Stockbrokers industry body Association of National Exchanges Members of India (ANMI) has shot a letter to exchanges stating that 5paisa.com‘s ad is promoting a misconception that no broker is needed to carry out trades.
5paisa.com‘s ad campaign ‘broker hatao, brokerage bachao’ (remove the broker, save on brokerage) has raised eyebrows among the country’s financial market ecosystem and the stockbrokers association ANMI has asked them to withdraw the advertisement campaign.
Anmi has asked 5paisa.com’s promoter IIFL to withdraw the advertisement and issue a clarification that the campaign was misleading. ANMI has written a letter addressed to the exchanges and SEBI, where it has alleged that the ad campaign is factually incorrect and hence misleading people at large.
“The issue is the said Ad is promoting a misconception and incorrect legal & factual statement among all the investors and market participants that the trade shall need no broker. The Ad is misleading the public at large to believe they can do away with a broker to trade in the securities market,” ANMI said in its letter, also shared with FE Online. “We submit that the Ad is propagating incorrect legal notion and promising various benefits to the investors which are in violation of SEBI (Stock Brokers & sub Brokers) Regulations, 1992,” ANMI’s letter said.
Defending their stance, Mr. Prakash Gagdani, CEO, 5paisa Capital said “The whole intention of the ad campaign is encouraging investors to move from offline brokers to online broking, where they can save on costs. We have put the caveats with the ad. We have also replied to Anmi that it has nothing against the broking community”
However, ANMI President Rajesh Baheti said, “5paisa.com has issued a factually incorrect advertisement that gives the impression that a broker is not needed to trade in the markets, and also incorrectly claiming that they are charging 0% brokerage. ANMI is not against their business plan, but it cannot be at the cost of misstating facts.”
In the past two years, 5Paisa.com has clocked Rs 150 billion in daily turnover and had two per cent of cash market share.
5Paisa.com, a leading online discount brokerage, has been aggressively keeping its fee flat and low at Rs 10 per trade. The move has miffed many small and medium-sized offline brokerages as 5paisa, along with other discount brokers, have been eating into their market share.
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