Stock brokerage income from online trades surges 57% in FY15

Mumbai: With digitalisation becoming an essential part of capital market trading, most stock brokerages' income from online transactions surged 57 percent last fiscal over the year-ago period, says a report.

As per Dun & Bradstreet's (D&B) latest survey, equity broking houses' income from e-broking transactions "rose by a sharp 57.1 percent in 2014-15 compared to a year ago" while the share of income from such online trades in total income from equity segment stood at a high 74 percent".

"These trends indicate that equity broking has truly evolved and e-broking is rapidly replacing the traditional call-and-trade mode of stock broking," D&B said in the report.

The report observed that while a large chunk of the brokerages expanded their client base last fiscal, the number of company-owned offices -- excluding sub-brokers -- of equity broking houses declined 3.1 percent, indicating a shift towards an online business model.

About 77 percent of the stock broking firms were able to secure new client acquisitions and the number of active customers rose by 8.5 percent in 2014-15, D&B said.

"Not surprisingly, about 78 percent of the equity broking houses surveyed acknowledged that e-broking and mobile trading applications had helped them expand their customer reach," it added.

As per the findings, the number of mobile-trading clients had risen by an estimated 65 percent to 9 lakh in 2014-15 for the period under review.

The proportion of clients using mobile trading facility is 6 percent, substantially higher than the 3.9 percent levels recorded by these equity broking houses in 2013-14.

"This indicates rapid spread of mobile trading while clearly showing that there exists a tremendous opportunity for growth," it said.

According to D&B, mobile and online trading platforms enable market participants to stay connected with the stock market real time while on the move.

It also noted that the technology facilitates access to real-time research, analyst views, funds transfer, secure trading and monitoring.

"Brokerages are also making use of automated phone systems like direct calls to appropriate departments, linkages between caller ID and client database for immediate access to clients' accounts," D&B said.

These platforms provide live rates, last trade price and clients can view market statistics such as top 5 gainers/ losers, order book, trade book, net positions, among others.

Interestingly, the survey said that a whopping 96 percent of the equity broking houses felt that adopting back-office IT infrastructure and trading platforms had helped them improve their operational efficiency.

Consequently, about 62 percent of the surveyed equity broking houses had actually made some investment in IT infrastructure during FY15.

"The use of technology in terms of back-office and IT infrastructure, for cloud servers, for data security, and for developing faster trading platforms has helped equity broking houses improve their operational efficiency," the report said.

"Ultimately, it has helped them improve the speed and quality of their product/service delivery," it noted.