The Hindu Business Line : Net-based trading gaining momentum

According to estimates, currently around 10 per cent of the daily turnover in the cash segment of the BSE and the NSE is generated through Net trading.

New Delhi , Sept. 6

A NEW group of tech savvy retail investors have emerged during the past one year during which the Sensex has hit several new highs thanks to the continuing bull rally. These are the people who prefer to trade on their own through their own Internet connections, either from home or somehow manage time during the trading hours from their offices where they have continuous access to the Internet.

According to broking firms that provide such Net trading facilities, it is the younger generation that is taking the lead. The bulk of the clients registered during the past year are in the age group of 20 to 40 years. Also, there is a substantial increase in female clientele.

According to estimates of these firms, currently around 10 per cent of the daily turnover in the cash segment of the BSE and the NSE is generated through Net trading.

There are a large number of brokerage firms offering this facility. The market leader remains icicidirect.com, which was the first entrant in this arena. But several others such as Sharekhan, Indiabulls, Indiainfoline, Kotak Securities and Motilal Oswal have emerged as significant players.

And more and more firms are getting prepared to offer this service to their clients in the fear of losing them. This is because it is now quite cheap for existing brokers to start this facility.

According to former president of the Delhi Stock Exchange, Mr Vijay Bhusan, whose Web site bharatbhusan.com offers this facility, albeit in a small way, any broker can start with an investment of as low as Rs 3 lakh.

"To become operational, only around Rs 3 lakh is required which includes the cost of a separate server and the firewall required for security if one takes the software from NSEIT, an arm of the NSE. Additionally, the broker has to pay a licence fee of Rs 10,000 for the first year and Rs 4,000 as annual renewal fee from the second year.

But the BSE offers better facilities to its existing members through BSE Webex. They offer it for free and the broker does not have to invest in the firewall and licence," Mr Bhusan said.

DSE Financial Services, a subsidiary of the DSE that has taken membership of the BSE, too has joined the race. The company Chairman, Mr Bharat Bhusan Sahney, said the company has sourced the software with 100 licences to enable its members to offer Net trading facilities to its clients developed by Internet ExchangeNext.com Ltd, a Reliance group company.

According to a spokesman of Sharekhan, the volumes are moving up. "Our client acquisition has doubled during the past year. On an average 10 per cent of daily volumes is through the Net," he said.

However, there seems to be a serious discrepancy between the data provided by these broking firms and statistics complied by the Ministry of Finance. According to the Finance Ministry, between July 1 and August 18, Net-based trading accounted for just 0.09 per cent of total exchange turnover on the BSE.

In the case of NSE, from January 1 to July 31, on an average around 5.2 per cent of the total turnover in the cash market came through Internet trading.

According to the brokers, this discrepancy is because the Finance Ministry is calculating on the basis of the entire turnover while this boom in Net trading is still mostly limited to the cash segment and lesser in the derivatives segment.

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