China Increases Oversight of Foreign ETFs Following Jane Street India Probe

China has initiated a detailed examination of foreign participation in its exchange-traded fund market, seeking clarity on the trading activities of global firms amid rapid growth in ETF trading and increased overseas involvement in its financial markets, as per Bloomberg. 

Regulatory Review Following India’s Jane Street Action 

Chinese authorities are seeking information on how brokers such as Jane Street Group and other foreign firms participate in the country’s roughly $859 billion ETF markets.  

The review follows heightened regulatory action against Jane Street in India, where regulators accused the firm last year of misleading retail investors through alleged index manipulation.  

The move underscores Beijing’s desire to better understand trading patterns of foreign liquidity providers as ETFs become a popular investment instrument among domestic investors.  

Foreign firms have increased their presence in China’s ETF sector in recent years, making their trading behaviour an area of interest for market overseers.  

Impact on Market Makers and Trading Arrangements 

Jane Street was reportedly the largest foreign ETF market maker through China’s Qualified Foreign Investor programme as of mid-2025, followed by other global players such as Optiver, Susquehanna International Group and Hudson River Trading.  

The firm accounts for a relatively small portion of total ETF trading on the mainland, but its activities have drawn attention due to their scale and sophistication.  

As part of the review, some brokers paused certain trades linked to Jane Street, with one major global bank temporarily stepping back from related ETF transactions.  

Read More: SEBI Launches Investigation into Jane Street Due to Continued Complaints! 

Conclusion 

The Chinese investigation into foreign ETF trading reflects broader regulatory caution as overseas firms increase their footprint in a rapidly evolving market. Greater transparency and supervision of foreign trading activity are likely to feature more prominently as China balances market openness with financial stability concerns. 

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