Close to 137 stock brokers of the National Stock Exchange capital market segment shut shop in the first 11 months of 2002.
According to data published in the NSE newsletter, the number of members in the capital market segment declined from 465 in January 2002 to 328 in November. Within the segment, the number of corporate members declined by 116.
However, the number of individuals and firms increased marginally. The NSE is yet to release data for December 2002.
On a whole, NSE's membership slipped from 942 in January 2002 to 906 in November. Interestingly, the number of active members on the Bombay Stock Exchange declined to 450 from around 700 a few years ago. Also, the number of securities listed on the NSE has fallen from 893 to 788.
However, the membership in the capital market and futures and options segment, another category covering the cash and derivatives markets on the NSE, has increased from 389 in January to 496 in November, indicating that several have shifted to dual membership.
In the last months, the turnover on the NSE's capital market segment dropped from Rs 68,719 crore with 21.3 million trades in January 2002 to Rs 51,352 crore with 17.5 million transactions.
"Falling brokerage rates, coupled with falling volumes and high rates of default, are making broking a tough business. Hence, several brokers are keen to exit," a leading Mumbai-based broker said.
Moreover, tougher empanelment norms by domestic institutions like the Units Trust of India, the Industrial Development Bank of India, the General Insurance Corporation and the Life Insurance Corporation are taking a toll on the business of medium and small stock brokers.
