Domestic brokerages, such as Motilal Oswal and ICICI Securities, are likely to strengthen their hold over the institutional market to catch up with their foreign counterparts, as their marketshare is expected to rise to over 50 per cent by 2015.
According to a report by global research firm Celent, domestic brokerages' importance is steadily increasing in the Indian institutional market, where foreign brokerages like CLSA, Merrill Lynch, Morgan Stanley and JPMorgan have been the leading players traditionally.
"Now the Indian brokerages such as Edelweiss, Kotak Securities, ICICI Securities, and Motilal Oswal are also becoming important players in the market. Hence, we anticipate the share of the domestic brokerages rising to more than 50 per cent in the institutional space by 2015," the report stated.
"This will be coupled with the growth of the domestic clients of some of these brokerages and their increasing acceptance with foreign institutional investors," it added.
The report revealed that domestic brokerages have become more service-oriented and have improved their technological capabilities.
Moreover, they are also improving the breadth of their product offerings and becoming more complete financial supermarkets in the process.
"Domestic brokerages are no longer content to play second fiddle in the market and are more comfortable using the latest technology and engaging foreign vendors," Celent Senior analyst and author of the report Anshuman Jaswal said.
Unlike its retail counterpart, the Indian institutional brokerages market is relatively concentrated, with nine to ten foreign brokerages and seven to eight domestic players having a combined market share of 60–70 per cent.
The Celent report also stated that electronic trading in the industry has been steadily increasing.
"We expect that electronic trading will go from only 10 per cent in 2009 to 50 per cent in 2015, as the domestic institutions become more adept at it," it stated.
