The financial sector in India has gone through immense loops & bounds over the years to give the country an economic boost. While new brokerage firms have entered the market and are focusing on developing technological capabilities to complement the rising trend of online trading. Also technological developments in trading and introduction of new financial products in the market will act as a huge catalyst for growth of the brokerage market.
As of now stock broking industry is facing too much dilemma due to latest changes in trading and margin related activities. Let us take one latest example of change in margin requirement for trading in stock market, because a lot of discussions have been going around regarding the new Margin Pledge rules which were implemented by SEBI but as a broker, I would like to express my gratitude towards SEBI’s committee that I believe the cluster of reforms introduced by the market regulator aims to safeguard the interests of investors, bring transparency and prevent brokerages from misusing the clients’ securities’. Also these new reforms will be bringing in some key changes to the existing system, affecting both investors as well as brokers, on the point of pledging & unpledging of shares, concept of the Power of Attorney (POA) used for transfer of shares to the exchanges against sale of shares by the client or by the broker sold to recover the debts or other norms like upfront margin.
Now talking about other points, this year during the initial phase of the ongoing pandemic , I believe stock broking industry players had actively provided most the of the trading & investment services to their clients while major team players were doing work from home. The corporates currently charge brokerage fees for their equity trading and other financial services such as asset management, mutual funds, wealth management, top picks, trading and several other services that can appeal the consumers. The financial brokers have now developed their marketing ability to assist customers in meeting their goals with a wide suite of products & services strengthening their relationships over the long term association with clients. The increasing use of internet, smartphones, and mobile apps has led to evolvement of lower brokerage fee system and has helped these brokers to gain momentum in the market wrt financial brokerage market growth rate over forecast period. Additionally, as per media sources around 12 lakh new investors opened demat accounts with the Depository Services in March & April alone. Out of these, approx 6.18 lakh accounts were opened in March’20 & 6 lakh in April’20. This marks a significant fillip when compared to 4.2 million new demat accounts opened in the prior 11 months between April 2019 and February 2020. Additionally a report by Mint citing data from the Securities and Exchange Board of India reported that the number of new demat accounts opened during FY2020 stood at 4.9 million, a 22.5 percent increase from the 4 million demat accounts opened in FY2019. This, the report noted, was the highest in at least a decade. While NSE data show that the internet trading volumes jumped 53 per cent in April to an average daily volume of ₹12,602 crore, compared to a daily average turnover of ₹ 8,261 crore. Based on the increased competition the discount brokers services in form of lower brokerage charges, the full service brokers have moved their strategy for boosting revenues from the non-brokerage segment. Asset management services, portfolio management services, insurance broking and mutual funds are the non-brokerage segment are considered to be full time services for brokers with focussed objectives.
Ahead in future,I believe that to survive in that competitive market as a broker one would need to focus beyond advancing their platforms with technological & back end up gradations including EKYC, biometric authentication, order management systems, advanced charting & analytical solutions etc. Also as a broker we should further focus on diversifying product portfolios to Portfolio Management Optimum, Institutional services & third party products distribution of Insurance, Loans, and Mutual Funds etc, to become a one-stop solution for all financial needs. Online trading has started gaining momentum since the start of the current decade and is playing a pivotal role in driving the retail brokerage market.
