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Regional clearing centres set to cut costs for NSE members in metros
Sunita Nagpal
NEW DELHI, January 9: Members of the National Stock Exchange (NSE) in Delhi, Calcutta and Chennai will find a substantial reduction in their operational costs, besides finding it profitable to boost their delivery-based business, thanks to the NSE's move to undertake the task of transporting documents. These members will now be able to save on the costs they were incurring to maintain an office in the financial capital.There are nearly 295 NSE terminals in Delhi, 135 in Calcutta and 70 in Chennai. In Delhi, nearly 150 members are active in delivery-based business and as many as 75 members have offices in Mumbai. Any member based in these cities till now had to maintain a full-fledged office in Mumbai just to take care of pay-ins and pay-outs. With the introduction of the new system, they will need a part-time employee to take care of bad deliveries and auctions. Under the new system members can deliver as well as receive share documents at the regional clearing centre (RCC) situated in the metro of
their region. The movement of documents from the metro RCC to Mumbai and then to the metro RCC of the receiving member for pay-out of securities will be carried out by National Securities Clearing Corporation Ltd (NSCCL). Till now, members had to ensure physical delivery of the documents at the Mumbai clearing centre for inter-region transactions. NSE member NDA Securities Ltd's director Sanjay Agarwal said: ``A member had to incur around Rs 50,000 per month to meet requirements of pay-in and pay-out. This expenditure included expenses incurred on courier, STD calls, conveyance, salaries and rent etc. Now with the new system a member just needs to hire one employee incurring a salary of around Rs 5,000 and one more employee in the Delhi office for the extra work load. This will lead to a saving of around Rs 15,000-20,000.'' With this saving many brokers feel that clients will now demand lower brokerages. However, despite the saving the brokers will not be in a position to reduce the brokerage as the they
have been charging very low fees. Many brokers were taking delivery-based business just to oblige the clients as in the case of deliveries brokers had to incur extra costs for sending the documents. Besides, there was always a danger of loss of documents during transit. Now, with the new system, the brokers will not be reluctant to do delivery-based business. However, some members feel that this move of NSE will not result in substantial increase in the deliveries. ``Maintaining an establishment in Mumbai was one of the requirements for getting an NSE membership, but with the business being low many brokers had closed down their Mumbai premises and were giving addresses of premises of their friends/relatives. The pay-in and pay-out were taken care of by vendors who were charging around Rs 15,000 (inclusive of conveyance) for the service. Other than this around Rs 9,000-10,000 was spent on courier and another Rs 3,500-5,000 on STD calls. Now these members will have to incur total expenditure of around Rs
7,000,'' said an NSE member.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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