The Securities and Exchange Board of India is considering allowing Direct Market Access (DMA) to retail investors. This could completely change the way how India trades on the Stock Markets. If SEBI continues with its decision, Indian stock brokers could possibly look at a huge change which could affect it’s existence.
India’s top 10 Stock Brokers account for nearly 63% of India’s investors. These are the Top 10 Indian Stock Brokers which shall be affected by SEBI’s move.
“Can this be offered to retail without a broker? Yeah, but retail investors use a broker for the platform (UI, UX, different order types, reporting, etc) on which they trade, DMA is not suitable. The biggest task for a broker is handling customer queries, complaints, etc. The industry has tens of thousands of employees for this. Can exchanges take over this and also act as a regulator to regulate itself when it comes to customer grievances? Maybe not,”
Nithin Kamath, Co-Founder of Zerodha on Twitter
DMA has always been available for institutions, but through a broker. Can this be offered to retail without broker? Yeah, but retail investors use a broker for the platform (UI, UX, different order types, reporting, etc) on which they trade, DMA is not suitable. 1/3
— Nithin Kamath (@Nithin0dha) July 27, 2020
But yeah, there is no status quo in today’s world, if something can be disintermediated, it will be. I don’t think this news is true, but there is usually no smoke without a fire. So maybe something is going to change. 3/3
— Nithin Kamath (@Nithin0dha) July 27, 2020
Also Read: SEBI signs MoU with CBDT
With a huge increase in Financial Awareness especially amongst the youth of the nation, online trading has seen a huge spike in the recent years. According to a recent report from HDFC Securities, Internet Trading accounts for nearly 29% of all transactions on the Stock Market. Clearly this huge inflow of first time retail investors have proved to be a game-changer for companies like Zerodha, Upstox, 5Paisa etc. Though if SEBI allows DMA, would these investors leave their current brokers or would they remain with them remains to be seen.
If Direct Market Access is allowed by SEBI, it could be beneficial for the Bombay Stock Exchange which is India’s oldest stock exchange and also a listed company, along with National Stock Exchange since it would open up a new revenue stream for both these companies which they would definitely capitalize upon. Just after the reports of DMA were out, BSE stock rose up to 9%
On the other hand, the share price of major listed stock brokers fell.
| Stock | Price as on 27th July, 2020 |
| Geojit Financial Services | ₹35.45 (-9.57%) |
| ICICI Securities | ₹493 (-8.3%) |
| Edelweiss | ₹77.75 (-4.43%) |
| India Infoline | ₹71.30 (-3.26%) |
