Zerodha CEO Issues Warning about Impact of Retail Trading

Nithin Kamath, the CEO and founder of Zerodha, has raised concerns about the potential impact on retail trading activity following the recent actions taken against proprietary trading firms like Jane Street. These firms, which are responsible for approximately half of the options trading volumes, play a significant role in the market.

Kamath expressed his worries about the repercussions of these firms scaling back their participation, stating that if they were to pull back as expected, retail trading, which constitutes about 35% of the market, could suffer. He emphasized that such a scenario could have adverse effects on both exchanges and brokers in the industry.

The Zerodha CEO highlighted the importance of monitoring the upcoming days closely to assess the situation, particularly focusing on the futures and options volumes to understand how heavily reliant the market is on these proprietary giants.

In a recent announcement made in the early hours of Friday, the market regulator disclosed findings regarding Jane Street, a hedge fund based in New York. The firm was found guilty of manipulating market indices through simultaneous bets in the cash, futures, and options markets to secure substantial profits. As a result, the hedge fund has been barred from accessing the market, and gains totaling over Rs 4,843 crore have been confiscated. The investigation exposed that Jane Street had generated a net profit of Rs 36,671 crore between January 2023 and May 2025.

Kamath condemned the actions of Jane Street, referring to their behavior as “blatant market manipulation.” He expressed shock at their persistence in such activities despite warnings from the exchanges. Kamath speculated that perhaps the lenient regulatory environment in the U.S. had enabled such practices, citing dark pools, payment for order flow, and other loopholes that benefitted hedge funds at the expense of retail investors. He praised the Indian regulatory authorities, particularly the Securities and Exchange Board of India (Sebi), for taking action against Jane Street and preventing the persistence of such practices in the Indian market.

In conclusion, Nithin Kamath’s comments serve as a reminder of the importance of maintaining transparency and integrity in financial markets, highlighting the need for stringent regulations to prevent market manipulation and protect the interests of all participants, including retail traders.