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A Training Report submitted in partial fulfillment of the requirements for the

Award of the degree of the Bachelor of Business Administration (Industry Integrated),
Gauhati University on



Submitted to: Prepared & Submitted by:

Controller of examination RAVI MISHRA
Guahati University, BBA (IIP) 2nd Semester



This is to certify that Ravi Mishra, a student of the Gauhati University has prepared his
Training Report entitled “Working of Stock Exchanges in India” under my guidance. He has
fulfilled all requirements under the regulations of the MBA(IIP) & BBA(IIP) Gauhati University,
leading to the B.B.A(IIP) degree. This work is the result of his own investigation and the project;
neither as a whole nor any part of it was submitted to any other University or Educational
Institution for any research or diploma.

I wish him all success in life.

Ms. Gurvinder Kaur

Head of the Training Department
NIAM Institute of Applied Management,

I hereby declare that the Training Report on



Under the guidance of

Ms. Gurvinder Kaur

Submitted in Partial fulfillment of the requirements for the

Degree of


(Industry Integrated)



Is my original work and the same has not been submitted for the award of any other
Degree/diploma/fellowship or other similar titles or prizes.

Place: Ravi Mishra

Roll No.09-02-0174
Date: Reg. No.- 003174
Year – 2009-10

Acknowledgement to be mentioned to the Head of the Academic Partner, NIAM, Faculty guide.
Training officer in charge. Manager in charge, other staff member, colleagues and friends for
their encouragement, support, guidance and assistance for undergoing management training and
preparing the training report.



1.1 General Introduction.

1.2 Light on stock exchange and it services


2.1 General Introduction
2.2 Role of SEBI
2.3 Terminologies associated with stock exchanges
2.4 National Securities Deposit Limited


3.1 General Introduction

3.2 Capital listed and market capitalization
3.3 BSE Sensex
3.4 Trading system
 Settlement and clearing
 Demat pay in
 Close out
3.5 Opportunities for foreign investors
3.6 Disclosure & Listing Norms
3.7 Computerized trading
3.8 Future development


4.1 General Introduction
4.2 Locations
4.3 Listing
4.4 Constitution
 Trading members
 Trading mechanism
 Market types
4.5 Order books
4.6 Order matching rules
4.7 Order conditions
4.8 Price Conditions
4.9 Trading Workstation and trading options
4.10 Broker and Sub-broker
4.11 Clint agreement form
 Details of client registration form
 For proof of address


5.1 Student’s work profile (Role and responsibilities)

5.2 Key Learning


6.1 Introduction
6.2 Types of Research
6.3 Research Design


7.1 Summary of leaming experience
7.2 Conclusation and recommendation

1.1 General Introduction

Of all the modern service institutions, stock exchanges are perhaps the most crucial agents and
facilitators of entrepreneurial progress. After the industrial revolution, as the size of business
enterprises grew, it was no longer possible for proprietors or partnerships to raise colossal
amount of money required for undertaking large entrepreneurial ventures. Such huge
requirement of capital could only be met by the participation of a very large number of investors;
their numbers running into hundreds, thousands and even millions, depending on the size of
business venture.

In general, small time proprietors, or partners of a proprietary or partnership firm, are likely to
find it rather difficult to get out of their business should they for some reason wish to do so. This
is so because it is not always possible to find buyers for an entire business or a part of business,
just when one wishes to sell it. Similarly, it is not easy for someone with savings, especially with
a small amount of savings, to readily find an appropriate business opportunity, or a part thereof,
for investment. These problems will be even more magnified in large proprietorships and
partnerships. Nobody would like to invest in such partnerships in the first place, since once
invested, their savings would be very difficult to convert into cash. And most people have lots of
reasons, such as better investment opportunity, marriage, education, death, health and so on for
wanting to convert their savings into cash. Clearly then, big enterprises will be able to raise
capital from the public at large only if there were some mechanism by which the investors could
purchase or sell their share of business as ands they wished to do so. This implies that ownership
in business has to be “broken up” into a larger number of small units, such that each unit may be
independently & easily bought and sold without hampering the business activity as such. Also,
such breaking of business ownership would help mobilize small savings in the economy into
entrepreneurial ventures.
This end is achieved in a modern business through the mechanism of shares.
1.2 Stock Exchange and it Services

What is a share?

A share represents the smallest recognized fraction of ownership in a publicly held business.
Each such fraction of ownership is represented in the form of a certificate known as a share
certificate. The breaking up of total ownership of a business into small fragments, each fragment
represented by a share certificate, enables them to be easily bought and sold.

What is a stock exchange?

“The institution where this buying and selling of shares essentially takes place is the Stock
In the absence of stock exchanges, i.e. Institutions where small chunks of businesses
could be traded, there would be no modern business in the form of publicly held companies.
Today, owing to the stock exchanges, one can be part owners of one company today and another
company tomorrow; one can be part owners in several companies at the same time; one can be
part owner in a company hundreds or thousands of miles away; one can be all of these things.
Thus by enabling the convertibility of ownership in the product market into financial assets,
namely shares, stock exchanges bring together buyers and sellers (or their representatives) of
fractional ownerships of companies. And for that very reason, activities relating to stock
exchanges are also appropriately enough, known as stock market or security market. Also a stock
exchange is distinguished by a specific locality and characteristics of its own, mostly a stock
exchange is also distinguished by a physical location and characteristics of its own. In fact,
according to me, the earliest location of the Bombay Stock Exchange, which for a long period
was known as “the native share and stock brokers’ association”, was probably under a tree
around 1870.
The stock exchanges are the exclusive centers for the trading of securities. The regulatory
framework encourages this by virtually banning trading of securities outside exchanges. Until
recently, the area of operation/ jurisdiction of exchange were specified at the time of its
recognition, which in effect precluded competition among the exchanges. These are called
regional exchanges. In order to provide an opportunity to investors to invest/ trade in the
securities of local companies, it is mandatory foe the companies, wishing to list their securities,
to list on the regional stock exchange nearest to their registered office.

Characteristics of Stock Exchanges in India

 Traditionally, a stock exchange has been an association of individual members called

member brokers (or simply members or brokers), formed for the express purpose of
regulating and facilitating buying and selling of securities by the public and institution at

A stock exchange in India operates with due recognition from the government under the
Securities and Contracts (Regulations) Act, 1956. The member brokers are essentially the
middlemen who carry out the desired transactions in securities on behalf of the public(for
a commission) or on their own behalf. New membership to a Stock Exchange is through
election by the governing board of that stock exchange.

At present, there are 23 stock exchanges in India, the largest among them being the
Bombay Stock Exchange. BSE alone accounts for over 80% of the total volume of
transactions in shares.

 Typically, a stock exchange is governed by a board consisting of directors largely elected

by the member brokers, and a few nominated by the government. Government nominee
include representatives of the ministry of finance, as well as some public representatives,
who are expected to safeguard the public interest in the functioning of the exchanges. A
president, who is an elected member, usually nominated by the government from among
the elected members, heads the board. The executive director, who is usually appointed
by the by the stock exchange with the government approval is the operational chief of the
stock exchange. His duty is to ensure that the day to day operations the Stock Exchange
are carried out in accordance with the various rules and regulations governing its

 The overall development and regulation of the securities market has been entrusted to the
Securities and Exchange Board of India (SEBI) by an act of parliament in 1992.

 All companies wishing to raise capital from the public are required to list their securities
on at least one stock exchange. Thus, all ordinary shares, preference shares and
debentures of the publicly held companies are listed in the stock exchange.

