Stocks

Online brokerages see uptake amid lockdown

PALAK SHAH Mumbai | Updated on April 13, 2020

Paperless account opening, flat brokerage rates and order punching via mobile app are a big draw with clients

The Covid-19-induced lockdown has come as a boon for a few online stock brokers in India. Brokerages such as SAMCO Securities and Upstox, speaking to BusinessLine, said they witnessed a 50-100 per cent jump in new client accounts in March.

According to experts, the key reasons for most online brokerages being able to gain more clients in March are paperless account opening, flat rates of brokerage, and ease of order-punching via mobile apps, all of which are highly suitable to trade markets during the lockdown.

Many brokerages in India are struggling to keep their offices functioning amid the lockdown due to lack of transport services and police action on those who venture out of their homes. The Association of NSE Members of India (ANMI) even wrote letters requesting SEBI to close markets or cut down on timings, due to operational difficulties. But online brokers said they were unfazed by the lockdown.

Prepared for ‘work from home’

“We were always prepared for a work-from-home scenario and planned this for the past 2-3 years,” said Ravi Kumar, co-founder, Upstox.

“We saw that several large, bank-led brokerages were facing manpower issues as they have big operations and the planning of such situations was not there. Due to huge back-office operations, some large brokers require a critical mass of people in office, the lack of which made them extend trading margins. Also, daily, there are a lot of clients who call for customer support.

“At Upstox, since we had planned for all this, we provided uninterrupted customer support via chat and email. As the markets saw a sharp fall, there were new clients who saw an opportunity and wanted immediate account opening; we do paperless work but with strict risk management,” Kumar said.

Upstox says it saw a 100 per cent month-on-month growth of new clients between February and March, when the lockdown came into effect. Kumar says he got most accounts from tier-2 and tier-3 cities and 86 per cent of all the traders in his brokerage in March came via mobile phones.

Opportunity in falling markets

SAMCO said more than 1.5 lakh clients that it caters to had uninterrupted trading limits.

“New accounts opened at SAMCO were 50 per cent higher than what was recorded in July 2019, which was the highest. We also received the highest amount of internet-based money transfer from clients during the lockdown period,” said Jimeet Modi, the brokerage’s founder and CEO.

Modi said they have opened 20,000 new accounts at SAMCO from February till date. Market players whom BusinessLine spoke to said other online brokers too had seen a high number of new client registrations, thanks mostly to the lockdown.

It was the brutal, near-30 per cent fall in benchmark indices, the largest since 2008, that attracted clients towards the stock markets. Small- and mid-cap stocks, the valuation of which remained high for several years since the BJP government came to power, have all seen value erosion of 60-80 per cent. From their low levels in March, both Sensex and Nifty have rallied by nearly 20 per cent.

Published on April 13, 2020

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