Dr. Sanjiv Agarwal
India will soon enter into an era where investors can indulge in stock trading via their mobile phones from any where in the world, irrespective of what they may be doing at that particular moment. You can visualize a situation where you are watching a movie and also investing or even trading while on a drive. Recently securities and Exchange Board of India (SEBI) had approved two important reforms in the capital market- allowing stock trades on mobile phones and use of smart order routing technology.
Both, Bombay Stock Exchange (BSE) and National Stock Exchange will soon commence stock trades on mobile phones as the guidelines have since been issued . it is understood that most of the large brokerage houses are also ready to step into this unique stock market reform. It is expected that m-trade will become a reality before Diwali 2010 wherein investors can place orders, view position and trade from any where.
Mobile trading will be conducted on the similar lines of internet trading on the stock exchange’s software whereby data will be provided to registered brokers and their clients. As a easy procedure , stock brokers will be given a URL on their cell phones. Once they get access, they will be required to put in a user id and a password to ensure proper identification and security. To enable m-trade in securities , members of BSE and NSE will have to submit their applications for a system audit before commencement of trading. Thus, system audit will be a pre- requisite to commence mobile trading. Once this is done, exchange will grant permission for commencing securities trading using the wireless technology. However, in case of a network failure, brokers will have to provide for alternative communication channels so that trade order could be placed.
Wire less trading though mobile phones shall require -
- a GRPS connection
- application with real time charts and stock quotes
- sending of e mail for order confirmation
- login to view account / transaction details
- password with automatic expiry
For mobile trading, a single user login will provide access to account details, market depth of identified scrips and quote in every thirty seconds. The mobile trading can be done on GPRS enabled hand sets. BSE has already developed its mobile application FASTTRADE whereas some big broking houses are also in the process of developing their own application.
As securities and risk management would attract greater concern in m-trades, stock brokers will have to acquaint the investors about the underlying risks. Also, such brokers would be subjected to annual systems audit by qualified professionals and only those registered brokers who provide internet based trading would be eligible for offering mobile trading.
Some broking houses are already in this product. Brokers provide real time quotes, charts and a single market watch for commodities and equities. To have easy access, same log in could be used. All transactions will have unique identification number to differentiate between a m-trade and a normal trade.
While currently, only future contracts in commodities are allowed trade though mobile phone, it is believed that there will be huge demand for mobile trading in equity from office going and young investors and in retail segment. Undoubtedly, mobile trading has huge business potential and all investors who moderate to large volumes will find this tool useful. Not only this, a large number of investors who are currently trading online may switch to the mobile trading. The m-trading will also allow stock investments to reach out to smaller towns, rural areas and other people without any of them spending on infrastructure. This is only an iceberg of what a handset can do for you.
There is, however, a need to caution that technology has its own perils. Data encryption, hacking up and systemic failures may creep in which are not ruled out.