Archive · 30 Jul 2026
Zerodha Co-Founder Warns of Margin Trading Crash Risk
Nithin Kamath, the co‑founder of a big Indian online brokerage called Zerodha, said that a type of trading called margin trading funding (MTF) could cause a big problem in the stock market.
He explained that many people borrow money to buy stocks, and if the prices fall, they have to sell quickly, which can make the prices fall even more.
He compared this to what happened in South Korea, where borrowing made the market crash.
Kamath thinks that even though the amount of borrowed money is small compared to the whole market, it could still hurt small and mid‑size companies a lot.
He also said that the Indian regulator, SEBI, has rules that keep borrowing from getting too big, but the fast growth of MTF might still be dangerous.
Zerodha co‑founder Nithin Kamath cites margin trading funding (MTF) as the biggest risk to Indian equities.
MTF book is about ₹9,000 crore, with half in non‑F&O stocks, increasing forced‑selling risk.
Kamath compares the risk to South Korea’s recent market crash driven by leveraged trading.
He says India’s regulatory oversight by SEBI has kept leverage lower, but rapid MTF growth could trigger a self‑reinforcing sell‑off.
The potential impact is disproportionate, especially on small‑ and mid‑cap stocks, despite MTF being a small share of market cap.
- Who
- Nithin Kamath, co‑founder of Zerodha
- What
- Warned that margin trading funding (MTF) poses a major risk to Indian equities
- When
- Published on 2024‑07‑30
- Where
- India
- Why
- Rapid growth of MTF and its concentration in non‑F&O stocks could trigger a self‑reinforcing sell‑off similar to South Korea’s recent crash
- Brokerage firm
- Zerodha
- Risk type
- Margin trading funding
- MTF book size
- ₹9,000 crore
- Regulator
- Securities and Exchange Board of India
- Market focus
- Small- and mid‑cap stocks