Current Indian Scenario

Indian stock broking industry is growing at a high pace. It now offers wider range of products. Also corporate memberships is growing and the scope of functioning of the brokerage firms has transformed from that of being a family run business to that of professional organized function that lays greater emphasis on observance of market principles and best practices. Emergence of online broking enabled reduction in transaction costs and costs of trading. Keen competition has emerged in online broking services, with some of these offering trading services at the cost of a few basis points or costs which are fixed in nature irrespective of the volume of trading conducted. A wide range of incentives are being created and offered by online brokerage firms to attract larger number of clients.
Also there are some major challenges that are being faced by the stock markets. The industry itself is highly fragmented. Also Capital adequacy has emerged as an important determinant that governs the scope of business in the financial sector. Broking has become international in character with the stock markets being open for domestic and international investors. Surging markets and growing opportunities will attract a number of international firms that will increase the pace of competition. Global firms with higher levels of capital, expertise and market experience will bring dramatic changes in the brokerage industry space which the local firms should be able to absorb and compete. Also it is important for brokerage firms to establish strong and streamlined systems and procedures for ensuring investor safety and protection. Firms found not having suitable infrastructure and processes to ensure investor safety and protection will encounter constraints from regulation as also class action suits that investors might bring against erring firms. The nature of penalties and punitive damages would become more severe.