Brokers find a helping hand in industry chamber

Ficci to conduct survey on health of capital markets

Yagnesh Kansara

Mumbai, Aug 10: Harassed stock brokers seem to have found an ally in The Federation of Indian Chamber of Commerce and Industry (Ficci) to voice their concern in the right quarters. This move follows the brokers’ from across the country coming under a common platform of the Securities Industries Association (SIA).

Given the current state of the capital markets, Ficci has thought it fit to carry out a detailed survey on the health of capital market, especially after the introduction of the new trading system.

The findings of the state of the Indian capital markets, expected to be out by end of this month, would be presented to the ministry of finance (MoF), the Securities and Exchange Board of India (Sebi) and other concerned authorities.

The nationwide survey intends to collate information from brokers, foreign institutional investors (FIIs), merchant bankers, investment bankers and other capital market intermediaries on the new trading mechanism put in place and their prospective implications on the investment climate.

Besides going into the detail analysis of the cause for the present state of the market the study also will make an attempt to ascertain the view of the participants whether domestic markets are prepared for the futures and options system and rolling settlement. It would also seek view of the intermediaries as regards the superiority of badla over the new trading measures.

After the introduction of the new trading system, the brokers are faced with many problems including falling volumes and liquidity, lack of finance from official sources and above all the threat to their survival as retail investor — their client base — has deserted the capital markets.

Ficci feels that though its almost a month since Sebi introduced rolling settlement and options and futures, the stock markets have been grappling with issues such as lower liquidity, lower volumes and capitalisation and plummeting stock indices.

It will incorporate the most important aspect of confidence of the market intermediaries on the regulatory body. This aspect is going to be almost the referendum of market participants as far as the behaviour of Sebi is concerned as they will be asked to rate on a scale of 1-5 (one being the least confident and five most confident), the confidence they have on the regulator.

The study will basically undertake the postmortem of the recent capital market crisis and try to collate the information from the very people who are associated with the market on a daily basis. The study is expected to come out with startling revelations as Ficci has promised the respondents that the names of persons answering its questionnaire would be kept confidential.

The trading community is yet to come to terms with the understanding of the operations of new mechanism, said the chamber in a communication to the prospective respondents of the survey.

It will also touch the issue of future of the regional stock exchanges after the transition to uniform settlement and particularly after the presence of nationwide network of the BSE and NSE.

The study will also survey whether brokers should be allowed some other deferral products to overcome the problem of liquidity. Whether they can be given the options of margin trading which is prevalent in the global markets.