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Hi Guys,
There is a broker FINVASIA which is a 0 brokerage company and recently they closed their NRI segment. Let me explain why?

So in NRI account you never transfer money to broker account and money lies in your account which gets updated everyday.
Suppose I buy a security today so at the end of the day the broker has to report blocked funds in their account regarding that buy but this blocked funds is their money and not clients money.
The same day they send a report to the bank to release funds for the clients purchase and the bank releases those funds next day. You can see the broker is having a negative cash flow which resulted into losses and they closed this segment.

When you apply for IPO you fill ASBA form which is Application Supported by Blocked Amount. You amount gets blocked in account and gets directly transferred to the merchant banker.

The broker used to make a lot of money for this positive cash flow. Money lying in your trading account. They still earn but it has reduced and there are many loophole in the system.

My overall point of explaining all of that was SEBI is now considering ASBA for secondary market which will be a big blow for all the discount brokers. That means you will never have to transfer money to your trading account.

If you go to screener their are close to 50 to 60 broker listed. Think about unlisted?. This space is over crowded and I feel in the next 5yrs it is a race to 0 brokerage.
I don’t see a bright future for brokerage companies. SEBI reduced leverage and now if ASBA comes in it is going to be a big blow.

I feel this industry will go through a consolidation and top 1 or 2 broker will have maximum market share, rest all are going to shut their shops. I also feel over the years I wont be surprised to see the brokerage close to 0 to acquire clients to survive and have a spot in top.

I might be completely wrong about the industry and above are my personal views

Updated disclosure: bought at average price of 951/share, 8% part of portfolio. It’s NOT a long term investment as of now. Want to ride growth in AC segment and sell when stock shows signs of weakness technically.

Would love to know your thesis on Patanjali Foods… Is it coz of the product transfer of ~690cr to the listed entity or something else? coz in the short run, after 6 months the palm oil issue will again arise if the govt dosen’t interfere.