Comparing India’s Options Market With US Is Misleading: Zerodha's Nithin Kamath

Kamath stressed that India’s leverage levels are considerably lower than those in the US when viewed in context. He pointed out that the margin trading market in the US has already crossed $1 trillion

Kamath highlighted that India’s leverage levels are considerably lower than those in the US when viewed in context

Source : LinkedIn

Nithin Kamath, Founder and CEO of stock brokerage firm Zerodha, has pushed back against growing concerns that India’s options trading market is excessively leveraged compared to the United States. In a detailed post on social media platform X (formerly Twitter) on Thursday, Kamath argued that such comparisons are often based on superficial metrics and fail to account for deeper market realities.

Responding to recent debates triggered by the surge in options trading volumes in India, Kamath said, “It's ridiculous to see people comparing options trading volumes in India and the US and claiming that we're overleveraged. For starters, the comparison itself is flawed. People often look at the number of contracts traded, not the premiums or the actual value involved.”

According to Kamath, measuring risk by simply counting contracts doesn't reflect the true scale of exposure in the system. “If anything, India is significantly less leveraged than the US, even taking into account the fact that our markets are 15-20 years behind theirs,” he added.

It’s ridiculous to see people comparing options trading volumes in India and the US and claiming that we’re overleveraged. For starters, the comparison itself is flawed. People often look at the number of contracts traded, not the premiums or the actual value involved.

If… pic.twitter.com/3uMAgllGQD

— Nithin Kamath (@Nithin0dha) July 31, 2025

India’s Margin And Short-Selling Markets Still Underdeveloped

Kamath highlighted that India’s leverage levels are considerably lower than those in the US when viewed in context. He pointed out that the margin trading market in the United States has already crossed $1 trillion, whereas India’s Margin Trading Facility (MTF) market is still under $10 billion — just 1 per cent of its American counterpart.

Short selling, a well-established practice in the US, also remains underutilised in India. Kamath noted, “US stocks shorted are estimated to be another $1 trillion, while in India, the stock lending and borrowing market remains practically insignificant.”

He attributed this to the underdeveloped state of India’s Stock Lending and Borrowing (SLB) mechanism, which facilitates short selling. Limited participation in SLB, according to him, is further evidence of India’s relatively low market leverage.