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“A STUDY OF ONLINE TRADING AND STOCK BROKING” AT ANDHRA PRADESH TECHNOLOGY DEVELOPMENT AND PROMOTION CENTER (APTDC)
A Project report submitted in partial fulfillment For the Award of the
M.B.A (TECHNOLOGY MANAGEMENT)
A.CHINNAPA REDDY Roll No. 08209
Under the Guidance of
Prof. ABBAS ALI
DEPARTMENT OF BUSINESS MANAGEMENT UNIVERSITY COLLEGE OF COMMERCE & BUSINESS MANAGEMENT OSMANIA UNIVERSITY HYDERABAD
I A.CHINNAPA REDDY hereby declare that this Project Report titled “A STUDY OF ONLINE TRADING AND STOCK BROKING” submitted by me to the Department of Business Management, O.U., Hyderabad, is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma / certificate or published any time before.
Name and Address of the Student
Signature of the Student
This is to certify that the project report title “A STUDY OF ONLINE TRADING AND STOCK BROKING” submitted in partial fulfillment for the award of M.B.A Technology Management from Department of Business Management O.U. Hyderabad was carried out by A. CHINNAPA REDDY under my guidance. This has not been submitted to any other University or Institution for the award of any degree/diploma/certificate.
Name and address of the guide
Signature of the guide
I A.CHINNAPA REDDY express my deep sense of gratitude and indebtedness to Sri. K SUBODH KUMAR, Head, CII, APTDC for his guidance and continuous support on this project without whose endeavor the project would not have been completed. I wish to express my heartful thanks to MR. ABBAS ALI project guide of UNIVERSITY COLLEGE OF COMMERCE & BUSINESS MANAGEMNET, OSMANIA UNIVERSITY for rendering his helpful hand in completion of the project.
Objectives and methodology
Findings and Suggestions Conclusion Bibliography
which would link the SHAREKHAN to individual / members. as the exchange has changed it’s trading from the outcry mode to online trading on 20th February 1997. configuration to set the network. • It is to study the functions of SHAREKHAN through various departments. • To know the online screen based trading system adopted by The appropriate SHAREKHAN and about its communication facilities. there is need to assess the performance of the capital market. 6 . OBJECTIVES OF THE STUDY: • It is to analyze the changes in trading after the exchange shifted from outcry to online trading system..CHAPTER-1 OBJECTIVES AND METHODOLOGY NEED FOR THE STUDY: The present study to review the online trading procedure a case study of ONLINE TRADING at SHAREKHAN.
The data collected from the magazines of the NSE. Various books relating to the investments. Secondary method: The secondary data collection method includes: The lecturers delivered by the superintendents of respective departments. 7 . LIMITATIONS OF THE STUDY: The study is confined to online trading procedure only. capital market and other related topics. METHODOLOGY OF THE STUDY: The data collection methods include both primary and secondary collection methods. The brochures and material provided by Sharekhan Securities limited.• To know about the latest and future development in the stock exchange trading system. etc. Problems of listing are not covered due to limited time and to keep the study in manageable limits. economic times. Primary method: This method includes the data collected from the personal interaction with authorized members of Sharekhan Securities limited.
CHAPTER-2 INDUSTRY PROFILE Following diagram gives the structure of Indian financial system: 8 .
These markets are the centers that provide 9 .FINANCIAL MARKET: Financial markets are helpful to provide liquidity in the system and for smooth functioning of the system.
facilities for buying and selling of financial claims and services. According to functional basis financial markets are classified into two types.g. E. Again the capital market is classified in to two types and they are Primary market and Secondary market. The unorganized market is composed of indigenous bankers. treasury bills. MONEY MARKET: Money market is a place where we can raise short-term capital. Again the money market is classified in to Inter bank call money market Bill market and Bank loan market Etc.. 10 . CAPITAL MARKET: Capital market is a place where we can raise long-term capital. The financial markets match the demands of investment with the supply of capital from various sources. commercial papers. They are Organized financial market Non-organized financial market. moneylenders. bank and government (SEBI) registered/controlled activities and intermediaries. CD's etc. individual professional and non-professionals. The organized market comprises of official market represented by recognized institutions. They are: Money markets (short-term) Capital markets (long-term) According to institutional basis again classified in to two types.
Banker to the issue 6. Primary market is also referred to as New Issue Market. Origination deals with the origin of the new issue.E. The primary market is regulated by the Securities and Exchange Board of India (SEBI a government regulated authority). for new projects as also for expansion. Function: The main services of the primary market are origination. Adviser to the issue 5. The following are the market intermediaries associated with the market: 1. Underwriter/broker to the issue 4.g. PRIMARY MARKET: Primary market is generally referred to the market of new issues or market for mobilization of resources by the companies and government undertakings. The principal ingredients of investors’ protection are: Provision of all the relevant information 11 . bonds. further and right issues to existing shareholders. Distribution refers to the sale of securities to the investors. Depository 7. Debentures.: Shares. the investing public should be protected. addition. Depository participant Investors’ protection in the primary market: To ensure healthy growth of primary market. Underwriting contract make the shares predictable and remove the element of uncertainty in the subscription. modernization. and Loans etc. and distribution. Primary market operations include new issues of shares by new and existing companies. Merchant banker/book building lead manager 2. diversification and up gradation. public offers. and issue of debt instruments such as debentures. underwriting. Registrar and transfer agent 3. The term investor protection has a wider meaning in the primary market. etc.
Listing of scrip’s provides liquidity and offers an opportunity to the investors to buy or sell the scrip’s. More the number of companies entering the primary market. It is a market place which provides liquidity to the scrip’s issued in the primary market. Share transfer agent 5. National Stock Exchange of India and Interconnected Stock Exchange of India. Outstanding securities are traded in the secondary market. Depository participants. “The secondary market is a market where scrip’s are traded”. Investment advisor 4. Portfolio Manager 3. the growth of secondary market depends on the primary market. Provision of accurate information and Transparent allotment procedures without any bias. The following are the intermediaries in the secondary market: 1. Trading activities in the secondary market are done through the recognized stock exchanges which are 23 in number including Over The Counter Exchange of India (OTCE). Secondary market operations involve buying and selling of securities on the stock exchange through its members. STOCK MARKETS IN INDIA: 12 . Depository 6. Broker/member of stock exchange – buyers broker and sellers broker 2. the greater are the volume of trade at the secondary market. SECONDARY MARKET The primary market deals with the new issues of securities. The companies hitting the primary market are mandatory to list their shares on one or more stock exchanges in India. which is commonly known as stock market or stock exchange. Thus.
