Tuesday, December 30, 2008
Reliance Money has the monetary backing of R-ADAG group; it is also a prominent player in commodity market after picking 10% stake in the National Multi Commodity Exchange (NMCE). The company wants to increase its holding to 26% in near future. Reliance Money’s spot exchange for agriculture commodities is also expected to early 2009. The FTIL group has interests in a currency futures exchange, commodity futures, power exchange and spot exchange for agricultural commodities and plans to set up an exchange for SMEs. It has also set up exchanges overseas.
There is tremendous scope for equity stock exchange in the country that has only 5% of its households investing in equities compared to the global average of around 50%. The equity derivative segment has the biggest scope, with the NSE enjoying a virtual monopoly in the segment with an average daily volume of around Rs 40,000 cr. The spot equity market average turnover doesn’t even match up to half of the NSE derivate average, with the BSE having a daily average volume of Rs 4,000 cr and the NSE having daily average volumes at Rs 10,000 crore in the spot segment.
Any aspirant in the stock exchange segment will however need approval from the Reserve Bank of India (RBI). For FTIL, the equity exchange would be an extension of MCX-SX, its currency trading exchange, which was launched under a subsidiary. Reliance Money will have to set up a new company. Another issue could be equity holding, SEBI has recently decided to allow a single shareholder to hold a maximum of 15% in stock exchanges, but has not notified this yet. The aspirant companies’ track record will also be key factor in getting regulatory approval. If approved, this will be the first stock exchange after 1994, when the NSE was set up
Even though both sources have not confirmed the development, both are eyeing the possibility of an exchange for small and medium-sized (SME) enterprises, an area which is beleaguered with several failed attempts. Earlier ventures such as the Indo Next under the BSE trading platform, Over the Counter Exchange of India (OTCEI) and Inter-Connected Stock Exchange of India had failed to take off.
Worldwide SME exchanges are flourishing. LSE's Alternative Investment Market (AIM) was established in 1995 to nourish young entrepreneurial British firms. AIM is home to over 1,500 firms of which close to 250 are listings of firms based outside Britain. Obviously, one of the attractions for overseas firms is the laidback regulatory regime.
Saturday, December 27, 2008
Reliance Money director and chief executive officer Sudip Bandyopadhyay said the company will be launching its portfolio management services (PMS) and other services in Malaysia soon.
"Reliance Money's PMS in Malaysia would be offered at a threshold level of as low as US$50,000 (RM174,000)," he said in a statement made available to Business Times.
Bandyopadhyay said this is the first such initiative by an Indian broking and distribution company to offer a bouquet of financial products and services to non-resident Indians (NRIs) in Malaysia.
"This is our first move to reach out to the large base of NRIs in Malaysia with our unique, cost-effective and efficient bouquet of products and services.
"Our presence in Malaysia will complement efforts to have a larger role in this region," he said, adding that the move is part of Reliance Money's plans to expand its global footprint.
Reliance Money provides customers with access to equities, equity and commodities futures, mutual funds, life and general insurance products and off-shore investment.
The company already operates in Asia, Europe and Africa and plans to expand its operations in over 15 countries by next year.
"We aim to generate 50 per cent of our revenues from overseas markets by 2012 and capture a bigger share of the record US$195 billion invested in India last year by overseas funds," Bandyopadhyay said.
Infinity Financial Solutions director Ben Bennett, meanwhile, said the new venture with Reliance Money will help the company augment its services portfolio and provide the large NRI population in Malaysia with a platform to transact in Indian financial instruments.
"This partnership would also help us utilise their (Reliance Money) expertise by providing enhanced investment tools to a large section of population who have not been able to use these services earlier," he said.
Reliance Money is part of the Reliance Anil Dhirubhai Ambani Group. At present, it serves some three million customers and has a network of over 10,000 outlets and 20,000 touch points in more than 5,000 locations.
Monday, December 22, 2008
Apart from the Mutual Funds, insurance, IPO, research reports and Gold coins, the portal also sell gifts, home appliances and consumer durables. The list is expected to become more exhaustive over a period of time.
The initiative may prove to be successful as R-ADAG has lot of products under Reliance Capital banner and the portal may prove to be a low cost distribution model.
Anil Ambani launches online shopping portal to sell financial products - Digital Inspiration.