Exchange management

Made some attempts in this direction, but this did not materially alter the situation. In view of the
less than satisfactory quality, of administration of broker-managed exchanges, the finance
minister in March 2005 proposed demutualization of exchanges by which ownership,
management and trading membership would be segregated from each other. The regulators are
working towards implementing this. Of the 23 stock exchanges in India, two stock exchanges
viz., OTCEI and NSE are already demutualised. Board of directors, which do not include trading
members, manages these. These are purest form of demutualised exchanges, where ownership,
management and trading are in the hands of three sets of people. The concept of demutualization
completely eliminates any conflict of interest and helps the exchange to pursue market efficiency
and investors interest aggressively.

2.1 Introduction

The SEBI, that is, the Securities and the Exchange Board of India, is the national regulatory body
for the securities market, set up under the securities and Exchange Board of India act, 1992, to
“protect the interest of investors in securities and to promote the development of, and to regulate
the securities market and for matters connected therewith and incidental too.

2.2 Role of SEBI

SEBI has its head office in Mumbai and it has now set up regional offices in the metropolitan
cities of Kolkata, Delhi, and Chennai. The Board of SEBI comprises a Chairman, two members
from the central government representing the ministries of finance and law, one member from
the Reserve Bank of India and two other members appointed by the central government.

As per the SEBI act, 1992, the power and functions of the Board encompass the regulation of
Stock Exchanges and other securities markets; registration and regulation of the working stock
brokers, sub-brokers, bankers to an issue (a public offer of capital), trustees of trust deeds,
registrars to an issues, merchant bankers, under writers, portfolio managers, investment advisors
and such other intermediaries who may be associated with the stock market in any way;
registration and regulations of mutual funds; promotion and regulation of self- regulatory
organizations; prohibiting Fraudulent and unfair trade practices and insider trading in securities
markets; regulating substantial acquisition of shares and takeover of companies; calling for
information from, undertaking inspection, conducting inquiries and audits of stock exchanges,
intermediaries and self- regulatory organizations of the securities market; performing such
functions and exercising such powers as contained in the provisions of the Capital Issues
(Control) Act,1947 and the Securities Contracts (Regulation) Act, 1956, levying various fees and
other charges, conducting necessary research for above purposes and performing such other
functions as may be prescribes from time to time.

SEBI as the watchdog of the industry has an important and crucial role in the market in ensuring
that the market participants perform their duties in accordance with the regulatory norms. The
Stock Exchange as a responsible Self Regulatory Organization (SRO) function to regulate the
market and its prices as per the prevalent regulations. SEBI and the Exchange play
complimentary roles to enhance the investor protection and the overall quality of the market.

2.3 Terminologies associated with the stock exchange


The trading platform of a stock exchange is accessible only to brokers. The broker enters into
trades in exchanges either on his own account or on behalf of clients. The clients may place their
order with them directly or a sub-broker indirectly. A broker is admitted to the membership of an
exchange in terms of the provisions of the SCRA, the SEBI act 1992, the rules, circulars,
notifications, guidelines, etc. Prescribed there under and the byelaws, rules and regulations of the
concerned exchange. No stockbroker or sub-broker is allowed to buy, sell or deal in securities,
unless he or she holds a certificate of registration granted by SEBI. A broker/sub-broker
compiles with the code of conduct prescribed by SEBI.
The stock exchanges are free to stipulate stricter requirements for its members
than those stipulated by SEBI. The minimum standards stipulated by NSE for membership are in
excess of the minimum norms laid down by SEBI. The standards for admission of members lay
down by NSE stress on factors, such as, corporate structure, capital adequacy, track record,
education, experience, etc. And reflect the conscious endeavors to ensure quality broking


Listing means formal admission of a security to the trading platform of a stock exchange,
invariably evidenced by a listing agreement between the issuer of the security and the stock
exchange. ; Listing of securities on Indian Stock Exchanges is essentially governed by the
provisions in the companies act, 1956, SCRA, SCRR, rules, bye-laws and regulations of the
concerned stock exchange, the listing agreement entered into by the issuer and the stock
exchange and the circulars/ guidelines issued by central government and SEBI.

Index services

Stock index uses a set of stocks that are representative of the whole market, or a specified sector
to measure the change in overall behavior of the markets or sector over a period of time. India
Index Services & Products Limited (IISL), promoted by NSE and CRISIL, is the only
specialized organization in the country to provide stock index services.

Trading Mechanism

All stock exchanges in India follow screen-based trading system. NSE was the first stock
exchange in the country to provide nation-wide order-driven, screen-based trading system. NSE
model was gradually emulated by all other stock exchanges in the country. The trading system at
NSE known as the National Exchange for Automated Trading (NEAT) system is an anonymous
order-driven system and operates on a strict price/time priority. It enables members from across
the countries to trade simultaneously with enormous ease and efficiency. NEAT has lent
considerable depth in the market by enabling large number of members all over the country to
trade simultaneously and consequently narrowed the spreads significantly. A single consolidated
order book for each stock displays, on a real time basis, buy and sell orders originating from all
over the country. The bookstores only limit orders, which are orders to buy or sell shares at a
stated quantity and stated price. The limit order is executed only if the price quantity conditions
match. Thus, the NEAT system provides an open electronic consolidated limit order book
(OECLOB). The trading system provides tremendous flexibility to the users in terms of kinds of
orders that can be placed on the system. Several time-related (Good-Till-Cancelled, Good-Till-
Day, Immediate-or-Cancel), price related (buy/sell limit and stop-loss orders) or volume related
(All-or-None, Minimum Fill, etc.) Conditions van be easily built into an order. Orders are sorted
and match automatically by the computer keeping the system transparent, objective and fair. The
trading system also provides complete market information on-line, which is updated on real time
basis. The trading platform of the CM segment of NSE is accessed not only from the computer
terminals from the premises of brokers spread over 420 cities, but also from the personal
computers in the homes of investors through the internet and from the hand-held devices through
WAP. The trading platform of BSE is also accessible from 400 cities.

Internet trading is available on NSE and BSE, as of now. SEBI has approved the use of Internet
as an order routing system, for communicating clients’ orders to the exchanges through brokers.
SEBI- registered brokers can introduce internet-based trading after obtaining permission from
the respective Stock Exchanges. SEBI has stipulated the minimum conditions to be fulfilled by
trading members to start internet-based trading and services.

NSE was the first exchange in the country to provide web-based access to investors to trade
directly on the exchange. It launched Internet trading in February 2001. It was followed by the
launch of Internet trading by BSE in March 2001. The orders originating from the personal
computers (pcs) of investors are routed through the Internet tot eh trading terminals of the
designated brokers with whom they have relations and further to the exchange of trade
execution. Soon after these orders get matched and result into trades, the investors get
confirmation about them on their pcs through the same Internet routes.

SEBI approved trading through wireless medium or WAP platform. NSE is the only exchange to
provide access to its order book through the hand held devices, which use WAP technology. This
serves primarily retail investors who are mobile and want to trade from any place when the
market prices for st0ocks of their choice are attractive.
Demat Trading

A depository holds securities in dematerialized form. It maintains ownership records of securities

in a book entry form and also effects transfer of ownership through book entry. SEBI has
introduced some degree of compulsion in trading and settlement of securities in dematerialized
form. While the investors have a right to hold securities in either physical or demat form, SEBI
has mandated compulsory trading and settlement of securities in dematerialized form. This was
initially introduced for institutional investors and was later extended to all investors. Starting
with 12 scrips on January 15, 1998, all investors are required to mandatorily trade in
dematerialized form in respect of 2,335 securities as at end-June, 2005.

