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ONLINE TRADING

The sale of goods and/or services over the internet. Customers must enter and submit
their credit card details online ; the sale will often proceed without the retailer and
customer ever having personal contact. Excluded from this definition is the practice of
retailing through a central web site operated by another party , either a franchise head office
or an external company, such as Interflora. It should be noted that the term 'online trading' does
not refer to buying or selling shares over the internet. It also does not refer to accepting credit card
details via email. Also called Securities Trading, Trading (Securities), Online Retail
Brokerages, and Online Securities Trading

DEFINITION:
An e-brokerage is a brokerage house that allows you to buy and sell stocks and obtain
investment information from its Web site. Some e-brokerages are provided by traditional and well-
established "offline" brokerage houses and a few are exclusively online only.

Tradition investing has experienced a revolution due to the rise of the e –brokerage
industry, which enables investors to use the Internet to conduct secure trading. Two factors
are contributing to the enormous growth of online investing. First, the Internet gives ready
access to raw data. Second, investment houses can offer transactions at lower prices
than traditional methods by eliminating the need for brokers or financial advisers.

The online brokerage industry has yet to attract mainstream investors, who represent 85
percent of the retail investment community. These investors prefer a combination of brokerage
services, including not only online trading, but also financial advice and guidance.

REGULATORY FRAME WORK


This Securities Contract Regulation (SCR) Act, 1956 and Securities and Exchange board of India
(SEB1) Act, 1992, provides a comprehensive legal framework. A 3-tier retaliatory structure
comprising the ministry of finance, SEB1 and the Governing Boards of the Stock Exchanges
regulates the functioning of Stock Exchanges.

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Ministry of finance: The Stock Exchange division of the Ministry of Finance has powers related
to the application of the provision of the SCR Act and licensing of dealers in the other area.
According to SEBI Act, The Ministry of Finance has the appellate and the supervisory power over
the SEBI. It has powered to grant recognition to the Stock Exchange and regulation of their
operations. Ministry of Finance has the power to approve the appointments of executives chiefs
and the nominations of the public representatives in the Government Boards of the Stock
Exchanges. It has the responsibility of preventing undesirable speculation.

SO HOW DOES ONE BUY SHARES:


Alright, you have decided you want part of the action. Shares are brought and sold on the
stock exchanges -- the main one in India are the National stock Exchange (NSE) and the
Bombay Stock Exchange (BSE). You can use three different routes to buy shares: through
your broker, trade directly online , or buy shares when a company comes out with a fresh issues
of shares. This is called an Initial Public Offering (IPO). Now that we have demystified the key
words -- shares, face value, market value and market capitalization – in the subsequent articles,
we will explore how to buy and sell stocks, and how to subscribe to a new issue.

Securities and Exchange Board of India


The Securities and Exchange Board of India (SEBI) even though established in the year 1988.
Received statutory powers only on 30th January 1992. Under the SEBI Act, a wide variety of
powers are vested in the hands of SEBI. SEBI has the powers to regulate the business of Stock
Exchanges, other security and mutual funds. Registration and regulation of the market
intermediaries are also carried out by SEBI. It has responsibility to prohibit the fraudulent unfair
trade practices and insider dealings. Takeovers are also monitored by the SEBI has the multi
pronged duty to promote the healthy growth of the capital market and protect the investors.

The Governing Board of stock exchanges: The Governing Board of the Stock Exchange
consists of elected members of directors, government nominees and public representatives.
Rules, by laws and regulations of the Stock Exchange substantial powers to the executive
director for maintaining efficient and smooth day-to day functioning of Stock Exchange. The
Governing Board has the responsibility to maintain and orderly and well-regulated market.
The governing body of the stock exchange consists of 13 member of which:

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A. Six members of the Stock Exchange are elected by the members of the Stock Exchange.
B. Central Government nominates not more than three members.
C. The board nominates three public representatives.
D. SEBI nominates personal not exceeding three and
E. The stock exchange appoints one executive director.

One third of the elected members retire at a Annual General Meeting (AGM). The
retired member can offer himself for election if he is not elected for two consecutive years. If a
member serves in the governing body for two years consecutively, he should refrain offering
himself for another two years.

The members of the governing body elect the president and vice-president. It needs to approval
from the Central Government or the Board. The office tenure for the president and vice-president is
on year. They can offer themselves for re-election, if they have not held for two consecutive
years. In that case they can offer themselves for re-election after a gap of one-year period.

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SCOPE OF STUDY:

The scope of the project is to study and know about Online Trading and
Clearing & Settlements dealt in Inter-Connected Stock Exchange.

By studying the Online Trading and Clearing & Settlements, a clear option of
dealing in stock exchange is been understood unlike olden days the concept of trading
manually is been replaced for fast interaction of shares of shareholder. By this we can access
anywhere and know the present dealings in shares.

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OBJECTIVES OF THE STUDY:

The objectives of the study are as follows:


 To know the on-line screen based trading system and about its communication facilities for
the appropriate configuration to set network. This would link the ISE to individual
brokers/members.
 To study about the back up measures with respect to primary communication facilities, in
order to achieve network availability and connectivity back-up options.
 Study about Clearing & Settlements in the stock exchanges for easy transfer and error prone
system. Also study about computerization demand process.
 To know about the settlement procedure involved in ISE and also NSDL operations.
 Clearing defining each and every term of the stock exchange trading procedures.

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METHODOLOGY OF THE STUDY:

DATA COLLECTION METHODS


The data collection methods include both the primary and secondary collection methods.

 Primary collection methods:


This method includes the data collection from the personal discussion with the authorized clerks
and members of the exchange

 Secondary collection methods:


The secondary collection methods includes the lectures of the superintend of the department of
market operations and so on., also the data collected from the news, magazines of the ISE and
different books issues of this study.

Research Instrument:
Questionnaire, which is used to collect the primary data by personal interview and
the day to day fluctuation in the stock markets of NSE & BSE.

Sampling Procedure:
The sample size is 50. The method of sampling used was random sampling method due
to the busyness of the employee and their non-availability because of their market activities.
Random sampling refers to that sampling technique in which each and every unit of population has
an opportunity of being selected in the sample.

Descriptive Approach:
This approach is one of the most popular approaches these days. In this approach, the
researcher using questionnaire to explore new areas of investigation.

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LIMITATIONS OF THE STUDY:

 The study confines to the past 2-3 years and present system of the trading procedure in the
ISE and the study is confined to the coverage of all the related issues in brief.
 The data is collected from the primary and secondary sources and thus is subject to slight
variation than what the study includes in reality.
 The accuracy and correctness can be measured only to the extent of what the sample Group
has furnished.

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INDUSTRY PROFILE

History of Stock Exchanges


In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India
began when the American Civil War broke and the cotton supply from the US to Europe stopped.
Further the brokers increased to 250.

At the end of the war in 1874, the market found a place in a street (now called Dalal Street). In
1887, "Native Share and Stock Brokers' Association" was established. In 1895, the exchange
acquired a premise in the street which was inaugurated in 1899.

Introduction:-
In general, the financial market divided into two parts, Money market and capital market.
Securities market is an important, organized capital market where transaction of capital is
facilitated by means of direct financing using securities as a commodity. Securities market can be
divided into a primary market and secondary market.

PRIMARY MARKET
The primary market is an intermittent and discrete market where the initially listed shares are
traded first time, changing hands from the listed company to the investors. It refers to the process
through which the companies, the issuers of stocks, acquire capital by offering their stocks to
investors who supply the capital. In other words primary market is that part of the capital markets
that deals with the issuance of new securities. Companies, governments or public sector institutions
can obtain funding through the sale of a new stock or bond issue. This is typically done through a
syndicate of securities dealers. The process of selling new issues to investors is called
underwriting. In the case of a new stock issue, this sale is called an initial public offering (IPO).
Dealers earn a commission that is built into the price of the security offering, though it can be
found in the prospectus.

SECONDARY MARKET
The secondary market is an on-going market, which is equipped and organized with a place,
facilities and other resources required for trading securities after their initial offering. It refers to a

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specific place where securities transaction among many and unspecified persons is carried out
through intermediation of the securities firms, i.e., a licensed broker, and the exchanges, a
specialized trading organization, in accordance with the rules and regulations established by the
exchanges.

A bit about history of stock exchange they say it was under a tree that it all started in 1875.Bombay
Stock Exchange (BSE) was the major exchange in India till 1994.National Stock Exchange (NSE)
started operations in 1994.

NSE was floated by major banks and financial institutions. It came as a result of Harshad Mehta
scam of 1992. Contrary to popular belief the scam was more of a banking scam than a stock market
scam. The old methods of trading in BSE were people assembling on what as called a ring in the
BSE building. They had a unique sign language to communicate apart from all the shouting.
Investors weren't allowed access and the system was opaque and misused by brokers. The shares
were in physical form and prone to duplication and fraud.

NSE was the first to introduce electronic screen based trading. BSE was forced to follow suit. The
present day trading platform is transparent and gives investors prices on a real time basis. With the
introduction of depository and mandatory dematerialization of shares chances of fraud reduced
further. The trading screen gives you top 5 buy and sell quotes on every scrip.

A typical trading day starts at 10 ending at 3.30. Monday to Friday. BSE has 30 stocks which make
up the Sensex .NSE has 50 stocks in its index called Nifty. FII s Banks, financial institutions
mutual funds are biggest players in the market. Then there are the retail investors and speculators.
The last ones are the ones who follow the market morning to evening; Market can be very
addictive like blogging though stakes are higher in the former.

ORIGIN OF INDIAN STOCK MARKET


The origin of the stock market in India goes back to the end of the eighteenth century when long-
term negotiable securities were first issued. However, for all practical purposes, the real beginning
occurred in the middle of the nineteenth century after the enactment of the companies Act in 1850,
which introduced the features of limited liability and generated investor interest in corporate
securities.

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An important early event in the development of the stock market in India was the formation of the
native share and stock brokers 'Association at Bombay in 1875, the precursor of the present day
Bombay Stock Exchange. This was followed by the formation of associations/exchanges in
Ahmadabad (1894), Calcutta (1908), and Madras (1937). In addition, a large number of ephemeral
exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times
subsequently.

Stock exchanges are intricacy inter-woven in the fabric of a nation's economic life. Without a stock
exchange, the saving of the community- the sinews of economic progress and productive
efficiency- would remain underutilized. The task of mobilization and allocation of savings could be
attempted in the old days by a much less specialized institution than the stock exchanges. But as
business and industry expanded and the economy assumed more complex nature, the need for
'permanent finance' arose. Entrepreneurs needed money for long term whereas investors demanded
liquidity – the facility to convert their investment into cash at any given time. The answer was a
ready market for investments and this was how the stock exchange came into being.

Stock exchange means any body of individuals, whether incorporated or not, constituted for the
purpose of regulating or controlling the business of buying, selling or dealing in securities. These
securities include:
(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like nature in
or of any incorporated company or other body corporate;
(ii)Government securities; and
(iii) Rights or interest in securities.
The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd (NSE) are the
two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges. However, the
BSE and NSE have established themselves as the two leading exchanges and account for about 80
per cent of the equity volume traded in India. The NSE and BSE are equal in size in terms of daily
traded volume. The average daily turnover at the exchanges has increased from Rs 851 crore in
1997-98 to Rs 1,284 crore in 1998-99 and further to Rs 2,273 crore in 1999-2000 (April - August
1999). NSE has around 1500 shares listed with a total market capitalization of around Rs 9, 21,500
crore.

