Business

What is mobile trading and why is it gaining popularity?

The increased penetration of smartphones, along with the availability of cheaper data plans, has made the cellphone a popular platform for investors, especially retail, to trade in the stock markets.

The increased penetration of smartphones, along with the availability of cheaper data plans, has made the cellphone a popular platform for investors, especially retail, to trade in the stock markets.   | Photo Credit: AP

What is mobile trading?

Mobile trading refers to trading in the stock market using a mobile phone. Leading brokerages now offer apps to their clients who can use them to trade in shares, invest in mutual funds or in initial public offers, and even monitor their portfolio. While the Securities and Exchange Board of India (SEBI) approved trading through mobile phones way back in 2010, traction was hardly visible in the initial years as investors preferred to trade through their dealers or relationship managers.

But the last few years have seen the share of mobile trading rise significantly, though it still accounts only for a small portion of the overall trading volume. As per BSE, mobile trading accounted for 5.1% of the total trading in August.

Two years ago, in August 2017, the share of mobile trading was pegged at 2.91%.

Why is mobile trading becoming popular?

First, the increased penetration of smartphones, along with the availability of cheaper data plans, has made the cellphone a popular platform for investors, especially retail, to trade in the stock markets. Second, most new-age discount broking entities prefer that their clients trade using their mobile apps, which also help the brokerages lower their overhead costs by maintaining fewer dealers and relationship managers.

Trading apps of brokerages like Zerodha, 5paisa, ICICI Direct, Upstox, HDFC Securities, Angel Broking, Sharekhan and Kotak Securities feature among the top apps in the finance category in both Android and iOS.

Is trading on the mobile safe?

Brokerages invest a lot in technology nowadays and hence, most trading apps have strong encryption and other security features so as to make the trading experience quite secure. Most brokerages nowadays have a chief technology officer, which was unheard of a few years ago. The apps are also regularly updated with security features, among other things.

The strong level of security is further corroborated by the fact that some of the leading brokerages now see more than 50% of their active clients trade via apps instead of the web portal.

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Printable version | Sep 21, 2020 1:07:12 PM | https://www.thehindu.com/business/investing-while-on-the-go/article29363457.ece

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