Checkered history

By Ravi Ranjan Prasad Sep 18 2015

Tags: Knowledge

India’s best-established share brokers are feeling the heat from the minnows who have the capacity to disrupt trade

Since the broking industry is among the oldest in the country’s financial services, some broking houses have long histories going back to the pre-independence era.

Off late though, the broking industry is witnessing a consolidation. Several smaller traditional brokers and their sub-brokers are finding the going tough as new age brokers backed by strong private banks stir the market by providing online trading platforms.

Resultantly, the traditionalists face huge real estate, technology, research and compliance cost issues as they compete with bank-promoted brokers.

Among the top brokers in the country, ICICI Direct-promoted ICICI figures both on the all India and on the Mumbai list. Edelweiss, which acquired Gujarat-based Anagram Stock Broking owned by Arvind Group, is another big player in institutional broking along with Motilal Oswal, Emkay Global Financial Services and Kotak Securities.

Ten years ago, Indiabulls Securities was a large broking firm, but has since diversified into other financial services, reducing their focus on equity broking.

SMC Global Securities and Religare Securities are big in the Delhi region. Geojit BNP Paribas is a large broking firm in Kerala and south India. Zerodha is emerging as a big player in Bengaluru while Karvy looms large in the Hyderabad region.

In Kolkata, East India Securities dominates while Achiievers is emerging as another significant discount broker in the area. Among the large brokers who are focused mainly on purely retail investors are ICICI Direct Sharekhan, India Infoline, Angel Broking and SBICap Securities.

Traditional brokers, specially known for their client servicing and a proven track record, include K R Choksey, Asit C Mehta and Darashaw. Antique Stock Broking is another firm that is known for servicing only high net worth clients. Darashaw is amongst the oldest, continuously managed broking and investment-banking house in India, established in 1926.

Stock Holding Corporation of India’s subsidiary, SHCIL Services, also offers retail and institutional broking. SHCIL Services mainly caters to the need of a large number of domestic institutional investors, including mutual funds, insurance companies, banks and other financial institutions.Due to adverse market conditions, the number of brokers in the country has fallen below 10,000 to 9,643 as on May 31, 2013, but the number of equity derivative brokers has risen due to rise in derivative trading.

There is also a rise in internet trading among retail investors, according to NSE data available for August. In the cash segment, the total internet-based daily trading ranged between Rs 3,745.73 crore to Rs 5,082.16 crore while in the futures and options segment, it was pegged between Rs 30,730.85 crore (notional value) to Rs 1,09,370 crore (notional value). It is difficult to get broker-wise client data as most insiders would like to share an approximate figure, which would include both their active and dormant clients.

However, the NSE website does provide some indicative clients’ data of all brokers registered with them.

Compilation of brokers based on their active clients show that ICICI Securities have the highest number of active clients at 5,73,922. They are followed by HDFC Securities (3,57,549 active clients), Sharekhan (3,41,651), India Infoline (2,87,203), Kotak Securities (2,64,197), Karvy Stock Broking (1,71,409), Angel Broking (1,65,262), Motilal Oswal (1,56,487), Geojit BNP Paribas (1,53,914) and Axis Securities (1,32,394), as the country’s top ten stock brokers.

Discount brokers may be far from the large full service brokers in terms of number of clients, but they have emerged as a disruptive force in the broking industry. Zerodha, the top discount broker, boasts of 38,702 active clients, according to NSE data. So is the case of other discount brokers, who are much smaller. RKSV Securities has 9,124 active clients and TradeSmartOnline promoted by VNS Finance & Capital Services has 8,580 active clients. Samco Securities, which has Indian Trading League trading platform with cricketer Kapil Dev as their brand ambassador, can show 3,887 active clients on their list.

raviranjan

@mydigitalfc.com