Definition of a stock exchange: “Stock exchange means any body or individuals whether incorporated or not. a number of stock exchanges were organized. Government securities are traded outside the trading ring in the form of over the counter sales or purchase. Government securities. In the stock market. On the basis of the committee’s recommendations and public discussion. The bargains that are struck in the trading ring by the members of the stock exchanges are at the fairest prices determined by the basic laws of supply and demand. These were organized as voluntary non-profit-marking associations of brokers to regulate and protect their interests. Before the control on securities under the constitution in 1950.” The securities include: Shares of public company. constituted for the purpose of assisting.Stock exchanges are the perfect type of market for securities whether of government and semi-govt bodies or other public bodies as also for shares and debentures issued by the joint-stock companies. During the war boom.Gorwala went into the bill for securities regulation. Soon after it became a central subject. regulating or controlling the business of buying. 13 . it was a state subject and the Bombay securities contracts (control) act of 1925 used to regulate trading in securities. Bonds History of Stock Exchanges: The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and Ahmedabad set up in 1894. the securities contract (regulation) act became law in 1956. Under this act. the Mumbai stock exchange was recognized in 1927 and Ahmedabad in 1937. selling or dealing in securities. purchases and sales of shares are affected in conditions of free competition.D. central legislation was proposed and a committee headed by A.
trust and local bodies have obtained from the public their financial requirements. diversification and modernization. Act. the central and state government have raised crores of rupees by floating public loans. public investment is increased and companies were able to raise more funds. By obtaining the listing and trading facilities. Municipal corporations. Bangalore Stock Exchange Bhubaneshwar Stock Exchange Association Calcutta Stock Exchange Cochin Stock Exchange Ltd. Various Stock Exchanges in India: At present there are 23 stock exchanges recognized under the securities contracts (regulation).the backbone of the country’s economy-have secured capital of crores or rupees through the issue of stocks. 1956. Those are: Ahmedabad Stock Exchange Association Ltd. The quoted companies with wide public interest have enjoyed some benefits and assets valuation has become easier for tax and other purposes. they help trading and raise funds from the market. Over the hundred and twenty years during which the stock exchanges have existed in this country and through their medium. shares and debentures for financing their day-to-day activities.Functions of Stock Exchanges: Stock exchanges provide liquidity to the listed companies. trade and commerce. Coimbatore Stock Exchange Delhi Stock Exchange Association Guwahati Stock Exchange Ltd 14 . organizing new ventures and completing projects of expansion. By giving quotations to the listed companies. and industry.
Saurashtra Kutch Stock Exchange Ltd. Jaipur Stock Exchange Ltd Kanara Stock Exchange Ltd Ludhiana Stock Exchange Association Ltd Madras Stock Exchange Madhya Pradesh Stock Exchange Ltd. Mumbai Stock Exchange National Stock Exchange of India OTC Exchange of India Pune Stock Exchange Ltd. NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. Based on the recommendations.Hyderabad Stock Exchange Ltd. Magadh Stock Exchange Limited Meerut Stock Exchange Ltd. Out of these major stock exchanges were: NSE (National Stock Exchange) The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. On its recognition as a stock exchange under 15 . which recommended promotion of a National Stock Exchange by financial institutions (FI’s) to provide access to investors from all across the country on an equal footing. Uttar Pradesh Stock Exchange Association Vadodara Stock Exchange Ltd.
Ensuring equal access to investors all over the country through an appropriate communication network. even older than the Tokyo Stock Exchange. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. Mumbai. and Meeting the current international standards of securities markets. The standards set by NSE in terms of market practices and technology. have become industry benchmarks and are being emulated by other market participants. It's that force which is guiding the industry towards new horizons and greater opportunities. popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". Enabling shorter settlement cycles and book entry settlements systems. 1956 in April 1993. It has evolved over the years into its present status as the premier Stock Exchange in the country. The NSE was set-up with the main objectives of: • • • • • Establishing a nation-wide trading facility for equities and debt instruments. It is the oldest one in Asia. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. which was established in 1878.the Securities Contracts (Regulation) Act. BSE (Bombay Stock Exchange) The Stock Exchange. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act 16 . NSE is more than a mere market facilitator. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000 NSE's mission is setting the agenda for change in the securities markets in India. Providing a fair. efficient and transparent securities market to investors using electronic trading systems.
who are from the broking community (one third of them retire ever year by rotation). matters regarding annulment of transactions. It also strives to educate and enlighten the investors by conducting investor education programmers and making available to them necessary informative inputs. A Governing Board having 20 directors is the apex body. debt and derivatives upholds the interests of the investors and ensures redresses of their grievances whether against the companies or its own member-brokers. etc. three SEBI nominees. norms. while providing an efficient and transparent market for trading in securities. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authority. three SEBI nominees or public representatives. 17 . The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange and the Chief Operating Officer and other Heads of Department assist him. consisting of three elected directors. an Executive Committee. The Exchange has inserted new Rule No. The Governing Board consists of 9 elected directors. fees. six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer. continuance and suspension of member-brokers. admission. Accordingly. margins and other monies payable by the memberbrokers to the Exchange. deposits.The Exchange. which decides the policies and regulates the affairs of the Exchange.1956. declaration of a memberbroker as defaulter.126 A in its Rules. Byelaws pertaining to constitution of the Executive Committee of the Exchange. Executive Director & CEO and Chief Operating Officer has been constituted. procedures and other matters relating to arbitration.
1956” and “Securities Exchange Board of India 1952”. He should not be engaged in any other business connected with a company. He should not be convicted for fraud or dishonesty. • • SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) The securities and exchange board of India was constituted in 1988 under a resolution of government of India. He should not be a defaulter of any other stock exchange.according to this act. The minimum required education is a pass in 12th standard examination. OBJECTIVES AND FUNCTIONS OF SEBI 18 . It was later made statutory body by the SEBI act 1992. Three tier regulatory structure comprising Ministry of finance The Securities And Exchange Board of India Governing body Members of the stock exchange: The securities contract regulation act 1956 has provided uniform regulation for the admission of members in the stock exchanges. the SEBI shall constitute of a chairman and four other members appointed by the central government. 1992 some of the powers and functions exercised by the central government.REGULATORY FRAME WORK OF STOCK EXCHANGE A comprehensive legal framework was provided by the “Securities Contract Regulation Act. The qualifications for becoming a member of a recognized stock exchange are given below: • • • • • The minimum age prescribed for the members is 21 years. He should be an Indian citizen. in respect of the regulation of stock exchange were transferred to the SEBI. With the coming into effect of the securities and exchange board of India act. He should be neither a bankrupt nor compound with the creditors.
