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Icici Direct Project Report

Icici Direct Project Report

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Published by kanika4_87

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Published by: kanika4_87 on Feb 16, 2010
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The Indian capital market has seen an unprecedented boom in its activity in the lastdecade. We can now boast of a very large investor population and substantial volumes of trade. However, this surge in activity has brought with it, numerous problems thatthreaten the very survival of the Capital market in the long run. A closer inspection of the problems would reveal that most of them arise due to the intrinsic nature of paper basedtrading and settlement.This century-old system of trading and settlement requires handling of huge volumes of  paper leading to increased costs and inefficiencies. Simultaneously, they expose theinvestors to greater risks putting them at a disadvantage. Some of these areas are:
Unwarranted delay in transfer of shares. It takes 30 to 60 days for the investors to getthe shares lodged in their name;
Possibility of forgery on various documents leading to bad deliveries, legal disputesetc;
Theft of shares leading to defective title in shares purchased and subsequentlitigation;
Prevalence of fake certificates in the market;
Mutilation or loss of share certificates in transit;
Increased transaction costs due to stamp duty, fake shares, rejection by registrars, etc.
This has made the investors, both retail and institutional, wary of entering the Indiancapital market. In this scenario, it was felt that the getting up of a depository and theintroduction of scrip less trading and settlement is imperative for the efficient functioningof the market.The Indian capital market has witnessed numerous changes in the recent past. Historically stock market booms have always resulted in a number of problems for the lay investor. Sometimes, the problem may magnify them and threatens to engulf theentire capital market. A close introspection of these problems will reveal that most of them are due to intrinsic nature of paper based trading and settlement. All this may havedriven away many potential investors and Foreign Institutional Investors.Dematerialization of shares is looked upon as the remedy for the ‘paper’ based problems.With effect from august 19, 1998 SEBI has granted certificate of registration of Central Depository Services (I) Ltd. (CDSL).Yet even with demat, from the point of view of investors there are numerous problems. Here Wallet Watch introduces you to setting up of a demat account andintroduction of scrip less trading and settlement. There are numerous benefits of this scripless trading and settlement, which Wallet Watch has discussed in detail.
Even as the European and American stock markets reckon with the changes broughtabout by the Internet and IT/telecom advances, the Indian stock market has quicklymoved to global standards.The sheer breadth of the changes since the National Stock Exchange startedoperations in 1994 and with the Securities and Exchange Board of India (SEBI) alsodriving the changes in the market system, have enabled the Indian market to move wellahead in just five years.Even as online automated trading and better clearing and settlement mechanismshave been put in place, perhaps, the most significant change in the Indian market has been the coming of paperless trading; it may well be a precursor to the next big changes – rolling settlements and Internet trading. But the push towards paperless trading stands outeven in a decade when the market landscape has changed beyond recognition.Dematerialisation (holding and trading securities in paperless mode) was analien concept in India before 1995; in five years, large quantities of paper have beenflushed out of the system. Since the entry of the foreign institutional investors (FIIs) andonline trading, the old system, laden with paperwork at every conceivable stage, was outof place in an otherwise fast trading environment.As the FIIs complained about the paperwork as a major constrainingfactor, the government and SEBI took notice. The requisite legislative changes were putin place quickly - the Depositories Act, 1996 was passed and the NSE, with the UTI andthe IDBI, set up the National Securities Depository Ltd (NSDL).But the depository concept did not gain popularity; the FIIs whichhad clamoured for its introduction, now ignored it. The reason: Lack of liquidity. But,unless the institutional investors stepped in, there could be no liquidity. This stalematefrustrated the push for a paperless environment.

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