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The BSE has over 6000 stocks listed and has a market capitalization of around Rs 9, 68,000 crore.
Most key stocks are traded on both the exchanges and hence the investor could buy them on either
exchange. Both exchanges have a different settlement cycle, which allows investors to shift their
positions on the bourses. The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has
the S&P NSE 50 Index (Nifty) which consists of fifty stocks. The BSE Sensex is the older and
more widely followed index.

Both these indices are calculated on the basis of market capitalization and contain the heavily
traded shares from key sectors. The markets are closed on Saturdays and Sundays. Both the
exchanges have switched over from the open outcry trading system to a fully automated
computerized mode of trading known as BOLT (BSE on Line Trading) and NEAT (National
Exchange Automated Trading) System.

It facilitates more efficient processing, automatic order matching, faster execution of trades and
transparency; the scrip's traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z'
groups. The 'A' group shares represent those, which are in the carry forward system (Badla). The
'F' group represents the debt market (fixed income securities) segment. The 'Z' group scrip's are the
blacklisted companies. The 'C' group covers the odd lot securities in 'A', 'B1' & 'B2' groups and
Rights renunciations. The key regulator governing Stock Exchanges, Brokers, Depositories,
Depository participants, Mutual Funds, FIIs and other participants in Indian secondary and primary
market is the Securities and Exchange Board of India (SEBI) Ltd.

BRIEF HISTORY OF STOCK EXCHANGES


Do you know that the world's foremost marketplace New York Stock Exchange (NYSE), started its
trading under a tree (now known as 68 Wall Street) over 200 years ago? Similarly, India's premier
stock exchange Bombay Stock Exchange (BSE) can also trace back its origin to as far as 125 years
when it started as a voluntary non-profit making association.

News on the stock market appears in different media every day. You hear about it any time it
reaches a new high or a new low, and you also hear about it daily in statements like 'The BSE
Sensitive Index rose 5% today'. Obviously, stocks and stock markets are important. Stocks of
public limited companies are bought and sold at a stock exchange. But what really are stock
exchanges? Known also as the stock market or bourse, a stock exchange is an organized
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marketplace for securities (like stocks, bonds, options) featured by the centralization of supply and
demand for the transaction of orders by member brokers, for institutional and individual investors.

The exchange makes buying and selling easy. For example, you don't have to actually go to a stock
exchange, say, BSE - you can contact a broker, who does business with the BSE, and he or she will
buy or sell your stock on your behalf.

MARKET BASICS
Electronic trading
Electronic trading eliminates the need for physical trading floors. Brokers can trade from their
offices, using fully automated screen-based processes. Their workstations are connected to a Stock
Exchange's central computer via satellite using Very Small Aperture Terminus (VSATs). The
orders placed by brokers reach the Exchange's central computer and are matched electronically.
Execute an order
Select a broker of your choice and enter into a broker-client agreement and fill in the client
registration form. Place your order with your broker preferably in writing. Get a trade confirmation
slip on the day the trade is executed and ask for the contract note at the end of the trade date.
Need a broker
As per SEBI (Securities and Exchange Board of India.) regulations, only registered members can
operate in the stock market. One can trade by executing a deal only through a registered broker of a
recognized Stock Exchange or through a SEBI-registered sub-broker.
Contract note
A contract note describes the rate, date, time at which the trade was transacted and the brokerage
rate. A contract note issued in the prescribed format establishes a legally enforceable relationship
between the client and the member in respect of trades stated in the contract note. These are made
in duplicate and the member and the client both keep a copy each. A client should receive the
contract note within 24 hours of the executed trade. Corporate Benefits/Action.
Split
A Split is book entry wherein the face value of the share is altered to create a greater number of
shares outstanding without calling for fresh capital or altering the share capital account. For
example, if a company announces a two-way split, it means that a share of the face value of Rs 10

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is split into two shares of face value of Rs 5 each and a person holding one share now holds two
shares.

Buy Back
As the name suggests, it is a process by which a company can buy back its shares from
shareholders. A company may buy back its shares in various ways: from existing shareholders on a
proportionate basis; through a tender offer from open market; through a book-building process;
from the Stock Exchange; or from odd lot holders. A company cannot buy back through negotiated
deals on or off the Stock Exchange, through spot transactions or through any private arrangement.

Settlement cycle
The accounting period for the securities traded on the Exchange. On the NSE, the cycle begins on
Wednesday and ends on the following Tuesday, and on the BSE the cycle commences on Monday
and ends on Friday. At the end of this period, the obligations of each broker are calculated and the
brokers settle their respective obligations as per the rules, bye-laws and regulations of the Clearing
Corporation. If a transaction is entered on the first day of the settlement, the same will be settled on
the eighth working day excluding the day of transaction. However, if the same is done on the last
day of the settlement, it will be settled on the fourth working day excluding the day of transaction.

Rolling settlement
The rolling settlement ensures that each day's trade is settled by keeping a fixed gap of a specified
number of working days between a trade and its settlement. At present, this gap is five working
days after the trading day. The waiting period is uniform for all trades. In a Rolling Settlement, all
trades outstanding at end of the day have to be settled, which means that the buyer has to make
payments for securities purchased and seller has to deliver the securities sold. In India, we have
adopted the T+5 settlement cycle, which means that a transaction entered into on Day 1 has to be
settled on the Day 1 + 5 working days, when funds pay in or securities pay out takes place.

What are the advantages of Rolling Settlements?


As mentioned earlier, this is the system practiced in developed countries. Pay outs are quicker than
in weekly settlements, and investors will benefit from increased liquidity. The other benefit of the
modified system is that it keeps cash and forward markets separate. In the current system, the

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trader has five days to square off his transaction which leads to a high level of speculation as
people even without funds tend to "play" the market. During volatile markets, especially in a
bearish market, this often leads to a payment problem which has dogged the Indian stock
exchanges for a long time. It provides for a higher degree of safety, and once mechanisms such as
futures and stock-lending become popular, it would result in quality speculation and genuine
investor interest.

When does one deliver the shares and pay the money to broker
As a seller, in order to ensure smooth settlement you should deliver the shares to your broker
immediately after getting the contract note for sale but in any case before the pay-in day. Similarly,
as a buyer, one should pay immediately on the receipt of the contract note for purchase but in any
case before the pay-in day.

Short selling
Short selling is a legitimate trading strategy. It is a sale of a security that the seller does not own, or
any sale that is completed by the delivery of a security borrowed by the seller. Short sellers take
the risk that they will be able to buy the stock at a more favorable price than the price at which they
"sold short."
The selling of a security that the seller does not own, or any sale that is completed by the delivery
of a security borrowed by the seller, Short sellers assume that they will be able to buy the stock at a
lower amount than the price at which they sold short.
Auction
An auction is conducted for those securities that members fail to deliver/short deliver during pay-
in. Three factors primarily give rise to an auction: short deliveries, un-rectified bad deliveries, and
un-rectified company objections
Separate market for auctions
The buy/sell auction for a capital market security is managed through the auction market. As
opposed to the normal market where trade matching is an on-going process, the trade matching
process for auction starts after the auction period is over.
If the shares are not bought in the auction
If the shares are not bought at the auction i.e. if the shares are not offered for sale, the Exchange
squares up the transaction as per SEBI guidelines. The transaction is squared up at the highest price

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from the relevant trading period till the auction day or at 20 per cent above the last available
Closing price whichever is higher. The pay-in and pay-out of funds for auction square up is held
along with the pay-out for the relevant auction.
Bad Delivery
SEBI has formulated uniform guidelines for good and bad delivery of documents. Bad delivery
may pertain to a transfer deed being torn, mutilated, overwritten, defaced, or if there are spelling
mistakes in the name of the company or the transfer. Bad delivery exists only when shares are
transferred physically. In "Demat" bad delivery does not exist.

REGULATION OF BUSINESS IN THE STOCK EXCHANGES


Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of stock
exchanges. The SEBI has been inspecting the stock exchanges once every year since 1995-96.
During these inspections, a review of the market operations, organizational structure and
administrative control of the exchange is made to ascertain whether:
 the exchange provides a fair, equitable and growing market to investors
 the exchange's organization, systems and practices are in accordance with the Securities
Contracts (Regulation) Act (SC(R) Act), 1956 and rules framed there under
 the exchange has implemented the directions, guidelines and instructions issued by the
SEBI from time to time
 The exchange has complied with the conditions, if any, imposed on it at the time of
renewal/ grant of its recognition under section 4 of the SC(R) Act, 1956.
During the year 1997-98, inspection of stock exchanges was carried out with a special focus on the
measures taken by the stock exchanges for investor's protection. Stock exchanges were, through
inspection reports, advised to effectively follow-up and redress the investors' complaints against
members/listed companies. The stock exchanges were also advised to expedite the disposal of
arbitration cases within four months from the date of filing.

During the earlier years' inspections, common deficiencies observed in the functioning of the
exchanges were delays in post trading settlement, frequent clubbing of settlements, delay in
conducting auctions, inadequate monitoring of payment of margins by brokers, non-adherence to
Capital Adequacy Norms etc. It was observed during the inspections conducted in 1997-98 that
there has been considerable improvement in most of the areas, especially in trading, settlement,
collection of margins etc.
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Dematerialization
Dematerialization in short called as 'demat' is the process by which an investor can get physical
certificates converted into electronic form maintained in an account with the Depository
Participant. The investors can dematerialize only those share certificates that are already registered
in their name and belong to the list of securities admitted for dematerialization at the depositories.

Depository: The organization responsible to maintain investor's securities in the electronic form is
called the depository. In other words, a depository can therefore be conceived of as a "Bank" for
securities. In India there are two such organizations viz. NSDL and CDSL. The depository concept
is similar to the Banking system with the exception that banks handle funds whereas a depository
handles securities of the investors. An investor wishing to utilize the services offered by a
depository has to open an account with the depository through Depository Participant.

Depository Participant: The market intermediary through whom the depository services can be
availed by the investors is called a Depository Participant (DP). As per SEBI regulations, DP could
be organizations involved in the business of providing financial services like banks, brokers,
custodians and financial institutions. This system of using the existing distribution channel (mainly
constituting DPs) helps the depository to reach a wide cross section of investors spread across a
large geographical area at a minimum cost. The admission of the DPs involves a detailed
evaluation by the depository of their capability to meet with the strict service standards and a
further evaluation and approval from SEBI. Realizing the potential, all the custodians in India and
a number of banks, financial institutions and major brokers have already joined as DPs to provide
services in a number of cities.