Since the introduction of the depository system, dematerialization has progressed at a fast pace
and has gained acceptance among the participants in the market. All actively traded scrips are
held, traded and settled in demat form. The details of progress in dematerialization in two
depositories, viz., NSDL and CDSL are presented as below:

In a SEBI working paper titled ‘Dematerialization: A Silent Revolution in the Indian Capital
Market’ released in April 2000, it has been observed that India has achieved a very high level of
dematerialization in less than three years’ time, and currently more than 99%of trades settle in
demand form. Competition and regulatory developments facilitated reduction in custodial
charges and improvements in qualities of service standards. The paper observes that one
imminent and apparent immediate benefit of competition between the two depositories is fall in
settlement and other charges. Competition has been driving improvement in service standards.
Depository facility has effected changes in stock market microstructure. Breadth and depth of
investment culture has further got extended to interior areas of the country faster. Explicit
transaction cost has been falling due to dematerialization. Dematerialization substantially
contributed to the increased growth in the turnover. Dematerialization growth in India is the
quickest among all emerging markets and also among developed markets excepting for the U.K
and Hong Kong.
2.4 National Securities Deposit Limited (NSDL)

Prior to trading in a dematerialized environment, settlement of trades required moving the

securities physically from the seller to the ultimate buyer, through the seller's
Broker and buyer's broker, which involved lot of time and the risk of delay somewhere
Along the chain.
Further, the system of transfer of ownership was grossly inefficient as every
transfer involved physical movement of paper to the issuer for registration, with the change
Ownership being evidenced by an endorsement on the security certificate. In many cases,
the process of transfer took much longer than stipulated in the then regulations. Theft,
forgery, mutilation of certificates and other irregularities were rampant. All these added to
the costs and delays in settlement and restricted liquidity. To obviate these problems and to
promote dematerialization of securities, nse joined hands with uti and idbi to set up the
first depository in india called the "national securities depository limited" (nsdl). The
depository system gained quick acceptance and in a very short span of time it was able to
achieve the objective of eradicating paper from the trading and settlement of securities,
and was also able to get rid of the risks associated with fake/forged/stolen/bad paper.
Dematerialized delivery today constitutes almost 100% of the total delivery based

3.1 General Introduction

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The
Native Share and Stock Brokers Association", as a voluntary non-profit making association. It
has evolved over the years into its present status as the premier Stock Exchange in the country. It
may be noted that the Stock Exchanges is the oldest one in Asia, even older than the Tokyo
Stock Exchange, which was founded in 1878.

The Exchange, while providing an efficient and transparent market for trading in securities,
upholds the interests of the investors and ensures redressal of their grievances, whether against
the companies or its own member-brokers. It also strives to educate and enlighten the investors
by making available necessary informative inputs and conducting investor education

A Governing Board comprising of 9 elected directors (one third of them retire every year by
rotation), two SEBI nominees, a Reserve Bank of India nominee, six public representatives and
an Executive Director is the apex body, which decides the policies and regulates the affairs of the
The Executive Director as the Chief Executive Officer is responsible for the day-to-day
administration of the Exchange.

The average daily turnover of the Exchange during the year 2005-2006 (April-March), was
Rs.8984.19 crore and average number of daily trades was 8.69 lakh. However, the average daily
turnover of the Exchange during the year 2006- 2007 has declined to Rs. 2244.10 crore and
number of average daily trades during the period to 8.17 lakh. The ban on all deferral products
like BLESS and ALBM in the Indian capital Markets by SEBI i.e. July 2, 2005, abolition of
account period settlements, introduction of Compulsory Rolling Settlements in all scrips traded
on the Exchanges i.e. December 31, 2005, etc. Have adversely impacted the liquidity and
consequently there is a considerable decline in the daily turnover at the Exchange.

3.2 Capital Listed and Market Capitalization

The Stock Exchange, Bombay (BSE) is the premier Stock Exchange in India. The BSE
accounted for 46 per cent of listed companies on an all India basis as on 31st March 1994. It
ranked first in terms of the number of listed companies and stock issues listed. The capital listed
in the BSE as on 31st March 1994 accounted for 50% of the overall capital listed on all the stock
exchanges. Its share of the market capitalization was around 74% as on the same date. The paid-
up capital of equity, debentures/bonds and preference were 73%, 31%, 44% respectively of the
overall capital listed on all the Stock Exchanges as on the same date.

On the BSE, the Steel Authority of India had the largest market capitalization of Rs.19, 908 crore
as on the 31st March, 1994 followed by the State Bank of India with the market capitalization of
Rs.16, 702 crore and Mahanagar Telephone Nigam Limited with the market capitalization of
Rs.11, 700 crore.


The BSE SENSEX, short form of Sensitive Index, first compiled in 1986 is a “market
Capitalization-Weighted” index of 30 component stocks representing a sample of large, well-
established and financially sound companies. The index is widely reported in both, the domestic
international, print electronic media and is widely used to measure the used to measure the
performance of the Indian stock markets.

The BSE SENSEX is the benchmark index of the Indian capital market and one, which has the
longest social memory. In fact the SENSEX is considered to be the pulse of the Indian stock
markets. It is the oldest index in India and has acquired a unique place in collective
consciousness of the investors. Further, as the oldest index of the Indian Stock Market, it
provides time series data over a fairly long period of time. Small wonder that the SENSEX has
over the years has become one of the most prominent brands of the Country.

Objectives of SENSEX

The BSE SENSEX is the benchmark index with wide acceptance among individual investors,
institutional investors, foreign investors, foreign investors and fund managers. The objectives of
the index are:

 To measure market movements

Given its long history and its wide acceptance, no other index matches the BSE
SENESX in the reflecting market movements and sentiments. SENSEX is widely
Used to describe the mood in the Indian stock markets.

 Benchmark for funds performance

The inclusion of blue chip companies and the wide and balanced industry
Representation in the SENSEX makes it the ideal benchmark for fund managers to compare
the performance of their funds.
 For index based derivatives products
Institutional investors, money managers and small investors, all refer to the BSE
SENSEX for their specific purposes. The BSE SENSEX is in effect the proxy for
The Indian stock markets. Since SENSEX comprises of the leading companies in
All the significant sectors in the economy, we believe that it will be the most liquid
Contract in the Indian market and will garner a predominant market share.

Some Companies represented in the SENSEX

Company name Sector

Hindustan lever FMCG

Reliance limited Chemicals and petrochemicals
Infosys technologies Information technology
Reliance petroleum Oil and gas
State bank of India Finance
MTNL Telecom
Satyam computers Information technology
Zee telefilms Media
Ranbaxy labs Healthcare
ICICI Finance
Larsen & toubro Diversified
Cipla Healthcare
Hindalco Metals and mining
HPCL Metal and mining
TISCO Metal and mining
Nestle FMCG

3.4 Trading System

Till Now, buyers and sellers used to negotiate face-to-face on the trading floor over a security
until agreement was reached and a deal was struck in the open outcry system of trading, that used
to take place in the trading ring. The transaction details of the account period (called settlement
period) were submitted for settlement by members after each trading session.

The computerized settlement system initiated the netting and clearing process by providing on a
daily basis statement for each member, showing matched and unmatched transactions.
Settlement processing involves computation of each member's net position in each security, after
taking into account all transactions for the member during the settlement period, which is 10
working days for group 'A' securities and 5 working days for group 'B' securities.

