MUMBAI: Not long ago, stock market dealers at brokerages were not allowed to step out of the trading room even for a two-minute tea break, and had to keep their personal phones outside – to prevent unauthorised trades. Today, these dealers are punching in trades on behalf of clients from the comfort of their homes.
The Covid-19-imposed lockdown has pushed dealers and brokerages to something that was unthinkable even 45 days ago – moving ‘stock dealing’ out of trading rooms into the homes of dealers.
“We never thought dealing, as a function, could be done from home,” said Anshu Kapoor, head – private wealth management at Edelweiss Global Wealth. “There’s so much to stock dealing – the security conduit for orders and trades, call recording of orders, the bulky trade execution platform. We’ve managed to get all of it on our dealers’ mobile devices.”
Brokerages such as Motilal Oswal, Angel Broking, IIFL, and Edelweiss have moved most of the critical function of dealing to a work from home arrangement.
What dealers could possibly miss is the hum of the trading room – the chatter amidst frantic keyboard taps, short cries of joy for a winning trade and a tsk-tsk when bets go wrong, the occasional clinking of tea-cups on saucers, and the constant whirring of air conditioners.
“When a lot of dealers sit together, you get a feel of the market…dealers keep talking about winning and losing trades all through the session,” said veteran broker Deena Mehta. “Now, with most dealers working remotely, the trading room environment would be missed,” he said.
Even the most digital-savvy broking outfits would have never thought of dealing as a remote function. It was considered out of the question for regulatory, security and even technical reasons.
“The lockdown forced even the dealing function to be moved home after the regulator permitted for the time being to operate from any place,” said Vinay Agrawal, CEO of Angel Broking.
The challenges were many – security, internet frequency, latency factor, front-running, and unauthorised trades, among others. However, after initial teething problems of a home set-up, brokerages have now realised that trades can be executed efficiently and securely from any location, officials said.
“We have an advanced IT system in terms of cyber security and encryption – and our IT team could create a security tunnel, in a matter of 24 hours, which was given to the dealers,” Agrawal said.
Kapoor of Edelweiss said, “When a dealer gets call on mobile, the call gets patched to our terminal and risk management system and gets recorded.”
Now, top bosses of several brokerages say they will not be comfortable about getting people to their offices for at least six months even if the lockdown restrictions are lifted, unless it is extremely essential.
With IT and security back up in place, brokerages say work from home is a scalable model with necessary regulatory approval.
“It (remote dealing/trading) is indeed scalable,” said Ajay Menon, CEO, broking and distribution, at Motilal Oswal Financial Services that has more than 1,000 dealers working from home.
“We will look forward to more and more controls – security, check on overtrading, front-running – being in-built so that physical location of dealers will not matter,” Menon said. “However, regulation will be something one will have to look at.”
Indian stock exchanges allowed stock brokerages to log in remotely in the third week of March after Covid-19 cases started rising in the country. Initially, the exchanges had decided to keep this arrangement only till April 30, but was later extended.
“If this has to be a more regular feature, the brokerages will have to find advanced technologies to meet all aspects of Sebi regulations,” a senior Bombay Stock Exchange (BSE) official said on condition of anonymity.
If brokerage sources are to be believed, bourses may allow remote log-ins to continue for some more weeks.