Indian Exchanges Gear Up For Net Trading
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The Indian market is getting ready for Internet trading, and The National Stock Exchange (NSE) of India has already announced that it is gearing up to provide Internet trading facility by January 2000.
Regional SEs are contemplating becoming the first stock exchange in the country to kick off Internet trading once the market regulator allows it.
Market is bullish on the new mantra of online trading. With 22 stock exchanges and over 9,000 registered brokers, India has enormous potential for Net-based trading.
"Despite the huge investment costs incurred in setting up a Web-based trading facility, atleast 15 per cent of Indian stock brokers are likely to offer such services as and when SEBI permits Net trading," said N. Murlidharan, business head, Schoolnet India (technology arm of IL&FS). He predicted that Web-based transactions would reach the one million mark in terms of daily transactions.
"We are actively considering commencing Internet trading. We are in the process of evaluating he market and to seek necessary approvals." said Rajendra Naniwadekar, president, Hyderabad Stock Exchange (HSE).
Securities and Exchange Board of India (SEBI), which had constituted a committee to look into Internet trading, is, however, yet to give official nod. But sources are confident that India is likely to kick-off Internet-based stock trading by the end of this year.
"We should be ready to start in a couple of months," says OP Gahrota, senior executive director, SEBI. "Business will go up enormously once Internet trading starts. It is mind-boggling."
SEBI panel is working on the modalities of the system, which would not take time since other major hurdles had been overcome. "So far, there was a problem because two networks could not talk to each other, but now that the department of telecom (DoT) has allowed the interconnectivity of the networks, the technology problem is over," Gahrota said.
The panel was tackling two key areas: the safety of messages transmitted and the standardization of the features of software used by brokers for Internet trading.
Meanwhile, Network Associates is having discussion with the NSE and the (SEBI) for providing the necessary software for starting Internet trading on the bourse. Network plans to help the stock exchanges by providing software for various security checks to avoid hacking during trading on the Net.
"We are talking to SEBI and NSE for providing the various security checks software for Internet trading," said Deb Dutta, regional director (Southeast Asia), Network Associates.
However, Murlidharan pointed out that transactions would grow if stock exchanges induced confidence in the new method of placing orders for scrips through self-service kiosks and call centres.
Striking a note of caution on the growth of net trading in India, Murlidharan said that its growth was limited by the low penetration of PCs, limited technology-savvy investors and an inadequate banking interface. Besides this, the high cost of the infrastructure enabling secure stock transactions may also be an impediment.