Most brokers not ready for extended trading: India Infoline

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Q: The ostensible reasons we have right now are increasing volumes and aligning with global markets, do you buy those arguments?

Tulsian: I don't think that both the arguments or objectives are getting achieved because I don't think it is making much impact for European market and we are definitely not able to align with the South East Asian market also because Singapore opens at 7 in the morning so still you will be lagging behind by two hours.

To coordinate or give some leeway to the US investor, I don't think that is sensible because in US everything starts in the morning at 6 or 7am and I don't think that they will remain awake for 12.30am or 1am just to catch one hour of trading or so.

Coming on the volume front, I don't think that the retail participation or the volume will increase to that extent but this will put a lot of discomfort. Take the case of a retail broker, who is catering to the retail or the high networth individual (HNI) investor, if he executes any trade on behalf of this clients and that client leaves at 3o'clock or 4o'clock and in the evening if he has to collect a cheque of one crore because next day morning before market opens, he has to make an early pay-in, from where he will manage the funds. I have the broking experience, when you talk to those clients, they will say, "We will only be able to send you the cheque tomorrow morning after 11o'clock." So these problems remain. If you ask me, we are exposing the risk management system of our Indian broking community by extending trading hours.

So honestly, this is a totally discomforting news and it is putting lot of pressure whether it is broking houses or even the investor community-How can you start your day in the morning at 8am because if market opens at 9am, you have to on a realistic basis start your day at 8am. You won't be able to wind up before 6.30pm or 7pm.

There will be a need to increase manpower-the back-office strength which will not offset additional revenues, which we all will be generating. So it is not percolating in my mind how or what is the idea of either gelling with the international markets or of achieving the higher volumes.

Q: Do you see costs escalating significantly whether it is by way of an extension of hours that you need to work or hiring much more to your current workforce or your team?

Thakkar: Let's not forget that we are doing commodity market trading, which constitutes around 20% of our volume and this trading runs till midnight and we are able to collect all our cheques, instruments and manage our risk very well. So I do not see any reason that why we should be concerned in terms of pressure on back office or on front office. When it's a matter of back office, I don't think there would be any cost escalation because when a client does three-four or five trades instrument to settle that trade is just one, so that will remain same and when we talk about dealers that cost is around 10-12% of total cost - that may go up by 15-20% but look at the revenue increment, I am expecting our topline may grow because of extending trading hours by around 10-15%. So I will look forward to numbers where we can see a bottomline growth better than topline. So cost escalation - whatever happens would be offset because of additional revenue stream that we will get. I do not see any concern why we should be worried about that market will start at 8 am. All dealers will have to work for nine-ten hours. So they will come at 8 am and leave by 6-6:30 pm and back office people who come around 10 am may come at 11-12 and leave around 8 pm. I think this can be manage within present cost structure that can be an escalation on dealers side which is just 10-12% our total cost.