A

PROJECT SYNOPSIS ON
DEPOSITORY
OF
LUDHIANA STOCK EXCHANGE












Introduction to Ludhiana Stock Exchange

The Ludhiana Stock Exchange Limited (LSE was established in 1981, by Sh. S.P. Oswal of
Vardhman Group and Sh. B.M. Munjal of Hero Group, leading industrial luminaries, to fulfill a
vital need of having a Stock Exchange in the region of Punjab Himachal Pradesh Jammu &
Kashmir and Union territory of Chandigarh. Since its inception, the stock exchange has grown
phenomenally. The stock Exchange has played an important role in channelizing savings into
capital for the various industrial and commercial units of the state of Punjab and other parts of
the company. The Exchange has facilitated the mobilization of funds by entrepreneurs from the
public and thereby contributed in the overall, economic, industrial and social development of the
state under its jurisdiction.
Ludhiana Stock Exchange is one of the leading Regional Stock Exchange and has been in the
forefront of other stock exchange in every spheres, whether it is formation of subsidiary for
providing the platform of trading to investors, for brokers etc. in the era of Screen based trading
introduced by national Stock exchange and Bombay stock Exchange, entering into the field of
Commodities trading or imparting education to the Public at large by way of starting Certificate
Programmed in Capital Market.
The vision and mission of stock Exchange is:
Reaching small investors by providing services relating to Capital market including
Trading Depository operations etc and creating Mass Awareness by way of education and
training in the field of Capital market.
To create educated investors and fulfilling the gap of skilled work force in the domain in
Capital Market.

Further, the exchange has 295 members out of which 171 are registered with national Stock
exchange as Sub- broker and 124 with Bombay Stock exchange as sub- brokers through our
subsidiary.




Strengths of LSE Group
1. LSE brand is popular among masses. The brand image of LSE can be capitalized.
2. We have requisite infrastructure for the Capital Market activities which includes a multi-
storeyed, centrally air conditioned building situated in the financial hub of the city i.e. Feroze
Gandhi Market.
3. We have well experienced staff handling operations of Stock Exchange.
4. We have competent Board and professional management.
5. We have much needed networking of sub brokers in the entire region, who are having rich
experience in Stock Market operations for the last 31 years.
6. We have more than 46,000 clients spread across Punjab, Himachal Pardesh, Jammu &
Kashmir and adjoining areas of Haryana and Rajasthan.
7. The turnover of our subsidiary is the highest amongst all subsidiaries of Regional Stock
Exchanges in India.


Infrastructure and Assets Base at Ludhiana Stock Exchange
Equipped library and view-terminals to provide live rates of NSE and BSE to investors.
Investors are also provided with Cable TV for the purpose of viewing the latest happenings in the
Capital Market and around. Basement of the building has air-conditioning plant and Generators
to provide air-conditioned environment and twenty-four hours power back up.
The Exchange has also an additional plot of land measuring 2333 sq. yards in the prime location
of city, to enhance its infrastructure and source of income


Status of Subsidiary i.e. Ludhiana Securities Ltd.
Due to Nation wide reach of bigger Stock Exchanges, the trading volumes at Ludhiana Stock
Exchange declined and ultimately, the trading stopped in February, 2002, but the Stock
Exchange converted the threat of bigger Exchanges into opportunities and acquired the corporate
membership of these exchanges through its subsidiary company i.e. LSE Securities Limited. We
have now been providing Trading Platforms of Bigger Stock Exchanges to the Investors of the
region. The vast network of Brokers of the Exchange is servicing millions of Investors. The
subsidiary company is also providing depository services in the State of Punjab and Himachal
Pradesh. The turnover of subsidiary is highest amongst all the subsidiaries of Regional Stock
Exchanges. The growth of subsidiary is swift and it has been providing a range of services to the
public at large such as Trading, Depository, IPO bidding collection Centre.
The Company in its continuous endevour to provide qualitative services to its valued clients, has
started e-broking trading services for its clients, thereby increasing the geographical reach of the
company.

Investor Related Services
The Exchange has been providing a variety of services for the benefit of investing public. The
services include Investor Service Centres, Investor Protection fund and Investor Educational
Seminars.

(I).INVESTOR SERVICE CENTRES :-
The Exchange has set-up Investor Service Centre at LSE Building for providing information
relating to Capital Market to the general public. The Centres subscribe to leading economic,
financial dailies and periodicals. They also store the Annual Reports of the companies listed at
the Stock Exchange. The Investor Service Centres are also equipped with a Terminal for
providing live rates of trading at NSE and BSE. A large number of the investors visit the
centre to utilize the services being provided by the Exchange.

