BSE, formerly Bombay Stock Exchange, has achieved another milestone this year. The stock exchange has now over seven crore registered users based on Unique Client Code (UCC). Similarly, the number of folios in the mutual fund industry is nearing 10 crore.

Tech-savvy investors

The growth of the last one crore on the BSE is phenomenal, as it came in just four-and-half months whereas it took almost two years to move from five to six crore investors and close to three years from four to five crore UCC investors.

However, the interesting fact is: the investor population is very young, In all, 62 per cent of the investors are less than 40 years of age, of that 24 per cent fall between 20 and 30 years. According to BSE, the growth has been led by tech-savvy young users, with an age profile of 20-40, who contributed 82 lakh of the one crore user additions from six crore to seven crore.

Though these statistics indicate rising awareness of capital markets, it would be helpful for the whole system if the new entrants come in with essential knowledge on the building blocks of investments and the risks involved in investing. To achieve this, all participants in market infrastructure institutions and intermediaries should join hands.

Investor awareness

SEBI, mutual funds, broking houses and exchanges regularly conduct investor awareness programmes but most of them are done by mandate. Most of the participants in such events tend to be middle-aged or older. Besides, most such events talk about successful investors or stock picking but rarely talk about current trends or context. The need of the hour is to impart basic knowledge to prospective investors of a much younger age i.e. from schooling level, like the one organised by the College of Business at Michigan Technological University in the US.

The Husky Investment Tournament for students (grades 9 through 12) across the world provides virtual money to trade in the market on a real time basis. The Michigan Technological University also offers scholarship programmes for the winners (decided by portfolio returns) and prize money. In India too we can look at similar contests mimicking real-life investing. Students can be offered different sets of portfolio stocks and virtual money and asked to provide reasons for buying select stocks. Another important lesson could be on how to use critical websites such as BSE, NSE and SEBI.

SEBI and the exchanges can also tie-up with leading business universities to offer scholarship programmes to entice students. The NSE and BSE do have tie-ups with schools and have certificate programmes, but the course content can perhaps be made more appealing with the use of technology.

Brokerages on their part can offer youth accounts, likes the one offered by Fidelity Investments, a brokerage account specifically designed to help kids of the ages 13-17 invest, save and spend. If young market participants are mature, then it not only benefits them but also the entire market infrastructure, which is good for a emerging country like ours.

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