The Hindu Business Line : The jobbers of Mumbai

Depending on their experience, and Lady Luck's mood swings, in a month, a jobber earns between Rs 20,000 and Rs 1 lakh. But it continues to be a profession dominated by men, whose risk-taking capacity is higher than that of women.

Finance Minister P. Chidambaram's dream budget has become a horror story this year for a major segment of the equity market that provides 70 per cent of the volumes and, hence, is its lifeline."

So feels Brijesh Shah (name changed), a Mumbai-based broker, who has nearly 60 jobbers and arbitragers seated in front of trading terminals at his four-room office in Bandra, Mumbai. He is referring to the transaction tax proposed in Budget 2004. (Of course, from the initial flat rate of Rs 15,000 for every Rs 1 crore turnover, this has now been reduced to Rs 1,500 for every Rs 1 crore for day traders in the cash segment and Rs 1,000 for every Rs 1crore in the futures and options (F&O) segment. The initial rate remains for delivery-based transactions.)

Eyes riveted to the screen, bodies taut and expressions grim... they punch in a number on the keyboard once every few minutes. While exact figures are not available, estimates put the number of jobbers and arbitragers at 30,000 to 75,000. "About 70 per cent of them are in Mumbai, followed by Delhi and Kolkata. A jobber is one who buys and sells equity in large numbers and has half a minute's view on the market vis-à-vis each transaction," explains Shah. The nomenclature comes from the trading-ring days of the BSE.

"But in those days with limited trading hours (12 noon to 2 p.m.), there were hardly 700 jobbers. Post-1995 and with screen-based trading, their numbers have increased. In the ring, with great difficulty they could buy and sell 20,000 Reliance shares in a day but, today, a single boy would punch that number in a day. Only with the jobber's frequent trades the market gets liquidity and gives investors easier entry-exit points," he says.

Arbitragers, on the other hand, use the difference in NSE and BSE prices to make money. "Nowhere in the world you have two exchanges and this gives an opportunity to arbitrage. If there is a 50 paise gap between Satyam at NSE and BSE, the arbitrager will buy it at one and sell at the other. During the trading day, the price can reverse, and he can square up, making money both ways."

Watching the 60-odd people at this brokerage, punching in trades every few minutes, one wondered at the high-pressure profession they were in. "Oh yes, they require a high level of concentration; the boys come at 9 a.m. and leave at 4 p.m.; some of them don't even get up for lunch. Doing this kind of work is no joke; not everybody can do it and their life span is hardly 10 years in this profession," explains Shah.

Jobbers are trained at his office, and the young men — women are just beginning to trickle in and he has just two female jobbers, and three under training — are either commerce graduates or MBAs. A jobber trades for a profit of 25 to 50 paise; "if he makes 25 paise, that's good. But the important thing is that whether he makes a profit or a loss, he should square up in 30 to 60 seconds; if he doesn't, and allows the price to go up or down by a couple of rupees, he is speculating and will not succeed," says the broker.

The important thing is to exit quickly either way; and re-enter even at a higher price if he thinks he can make a further gain of 25 to 50 paise. "He can do this trade 50 or even 100 times in a day. In the western countries they are called market-makers," says Mathew Varghese, his partner.

Jasbinder Sachdev is one of the ace jobbers at this outfit and has been at it for 10 years. "I was there at the ring too and have some experience," says the 36-year-old man, who does a lot of physical exercise to keep his body and mind alert for this high-risk job. "It was pouring today, but I picked up my umbrella and walked to office as usual. It requires guts to buy 5,000 or 10,000 shares of Nifty. Supposing I buy 10,000 at Rs 1,590 and the price comes down to Rs 1,587, I straightaway have to book a loss of Rs 30,000. And pay tax to celebrate that loss!"

This morning, Sachdev has taken a fancy to Nifty futures and keeps buying and selling 1,000 Nifty shares — sometimes making a profit and sometimes a loss. "You saw how I bought it at Rs 1,590, and it immediately fell to Rs 1,589; I squared up at my buy price, but had it fallen further, I would have lost. Now I have to pay the transaction tax , whether I win or lose, and that is unfair," says the jobber. He says that till now their protest has been civilised — the jobbers had kept off their screens through a one-day strike in July, plunging the volumes on the bourses — "and not like that of politicians".

