EducationWorld

There are billions in this trade

Stock market

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, TCS, Wipro 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.

India’s 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 as well as facilitating transactions (‘broking’) becomes more complex and voluminous. The National Stock Exchange or NSE (inaugurated on July 23, 1994) provides nationwide trading facilities accessible to investors across 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 Merril Lynch having entered the Indian stockmarket, stockbroking has become more professional. 

Today’s progressive stockbrokers have all their operations computerised and employ qualified industry specialists to advise on buying and selling of stocks and shares. 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 institutions offering learning programmes for the stockbroking business are:

• Institute of Company Secretaries of India, New Delhi, which offers a postgraduate 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. It 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. Certificate courses run throughout the year

• Institute of Financial and Investment Planning, Mumbai. Its one year correspondence-cum-lecture series course leads 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 Exchange 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.

Another major change is that 70 percent of stockbroking firms which were partnership or proprietary concerns have now registered themselves as companies. Now some 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. 

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.

(Excerpted from 101 Great Careers for the 21st Century by Indra Gidwani, 2016)