Zerodha founder Nithin Kamath has defended the brokerage's decision to continue offering futures and options (F&O) and leveraged products such as Margin Trading Facility (MTF), saying the company has never pressured customers into trades that could be harmful to them.
Kamath made the comments in a discussion on TradingQnA, responding to questions about Zerodha's approach to derivatives, falling F&O participation and the company's plans to diversify beyond its brokerage business.
The comments come against the backdrop of fresh data from market regulator SEBI showing that nearly nine in 10 individual F&O traders lost money in FY26. Individual traders lost a combined Rs 91,685 crore in equity derivatives during the year, even as the number of active participants fell 18% to 87.5 lakh.
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SEBI's study found that 87.7% of individual traders lost money in FY26, compared with 90.9% in FY25. Options accounted for 92% of total individual losses. Among loss-making traders, the average loss was Rs 1.47 lakh, compared with an average profit of Rs 1.22 lakh among those who made money.
Responding to criticism that offering products such as MTF was inconsistent with Zerodha's stated values, Kamath said the brokerage's approach was based on giving customers access to tradable products without actively encouraging risky behaviour.
“I don't think offering MTF is compromising values. We offer buying options, which are exponentially more dangerous,” he said.
“Our value, as you can call it, is that whatever you can trade on, you should be able to do it at Zerodha at reasonable rates,” Kamath said.
He added that the company does not push MTF or use design features aimed at encouraging customers to take leveraged positions.
“And generally, our vision, in a way, is: don't do to others what you don't want done to you. So we never push MTF or use dark patterns to induce greed and make you click on MTF order, etc.,” he said.
On the future of retail participation in derivatives, Kamath said it could be approaching a plateau, depending on broader market conditions.
“If the market continues to be in a range, I don't see what will be the trigger to get more people interested in trading,” he said, adding that he did not see a clear trigger for India to return to a bull market.
Kamath also acknowledged the longer-term challenges facing F&O brokerage businesses. He said regulations could continue to tighten because F&O trading “isn't good for 99% of the people”.
He said Zerodha was diversifying into businesses including insurance, lending against securities and asset management, while investments were also being made through Rainmatter. However, Kamath said these businesses have yet to match the company's F&O brokerage income.
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SEBI's findings underline the risks he referred to. Traders below 30 accounted for 43% of the trader base in FY26, while 88.5% of them incurred losses. About 73% of traders had annual incomes below Rs 5 lakh and this group accounted for 53% of aggregate losses.
Kamath said Zerodha had remained consistent with its approach since its founding. “To run a brokerage firm is to live with contradictions,” he said. “We've never done anything that forces customers to do something that is bad for them.”
He added that the company had maintained the same philosophy throughout its 16-year history, even as it expanded the range of products available to customers.
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