For the complete report, get in touch with us at : info@netscribes.com Financial brokerage market in India is going through sweeping changes with new players looking to be a part of the highly competitive brokerage market characterized by dwindling brokerage and exponential growth of brokers and sub brokers. On the other hand, many existing players have been forced to undercut operations due to lack of revenues while others still surviving on the basis of consolidation. The market is witnessing new guidelines by the regulatory authorities and new innovative offers by banks and brokerage companies. The report provides a brief introduction to the financial broking market. The market overview includes information regarding the Indian market scenario and equity volumes on a year on year basis. An indication of the prevailing brokerage structure is included as well as highlights of the business model employed by the brokerage firms. It covers information regarding the changes in brokerage fee structure due to changes in the market. The primary guidelines stated by SEBI regarding the brokerage market are provided. The market overview section also analyses the brokerage sector as a whole to understand the opportunities and competitiveness of the market through a porter’s analysis. The overall distribution of brokers and stock brokers has also been provided. The following section explains the major drivers in the market such as increase of income levels in tier 2 cities, under penetration of equities which can be explored by the brokerage firms to increase their brokerage. Other factors include developing franchisees to gather more revenue without having to actually spend on infrastructure. Return of FII and IPO are other encouraging factors. Rising rate of FD and other traditional saving instruments are proving to be more in vogue due to the turbulent Indian market conditions which is acting as a major challenge for the market. Global uncertainties have created huge pressures on the market. Consolidation of smaller broking firms and retail investors staying away are other important barriers that the market faces. The trends identified are trading in mobile and online platforms along with offline modes in order to reach out to the far flung customers, new players coming in the Indian broking space making the competition even more intensive including banking institutions. Other trends include diversification of the major players in other lines of business and new innovative offerings by broking units so as to lure customers. It has been seen that broking units are also trying to hard sell demat account and bulk of the equity investments from retail customers are coming via mutual fund route. Additionally, large players are tying up with smaller players towards expanding their distribution network and to tap a larger market. The competition section provides the prevailing brokerage structure and a comparison of the market capitalization a

1. Financial Brokerage Market – India
Financial Brokerage Market India
August 2011

2. Executive Summary
 Average daily volumes in equity reached INR XX bn in 20‐‐‐‐‐
Market  Stock market has seen fluctuations in the recent past and so have the earnings in brokerage
Overview  Commodities and currency markets are steadily picking up
Drivers Challenges
 Rising income levels  Rising rate of FD proving to be attractive
Drivers &  Under penetration of equities  Global uncertainties
 Franchisee model fuel expansion
h d lf l  Undercutting and consolidation
Challenges
 FIIs show strong return
 IPOs showing strong return
 Trading in other platforms
Trading in other platforms  MFs pose less risk when invested for a longer
MFs pose less risk when invested for a longer
 Advent of foreign and new Indian tem
players  Lifetime offers by brokerage houses to lure
Trends customers
 Hard selling of Demat account
 Stock Brokers foray into real estate
Stock Brokers foray into real estate  Tie‐ups between big and small brokers
Tie‐ups between big and small brokers
broking
Major Players in the Market
Competition
Player 1
Pla er 1 Player 2
Pla er 2 Player 3
Pla er 3 Player 4
Pla er 4
FINANCIAL BROKERAGE MARKET IN INDIA 2011.PPT 2

3. •Introduction
•Market Overview
•Drivers and Challenges
•Drivers and Challenges
•Trends
•Competition
•Key Takeaways
y y
FINANCIAL BROKERAGE MARKET IN INDIA 2011.PPT 3

