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DEC 05, 2017

Merger of Stock Broking and Commodity Broking Company

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Brokers are the indispensable comment of Capital Markets and have been part of the evolution of the industry over the years. The recent merger of market regulators (SEBI and FMC) is yet another development which opened wide range of opportunities for the industry. Ever since taking charge of the Commodity Derivatives market by SEBI, there have been regular updates in this segment and latest being SEBI allowing brokers to merge their equity and commodity derivatives operations under a single entity.

Till date, the brokers were under compulsion to carry out the business of Equity broking and Commodity derivative broking business in the two separate entities. With SEBI now allowing merging of the two separate entities carrying similar business but in different segments together will not only reduce the operational and compliance cost but will now enable the brokers to take benefit of margin fungibility not only amongst equity exchanges but also now with Commodity derivative exchanges. Likewise, the brokers can also claim adjustments of profit or loss in one segment against the profit and loss of another segment and will not be required to maintain separate Net-Worth. The unification of equity and commodity arms will also ease KYC requirements and would also directly benefit the clients in terms of maintaining single accounts; inter-se use of funds; etc.

Although before deciding to take a step forward in this direction, there must be lots of issues and concerns clouding your mind. How to structure? What process to follow? Stamp Duties? Time effectiveness? Existing collaterals, BG, cash & FDs? Cost of Transfer? Approvals? Whether change in DPG or not? Transfer of Connectivity – Vsat, leased lines etc. and etc. Also the structuring for every group has to be customize keeping the uniqueness of your business in mind.

We, at Corporate Professionals, have been closely associated with the broking industry for over two decade now and understand the nitty-gritties of broking business well. Our group Founder, Mr. Pavan Kumar Vijay had been the managing director of one of the India’s biggest broking house and entail deeper insight to the business of the community and issues thereof.

Keeping your specific business needs as the core of our advisory, we propose to analyze your existing business structure and to offer you a solution not only most suitable and cost effective to you but also ensuring growth of your business. Also, after finalizing the structure and action plan we can hand hold you with end to end advisory and ensuring effective and speedy implementation of the proposed plan.

We would be pleased to meet and discuss the possibilities in a one to one conversation and hence it will be great if you can let know a time suitable for you to have an effective and interactive discussion.

We look forward to hear from you.