Mobile-based trading jumps amid lockdown, makes up 25% of cash market deals

Experts say spike can be attributed to limited availability of dealing room staff

Mobile-based trading has seen a sharp spike in recent months, with trades executed through mobile phones accounting for one-fourth of cash market transactions on the National Stock Exchange (NSE) in July.

According to industry estimates, the share of mobile-based trading was 24.47 per cent on the NSE in July, against 23.4 in the previous month. On the BSE, the share of mobile-based trading rose to 17.24 per cent in July, from 11 per cent in June. Market participants say one of the reasons behind this rise is the limited availability of dealing room staff amid the lockdown. “Volumes that came through dealers have shifted towards the mobile interface because of the lockdown. Clients were earlier able to place orders through CTCL systems of brokers, with the help of dealers,” said Jimeet Modi, founder and CEO of SAMCO Securities.

CTCL is a computer-to-computer link network, which is operated by dealers of brokerages. “The April to June quarter saw 21 per cent rise in trading over smartphones in the cash segment, compared to the January to March quarter,” pointed out Ravi Kumar, co-founder and CEO, Upstox.

On the NSE, the share of mobile-based transactions was only lower than those routed through co-location a facility. The latter is largely used by institutional investors and high-frequency traders to place large-sized trades on the exchanges.

 

 

Experts say there has been an increased interest from smaller cities. “We are seeing more traction for mobile-based trading in non-metro cities. Clients in these cities are heavily using the mobile interface to place their orders in the market,” said Rahul Jain, head, Edelweiss Wealth Management.

The firm’s mobile trading app —Edelweiss Mobile Trader — saw a 65 per cent jump in its user base in the June quarter, on a year-on-year (YoY) basis. Over 58 per cent of the active user base was from non-metro cities, indicating increased investor interest from tier-II and tier-III cities.

The entry of millennials in equity markets is also driving the jump in mobile-based transactions.

“This growing demand for mobile-based trading is majorly among millennials and GenZ, who are also first-time investors,” said Tejas Khoday, co-founder and CEO of FYERS, a technology-focused brokerage. 

FYERS reported a 40 per cent growth in business during the lockdown. The sharp run-up in equity markets since March 23 lows have led to more investors entering equity markets. Brokers have seen a sharp jump in both new investor accounts, as well as higher activity within the existing client base.

Since March 23, the front line indices — Sensex and Nifty — are up about 50 per cent each.

Market participants say that while technology-driven user-systems have led to quick on-boarding of new investors into the markets, it would be interesting to see how these investors behave if market volatility rises again.