Mumbai, Feb 12: The move by the Securities and Exchange Board of India (Sebi) to register sub-brokers has seen only 4,000 of them register with the regulator till date.Interestingly, however, Sebi is satisfied with the response as it feels that these are about the only sub-brokers who are still existing in the market."Where are the sub-brokers? In a bad market they have all run away. We feel the ones who have got themselves registered are about the only ones in business," said a senior Sebi official.
According to market estimates, there were more than one lakh sub-brokers in the market earlier who operated without Sebi registration. And considering that the sub-broker was a link between the market and the small investor, the market regulator had thought it prudent to push through the registration of sub-brokers.
Early last year, Sebi had asked all sub-brokers to register themselves with it. By mid-1997, these sub-brokers had been asked not to carry out their business unless they were registeredentities. This had sent shock waves through the sub-broking community.
Sources say that the small number of sub-brokers registered is also indicative of the fact that a number of brokers did not come forward to take the responsibility of their sub-brokers of the kind that had been envisaged in Sebi registration's requirements.
"The fact that delivery-based volumes, which had till now been a prerogative of the institutional and retail investors, have come down shows that the retail investors themselves have run away from the market. And since sub-brokers deal only with the retail investors there are very few of the tribe which are still in existence," said the Sebi official.
"We feel that a bulk of the sub-brokers who are still keen to do business have already been registered with us. Once the market improves, we might see a sudden rush of these sub-brokers," said the official.
"The sub-brokers do not seem to have been supported by their brokers when the time to get themselves registered came. Thethreat of bad paper which has been looming on the market seems to have been the cause of this," said a stock exchange official.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
