MORE than three decades after starting as a broker on the BSE (Bombay Stock Exchange), Asia’s oldest bourse, Yogesh Choksey shut up shop last year, missing out on a record-breaking equity rally that would usually boost profits for brokerages.

“The business was no longer viable for a smaller setup like mine,” said Choksey, who opened his namesake firm in 1986 in the iconic Jeejeebhoy Towers, home to the BSE in the old business district of Mumbai.

Choksey, 65, is part of a dying breed of traditional stockbrokers in India, whose numbers have shrunk by about three quarters in less than six years. Smaller brokerages have been rapidly closing their doors as they fail to keep up with cheaper online competitors.

“The stockbroking business, as we knew it, is dead,” said Premal Sanghvi, a remisier — a broker paid on commission — at Sharekhan by BNP Paribas in Mumbai. Sanghvi began his career in the early 1990s at his family’s brokerage firm, which is no longer doing business.

India had slightly more than 2,400 brokerages as of Dec. 24, down from more than 9,000 in March 2014, data from the regulator show. The decline has been intensified by the shuttering of 13 regional bourses, which forced about 3,000 brokers out of business between 2014 and 2017.

The emergence of discount online brokers has turned the industry into a business of high volumes and wafer-thin margins, prompting several large publicly traded broking firms to expand into lending, wealth management and even insurance.

They’re epitomized by market leader Zerodha, a discount broker which boasts more than 1.5 million clients. It offers free trades if customers hold shares longer than a day and collects less than 30 cents on intraday and derivatives orders.

Zerodha handled about 10 percent of the nation’s stock trades in the year ended March, a period when the S&P BSE Sensex rose 17 percent and many Indians shifted into stocks from cash after the government’s ban on high-value currency bills in 2016 altered saving habits.

But the rise of online brokers isn’t the only thing hurting their traditional counterparts. Also at issue are the costs and efforts needed to meet stricter compliance and reporting obligations, which apply regardless of a brokerage’s size.

The Securities and Exchanges Board of India has tightened compliance and reporting rules in recent years as it seeks to address the risk of brokers not acting in their customers’ interests.

“The double-whammy of high regulatory expectations and rapidly changing market dynamics have made it unviable for traditional brokers,” said Uttam Bagri, chairman of the BSE Brokers’ Forum, which represents 900 members. “There’s a cost to compliance, which isn’t linked to the size of the firm. It adds up for small brokers.”

(SD-Agencies)