(II).INVESTOR AWARENESS SEMINARS:-
The Exchange has been organizing Investor Awareness Seminars for the benefit of Investors of
the region comprising State of Punjab, Himachal Pradesh, Jammu & Kashmir, Chandigarh and
adjoining areas of Haryana and Rajasthan. This massive exercise of organizing Investor
Awareness Seminars has been launched as a part of Securities Market Awareness Campaign
launched by SEBI in January, 2003. The Exchange apprises the investors about Dos and Donts
to be observed while dealing in Securities Market. During 2011-2012, till date, Exchange has
organized more than 83 workshops in the region mentioned above.

(III).WEBSITE OF THE EXCHANGE:-
www.lse.co.in The Exchange has its own website with the domain name www.lse.co.in. The
website provides valuable information about the latest market commentary, research reports
about companies, daily status of International markets, a separate module for Internet trading,
information about listed companies and brokers and sub-brokers of the Exchange and its
subsidiary. The website also contains many useful links on portfolio management, investor
education, frequently asked questions about various topics relating to Primary and Secondary
Market, information about Mutual Funds, Financials of the Company including Quarterly
Results, Share Prices, Profit and Loss Accounts, Balance Sheet and Many More. The website
also contains daily Technical Charts of various scrips being traded in BSE and NSE.



INTRODUCTION TO THE TOPIC

DEPOSITORY

Since the beginning of liberalisation process in 1991, the size of Indian capital market expanded
manifold. The traditional system of settlement through physical transfer of securities failed to
cope with the requirements of growing of the market. Physical settlement mechanisms gave rise
to inefficiencies and risks of bad deliveries. Delays in transfer and registration, fake certificates
and forgeries.

Minimisation of settlement risks and shortening of settlement cycles are the basic requirements
for greater depth and expansion of markets by upgrading the existing trading system into a
modern internationally competitive one .Severe infrastructural bottlenecks delayed upgradation
of Indian clearing and settlement systems. These bottlenecks became more pronounced with
every increase in the number of investors and volume of trading in securities. Inability of
clearing and settlement infrastructure to efficiently manage the flow of paper work made it
difficult for the exchanges to shorten settlement cycles and move to rolling settlement. The
Depositories Act has paved the way for instituting an infrastructure for eliminating various risks
associated with capital market transactions and increasing the efficiency of clearance and
settlement systems. It allows for dematerialisation and re-materialisation of securities in
depositories through electronic book entry thus reducing settlement risks and removing some of
the infrastructural bottlenecks.

What is a Depository?
A depository is an organisation which holds securities (like shares, debentures, bonds,
government securities, mutual fund units etc.) of investors in electronic form at the request of the
investors through a registered Depository Participant. It also provides services related to
transactions in securities.

LEGAL FRAMEWORK

The Depositories Act 1956 provides the regulation of depositories in securities. SEBI formulated
the Depositories and participants Regulation Act, 1996 to oversee the matter regarding admission
and working of Depositories and its participant. The Depositories Act passed by parliament
received the President's assents on August 10, 1996. The Act enables the setting up of multiple
depositories in the country. Only a company registered under the companies Act (1956) and
sponsored by the specified categories of institution can setup depository in India. The Depository
offers services relating to holding of securities and facility processing of transaction in such
securities in book entry form. The transaction handled by depositories includes settlement of
market trades, settlement of off-market trades, securities lending and borrowing, pledge &
hypothecations.

ELIGIBILTY CRITERIA FOR DEPOSITORY
Any of the following may be a Depository:
A public financial institution as defined in section 4A of the Companies Act, 1956.
A bank included in the second schedule to the RBI Act, 1934.
A foreign bank operating in India with the approval of the RBI.
A Recognized Stock Exchange.
An institution engaged in providing financial services where not less than 75% of the
equity is held jointly or severally by the institution.
A custodian of the securities approved by Government of India.


Comparison of a Depository with a Bank
Depositories Banks
Hold securities in an account Hold funds in an account
Transfer securities between
accounts on the instruction of
the account holder
Transfers funds between
accounts on the instruction of
the account holder
Assist in transfer of ownership
without having to handle
securities
Assist in transfers without
having to handle money
Facilitates safekeeping of shares
Facilitates safekeeping of
money


BENEFITS OF AVAILING DEPOSITORY SERVICES

The benefits are enumerated below:-
A safe and convenient way to hold securities.
Immediate transfer of securities.
No stamp duty on transfer of securities.
Elimination of risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc.
Reduction in paperwork involved in transfer of securities.
Reduction in transaction cost.
No odd lot problem, even one share can be traded.
Nomination facility.
Change in address recorded with DP gets registered with all companies in which investor
holds securities electronically eliminating the need to correspond with each of them separately.
Transmission of securities is done by DP eliminating correspondence with companies.
Automatic credit into demat account of shares, arising out of
bonus/split/consolidation/merger etc.
Holding investments in equity and debt instruments in a single account.


