An increasing number of brokerages are likely to offer clients the option to trade on the stock exchanges of other countries.
At least three major brokerages are looking at making such offerings available to their clients, according to officials with whom Business Standard spoke. They include Angel Broking, Geojit Financial Services and Samco Securities. A number of launches are focusing on trading in shares in the US.
Vinay Agrawal, chief executive officer of Angel Broking, said that its clients would be able to trade overseas soon.
“We would be launching very soon. We are starting with the US (United States) markets,” he said.
“We are also in the process of rolling out such a platform,” said Jimeet Modi, chief executive officer at Samco Securities. He added that it was likely to be a niche product as remitting money abroad is often not as simple as deploying it domestically. Bank charges can often be high if very small amounts are involved, which can make it less attractive for those who trade smaller amounts in domestic markets, he pointed out.
Satish Menon, executive director at Geojit Financial Services, echoed the sentiment, while adding that it was a good product for those who wanted diversification.
“We are exploring options for a select set of clients,” he said.
Bank-backed brokerages had been making offerings available to their clients in recent times. The brokerage arm of ICICI Bank, one of the country’s largest private sector banks, ICICI Securities had announced a similar launch in August. It had tied up with Interactive Brokers, which is based in the US. Another private sector major Axis Bank’s retail broking and investment services firm Axis Securities also announced a similar venture last month by tying up with online platform Vested Finance.
The Reserve Bank of India allows residents to send up to $250,000 a year abroad under its Liberalised Remittance Scheme (LRS). An analysis of past data shows increasing equity and debt investments abroad.
Residents invested $165.5 million in 2013-14. This rose by over 160 per cent to $431.4 million in 2019-20. This outstrips growth in immovable property, which grew around 47 per cent over the same period. It was $58.7 million in 2013-14 and rose to $86.4 million in 2019-20.
The offerings also include an avenue for fractional investing, which means that an order can be executed for a part of a share. This means that, illustratively, if a share costs $500, you might be able to purchase a tenth of it by paying $50.
The drive to offer new products comes even as an increasing number of people are opening trading accounts in India. The fall in commission that brokers charge has fallen over the years. Brokerages saw a significant rise in activity as more people stayed at home during the lockdown aimed at curbing the spread of the Covid-19 pandemic. Stock markets crashed in March, only to bounce back. The benchmark S&P BSE Sensex fell to a low of 25,638.9 on March 24. It has since risen 52.1 per cent to close at 38,990.94 on Thursday. This means that someone who invested in March would have made 50 per cent or more in just a few months.