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| Around 50 bond brokerage houses are set to down shutters as there is virtually no business for them any more. With the introduction of screen-based trading of government securities this month, commercial banks are hardly reaching out to the hotline for voice broking, which was the custom till July 31. |
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| "We have told our dealers to look around (for jobs). We will close shop next month," said the chief of a debt broking house in Mumbai, which employed nine people. |
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| Over 70 per cent of trading in government securities are now being struck on the screens of the negotiated dealing system (NDS) where brokers have no role to play. |
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| The broking community expects the share of screen-based trading to go up to 90 per cent over the next few weeks, making them totally redundant. |
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| "About 50 broking houses will close down in the next few months. The top 10 or 12 houses, which used to account for 75 per cent of the total business, may be around for some time," said another broker. |
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| Sensing an opportunity, commercial banks are planning to employ some sharp-shooter dealers of broking houses. Those who will not be hired by banks will shift to equity and commodity trading. |
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| Debt brokerages mushroomed about five years back when the volume of trading of government securities and treasury bills hit a staggering Rs 8,000 crore-plus daily. |
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| With the rise in interest rates, the average daily traded volume has come down to around Rs 2,500 crore and the brokers now account for around Rs 800 crore of this pie. |
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| "The drastic shrinkage in the volume does not justify the presence of so many brokerages," said a banker. Typically, a brokerage house charges around Rs 1500-2000 for trading of a lot of Rs 5 crore worth of government securities. |
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| "Screen-based trading ensures confidentiality and speed. However, one would prefer a voice broker in a volatile day when the spread between bids and the ask prices widens on the screen. A voice broker can help in narrowing the spread," said a chief dealer with a private sector bank. |
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| Banks and primary dealers want to keep options open for voice broking. However, they might shift entirely to the screen as there had not been too many quotes from brokerage houses, said a primary dealer. |
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Banks are also finding the screen-based trading system convenient as, besides being economic, there will not be any auditor
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