Advantages of a depository services:


Trading in demat segment completely eliminates the risk of bad deliveries. In case of transfer of
electronic shares, you save 0.5% in stamp duty. Avoids the cost of courier/ notarization/ the need
for further follow-up with your broker for shares returned for company objection No loss of
certificates in transit and saves substantial expenses involved in obtaining duplicate certificates,
when the original share certificates become mutilated or misplaced.Lower interest charges for
loans taken against demat shares as compared to the interest for loan against physical shares. RBI
has increased the limit of loans availed against dematerialized securities as collateral to Rs 20 lakh
per borrower as against Rs 10 lakh per borrower in case of loans against physical securities. RBI
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has also reduced the minimum margin to 25% for loans against dematerialized securities, as
against 50% for loans against physical securities. Fill up the account opening form, which is
available with the DP. Sign the DP-client agreement, which defines the rights and duties of the DP
and the person wishing to open the account. Receive your client account number (client ID).
This client id along with your DP id gives you a unique identification in the depository system. Fill
up a dematerialization request form, which is available with your DP, Submit your share
certificates along with the form; write "surrendered for demat" on the face of the certificate before
submitting it for demat) Receive credit for the dematerialized shares into your account within 15
days.

National Stock Exchange


The National Stock Exchange (NSE) is a stock exchange located at Mumbai, India. It is the
largest stock exchange in India in terms of daily turnover and number of trades, for both equities

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and derivative trading. The National Stock Exchange was incorporated in 1992 by Industrial
Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial
Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.
Trading at NSE
1. Fully automated screen-based trading mechanism
2. Strictly follows the principle of an order-driven market
3. Trading members are linked through a communication network
4. This network allows them to execute trade from their offices
5. The prices at which the buyer and seller are willing to transact will appear on the screen
6. When the prices match the transaction will be completed
7. A confirmation slip will be printed at the office of the trading member

Advantages of trading at NSE


1. Integrated network for trading in stock market of India
2. Fully automated screen based system that provides higher degree of transparency
3. Investors can transact from any part of the country at uniform prices
4. Greater functional efficiency supported by totally computerized network.

Mission
NSE mission is setting the agenda for change in the securities market in India.
The NSE was setup with the main objectives of:
 Establishing a nation-wide trading facility equities, debt instruments and hybrids,
 Ensuring equal access to investors all over the country through an appropriate
communication network,
 Providing a fair, efficient and transparent securities to investors using electronic trading
systems,
 Enabling shorter settlement cycles and book entry settlement systems, and
 Meeting the current international standards of securities market.

NSE’s markets
Currently, NSE has the following major segments of the capital market:
 Equity
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 Futures and Options
 Retail Debt Market
 Wholesale Debt Market
 Currency futures
 Mutual fund
 Stocks Lending & Borrowing

Hours
NSE’s normal trading sessions are conducted from 9:15 am India Time to 3:30 pm India Time on
all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange (or
by the Government of India) in advance.
On 16 December 2009, NSE announced that it would pre-pone the market opening at 9am from 18
December 2009. So NSE trading hours will be from 9:00 am till 3:30 pm India Time.
However, on 17 December 2009, after strong protests from brokers, the Exchange decided
to postpone the change in trading hours till 4 Jan 2010.
NSE new market timing from 4 Jan 2010 is 9:00 am till 3:30 pm India Time.

Indices
An Index is used to give information about the price movements of products in the
financial, commodities or any other markets. Financial indexes are constructed to measure price
movements of stocks, bonds, T-bills and other forms of investments. Stock market indexes are
meant to capture the overall behavior of equity markets.
NSE also set up as index services firm known as India Index Services & Products
Limited (IISL) and has launched several stock indices, including:
 S&P CNX Nifty(Standard & Poor's CRISIL NSE Index)
 CNX Nifty Junior
 CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)
 S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)
 CNX MIdcap (introduced on 18 July 2005 replacing CNX Midcap 200)

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Promoters
NSE has been promoted by leading financial institutions, banks, insurance companies and other
financial intermediaries:
 Industrial Development Bank of India Limited
 Industrial Finance Corporation of India Limited
 Life Insurance Corporation of India
 State Bank of India
 ICICI Bank Limited
 IL & FS Trust Company Limited
 Stock Holding Corporation of India Limited
 SBI Capital Markets Limited
 Bank of Baroda
 Canara Bank
 General Insurance Corporation of India
 National Insurance Company Limited
 The New India Assurance Company Limited
 The Oriental Insurance Company Limited
 United India Insurance Company Limited
 Punjab National Bank
 Oriental Bank of Commerce
 Indian Bank
 Union Bank of India
 Infrastructure Development Finance Company Ltd.

BOMBAY STOCK EXCHANGE


INTRODUCTION
BSE created history on June 9, 2000 by launching the first Exchange traded Index
Derivative Contract i.e. futures on the capital market benchmark index - the BSE Sensex. The
inauguration of trading was done by Prof. J.R. Varma, member of SEBI and chairman of the
committee responsible for formulation of risk containment measures for the Derivatives market.
The first historical trade of 5 contracts of June series was done on June 9, 2000 at 9:55:03 a.m.

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between M/s Kaji & Maulik Securities Pvt. Ltd. and M/s Emkay Share & Stock Brokers Ltd. at the
rate of 4755.

In the sequence of product innovation, the exchange commenced trading in Index Options on
Sensex on June 1, 2001. Stock options were introduced on 31 stocks on July 9, 2001 and single
stock futures were launched on November 9, 2002. September 13, 2004 marked another milestone
in the history of Indian Capital Markets, the day on which the Bombay Stock Exchange launched
Weekly Options, a unique product unparallel in derivatives markets, both domestic and
international. BSE permitted trading in weekly contracts in options in the shares of four leading
companies namely Reliance, Satyam, State Bank of India, and Tisco in addition to the flagship
index-Sensex.

Contract Specifications:
• Contract Specification for Sensex® Futures contracts
Security Symbol
Underlying BSX

SENSEX®
Contract Multiplier

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Contract Period 1, 2, 3 months
Tick size 0.05 index points
Price Quotation SENSEX points
Trading Hours 9:55 a.m. to 3:30 p.m.

Last Last Thursday of the contract month. If it is holiday, the immediately


Trading/Expiration preceding business day. Note: Business day is a day during which the
Day underlying stock market is open for trading.

Cash Settlement. On the last trading day, the closing value of the
Final Settlement underlying index would be the final settlement price of the expiring
futures contract.

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TYPES OF PRODUCTS
Index Futures
A futures contract is a standardized contract to buy or sell a specific security at a future date
at an agreed price.
An index future is, as the name suggests, a future on the index i.e. the underlying is the
index itself. There is no underlying security or a stock, which is to be delivered to fulfill the
obligations as index futures are cash settled. As other derivatives, the contract derives its value
from the underlying index. The underlying indices in this case will be the various eligible indices
and as permitted by the Regulator from time to time.

Index Options
Options contract give its holder the right, but not the obligation, to buy or sell something on
or before a specified date at a stated price. Generally index options are European Style. European
Style options are those option contracts that can be exercised only on the expiration date. The
underlying indices for index options are the various eligible indices and as permitted by the
Regulator from time to time.

Stock Futures
A stock futures contract is a standardized contract to buy or sell a specific stock at a future
date at an agreed price. A stock future is, as the name suggests, a future on a stock i.e. the
underlying is a stock. The contract derives its value from the underlying stock. Single stock futures
are cash settled.

Stock Options
Options on Individual Stocks are options contracts where the underlings are individual
stocks. Based on eligibility criteria and subject to the approval from the regulator, stocks are
selected on which options are introduced. These contracts are cash settled and are American style.
American Style options are those option contracts that can be exercised on or before the expiration
date.

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TRADING SYSTEM
The Derivatives Trading at BSE takes place through a fully automated screen based trading
platform called as DTSS (Derivatives Trading and Settlement System). The DTSS is designed to
allow trading on a real time basis. In addition to generating trades by matching opposite orders, the
DTSS also generates various reports for the member participants.

Product Specifications BSE-30 Sensex Futures


 Contract Size - Rs. 50 times the Index
 Tick Size - 0.1 points or Rs. 5
 Expiry day - last Thursday of the month
 Settlement basis - cash settled
 Contract cycle - 3 months
 Active contracts - 3 nearest months

NATIONAL SECURITIES DEPOSITORY LIMITED

National Securities Depository Limited (NSDL) is the first central securities depository in India
based in Mumbai. It is promoted by institutions of national stature responsible for the economic
development of India and has established a national infrastructure of international standards that
handles most of the securities held and settled in dematerialized form in the Indian capital market.

History
Although India had a vibrant capital market which is more than a century old, the paper-based
settlement of trades caused substantial problems like bad delivery and delayed transfer of title till
recently. The enactment of Depositories Act in August 1996 paved the way for establishment of
National Securities Depository Limited (NSDL), the first depository in India. This depository
promoted by institutions of national stature responsible for economic development of the country
has since established a national infrastructure of international standards that handles most of the
securities held and settled in de-materialized form in the Indian capital market.

Using innovative and flexible technology systems, NSDL works to support the investors and
brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of

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Indian marketplaces by developing settlement solutions that increase efficiency, minimise risk and
reduce costs. NSDL plays a quiet but central role in developing products and services that will
continue to nurture the growing needs of the financial services industry.

In the depository system, securities are held in depository accounts, which is more or less similar to
holding funds in bank accounts. Transfer of ownership of securities is done through simple account
transfers. This method does away with all the risks and hassles normally associated with
paperwork. Consequently, the cost of transacting in a depository environment is considerably
lower as compared to transacting in certificates. In August 2009, number of Demat accounts held
with NSDL crossed one core.

Promoters / shareholders
NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest
development bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and
National Stock Exchange of India Limited (NSE) - the largest stock exchange in India. Some of the
prominent banks in the country have taken a stake in NSDL.
Other Shareholders
 Axis Bank Limited
 State Bank of India
 Oriental Bank of Commerce
 Citibank NA
 Standard Chartered Bank
 HDFC Bank Limited
 The Hongkong and Shanghai Banking Corporation Limited
 Deutsche Bank
 Dena Bank
 Canara Bank
 Union Bank of India
NSDL Facts & Figures
As on March 31, 2010
 Number of certificates eliminated (Approx.) : 702 Crore
 Number of companies in which more than 75% shares are dematted : 2670
 Average number of accounts opened per day since November 1996 : 3646

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 Presence of demat account holders in the country : 80% of all pin codes in the country

Central Depository Services Limited


Central Depository Limited (CDSL), is the first Indian central securities depository based in
Mumbai. Its main function is the holding securities either in certificated or uncertificated
(dematerialized) form, to enable book entry transfer of securities.

Promoters / shareholders
CDSL is promoted by Bombay Stock Exchange Limited (BSE) jointly with State Bank of India,
Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and
Centurion Bank.

PRESENT & PAST SCENARIO OF THE STOCK EXCHANGES


What is Indian Stock Market?
Indian Stock Market contains more then 20 Stock Exchanges, some of which are popular
nationally as well as regionally. The first stock market started in the country was the Bombay
Stock Exchange (BSE). Its the oldest stock market in Asia and was established as “the Native
Share and Stock Broker's Association” in the year 1875.It has around 5000 listings and a volume of
more than US$ 1 Trillion. The other most popular Stock Exchange is the National Stock Exchange
(NSE). Its also the largest Stock Exchange in the country and third in the world. These two
exchanges constitute a major part of the Indian Capital Market.

What is their purpose?


