The Bombay Exchange Brokers Association (BEBA) is even contemplating legal action against Reuters. The association is peeved with Reuters on what it claims is an attempt by the wire agency to introduce electronic broking via its `Dealing 2000-2 Spot India CUG' in violation of guidelines set by the Foreign Exchange Dealers Association of India (Fedai) and the Reserve Bank of India on the broking business. BEBA has taken legal opinion on the matter from Udwadia, Udeshi, Desai, Berjis & Chinoy as well as Little & Co and approached the Reserve Bank and Fedai seeking these bodies' opinion on whether the move by Reuters is ultra-vires of extant broking norms.

The issue has reached aflashpoint with bankers going along with Reuters.

The main contention of players in the lucrative forex broking business, conservatively estimated at $300 million a day, is: (i) Reuters claim that its Dealing 2000-2 Spot India CUG to be introduced shortly billed as `electronic matching system' is nothing but `electronic broking' and (ii) a flat fee of $3,000, but negotiable, to be charged by Reuters will eat into the existing brokers' margins wherein charges, as fixed by Fedai, are way high.

Broker charges for fixed by Fedai on a typical $1 million transaction are as follows: Rs 2,000 for spot transactions (from both parties involved in the deal); Rs 3,000 for long swaps (over a week) and Rs 1,500 for short swaps (less than a week).

The issue was sought to be sorted out at a Forex Association of India meeting on Wednesday, which was attented by Gautam Rasiklal Ashra of Kanji Pitamber & Company, Abdully Mecklai of Mecklai & Mecklai and Sandeep Atit of Vrajlal Thakkar & Company.

The wire agency isplanning to launch Dealing 2000-2 Spot India CUG in the third week of August, subject to the Reserve Bank approval. Reuter adds that it intends to launch Dealing 2000-2 -- for forwards matching -- and Dealing 2000-2 -- for international dealing -- in the coming months. "All the prices that you would see on the screen would be screened for credit, so you know you can deal on the prices you see. Credit limits can be set, maintained and modified any time. The system will generate alert signals when 25 per cent of the counter-party credit limit remains and you can check back to see if higher limits could have screened better prices," says the agency in letter adressed to a few bankers.

But as Mecklai & Mecklai's Abdully Mecklai says: "The Reuters service is a broking one though they call it matchmaking...I do it over telephone while they do it on screen."

Udwadia, Udeshi, Desai, Berjis & Chinoy's partner Dilip Udeshi says: "The question is what Reuters is doing...they are bringing two people together...if itit is not broking, what else is? It helps in the consummation of a transaction and Reuters is collecting a fee for it. It is as simple as that, the rest is all sophistry."

Parekh Forex Pvt Ltd managing director Atul Parekh says: "There should be a level playing field...If the said Reuters system is introduced, revenues of brokers will drop...it will indirectly affect MTNL in terms of revenues lost on account of less telephony."

However, IndusInd Bank treasury head and chairman Forex Association of India Moses Harding supports Reuters: "The Reuters platform functions are that of broking, but a machine cannot be called a broker...the Reuters offering will help banks and make pricing transparent. The present system of voice-based broking does not help banks get reduced broking charges in case of big ticket deals...Fedai charges are high and our margins are hit. The present lot of brokers want Reuters to call their service `broking', be a member of BEBA, ensure that Fedai charges are pegged so that theirbusiness is not affected."

Reuters was unavailable for comment. Sources in the agency say that "no one here is authorised to speak to the media on this issue, save for Reuters Asia managing director John Atkinson, who is away."

However, Kanji Pitamber's Ashra says: "The said system is recognised as a broking unit of Reuters worldwide...only in India is Reuters trying to enter the broking business in a surreptitous way...and they are trying to do it through Reuters Transaction Services, Switzerland...We are not against Reuters, but they must follow the same norms fixed by Fedai and charge the same brokerage that others are allowed."

Mecklai points out that "the issue of fees is a separate one...it has nothing to do with the Reuters service. In any case, the fees are those which are prescribed by the Fedai."