OBJECTIVES OF THE STUDY

To study the securities in market
To know the difference between NSDL and CDSL
To know the overall functioning of depository
To examine the satisfaction level of investors by the services provided by NSDL and
CDSL
To know about the benefits yielded to brokers
To understand the functioning of LSE
To know the brokers perception about NSDL and CDSL
To know about dematerialization.


RESEARCH METHODOLOGY

RESEARCH
Research refers to search for knowledge. Research is an original contribution to the existing
stock of knowledge making for its advancement. It is the pursuit of truth with the help of study,
observation, comparison and experiment. In short, the search for knowledge through objective
and systematic method of finding solution of the problem is research
This chapter describes the research methodology adopted for the study. It includes methodology
and limitation of the studies
1. Research Plan: to meet the objectives of the studies undertaken, the descriptive
respondents were adopted.
2. Data sources:
a) Primary data
b) Secondary data

PRIMARY DATA
It is first hand data, which is collected by researcher itself. Primary data is collected by various
approaches so as to get a precise, accurate, realistic and relevant data. The main tool in gathering
primary data will be investigation and observation. It will be achieved by a direct approach and
observation from the officials of the company.

SECONDARY DATA
The secondary data are those which have already collected and stored. Secondary data easily
get those secondary data from records, journals, annual reports of the company etc. It will save
the time, money and efforts to collect the data. Secondary data also made available through trade
magazines, balance sheets, books etc. . It provides reliable, suitable, adequate and specific
knowledge.

TYPE OF DATA USED I N THE STUDY
Primary data:
In this study questionnaire and personal interview methods will be used for receiving primary
data.
Secondary data:
In this study information from various website will be used. Thus it will include going through
various research projects.

Research Approach: Survey research will be adopted
Research instruments: Questionnaire will be used to interview the respondents. A judicious
mix of open needed and close-ended question will be used.
Sampling plan
Sampling unit: It will consist of investors, brokers etc.
Sampling size: 200 respondents will be selected
Sampling procedure: To obtain representative sample, non-sampling procedures will be
adopted. Sampling will be done to silent the most accessible population.
Contact method: The respondents will be personally interviewed.
Analysis method: The data will be tabulated and frequency distribution will be
developed. The percentages will be computed for different variables.


QUESTIONNAIRE

QUES. 1: Do you know about depository system?
a) YES b) NO

Ques.2: Do you have demat account?
a) YES b) NO

Ques.3: Do you satisfied with the fee structures of Depository Participant?
a) YES b) NO

Ques.4: What were the criteria for choosing the DP?
a) Distance convenience c) Service level
b) Charges d) Reputation

Ques.5: Do you have individual account or with company?
a) Individual b) Company

Ques.6: Who can make a request for the demat of the security?
a) Company c) Registered holder of the company
b) Depository d) Depository participant

Ques.7 : Is there any grievance to parties for NSDL?
a) YES b) NO

Ques.8: How much time period is given to the parties to resolve their grievances for NSDL?
a) 30 DAYS c) 45 DAYS
b) 21 DAYS d) 25 DAYS

Ques.9: In case of partnership firm account will be open in the name of?
a) MAXIMUM HOLDING PARTNER c) ANY AUTHORIZED PARTNER
b) FIRM
QUES.10: From which depository participant you make trading?
a) Sharekhan c) India bulls
b) Reliance d) ICICI direct.com
e) Others
QUES.11: If your selected trading company increases their annual charges will you go with
it?
a) YES c) IF CHARGES ARE REASONABLE
b) NO

QUES.12: According to you which one is the most important factor for trading company
to enhance loyalty and customer?
A) Provide maximum profit C) Provide tips time to time
B) No hidden charge D) Other factors


Ques13: Preferred Portfolio by Investors
a) Equity c) Balanced
b) Debt


















BIBLOGRAPHY


Sites:-

www.lse.co.in
www.nsdl.co.in
www.cdslindia.com


Referred Books:-

Financial institutions and markets- L.M. Bhale
Research methodology-Mohit Gupta, Navdeep Aggarwal
Financial services- Shashi k. Gupta, Nisha Aggarwal