The recent scam in the stock markets has left a large number of retail investors gasping for breath. For many, it has resulted in a loss of trust in the market as broker members, banks, prominent institutional investors and even the regulators are accused of manipulations. This lack of trust has resulted in reduced volumes and crash in prices. According to a Delhi-based broker, "Our commissions are based on the price and number of scrips purchased. Since the last month has witnessed a drop in volumes and crash in prices, our business has been reduced to 10-20 per cent."

The small investors are virtually absent from the markets and even many institutions and mutual funds have been adopting a wait and watch approach.The average daily turnover on the bourses touched the nadir in March. Most of the scrips had touched their 52-week lows while many others traded close to this level during the month of March.

According to another broker, "The entire broking community is bearing the brunt of the actions of some individuals. We are suffering from the loss of trust of our clients."

"When the prices are coming down, the broker is the first person to be blamed by the investor. There is a loss of trust and investors are wary of returning to equity markets," said another broker.

Besides the low volumes, brokers are also pressed by margins imposed by the regulators and individual exchanges. "Margins do not solve the purpose of declining volatility, but reduces the volumes apart from increasing the transaction costs."

While the brokers are accused of not being able to meet their commitments to the exchanges, they themselves are pressed by slowdown in payments by their clients. According to a broker, "Our clients are not able to make payments as they have suffered huge losses in stocks."

Meeting fixed costs is another problem. Brokers have to meet them from their own pockets. "We are facing problems in meeting our administrative and other fixed costs. Besides, we also need to train our employees to deal with scrips which have come under rolling settlement," said another broker.

While it may take some time to restore the investor confidence, a broker suggested that they also look at the situation in a positive way. "The current crisis may have taken the winds out of the markets but it has also brought out the inefficiency of the system. The agencies need to learn from past mistakes and take corrective action to ensure transparency and fair play in the markets."