Online trading clicks big with investors

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Aarati Krishnan

MORE Indian investors are logging on to the Internet to put through their stock market trades. The number of investors registered for online stock trading has risen three-fold, to 13 lakh, over the past two years.

Online trades now account for about 12 per cent of the daily turnover on the NSE, up from about 4 per cent in 2004, according to brokerage industry estimates.

The "democracy" of online trading is the key reason why retail investors prefer to transact over the Internet, rather than place orders through their broker, say the players.

"Online trading treats all investors equally, whether big-ticket or small-sized. Investors love that," explains Mr Amit Golia, Head of E-Broking at Motilal Oswal Securities.

"It is a democratic medium. It gives the retail customer ready access to the market. He is in complete control of his investments and gets the benefits of transacting real-time," observes Mr Anup Bagchi, Managing Director and CEO of ICICIdirect, the largest e-broker in India.

The "three-in-one" accounts offered by private sector banks, that link up your online trading account to savings bank and demat accounts for easy transaction, have captured the lion's share of online trading customers.

ICICI Bank claims to have a 60-65 per cent share of the market, with 8 lakh users on ICICIdirect its online trading platform.

Traditional brokerages, which right now have a much smaller share of the business, say that it is the number of "active users" that counts. They point out that only about a third of those who open an online trading account actively use it to put through trades.

Kotak Securities says that the number of active users on its portal has grown from 25,000 to about 75,000 in two years. "We allow only serious investors to register and that has made us quite profitable", says Mr Prasanth Prabhakaran, who heads Kotak's online initiative.

Players also see a change in the profile of investors registering for online trading.

While young Net-savvy retail investors were the first to embrace e-broking, quite a few high net worth investors (HNI) are now moving to the Internet. "Derivative volumes are now higher than cash volumes, a clear indication that more HNI customers are using the online channel," points out Mr Golia.

High net worth investors seem to like the privacy that online trading offers.

For those who prefer a personal interface with their broker, brokerages such as Kotak Securities are offering exclusive personalised research calls to nudge them to the online platform. "We even provide some of our online customers with a personal investment advisor," says Motilal Oswal.

Related Stories:
IDBI Capital launches online portal
Geojit unveils new trading portal
Sharekhan plans tie-ups with banks to provide online trading platform

(This article was published in the Business Line print edition dated February 19, 2006)
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