Financial Portals Acquiring Bse Membership

Indian web players are slowly spreading their wings. From being content providers just six months ago, the most ambitious of the flock are entering the broking business on the Bombay Stock Exchange.

The BSE board recently cleared applications for fresh memberships from portals like Nirmal Jain-promoted Indiainfoline.com and Infopile, a subsidiary of Indiainfo.com of Raj Kouneru of the US-based Intelli group, besides HDFC Securities.

The exchange has sold fresh membership cards to these portals for Rs 2.50 to 2.91 crore.

In a presentation made to the exchange, these portals highlighted that they intended to become major service providers on the Internet trading platform.

 

But this means impending trouble for the stand-alone e-broking ventures which do not have the backing of news, information and analysis.

BSE vice-president Deena Mehta confirmed, "The board had received several membership applications, and few of them belong to the portals which intend to commence Internet trading soon." However, she declined to give any further details.

Giving membership rights to institutional portals is also worrying the broking community. They argue that these portals would eventually take over the broking business as they perform the dual role of giving market-sensitive information as well as the option to trade in the equity and debt markets.

Second, the argument against banks and institutional players becoming brokers is that they provide the dual comfort of trading and financing against shares held in the demat form.

Further, a section of brokers is concerned that since portals are in the business of information, there could be a potential clash of interest as the release of market- sensitive information could be strategically timed.

They said internationally, institutions keep distant ties between the news services and their trading platforms.

"While brokers are prohibited from tipping off clients, portals can do that within their normal lines of business," a broker said, noting that most portals have sections which give stock tips, flouting the rules set by the Securities and Exchange Board of India.