Trading is done by members and their authorized assistants from their Trader Work Stations
(TWS) in their offices, through the BSE On-Line Trading (BOLT) system. BOLT system has
replaced the open outcry system of trading. BOLT system accepts two-way quotations from
jobbers, market and limits orders from client-brokers and matches them according to the
matching logic specified in the Business Requirement Specifications (BRS) document for this

The matching logic for the Carry-Forward System as in the case of the regular trading system is
quote driven with the order book functioning as an "auxiliary jobber".


The Exchange, which had an open outcry trading system, had switched over to a fully automated
computerized mode of trading known as BOLT (BSE on Line Trading) System. Through the
BOLT system the members now enter orders from Trader Work Stations (twss) installed in their
offices instead of assembling in the trading ring. This system, which was initially both order and
quote driven, was commissioned on March 14, 1995. However, the facility of placing of quotes
has been removed i.e. August 13, 2005 in view of lack of market interest and to improve system-
matching efficiency. The system, which is now only order driven, facilitates more efficient
processing, automatic order matching and faster execution of orders in a transparent manner.

Earlier, the members of the Exchange were permitted to open trading terminals only in Mumbai.
However, in October 1996, the Exchange obtained permission from SEBI for expansion of its
BOLT network to locations outside Mumbai. In terms of the permission granted by SEBI and
certain modifications announced later, the members of the Exchange are now free to install their
trading terminals at any place in the country. Shri P. Chidambaram inaugurated the expansion of
BOLT network the then Finance Minister, Government of India on August 31, 1997.

In order to expand the reach of BOLT network to centers outside Mumbai and support the
smaller Regional Stock Exchanges, the Exchange has, as on March 31, 2006, admitted subsidiary
companies formed by 13 Regional Stock Exchanges as its members. The members of these
Regional Stock Exchanges work as sub-brokers of the member-brokers of the Exchange.

The objectives of granting membership to the subsidiary companies formed by the Regional
Stock Exchanges were to reach out to investors in these centers via the members of these
Regional Exchanges and provide the investors in these areas access to the trading facilities in all
scrips listed on the Exchange.

Trading on the BOLT System is conducted from Monday to Friday between 9:00 a.m. And 3:30
p.m. The scrips traded on the Exchange have been classified into 'A', 'B1', 'B2', 'F' and 'Z' groups.
The number of scrips listed on the Exchange under 'A', 'B1 ', 'B2' and 'Z' groups, which represent
the equity segment, as on March 31, 2006 was 173, 560,1930 and 3044 respectively. The 'F'
group represents the debt market (fixed income securities) segment wherein 748 securities were
listed as on March 31, 2006. The 'Z' group was introduced by the Exchange in July 1999 and
covers the companies which have failed to comply with listing requirements and/or failed to
resolve investor complaints or have not made the required arrangements with both the
Depositories, viz., Central Depository Services (I) Ltd. (CDSL) and National Security
Depository Ltd. (NSDL) for dematerialization of their securities by the specified date, i.e.,
September 30, 2005. Companies in "Z" group numbered 3044 as on March 31, 2002. Of these,
1429 companies were in "Z" group for not complying with the provisions of the Listing
Agreement and/or pending investor complaints and the balance 1615 companies were on account
of not making arrangements for dematerialization of their securities with both the Depositories.
1615 companies have been put in "Z" group as a temporary measure till they make arrangements
for dematerialization of their securities. Once they finalize the arrangements for
dematerialization of their securities, trading and settlement in their scrips would be shifted to
their respective erstwhile groups.

The Exchange has also the facility to trade in "C" group which covers the odd lot securities in
'A', 'B1', 'B2' and 'Z' groups and Rights renunciations in all the groups of scrips in the equity
segment. The Exchange, thus, provides a facility to market participants of on-line trading in odd
lots of securities and Rights renunciations. The facility of trading in odd lots of securities not
only offers an exit route to investors to dispose of their odd lots of securities but also provides
them an opportunity to consolidate their securities into market lots.

The 'C' group can also be used by investors for selling unto 500 shares in physical form in
respect of scrips of companies where trades are to be compulsorily settled by all investors in
demat mode. This scheme of selling physical shares in compulsory demat scrips is called as Exit
Route Scheme.

With effect from December 31, 2001, trading in all securities listed in equity segment of the
Exchange takes place in one market segment, viz., Compulsory Rolling Settlement Segment.

Permitted Securities

The Exchange has since decided to permit trading in the securities of the companies listed on
other Stock Exchanges under “Permitted Securities" category which meet the relevant norms
specified by the Exchange. Accordingly, to begin with the Exchange has permitted trading in
scrips of five companies listed on other Stock Exchanges i.e. April 22, 2002.
Computation of closing price of scrips in the Cash Segment
The closing prices of scrips are computed on the basis of weighted average price of all trades in
the last 15 minutes of the continuous trading session. However, if there is no trade during the last
15 minutes, then the last traded price in the continuous trading session is taken as the official
closing price.

Compulsory Rolling Segment (CRS)

Compulsory Rolling Settlement (CRS) Segment:

With a view to introduce the best international trading practices and to achieve higher settlement
efficiency, as mandated by SEBI, trades in all the equity shares listed on the Exchange in CRS
Segment were to be settled on T+5 basis i.e. December 31, 2005. SEBI has further directed the
Stock Exchanges that trade in all scrips i.e. April 1, 2006 should be settled on T+3 bases.
Accordingly, all transactions in all groups of securities in the equity segment and fixed income
securities listed on the Exchange are settled on T+3 bases i.e. April 1, 2006

Under a rolling settlement environment, the trades done on a particular day are settled after a
given number of business days rather than settling all trades done during a period at the end of an
'account period'. A T+3 settlement cycle means that the final settlement of transactions done on
T or trade day by exchange of monies and securities, occurs on fifth business day after the trade

The transactions in securities of companies which have made arrangements for dematerialization
of their securities by the stipulated date are settled only in Demat mode on T+3 on net basis, i.e.,
buy and sale positions in the same scrip are netted and the net quantity is to be settled. However,
transactions in securities of companies, which have failed to make arrangements for
dematerialization of their securities or /are in "Z" group, are settled only on trade to trade basis
on T+3 i.e., the transactions are settled on a gross basis and the facility of netting of buy and sale
transactions in a scrip is not available. For example, if one buys and sells 100 shares of a
company on the same day which is on trade to trade basis, the two positions will not be netted
and he will have to first deliver 100 shares at the time of pay-in of securities and then receive
100 shares at the time of pay-out of securities on the same day. Thus, if one fails to deliver the
securities sold at the time of pay-in, it will be treated as a shortage and the position will be
auctioned/ closed-out.

The following tables summarize the steps in the trading and settlement cycle for scrips under

Day Activity

Trading on BOLT and daily downloading of statements showing details of transactions and
margins at the end of each trading day.

6A/7A entry by the member-brokers.

Confirmation of 6A/7A data by the Custodians. Downloading of securities and funds obligation
statement by members.

Pay-in of funds and securities by 11:00 a.m. And pay-out of funds and securities by 2:00 p.m

Auction on BOLT.

Auction pay-in and pay-out.

* 6A/7A : A mechanism whereby the obligation of settling the transactions done by a member-
broker on behalf of a client is passed on to a custodian based on his confirmation.
Thus, the pay-in and pay-out of funds and securities takes places on the 3rd working day of the
execution of the trade.

The Information Systems Department of the Exchange generates the following statements, which
can be downloaded by the members in their back offices on a daily basis.

Statements giving details of the daily transactions entered into by the members.

