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Digital Adoption Contributes To Better Growth In Capital Markets

05 Jan 2023

Regulatory support and digital adaption by participants, paves the way for a bigger growth in capital markets, which is reflected across exchange volumes, digital account opening and E-Dis.

SEBI & Exchanges facilitates WFH for dealers / advisors

In the past due to security market regulations, stock exchange members were allowed to work from specific locations only. Due to fear of Covid-19 spread, regulator instantaneously decided to allow dealers and employees of brokerages to log into trading systems from remote locations to put client orders and execute transactions. Earlier trading from remote locations sites dedicated for disaster recovery (DR) or business continuity plan (BCP) was allowed with the provision to connect remotely from the DR and BCP sites to the main office

With relaxation given to WFH for dealers, for broking houses there was no hurdle to cross when it came to client servicing. This contributed to smooth functioning & client servicing across broking houses.

E-DIS (No POA required) made digital account opening easier 

E-DIS helped brokers to implement an electronic delivery instruction slip (e-DIS) that allows clients to sell their stocks real-time without giving  physical slip or a power of attorney. Previously, this may not have been there since the broker don't have clients PoA.

Most of the stock broking industry moved swiftly in adapting and evolving processes during lockdown/WFH forced on account of Covid-19. Activities like client on-boarding and trading platforms were already seamless and evolved.

The only issue left was to get a wet signature on a POA which has now been done away with the new E-DIS.

One good thing that happened is that SEBI, exchanges and depositories have come up very quickly in terms of solutions and providing alternate digital options for same activities.

Innovative features & tools make client journey more exciting

Digital platforms from brokers played a big role in the activity spurt being witnessed on stock exchanges. The features which were available and used mainly on trading terminals are now being offered on digital assets like Mobile trading application and Mini websites (Lighter version). 

These trading routes were usually used by millennial DIY clients earlier, but now with growing awareness and covid-19 restrictions even the older generation has made peace with technology and mended themselves as self traders using available research and trading solutions.

For day traders

there are host of products available where the trader ends up getting higher leverage using smarter order types like bracket(stop loss) order, trailing stop loss orders(maximise gains), using complex charts on mobile platforms which helps them to take informed decisions etc.

Further to add clients have been getting quality inputs from research houses, facility of API based trading with client writing his own trade conditions,  accessibility to advance charting software , Algorithmic trading as added tools.

Due to new margin rules becoming effective which made strategy trade possible at lesser margin and market volatility going north, it just added icing on the cake for traders.

For Investors / positional traders

research papers have become easily accessible in last few years. This time around in last 1-2 years there are many research firms which have started robotic advisory based on proprietary investment models. The client just needs to set the sector of choice or preferred market capitalisation criteria for stocks and select an portfolio from the given options available. They also get a choice to select a sector based portfolio or a mix of 1, 2 or 3 sectors in one portfolio. Some of the bigger broking houses also started with special portfolios keeping in mind the current market volatility selecting mix of large cap and mid cap stocks with proper sector allocation within the portfolio.

Easy account opening

Many players in the broking industry also attribute the spike in new accounts to the efforts of the regulator (SEBI) and other market participants, who have made the end-to-end account opening process seamless and entirely digital.

We can attribute it to the fact that people are at home and returns on other assets not giving very clear picture of upside, people have started looking towards trading as an alternative” 

The upward movement of the market in the last two months would have improved the confidence of the new entrants and seasoned traders, and such sentiments will help increase market participation.


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