Brokerages boost online trading

Brokerages are stepping up the gas on internet trading, targeting young office-goers and home keepers, to boost their trading volumes as they adopt strategies ranging from expanding their network of branches, providing research content on stocks on their websites and offering advisory products.

The share of online trading has grown from just 3 per cent of the total turnover in 2003-04 to 16 per cent in 2006-07, accounting for one sixth of the total turnover of Rs 74,73,200 crore in 2006-07.

Industry observers expect online trading volumes to make rapid strides over the next three years to corner 50 per cent of the total turnover. Already, 242 trading members of the National Stock Exchange have been granted permission to provide internet-based trading to their clients.

But players such as ICICI Direct, Kotak Securities and HDFC Securities have an edge over the others due to their association with a bank brand name.

"We share a seamless platform with the ICICI Bank and as a consequence of this, we have entered a lot of sectors in the last 5 years where we met the kind of demographic profile (the younger age group) that we target," said Anil Kaul, director and CEO (retail) of ICICI direct.

India Infoline, a leading player, is using the strategy of spreading its network of branches to boost the internet business.

"Investors prefer to come to the branches for opening the accounts. They want to see the people so that they know that even if something goes wrong, they can approach the branches concerned to resolve any issues they may have," said R Venkataraman, director, India Infoline.

Internet trading volumes account for 88-89 per cent of the total turnover for India Infoline. The broking outfit has expanded its network of branches from 175 last year to 561 this year. Offline network is bringing us online clients, added Venkataraman.

Kotak Securities has also increased the physical presence of its internet-based trading. From seven branches in 2004, the brokerage now has 215 branches. Thanks to this, 40 per cent of its business comes from metros and 60 per cent from non-metros.

Brokerages are also providing research content on their websites, allowing clients to take their own decisions on stocks.

"Most retail investors begin investing online in mutual funds and initial public offers (IPOs). The fear of moving into the secondary market is large," said E Prasanth Prabhakaran, senior vice president, Kotak Securities.