He and his tribe are reconciled to the fact that they will have to pay some tax, but they want it reduced to Rs 100 or 150 per Rs 1 crore. "I don't know any other work and I have two school-going children, so I'll have to continue in this profession. But it will be much more difficult to make ends meet, because I'll have to drastically reduce the number of transactions and make only calculated moves."

This confession made one wonder what would happen to the jobber's "half-minute view of the market." Varghese agrees that there are tough times ahead for this community. "The arbitragers are hit even more because on some days the difference between BSE and NSE prices don't go in your favour and they have to take delivery. For this they will have to now pay Rs 15,000 per crore."

Coming to the profile of the jobbers, why were there fewer women on the job?

"They are a little slower than the boys and less prone to risk-taking. Here they are not on a salary and can lose if their call goes wrong. The boys don't mind losing, thinking that after all they are losing from what they have earned, but women are more careful."

Depending on their experience and, of course, Lady Luck's mood swings, a jobber earns between Rs 20,000 to Rs 1 lakh a month. "We cut TDS and give them cheque payment every month. This is not speculation based on certain hedging mechanism, so windfall profits are not there," says Shah. His benchmark for success: Of 10 trades, 6 to 7 should be profitable. A jobbers' daily turnover can range between Rs 50 lakh to Rs 50 crore. "Ek ladka 1,000 Reliance dabayega.. ussey jyada uska jigar nahi chalta. (One boy will punch 1,000 Reliance; he'll not dare to trade more than that.) But another guy can punch even 10,000 or 20,000 Reliance shares; it depends on their experience and risk-taking capacity. But speculators fail because they will not be able to square up trades that are not favourable. When some trade goes in your favour, you can square up. But success comes when you can square up fast when a trade goes against you," says Shah, who is in this business since 1982.

Adds Varghese, "This is why for this community it does not matter whether the market is going up or down. Their job is only to look for that 50 paise profit by buying and selling or vice versa."

One is not surprised to hear that 90 per cent of the jobber/arbitrager community is Gujarati; Shah has a few Marathis and Punjabis, but not a single south Indian. This is a good indicator of the risk-taking appetite of people from different regions of the country. In the trading rooms, Gujarati is the language of communication, as the jobbers indulge in a bit of banter to let off steam. The market is in positive zone after a couple of negative sessions that day and the monsoon has picked up momentum too.

"Bahar varsad chchey aney market ma teji chchey. Pun ek vagya pachi shu thashey? London ma gora ney thodi khabar chchey key Mumbai ma varsad chchey (It's pouring outside and hence the market has rallied, but what will happen after 1 p.m.? The white man in London does not know that the monsoon has revived in Mumbai)," somebody comments.

Shah says that he doesn't have to advertise for the post and the educational profile of jobbers has improved over the years, and his new recruits are all MBAs. Apart from keeping physically and mentally fit and alert, they have to understand the market and do a lot of reading. The training is for three months; the first month the system is explained to the fresher, next month, he is made to sit beside an experienced hand and, in the third month, he or she is given a screen of their own. Some leave because they can't handle the pressure, but this number is very small. "Those who are successful are in the 25 age group; the brain is faster and the youngster wants to do something. He has no family tension and learns fast on the job because he can concentrate. If your mind switches off for even five minutes, you're dead," says Shah. The youngsters begin with small trades of 100 shares and "I tell them that if you lose Rs 300, there's no problem. But if you make Rs 300, I know your concept is right. But if he continues to lose, we ask him to leave because somewhere he is speculating and not following the principle of jobbing." The profits are shared equally between the broker and the jobber.

Mumbai brokers say that some of the jobbers and arbitragers have taken huge loans for housing or marriage expenses earlier this year, when the equity market was in boom. The transaction tax will hit these people badly, the brokers say.

"They had thought they will continue to make money, but are now under tremendous pressure. The real impact of this move will be seen in September when the Budget proposals come into effect. The common perception is arbitragers and jobbers make money. But they also lose money. I know some people whose entire earnings went in a single day on May 17," adds Shah.

Picture by the author

Response may be sent to rasheeda@thehindu.co.in

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