The Hindu Business Line : Geojit Comtrade setting new trends

Kochi, Jan. 5 The recently constituted Geojit Comtrade could be the first and only broking company to deal exclusively in commodity futures in the country.

The company, which has acquired licences and commenced trading at MCX, NMCE and NCDEX in commodity derivatives, has developed a novel business model to compete against the integrated broking houses where equities, commodities and derivatives trade are all undertaken under one roof.

The advantages of integrated broking houses are manifold since the total infrastructure, including the branch network, IT backbone, communication systems and personnel, can be deployed for a variety of trading activities, sources in the industry said. This would bring in greater economies of scale, leaner management systems and greater operational efficiency.

Growth avenues

“But with the advent of modern technology especially the Internet, dependence on the old-world brick and mortar branch network and back-office investments has come down. We would be focusing on two major avenues for growth. One is to build up a large portfolio of High Net Worth clients who would be one of the principal pillars of our growth. The other would be a large number of retail Internet clients who would form the other driver of growth,” Mr C.J. George, who is the principal investor in the new venture, said.

Mr George, who is also Managing Director, Geojit Financial Services Ltd, was instrumental in transforming GFSL into the country’s first Internet stock broking company. He holds 60 per cent stake in the new venture.

The erstwhile clientele of Geojit commodity futures trading is the foundation on which the new company is building its base. GDSL had recently surrendered its licences at MCX, NMCE, NCDEX and the Associate membership at the Singapore Commodity Exchange, and exited from commodity derivatives operations.

Advisory services

The new company would be tying up with international commodity exchanges, multinational commodity houses and international commodity boards to provide advisory services to its clients. This facility would be first targeted at HNIs. Scaling up of operations in Geojit Comtrade will follow later.

For now, the company would have a single office for a State like Tamil Nadu at Chennai, for Karnataka at Bangalore, and the majority of the retail customers are expected to transact through the Internet.

The obvious advantages of the new company would be the South-based location, from where a large number of commodities are produced, and the brand identity with Geojit, which has a long history with investors and commodity traders in the country.

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