Stock markets basic role is to provide a platform for the masses of the country to invest their
savings and also as a source of funds for various organizations and institutions. It provides an
opportunity for any person to become a part-owner of the company by buying the companies
shares. These shares can be sold and exchanged as well as used as collateral in certain cases. One
can deal in a variety of financial instruments in a stock market such as Equity which has already
been explained, Future's, Retail Debt, Wholesale Debt, Currency Future's, Derivatives, Bonds etc.
Trading can only be performed by a registered broker of the respective stock one wants to deal in
or through a broker.

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Impact on the Economy
The stock market has both positive and negative effects on the Indian Economy. Some of which
are listed below
Provides a source of funding for organizations
An investment avenue
A source of income for investors
A source of revenue for the government in the form of taxes
A source of employment opportunities
Meeting place for investors and organizations
Idle funds of common investors can be used for profitable purposes

Present Scenario
The current condition of Indian markets have drastically improved. There is absolute
transparency and instant transactions. All Indian Stock markets are now computerized and Internet
Trading has become a common phenomenon. Indian stock markets have also developed a dynamic
nature and can change from a bullish temperament to a bearish slide. Any small bit of information
or even a rumor from any part of the country can affect the market and is a fairly accurate indicator
of the prevalent atmosphere in the region or country. People from across the country and globe get
in touch with minute wise readings on the stock market and gain a lot of trading aptitude after daily
seeing BSE Stock Gainers or BSE top losers list which does a world of good to their investment
portfolio.

Conclusion
The Indian Stock Markets can be a very rewarding avenue of investment but the constant changes
and the inherent dynamic nature of the markets can wipe out your funds or savings within a
minute. Thus, the key words for every retail investor is to be constantly alert and very observant.
Don't always rely on the daily list of BSE top gainers or BSE top losers as it only takes a minute to
get the things changed here. Keeping ones eyes and ears open can the insure the investor against
any major losses. Following such rules and with some experience and practice, one can emerge
victorious and can churn out a fortune for himself as well. Hence, it is a way to turn your savings
into a fortune.

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COMPANY PROFILE

Inter-connected stock exchange of India limited [ISE] has been promoted by 14 Regional stock
exchanges to provide cost-effective trading linkage/connectivity to all the members of the
participating Exchanges, with the objective of widening the market for the securities listed on these
Exchanges. ISE aims to address the needs of small companies and retail investors with the guiding
principle of optimizing the existing infrastructure and harnessing the potential of regional markets,
so as to transform these into a liquid and vibrant market through the use of state-of-the-art
technology and networking.

The participating Exchanges of ISE in all about 4500 stock brokers, out of which more than 200
have been currently registered as traders on ISE. In order to leverage its infrastructure and to
expand its nationwide reach, ISE has also appointed around appointed around 450 Dealers across
70 cities other than the participating Exchange centers. These dealers are administratively
supported through the regional offices of ISE at Delhi [north], kolkata [east], Coimbatore,
Hyderabad [south] and Nagpur [central], besides Mumbai.

ISE has also floated a wholly-owned subsidiary, ISE securities and services limited [ISS], which
has taken up corporate membership of the National Stock Exchange of India Ltd. [NSE] in both the
Capital Market and Futures and Options segments and The Stock Exchange, Mumbai In the
Equities segment, so that the traders and dealers of ISE can access other markets in addition to the
ISE markets and their local market. ISE thus provides the investors in smaller cities a one-stop
solution for cost-effective and efficient trading and settlement in securities. With the objective of
broad basing the range of its services, ISE has started offering the full suite of DP facilities to its
Traders, Dealers and their clients.

OBJECTIVES OF THE COMPANY:


 Create a single integrated national level solution with access to multiple markets for
providing high cost-effective service to millions of investors across the country.
 Create a liquid and vibrant national level market for all listed companies in general and small
capital companies in particular.

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 Optimally utilize the existing infrastructure and other resources of participating Stock
Exchanges, which are under-utilized now.
 Provide a level playing field to small Traders and Dealers by offering an opportunity to
participate in a national markets having investment-oriented business.
 Reduce transaction cost.
 Provide clearing and settlement facilities to the Traders and Dealers across the Country at
their doorstep in a decentralized mode.
 Spread demat trading across the country

SALIENT FEATURES:
Network of intermediaries:
As at the beginning of the financial year 2003-04, 548 intermediaries (207 Traders and 341
Dealers) are registered on ISE. A broad of members forms the bedrock for any Exchange, and in
this respect, ISE has a large pool of registered intermediaries who can be tapped for any new line
of business.

Robust Operational Systems:


The trading, settlement and funds transfer operations of ISE and ISS are completely automated and
state-of-the-art systems have been deployed. The communication network of ISE, which has
connectivity with over 400 trading members and is spread across46 cities, is also used for
supporting the operations of ISS. The trading software and settlement software, as well as the
electronic funds transfer arrangement established with HDFC Bank and ICICI Bank, gives ISE and
ISS the required operational efficiency and flexibility to not only handle the secondary market
functions effectively, but also by leveraging them for new ventures.

Skilled and experienced manpower:


ISE and ISS have experienced and professional staff, who have wide experience in Stock
Exchanges/ capital market institutions, with in some cases, the experience going up to nearly
twenty years in this industry. The staff has the skill-set required to perform a wide range of
functions, depending upon the requirements from time to time.

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Aggressive pricing policy:
The philosophy of ISE is to have an aggressive pricing policy for the various products and services
offered by it. The aim is to penetrate the retail market and strengthen the position, so that a wide
variety of products and services having appeal for the retail market can be offered using a common
distribution channel. The aggressive pricing policy also ensures that the intermediaries have
sufficient financial incentives for offering these products and services to the end-clients.

Trading, Risk Management and Settlement Software Systems:


The ORBIT (Online Regional Bourses Inter-connected Trading) and AXIS (Automated Exchange
Integrated Settlement) software developed on the Microsoft NT platform, with consultancy
assistance from Microsoft, are the most contemporary of the trading and settlement software
introduced in the country. The applications have been built on a technology platform, which offers
low cost of ownership, facilitates simple maintenance and supports easy up gradation and
enhancement. The soft wares are so designed that the transaction processing capacity depends on
the hardware used; capacity can be added by just adding inexpensive hardware, without any
additional software work.

Vibrant Subsidiary Operations:


ISS, the wholly owned subsidiary of ISE, is one of the biggest Exchange subsidiaries in the
country. On any given day, more than 250 registered intermediaries of ISS traded from 46 cities
across the length and breadth of the country.

SWOT Analysis
STRENGTHS:
Investments are the oxygen of growth. Within the larger context of the country’s

Increasing investments in Securities Market, the Company is also investing in multiple spheres -
people, technology, capacity expansion and brand building.

This is essential for sustaining the growth momentum and continuous Value creation. Due to
Demutualization of regional stock exchanges and favorable terms of SEBI, different investors can
be a part of the Exchange.

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Talent acquisition and retention is one of the key result areas for our senior managers. On an on-
going basis, the Company endeavors to ensure a vibrant and motivated workforce. The Company is
constantly honing people management leadership skills of the employees and is increasingly
investing in Innovative human resource.
Inter connected stock exchange of India limited. is contributing to a great extent in terms of turn
over as also building up the economy of the country.

WEAKNESSES:
No trading by trading members on screen of inter connected stock exchange of India limited Due
to change in technology the role of regional stock exchange needs to be reinvented.

OPPORTUNITIES:
A large domestic market that is still into traditional fixed income and other government savings is
all buy bound to enter the market sooner if not later.

THREATS:
Global Economic slowdown, Currency mismanagement, High global commodity prices. Over
valuation in Index scripts, Non Liquidity in non-derivatives related scripts. Change in government
focus on controlling inflation.
Name of the Board of directors
 Shri K. Rajendran Nair  Chairman, Public Interest Director
 Shri A. K. Mago  Public Interest Director
 Shri H. C. Parekh  Public Interest Director
 Shri K. V. Thomas  Shareholder Director
 Shri K. D. Gupta  Shareholder Director
 Shri A. K. Chakrawal  Shareholder Director
 Shri Debraj Biswal  Shareholder Director
 Shri Dharmendra B. Mehta  Shareholder Director
 Shri P. Sivakumar  Shareholder Director
 Shri Surendra Holani  Trading Member Director
 Shri Rajeeb Ranjan Kumar  Trading Member Director

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THEORITICAL FRAMEWORK

ONLINE TRADING
TRADING PROCEDURE BEFORE ONLINE TRADING:
 Market Access
 Trading Sessions

The market would have the following sessions:


Logon Sessions: 8.45 a.m. to 9.55 a.m.:
Trading Members can LOG ON during this session and can download various trading
related information. They can prepare the batch of orders for speedy submission at the start of the
Trading session.
During this session the Trading Members are not allowed to enter orders in the BOLT
system. Trading Members can do the batch upload of orders during this session. However, the
bath submission of these orders can be done only in the continuous trading session. During this
session the Trading Members are not allowed to enter orders in the BOLT system. Trading
Members can do the batch upload of orders during this session. However, the bath submission of
these orders can be done only in the continuous trading session. Trading members/traders can also
download the BRK (consolidated trade log i.e. trades form various TWS’s can be downloaded by
the Trading Members), TRD files (trade log file can be downloaded by the trader form his TWS
pertaining to his TWS) of the previous 5 settlements and the Auction files can be downloaded for
the previous 25 settlements.

Continuous Trading Session: 9.00 a.m. to 3.30 p.m.:


During this session, all types of orders are allowed to be entered into the system and the
traders can carry on all their trading activities. The trade receives confirmations of the orders
entered as well as trades executed by him and can also view the net position on both scrip-wise and
client-wise. The ticker facility in the BOLT provides market sensitive information as and when
received form the sources. The BSE SENSEX is calculated at every 15 seconds and is broadcasted
on TWS as well as to the Derivatives system of the Exchange. The rate of the scrip is determined
by the market forces based on the demand and supply. Kindly note the Block Deals orders are

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allowed up to initial 35minutes of the continuous trading session (i.e. from 9.55 am to 10.30 a.m.
during normal trading timings).
Closing Session: 3:30 p.m. to 3:40 p.m.:
In this session the Trading members will not be allowed to enter any orders. The closing
price of scrip is computed during this session as per the computations logic. At the end of the
session, the computed closing price of all the scrip traded on BOLT system in the continuous
trading session is displayed on the Touchline window of TWS and it is also displayed in the
Marked view (scrip wise) Screen (on pressing of “Refresh” pushbutton in the Order Entry
window).
The closing price of all the traded scrip will be calculated based on:
a) The weight age average price of all the trades in last ‘N’ minutes for that scrip. The
current ‘N’ value in the BOLT system is ‘30’ minutes or
b) If there are no trades in last ‘N’ minutes in that scrip, then the last traded price would be
taken as the official closing price or
c) If the scrip is not traded on that day, the previous day’s closing price of the scrip shall be
treated as the Closing Price.

Post-Closing Session: 3:40 p.m. to 4:00 p.m.:


This session is held after the closing session. The Trading Members can enter only Limit
Orders at Closing Prices declared by the Exchange. Any order other than those at closing price
would not be accepted. The trader has to select Retention flag as “EOSESS” for order. All the
unmatched orders are return at the end of the session.
Only during the Post closing Session the Trading Members are:
i) Allowed to do rectification of erroneous Client Codes entered by them while entering
Orders and which had resulted in trades.
ii) Allowed to rectify the wrong “Institutional id” (i.e. client type) which they have marked
while entering orders in the BOLT system.