“We have held discussions with Gujarat Niyantrit Bazaar Sangh, the apex body of more than 200 mandis in the state, and its counterpart in Tamil Nadu, and we may rope them in as shareholders,” Reliance Money CEO Sudip Bandyopadhyay said.
In August, Reliance Money and NMCE had announced the setting up of National Agriculture Produce Marketing Company of India (National APMC) that aims to provide the required infrastructure for electronic trading in agricultural products.
Bandyopadhyay said that a separate spot exchange for non-agricultural products would also be set up once National APMCL started functioning hopefully by June next year. The company had earlier indicated that National APMC would commence operations by December.
On shareholding details, the Reliance Money CEO said that those were being finalised.
While National APMC has approached more than a dozen states for permission to ensure that it is able to deliver the farm products traded electronically, so far it has received permission only from Gujarat and Rajasthan.
Analysts said that by tying up with state-level agencies for mandis, Reliance Money was also reducing chances of political opposition to electronic spot trading as these bodies were controlled by local politicians.
Commodities trading has been a politically sensitive issue and the government in the past has imposed ban on futures trading in commodities. The ban followed uproar by politicians, who said futures trading was speculative and blamed it for the increase in prices.
Presence in the commodity exchange business has emerged as a major focus area for Reliance Money, which is part of the Anil Dhirubhai Ambani Group (ADAG). It has sought permission to acquire 26 per cent stake in NMCE, the national commodity futures exchange, but has so far received the go ahead to buy 10 per cent. In addition, it had bought a 15 per cent stake in Hong Kong Mercantile Exchange to become the second largest shareholder in the commodity bourse. Hong Kong Mercantile Exchange plans to start trading in the first quarter of 2009 by offering dollar-denominated oil contract.
Tuesday, December 16, 2008
Reliance Money's report:
Consequent to the recent RBI directive, FCCBs are now being allowed to be bought back by Indian Companies. It has now been decided to permit premature buyback of FCCBs. For the buyback of FCCBs out of rupee resources the RBI has fixed a minimum discount of 25% on the book value. The amount of the buyback is limited to USD 50 million of the redemption value per company wherein this window will be kept open till March 09. We believe RBI’s FCCB buyback policy is a welcome move but grossly inadequate.
Monday, December 15, 2008
There are still some buyers in the financial services sector. Anil Ambani led Reliance ADAG which has been striking international deals in the brokerage and commodities exchange business, is now looking at a bigger play on cross border money transfer activity. It is now close to acquiring 50% stake in a UK-based currency exchange and money transfer firm for an undisclosed amount. This will enable the Indian company to sell its financial products including mutual funds to the 1.4 million NRI population in the UK, says this report.
There are a number of large money transfer and currency exchange firms in the UK with Travelex (which was acquired by a consortium led by Apax Partners three years back). The target company is said to have more than 250 outlets. Some of the prospective names in the field who could be under the radar of Reliance ADAG include TTT Moneycorp and No1 Currency.
TTT Moneycorp is a retail, wholesale and commercial foreign exchange services firm in the UK owned by the Shlewet family trust and backed by the Royal Bank of Scotland while No1 Currency was formed in 1996 and is owned by its two founding partners David Hale and Mark McElney.
Wednesday, December 10, 2008
Under the agreement, the firm would provide trading facilities for different derivatives including agricultural products, metal and energy products, which are traded on various major exchanges worldwide, Reliance Money said in a statement.
It would also provide trading facility on OTC (over-the-counter) products in segments such as energy and freight, the company added.
"Our agreement with DBS Vickers will now open a safe, secure and cost effective transaction platform for our customers to trade in Global Commodities Exchanges," Reliance Money Director and CEO Sudip Bandyopadhyay said.
"The size of the global commodities derivatives markets is estimated to be around USD 800 billion. We believe that Indian investors are looking at diversifying their portfolio and overseas trading service enables them to do so, Bandyopadhyay added.
DBS Vickers Securities is a member of the Singapore Exchange. It is the securities and derivatives arm of the DBS Group, a leading banking group of Southeast Asia.
Globally, exchange traded commodity futures is one of the largest market segments in the financial markets witnessing participation from the producers, users, traders alike.
Friday, December 5, 2008
AHMEDABAD: Promoters of commodity exchange NMCE Reliance Money and Neptune Overseas have joined hands with farm produce marketing committees in Gujarat -- a major destination for the private sector-- to launch an electronic platform for physical trading in agriculture goods.