Prohibiting insider trading in securities. public representatives and government representatives to the extent of 50% of total number of members. ‘buy Reliance Petroleum at Rs. Limit orders: Orders are limited by a fixed price. It may be lowest rate for buying and highest rate for selling. Registering and regulating the working of intermediaries associated with securities market as well as working of mutual funds. exchanges depending upon their turnover of trade and other • All recognized stock exchanges will have to inform about transactions within 24 hrs.’Here.g. Best rate order: Here. • • • • • SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES): • Board of Directors of Stock Exchange has to be reconstituted so as to include non-members. Performing such functions and exercising such powers under the provisions of capital issues (control) act. Promoting and regulating self-regulatory organizations. 1947and the securities to it by the central government. the order has clearly indicated the price at which it has to be bought and the investor is not willing to give more than Rs. The orders are of different types.50.50. Regulating substantial acquisition of shares and take over of companies. Regulating the business in stock exchanges and any other securities market. the buyer or seller gives the freedom to the broker to execute the order at the best possible rate quoted on the particular date for buying.• • To protect the interest of investors in securities. E. 19 . • Capital adequacy norms have been laid down for the members of various stock factors. TYPES OF ORDERS: Buy and sell orders placed with members of the stock exchange by the investors.
In this physical trading form. once the broker gets the share certificate through the clearing houses he delivers the share certificate along with transfer deed to the investor.’C’. the broker is authorized to sell the shares to prevent further loss. Once matching order is found. The Z group scrips are of the blacklisted 20 . A particular limit is given for waiting. The broker can use his discretion to buy within the specified limit. stop loss at Rs. Sell BRC limited at Rs.’B2’.22. number of shares bought. E. which are in the carry forward system. The broker then delivers the contract note to the investor. the broker effects the payment to the investor. Generally the approximation price is fixed. The stamp duty is one of the percentage considerations.g.24.’F’ and ‘Z’ groups. The order may be of any type. The ‘F’ group represents the debt market segment (fixed income securities). It gives the details regarding the name of the company. and the date of delivery of share. The investor should be account holder in any of the depository participant. In the case of sale of shares on receiving payment from the purchasing broker. After receiving the order the broker tries to execute the order in his computer terminal. price. The order stands as this “buy BRC 100 shares around Rs. Share groups: The scrips traded on the BSE have been classified into ‘A’. the broker has to give a matching instruction to his depository participant to transfer shares bought to the investors account. brokerage. Buying and selling shares: To buy and sell the shares the investor has to locate register broker or sub broker who render prompt and efficient service to him.40”.’B1’.Discretionary order: The investor gives the range of price for purchase and sale. If the price falls below the limit. If it is bought in the DEMAT form. The investor has to fill the transfer deed and stamp it. The ‘A’ group represents those. the investor should lodge the share certificate and transfer deed to the register or transfer agent of the company. The order to buy or sell specifying the number of shares of the company of investors’ choice is placed with the broker. the order is executed. Stop loss order: The orders are given to limit the loss due to unfavorable price movement in the market.
00 am. ROLLING SETTLEMENT SYSTEM: Under rolling settlement system. Share settlement is likely to be completed much sooner after the transaction than under the fixed settlement system. The shares bought and sold are paid in for n days after the trading day of the particular transaction. A rolling period which offers a large number of days negates the advantages of the system. Automated Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme (BELSS) with effect from Dec 31. the settlement period is n days after the trading day. 2001.e. Generally longer settlement periods are shortened gradually. the settlement takes place n days (usually 1. A provision of an exception window would be available for late confirmation. Depository participants accept the instructions for pay in securities by 21 . 2. The ‘C’ group covers the odd lot securities in ‘A’. SEBI has introduced T+5 rolling settlement in equity market from July 2001 and subsequently shortened the cycle to T+3 from April 2002. SEBI made RS compulsory for trading in 10 securities selected on the basis of the criteria that they were in compulsory demat list and had daily turnover of about Rs. After the T+3 rolling settlement experience it was further reduced to T+2 to reduce the risk in the market and to protect the interest of the investors from 1st April 2003. The exchanges/clearing house/ clearing corporation would process and download the obligation files to the broker’s terminals late by 1.1 crore or more. Then it was extended to “A” stocks in Modified Carry Forward Scheme.m on T+1. ‘B1’&’B2’ groups. 3 or 5days) after the trading day. The rolling settlement system is noted by T+N i.30 p.companies. The time limit and the additional changes for the exception window are dedicated by the exchange. Activities on T+1: conformation of the institutional trades by the custodian is sent to the stock exchange by 11.
Sharekhan provides the facility to trade in commodities through Sharekhan Commodities Pvt. Sharekhan is the member of two major commodity exchanges MCX and NCDEX. Sharekhan offers the trade execution facilities for cash as well as derivatives.m. the SSKI group also comprises of institutional broking and corporate finance. The buy and sale positions in the same scrip can be settled and net quantity has to be settled. Activities on T+2: The depository permits the download of the paying in files of securities and funds till 10. an organization with over eighty years of experience in the stock market with more than 280 share shops in 120 cities and big towns.Ltd-a wholly owned subsidiary of its parent SSKI.30 p. The exchange/clearing house/clearing corporation executes the pay-out of securities and funds latest by 1. depository services.m for same day processing. India’s leading stock broker is the retail arm of SSKI. In the demat mode net basis settlement is allowed. and premier online trading destination www.m on T+2 from the brokers’ pool accounts. SHAREKHAN Sharekhan.m and in electronic form upto 6 p.sharekhan. the depositories accept from other DPs till 8p.00am/on T+2. investment advice tempered by eighty years of broking experience. The institutional broking division caters to domestic and foreign institutional investors. SSKI Apart from Sharekhan. while the corporate finance division focuses 22 . on BSE and NSE.investors in physical form upto 4 p.m on T+2 to the depositories and clearing banks.30 a. The depository processes the pay in requests and transfers the consolidated pay in files to clearing House/clearing Corporation by 11. commodities trading on the MCX(Multi Commodity Exchange of India Ltd) and NCDEX (National Commodity and Derivative Exchange) and most importantly.com.
twice by Euromoney survey and four times by Asia money survey.on niche areas such as infrastructure. First Caryl and Intel Pacific. CHAPTER-3 PROJECT ANALYSIS OUTCRY SYSTEM 23 . telecom and media. SSKI has been voted as the top domestic brokerage house in the research category. SSKI owns 56% in Sharekhan and the balance ownership is HSBC.
