Fortunes at fingertips

If you think mobile phones are handy to pay bills and part with hard-earned money, think again. Increasingly, for thousands of retail investors in the capital markets, the snazzy, graphene-laced, palm-happy wonder called the smartphone spells fortunes at fingertips, thanks to mobile trading platforms. Millions, probably billions, of rupees can be made (or lost), with the silent, effortless press of those shapely fingertips glowing from the touchscreen-light.

Retail investors abound who would vouch that even the basic GPRS-enabled mobile phone, not just the top-end smartphone, could make money-making fun, simple, secure and convenient. The National Stock Exchange (NSE) data show that the total monthly traded turnover on the mobile platform has seen a 406% increase since the beginning of this financial year. Introduced in September 2010, the NSE mobile trading platform has seen a rise in total monthly turnover from Rs715 crore in April 2011 to Rs3,622 crore in January 2012.

“Although the traded turnover through the mobile platform is minuscule, around `25 crore on a daily basis, customers’ interest is growing rapidly. Most of them are quite appreciative of this convenience,” says Ketan Shah, associate director, IT and business development, Angel Broking.

B. Gopkumar, head of broking, Kotak Securities, says that launch of various smartphones over the last few months has made a big impact on investors’ attitude toward use of technology in trading. That prices of all kinds of mobile devices are now lower is also a factor.

“Around 5,000 of our customers place a trade through the ‘mobile stock trader’ every month, with total monthly volumes of over Rs300 crore,” says Gopkumar.

Mobile platforms facilitate buy and sell orders for securities via basic GPRS-enabled handsets and smartphones, using either a (WAP-based) browser or firm-specific apps.  “Contrary to the perception that mobile trading may be handy only for retail customers who trade once in a while in cash markets and use it for viewing their stock portfolios, we have seen almost 40-50% of transactions on our mobile platform coming in for the futures and options segment from intra-day traders and some big clients who trade on a regular basis,” says Gopkumar.

Even as the novelty factor helps the mobile platform to gather momentum, it is still early days. In absolute terms, mobile trades don’t constitute much of overall traded turnover. Terminal identification data for December 2011 suggest that mobile trading constituted just 0.07% and 0.02% of overall trading in equities on the NSE and BSE respectively. These figures indicate Indian bourses still have some catching up to do vis-à-vis stock exchanges in developed countries.

 “In India, we are just about reaching the point of inflection for mobile trading. Globally, for our brokerage clients, we have seen 10-14% of their online trades coming in through mobile within  6-12 months of their adopting the mobile application,” says Venkat Rangan, chief executive of Market Simplified Inc, a provider of mobility solutions. 

Experts believe that one of the major challenges is rapid technological advancement and attendant compatibility issues.

With mobile phones using various operating systems like Symbian, Android, RIM, iOS and Microsoft that require frequent upgrades, market players are finding it increasingly difficult to keep pace. “As a brokerage, you need to ensure that your application is compatible with all the new phones. Also, brokerages need to do more in terms of marketing the service,” says Gopkumar.

Of course, that they need to do, given that there were as many as 894 million mobile subscriptions in India as on December 31, 2011. A conservative estimate of the number of individuals owning mobile phones would be half that figure. This would still mean that the number of mobile phone users is much higher than the 100 million of internet users. According to Gartner, Inc., mobile device sales in India are forecast to reach 231 million units in 2012, up 8.5% over 2011 sales of 213 million units.

All this data encourage experts to foresee rapid growth taking mobile trading toward the levels seen in internet-based trading (which constitutes 10.97% of overall traded turnover on the NSE —5.82% on the BSE).  “It’s just the beginning. In the coming years, we should see mobile trading narrowing the gap. Although the mobile trading application works on the 2G network, 3G services, which are currently a bit expensive, offer better speeds than that provided on a normal computer terminal. Also, with integration of product offerings like research products and derivative calls, more and more investors may opt for mobile trading, if they are able to access the same at higher speeds,” says Gopkumar.