Member Query Session: 4.00 p.m. to 5.25 p.m.:


In this session, the system generates member-wise, trader level reports. In this
session trading members are allowed to download the break-up of trades-wise positions. Member-

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Query window is a function provided in the main menu. This window displays the trades of all the
traders executed during the day. Members can download the TRD & BRK files.
TRD file containing the trades executed form that particular TWS (Trader Work Station)
can be downloaded by the traders if allowed by the ADMIN Terminal. Only Trader 1 is authorized
to download the BRK file during member Query Session. This can be done by clicking on the
‘BRK’ (Shift+F10) icon. When all the trades are downloaded, a check is initiated to detect any
error in download trades. A warning message is displayed in case of an error and query message is
displayed in case of an error and query would have to be reinitiated. If all the trades are
downloaded successfully, a message is displayed indicating the file in which the data had been
stored.

The file is created in the Export sub-directory and is the binary format. The Exchange
provides WINPRN utility to convert the downloaded data from Binary to TXT/DAT format.
Member Query is normally allowed from TWS No. 0. However, at the discretion of the Trading
Member, he can allow this facility to any other TWS.

A.CHOICE OF BROKER:
The prospective investor who wants to buy shares or the investor who wants to sell his
shares cannot enter into hall of the exchange and transact business. They have to act through only
member brokers. They can also appoint their bankers for this purpose. Since, bankers can become
members of stock exchange as per the present regulations. So, the first task in transacting business
on stock exchanges is to choose a broker of repute or banker. Such people’s can ensure prompt and
quick execution of a transaction at the possible price. At present there are 4500 authorized brokers
in ISE.

B. PLACEMENT OF ORDER:
The next step in planning of order for the purchase or sale of Securities with the broker. The order
is usually by telegram, telephone, letter, fax etc., or in person. To avoid delay it is placed generally
over the phone. The orders may take any one of the forms such as at best order, limit order,
immediate or cancel order, discretionary order, limited discretionary order, open order and stop
loss order.
C. PLACING ORDER WITH THE BROKER:The next step is placing an order for the
purchase/sale of securities with the broker. The order is usually placed over telephone, fax. It can

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also take the form of telegram or letter or in person. The order placed may be any of the following
varieties (largely classified on the basis of price limits that it imposes.).
INTRODUCTION TO ONLINE TRADING
Gone are the days of trading on the floor. Technology has changed the landscape of the
Stock market. The look of the stock Exchanges has undergone metamorphic change in the recent
years. Prior to online trading, regional stock exchange was playing a very important role in
capital markets, as they were local investors. Regional SE, which was unable to interact with other
SEs started developing this own screen based trading and connecting to other scrip’s which were
not available with them. This also helped in accessing the quotes and other market information
from other stock exchange which proved vital in the functioning of the system as a whole.

BROKERS PREMISES
NSE has main computer which is connected through Very Small Aperture Terminal
(VSAT) installed at its office. The main computer runs on a fault tolerant STRATUS mainframe
computer at the Exchange. Brokers have terminals (identified as the PCs in the given picture)
installed at their premises which are connected through VSATs/ leased lines/modems. An
investor informs a broker to place an order on his behalf. The broker enters the order
through his Personal Computer (PC), which runs under Windows Net Trading and sends signal to
the satellite via VSAT/leased line/modem. The signal is directed to mainframe computer at
NSE via VSAT at NSE’s office . A message relating to the order activity is broadcast to the
respective member. The order confirmation message is immediately displayed on the PC of the
broker. This order matches with the existing passive order(S) otherwise it waits for the active
orders to enter the system. On order matching, a message is broadcast to the respective
member.

Our business has four core areas:


Markets:
The Exchange enables companies from global giants to smaller enterprises around the
world to raise the capital they need to grow, with a choice of four primary markets:
 Main Market – regarded by investors and companies as the world’s most prestigious listing
and trading environment.
 AIM – equities market for smaller growing companies
 Professional Securities Market - for listed debt and depository receipt securities
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 Specialist Fund Market - which is dedicated to specialized investment entities
 Once companies have been admitted to trading, we help companies maximise the value of
their listing.
Trading services:
The Exchange provides a highly active and efficient market for trading in a
wide range of securities, including UK and international equities, debt, covered warrants, exchange
traded finds (ETFs), REITs, fixed interest, contracts for difference (CFDs) and depositary
receipts.In June 2007 the Exchange launched Trade-last, a new trading system giving us greater
ability to develop and enhance our range of services. Both capacity and speed of trading have
increased with over 600,000 trades executed daily and each trade completing in 6 milliseconds.
Market data information:
Direct from the source, we supply high quality, real-time and historical prices, news, and other
financial data information to the global financial community. We also have strong relationships
with other leading data vendors, helping to ensure the markets receive the information they depend
upon. We invest heavily in the best technology to create new applications for our data. We work
closely with world-class partners to constantly upgrade our products and services.

Derivatives
Our derivatives business is a pioneering diversification beyond our core equity markets.
EDX London is our international equity derivatives exchange and our aim is to become the world’s
most efficient and liquid market for equity derivatives. The UK covered warrants market is one of
the world's fastest growing investment markets. We host five blue-chip issuers offering over 800
warrants and certificates on single stocks and indices in the UK and around the world.

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BENEFITS OF ONLINE TRADING

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Arrangements of the trading:
AT BEST ORDER (OR) BEST RATE ORDER:
“Buy 1000 XYZ ltd.”, it does not specify any price. It means buy XYZ Ltd. Securities at the
prevailing market price. These are executed very fast as there is no price limits.

LIMITED DISCRETIONARY ORDER:


“Buy 1000 XYZ Ltd., around Rs.100”. it gives discretion to the broker. The price can be a little
above Rs 100. How much discretion is implied depends on how the broker and client define
around.
OPEN ORDER:
It is an order to buy or sell without fixing any time or price limit on the execution of the
order.
STOP LOSS ORDER:
“Buy 100 XYZ Ltd. @ Rs 12 to stop Rs 10”. It means buy 100 XYZ Ltd securities at the market
rate of Rs. 12 but if on the same day the price falls to Rs. 10 immediately sell of the securities
/shares.
Thus an attempt is made to limit the loss of sudden unfavorable shift in the market.
NET RATE ORDER:
“Buy 1000 XYZ Ltd. @Rs.30 net “would mean that the client is willing to buy 1000 XYZ Ltd. For
no more than Rs.30 per security inclusive of brokerage payable to the broker. Net rate is purchase
or sale rate minus brokerage.

MARKET RATE ORDER:


Market rate is net rate plus brokerage for purchase and net minus brokerage for sale. So, “Buy each
1000 XYZ Ltd. @Rs.30 market” would mean that the client is willing to pay Rs.30 plus brokerage
for security of XYZ Ltd.

ENTRY OF ORDER INTO THE BOOKS:


After receiving the order, the member enters them in his books and the purchase and sale orders are
distributed among his assistants to handle them separately in non-specified and odd-lots.

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EXECUTION OF ORDER:
Big brokers transact their business through their authorized clerk. Small ones out their business
personally. Orders are executed in the trading ring of the ISE. This works from 12:00 noon to 2:00
p.m discretionary order on all working days from Monday to Friday and a special hour session
on Saturday.
The floor of the stock exchange is divided into number of markets (pits) according to the nature of
security deal in. The authorized clerk/broker goes to the pit and jobbers offer two way quotes
for the scrip they deal in. they act as market makers and provide liquidity to the market. The
system has been designed to get the bet lids and offers from the jobber’s book as well as the
best buy and sell orders from the book. If the quotation is not acceptable to the brokers, he may
make a counter bid/offer. Ultimately the bargains may be closed at a price mutually acceptable to
both the parties. In case the quotation is not acceptable to him, the broker may go to another dealer
and make a bargain. All bargains on the stock exchanges are settled by word of mouth and there is
no written contract signed immediately by the parties concerned. Once the transaction is finalized,
the deals are recorded in a Capri Rough notebook or transaction note or confirmation memos.
Soudan block books or confirmation memos are provided by the stock exchange. The details are
recorded in these books also. The prices at which different scrip are traded on a particular day
published on the next day in the newspapers. An authorized representative of the stock exchange is
also present in the hall to supervise the trading.

PREPARATION OF CONTRACT NOTES:


Usually, the authorized clerks enter the particulars of the business transacted during a particular
day in ‘Kasha Saudi Book’ they are transferred to ‘Puce Saudi Book’, which are maintained
separately for the ready delivery contracts. Then the broker/authorized clerk prepares a contract
note. A contract note is a written agreement between the broker and his client for the transaction
executed. It contains the details of the contract made for the purchase/sale of Securities, the
brokerage chargeable, name of the company, number of shares bought/sold, net rate, etc., it is
prepared in a prescribed from and a copy of it is also sent to the client.

CLEARING HOUSE:The exchange has a clearing house as a part of its Market Operations
Department to collect the securities from all members and distribute to each member, all the
securities that are due to him in respect of every settlement.

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The whole of the operations of the clearing house are computerized. CH is like are bank where all
the members of ISE maintain their accounts. CH acts as a member between the buyer and seller. It
gets a record of all the transactions (buying and selling) done by a particular week and process
these transactions and directs the members to deliver the shares or make payment on the pay-in
day.
On the payout day, the CH gives the delivery and the payment to the members according to their
respective positions. There are 5 counters in the ISEs, CH where bad deliveries, auction, odd-lot
shares transaction, spot transaction etc.., are dealt in respect of all the transactions done from
Monday to Friday all the shares will have to be delivered through the ISEs CH as per the
settlement program field, which is generally, a Saturday on next.

NORMAL TRANSACTION:
In case of regular transaction, shares are deposited in clearing house on Tuesday and Wednesday.
Payout will be on Thursday. Deliveries will also be on Thursday.

STOCK MARKET TRADING ON INTERNET:


The major events that will take place in the Indian Capital Market are introduction of index-based
futures trading on internet. Trading on internet means that the investor’s will actually buy and sell
the stocks on-line through the net. A committee was setup by SEBI to develop regulatory
parameters for use internet trading. SEBI approved the report on the committee. SEBI decided that
internet trading could take place in India within the existing legal framework through use of order
routing system, which will route order from client to brokers,. For trade execution on registered
stock exchanges. The broad also took note of the recommended minimum technical standards for
ensuring safety and security of transaction between clients and brokers, which will be forced by the
respective stock exchanges.

ADVANTAGES OF INTERNET TRADING:


 It will help in reducing transaction costs particularly for overseas and remote located
investors.
 It will provide real time quotes and on-line trading facility at a much cheaper cost.
 Facility of transaction business from the terminal of the investors and will help him making
rational judgment or decisions.
 It will bring down the brokerages fees and increases the trading volumes.
39
 Quick response in transaction i.e. giving the order verification and acknowledgement.
 It allows transparent companies of services and easy price discovery.
 It is easy enough to set up either as individual account for margins trading or settle
transactions by credit card.
 It is easy for brokers to monitor and maintain online accounts and the possibility of miss-
trading is less.
 Surveillance is easy as there is very less scope for speculation
 The investor is provided with best offer
 Trading procedure is easy and fully automated
.
CLEARING & SETTLEMENT TRADING MECHANISM
The clearing and settlement mechanism in India securities market has witnessed several
innovations during the last decade. These include use of the state-of-art information technology,
compression of settlement cycle, dematerialization and electronic transfer of securities, securities
lending and borrowing, professionalization of trading members, fine-tuned risk management
system, emergence of clearing corporation to assume counterparty risk etc., though many these are
yet to permeate the whole market.