If he is not satisfied with the quote price. • • In audibility was another disadvantage of the outcry system. In the trading ring the space is provided for specified and non-specified sections. Basically the brokers shout while buying or selling the securities. he may turn to some other dealer. the price agreed upon. MANUAL TRADING Trading procedure before introduction of online trading Trading on stock exchanges is officially done in the trading ring. the dealer as well as the broker makes a brief note of the particulars of the deal. Due to the above disadvantages of the outcry system the SHAREKHAN has shifted from outcry system to online trading from February 29th 1997. he quotes his purchase or sale price. speculation and mal practice is more. are noted. quotes his own price when the quotation of the dealer suits the broker. On the close of the bargain. For this. what membership number etc. the broker using ‘open outcry’ method makes an offer or bid price. In the post pit or wing. Such notes are made on some pad and on it the number of shares. he may loose the bargain. the broker or his authorized representatives goes to the stock exchange. This method is called the open outcry system. the members and their authorized assistants have to wear a badge or carry with 24 .. The floor of the stock exchange is divided into a number of markets also known as ‘post pit’ or wing based on particular securities dealt there. to whom the price is quoted. DISADVANTAGES OF OUTCRY SYSTEM: • • • It lacks transparency. also known as offer or bid price. the name of the party. For making the necessary bargain. Signal were more important in the outcry system any member who could not interpret the buy/sell signal correctly often landed himself in disaster situation.The broker has to buy or sell securities for which he has received the orders. The scope of manipulation. The dealer.
duly authorized by the exchange and carry a pen with them. They carry a sauda Block Book or conformation memos. Immediate or Cancel Order. The orders may take any one of the forms such as At Best Orders. both broker and jobber make a note in their sauda block books. The stock exchanges operations are floor level are technical in nature . have to act through member brokers only. Stop Loss Order.them an identity card given by the exchange to enter the trading ring. Limited Discretionary Order. From the sauda book. and a special one-hour session on Saturday. They carry a sauda book or confirmation memos.M on all working days Monday to Friday. To avoid delay. telephone. who wants to placing order for the purchase or sale of securities with a broker. The order is usually placed by telegram.The steps involved in this method of trading have given below: Choice of broker: sell shares and transact business. This in a purchase transaction. Drawing Up and Bills: Both sale and purchase bills are prepared along with the contract note and it is posted on the same day or the next day. Execution of order or contract: Orders are executed in the trading ring of the BSE. 25 . the contract notes are drawn up and posted to the client. and Open Order.Non-members are not permitted to enter in to stock market. This works from 11:30 to 2. Placement of order: The next step is the The prospective investor who wants to buy shares or the investors. which are duly authorized by the exchange when the deal is struck. The members or the authorized assistants have to wear a badge given by the exchange to enter into the trading ring. fax etc or in person. Limit Order. it is placed generally over the phone. letter. Hence various stages have to be completed in executing a transaction at a stock exchange . They can also appoint their bankers for this purpose as per the present regulations. A contract note is written agreement between the broker and his clients for the transaction executed.30 P.
This list is steadily increasing. Investor’s willing to exercise this option sends a Demat request along with the option letter sent by the company to his DP. Most of the active scrip’s in the market including all the scrip’s of S&P CNX NIFTY and BSE SENSEX have already joined NSDL. including other expenses incurred by the broker in the price itself. the process is as follows: after completion of transfer. Dematerialization normally takes about fifteen to thirty days. The investor has to ensure that he marks “Submitted for Dematerialization” on the certificates before the shares are handed over to the DP for demat. DEMATERLIZATION: Dematerialization is the process by which physical certificates of an investor are converted to an equipment number of securities in electronic from and credited in the investor account with his DP. To get back dematerialized securities in the physical form. 26 . the investor gets the option to dematerialize such shares. the process ends. The company or its R&T agent would confirm the Demat request on its receipt from the DP to reduce risk of loss in transit. which are already registered in your name and belong to the list of securities admitted for Dematerialization at NSDL. which is DP and submit the same along with the share certificates. Dematerialization can only be done to those certificates. These shares are fungible-which means that 100 shares of a security are the same as any other 100 shares of the security. a bill is made out giving the total cost of purchase. request DP for Rematerialization of the same is made. Briefly. an investor has to first open an account with a DP and then request for the Dematerialization Request Form.once the shares are delivered to the client effects payment for the purchases and pays the stamp fees for transfer. Dematerialized shares do not have any distinctive or certificate numbers. With this. Odd lot shares certificates can also be dematerialized. In order to dematerialize the certificates.
ubiquitous links to anyone anywhere and anytime to build up interactive relationships. self-governed network connecting several other smaller networks and millions of computers and persons. 1) What is Internet? Internet is a worldwide. It allows direct. 27 . accelerating the pace of business reforms and revolutionizing the way companies are managed. • direct credit. ONLINE TRADING Before getting in to the online trading we should know some things about the internet. • In case of transfer of electronic shares. • dematerialized securities as against 50% for loans against physical securities. Benefits of Demat: • It reduces the risk of bad deliveries. in turn saving the cost and wastage of time associated with follow up for rectification. • Demat shares as compared to loans against physical shares. Internet or net is an interconnection of computer communication networks spanning the entire globe. to mega sources of information.5% in stamp duty. A combination of time and space. e-commerce and etc. You can receive your bonuses and rights issues into your DA as a You can also expect a lower interest charge for loans taken against There is no lost in transit. called the Internet promises to bring unprecedented changes in our lives and business. you save 0.Rematerialization is the process of converting electronic shares in to physical shares. thus the overheads of getting a duplicate RBI has also reduced the minimum margin to 25% for loans against You avoid the cost of courier / notarization. • copy in such circumstances is reduced. This technology shrinks vast distances. this eliminating risk of loss in transit. This has lead to reduction in brokerage to the extent of 0.5% by quite a few brokerage firms.