Statements giving details of margins payable by the members in respect of the trades executed by

The settlement of the trades (money and securities) done by a member on his own account or on
behalf of his individual, corporate or institutional clients may be either through the member
himself or through a SEBI registered Custodian appointed by him or the respective client. In case
the delivery/payment is to be given or taken by a registered Custodian, he has to confirm the
trade done by a member on the BOLT System through 6A-7A entry. For this purpose, the
Custodians have been given connectivity to BOLT System and have also been admitted as
members of the Clearing House. In case a transaction is not confirmed by a registered Custodian,
the liability for pay-in of funds or securities in respect of the same devolves on the concerned

The introduction of settlement on T+3 basis has resulted in reduction in settlement risk, provided
early receipt of securities and monies to buyers and sellers respectively and brought Indian
Capital Markets at the international standard of settlements

 Settlement and Clearing System

Pay-in and Pay-out for 'A', 'B1', 'B2', 'C', "F" & 'Z' group of securities
As discussed earlier, the trades done by members in all the securities in CRS are now settled by
payment of money and delivery of securities on T+3 basis. All deliveries of securities are
required to be routed through the Clearing House, except for certain off-market transactions
which, although are required to be reported to the Exchange, may be settled directly between the
members concerned.

The bank accounts of members maintained with the eight clearing banks, viz., Bank of India,
HDFC Bank Ltd., Global Trust Bank Ltd., Standard Chartered Bank, Centurion Bank Ltd., UTI
Bank Ltd., ICICI Bank Ltd., and Indusind Bank Ltd., are directly debited through computerized
posting for their settlement and margin obligations and credited with receivables on accounts of
pay-out dues and refund of margins.

The Clearing House of the Exchange handles the share and the money parts of
the settlement process in the case of 'A' and 'B1' groups. The Clearing House handles only the
money part of 'B2' group while securities are physically exchanged between the brokers.

 Demat pay-in

The members can effect demat pay-in either through Central Depository Services (I) Ltd.
(CDSL) or National Securities Depository Ltd. (NSDL). In case of NSDL, the members are
required to give instructions to their Depository Participant (DP) specifying settlement no.,
settlement type, effective pay-in date, quantity, etc. The securities are transferred to the Pool
Account. The members are required to give delivery-out instructions so that the securities are
considered for pay-in.

 Close Out

There are cases when no offer for particular scrip is received in an auction or when members
who offer the scrips in auction, fail to deliver the same. In the former case, the original seller
member's account is debited and the buyer member's account is credited at the closeout rate. In
the latter case, the offer or member's account is debited and the buyer member's account is
credited at the close-out rate.

3.5 Opportunities available for foreign investors

1. Direct investment

Foreign Companies are now permitted to have a majority stake in their Indian affiliates
except in a few restricted industries. In certain specific industries, foreigners can even have
holding upto 100 per cent.

2. Investment through Stock Exchanges

Foreign Institutional Investors (FII) upon registration with the Securities and Exchange
Board of India (SEBI) and the Reserve Bank of India (RBI) are allowed to operate in Indian
Stock Exchanges subject to the guidelines issued for the purpose by SEBI.

Important requirements under the guidelines are as under:

I. Portfolio investment in primary or secondary markets will be subject to a ceiling of 24 per

cent of issued share capital for the total holding of all registered fiis in any one company. The
holding of a single FII in any one company is subject to a ceiling of 5 per cent of the total
issued capital.
However, in applying the ceiling of 24 percent the following are excluded:

 Foreign investment under a financial collaboration (DFI), which is, permitted upto 51
per cent in all priority areas.

 Investment by fiis through following alternative routes; Offshore Single/Regional

funds, GDR's and Euro convertibles.
II. Disinvestments will be allowed only through a broker of a Stock Exchange.

III. A registered FII is required to buy or sell only for delivery. It should not offset a deal. It
is also not allowed to sell short.

3. Investment in Euro Issues/Mutual Funds Floated Overseas

Foreign investors can invest in Euro issues of Indian companies and in India-specific funds
floated abroad.

4. Broking Business

Foreign brokers upon registration with the SEBI are now allowed to route the business of
registered fiis. Guidelines for the purpose have been issued by SEBI. However, foreign
brokers at present are not allowed membership in India Stock Exchanges.

5. Asset Management Companies/Merchant Banking

Foreign Participation in Asset Management Companies and Merchant Banking Companies is


3.6 Disclosure & Listing Norms

Companies who wish to raise money from capital market follow guidelines relating to disclosure,
laid down by the Securities and Exchange Board of India. Some of the disclosure norms are:

 Details of other income if it constitutes more than ten percent of total income.
 All adverse events affecting the operations of the company.
 Any change in key managerial personnel.
 Risk factors specific to the project and those which are external to the company.
The listing requirements with the Exchange call for further disclosure by companies to promote
public confidence. Important disclosures are:

 The company is required to furnish unaudited half-yearly financial results in the

prescribed Performa.

 The company must explain to the Stock Exchange any large variation between audited
and unaudited results in respect of any item.

 When any person or an institution acquires or agrees to acquire any security of a

company which would result in his holding five percent or more of the voting capital of
the company, including the existing holding the Exchange must be notified within two
days of such acquisition by the company or by authorized intermediary or by the

 Any take-over offer made either voluntarily or compulsorily to a company requires a

public announcement by both the offer and the offered company.

3.7 Computerized Trading

BSE computerized its trading and settlement activities by following a three-phased approach.

Phase I: The primary objective of this phase was the real time dissemination of price data
through the Display Information Driver System (DIDS). DIDS was commissioned in November
1992 to disseminate bids, offers, actual rates of transactions and indices on a real time basis.

Phase II: In 1994, settlement related daily transactions inputs and outputs were uploaded and
downloaded from the TWS in the brokers’ offices.
Phase III: Commissioned on March 14, 1995. Although, screen based trading started with 818
scrips, by the 70th day of its commissioning, all scrips-exceeding 5000 had been put on the
BOLT system. The BOLT system was commissioned with the Himalaya K 10,000 central
trading computer hardware. Since then the hardware has been upgraded to the Himalya K 20,000
system. The system provides for a response time of two seconds and can handle more than two
hundred thousand trades in a day.

Stock Market Indicators

1991-92 1992-93 1993-94 1994-95

(Apr.Mar (Apr.Mar (Apr.Mar (Apr.Mar
) ) ) )
No. Of Listed
2061 2861 3585 4702 5603
Market Capitalization
(In Rs.Billion) 3059.87 1881.46 3680.71 4354.81 5264.76
(In US $ Billion) 97.13 59.72 116.85 138.37 153.27
Annual Turnover
(In Rs.Billion) 717.77 456.96 836.29 677.49 500.64
(In US $ Billion) 22.78 14.50 26.55 21.51 14.57
Velocity 0.23 0.24 0.24 0.16 0.10
Average Daily Turnover
(In Rs.Billion) 3.32 2.38 3.84 1.78 2.16
(In US $ Billion) 0.10 0.07 0.12 0.06 0.06
No. Of Shares
Traded 6,35,515 3,50,313 7,42,792 1,07,24.8 7,71,850
(In Million Nos.)
Number of Daily 75,000 65,535 63,786 85,010 73,855
BSE Sensitive
Index 4285.00 2280.52 3778.99 3260.95 3366.61
(Year End)
BSE National
Index 1967.71 1021.40 1829.53 1605.57 1549.25
(Year End)
BSE 2000
585.19 234.35 450.07 365.97 345.40
(Year End)
Dollex (Year
261.25 124.89 238.86 194.67 168.54
No. Of - - 145 308 366
Registered Flls
Fll Net investment
(In Rs. Billion) - - 29.85 21.24 31.63
(In US $ Billion) - - 0.95 0.67 0.92
No. Of Members
558 558 628 636 641
(Year End)
No. Of
4 4 4 26 63
Members (Year

3.8 Future Developments

In 1995, the President of India promulgated an Ordinance, which allowed for establishment of

BSE in collaboration with Bank of India (BOI) will shortly establish a depository. BSE has
applied for permission from SEBI to expand BOLT to other centres. Expansion of BOLT would
bring more investors into the ambit of the capital market and consequently add depth to it.

