KPI for Stock Broking
Stock Broking, like the other financial services organizations have realised the need to deploy BI to manage risk, detect fraud, leverage customer insights and gain visibility into profitability.
Major Revenue Sources of Stock Broking Organizations could be Brokerage from Cash, F&O, Commodity, Insurance, Mutual Funds, PMS, Wealth Mgt. Fees, Proprietary Trading, Margin Funding, Arbitrage, DP Operations (Client Servicing).
Typical Business Processes of organizations in Stock Broking could be Capital Market (Derivatives – Earnings, Derivatives – Risk Management, Equity, Depository), Distribution (IPO’s, NFO’s, Mutual Funds, Life Insurance, Non-Life Insurance, Any other Fixed Income Instruments), Fund and Wealth Management (Portfolio Management, Portfolio Advisory), Knowledge Management – Customer Profiling (Research Distribution, Privilege Customer Services, Customer Call Effectiveness, Business Overview, Financial Performance)
Performance Management Issues in EQUITY
- What is the share of total business of my top few channels?
- Which are the most popular scrips traded in?
- Who are my most valued clients with regards to trade values?
- What is the share of total equity business of my top few channels?
- Who are my most valued clients with regards to equity?
KPI and Trends for EQUITY
- Purchase Qty./Amt. Traded
- Sale Qty./Amt. Traded
- Purchase Amt. Delivered/Settled
- Sale Amt. Delivered/Settled
- Total Trade Amount
Dimensions for EQUITY
- Exchange
- Scrip
- Channel
- Client wise
- Transaction Type
Typical MIS Reports for EQUITY
- Total number of trades with performance trends
- Customer Type-wise Average Trade per Transaction
- Low and High Performing Customer Category within Customer Type to Look at Avg. Trade Value
- Customer Type-wise Average Trade Value
- Age Group-wise Average Trade per Transaction
- Age Group Analysis that contribute to Trade
- Trend Chart of Transactions and Net Brokerage across Periods…
- Scrip-wise Analysis
Performance Management Issues in BROKERAGE
- Which Channels earn the highest brokerage and in which exchanges?
- Which of my clients contribute highest to the brokerage kitty?
- What is the breakup of brokerage earned on Delivery / Settlement transactions?
- What is the proportion of Purchase and Sale Brokerage in my total earnings from derivatives trade?
KPIs and Trends for BROKERAGE
- Brokerage Delivery
- Brokerage Settled
- Total Brokerage
- Brokerage Charges
- Net Brokerage
Dimensions for BROKERAGE
- Customer Type
- Time
- Exchange
- Branch
- Scrip
Performance Management Issues in DERIVATIVES
- What is the share of total derivatives business of my top few channels?
- Who are my most valued clients with regards to derivatives trade?
- What is the proportion of Purchases and Sales in my total derivatives trade?
KPIs and Trends for DERIVATIVES
- No. of Contracts
- Purchase Qty./Rate/Amt.
- Sale Qty./Rate/Amt.
- Purchase Brokerage
- Sale Brokerage
- Total Brokerage
Dimensions for DERIVATIVES
- Exchange
- Scrip
- Channel
- Client wise
Performance Management Issues in BUSINESS OVERVIEW
- How many active clients do I have?
- What is the average value traded per transaction/ per scrip?
- How many scrips do I trade in?
- How many trades do I execute on an average per month/ per client/ per exchange?
- Which are the most popular instruments traded in?
KPIs and Trends for BUSINESS OVERVIEW
- Total No. of Transactions
- No. of Scripts Traded
- Average Trade per Transaction
- Average Trade per Client
- Average Trade per Scrip
Dimensions for BUSINESS OVERVIEW
- Customer Type
- Time
- Exchange
- Branch
- Scrip
Performance Management Issues in CUSTOMER PROFILING
- Which type of client (age group, type, status etc.) contributes most to my business?
- Which category do a majority of my clients fall into? Am I attracting a certain type of clientele only?
- What is the frequency of transactions for each type of client?
- Who are my High Value-Low Frequency clients?
KPIs and Trends for CUSTOMER PROFILING
- Total No. of Clients
- No. of Active Clients
- % of Active Clients
- Average Trade per Client
Dimensions for CUSTOMER PROFILING
- Client Type
- Transaction
- Customer segment
- Time
Performance Management Issues in CALL EFFECTIVENESS ANALYSIS
- How many recommendations were issued in a particular period?
- Of the recommendations, how many were acted upon by clients?
- What % of recommendations hit their Target rate?
- How many hit their Stop Loss rate?
KPI and Trends for CALL EFFECTIVENESS ANALYSIS
- Total No. of Recommendations
- No. Acted upon
- No. Target Achieved
- No. Stop Loss Hit
Dimensions for CALL EFFECTIVENESS ANALYSIS
- Client Type
- Time
Typical Reporting Challenges:
- Gathering report requirements for each lay out
- Slow development and testing cycle
- Labor intensive report writing dependency on vendor
- Inflexible and Static reporting from individual applications
- Desktop application reporting like in Excel
- Zero Security and Control on Reporting
- Unified Single View of Customers in single report from all transactional applications
Business Intelligence (BI) Reporting with 1KEY BI
Real Time: E.G. Capturing Dealing Errors and suggest corrective responses required during Institutional contract process – custodian mismatch-CP-OTR, saves time & reducing on errors increasing overall efficiency
Near Real Time: Automated Share Pay-Out – DSS, Automated Fund Pay Out – DSS, Exposure Limit Setup
- Long / Short Term
- Exchanges wise reporting on turnover, brokerage, profit
- Human Resources and Operations reports
- Square off & Delivery brokerage sharing patterns – impacts on business
- Brokerage V/s Funding cost
- Top ‘n’ customers in terms of revenue earned across all segments including mutual funds, PMS / wealth mgt. fees etc.
- Contribution of n% of income
- Channel Partner / Branch / Sub-brokers analysis – top ‘n’ branches
- Utilization of exposure / under utilized
- Target V/s Budget Variances
- Income Expense and Various Ratio Analysis
- Risk and Compliance Reporting
- Trend analysis reports
- Brokerage Analysis
- Ageing Analysis
- PMS Analysis
- Sales Analysis
- Fund Flow Analysis
Posted on January 25th, 2010 by Dhiren Gala
Filed under: Business Intelligence
Awesome blog you have got here on KPI for Stock Broking. Will keep coming reading these good articles you are going to write.