Now, poaching of investors on cards

TNN / Apr 30, 2006, 03:29 IST

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IPO Scam: dps may target entities on sebi list.

MUMBAI/DELHI/AHMEDABAD: If you are a stock market investor and trade through one of the entities named by Securities and Exchange Board of India (Sebi) in its report on IPO scam, prepare to be swamped by calls from the brokers that don��t figure on that list.
Market players say that a number of depository participants (DPs) are already preparing to poach investors from those DPs named in the Sebi report.
"That (poaching) is bound to start soon," said a sub-broker with a domestic broking house. "Brokers and DPs will highlight the integrity factor and ask investors to shift their account. For them, the Sebi report would come handy.
Of late, although the three-year old rally in the stock market has brought in new investors, most of the brokers and DPs were finding it increasingly difficult to get new clients.

After the recent Sebi clamp-down, it��s like a new market has opened up for most of those not named in the report, a dealer with a local brokerage.
Broking, like banking, is a trust-based business that comes from the integrity of the broking house.
In the light of the Sebi report which has questioned the integrity of several big market intermediaries including some of the biggest and most reputed banks and brokers in the country investors might actually start thinking about changing their DPs, market players said.

For example, from Karvy and Pratik DPs, about 10.25 lakh accounts have to be shifted within the next 15 days. Also a large DP like HDFC Bank has been barred from opening new demat accounts, which in turn has sidelined an aggressive player from the market.
On Thursday, in a 252-page order, Sebi has barred 24 DPs from opening new demat accounts and has asked NSDL to inspect the books of account of another 15 DPs to ascertain if the latter had followed all the rules while opening demat accounts.
However, small DPs might not be able to grab the opportunity. This is mainly because of smaller players are finding it difficult to meet the relatively high cost involved in following the current ��know your client�� norms.
Then, there��s a big problem looming large. Under the new SEBI norms, an investor will need a PAN card to open a new demat account. Applying for a new PAN card could take at least 3 weeks.
Chinubhai Shah, president, Gujarat Investors and Shareholders Association, believes that meeting the stipulated deadline will be tough for investors without a PAN card.

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