Indian Exchanges Gear Up For Net Trading

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 in the process of fine-tuning the modalities required to implement
this. It is in final stages. Once the regulatory framework is in place, we
will be ready to start,” said Ravi Narain, deputy managing director, NSE.

“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.

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