Mr Amit Sharma (name changed), a departmental head at a large retail brokerage in Mumbai, had to take a 35 per cent pay cut last week.

Rising costs and falling revenues are forcing broking houses to delay salaries, cut pay packets and even lay off employees. Some brokerages are even contemplating winding up business.

Experts said that another Y2K kind of scenario could emerge. “All of a sudden, my inbox is flooded with CVs of overqualified people willing to work for any price,” said the Head of Research of an Indian Brokerage. “Retrenchment had already started two to three weeks ago,” he added.

Many brokers were willing to speak on the issue but none wanted to go on record.

“The market has become over-brokered,” said Mr Prakash Diwan, Head – Institutional Equities Networth Stock Broking. “Only those with deep pockets and the ability to service clients while operating in a low-cost regime will survive.”

Drop in daily turnover

Meanwhile, the average daily turnover in the cash segment of NSE has seen a significant drop (see table) and so has the average ticket size of trades.

“When markets fall like this, the first impact is felt by employees,” said Mr Kishor Ostwal, CMD CNI Research. “Many brokerages are not paying salaries on time and if this downward trend continues for another 10-15 days, major layoffs across the board are sure to occur,” he added.

Many small brokers catering to the retail investor are also thinking of shutting shop, said market experts. Employees in sales, dealing and research in many brokerage houses have been served a three-month notice and asked to look out for other opportunities, said the Head of Research at a broking house.

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