Stockbroking: There are billions in this trade

Old-style stockbroking firms have morphed into gleaming Wall Street-style powerhouses employing economists, accountants, analysts, and specialists
Very few monitors of the Indian economy could have imagined that Indian companies like Infosys Technologies, Tata Consultancy Services and others would emerge from the cloistered corporate world of India to become star scrips on Nasdaq (National Association of Securities Dealers Automated Quotations), the technology-heavy US stockmarket index. But these scrips were merely the vanguard of at least a dozen other Indian companies which are now listed on Nasdaq.

Indias two active stock exchanges are now dealing with big numbers and big money with stockbrokers dealing in billions rather than in millions. Their characteristic tiny booth-like offices boasting only a telephone have metamorphosed into gleaming avant-garde Wall Street-style powerhouses employing economists, chartered accountants, financial analysts, researchers, and industry specialists.

Quite obviously stockbroking firms and stockbrokers are redefining themselves as the business of advising buyers and sellers of financial paper and of facilitating the transaction (‘broking) becomes more complex and voluminous. The National Stock Exchange or NSE (inaugurated on July 23, 1994) provides nationwide trading facilities accessible to investors all over the country with the automated, screen-based trading system using state-of-the-art technology making stockmarket operations more transparent. Simultaneously with foreign financial institutions such as Morgan Stanley and Jardine Fleming having entered the Indian stockmarket, stockbroking has become more professional.

Todays progressive stockbrokers have all their operations computerised and employ qualified industry specialists to advise on buying and selling of stocks. The Securities and Exchange Board of India (SEBI) has been empowered by an Act of Parliament to protect the rights of investors and ensure the promotion and regulation of the capital markets.

The Institute of Chartered Accountants of India (ICAI), New Delhi, conducts its chartered accountancy programme for Plus Two level school leavers through a foundation course and directly for graduates (except fine arts graduates). Finance managers may be MBAs with specialisation in finance from reputed institutes of management or from business administration departments of major universities.

Some other useful learning programmes for the stockbroking business are:

Institute of Company Secretaries of India, New Delhi, offers a postgraduate membership course in capital markets and financial services
Institute of Capital Market Development, New Delhi, offers a one-year postgraduate programme in fundamentals relating to capital market development

All India Centre for Capital Market Studies, Nasik, Maharashtra, offers a one-year postgraduate programme in capital market studies in collaboration with the Bombay Stock Exchange Training Institute, leading to a diploma from the University of Pune

Stock Exchange Building, Mumbai, offers certificate courses run throughout the year

Institute of Financial and Investment Planning, Mumbai, offers a one-year correspondence-cum-lecture series course leading to a diploma in financial and investment planning

Institute of Chartered Financial Analysts of India (ICFAI), Hyderabad, offers a chartered financial analyst equity research programme

The Orion Institute of Capital Market, New Delhi, offers a one-year diploma programme in financial systems and investment management

With a large number of foreign financial institutions entering the Indian stockmarket courses in forex training have also been started by the Bombay Stock Exchanges Training Institute, Mumbai; the All India Centre for Capital Market Studies, Nasik; Institute of Company Secretaries of India, New Delhi; Orion Institute of Capital Market, New Delhi; and the UTI Institute of Capital Market, Navi Mumbai.

According to Janak Mehta, director of the Mumbai-based LKP Shares & Securities Ltd, one of the top five brokerage houses in the country, the stockmarket has experienced a sea change” during the past five years. We have changed from an open outcry system where settlements were made with the physical transfer of shares to computerised trading since 1995 and recently to the dematted (de-materialised) system of trading. As a consequence, currently we have one of the best trading systems in the world and settlements are very quick. Since the Bombay Stock Exchange (BSE) is the largest stock exchange in Asia and the second largest in the world in terms of number of listed scrips, there has been an 80 percent increase in the volume of trades being handled by BSE and NSE,” says Mehta.

GREATER PROFESSIONALISM. According to Mehta another major change is that in the last 12 years, 70 percent of the stockbroking firms which were partnership or proprietary concerns have now registered themselves as companies. Now stockbroking firms themselves are listed on the stockmarket and can raise institutional finance. Besides, a lot of foreign institutional money running into billions of dollars has flowed into the Indian bourses followed by brokers ushering in greater sophistication, competition, and professionalism.

The downside of the stockbroking business is that very strict time schedules have to be followed and working hours stretch to 10–11 hours per day including Saturdays. The upside is that those in the thick get a lot of exposure and the unique excitement of trading. Once the stockmarket bug bites you, its difficult to get it out of your system. The job satisfaction is tremendous and this is the ideal vocation for extroverts,” says Mehta.

With many economy and business analysts convinced that the equity boom will continue and that the equity cult is spreading, this is one of the careers of the 21st century.

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