporary trading suspension last year. In July, India’s securities regulator accused Jane Street of using its “immense” financial and technological prowess to influence price action in the futures and cash markets in favor of its index option positions. Jane Street has denied those allegations.

The trading firm is now awaiting the next step in its India case. The Securities and Exchange Board of India lifted the temporary trading ban on the company after it complied with an order to put $570 million in escrow. The firm filed an appeal, which will be heard on Jan. 19.

Jane Street profited from price swings in India’s vibrant options market and the much smaller cash equities market. The firm has argued its trading included arbitraging price differences between the two, and market-making in response to huge demand from retail investors.

It had already scaled back its India trading in the first half of last year and ceased all activity following the July enforcement, even after the temporary ban was lifted. Jane Street made about $4.3 billion from trading in India between January 2023 and March 2025, according to SEBI’s interim order.

After cutting its exposure to India, Jane Street has ramped up trading in other markets, including US Treasuries, interest rates and ETFs in Asia, according to people familiar with the firm’s operations. It’s unclear how much trading revenue Jane Street has generated from China.

–With assistance from Betty Hou, Zhang Dingmin and Jack Wang.

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