Reliance Money and Neptune Overseas have also decided to form a separate company National Agricultural Produce Market Company (NAPMC) in association with Gujarat Niyantrit Bazaar Sangh, an apex body of 209 agricultural produce marketing committees.
"As experience from futures market has been bitter, we collaborated with Reliance Money to open our own spot exchange," Sangh Chairman Narayan Lalludas Patel said, adding that the market for spot trading is opening up in the state so we decided to protect the interest of farmers.
Gujarat, a key producing state in several agriculture products, has emerged as a major destination for the private sector with as many as 12 players, including Jayant Agro, Gokul Refoils and Solvent, already receiving nod for direct procurement from farmers.
Sangh Honorary Secretary N I Chachatiya said, "We will soon file an application with the state government to obtain licence for starting a spot exchange." As soon as the nod is received, the spot exchange will be operationalised, he added.
He said the Agriculture Produce Marketing Committees (APMC) in the state can be a member of the spot exchange to offer the electronic platform in its premise.
Thursday, December 4, 2008
This may seem a bit surprising, considering that overall traded turnover on bourses has been shrinking since the start of this year. Industry watchers, however, say broking firms are finally coming to terms with the fact that it is not viable to charge very low levels of commission. Leading broking firms are said to have hiked their fees anywhere between 15 basis points (bps) and 50 bps.
“In good times, marginal costs were quite low. Today, brokers’ costs have gone up and revenues do not justify the kind of commissions that clients were being charged in the beginning of the year,” said a veteran BSE broker on condition of anonymity.
Some outfits have also introduced a standard ‘minimum’ brokerage charge, which would be applicable for even a single trade done by a client. Regular clients will also attract a minimum monthly brokerage at some of the firms.
“As trading volumes on bourses shrink, stock brokers expect a sharp fall in their income in the coming quarters. Such a move was waiting to happen. Unlike last year, when we saw broking firms vying with each other to cut costs, this year outfits have been forced to consider a hike across various sections,” said a person familiar with the development.
Some of the broking houses, which have reportedly hiked brokerage, include India Infoline, Indiabulls, Motilal Oswal, Edelweiss and Sharekhan. India Infoline is said to have raised brokerage charge on delivery-based transactions to 50 bps from 15 bps. For F&O trades, charges are said to have been hiked from 2 bps to 5 bps. Indiabulls, too, is said to have done something similar.
In an email reply to ET’s query, India Infoline said: “There has been no increase in brokerage rates across the board. What we have done is a part of normal rationalisation measures where customers who have significant trade volumes enjoy preferential brokerage rates and simultaneously those who do insignificant volumes, (barely active customers), typically have slightly higher brokerage rates. But this is only for a small group of customers with insignificant volumes. If you open an account with us today, then you will be charged the same brokerage as was being charged as before.”
On whether they have hiked delivery brokerage to 50 bps from 15 bps, an official said: “These are customers who would have had preferential brokerage rates earlier owing to higher committed volumes and since they haven’t generated significant volumes, their brokerage rates are being reverted to the standard five paisa for intra-day and 50 paisa for delivery trades. These are anyway the standard brokerage rates that we operate with.”
Indiabulls maintains brokerage charges are client-specific and as such there are no fixed slabs. “It’s a fluid system, whereby clients are charged according to the kind of business and volume they generate. As such, clients who do large volume of trades are charged less and vice versa,” said an Indiabulls official.
Reiterating this, officials at Motilal Oswal also said their charges were client specific. “2 bps/ 20 bps to (trading/delivery) to 5 bps to 50 bps, depending on the size of the client. For larger clients, there is a volume discount, which is an industry norm,” a senior official told ET.
Sharekhan still retains the standard slab. “The standard slab is trading -0.1% and delivery -0.5%. For customers with higher volumes, there are various slabs which they can subscribe to avail of lower brokerage,” a company spokesperson said.
The television program named as 'Our Money Forum' aims to help the retail investors to take investment decisions, the channel said in a statement here.
The 10-episode series, which would have eminent financial experts on the panel would focus on educating the retail investors on the growing need and importance of financial planning.
The program would be conducted at various corporate houses across the country such as Patni Computers and Subex.