For the complete report, get in touch with us at : info@netscribes.com Financial brokerage market in India is going through sweeping changes with new players looking to be a part of the highly competitive brokerage market characterized by dwindling brokerage and exponential growth of brokers and sub brokers. On the other hand, many existing players have been forced to undercut operations due to lack of revenues while others still surviving on the basis of consolidation. The market is witnessing new guidelines by the regulatory authorities and new innovative offers by banks and brokerage companies. The report begins with a brief introduction to the financial broking market. The market overview includes information regarding the Indian market scenario and equity volumes on a year on year basis. An indication of the prevailing brokerage structure is included as well as highlights of the business model employed by the brokerage firms. It covers information regarding the changes in brokerage fee structure due to changes in the market. The primary guidelines stated by SEBI regarding the brokerage market are highlighted. The market overview section also analyses the brokerage sector as a whole to understand the opportunities and competitiveness of the market through a porter’s analysis. The overall distribution of brokers and stock brokers has also been provided. The following section explains the major drivers in the market such as increase of income levels in tier 2 cities, under penetration of equities which can be explored by the brokerage firms to increase their brokerage. Other factors include developing franchisees to gather more revenue without having to actually spend on infrastructure. Return of FII and IPO are other encouraging factors. Rising rate of FD and other traditional saving instruments are proving to be more in vogue due to the turbulent Indian market conditions which is acting as a major challenge for the market. Global uncertainties have created huge pressures on the market. Consolidation of smaller broking firms and retail investors staying away are other important barriers that the market faces. The trends identified are trading in mobile and online platforms along with offline modes in order to reach out to the far flung customers, new players coming in the Indian broking space making the competition even more intensive including banking institutions. Other trends include diversification of the major players in other lines of business and new innovative offerings by broking units so as to lure customers. It has been seen that broking units are also trying to hard sell Demat account and bulk of the equity investments from retail customers are coming via mutual fund route. Additionally, large players are tying up with smaller players towards expanding their distribution network and to tap a larger market. The competition section provides an overview of the competitive landscape in the market and includes a detailed pro

1. Financial Brokerage Market – India
Financial Brokerage Market India
January 2012

2. Executive Summary
 Average daily volumes in equity reached INR XX bn in 20‐‐‐‐‐
Market  Stock market has seen fluctuations in the recent past and so have the earnings in brokerage
Overview  Commodities and currency markets are steadily picking up
Drivers Challenges
 Rising income levels  Rising rate of FD proving to be attractive
Drivers &  Under penetration of equities  Global uncertainties
 Franchisee model fuel expansion
h d lf l  Undercutting and consolidation
Challenges
 FIIs show strong return
 IPOs showing strong return
 Trading in other platforms
Trading in other platforms  MFs pose less risk when invested for a longer
MFs pose less risk when invested for a longer
 Advent of foreign and new Indian tem
players  Lifetime offers by brokerage houses to lure
Trends customers
 Hard selling of Demat account
 Stock Brokers foray into real estate
Stock Brokers foray into real estate  Tie‐ups between big and small brokers
Tie‐ups between big and small brokers
broking
Major Players in the Market
Competition
Player 1
Pla er 1 Player 2
Pla er 2 Player 3
Pla er 3 Player 4
Pla er 4
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 2

3. •Introduction
•Market Overview
•Drivers and Challenges
Drivers and Challenges
•Trends
•Competition
•Key Takeaways
•Appendix
A di
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 3

4. Stock markets have been on a downturn due to global cues
affecting financial brokerage market negatively
Market Overview – Stocks (1/2) Equity: Average Daily Volumes
• In the stock market, various equity and shares of the Type 1 Type 2 Type 3 Type 4
listed companies are traded
INR bn
INR bn
• It is also known as the secondary market
1,500 X
• In India, capital markets, of which secondary market
is a part of, is regulated by SEBI 1,000
W
U a4%
• On account of higher inflows from FIIs and FDIs, the a1% V a3%
market has reacted well in 20XX XX
20XX‐XX 500 b1% a2%
b3%
b2% b4%
c1% d1% c2% d2% c3 d3% c4% d4%
0
20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐
Geographical Distribution (Cash Segment) Turnover (Cash Segment)
City 1 City 2 City 3 City 4 O Type 1
INR bn r3%
Type 1 Type 2 Type 2 r2%
80,000 P
20‐‐ ‐ ‐‐
r1% N
20‐‐ ‐ ‐‐ g1% h1% k1% l1% m1% p1% e5%
60,000
60 000 e3% O
i1% j1% n1% o1%
20‐‐ ‐ ‐‐ M e4%
20‐‐ ‐ ‐‐ g2% h2% k2% l2% m2% p2% 40,000 L
i2% j2% n2% o2% e2%
e1% f3% f5%
20‐‐ ‐ ‐‐
20‐‐ ‐ ‐‐ g3% h3% k3% l3% m3% p3% 20,000 f4%
f1% f2%
i3% j3%
j n3% o3%
20‐‐ ‐ ‐‐ g4% h4% k4%
20‐‐ ‐ ‐‐
l4% m4% p4% 0
20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐ 20‐‐ ‐ ‐‐
i3% j3% n4% o4%
Source:
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 4

