Online trading has been offered in India since the few decades.
In its brief duration of existence, it has proved to be an essential improvement to the existing systems. Read more to find out about the history and the future of online share trading in India.
When it comes to the history of online stock trading, it is no less than fascinating. Nothing short of revolutionary, in fact.
Before the internet collided with the world of electronic stock trading to give rise to this unique trade, investors and stock traders used to call up a live broker to place their trade. Similarly the brokers used to call their clients or investors to sell their purchase of a stock.
But that changed rapidly with the help of the internet. With a few clicks and keystrokes, investors can now take decisions and place their purchases or sell their stocks. Isn’t it amazing?
In 1996, the Pune Stock Exchange was the first regional stock exchange to implement an online trading system to be at par with the systems in USA and mainland Europe. The project was initially undertaken by a government enterprise and was successfully completed under the name Vector System.
With this new system in place brokers did not have to assemble themselves in the trading ring to get their orders executed. They could just conduct their trading by sitting in their cushy offices and would be connected to the main terminal of the stock exchange through a LAN or Local Area Network connection.
The orders then would be compiled during the trading hours and they would match the orders. Once the trade was matched it would instantly inform the members so that they can see the trade on their screens. Along with that the system implemented transparency for investors when it came to rate of securities, market trends, liquidity etc.
The Securities & Exchanges Board of India (SEBI) finally approved the report on Internet Trading that was brought out by the SEBI Committee itself on Internet Based trading and Services during the year 2000.
The report instructed that trading would take place through order routing systems and it will route the orders of clients to the trading systems for execution. Any client sitting anywhere with internet access would be able to purchase or sell stocks using the broker’s trading systems.
Any SEBI registered broker could introduce internet based trading after they obtained a permission from their respective Stock Exchanges for the same. SEBI had placed a list of minimum conditions that needed to be fulfilled by the trading members so that they could start internet based online trading and services as soon as they wanted to.
The NSE was the first exchange that allowed its members to provide internet based online trading services to its clients. According to SEBI’s directives, NSE issued circulars that had all the requirements and procedures present with great detail related to online trading.
As for the future, stock trading will continue to evolve as technology keeps evolving. There will surely be more development of software applications for trading. Many brokerage firms do provide mobile based trading applications so that you can trade on the go.
Along with that mobile trading services can actually provide you the same services that you would get if you access it from your desktop computer. Brokerage firms will keep improving their stock trading capabilities not only to retain customers but to make the entire process of trading stocks easier and simpler.
The history of online stock trading in India may be a brief one but it is becoming stronger day by day. The future holds a knowledge based and rock solid system for stock trading which will provide greater access to trading in global markets as well.