4.1 General Introduction

The National Stock Exchange (NSE) is India's leading stock exchange covering around 400
cities and towns all over India. NSE introduced for the first time in India, fully automated screen
based trading. It provides a modern, fully computerized trading system designed to offer
investors across the length and breadth of the country a safe and easy way to invest or liquidate
investments in securities.

Sponsored by the industrial development bank of India, the NSE has been co-sponsored by other
development/ public finance institutions, LIC, GIC, banks and other financial institutions such as
SBI Capital Market, Stockholding corporation, Infrastructure leasing and finance and so on.
India has had a history of stock exchanges limited in their operating jurisdiction to the cities in
which they were set up.

NSE started equity trading on November 3, 1994 and within a short span of 1 year became the
largest exchange in India in terms of volumes transacted. Trading volumes in the equity segment
have grown rapidly with average daily turnover increasing from Rs.7 crore in November 1994 to
Rs.6797 crore in February 2005 with an average of 14.6 lakh trades on a daily basis. During the
year 2004-2005, NSE reported a turnover of Rs.19, 39,510 crore in the equities segment
accounting for 45% of the total market.

The NSE represented an attempt to overcome the fragmentation of regional markets by providing
a screen-based system, which transcends geographical barriers. Having operationalised both the
debt and equity markets, the NSE is planning for a derivative market, which will provide futures
and options in equity. Its main objectives has been to set up comprehensive facilities for the
entire range of securities under a single umbrella, namely,
 To set up a nation wide trading facility for equities, debt instruments and
o Hybrids;
 To ensure equal access to investors across the country through an appropriate
o Communication network;
 To provide a fair, efficient and transparent securities market to investors using
the electronic trading system;
 To ensure shorter settlement cycles and book entry settlement systems; and
 To meet the current international standards prevalent in the securities

Some Companies represented in the Nifty

Company name Sector

ABB Ltd. Electrical equipment

ACC Ltd. Cement and cement products

NTPC Ltd. Power Power

Bharat Heavy Electricals Ltd. Electrical Equipment

HDFC Bank Ltd. Banks Banks

Dr. Reddy's Laboratories Ltd. Pharmaceuticals

Tata Power Co. Ltd. Power

Reliance Industries Ltd. Refineries

Punjab National Bank Banks

National Aluminum Co. Ltd. Aluminum

Zee Entertainment Enterprises Metals


Sterlite Industries (India) Ltd. Diversified

Hindustan Unilever Ltd. Software

Wipro Ltd. Computers Electrical Equipment

Suzlon Energy Ltd. Engineering

Larsen & Toubro Ltd.


4.2 Locations

One of the objectives of NSE was to provide a nationwide trading facility and to enable
investors’ spread all over the country to have an equal access to NSE. NSE uses sophisticated
telecommunication technology through which members can trade remotely from their offices
located in any part of the country. NSE trading terminals are present in around 400 cities and
towns all over India.

4.3 Listing

The prime objective of admission to dealings on the Exchange is to provide liquidity and
marketability to securities as also to provide a mechanism for effective management of trading.
Securities listed on the Exchange are required to fulfill the listing eligibility criteria. Various
types of securities of a company are traded under a unique symbol and different series. This
section provides a direct link to the web site of companies traded on the Exchange.

4.4 Constitution

The NSE has two segments for trading in securities: Wholesale Debt Market (WDM) and Capital
Market (CM). Separate membership is required for each segment.

 Trading members
They are recognized members of NSE. The persons eligible to become tms are body corporate,
subsidiaries of banks and financial institutions. They are selected on the basis of a
comprehensive selection criterion.

 Trading Mechanism

Rolling Settlement

In a rolling settlement, each trading day is considered as a trading period and trades executed
during the day are settled based on the net obligations for the day.

In NSE, the trades in rolling settlement are settled on a T+5 basis i.e. On the 5th working day.
For arriving at the settlement day all intervening holidays, which include bank holidays, NSE
holidays, Saturdays and Sundays are excluded. Typically trades taking place on Monday shall
be settled on the next Monday, Tuesday's trades shall be settled on the next Tuesday and so on.
Limited Physical Market

Pursuant to SEBI guidelines, NSE introduced a new market called Limited Physical Market to
provide a facility to small investors to trade and settle physical shares in those securities where
compulsory dematerialized trading and settlement is enforced by SEBI. In this segment quantity
not exceeding 500 shares of each security held in the name of the investor can be traded.

Institutional Segment

Trading in this market segment is available for institutional investors only. In order to ensure that
the overall FII ceiling limits are not violated, trading members are allowed to enter sell orders in
this market segment only for their FII clients. However, members can enter buy orders on behalf
of FII/FI clients. The settlement of transactions in this segment is in demat mode only.

Trade for Trade Segment

Trading in this segment is available only for those securities, which have not established
connectivity with both the depositories as per SEBI directive. The list of these securities is
notified by SEBI from time to time.

Trading System

NSE operates on the 'National Exchange for Automated Trading' (NEAT) system, a fully
automated screen based trading system, which adopts the principle of an order driven market.
NSE consciously opted in favour of an order driven system as opposed to a quote driven system.
This has helped reduce jobbing spreads not only on NSE but in other exchanges as well, thus
reducing transaction costs.

Till the advent of NSE, an investor wanting to transact in a security not traded on the nearest
exchange had to route orders through a series of correspondent brokers to the appropriate
exchange. This resulted in a great deal of uncertainty and high transaction costs. NSE has made it
possible for an investor to access the same market and order book, irrespective of location, at the
same price and at the same cost.

 Market Types

The NEAT system in NSE has four types of market. They are:

 Normal Market

All orders which are of regular lot size or multiples thereof are traded in the Normal Market. For
shares, which are traded in the compulsory dematerialized mode the market lot of these shares, is
one. Normal market consists of various book types wherein orders are segregated as Regular lot
orders, Special Term orders, and Negotiated Trade Orders and Stop Loss orders depending on
their order attributes.

 Odd Lot Market

All orders whose order size is less than the regular lot size are traded in the odd-lot market. An
order is called an odd lot order if the order size is less than regular lot size. These orders do not
have any special terms attributes attached to them. In an odd-lot market, both the price and
quantity of both the orders (buy and sell) should exactly match for the trade to take place.
Currently the odd lot market facility is used for the Limited Physical Market as per the SEBI

 Spot Market
Spot orders are similar to the normal market orders except that spot orders have different
settlement period’s vis-à-vis normal market. These orders do not have any special terms
attributes attached to them. Currently the Spot Market is being used for the Automated Lending
& Borrowing Mechanism (ALBM) session.

 Auction Market

In the Auction Market, the Exchange on behalf of trading members for settlement related reasons
initiates’ auctions.

There are 3 participants in this market.

 Initiator
The party who initiates the auction process is called an initiator.