5. Prevailing Brokerage Structure – Indicative
Type: Equity
Resident Indians Non‐Resident Indians
Delivery Based a% or min INR B or x% on transaction value ( Both c% or min INR D or e% on transaction
Trades BUY/SELL) value (Both BUY/SELL)
Type: Derivatives
Futures Market f% or min INR G/‐ or ceiling of h% of transaction value (Both Buy & Sell)
Type: Option Market
Option Market Higher of i% of the premium amount or INR J per lot (Both Buy & Sell)
Type: Currency Derivatives
Currency Account opening fees of INR K/‐
Derivatives Brokerage of INR L/‐ per Contract on carry forward trades and INR M/‐ each side on square up of
trades (statutory and other charges to be levied separately)
Of the total commission pool of INR Y to INR Z bn, institutional broking contributes to p% of the pool
Source: SAMPLE
S FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 5

6. •Introduction
•Market Overview
•Drivers and Challenges
Drivers and Challenges
•Trends
•Competition
•Key Takeaways
•Appendix
A di
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 6

7. Drivers & Challenges – Summary
Drivers Challenges
Rising rate of FD proving to be
Rising rate of FD proving to be
Rising income levels attractive
Under penetration of equities Global uncertainties
Franchisee Model fuels expansion Undercutting and consolidation
FIIs showing strong return
IPO showing strong return
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 7

8. Trends – Summary
Trading in other platforms
Advent of foreign and new Indian players
Hard selling of Demat account
Hard selling of Demat account
Key
Trends ` Stock Brokers foray into real estate broking
MFs pose less risk when invested for a longer tem
Lifetime offers by brokerage houses to lure customers
Tie‐ups between big and small brokers
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 8

9. •Introduction
•Market Overview
•Drivers and Challenges
Drivers and Challenges
•Trends
•Competition
•Key Takeaways
•Appendix
A di
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 9

10. Public: Domestic Company – Player 1 (1/3)
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
p
Ticker Symbol
Stock Exchange
Head Office
Products and Services
Products and Services Regional Office
Regional Office
Category Products/Services
Category 1 Key People
Category 2
Category 2 Name
N Designation
D i ti
A
SAMPLE
SAMPLE
B
C
D
Source:
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 10

11. Public: Domestic Company – Player 1 (2/3)
Financial Snapshot
i i lS h Key Ratios
K i
y‐o‐y change
Particulars 2010 2009 2008
Total Income (2010‐09)
Total Income
Net Profit / Loss
Net Profit Profitability Ratios
150 15 Operating Margin
Net Margin
N tM i
10
100 Profit Before Tax Margin
5 Return on Equity
50
0 Return on Capital Employed
0 ‐5 Return on Working Capital
2008 2009 2010 Return on Assets
Return on Fixed Assets
R t Fi d A t
Financial Summary Cost Ratios
• The company incurred a net loss of INR X mn in FY 20XX, as Operating costs (% of Sales)
compared to net profit of INR Y mn in FY 20XX Administration costs (% of Sales)
• The company reported total Income of INR A bn in FY 20XX,
SAMPLE
SAMPLE
Interest costs (% of Sales)
registering an increase of b per cent over FY 20XX
registering an increase of b per cent over FY 20XX Liquidity Ratios
i idi i
• The company earned an operating margin of C per cent in FY 20XX a Current Ratio
decrease of d percentage points over FY 20XX Cash Ratio
Leverage Ratios
• The company reported debt to equity ratio of Z in FY 20XX, an
Debt to Equity Ratio
increase of W per cent over FY 20XX
Debt to Capital Ratio
Key Financial Performance Indicators Interest Coverage Ratio
Efficiency Ratios
Indicators Value (XX/XX/20XX) Fixed Asset Turnover
Market Capitalization (INR) Asset Turnover
Total Enterprise Value (INR) Current Asset Turnover
g p
Working Capital Turnover
EPS (INR)
EPS (INR)
Capital Employed Turnover
PE Ratio (Absolute)
Source: Improved Decline
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 11

