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'Dabba' trading worry for brokers
Brokerages fear that the rise in compliance costs can force smaller brokers to shut shop and end up pushing clients to the illegal “dabba” trading where there is a lot of flexibility as regulations are blatantly violated. “The stringent margin requirements may make it difficult for smaller brokers to keep hold of their clients who seek to trade in a more relaxed framework where upfront margin is not strictly insisted upon,” said an executive of a broking house. In dabba trading, brokers cut deals on paper chits, instead of the exchange platform to save
Brokerages fear that the rise in compliance costs can force smaller brokers to shut shop and end up pushing clients to the illegal “dabba” trading where there is a lot of flexibility as regulations are blatantly violated. “The stringent margin requirements may make it difficult for smaller brokers to keep hold of their clients who seek to trade in a more relaxed framework where upfront margin is not strictly insisted upon,” said an executive of a broking house. In dabba trading, brokers cut deals on paper chits, instead of the exchange platform to save