4. Stock markets have been on a downturn due to global cues
affecting financial brokerage market negatively
Market Overview – Stocks (1/2) Equity: Average Daily Volumes
• In the stock market, various equity and shares of the Type 1 Type 2 Type 3 Type 4
listed companies are traded
INR bn
INR bn
• It is also known as the secondary market
1,500 X
• In India, capital markets, of which secondary market
is a part of, is regulated by SEBI 1,000
W
U a4%
• On account of higher inflows from FIIs and FDIs, the a1% V a3%
market has reacted well in 2009 10
2009‐10 500 b1% a2%
b3%
b2% b4%
c1% d1% c2% d2% c3 d3% c4% d4%
0
20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐
Geographical Distribution (Cash Segment) Turnover (Cash Segment)
City 1 City 2 City 3 City 4 O Type 1
INR bn r3%
Type 1 Type 2 Type 2 r2%
80,000 P
20‐‐ ‐ ‐‐
r1% N
20‐‐ ‐ ‐‐ g1% h1% k1% l1% m1% p1% e5%
60,000
60 000 e3% O
i1% j1% n1% o1%
20‐‐ ‐ ‐‐ M e4%
20‐‐ ‐ ‐‐ g2% h2% k2% l2% m2% p2% 40,000 L
i2% j2% n2% o2% e2%
e1% f3% f5%
20‐‐ ‐ ‐‐
20‐‐ ‐ ‐‐ g3% h3% k3% l3% m3% p3% 20,000 f4%
f1% f2%
i3% j3%
j n3% o3%
20‐‐ ‐ ‐‐ g4% h4% k4%
20‐‐ ‐ ‐‐
l4% m4% p4% 0
20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐
i3% j3% n4% o4%
Source:
FINANCIAL BROKERAGE MARKET IN INDIA 2011.PPT 4

5. Prevailing Brokerage Structure – Indicative
Type: Equity
Resident Indians Non-Resident Indians
Delivery Based 0.a% or min INR B or x% on transaction value ( 0.d % or min INR K or p % on
Trades Both BUY/SELL) transaction value (Both BUY/SELL)
Type : Derivatives
Futures Market 0.d % or min INR D or ceiling of e % of transaction value (Both Buy & Sell)
Type: Option Market
Option Market Higher of g % of the premium amount or INR.R per lot (Both Buy & Sell)
Type : Currency Derivatives
Currency Account opening fees of INR U
Derivatives Brokerage of INR H p Contract on carry forward trades and INR D - each side on square
g per y q
up of trades (statutory and other charges to be levied separately).
Of the total commission pool of INR A1bn to INR A2 bn, institutional broking contributes to p% of the pool
Of the total commission pool of INR A1bn to INR A2 bn institutional broking contributes to p% of the pool
Source:
FINANCIAL BROKERAGE MARKET IN INDIA 2011.PPT 5

6. Drivers & Challenges – Summary
Drivers Challenges
Rising rate of FD proving to be
Rising rate of FD proving to be
Rising income levels attractive
Under penetration of equities Global uncertainties
Franchisee Model fuels expansion Undercutting and consolidation
FIIs showing strong return
IPO showing strong return
FINANCIAL BROKERAGE MARKET IN INDIA 2011.PPT 6

7. Trends – Summary
Trading in other platforms
Advent of foreign and new Indian players
Hard selling of Demat account
Hard selling of Demat account
Key
Trends ` Stock Brokers foray into real estate broking
MFs pose less risk when invested for a longer tem
Lifetime offers by brokerage houses to lure customers
Tie‐ups between big and small brokers
FINANCIAL BROKERAGE MARKET IN INDIA 2011.PPT 7

8. Major Players (1/21)
Company Snapshot: Player 1
Corporate Information Financial Performance
Revenue
Headquarters Location 1
Location 1
Net Income
Founded 19‐‐ A D
10 3
B C
8
Products/ 6
2
Product 1, Product 2, Product 3
Services 4
1
2
Key People Person 1, Position 1 0 0
20‐‐ 20‐‐ 20‐‐ 20‐‐
Business Highlights
Business Highlights
• The company was formerly known as A Limited and changed its name to B Ltd. in 20‐‐
• Its network is spread across A1 offices across B cities as on 20‐‐
• In the year 20– Company C became the subsidiary of Company A Limited
 Thi
This was a very strategic move as it helped Company A to form a large network of various branches, sub‐brokers and nearly A3 clients
t t i it h l d C A t f l t k f i b h bb k d l A3 li t
• Of late, it has diversified into home loans under the subsidiary called Company ABC Limited under the aegis of
authority XYZ
• In FY– Company A had entered into a JV with Company S Inc, to enter the life insurance segment in country I
FINANCIAL BROKERAGE MARKET IN INDIA 2011.PPT 8

9. Thank you for the attention
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