 Competitor
The party who enters orders on the same side as of the initiator is called a

 Solicitor
The party who enters orders on the opposite side as of the initiator is called a

3.5 Order Books

The NSE trading system provides complete flexibility to members in the kinds of orders that can
be placed by them. Orders are first numbered and time-stamped on receipt and then immediately
processed for potential match. Every order has a distinctive order number and a unique time
stamp on it. If a match is not found, then the orders are stored in different 'books'. Orders are
stored in price-time priority in various books in the following sequence:

 Best Price- Price priority means that if two orders are entered into the system, the order
having the best price gets the higher priority.

 Within Price, by time priority-Time priority means if two orders having the same price are
entered, the order that is entered first gets the higher priority.

The Capital Market segment has following types of books

1. Regular Lot Book

The Regular Lot Book contains all regular lot orders that have none of the following
attributes attached to them.
a) All or None (AON)
b) Minimum Fill (MF)
c) Stop Loss (SL)

2. Special Terms Book

The Special Terms book contains all orders that have either of the following terms
a) All or None (AON)
b) Minimum Fill (MF)
Note: Currently, special term orders i.e. AON and MF are not available on the system as per
the SEBI directives.

3. Negotiated Trade Book

The Negotiated Trade book contains all negotiated order entries captured by the system
before they have been matched against their counterparty trade entries.
These entries are matched with identical counterparty entries only. It is to be noted that these
entries contain a counter party code in addition to other order details.

4. Stop-Loss Book
Stop Loss orders are stored in this book till the trigger price specified in the order is reached
or surpassed. When the trigger price is reached or surpassed, the order is released in the
Regular lot book.

The stop loss condition is met under the following circumstances:

Sell order - A sell order in the Stop Loss book gets triggered when the last traded price in the
normal market reaches or falls below the trigger price of the order.

Buy order - A buy order in the Stop Loss book gets triggered when the last traded price in the
normal market reaches or exceeds the trigger price of the order.
5. Odd Lot Book
The Odd lot book contains all odd lot orders (orders with quantity less than
Marketable lot) in the system. The system attempts to match an active odd lot
Order against passive orders in the book. Currently, pursuant to a SEBI directive
The Odd Lot Market is being used for orders which has a quantity less than or
Equal to 500 (Qty more than the market lot) for trading. This is referred as the
Limited Physical Market (LPM).

6. Spot Book
The Spot lot book contains all spot orders (orders having only the settlement period different)
in the system. The system attempts to match an active spot lot order against the passive orders
in the book. Currently the Spot Market book type is being used for conducting the Automated
Lending & Borrowing Mechanism (ALBM) session.

7. Auction Book
This book contains orders that are entered for all auctions. The matching process
For auction orders in this book is initiated only at the end of the solicitor period.
3.6 Order Matching Rules

The best buy order is matched with the best sell order. An order may match partially with
another order resulting in multiple trades. For order matching, the best buy order is the one with
the highest price and the best sell order is the one with the lowest price. This is because the
system views all buy orders available from the point of view of a seller and all sell orders from
the point of view of the buyers in the market. So, of all buy orders available in the market at any
point of time, a seller would obviously like to sell at the highest possible buy price that is
offered. Hence, the best buy order is the order with the highest price and the best sell order is the
order with the lowest price.

Members can proactively enter orders in the system, which will be displayed in the system till
the full quantity is matched by one or more of counter-orders and result into trade(s) or is
cancelled by the member. Alternatively, members may be reactive and put in orders that match
with existing orders in the system. Orders lying unmatched in the system are 'passive' orders and
orders that come in to match the existing orders are called 'active' orders. Orders are always
matched at the passive order price. This ensures that the earlier orders get priority over the orders
that come in later.

4.7 Order Conditions

A Trading Member can enter various types of orders depending upon his/her requirements.
These conditions are broadly classified into three categories: time related conditions, price-
related conditions and quantity related conditions. For example

Time Conditions
 DAY - A Day order, as the name suggests, is an order which is valid for the day on which
it is entered. If the order is not matched during the day, the order gets cancelled
automatically at the end of the trading day.

 GTC - A Good Till Cancelled (GTC) order is an order that remains in the system until the
Trading Member cancels it. It will therefore be able to span trading days if it does not get
matched. The Exchange notifies the maximum number of days a GTC order can remain
in the system from time to time.

 GTD - A Good Till Days/Date (GTD) order allows the Trading Member to specify the
days/date up to which the order should stay in the system. At the end of this period the
order will get flushed from the system. Each day/date counted is a calendar day and
inclusive of holidays. The days/date counted are inclusive of the day/date on which the
order is placed. The Exchange notifies the maximum number of days a GTD order can
remain in the system from time to time.

 IOC - An Immediate or Cancel (IOC) order allows a Trading Member to buy or sell a
security as soon as the order is released into the market, failing which the order will be
removed from the market. Partial match is possible for the order, and the unmatched
portion of the order is cancelled immediately.

 AON - All or None orders allow a Trading Member to impose the condition that only the
full order should be matched against. This may be by way of multiple trades. If the full
order is not matched it will stay in the books till matched or cancelled.

Note: Currently, AON and MF orders are not available on the system as per SEBI directives.

4.8 Price Conditions

Limit Price/Order
An order, which allows the price to be specified while entering the order into the system.

Market Price/Order
An order to buy or sell securities at the best price obtainable at the time of entering the order.

Stop Loss (SL) Price/Order

The one which allows the Trading Member to place an order which gets activated only when the
market price of the relevant security reaches or crosses a threshold price. Until then the order
does not enter the market.

Sell order

A sell order in the Stop Loss book gets triggered when the last traded price in the normal market
reaches or falls below the trigger price of the order.

Buy order

A buy order in the Stop Loss book gets triggered when the last traded price in the normal market
reaches or exceeds the trigger price of the order.

E.g. If for stop loss buy order, the trigger is 93.00, the limit price is 95.00 and the market (last
traded) price is 90.00, then this order is released into the system once the market price reaches or
exceeds 93.00. This order is added to the regular lot book with time of triggering as the time
stamp, as a limit order of 95.00.
4.9 Trading Workstation

The trader workstation is the terminal from which the member accesses the trading system. Each
trader has a unique identification by way of Trading Member ID and User ID through which he
is able to log on to the system for trading or inquiry purposes. A member can have several user
ids allotted to him by which he can have more than one employee using the system concurrently.

The Exchange may also allow a Trading Member to set up a network of dealers in different cities
all of whom are provided a connection to the NSE central computer. A Trading Member can
define a hierarchy of users of the system with the Corporate Manager at the top followed by the
Branch Manager and Dealers.

Trader Workstation Screens

The Trader Workstation screen of the Trading Member is divided into several major windows:

Title Bar

The title bar displays the current time, Trading system name and date.

Tool Bar

A window with different icons which provides quick access to various functions such as Market
By Order, Market By Price, Market Movement, Market Inquiry, Auction Inquiry, Snap Quote,
Market Watch, Buy order entry, Sell order entry, Order Modification, Order Cancellation,
Outstanding Orders, Order Status, Activity Log, Previous Trades, Net Position, Online Backup,
Supplementary Menu, Security List and Help. All these functions are also available on the

Ticker Window
The ticker displays information about a trade as and when it takes place. The user has the option
to set-up the securities, which appear in the ticker.

Market Watch Window

The Market Watch window is the main area of focus for a Trading Member. The purpose of
Market Watch is to view market information of pre-selected securities, which are of interest to
the Trading Member.

On line index and Index Inquiry

With every trade in a security participating in Index, the user has the information on the current
value of the Nifty. This value is displayed at the extreme right hand corner of the ticker window.

Index Inquiry gives information on Close, Open, High, Low and current index values at the time
of invoking this inquiry screen.

