New wolves of D-Street: Cheap data, millennials push up mobile trading

The Covid-19 pandemic has powered a revolution in investing as an army of millennials and Gen Zers, driven by quarantine boredom, signed up to trading applications (apps) and ploughed their money into stocks or cryptocurrencies.

The proportion of the cash market turnover attributable to mobile phones has jumped from 6.9 per cent in December 2019 to 19.06 per cent in December 2021, according to the BSE data. The share of mobile trading on the National Stock Exchange is at 23 per cent.

Higher smartphone penetration, lower data charges, and more millennials and GenZ investors becoming active traders are powering this trend.

Easy onboarding, according to experts, is the most significant factor responsible for the rise in mobile trading. Onboarding through Aadhaar has assisted mobile trading since opening a demat account is effortless.

"Easy onboarding has played a huge role in the rise of trading on smartphones. All the hurdles that existed in opening a demat account earlier are now gone. Today, you can open an account in 10-15 minutes. All you need is decent connectivity. More people are using mobile phones to execute their trades," said Jaideep Hansraj, managing director (MD) and chief executive officer (CEO), Kotak Securities.

Once brokers realised investors were adapting to the digital medium much faster, they started investing more in technology. With the limited availability of dealing room staff after the pandemic, the volumes that came through dealers shifted to mobile phones.

Earlier, clients used computer-to-computer link systems of brokers to place orders with the help of dealers. Institutional investors and high-frequency traders use the colocation facility to place large-sized trades on exchanges.

The advent of mobile-based discount brokerages has also led to a rise in mobile phones for trading. Mobile trading has also helped brokerages cut costs. It has reduced their dependence upon personnel used to punch orders. This has also led to a significant cutback in erroneous trades. Moreover, it helps brokerages to scale up their business at a quicker pace.

Experts said there is a limitation on the number of trades a person can place. Because some dealers recommend trades, the probability of clients incurring losses tends to be higher.

On mobile phones, customers do it themselves. The longevity of a customer is higher, even if the number of trades he puts is fewer. In terms of cost, it is much cheaper.

"There is a huge cost benefit as both sales and dealing costs have come down 50 per cent. Brokers can pass on the benefits to customers in terms of better brokerage discounts," said E Prasanth Prabhakaran, MD and CEO, YES Securities (India).

Experts said the share of mobile trading will go up as more young people become active in the equity markets.

"Most of our new client additions are from tier 2 and tier 3 towns, and mobile is their first choice. We are primarily a mobile app-driven organisation," said Prakarsh Gagdani, CEO, 5paisa.

Hansraj said investors who want to do things independently will rely more upon mobile trading. "Convenience is a big motivator for people to use the mobile phone. After that, it is the comfort they have with their respective brokers," he added.