The Indian markets regulator's ban on Wall Street trading giant Jane Street has squeezed volumes in the country's options market, but traders expect activity to snap back as larger investors step in.

A temporary trading ban imposed by India’s securities regulator on Jane Street Group LLC is fueling concerns that volumes in the nation’s bustling derivatives market may drop, hurting business at the top exchange.

Options trading in India fell to a four-month low following Jane Street Group's trading ban. The NSE reported a 40% drop in derivatives premiums, with the Nifty 50 Index closing down 0.5%.