New Delhi, July 30 -- Zerodha co-founder Nithin Kamath has flagged margin trading funding (MTF) as the single biggest risk facing his brokerage, warning that a sharp correction in Indian equities could trigger a chain reaction of forced selling, similar to what has unfolded in South Korea's stock market. While he stressed that India's regulatory framework has helped prevent excessive leverage, Kamath said the rapid growth of MTF over the past few years remains his "biggest nightmare" as a broker.

In a post on X, Kamath said the rapid expansion of Zerodha's MTF book has become the firm's largest source of risk since it was founded in 2010. According to him, the concern is not merely the size of the exposure but the composition of the port...