The number of big-ticket brokers on the National Stock Exchange's futures & options (F&O) segment has increased dramatically in the last six months, continuing the trend of marginalisation of small brokers.

The top 25 NSE brokers contribute around 39-40 per cent of the total business on the futures segment.

Meanwhile, the top 5 brokers contribute 15 per cent of the business in the futures segment.

On NSE's options segment, the top 25 brokers contribute 47-48 per cent of the business, while the contribution of the top 5 brokers is between 16-18 per cent.

Interestingly, the share of institutional investors on NSE's F&O segment has risen from 1.22 per cent [Rs 1,199 crore (Rs 11.99 billion)] in March 2003 to 1.62 per cent [Rs 4,549 crore (Rs 45.49 billion)] in August.

On the other hand, the share of non-institutional investors has dipped from 98.78 per cent [Rs 97,464 crore (Rs 974.64 billion)] in March 2003 to 98.39 per cent [Rs 276,176 crore (Rs 2,761.76 billion)] in August.

Dealers at a local brokerage house said, "Investor interest is picking up in derivatives trading, as the settlement is done in cash, making both entry and exit from the F&Os market easy for retail investors."

In other words, on settlement, only the net cash gains/losses registered are credited/debited from the trader's account, depending on whether the price of the underlying stock has moved up or down in the underlying cash market.

Further analysis of the trading pattern in the NSE's futures segment indicates that 125 brokers did more then Rs 500 crore (Rs 5 billion) in monthly traded business in August compared with a mere 31 brokers in March.

Meanwhile, the number of brokers doing business of up to Rs 5 crore (Rs 50 million) in the futures segment has slipped to 23 in August compared with 58 in March.

Overall, 143 NSE brokers generated business of more than Rs 500 crore in August compared with a mere 49 brokers in March.

On the other hand, the NSE brokers doing business of up to Rs 5 crore has declined sharply.

In August, just 14 brokers had monthly traded values of up to Rs 5 crore compared to 43 brokers in March. There were 543 registered brokers on NSE's F&O segment as on August 31.

With a phenomenal absolute growth in F&O volumes, the size of the pie has also been increasing by the day. In absolute terms, F&O turnover jumped from Rs 1,01,925 crore (Rs 1,019.25 billion) in 2001-02 to Rs 4,39,863 crore (Rs 4,398.63 billion) in 2002-03.

The average daily turnover increased from Rs 413 crore (Rs 4.13 billion) in 2001-02 to Rs 1,763.16 crore (Rs 17.63 billion) in 2002-03. This year, the average daily turnover has further increased to Rs 7,018 crore (Rs 70.18 billion) in August 2003. The total turnover during the month was Rs 1,40,363 crore (Rs 1,403.63 billion).

Moreover, derivatives business is spreading to smaller towns in the country too. Mid-sized towns such as Ludhiana, Bangalore, Baroda, Kolkata, Howrah, Jaipur and Chandigarh are reporting higher shares in the NSE's total F&O turnover.

In fact, Mumbai, is losing out to other cities, with its share shrinking from 41.10 per cent in March to 40.51 per cent in August.