The decision of the BSE to slash the membership fee by 90 per cent, from Rs1 crore to Rs10 lakh, is being seen as an opportunity by the majority of sub-brokers in the state.
The decision of the Bombay Stock Exchange (BSE) to slash the membership fee by 90 per cent, from Rs1 crore to Rs10 lakh, is being seen as an opportunity by the majority of sub-brokers in the state.
According to sources, in addition to the existing 800 members, BSE has received inquiries from 1,200 people for membership, of which more than 300 are from Gujarat Gujarat is an investment hub with a large number of brokers. Almost 25 per cent aspirants for membership can usher in a big revolution in the stock market as, with the cut in fees and addition of more members, the small sub-brokers would have an independent entity of their own, free from the formalities to be served to the main brokers.
As compared to the membership rates of the NSE, which still stand at Rs1 crore, experts feel that BSE will have the upper hand, but the huge cut in membership rates has its pros and cons. At the same time, the criteria of minimum net worth of Rs1 crore can be a hurdle. While big- and medium-sized broking firms feel this necessary to prevent defaults, small firms find it an obstacle.
"There would be employment generation due to this drive, but there are also concerns of risk when small firms acquire membership," said Madhur Todi, certified financial planner at Mera Money Advisors Pvt. Ltd.
No major impact will take place on the trading and volume front as almost 80 per cent of the trading volumes at BSE is done by 20 to 30 big brokers. The revolution that this drive is supposed to create is that it will benefit the small sub-brokers who would be able to trade directly and save on the brokerage front. BSE has to look after various norms as the credibility of a broker is of utmost importance. BSE will have to take various steps to manage the risk, credibility and guarantees when small brokers are involved.
"It is worth thinking as to how BSE would tackle the risk issue involved when the members would increase. Also, the minimum net worth of Rs1 crore stands as a hurdle," added Todi.
"No major reforms can be seen in the volumes at BSE as majority of the trading volumes are taken away by NSE and the addition of more members would not bring a major change," said Bhavik Patel, senior technical analyst at Vimal Stocks.
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