Till recently, the stock exchanges in India were following a system of account period settlement
for cash market transactions, expert for transaction in a few active securities, which were settled
under t+3 rolling settlement. The rolling settlement has been introduced for all securities. With
effect from April 1, 2003 T+2 rolling settlement has been introduced. The stock exchange were
also offering deferral products to provide leverage to members to postpone their settlement
obligations. The transaction are not settled immediately but after 2 days after the trade day. The
members receive the funds/securities in accordance with the pay-in/pay-out schedules notified by
the respective exchanges. Given the growing volume of trades and market volatility, the time gap
between trading and settlement gives rise to settlement risk. In recognition of this, the exchanges
and their clearing corporation employ risk management practices to ensure timely settlement of
trades. The regulators have also prescribed elaborate margining and capital adequacy standards to
secure market integrity and protect the interests of investors. The exchanges not providing counter-
party guarantee have been advised by SEBI to set up trade guarantee funds, which would honour
pay-in liabilities in the event of default by a member. In pursuance to this, 16 out of 23 exchanges
have set up trade/settlement guarantee funds. The trades are settled irrespective of default by a

40
member and the exchange follows up the defaulting member subsequently for recovery of his dues
to the exchange. The market has full confidence that settlements will take place in time and will be
completed irrespective of possible default by isolated trading members.

Movement of securities has become almost instantaneous in the dematerialized environment.


Two depositories viz., National Securities Depositories Ltd. (NSDL) and Central Depositories
Services Ltd. (CDSL) provide electronic transfer securities and more then 99% of turnover is
settled in dematerialized form. All actively traded scrip’s are held, traded and settled in demat
form. The obligations of members are downloaded to members/custodians by the clearing agency.
The members/custodians make available the required securities in their pool accounts with
Depository Participants (DPs) by the prescribed pay-in time for securities. The depository transfers
the securities from the pool accounts of members/custodians to the settlement account of the
clearing agency. As per the schedule determined by the depository from the settlement account of
the clearing agency to the pool accounts of members/custodians. The pay-in and pay-out of
securities is affected on the same day for all settlements.

TRANSACTION CYCLE
A person holding assets (securities/funds), either to meet his liquidity needs or to reshuffle his
holdings in response to changes in his perception about risk and return of the assets, decides to buy
or sell the securities. He finds out the right broker and instruct him to place buy/sell order on an
exchange. The order is converted to a trade as soon as it finds a matching sell/buy order. The trades
are cleared to determine the obligations of counterparties to deliver securities/funds as per
settlement schedule. Buyer/seller delivers funds/securities and receives securities/funds and
acquires ownership over them. A securities transaction cycle is presented given below.

41
DATA ANALYSIS & INTERPRETATION
MARKET WATCH

INTERPERTATION
The above picture shows the how online trading takes place and what are the
company are traded on online bases and at what price the trading takes place . It show the
company names and its share price of the opening , closing, highest and lowest value of share
by this we can have a clear idea about the market

42
BUY ORDER FORM

INTERPRETATION:
The Above figure is the buy order book. Broker Will make the buyer
to buy the share through online with the help Of buy order book . There was a column
provided for buying transaction purpose .It consist of buyer name, company name, share
quantity and price of share.

43
SELL ORDER FORM

INTERPRETATION
The above figure is the sell order form. Broker will make Seller to sell the
share through online with the help of sell Order form. There was a column provided
for selling transaction purpose. It consist of seller name, company name, share quantity and
price of share.

44
ORDER FORM

INTERPRETATION
The above figure is the order form. After receiving the order, the member enters
them in his books and purchase and sale order are distributed among his assistants to
handle them separately in non-specified and odd-lots.

45
MARKET DEPTH

INTERPRETATION
The above figure is the market depth . with this we can have known how much
was the price quoted for each company whether it high or low and fluctuation of share price,
rating of the company opening ,closing prices and its sensex is whether decreasing or
increasing everything regarding of share is known.

46
TRADE BOOK

INTERPRETATION
The above figure is trade book . the total number of share traded or
transferred from the buyer to seller or seller to buyer in a day of the which company and
how many share are trade will be made an entry in the trade book.

47
CLIENT MARGIN

INTERPRETATION
The above figure is client margin. When a trader like to buy a number of share
or a price the quantity required and the price for which the seller is ready to sell his
shares is the client margin.

48
CLIENT ACTIVITY REPORT

INTERPRETATION
The above figure is client activity report. The number of share which a seller is going
to sell and the number of share which a buyer is going to buy on this they will prepare report
is known as client activity report.

49
SENSEX
It is the benchmark index for the Indian stock market . It is the most frequently used
indicator while reporting on the state of the market. The index has just one job: To
capture the price movement . so a stock index will reflect the price movement of the
shares while a bond index captures the manner in which bond prices go up or down.If
the sensex rises , it indicates the market is doing well. Since stocks are supposed to
reflect what companies expert to earn in the future , a rising index indicates investors expect
better earnings from companies. It is , therefore , also a measure of the state of the Indian
economy . If Indian companies are expected to do well, obviously the economy should do well
too. In case you are wondering why a stock market index has a provocative term like sensex, let me
tell you it stands for something quite mundane - the Bombay stock exchange sensitive index.
SENSEX (BSE)

Live Index Watch


This data was last updated on Friday, December 31, 2015 10:56:37 AM
Current Previous
Category/Index Open High Low Change(Pts) Change(%)
Value Close
Broad
SENSEX 20,412.76 20,519.85 20,412.76 20,493.24 20,389.07 104.17 0.51
MIDCAP 7,714.61 7,794.91 7,714.61 7,785.62 7,714.61 71.01 0.92
SMLCAP 9,552.61 9,668.68 9,552.61 9,662.45 9,552.61 109.84 1.15
BSE-100 10,611.11 10,673.03 10,611.11 10,664.36 10,599.77 64.59 0.61
BSE-200 2,517.32 2,533.46 2,517.32 2,531.65 2,514.96 16.69 0.66

50
BSE-500 7,905.21 7,958.83 7,905.21 7,952.67 7,898.59 54.08 0.68
Thematic
SHARIAH 50 1,243.55 1,249.95 1,243.55 1,249.00 1,243.10 5.90 0.47
Investment Strategy
BSE IPO 1,927.10 1,951.50 1,927.10 1,950.13 1,927.10 23.03 1.20
DOLLEX-30 3,732.07 3,755.78 3,728.53 3,751.50 3,727.74 23.76 0.64
DOLLEX-100 2,444.53 2,461.69 2,443.06 2,459.95 2,441.92 18.03 0.74
DOLLEX-200 933.32 940.48 932.94 939.83 932.44 7.39 0.79
Sectoral
REALTY 2,789.34 2,844.35 2,789.34 2,840.50 2,789.34 51.16 1.83
CG 15,383.27 15,542.49 15,383.27 15,529.33 15,346.18 183.15 1.19
CD 6,311.48 6,388.26 6,311.48 6,380.83 6,311.48 69.35 1.10
BANKEX 13,192.06 13,330.44 13,192.06 13,315.69 13,195.21 120.48 0.91
POWER 2,972.76 2,993.86 2,972.76 2,992.08 2,968.16 23.92 0.81
OIL&GAS 10,599.24 10,624.85 10,565.83 10,619.60 10,553.19 66.41 0.63
AUTO 10,151.57 10,225.44 10,151.57 10,203.64 10,140.90 62.74 0.62
FMCG 3,676.86 3,701.55 3,668.11 3,694.52 3,673.37 21.15 0.58
PSU 9,406.04 9,458.33 9,390.93 9,453.55 9,400.39 53.16 0.57
METAL 17,530.08 17,634.76 17,515.82 17,604.85 17,508.83 96.02 0.55
HC 6,712.57 6,735.41 6,712.57 6,730.43 6,698.30 32.13 0.48
TECk 4,027.09 4,048.39 4,015.78 4,024.77 4,034.26 -9.49 -0.24
IT 6,818.22 6,845.09 6,776.23 6,789.53 6,827.59 -38.06 -0.56

Volatility Index
This data was last updated on Thursday, December 30, 2010

REALVOL-
-- -- -- 8.89 8.68 0.21 2.42
1MTH

REALVOL-
-- -- -- 17.81 17.99 -0.18 -1.00
2MTH

REALVOL-
-- -- -- 17.81 17.99 -0.18 -1.00
3MTH

51
30 Scripts
Weightage
Average Free-float
Co-efficient of Returns (%) in
Beta Daily Adj.Factor
Scrip Code Company Determination (1 year) SENSEX
Values Volatility as on
(R2) (%) as on
(%) 30/06/09
30/06/09
500410 ACC LTD. 0.65 0.38 3.26 47.16 0.75 0.55
BHARAT HEAVY
500103 0.99 0.68 3.71 59.67 3.57 0.35
ELECTRICALS LTD.
532454 BHARTI AIRTEL LTD. 0.86 0.61 3.39 11.15 5.04 0.35
532868 DLF Ltd. 1.50 0.56 6.17 -21.55 1.25 0.25
GRASIM INDUSTRIES
500300 0.68 0.37 3.45 25.12 1.50 0.75
LTD
500180 HDFC BANK LTD 0.95 0.66 3.60 48.83 5.10 0.85
HERO HONDA
500182 0.36 0.23 2.31 104.72 1.32 0.50
MOTORS LTD
HINDALCO
500440 1.10 0.54 4.60 -32.99 0.91 0.65
INDUSTRIES LTD
HINDUSTAN
500696 0.38 0.27 2.25 29.60 2.75 0.50
UNILEVER LTD.
HOUSING
500010 DEVELOPMENT FIN. 1.21 0.71 4.43 19.52 5.68 0.90
CORPN. LTD
532174 ICICI BANK LTD. 1.58 0.78 5.50 14.57 7.60 1.00
INFOSYS
500209 0.67 0.46 3.04 2.43 8.18 0.85
TECHNOLOGIES LTD.
500875 ITC LTD. 0.48 0.36 2.49 1.84 4.76 0.70
JAIPRAKASH
532532 ASSOCIATES 1.71 0.66 6.49 42.54 1.36 0.50
LIMITED
LARSEN & TOUBRO
500510 1.14 0.73 4.11 43.67 7.82 0.90
LTD.
MAHINDRA &
500520 0.96 0.43 4.52 42.77 1.37 0.75
MAHINDRA LTD
MARUTI SUZUKI
532500 0.67 0.39 3.31 72.47 1.46 0.50
INDIA LIMITED
532555 NTPC LTD. 0.68 0.49 2.96 28.62 2.28 0.15
500312 ONGC CORPN 0.80 0.56 3.30 30.98 4.32 0.20

