Kotak Securities plans to cash in on this wave of investor participation by developing a wide-base of retail clients as well, something which it has stayed away from till now. The results are already there to see. Kotak has built up a chain of sub-brokers to cater to its retail clients. These 150-odd sub-brokers in four cities have brought Kotak about 1,000 fresh clients in less than two months. The company expects this number to go up to 4,000-5,000 in due course of time.

Shares worth Rs 50 crore have already been dematerialised by Kotak. A total of 2,500 accounts have been opened so far. The sub-broker network is being created at Mumbai, New Delhi, Calcutta and Ahmedabad.Depository services themselves are being offered from 13 cities including Dubai and London.

"We were restricted to institutional and high networth clients till now as we could not take the risk of dealing with small investors whom we did not know and were not sure about. Now, we can deal with an absolutely faceless mass and this helps brokerages like us to expand client base. We now not only have top institutions as our clients, but retail investors as well and this gives us a good balance," says Narayan.

"In a demat environment the costs of settlement, including the absence of a stamp duty charge on a transaction, are extremely low. Added to this is the speed and ease with which a settlement goes through. If earlier investors got in and out of a stock in three months, they are doing so now in three weeks. This churning of portfolio will see greater volumes in the days to come especially delivery-based volumes," he added.

Kotak's strategy is clear. It does not view its depository operations as a moneyspinning business. It is looking at this business to expand its client base and also to cater to the needs of its broking clients in a mandatory demat trading regime. "There were initial hitches as it took sometime for investors to realise the merits of dematerialisation. Now things are totally different. "We are seeing a major rush for opening accounts and have therefore been forced to hire the services of an external agency to handle the sorting out of these requests. We are at the same time relocating our staff. It is only because of this that we are still managing sending the demat request to a registrar within two days of its receipt," noted Narayan.