com age. It manages the resources of the computer system in a fair and efficient manner. banking. It has re-defined the methods of communication. visit to shopping arcades. games. In India. E-commerce refers to the paperless exchange of business information using electronic data inter change. the various operating systems are the most basis program within a computer. It helps conduct traditional commerce through new way of transferring and processing of information. Internet can change the nature and capacity of stock broking business in India. It is expected to bring changes in every functional area of business activity including management and financial services. 2. commerce and what not it is virtually changing every thing and we are living in dot. in cyber space even the information can be copied. etc. growth of Internet is of recent times. education. trade. The computers are either workstations of individual office works or serves where large databases and information reside. health. Network connects both categories of computers. It not only reduces manual processes and paper transactions but also helps organization move to a fully electronic environment and change the way they operated. business. 28 .crossing all geographical boundaries. downloaded and retransmitted. It offers stock trading at a lower cost. The use of Internet has grown 2000 percent in last decade and is currently growing at 10 percent per month. enables participation by individuals in business to business and business to consumer commerce. E-commerce Electronic commerce is associated with buying and selling over computer communication networks. PC’s and networking attempts to introduce banks of the tools and technologies required for electronic commerce. leisure. electronic technologies. Net being an interactive two way medium. work study. through various websites. Information is electronically transferred from computer to computer in an automated way. Now we can enter in to the concept known as online trading.
The actual definition of “Online Trading” is as explained below: “Online trading is a service offered on the internet for purchase and sale of shares. market research and news. tax planning. Now information has become easily accessible to both retail as well as big investor. The net brings data to the investor on-line and net broking enables him to trade on a click of mouse. EVOLUTION OF BROKING IN INDIA: The evolution of a broking in India can be categorized in three phases • Stockbrokers will offer on their sites features such as live portfolio manager. • Brokers (now e-brokers) will offer value management or services like initial public offering online.e. In the real world you place orders on your stockbroker either verbally (personally or telephonically) or in a written form (fax). • Brokers will offer online broking and relationship management by providing and offering analysis and information to investors during broking and non-broking hours based on their profile and needs. In India: Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. Orders are communicated to the stock exchange through website. The net is used as a mode of trading in internet trading. The SEBI committees on internet based 29 . customized services. you will access a stockbroker’s website through your internet enabled PC and place orders through the broker’s internet based trading engine. to attract more investors. i. financial planning.” In online trading.In the past. insurance services. etc. investors had no option but to contact their broker to get real time access to market data. and enables the investors to take better and well considered decisions. on-line asset allocation. live quotes. These orders are routed to the stock exchange without manual intervention and executed thereon in a matter of a few seconds. etc. portfolio management.
Registration for on-line trading with broker 5. quantity. so as to handle growing volumes easily and to support nationwide expansion of market activity. these are: • • • Investor protection Creation of a fair and efficient market. Some of the brokers offering net trading include ICICI direct. price buy/sell) on broker’s site. etc. Compliance with SEBI guidelines for net trading The following should be produced to get a demat account and online trading account: 30 . Provide management information system. Objectives: Internet trading is expected to • Increase transparency in the markets. kotakstreet. Introduce flexibility in system. • Reduce settlement risks due to open trades. by increasing quote continuity and market depth. and Reduction of the systematic risks. Under the ORS the client enters his requirements (security. through internet trading three fundamental objectives of securities regulation can be easily achieved. Depository account 7.securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. • • Besides. Installation of a modem 3. • Enhance market quality through improved liquidity. Requirements for net trading: For investors: 1. by elimination of mismatches. A bank account 6. Installation of a computer with required specification 2. Telephone connection 4.
Setting up a website. Permission from stock exchange for net trading 2. The net is used as a medium of trading in internet trading. and buy/sell) in broker's site. Communication of order (trade confirmation to investor by e-mail) 7. For stock brokers: 1. Net worth of Rs. price. 50 lac 3. Adequate back-up system 4. Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. They are checked electronically against the clients account and routed electronically to the appropriate 31 . which are necessary • • First page of the bank pass book and last 6 months statement. Issue of contract notes within 24 hours of the trade execution 9. The SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Use of authentication technologies 8. Adequate. Orders are communicated to the stock exchange through website. Under the Order Routing System the client enters his requirements (security. Bank manager’s signature along with bank’s seal. quantity. Secured and reliable software system 5. manager registration code on photograph. experienced and trained staff 6.As identity proof & address proof any one of the following: 1) 2) 3) 4) 5) 6) Voter ID card Driving license PAN card( in case of to trade more than 50000) Ration card Bank pass book Telephone bill Other requirements.
Thus. Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit. Step 6: The investor will receive an "Order Confirmation" message along with the order number and the value of the order. Step 5: After the review has been satisfactory. for which there are different mode. (b) Second. Step 3: Actual placement of an order. a time lag of about 10 seconds is there in executing the trade. should approach the brokers and get them self registered with the Stock Broker. He should also have demat account and bank account. He may also re-set to clear the values. The customer's portfolio and ledger accounts get updated to reflect the transaction. the broker will provide to them a Login name. The system permits only a registered client to log in using user id and password. an appropriate message will appear at the bottom of the screen. The client receives a confirmation on execution of the order.e. An order can then be placed by using the place order window as under: (a) First by entering the symbol and series of stock and other parameters like quantity and price of the scrip on the place order window. Password and personal identification number (PIN). Step 2: After registration.exchange for execution by the broker. the investor has to review the order placed by clicking the review option. series and the default quantity. the order has to be sent by clicking on the send option. At present. The user should have the user id and password to enter into the electronic ring. Some brokers will take some advance payment from the investor and will fix 32 . who are interested in doing the trading over internet system i. Step 4: It is the process of review. Step 8: It is regarding charging payment. Procedure for net trading Step 1: Those investors. Order can be placed using place order window of the website. NEAT-IXS. fill in the symbol.
Instant feedback is available about the execution. only the broker knew the actually transacted price. • • • • News and research report BSE and NSE movements Stock analysis IPO and mutual fund centers Step by step procedure in online trading: 2) Following steps explain the step by step approach to on-line trading: 3) Log on to the stock broker's website 4) Register as client/investor 5) Fill the application form and client broker agreement form on the requisite value stamp paper 6) Obtain user ID and pass word 7) Log on to the broker's site using secure user ID and password 8) Market watch page will show real time on-line market data 9) Trade shares directly by entering the symbol or number of the security 10) Brokers server will check your limit in the on-line account and demat account for the number of shares and execute the trade 11) Order is executed instantly (10-30 seconds) and confirmation can be obtained. Confirmation and execution of trade reaches the investor within the least possible time. 12) Confirmation is e-mailed to investor by broker 33 . Screen based trading provides more transparency.their trading limits. Some of the websites also offer. mostly within 30 seconds. Internet trading provides total transparency between a broker and an investor in the secondary market. When the trade is executed. With online trading investors can see themselves the price at which the deal takes place. In the open outcry system. The time gap has narrowed in every stage of operation. the broker will ask the investor for transfer of funds to his account.
