 "Brokers after recruits, but no wild chase")
The domestic broking sector had significantly reduced its personnel after the global financial crisis hit home in 2008. It has resumed hiring, especially in the past one year, to cater to a surge in clients, especially of wealthy ('high net worth') individuals.
Top domestic brokers have increased their staffers by 25-30 per cent in the past 12 months over the previous year, say experts. “Hiring has been of dealers and people on the sales side, largely to cater to the inactive base of clients that have become active again,” said Kamlesh Rao, chief executive, Kotak Securities. “We have been hiring on the dealing and technology side, mostly to ramp up our online platform.”
Hiring, however, has been much more restrained than in the heyday of 2006-07. “There is no mad dash. Brokers are much more cautious and focused on adding relationship managers who can move clients with them,” said Rahul Rege, business head, retail, Emkay Global. Added Prasanth Prabhakaran, head, retail broking, IIFL: “Hiring is proportionate to the increase in client participation, mid-2014 onwards.”
According to market participants, the number hired at present is 20-30 per cent of that in 2007. One reason is that large domestic brokers are focusing on the online space, where the personnel required is much lower than in the offline space, said Rao. Brokers have been cautious as retail investors are not back in huge numbers. "That said, a large amount of money has come into equity mutual funds and a small portion of that money has moved into direct equity as well,” he said.
While the benchmark BSE Sensex rose 30 per cent in calendar year 2014, it has shed 4.9 per cent in the year till date. Brokers have been struggling as margins have shrunk, owing to the increase in low-yield options volumes, about 80 per cent of total market turnover today. In 2007-08, options volumes contributed only a tenth to the total market turnover.
Intense competition among brokers and the proliferation of discount brokerages have also been key in driving down costs. For the cash market, rates vary between 10p and 30p for delivery-based trades and below four paise for intra-day trades. Charges in the options segment are Rs 20-50 for each lot.
Rege says the key challenge for brokers is to attract new retail clients and bring back those that burnt their fingers during the crash of 2008. Retail clients are important as they mostly do delivery-based trades, where brokerages are the highest.
NOT A MAD SCRAMBLE
Top domestic brokers have increased their staffers by 25-30 per cent in the past 12 months over the previous year, say experts. “Hiring has been of dealers and people on the sales side, largely to cater to the inactive base of clients that have become active again,” said Kamlesh Rao, chief executive, Kotak Securities. “We have been hiring on the dealing and technology side, mostly to ramp up our online platform.”
Hiring, however, has been much more restrained than in the heyday of 2006-07. “There is no mad dash. Brokers are much more cautious and focused on adding relationship managers who can move clients with them,” said Rahul Rege, business head, retail, Emkay Global. Added Prasanth Prabhakaran, head, retail broking, IIFL: “Hiring is proportionate to the increase in client participation, mid-2014 onwards.”
According to market participants, the number hired at present is 20-30 per cent of that in 2007. One reason is that large domestic brokers are focusing on the online space, where the personnel required is much lower than in the offline space, said Rao. Brokers have been cautious as retail investors are not back in huge numbers. "That said, a large amount of money has come into equity mutual funds and a small portion of that money has moved into direct equity as well,” he said.
While the benchmark BSE Sensex rose 30 per cent in calendar year 2014, it has shed 4.9 per cent in the year till date. Brokers have been struggling as margins have shrunk, owing to the increase in low-yield options volumes, about 80 per cent of total market turnover today. In 2007-08, options volumes contributed only a tenth to the total market turnover.
Intense competition among brokers and the proliferation of discount brokerages have also been key in driving down costs. For the cash market, rates vary between 10p and 30p for delivery-based trades and below four paise for intra-day trades. Charges in the options segment are Rs 20-50 for each lot.
Rege says the key challenge for brokers is to attract new retail clients and bring back those that burnt their fingers during the crash of 2008. Retail clients are important as they mostly do delivery-based trades, where brokerages are the highest.
NOT A MAD SCRAMBLE
- Hiring has been much more restrained than in the heyday of 2006-07
- If 100 people were hired in 2007, today the number is just 20 to 30 recruits
- Large domestic brokers are now focusing on the online space, where the manpower required is much lower than in bricks-and-mortar offices
- Margins have shrunk owing to the the increase in low-yield options volumes, which contribute to 80% of the total market turnover today
- Intense competition among brokers and the proliferation of discount brokerages is driving down costs
- A challenge is to attract retail clients. They mostly do delivery-based trades, where brokerages are the highest