Evolution of the Indian stock broking industry since the Harshad Mehta scam - Scam92 TV Show

18 Oct 2020

#Scam1992TheHarshadMehtaStory - a thread on everything that has changed since then in the world of Indian stockbroking.

Today the settlement cycle is 2 days & SEBI is hinting at a 1-day cycle soon (first few countries in the world). Back then, it was 14 days (the time within which you have to pay full money and take delivery of stocks or deliver stocks if sold).

Today, a customer can’t buy stocks without the minimum money in the account or sell without stocks in Demat. This reduces the systemic risk from aggressive brokers who were compromising risk for business. There was no such rule back then.

Today all settlement of trades happens through clearing corporations (CC), and all transactions are electronic (Demat), it was paper then. Today, there’s no counterparty risk like back then.

Today since the risk from the customer is way lesser due to margin requirements & CC, you don’t need approval from a broker to open an account like back then. You can open a trading account online in under 15 mins with any broker today.

Today brokerage firms focus on execution and not advisory. Back then, it was mostly advisory.

Today most trades are executed by the customers on their own. Back then, all trades were placed through dealers and hence they carried a huge execution risk. At @zerodhaonline for every million trades we have maybe 10 trades done through call & trade.

Today, we at @zerodhaonline charge 0% for equity delivery trades 😀, back then you never knew and would pay at least 1% as brokerage.

Back then, many dealers used to earn ગાળિયો. Giju word used for difference between price told to customer and actual trade price. Now its 100% transparent.

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