Fall in trading volumes lead to 182 stock brokers shutting shop

The number of stock brokers registered with exchanges has declined across segment as market regulator SEBI tightened regulations and trading volumes in equity cash segment plunged.

Overall, the number of brokers who have surrendered their registration with NSE, BSE, and Metropolitan Stock Exchange jumped by 392 against the new addition of 210, resulting in a net reduction of 182 brokers last fiscal.

The brokers strength facilitating trading in stock exchanges fell to 8,996 in the last fiscal from 9,178 in FY22, according to SEBI annual report.

The cancellation of broking licence was more pronounced in the equity cash and commodity derivatives segments.

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In the cash segment brokers net brokers addition in BSE fell by 32 last fiscal to 1,270 against 1,302 in FY’22 while that of Metropolitan Stock Exchange was down by 8 to 303 (311) and NSE’s was down a tad at 1,226 (1,227), according to the report.

Brokers registered for equity derivatives with BSE and MSEI were down by 20 and 12 to 886 (906) and 284 (296) while that of NSE was up marginally at 1149 (1,146).

The cancellation of broking licence at five commodity derivatives segment was at 147 with MCX and NCDEX registering a walk-out by 72 and 34 members.

Trading turnover dips

Vaibhav Shah, CEO, Wealth Advisors said the cancellation of broking licence can be traced back to falling trading volumes on the exchange besides the rising operational cost of broking.

This apart, the cost structure of traditional broking firms have been challenged by new age online broking firms, he added.

The turnover in the equity cash segment of the country’s largest exchange NSE plunged 20 per cent last fiscal to ₹133 lakh crore against ₹1.66 lakh crore logged in same period the previous year.

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Similarly, BSE equity cash segment turnover dipped 23 per cent to ₹10 lakh crore. Overall, cash segment turnover fell by 20 per cent to ₹143 lakh crore including that of MSEI.

The average daily turnover last fiscal declined by 20 per cent to ₹53,434 crore at NSE and 23 per cent to ₹4,132 crore at BSE as compared to the previous year.

ICICI Securities, one of the largest stock broking firms, has reported that its net profit in FY’23 was down at ₹1,112 crore against ₹1,3679 crore as its revenue dipped to ₹3,415 crore (₹3,435 crore).

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