12. Public: Domestic Company – Player 1 (3/3)
Key Business Segments Key Geographic Segments
Segment 1 Segment 2 Country 1
100% India is the only geographic
India is the only geographic
100%
segment in which Player 1 has
been operating for the last X
50% 99.9% 99.9% 100.0% 50% 100%
years
0% 0.1% 0.1% 0.0% 0%
20XX
20XX 20XX 20XX
Key Recent Developments
Description News
• Player 1 is a leading stock and commodity broking house with acknowledged industry Leadership in
SAMPLE
SAMPLE
execution and clearing services
Overview • It is a member of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) through which it
It is a member of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) through which it
handles trading needs through a network of experienced dealers across various locations, and through
their comprehensive web enabled services
• It facilitates the investment process and also provides value‐added services like research, stock ideas,
Services DEMAT, online trading and others to make the investment experience easy and rewarding
• It also provides research and consulting services for taking the right investment decisions
Source:
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 12

13. Private: Domestic Company – Player 2 (1/3)
Company Information Offices and Centres – India
Corporate Address
Tel No.
156,117.2
Fax No.
Website
Year of Incorporation
Head Office
Products and Services
Products and Services
Category Products/Services
Category 1 Key People
Category 2
Category 2 Name
N Designation
D i ti
A
SAMPLE
SAMPLE
B
C
D
Source: Note: The list of products and services is not exhaustive
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 13

14. Private: Domestic Company – Player 2 (2/3)
Financial Snapshot
i i lS h Key Ratios
K i
Total Income Net Profit/Loss y‐o‐y change
Particulars 2011 2010 2009 2008
(2011‐10)
INR mn INR mn
Profitability Ratios
1400 250 Operating Margin
1200 200 Net Margin
1000 150 Profit Before Tax Margin
800 Return on Equity
100 Return on Capital Employed
600
50 Return on Working Capital
400
0 Return on Assets
200
Return on Fixed Assets
0 -50
Cost Ratios
2008 2009 2010 2011 Operating costs (% of Sales)
Administration costs (% of
Sales)
Financial Summary Interest costs (% of Sales)
Interest costs (% of Sales)
• The company incurred a net profit of INR X mn in FY 20XX, as Liquidity Ratios
compared to net profit of INR Y mn in FY 20XX Current Ratio
Cash Ratio
• The company reported total Income of INR A bn in FY 20XX, Leverage Ratios
SAMPLE
SAMPLE
registering an increase of b per cent over FY 20XX Debt to Equity Ratio
• The company earned an operating margin of C per cent in FY Debt to Capital Ratio
b i l i
20XX a decrease of d percentage points over FY 20XX Interest Coverage Ratio
Efficiency Ratios
• The company reported debt to equity ratio of Z in FY 20XX, a
Fixed Asset Turnover
decrease of W per cent over FY 20XX Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Source: Improved Decline
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 14

15. Private: Domestic Company – Player 2 (3/3)
Key Recent Developments
Description News
• Player 2 is a leading investment bank offering a wide range of financial services and wealth management
l l d b k ff d ff l d lh
solutions to institutions, corporations, high–net worth individuals and families
Overview
156,117.2
• It has rapidly expanded its footprint to over X locations across India with international presence in
Country A, Country B and Country C
• Player 2 has completed the first round of fund‐raising for the realty fund it has set up with Firm B, Y
Fund Raising
Portfolio, collecting ~INR C bn
• It has tied up with French asset management company, Z, to launch India‐focused quant‐based
Collaborations
alternative investments products
alternative investments products
• It has been voted as the ‘ _' by M in 20XX
Awards and Recognitions
• Player 2 has been ranked as ‘_’ by N in 20XX
Player 2 has been ranked as by N in 20XX
Source:
SAMPLE
SAMPLE
FINANCIAL BROKERAGE MARKET IN INDIA 2012.PPT 15

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