Brokerages welcome extended time for Gold ETFs

Sneha Padiyath Mumbai | Updated on May 05, 2011 Published on May 05, 2011

But operational cost will be ‘more than the volumes that we will see'

Broking firms have welcomed the extra trading hours set by the stock exchanges on Akshay Tritiya, May 6.

The National Stock Exchange and Bombay Stock Exchange have jointly decided to keep their trading platforms open till 9 pm for trading in gold exchange traded funds (ETF). Generally trading platforms are open from 9 am to 4 pm.

“This is a good initiative by the stock exchanges to popularise the gold ETF segment,” says Mr Vinay Agrawal, Executive Director-Equities Broking, Angel Broking. “It is a much more convenient option and less risky. People want to invest in gold, but the jewellery segment is very cluttered and difficult, so this is also a less cumbersome investment as well.”

Akshay Tritiya is considered an auspicious day according to the Hindu calendar. The demand for gold jewellery increases manifold on this day. Jewellery stores launch designs and stay open for longer hours. In the same vein, brokerages have been given an opportunity to increase volumes in gold ETFs, say analysts.

Broking firms are also looking at this as an opportunity to educate investors.

There are 11 gold ETFs in the industry today. Most of the larger mutual fund houses — such as Reliance, UTI, HDFC, ICICI, Benchmark, Birla Sun Life, SBI, Religare, Quantum, Kotak and Axis — have a product in the segment.

“There needs to be a larger massive pull towards this product which is what we expect to see on Akshay Tritiya. Extending trading hours will certainly help create more volumes for this segment,” added Mr Agrawal.

However, will the terminals see increase in volumes is the question being asked by brokerage firms?

“While the initiative by the exchanges is good, it may not necessarily translate into volumes. In fact, the cost of keeping the brokerage house open is going to be more than the volumes that we will see,” said Mr Abhinav Angirish, Managing Director, Abchlor Investment Advisors.

This view was not shared by all firms as this is the first time such a service is being offered.

“The extended time window can be looked at as an opportunity by investors who want to trade after work hours as Akshay Tritiya falls on a working day,” said Mr Alex Mathew, Head of Research, Geojit BNP Paribas Financial Services.

But not everyone is happy with the arrangement. While brokerage houses are optimistic, brokers are less than excited. “As the owner of the firm, I am happy. But my employees are not,” says Mr Angirish, and adds that it is a just one-off case and is in the interest of the investors.

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Published on May 05, 2011
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