BSE sees QFI gateway in Facebook app

Geojit BNP Paribas offers application suite; other brokerages have similar route in mind, though practical issues remain

Asia's oldest exchange, the BSE (formerly Bombay Stock Exchange) is looking to new-age social media for bringing foreign retail investors to the Indian market, through the qualified foreign investor (QFI) route.

Ashish Kumar Chauhan, managing director and chief executive officer of the exchange, suggested the application could be a gateway for Indian equities to reach out across regions. "QFIs are a new investor class…connecting to them is a challenge, since they are spread over the world. How do we market ourselves to a totally diverse segment…to the housewife in Japan?…This platform could be a way," he said.

Japanese housewives are regarded as savvy international investors, who use the low interest rates in Japan to borrow funds, which they use to play the global markets. Chauhan was speaking on the sidelines of a Facebook application which would allow investors to trade, using a platform traditionally seen as a means to keep in touch with friends, play games and share pictures and videos. Geojit BNP Paribas launched 'Flip Social', which it claims is India's first stock trading application suite for Facebook.

A P Kurian, chairman of Geojit BNP Paribas Financial Services Ltd, suggested QFIs could be tapped through the platform, though they might not be a primary target.

"QFIs will need to do the KYC (paperwork to comply with the Know Your Customer guidelines) and follow all the other requirements. But once that is done, they can use this platform," he said.

The QFI route allows retail participants from other countries to invest directly in Indian stock markets. The route has so far drawn Rs 764 crore in investments, spread across 64 stocks, according to data from depositories.

Interestingly, Geojit BNP Paribas has an extensive presence in the West Asian region, via joint ventures and partnerships. Some of its partnerships include Barjeel Geojit Securities, its joint venture with the Al Saud group, headquartered in Dubai. There is also Aloula Geojit Capital Co, a joint venture with the Al Johar group in Saudi Arabia, headquartered in Riyadh. It also has a presence in Oman and Kuwait.

Others
Two other brokerages suggested they might be looking to go the Facebook way. India itself is an underdeveloped market for the equity market, so Facebook could be a platform to reach out to these players as well, according to the senior vice-president, who looks after apps development at one of the top five brokerages.

"Financial services firms are still grappling with how to use Facebook. It is still used as a way to manage their brands and offer a voice to the customer," he said, suggesting that transacting on Facebook could be some time away. "There would be some privacy and security concerns," he added.

Vinay Agarwal, executive director at Angel Broking, indicated they were working on a Facebook app, though he declined to share a timeline for releasing this, citing the need for regulatory approvals.

"I see it as an opportunity, though not necessarily aimed only at QFIs. The country is amongst the largest Facebook users is India," he said.

According to social media monitoring sites, Facebook has a little over a billion users. America is the biggest market, with 170 million users, followed by Brazil with nearly 70 mn. India is the third most active Facebook nation, with about 65 mn users.

The chief executive of another brokerage suggested the image of Facebook could work against it when it comes to such applications.

"Facebook seems too non-serious a platform for something like this…I would have imagined it on something like LinkedIn," he said. Maybe that's next?