52
RELIANCE
532712 COMMUNICATIONS 1.47 0.63 5.66 -34.47 1.98 0.35
LTD.
RELIANCE
500325 1.18 0.77 4.14 -3.34 15.06 0.50
INDUSTRIES LTD.
RELIANCE
500390 INFRASTRUCTURE 1.61 0.72 5.84 52.59 1.65 0.65
LTD
STATE BANK OF
500112 1.05 0.65 4.02 56.74 4.71 0.45
INDIA
STERLITE
500900 1.31 0.57 5.34 -13.41 1.63 0.40
INDUSTRIES.
SUN
524715 PHARMACEUTICAL 0.26 0.08 2.74 -21.66 0.85 0.40
INDS LTD.
TATA
532540 CONSULTANCY 0.86 0.51 3.72 -9.25 1.80 0.25
SERVICES LIMITED
500570 TATA MOTORS LTD. 1.11 0.47 5.02 -29.51 0.68 0.55
TATA POWER CO.
500400 0.91 0.54 3.79 9.16 1.69 0.70
LTD.
TATA STEEL
500470 1.37 0.60 5.45 -46.34 1.89 0.70
LIMITED.
507685 WIPRO LTD. 0.91 0.53 3.83 -13.77 1.05 0.20

SENSEX 1.00 3.06 7.67

Beta = Co-variance(SENSEX, Stock)/ Variance(SENSEX)


R2 = (Correlation)2
Average Daily Volatility = One standard deviation of daily returns of individual stock price
for last one year
Returns = % variation in the stock price over last one year

53
NIFTY 50 List

Company Name Industry Symbol Series ISIN Code

ABB Ltd. ELECTRICAL EQUIPMENT ABB EQ INE117A01022

CEMENT AND CEMENT


ACC Ltd. PRODUCTS ACC EQ INE012A01025

Ambuja Cements CEMENT AND CEMENT


Ltd. PRODUCTS AMBUJACEM EQ INE079A01024

Axis Bank Ltd. BANKS AXISBANK EQ INE238A01026


Bharat Heavy
Electricals Ltd. ELECTRICAL EQUIPMENT BHEL EQ INE257A01018

Bharat Petroleum
Corporation Ltd. REFINERIES BPCL EQ INE029A01011

TELECOMMUNICATION –
Bharti Airtel Ltd. SERVICES BHARTIARTL EQ INE397D01016

OIL
Cairn India Ltd. EXPLORATION/PRODUCTION CAIRN EQ INE910H01017

Cipla Ltd. PHARMACEUTICALS CIPLA EQ INE059A01026

DLF Ltd. CONSTRUCTION DLF EQ INE271C01023

GAIL (India) Ltd. GAS GAIL EQ INE129A01019

Grasim Industries CEMENT AND CEMENT


Ltd. PRODUCTS GRASIM EQ INE047A01013

HCL Technologies
Ltd. COMPUTERS - SOFTWARE HCLTECH EQ INE860A01027

HDFC Bank Ltd. BANKS HDFCBANK EQ INE040A01018


Hero Honda Motors AUTOMOBILES - 2 AND 3
Ltd. WHEELERS HEROHONDA EQ INE158A01026

Hindalco Industries
Ltd. ALUMINIUM HINDALCO EQ INE038A01020
Hindustan Unilever
Ltd. DIVERSIFIED HINDUNILVR EQ INE030A01027
Housing
Development FINANCE - HOUSING HDFC EQ INE001A01028

54
Finance Corporation
Ltd.

I T C Ltd. CIGARETTES ITC EQ INE154A01025

ICICI Bank Ltd. BANKS ICICIBANK EQ INE090A01013


TELECOMMUNICATION –
Idea Cellular Ltd. SERVICES IDEA EQ INE669E01016
Infosys Technologies
Ltd. COMPUTERS - SOFTWARE INFOSYSTCH EQ INE009A01021

Jindal Steel & Power


Ltd. STEEL AND STEEL PRODUCTS JINDALSTEL EQ INE749A01030

Larsen & Toubro


Ltd. ENGINEERING LT EQ INE018A01030

Mahindra &
Mahindra Ltd. AUTOMOBILES - 4 WHEELERS M&M EQ INE101A01018

Maruti Suzuki India


Ltd. AUTOMOBILES - 4 WHEELERS MARUTI EQ INE585B01010

NTPC Ltd. POWER NTPC EQ INE733E01010


National Aluminium
Co. Ltd. ALUMINIUM NATIONALUM EQ INE139A01026
Oil & Natural Gas OIL
Corporation Ltd. EXPLORATION/PRODUCTION ONGC EQ INE213A01011
Power Grid
Corporation of India
Ltd. POWER POWERGRID EQ INE752E01010
Punjab National
Bank BANKS PNB EQ INE160A01014

Ranbaxy
Laboratories Ltd. PHARMACEUTICALS RANBAXY EQ INE015A01028
Reliance Capital Ltd. FINANCE RELCAPITAL EQ INE013A01015
Reliance
Communications TELECOMMUNICATION –
Ltd. SERVICES RCOM EQ INE330H01018

Reliance Industries
Ltd. REFINERIES RELIANCE EQ INE002A01018
Reliance
Infrastructure Ltd. POWER RELINFRA EQ INE036A01016

Reliance Power Ltd. POWER RPOWER EQ INE614G01033

55
Siemens Ltd. ELECTRICAL EQUIPMENT SIEMENS EQ INE003A01024

State Bank of India BANKS SBIN EQ INE062A01012


Steel Authority of
India Ltd. STEEL AND STEEL PRODUCTS SAIL EQ INE114A01011

Sterlite Industries
(India) Ltd. METALS STER EQ INE268A01031

Sun Pharmaceutical
Industries Ltd. PHARMACEUTICALS SUNPHARMA EQ INE044A01028

Suzlon Energy Ltd. ELECTRICAL EQUIPMENT SUZLON EQ INE040H01021


Tata
Communications TELECOMMUNICATION –
Ltd. SERVICES TATACOMM EQ INE151A01013

Tata Consultancy
Services Ltd. COMPUTERS - SOFTWARE TCS EQ INE467B01029

Tata Motors Ltd. AUTOMOBILES - 4 WHEELERS TATAMOTORS EQ INE155A01014

Tata Power Co. Ltd. POWER TATAPOWER EQ INE245A01013

Tata Steel Ltd. STEEL AND STEEL PRODUCTS TATASTEEL EQ INE081A01012

Unitech Ltd. CONSTRUCTION UNITECH EQ INE694A01020

Wipro Ltd. COMPUTERS - SOFTWARE WIPRO EQ INE075A01022

56
ACCOUNT OPENING CHARGES:
This is a first step of the investor to trade in online trading. The investor has to open the
account with respect to brokers. The charges of the account opening including demat charges
will be a different from one company to another.

BENEFITS:
It reduces the risk or bad deliveries in term saving the cost and wastage of a time
associated with follow of rectification this has led to reduction in brokerage of 0.5 % by quite a
few brokerage firms. In case of transfer of electronic shaded you save 0.5% in stamp duty you
avoid the cost of carrier. RBI has also reduced the minimum margin to 25% for loans against
the demetaterilized securities and 50% for loans against physical securities.
The charges of different companies are:
Account opening charges comparing with top ten companies:
Account opening 2010-11 2011-12 2012-13 2013-14 2014-15
charges
Zen Securities Ltd. 300 300 300 500 500
Reliance money 800 800 800 1000 1000
ICICI Direct 500 500 500 950 950
0.5 paise.com 500 500 500 500 500
Indian Info line 555 555 555 555 555
Share Khan 750 750 375 350 300
Indian Bulls 500 500 750 750 750
Kotak Security 550 550 550 550 550
HDFC 500 650 650 700 700
Angel Trade 575 575 575 575 575

INTERPRETATION:
Gen securities charges Rs.300 up to 2010-11. But from 2014-15 it started
increased to Rs.500. Account opening charges are like agreement. As the increase in forms
cost, printing charges, stamp duty the charges also increased in every company.
Reliance money, Indian bulls, HDFC, ICICI Direct also increased its accounting
opening charges with this reasons from last three years.
Share Khan reduced because of tough competition.

57
Maintenance charges demat:

Maintenance
2010-11 2011-12 2012-13 2013-14 2014-15
Charges
Zen Securities Ltd. 300 300 300 300 300
Reliance money 650 650 650 650 650
ICICI Direct 550 550 550 750 750
0.5 paise.com 500 500 500 550 600
Indian Info line 250 250 250 250 250
Share Khan 300 300 300 300 300
Indian Bulls 300 300 350 350 400
Kotak Security 300 300 350 350 400
HDFC 500 500 500 500 500
Angel Trade 250 250 250 250 250

INTERPRETATION:

Zen securities charges same amount from 2010-15 Rs.300 in all the 5 years. The
charges depend on taxes. From 2010 government has started charging new taxes on brokers
that is securities transaction tax with this some companies increased its maintenance charges
like ICICI Direct, Indian Bulls and Kotak security.
Reliance charges high from all five years compare to others. And angel trade
charges less amount compare to others because they have less customers and more competitor.

58
58
INITIAL CHARGES
BROKERAGE: (INTRA DAY)
Brokerage Charges: (Intra delivery)
The company will charge some commission on the transaction of the trading in
online the brokerage in two types delivery and intraday
Brokerage intraday another way of saying “with in the day” intraday price
movements and particularly important to short term traders looking to make many a trades over
the codes of a single trading system the tem intraday is occasionally is to describe securities
that trade on the markets during regular business hours. Such as stock which must be from a
dealer.

Brokerage Charges(
2010-11 2011-12 2012-13 2013-14 2014-15
Intra delivery)
Zen Securities Ltd. 0.05 0.05 0.05 0.05 0.05
Reliance money 0.02 0.02 0.02 0.02 0.02
ICICI Direct 0.10 0.10 0.10 0.10 0.10
0.5 paise.com 0.02 0.02 0.02 0.02 0.02
Indian Info line 0.05 0.05 0.05 0.05 0.05
Share Khan 0.10 0.10 0.10 0.10 0.10
Indian Bulls 0.05 0.05 0.05 0.05 0.05
Kothak Security 0.05 0.05 0.05 0.05 0.05
HDFC 0.05 0.05 0.05 0.05 0.05
Angel Trade 0.03 0.03 0.03 0.03 0.03

INTERPRETATION:
Price movements are particularly important to short term traders how are looking to
make many trades over the course at a single trading session. In this share khan, ICICI direct
are charging more that is 0.10 percent. Were as Zen securities, Indian info line, Indian Bulls,
Kotak security and HDFC charging a constant rate 0.05 from 2010-15 Reliance Money and 0.5
paise charging fewer amounts compare to others because they have less number of investors.

