India's broking industry just got the shock of its life – SEBI may soon allow investors to trade directly on the exchanges

• The Securities and Exchange Board of India is reportedly considering allowing Direct Market Access (DMA) to retail investors.
• If the regulator goes ahead with the decision, India’s broking industry is looking at a major change which could possibly also threaten their existence.
• The top 10 brokers alone contribute to over 63% of the industry size, according to a report by ICICI Securities.

In a move that could completely change the way India’s trading market functions, the Securities and Exchange Board of India is reportedly considering allowing Direct Market Access (DMA) to retail investors.

If the regulator goes ahead with the decision, India’s broking industry is looking at a major change which could possibly also threaten their existence.


The big beneficiary will be BSE ⁠— India's oldest stock exchange that is also a listed company ⁠— as well as the National Stock Exchange, which is preparing for an IPO. The stock of BSE rose 9% in trade today after the report.

Nithin Kamath, co-founder of Zerodha, one of the biggest online stock trading platforms in India, wrote on Twitter that DMA has always been available for institutions, but through a broker.

“Can this be offered to retail without a broker? Yeah, but retail investors use a broker for the platform (UI, UX, different order types, reporting, etc) on which they trade, DMA is not suitable. The biggest task for a broker is handling customer queries, complaints, etc. The industry has tens of thousands of employees for this. Can exchanges take over this and also act as a regulator to regulate itself when it comes to customer grievances? Maybe not,” he wrote.

More and more millennials are moving to stock trading, as financial awareness has increased.

The Indian online trading industry has risen quickly over the years. According to a report by HDFC Securities dated March 2019, Industry internet trading share has increased from 22% in FY13 to 29% in FY18.

The top 10 brokers alone contribute to over 63% of the industry size, according to a report by ICICI Securities.

Here are the top stock broking platforms for retail investors in India, who will be impacted by the move.

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