Market Inquiry (MI)

Market Inquiry enables the user to view the market statistics like Open, High, Low, Previous
close, Last traded price change indicator, Last traded quantity, date and time etc. A user may find
inquiry screens like Market Movement, Most Active Securities and Net Position useful. These
are available in the supplementary menu.

Market Movement (MM)

The Market Movement screen provides information to the user regarding the movement of a
security for the current day. It gives details of the movement of the scrip for a time interval. The
details include total buy and sell order quantity value, Open, High, Low, Last traded price etc.

Most Active Securities

This screen gives a list of the securities with the highest traded value during the day and the
quantity traded for each of them.

Net Position

This functionality enables the user to interactively view his net position for all securities in
which he has traded.

Snap Quote

The Snap Quote feature allows a Trading Member to get instantaneous market information on
any desired security. This is normally used for securities which are not already on display in the
Market Watch window. The information presented is the same as that of Market Watch window.

On line back up

An on line back up facility is provided which the user can invoke to take a back up of all order
and trade related information. There is an option to copy the file to any drive of the computer or
on a floppy diskette. Trading members find this convenient in their back office work.

Off Line Order Entry

A member is able to make an order entry in the batch mode.

Trading options:

Trading options are riskier than futures. This is purely from the options-writer's perspective.
Market making in options depends to a great extent on institutions willing to write the contracts.
Since the buyer of an option contract is not under any obligation to exercise his right, his risk is
limited to the premium paid for purchasing the right.

However, the writer is under an obligation to deliver. This means the risk borne by the option-
writer is enormous. Exchanges normally guarantee the writer's position. Hence, to limit default
in the market, the margin requirements are quite high. For instance, in international markets,
while the margin rate for index futures contracts is around 5 per cent, that for index options
works out to the commission received plus around 15 per cent of the contract's notional value.

Thus, in this situation, there is excessive risk for the options-writer and transactions costs could
be high. Currently, the regulations prevent funds from taking speculative positions in the spot
market. So, they may not be allowed to write options. A market exists only if there is a writer
and a buyer. But given that there are few takers for the futures market, it is difficult to foresee a
lot of interest in the options market.

4.10 Broker and Sub-broker


A broker is a member of a recognized stock exchange, who is permitted to do trades on the

screen-based trading system of different stock exchanges. He is enrolled as a member with the
concerned exchange and is registered with SEBI.


A sub-broker is a person who is registered with SEBI as such is affiliated to a member of a

recognized stock exchange.
4.11 Client Agreement Form

This form is an agreement entered between client and broker in the presence of witness where
The client agrees (is desirous) to trade/invest in the securities listed on the concerned Exchange
through the broker after being satisfied of brokers capabilities to deal in securities. The member,
on the other hand agrees to be satisfied by the genuineness and financial soundness of the client
and making client aware of his (broker’s) liability for the business to be conducted.

 Details of Client Registration form

The brokers have to maintain a database of their clients, for which you have to fill client
registration form. In case of individual client registration, you have to broadly provide following

 Name, date of birth, photograph, address, educational qualifications, occupation,

residential status (Resident Indian/ NRI/others)

 Unique Identification Number (wherever applicable)

 Bank and depository account details

 Income tax no. (PAN/GIR) which also serves as unique client code.

 If you are registered with any other broker, then the name of broker and concerned Stock
exchange and Client Code Number.

 Proof of identity submitted either as MAPIN UID Card/Pan No./Passport/Voter

 ID/Driving license/Photo Identity card issued by Employer registered card.

 For proof of address (any one of the following)

 Passport

 Voter ID

 Driving license

 Bank Passbook

 Rent Agreement

 Ration Card

 Flat Maintenance Bill

 Telephone Bill

 Electricity Bill

 Certificate issued by employer registered under MAPIN

 Insurance Policy
5.1 Student’s work profile (Role and responsibilities)

I am working as a trainee under the guidance of Ms. Gurvinder Kaur. The job profile is to go in
the market to meet with the customers and giving them details about the demat account in which
the company is dealing. I also have to provide relevant information to the customers about the
product. I guide them for various solutions related to demat account. I also sent company’s
representatives to the clients who need more information about his quarries. Many times I store
the data in the computer regarding clients.

5.2 Key Learning

There I was working as a trainee. Some of the key learning is listed below:

 How to interact with the customer and understand the nature of them.

 Some client doesn’t having listened about the product. I have to tell all the features of it.

 Some of them are having negative profile about the product.

6.1 Introduction

The project titled procedures & documentation of “Working of Stock Exchange in India” (With
references to BSE and NSE) is clearly defined & based on systematic research design to meet the
objectives of the study. The logical analysis of various aspects of the data is made to arrive at the
results of the study.

The research process includes the following steps:

 Defining the problem.

 Statement of research objectives.

 Planning the research design.

 Planning the sample.

 Collection of data.

 Analyzing the data.

 Formulation of conclusion.

 Preparation of the report.

6.2 Types of Research

 Exploratory Research

It is done to generate new ideas; respondents should be given sufficient freedom to express

themselves. It is generally based on secondary data that are readily available. Therefore unable to

frame detailed research questions

 Descriptive research

It is undertaken when researcher is interested in knowledge the characteristics of certain groups

such as age; sex; educational level; occupation or income; interested in knowledge the proportion

of it in a given population who have behaved in a particular manner; making the projections of a

certain things; or determining the relationship between two or more variables, descriptive study

may be necessary.

Data Collection Method

Data collection methods can be classified into two methods:

 Primary methods

Data directly collected by a researcher is known as Primary Data. The methods used for

collecting primary data may be:

 Survey

 Observation

Sources of primary data

 Interview methods
 Depth interviews

 Mail interviews

 Telephone interviews

 Delphi technique.

Secondary Methods

Data not originally collected for use in the research project under consideration, but rather for

use by some other person or for some other project are termed secondary data.

It can be classified into two categories:

 Internal Sources

 External Sources

6.3 Research Design

It is a type of blueprint prepared developing on various types of blueprints available for the
collection, measurement & analysis of data. The design of a research study is based on the
purpose of the study.

Types of research design

 Qualitative Research Design.

 Quantitative Research Design.


7.1 Summary of leaming experience

The roles and responsibility whar I was as a trainee. It is not that I constrained myself just
to trainee. I believe in the practical knowledge of the job. The concept is difficult but I
got an opportunity to learn different ways of marketing, It is not easy to handle this
concept but I was never scared because I got training under the guidance of Gurivander
Kaur. In my whole training period I got a chance to work with my various seniors, so it
was a great opportunity for me to improve my knowledge also how to work in selling the
demat account, Here I got the real practical experience how to talk with the customer.

1.2 Conclusation and recommendation

To gain complete knowledge about company & its product. It is very essential to know
every aspect of the company is dealing in which it is dealing. I was not having much
Information about the company and its products, I came to know about the different
benefits of the same, facilities they provide, requirements and demands of customers,
different mindsets of customers and prices of different packages.

• To know what position does it earns in the market

As a trainee, It has been a great pleasure to work with ICICI Bank. All the people at
iCICi Bank are very supported and helpful, They help me every time whenever I require
them. This company earns good reputation In the market of business card There are a
large number of clients of this company

• To be confident while dealing with the customers.

One of the main aims of working there to be confident. Confidence is one of the most
Important things that Is required while dealing with the customers. There are many
types of customers, which comes across while working. We should be very confident.
In order to attract them for our product . Before I feel hesition at the time of meeting
with the customers but after working there I become very cofident in my dealings.

1) Indian securities market

2) NSE News