59
59
3.4.5. BROKERAGE DELIVERY:
This type commission is charged on the trade after completion off 24 hours. This
commission will charge depends upon the investor the charges of different companies
mentioned below
Brokerage Charges Delivery:
Brokerage
2010-11 2011-12 2012-13 2013-14 2014-15
Charges Delivery
Zen Securities Ltd. 0.25 0.25 0.25 0.25 0.25
Reliance money 0.75 0.75 0.75 0.75 0.75
ICICI Direct 0.40 0.40 0.40 0.40 0.40
0.5 paise.com 0.50 0.50 0.50 0.50 0.50
Indian Info line 0.25 0.25 0.25 0.25 0.25
Share Khan 0.50 0.50 0.50 0.50 0.50
Indian Bulls 0.40 0.40 0.40 0.40 0.40
Kothak Security 0.50 0.50 0.50 0.50 0.50
HDFC 0.40 0.40 0.40 0.40 0.40
Angel Trade 0.50 0.50 0.50 0.50 0.50

INTERPRETATION:
The brokerage charges are less compare to reliance money and share khan
during last 5 years. Zen is collecting brokerage charges reasonable amount for each transaction
in the intraday, brokerage, commission i.e. 0.25 during 2010-15 because of tough competition.
The reliance money and 0.5paise.com were charging less on intra trading and increased its
charges in brokerage charges delivery.

60
60
3. Customer’s perception regarding Stock trading business.
TABULATION

CUSTOMERS
No. OF CUSTOMERS PERCENTAGES
PERCEPTION
Risky 28 56%

Profitable 22 44%

TOTAL 50 100%

PIE CHART FOR THE ABOVE DATA

INTERPRETATION FOR THE ABOVE TABLE & GRAPH No.3


From the above data, we can observe that out of 50 respondents, 44% of them (i.e.…22
respondents) feel that the stock trading business is profitable and remaining 56% (i.e.…28
respondents) of them perceive that stock trading is risky business. As the customers who earned
good profits opinioned that stock trading business is profitable & the customers who went in to
loss opinioned that stock trading business is risky.

61
61
4. Type of asset preferred by customers in stock trading process
TABULATION
Type of Asset No. of customers Percentage

Equity 34 68%

Commodity 12 24%

Future & Options 04 8%

TOTAL 50 100%

BAR CHART FOR THE ABOVE DATA

INTERPRETATION FOR THE ABOVE TABLE & GRAPH No.4


From the above graph and table, the type of asset preferred by the customers can be
observed. Out of 50 respondents, 68% of customers (i.e.…34 respondents) do the trading
business with ‘Equity’, 24% of the customers (i.e.…12 respondent) do the trading business
with the ‘commodity’, and the remaining 8% of the customers (i.e.., 04 respondent) do the
trading business with the ‘Futures & Options.

62
62
5. If in the equity, the exchange preferred by the customers. TABULATION

TYPE OF STOCK No. OF


PERCENTAGE
EXCHANGE CUSTOMERS

NSE 26 76%

BSE 8 24%

Any Other Exchange 0 0%

TOTAL 34 100%

PIE CHART FOR THE ABOVE DATA

INTERPRETATION FOR THE ABOVE TABLE & GRAPH No.5


From the above graph and table, the type of exchange preferred by the equity customers
in can be observed. Out of 34 respondents, 76% of customers (i.e.…26 respondents) do the
trading business through NSE, and remaining 24% of the customers (i.e.…08 respondent) do
the trading business with BSE Sensex.

63
63
6. If in commodity the trading process followed by the customers.
TABULATION
Trading Exchange No. of customers Percentage
MCX 07 58%

NCDEX 05 42%

NMCEIL 0 0%

TOTAL 12 100%

CONE CHART FOR THE ABOVE DATA

INTERPRETATION FOR THE ABOVE TABLE & GRAPH No.6


From the above graph and table, the type of trading exchange preferred by the
commodity customers can be observed. Out of 12 respondents, 58% of customers (i.e.…07
respondents) do the trading business through MCX, 42% of the customers (i.e.…05
respondent) do the trading business through NCDEX.

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7. Type of commodity preferred by the customer in MCX
TABULATION

Type of
No. of customers Percentages
Commodity
Gold 02 28.5%
Silver 02 28.5%
Copper 03 43%

TOTAL 07 100

BAR CHART FOR THE ABOVE DATA

INTERPRETATION FOR THE ABOVE TABLE & GRAPH No.7


From the above graph and table, the type of commodity preferred by the customers in
MCX can be observed. Out of 07 respondents, 43% of customers (i.e.…03 respondents ) do
the trading business with the commodity ‘copper’, 28.5% of the customers (i.e.…02
respondent) do the trading business with the commodity ‘Gold’, and the remaining 28.5% of
the customers (i.e..,02 respondent) do the trading business with the commodity ‘Silver’.

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8. If in NCDEX, type of commodity preferred by the customers.

TABULATION

Type of commodity No. of customers Percentage


Turmeric 03 60%

Maize 01 20%

Pepper 01 20%

TOTAL 05 100%

BAR CHART FOR THE ABOVE DATA

INTERPRETATION FOR THE ABOVE TABLE & GRAPH No.8


From the above graph and table, the type of commodity preferred by the customers in
NCDEX can be observed. Out of 05 respondents, 60% of customers (i.e.…03 respondents) do
the trading business with the commodity ‘Turmeric’, 20% of the customers (i.e.…01
respondent) do the trading business with the commodity ‘Maize’, and the remaining 20% of the
customers (i.e.., 01 respondent) do the trading business with the commodity ‘Pepper’, these are
the three general commodities where the customers prefer mostly.

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FINDINGS

 All the stock exchanges in India were mechanized in the year 1994 November. That was
the year when the stock exchanges introduced screen based trading across the country.
 While on line trading gives you speed and price advantage, there is some risk and
disadvantage to entering orders on-line. The page alerts you to any pitfalls you should
watch out for if you want to use the internet to trade stocks.
 If you do commit to trading online, you must be careful when you enter stock orders. It is
easy to make mistakes, but the market and your brokers may not be sympathetic. Once an
order is submitted, there may be nothing you can do to take it back if you made a mistake.
The various types of orders you enter can be confusing.
 Individuals are restricted to first hand financial guidance. This simply means that the
individual is himself/herself alone to make the decisions.
 Tax (sales tax and value added tax) evaluation becomes an issue, especially when you are
trading internationally.
 Changes are that one has no idea who is dealing with on the other end, so it is advisable to
gather all the possible information about the party one is dealing with. In short are full
knowledge is to be known.
 Online trading as left individual open to too much information. This is harmful since it
leaves brokerages wide open to sensitive data.
 When network crashes there will be problems and delays due to a large influx of traffic
and rapid online trading criteria. For instance on 27th Oct 1997 there was a one day crash,
which caused online trading on the New York Stock Exchange to stop and brokers were
unable to conduct business.
 If you are going to trade online, you were obviously the one making all the trading
choices. To make your trading decisions, you need to research your stocks and constantly
pay attention to market news. This will require some time, as you pursue your sources of
market information and use online tools.

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OBSERVATION

The online in ISE is introduced to reduce and eliminate all the discrepancies that
arise out of manual trading system. It has been developed to computerize the trading activity
of the broker. With the computerization of the trading activity, the number of transaction and
the volume of trading have increased to a great extent. ISE is dealing in both BSE and NSE.
The turnover of ISE has gone up during 1998 with the introduction of online trading system.
The trading of ISE of the first day was Rs. 37.00 cores.

Now the companies are also taking orders on phone call. Only ISE is not in phone
order. Trading in Z securities is not available. (Z securities are those securities which are not
traded regularly). Bank account for instant transfer is also not available, which all the
companies dealing with online trading are giving instant bank a/c. all companies are giving
offline option while ISE is not giving any offline options. Portfolio valuation is not available.
Moreover, only govt securities and bonds are allowed for mutual trading.

SUGGESTIONS
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The overall performance of ISE, DP and ONLINE TRADING is good. Here are
the suggestions for further improvements of the performance in the future.
 Volume of paper work is small but it is very complicated to maintain data in system so
try to reduce that by regular audit and updating data.
 Most of DPs do not have the necessary infrastructure to handle the high workload of
transactions lending to many error by DPs, so by giving full infrastructure information
to every DP can avoid this problem
 The pool a/c does not know the true owner of the shares and hence dividends are paid
to the broker instead of owners, by this broker can do any manipulations or any fraud
with the owner, for this the owner can loose his dividend. Hence for this try to pay the
dividend directly to the owner.
 If the shares are fake/forged which delivered by the broker the shareholder can loose
that system and have to receive another lot of issued shares from the broker in 21 days,
this system stands abused as soon as possible.
 The online trading is easy to work but it is costly to maintain and difficult to learn.
 It should increase the speed of executing the orders.
 Mutual funds trading for other companies have to be encouraged. If phone orders are
encouraged, trading in z securities are allowed, bank account for instant transfer are
provided and offline option are given then ISE would be definitely improving in the
turnover.
 Necessary steps should be taken by the exchanges to deal with the situation arising due
to break down in online trading.
 Instant bank account should be provided as the other companies are providing,
because this helps the ISE in dealing directly with the investors.
 Another important thing, which has to be taken into considerations, is portfolio
management. It should have a separate department for portfolio management and
should guide the investors. If ISE takes initiative steps for portfolio valuation of the
investor’s .Then investors will be attracted towards the ISE to a greater extent.
 ISE has to give more advertisement through the media stating the advantages to the
investors by using ISE.
 Leverages should be provided to the investors till settlement. Then only it encourages
the investors to take active part in online trading of the stock exchange

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 The software or the system used in online trading should be advanced and the
persons who operate should have minimum knowledge or if they are very well versed
about the functioning of the system then it will be helpful in smooth functioning of
online trading.
 In ISE investors cannot do their own trading on the system, every time they have to
consult the DP members and has to tell to hold the shares by his name, instead of this
provide the web trading facility to investors by this they can do their own trading by
sitting in front of internet.

CONCLUSION

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The comprehensive study of on “online trading system and Clearing & settlements at
Inter-connected stock Exchanges has been an enlightening experience stressing on the position
aspects on security trading. Dematerialization of shares and online trading has done in whole lot
of good to the issuer, investor, companies and country.

The Depository system has reduced the time lag in delivering and settlement of
securities but also supported the cause of providing more liquidity to the security holder, the
need for setting up of a depository, paper less trading through online trading system and
settlement became in evitable and unavoidable for the smooth and efficient functioning of the
capital market. This system has proven its worthiness by increasing in the settlement will be
done with in the day in future is in itself an indication of how great a boon in this system of
Online trading.

E-brokerages provide convenience, encourage increased investor participation and


lead to lower up front costs. In the long run, they will likely reflect increased market efficiency
as well. In short run, however, there are a number of issues related to transparency, investor’s
misplaced trust, and poorly aligned incentives between e-brokerages and markets, that may
impede true market efficiency.

For efficiency to move beyond the user interface and into the trading process,
consumers need a transparent window to observe the actual flow of orders, the time of execution
and the commission structure are various points in the trading process. In this regard,
institutional rules, regulations and monitoring functions play a significant role in promoting
efficiency and transparency along the value chain in electronic markets. Our analysis confirms
that in the context of online stock markets, the need for such intervention and oversight it
particularly strong.

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BIBLIOGRAPHY

Books:
 Dr.K.Natarajan, E.Gordon
Financial Markets & Services – Himalaya Publications

 MY. Khan, Indian Financial


Tata McGraw Hill publishing company ltd., System

 N.Sankara Narayana
Depository System of India (Nov 19, 1997)

Websites:

 www.investsmartindia.com
 http://www.zenmoney.com
 www.marketsimplified.com
 www.nseindia.com
 www.bseindia.com
 www.sebi.gov.in
 www.moneycontrol.com

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