Market orders: orders can be filled at unexpected prices. Companies can establish themselves according to their gains and losses. since you have to buy stock at the given price. Being online does not identify the size of any particular organization. 2) Online trading has let room for smaller organizations to compete with multinational organizations since it is no longer a leg it issue. for instance where tax (sales and value added taxes) is best suited to them. 4) Online trading gives control to individuals and they can exercise it over accounts thus comprehend what is going on when they trade. this additional power to the underdogs. Cash account: where funds have to be available prior to placing the order. but there is an extra Charge for this leeway facility since one need to hold a price. Margin account: where orders can be placed against stocks. 34 . 3) Online trading has allowed companies to locate themselves where they want as physical location is not an issue anymore. ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS: 1) Limit / stop orders: orders that can be go unfilled. to increase Purchasing power. therefore. It is like going back to school and re-educating oneself on how to trade online. but this type is much more risky.13) Contract note is printed and mailed in 24 hours 14) Settlement will take place automatically on the settlement day 15) Demat account and the bank account will get debited and credited by electronic means. 2) 3) 4) ADVANTAGES OF ONLINE TRADING: 1) Online trading has made it possible for anyone to have easy and efficient access to more reports and charts than it was previously possible if one went to any brokers' office. Thus we have access to a lot more information online.
fast. and can create their own portfolio. unlike earlier when people bought bonds. can make their own decisions and don’t have to give reasons for their actions. government. and convenient. and even insurance. 5) 6) It will give investors a greater choice and better realization. mutual funds. Individuals can invest in a variety of products. 2) 3) 4) They have a reason to participate in the market and learn about it. stock and index options mutual funds. A lot of information is online so they can keep up-to-date with what is happening in the trading world. which have better trading conditions and also members to offer them better facilities. The immediate impact will be competition and benefits will accrue to the investors. 9) They have access to numerous tools to invest. 8) Investors will now go to place. 7) It will lead to brokerage commissions going down and brokers striving to increase business afloat. easy. HERE ARE THE POSSIBLE DISADVANTAGES: 35 . and stock for long-term basis and sat on them. cheap.5) Individuals’ benefit by saving comparatively a lot more when trading online as the cost per trade is less. Now they can invest in stocks. It is interesting. 6) INVESTORS REASONS TO TRADE ONLINE: 1) They have control over their accounts. They are independent.
2) Individuals are restricted to first-hand financial guidance. his trade goes through a broker. 7) There is a need for more effective communication links over the Internet and the ability of the server to deal with a large volume of visitors. carried away online and begins to trade for too much which causes losses for him / her. the more one trades the less returns one gets. 4) 5) One has no idea with whom he is dealing with on the other end. especially when you are trading internationally. It seems that the middleman has been removed. there will be problems and delays due to a large influx of rapid online trading criteria. This simply means that the individual is himself / herself alone to. 3) A tax (sales tax and value added tax) evaluation becomes an issue. 6) Individuals think that they are trading with the market directly and know what they are doing. the basic rules of trading are the same. According to a study conducted by Mary Rowland. careful investor: is online trading bad for your portfolio. TRADING AND SETTLEMENT AT SHARE KHAN 36 . but that is not so. but the truth is that even though technology has taken over. meaning that an addicted trader gets.1) When network crashes. The commissions online pertain to the intermediary. When the individuals click on the mouse.
. TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING Share Khan deals in buying and selling equity shares and debentures on the National Stock Exchange (NSE). CTS will reject the orders and send respective error message to the member concern. Share Khan is provided with a computer and required software from their registered stock exchanges. auction orders etc. orders. in-house deals. The Online trading system imparted a greater level of transparency and investors preferred exchanges that offered Online trading because of the following factors: • The ease of operation from the view of the both members and the investors. Facilities better monitoring of the market by the exchange. through the computer. The main objective of CTS is to monitor the Stock Exchanges operations. 37 . These centers are called “Broker Work Stations”. If there is any mistake in the order. The Central trading system (CTS) will accept these orders and send it for match. the Bombay Stock Exchange (BSE) and the Over-The-Counter Exchange of India (OTCEI).The NSE first introduced online trading in India. The best price achieved in buying and selling. • • • All these resulted in ever-increasing volumes on the exchanges offering the online trading. deals. Increase in the confidence of the investors because of higher level of transparency. negotiations. These computers are connected to the server at the stock exchanges through cable. All these operations are in built. The member or broker sitting in his office can send the quotations.
Trader-wise. market summary etc. to 3:30 P. the order will not cancel. previous day’s closing price. information about liquidated companies. Monday to Friday is the trading period in all the stock exchanges.Order placed by the broker will be sent for a match and if the match is found suitable. the order will be deleted automatically after completion of trading time. The carry forward transactions (Good Till cancellation) are forwarded to the next day. the transaction will be executed. Even if the match is not found with in the prescribed period. Brokers are also provided with information relating to the companies in the matter of Book closure. These include top gainers /losers of the day. Other information will be available on query from the BWS. BROKER WORK STATION: At the broker workstation the BBO’s. the day‘s opening price. as the BBO for each scrip. SEBI has stipulated that all the stock exchanges in India must have same trading period. the last traded price. highest and lowest prices. TRADING SESSION Trading timings are from 9:55 A. resolutions in board meeting. Otherwise.M. top scrip by the volume/value. 38 . Dividend declarations. ORDERS: Orders can be done one at a time or in a batch mode. company report etc. on all 5 days of the trading period.M. client wise net position. scrip wise net position. the weighted average price and total trade value will be available continuously.
when such match is found a trade gets executed. If the correct match is not found. which fits the requirement of the buy order. If Accepted at the CTS it will be added to the local pending order book. For example if a member wants to purchase 1000 shares of satyam info @ 400 each through Good for Day order. Good till cancellation: This order is forwarded to the last trading day of that settlement period. broker has to select the option of GTC for the order. Orders sent by the brokers are two types: 1) Good for the day (GFD) 2) Good till cancellation(GTC) Good for the day: This is also called as “market order”. Both these traders are informed of the trade being executed at their respective BWS. This is also called as carry forward order like GFD. The order will then be taken up for matching. If the match is not found then after trade time the order gets cancelled that day. Each trade involves two brokers and respective traders who sent the order. At the BWS the trade is added to the local trade book. after validation if it finds any invalid reason the order is return back to the BWS. the order is executed. with the appropriate error message. the order is cancelled on the last day of settlement period. If no match is found. This order is not carried forward to the next settlement period. If the order finds match with in the trading settlement period.The submitted order will be accepted at the CTS. order gets cancelled automatically and new quotation has to be placed the next day. 39 . If a “best bid” founds match with “best order” then the transaction gets executed. the order is treated as market order. Next day he has to place a new order. For an order if the member selects the deal as good for the day. if it is a buy order the system tries to find a sell order.
