The Hindu Business Line : `Provide an industry status to broking business'

Certain deeming provisions as outlined in Section 73 of the I-T Act - treating speculative income/loss arising out of securities transactions in the hands of corporate assessees - should be abolished.

Kolkata , Oct. 8

Stockbrokers, feels Mr Bijay Murmuria, Director of broking and advisory company Sumedha Fiscal, need to provide more value-added services. As someone closely associated with AMNI, the Association of NSE Members of India, he should know.

Excerpts:

Stocks are extremely volatile currently. What can investors expect from such a market?

Please remember that the last few months have seen new records being created. In this situation, there is bound to be a bout of concern and a lot of uncertainty.

Investors should not be too perturbed with short-term changes. But they should at the same time undertake profit booking on upsides. Even though current valuations are far stretched, the overall market looks strong with companies continuing to post robust results and FIIs betting on India.

The strong rupee is also a positive factor. If you have a long-term horizon, you should continue to hold your stocks.

What can brokers expect from policymakers on issues like capital gains taxes, better trading infrastructure and tie-ups among regional SEs?

Our trading platforms are efficient, complete with proper risk management systems. The government should continue with its current taxation policy with respect to capital gains. It should also provide an industry status to the broking business.

With corporatisation of broking and demutualisation of stock exchanges, certain deeming provisions as outlined in Section 73 of the I-T Act - treating speculative income/loss arising out of securities transactions in the hands of corporate assessees engaged in securities business - should be abolished.

On another front, regional exchanges are practically non-existent. Any move towards mergers or continuing their existence with subsidiaries should be properly monitored. The government should further take steps in rationalising the levy of stamp duty on securities transactions across various states.

ANMI has said it will invite BSE members too to form a joint forum. What is the progress here?

The Association has already made a move by effecting a change in its Memorandum and Articles of Association. Further, ANMI is converting itself into an SRO (self regulatory organisation) in line with SEBI's objectives.

It will play a dual role as an SRO and a trade association while discharging its larger responsibility towards the overall functioning and development of the capital market.

Stockbrokers in India are expanding operations even as business volumes are growing. Shouldn't transaction costs come down further?

It is true that brokers, especially those who have larger volumes, are expanding rapidly. This has actually led to a larger portion of the total business being cornered by the bigger players. A re-orientation in the smaller centres is underway. This has certain benefits to offer. With investors having multiple choices, various transaction costs have indeed declined.

What are the other trends on the services front?

Broking houses are now offering flat/fixed-fee brokerage services. They are also providing value-added services. Many of them issue comprehensive research reports, which are particularly aimed at wealth advisory services clients.

Today there is a distinct flow of information, courtesy reports on sectors, reviews of specific corporate performance, portfolio evaluation and the like.

These are necessary in the present context as investors can take informed decisions. Brokers will need to provide value added facilities, infrastructure and constant analyses to clients.

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