‘There are more compliance officers than brokers’

In view of increasing retail participation in the markets, the BSE Brokers Forum is all geared up to take up issues and to ensure better interaction within the broker community. The forum signed its first Memorandum of Understanding (MoU) with the Hong Kong Securities Association (HKSA) on Thursday.

Siddharth Shah, Chariman, BSE Brokers’ Forum, speaks about brokers complaints and the professionalisation taking place within the forum. The BSE brokers’ Forum has about 800 members from both the BSE and the NSE.

What is the purpose of such an MoU with HKSA?

This is the first venture for the forum which is international. We have chosen HKSA’s because we believe both are equal partners. The composition of members, the working, etc, is all very similar. This is a very wide MoU that we have signed. It is an exchange of best practices and regulations and has a training part. It will be both ways — they will be coming here to get trained and we will be going there to get trained.

In the next few months, you will hear of two or three more MoUs. We are already in talks with the UK. Our team has already gone to Maldives so that there will be another MoU. Although Maldives is very small, we would like to have a foot print all over the world. We are also looking at establishing tie-ups in West Asia.

We don’t know if these MoUs will result in increasing foreign participation in Indian markets. But, this is something that can work in the UK where there are a huge number of NRIs.

It has been about two months since you have chosen professionals to lead the forum. What was the objective behind this?

This is my second term as the Chariman of the forum. When I joined, we used to react to certain events. All the members in the forum are trading members and they have their own brokerages. So, whenever a common cause was there, we used to be present. We realised that this was not the way forward. We have to take active part before regulations are made. I don’t think, on an individual basis, some one will do this work on a honorary basis.

Professionalisation means they should be able to work independently and take the activities of the forum ahead. They will be representing us and we will take a back seat. This is a shift. They have joined just two months ago. Because of the change in our attitude ministry calls us, we have discussions with regulators, exchanges involve us in decision making, and the RBI calls us.

What is the top priority of the forum at this point?

There are multiple things that we are getting done. Our focus is to cater to our brokers first and at the same time to see to it that the equity cult is formed. The Government is trying to increase participation in the market. We are also trying to educate people at grassroots to invest. Other priorities are: ongoing discussions with authorities/ regulators for the betterment of the markets and ease of operations.

What are brokers most concerned about?

Compliance and operations are their biggest concerns. Today, there are more compliance officers than brokers. There are a lot of things to comply as a broker.

If at all we can be instrumental to ease those it will be good. Certain checks and balances are required, but if the same thing can be achieved in a different manner, then it can lead to an ease of operations. For the operations bit, we are in regular touch with SEBI. Policy issues we discuss with the Ministry of Finance.

Another concern is the Securities Transaction Tax (STT), regular traders have shifted their business from equities to commodities because there is no STT there. If there is STT on equities, then it should be on commodities as well. If liquidity dries out, then impact cost goes up for an investor. To keep liquidity where it is there should be some level-playing field.

Brokers are also finding it very difficult to explain the Rajiv Gandhi Equity Scheme to investors. It is a little complicated one for first time investors. Although it is well envisaged by the Government, in terms of practicality, it is not very well spelt out

How are brokers reacting to one more equities stock exchange?

Competition is always good. As a broker there are two ways of looking at it. One is, if they come out with a new product, it will be a ‘win-win’ for all of us. Brokers have opened a third department to accommodate a third exchange. Every exchange has a different level of compliance. It will become difficult for brokers to deal with three exchanges.

It is taxing in terms of resources as well. They have to become a member, shell out deposits to them, invest in the back office and invest in training the staff for that. They are willing to do that if there is more business for a new avenue. For this, a new product is important.

> Priya.s@thehindu.co.in