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BSE brokers surrender 931 terminals, 300 in queue

Rakesh P Sharma

Brokers across the country are rushing to surrender their trading terminals owing to sinking trading volumes under the new rolling settlement regime.

According to Bombay Stock Exchange statistics, the number of active BOLT users fell to 6,200 at June-end from 7,131 at February-end. To make things worse, BSE official say that further applications for surrender of over 300 trading terminals are pending with the exchange administration.

One broker who has already surrendered his BSE terminal and has applied to the National Stock Exchange to surrender that bourse's terminal, said: "The decision to ban the badla system was a hasty one. The same could have been streamlined to suit changing times instead of scrapping it altogether. This is playing havoc with our business."

This fall of 931 terminals constitutes almost 14 per cent of the total BOLT connections in the country. A foreign institutional investor has also surrendered its terminal to BSE.

Trading volumes in the specific segment have dipped from a high of around Rs 45 billion in February 2001 to current levels of around Rs 8.50-9 billion.

The number of terminals surrendered to the NSE are also huge, say sources in the NSE members' association. NSE officials, however, refused to specify the number of members who have surrendered or applied for surrendering their terminals.

All this is attributed to Sebi's investigations on some brokers during March and a ban on the age-old badla (carryforward) system.

With volumes plummeting and rising client defaults, many brokers prefer to shut the sub-brokers' terminals. A large chunk of deactivated terminals is contributed by Sebi's ban on a few large brokers such as Anand Rathi Securities, First Global Stock Broking, Triumph Securities group and others.

Meanwhile, brokers' worries are compounded by the stipulation that they must obtain a "no objection certificate" from the Securities and Exchange Board of India before surrendering their trading terminals.

And to obtain an NOC is not easy as brokers have to first pay the turnover tax collectively running into billions of rupees.

Brokerage rates have dropped from one per cent a few years ago to the current level of as low as 0.04 per cent to the end client due to automation and increase in volumes.

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