DETAILS OF PROCEDURES: Delivery in : The members who are in pay-out position delivers share certificates in to clearing house within the settlement period along with the delivery Chelan filled in with the details of share certificates which has folio numbers or distinctive numbers etc. The buyer then fills up the certificates fills up the particulars in the transfer deed. Spot settlement: under this method. Finally. Rolling settlement: Under this rolling settlement the trading is on “T+2”. Settlement can be done in the following way.basis i. 40 . In case on non-delivery. if a member a place purchase order of 500 shares of SBI @ 690 per share and selects the order as GTC and place an order. the settlement is made by means of delivering the share certificates along with the transfer deeds. It bears a stamp of the selling broker.For example. the securities will go for auction. Delivery out: The buyer of shares who made pay in position will take delivery of shares from the clearing house. If the match is not found on that day it will be forwarded to the next day until trading settlement period day. Buyers will take the delivery of shares through the depository participants like SHARE KHAN and others. if Monday is trading day then Wednesday is the paying day . SETTLEMENT OF TRANSACTIONS: Clearing of transaction in the form of shares and cash is called settlement. the delivery of securities and payment for them are affected on the day of the contract itself. The transferor (or the seller) duly signed transfer deed.e.
All disputes arising between members regarding non-deliveries.Pay-in: The member who is in paying position shall pay for value of shares with in the trading settlement period (T+2). good and bad deliveries pertaining to the settlement will be settled by the settlement committee of the exchange. nonpayments. The given flow chart clearly explains the process of online trading: 41 . Payout: The cheques paid in the clearinghouse will be paid to members who are in paying position.
L o g i n B T h e s y l i m u y t r a n w s c i l l c a t S i o e nl l T h e h de pc t r a n s c a t i o n s t e m i t s s y s t e m w i l l c h e k a c b c u o y u i nn gt q u a n t i t O r d e r s a c c e p t e d c R e j e c t e d o m m u n i c o r d e or s r dw a t e d a l o n e o r u s l d a bc e c g w i t h e p t r e a s o y o u r o r d e r i s t r a n s m i t t e d t o e p w e n d i n g b u y o no r e d x e e r c s u o u l d b e d oi s f p y l a o y u e r d o o n y o u r s c r e e n s e l l o r d t pi o e n n d i n g b e d i s p l a r w d oe ru s l d o n y o u r s c r e e n y p o u e n m d a y y o e u d i m t ay y o u d r e l e ty e o u m a y i n yg o o u r r d p e e r n d i n g o p r ed n e dr i n g e o d i t y yo r d e r p o u ur m e n d a y i n g d e l e t e o r d e r f l a s h e d o nc s c r e e n i m md o n e x e c u te i oy e b -o m no f u o r r m a tc i o n ct r o a uc ys eo n u d e i a s t e ln y d b t o e n a i l a n d o m r o h b a ni l n o t e r t o t b y ed d e l i v lt e r y w m o a CHAPTER-4 COMPARATIVE ANALYSIS 42 .
1st year charges included in Account Opening Initial Margin : Rs 5000/.50%** each side + ST *Rs 25 Min Brokerage per transaction **Rs 8 Min Brokerage per transaction 43 .15%* each side + ST Delivery 0.COM 4) INDIABULLS.COM 3) KOTAKSTREET.for non HDFC Bank Customers (AQB) Brokerage: Trading 0.THE MAJOR PLAYERS IN ONLINE TRADING 1) SHAREKHAN. Pioneers in setting up Dial-a-share service with the largest team of Tele-brokers. Online Account Type: • HDFC Online Trading A/c: Plain Vanilla Account with focus on 3 in 1 advantage. Pricing of HDFC Account • • • • Account Opening: Rs 750 Demat: NIL.COM 2) 5PAISA.COM 5) ICICIDIRECT. HDFC and Chase Capital Partners and their associates.COM HDFC SECURITIES: Company Background: HDFC Securities Ltd is promoted by the HDFC Bank.COM 6) HDFCSEC.
Only Rs 100 as linking charges per DP • • Initial Margin : Nil Brokerage: ICICI’s brokerage rates are inclusive of Stamp duty (0.25% < 50 lakhs 50 lakhs – 2 Cr 2Cr-5Cr 5Cr.002%) for trading and 0.10 Cr 10Cr -20 Cr > 20 Cr ---- Brokerage .45% 0.30% 0. < 10 lakhs 10 – 25 lakhs 25 – 50 lakhs 50 lakhs . • Delivery Vol per QTR Brokerage Square Vol P.04% Both Sides .05% Both Sides .ICICI Direct: • • Account Opening: Rs 750 Schemes: For short periods Rs 750 is refundable against brokerage generated in a qtr.70% 0.10% Both Sides .03% Both Sides -------- INDIABULLS: Company Background: 44 .08% Both Sides . These schemes are introduced 3-4 times a year.75% 0.M.035% Both Sides .010% for delivery while service tax (10. • Demat: NIL.55% 0.1 Cr 1 Cr – 2 Cr 2 Cr – 5 Cr > 5 Cr 0.35% 0. 1st year charges included in Account Opening Plus a facility to open additional 4 DP’s without 1st yr AMC.2%) on BROKERAGE land turnover tax is EXTRA.
