Stock broking is not a good biz. It long trended towards being unviable. Most old brokers went bust. Today, nobody sees where stock brokers make money. Our obsession with brokerage rates blindsides us to other areas. The prop book is still inadequately regulated. Much to know.
Their major metric is churn. Making clients trade more is obsessive. So they give you margin funding, loan against your shares, zero brokerage and endless enticements. Often, the PoA given for delivery purpose becomes a PoA to trade4U.
In the end, the house is the only winner.
In the end, the house is the only winner.
F&O trading is a very grey area. Assume you have futures positions. The house knows until what level your position can be held on. It knows your cash level. Imagine a house knowing cash levels of millions of clients. Imagine theIR prop book playing the other side. Nothing stops.
If super rich stock brokers are emerging out of these times, you need to think where the money is being made. Most likely, it can only be off you. It could be off information about you. Who would not let you in for free if they can see everything about you. You are a grt bunny.
Outages are an unexplored area of regulation. We still earnestly believe outages are technological. What if they aren't? Has regulation ensured investor interest is fully protected? Exchange outages and platform outages must be dealt with far more alarm. Its not a simple thing.
Now to the last and most relevant point. This is the crux of the issue. If my money is with a stock broker it rightfully belongs to me. How is regulation permitting the broker to earn returns on that float? Should this practise not be stopped in investor interest?
The Karvy issue is about misuse of shares. But, we turn a blind eye to misuse of float money. Fiduciary failures are structural. We need to follow a uniform regulatory approach on stock broking. If the money does not belong to a broker, the returns should not too. Right?
