Expert Speak

Learning from the Stock Markets

Stock Markets

With the BSE sensitive index and the NSE S&P Nifty on the threshold of the magical 10,000-mark, I ve got to hear so much about how the electronic terminals and dematerialization of shares have helped participation in the markets of just about anyone with funds.

Making things even simpler for authorities to nip scams in the bud, or to resolve grievances, making the entire exercise of capital protection and income generation that much safer.

In contrast, the IT hardware business has always been based on relationship and trust, two factors that don t find its way into any “system” that is based on logic and certain specified criteria being met. I happened to discuss the similarities with one trade partner. Well, similarities, he said, ended in the activity of trading. Everything else had become so sophisticated, one can t think of replicating them entirely into the hardware trading business. Credit for instance, the broker actually had the right to sell stock because until the funds were transferred the stock was in his name. While here, distributors demand signed blank cheques against the inventory bought.

Bad deliveries don t happen any more in stock trading due to the compulsory dematerialized format. Last week, we saw very wrong inventory delivery could get a few dealers mentioned they were sold hard disks with the wrong warranty, presumably a set with the wrong serial numbers. The cases have been hanging for nearly two years, without as much of a resolution in sight, while account managers have moved on, and companies taken over.

Market operating prices is something that could not be controlled across markets, but I believe there still needs some kind of a central “authority” or system to manage and resolve dealer grievances. Apart from giving warranty periods, et al. vendors and distributors should also include in their service agreements turnaround time for grievance resolution.

Such measures are sure to increase confidence among potential partners and current ones who realize that their principals are willing to support them in their business, all factors combining to a healthier marketplace.

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