Healthy Mix Of Online And Offline Trading Needed

You have been in the field of market research for a significant period of time. What is your perspective on the phenomenon for e-broking?

I feel that a pure online play is a risky model in the long term as people are still getting used to the idea of trading on the Net. There has to be a healthy mix of online and offline models for the investing community to accept the idea. Charles Schwabb has around 500 brick and mortar offices in the US in addition to its significant presence on the Net trading segment where it is number one. The US markets have taken four years to develop and we certainly cannot hope to achieve that level in six month time though the concept is here to stay and would only grow with time. The market share of Net trading in the US is around one fifth of the total trading volumes which reflects the penetration made by the medium.

 

In broking business personal interaction is an essential feature and will continue to remain so though Internet will help raise the market participation of retail investors. It is a factor that we have taken into account while launching the e-broking initiative. Our prime focus will be to provide high service standards, access to market research and seamless execution of trades for all classes of investors.

What is your game plan?

We see the Net as another medium by which we can fulfil the aspirations of our clientele. However, it will mark a difference in the target audience. Initially, it would be the retail side and that too the high networth segment. The information requirements of this clientele would be quite distinct from those of our institutional clients. They would require information in a more crisp format and this is something we would address on the content side. From an investment perspective we have earmarked close to Rs 15 crore .This would cover various aspects including the technology platform of IBM as also the marketing and administrative expenditure. The synergies of the group would be leveraged to provide research and other inputs.

What are your experiences in the venture funding business?

The operations are still at a nascent stage. We have identified a few companies and negotiations are at a crucial phase. There would be a technical lock in for funds invested but rationally we would be looking at opportunities which would bear fruit in the next three years. For this simple reason we would avoid start ups .Our thrust as far as laying our bets are concerned would initially be more on technology start ups. For this we have our guys in the technologically happening parts of the country. We also have situations of emerging funding opportunities because of our existence in activities like equipment financing. Down the line many of our venture funding investments could emerge as opportunities for our investment banking business.

And the action on the mutual fund?

The sudden increase in interest rates , downward pressure on the rupee as also downward drift in the equity markets have had a very negative effect on inflows. We see the situation stabilising pretty soon at least as far as inflows into our debt offerings in our mutual fund business are concerned.

What changes have you witnessed on the public issue front. What has been the public's perception?

Over the years and especially in the past two years the whole process of IPO float has become much more transparent. The pricing of an offer is now determined by market forces and public at large rather than by a few people in a closed door room arbitrarily. Due to this quality issues will get proper response from the public. This development has been a major step towards greater public participation in the whole process. We handled most of the public offerings by corporates during the previous year. The experience from their and our sides has largely been satisfactory and fruitful. There has been a slowdown in the number of offerings of late due to volatile market conditions. The next big step would be distribution of shares through Internet in a more transparent manner.