Sebi Panel Clears Mobile Trading

The long wait may be slowly coming to an end with the technical panel of the Securities and Exchange Board of India (Sebi) giving its green signal to launch stock trading on a mobile phone platform.
“The entire issue relates to security. The entire question revolved around what will happen if a client disowns trades done through his mobile phone. It may be because the instrument was stolen or misplaced, leaving room for misuse in someone’s possession, or for some other reason,” said a senior Sebi official.

This issue was addressed to Sebi’s technical advisory committee headed by S Sadagopan, professor, IIT Bangalore.

It is learnt that the committee has suggested security settings similar to those used for internet banking. In addition to the mobile phone, which is the primary security device for a customer, there will be a login password and a transaction password for mobile trading, another person aware of the development said.

The service providers, in this case broking firms, will have the primary responsibility for providing the feeds to clients and the security aspects of mobile trading, the person said.

According to him, stock exchanges need not have to upgrade their systems to provide mobile trading facility to brokerages. “Whatever existing system they have will be sufficient. There is no need for systems upgrade,” he said.

The introduction of mobile trading, it is felt, will attract more investors into the stock market. Further, it will also help investors to conduct transactions on the move.

When asked why there is a delay in introducing the facility, considering that several brokerages are ready to launch mobile trading, a member of the panel said: “Sebi has to take a decision on timing. May be they are not comfortable with the timing, given that markets are slowly heating up.”

A key point argued in favour of mobile trading in India is that it will help the spread of equity culture to more people. India has about 47 crore mobile connections, as per the July figures of the Cellular Operators Association of India. Compared to this, demat accounts, which more or less reflect the number of investors, are only 1.6 crore. Brokerages hope to lure more mobile phone users into stock trading once the regulator approves trading via cellphones.

Speaking at a function early this year, Ravi Narain, managing director of National Stock Exchange, said he expected mobile trading to be even more popular than internet trading in India. “Looking at the mobile penetration in India, it is possible that mobile trading will become more popular than online trading.”

Financial Chronicle, New Delhi, 20-08-2010