'How casually people in power...': Why Nithin Kamath compared India & US markets over gold duty hike

Nithin Kamath, founder and CEO of Zerodha and Rainmatter, sparked a discussion on market transparency and insider trading after commenting on India’s latest increase in import duties on gold and silver. 

In a post on LinkedIn, Kamath said the announcement regarding import duties being raised to 15 per cent came late at night, but Indian markets did not show any suspicious activity beforehand. According to him, there were no unusual spikes in open interest, trading volumes, or prices in gold and silver contracts in the hours leading up to the government decision. 

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Kamath contrasted this with what he described as a recurring pattern in some Western markets, especially in the United States, where politically sensitive information has often been linked to suspicious trading activity ahead of major announcements. 

Why did Kamath mention the US? 

Kamath argued that if a similar policy move had occurred in the US, traders with access to privileged information may have attempted to profit through regulated futures markets, derivatives, or prediction platforms such as Polymarket and Kalshi. 

He referred to previous controversies surrounding oil markets and geopolitical events, including trading activity during the Iran conflict, where allegations surfaced that politically connected individuals may have benefited from advance information. 

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According to Kamath, such practices blur the line between legitimate market participation and insider trading. 

What is insider trading? 

Insider trading refers to buying or selling securities using confidential, price-sensitive information that is not available to the public. 

In most regulated markets, insider trading is illegal because it gives unfair advantage to a select group of traders. Regulators monitor suspicious trading patterns before major policy announcements, mergers, earnings releases, or geopolitical developments. 

Typical warning signs include: 

• Sudden spikes in trading volumes 
• Sharp movement in prices before announcements 
• Unusual derivatives activity 
• Large bets in futures or options markets 

Kamath’s observation was that Indian gold and silver markets did not display these warning signs before the duty hike announcement. 

Why are gold import duties important? 

India is one of the world’s largest consumers of gold. Changes in import duties directly affect: 

1. Domestic gold prices 
2. Jewellery demand 
3. Inflation pressures 
4. Trade deficit levels 
5. Bullion imports 

Any sudden change in duties can create immediate reactions in commodity markets, particularly in futures trading. 

Because of the financial impact, advance knowledge of such decisions could potentially offer significant trading opportunities. 

What did Kamath say about Indian markets? 

Despite frequently criticising certain aspects of Indian market regulation and investor behaviour, Kamath said India’s financial markets appear to be more tightly controlled in “grey zones” involving privileged information. 

His comments suggested that regulatory surveillance in India may be comparatively stronger in preventing suspicious pre-announcement trading activity linked to government decisions. 

India’s market regulator, Securities and Exchange Board of India, commonly known as SEBI, has expanded surveillance mechanisms in recent years to track abnormal trading patterns across equities, commodities and derivatives markets. 

Why the comments matter 

Kamath’s remarks stand out because they touch on a larger global debate around: 

• Political access and financial markets 
• Regulation of prediction markets 
• Transparency in derivatives trading 
• Use of privileged government information 
• Ethical concerns in high-frequency trading ecosystems 

The comments also come at a time when prediction markets and event-based trading platforms are facing increasing scrutiny worldwide over whether they can become vehicles for speculative trading linked to sensitive political or economic decisions. Platforms like Polymarket and Kalshi allow users to place bets on real-world outcomes ranging from elections to economic events.