Online trading comes of age

Volumes grow 150% per annum to over Rs 700 cr.

Online trading is gaining momentum with trading volumes growing by 150 per cent per annum. Over the past two years, the value of all trades executed through the Internet on the National Stock Exchange has grown from less than Rs 100 crore in June 2003 to over Rs 700 crore in July 2005.

There has been a massive rise in the number of Internet traders. At the end of July 2005, there were 108 registered brokers on the NSE, and about 1.054 million Internet trading subscribers. However, the top three players, ICICIdirect.com, Indiabulls and Kotak Securities, command nearly 85 per cent of the total customer base.

ICICIdirect.com, the largest trading portal, has over 675,000 customers. In March 2003, the firm had about 234,000 customers trading through its portal.

"Being the first player to enter the online trading segment, ICICIdirect has made broking more structured and transparent, reducing the operational hassles," says Anup Bagchi, managing director and CEO of ICICIdirect.com. Bagchi expects online business to grow around 80-100 per cent in the coming year.

Says Narayan SA, managing director, Kotak Securities, "The number of subscribers trading through our portal has gone up significantly by 150 per cent and we expect this growth rate to continue."

Over the past one year, the number of subscribers to kotakstreet.com, Kotak Securities' online trading portal, has grown from 30,000 to 75,000. Narayan expects kotakstreet.com to have at least 130,000 customers by the end of this fiscal.

Similarly, Indiabulls, a relatively late entrant in the game, has been on the fast track with its online customers growing from 35,000 in June 2003 to over 140,000 at present.

"Being the third entrant "" next to ICICIdirect and Geogit Securities Limited - Indiabulls has expanded to 90 different cities and towns with 135 offices that deal only in equities," says the company's Executive Director Gagan Banga. The firm has a client base of 180,000, a bulk of whom are online customers.

Indiabulls has scaled up its operations to cater for its growing customer base. Currently, there are around 2,000 relationship managers to handle online clients, adds Banga.

Sharekhan, the retail broking arm of Mumbai-based broking firm SSKI, has 250 centres across 123 cities and towns in India and offers its online services through its site sharekhan.com, which was launched in 2000.

Jaideep Arora, director, Sharekhan, said, "Online trading represents 30 per cent of Sharekhan's broking business. The number of customers registered with Sharekhan is 130,000 currently, of which 60,000 use Internet trading."

Despite the rapid growth, online trading constitutes a puny 8-10 per cent share of the total turnover on the NSE, although this is up from 2-3 per cent about two years ago. The biggies in the online business are very optimistic about growth going forward. They anticipate a 100 per cent growth in their subscriber base every year for the next few years.

Simplicity, convenience and greater reliability have put online trading on a high growth trajectory. However, even now, many investors prefer to trade through traditional brokers as they get "hot tips". But industry experts believe that online trading will take off in a big way in the years to come.