It offers a full range of financial services and products ranging from Equities to Insurance. No AMC for this DP * Initial Margin: NIL * Brokerage: Negotiable PAID Research: SCHEME WebBased-1-Month-500: WebBased-1-Month-6000: PrintReport-1-Month-750: PrintReport-1-Month-9000: FACILITY View & Print on Website View & Print on Website View & Print on Website + 10 Reports Delivered View & Print on Website + 10 Reports Delivered Kotakstreet: Company Background: Power India Bulls * Account Opening: Rs * Demat: Rs.India Bulls is a retail financial services company present in 70 locations covering 62 cities. Pricing of IB Accounts: Signature Account * Account Opening: Rs 250 750 * Demat: Rs 200 if POA is signed.200 if POA No AMC for this DP * Initial Margin: NIL * Brokerage: Negotiable 45 .M. The equity analysis is a paid service even for A/c holders. Online Account Type: • Signature Account: Plain Vanilla Account with focus on Equity Analysis. • Power India bulls: Account with sophisticated trading tools. low commissions and priority access to R. is signed. 450 + Relationship Managers who act as personal financial advisors.
m Initial Margin : Rs 5000(Compulsory) Min Margin Retainable : Rs 1000 Brokerage Slab wise: Higher the volume. additional 0.m.03% per transaction High Trader : 6 Times Exposure Cash & Derivatives. Non refundable. Limit against shares Free Way: Flat Rs 999 Cover Charge p. Keat Desktop with advanced tools comes at a charge of Rs 500 p.f 1/4/2004 46 . lower the brokerage. 0.e.5% charges For Kotak FastLane / Keat Lite / Keat Desktop are trading interfaces.40%) have been moved to the slab wise structure w.5 p.m. Kotak Securities limited is a joint venture between Kotak Mahindra Bank and Goldman Sachs. Online Account Type • • • • Twin Advantage / Green Channel : 2 DP’s. PRICING OF KOTAK • • • • • Account Opening : Rs 500 Demat: Rs 22. Even older customers (on 0. Auto sq off 2:55 Cash Expressway : Spot payment.25% & 0.Kotakstreet is the retail arm of Kotak Securities.
65% 0.5 Cr 5. Apart from offering online trading in stock market the company offers mutual funds online.10% Both Sides 10 lakhs – 25 lakhs 0.04% Both Sides 0.e.03% Both Sides -------> 5 Cr ---do------ * Brokerage is inclusive of All Taxes * Brokerage is inclusive of All Taxes * Brokerage is inclusive of All Taxes.5 Cr – 10 Cr > 10 Cr Brokerage 0.20% Brokerage * Square Vol P.05 per share per share Derivatives Vol off p m < 2 Cr 2 Cr . 5paisa Company Background Indiainfoline was founded in 1995 and was positioned as a research firm In 2000 e-broking was started under the brand name of 5paisa.60% 0.2 Cr 0. Insurance.07% Both Sides 0.50% 2 Cr < 10 lakhs Brokerage 0.035% Both Sides 0. present in 20 cities • • Online Account Types Investor Terminal : Investors / Students Trader Terminal : Day Traders / HNI’s 47 . Limited ground network.Slab structure of Kotak Delivery Vol p m ** < 1 lakhs 1 lakhs – 5 lakhs 5 lakhs – 10 lakhs 10 lakhs .30% 0.com.2 Cr >2 * DP Charges Extra * Min Brokerage of Rs 0.5. It also acts as a distributor of various financial services i.05% Both Sides 5 Cr 0.08% Both Sides 25 lakhs .04% Both Sides 0.20 lakhs 20 lakhs – 60 lakhs 60 lakhs . GOI securities.01 0. 0.40% 0.25% 0. Company Fixed Deposits.05% Both Sides 0.03% Both Sides * Min Brokerage of Rs 0.M.
adjustable against brokerage Sharekhan Company Background • Sharekhan is the retail broking arm of SSKI Securities Pvt Ltd.10% each side + ST Delivery 0.50% each side + ST PRICING FOR HNI CLIENTS Trader Terminal • Account Opening : Rs 500 • Demat 1st Yr : Rs 250 • Initial Margin : Rs 5000(Compulsory) • Min Margin Retainable : Rs 1000 • Brokerage : Trading 0.50% each side + ST (Negotiable to 0.05% each side & 0. First Caryle.10% each side + ST Delivery 0. SSKI owns 56% Pacific in Sharekhan. and Intel • • • Into broking since 80 years Focused on providing equity solutions to every segment Largest ground network of 210 Branded Share shops in 90 cities Online Account Types • • Classis Account / Applet : Investor in equities Speed Trade : Trader in equities & derivatives 48 . balance ownership is HSBC.25%) • Account Access Charges Monthly Rs 800.PRICING FOR RETAIL CLIENTS Investor Terminal • • • • • Account Opening : Rs 500 Demat 1st Yr : Rs 250 Initial Margin : Rs 2500 (Compulsory) Min Margin Retainable : Rs 1000 Brokerage : Trading 0. adjustable against Brokerage Yearly Rs 8000.
50% each side + All Taxes Sharekhan online Trading Interfaces The customer can choose the online trading interface that meets his requirement based on his trading habits and preferences CLASSIC / APPLET The website is meant for customers who Invests in Equities 49 .10% each side + All Taxes Delivery 0.10% each side + All Taxes Delivery 0.PRICING FOR HNI CLIENTS Speed Trade • • • • • Account Opening : Rs 1000 ( Refundable against brokerage in Month + 1) Demat 1st Yr : Incl in Account Opening Initial Margin : Nil Min Margin Retainable : NIL Brokerage : Trading 0.a) Pricing for Retail Customers Classic / Applet • • • • • Account Opening : Rs 750 Demat 1st Yr : NIL Initial Margin : NIL Min Margin Retainable : NIL Brokerage: Trading 0. No access charges for gold customers (Above 1 lac brokerage p. adjustable qtrly against brokerage of Rs 9000/.for qtr.50% each side + All Taxes (Negotiable based on volume) • Account Access Charges Monthly Rs 500.
shortly Free calls for order placement on Toll-Free Trusted. the call is transferred Trusted.m CLASSIC/WEBSITE FEATURES • • • • • • • • • • Facility to integrate choice of 4 Banks/DP/Trading Account Instant credit for shares sold from DP Automatic pick-up of shares from linked DP for pay – in Automatic deposit of shares into linked DP after pay-out 4 Times leverage on Margin Trades Margin Trading available for entire marker session Slab wise brokerage structure for delivery and margin trades.55 am and 3. professional advice of Tel-brokers who offer undiluted Sharekhan Research Inputs After-hours order placement facility ** Transfer of money using phone banking is available with Citibank only • • ** Between 9 a.m to 6 p. DNT – TOLL FREE FERTURES • • • • • Dedicated Toll – Free number for Order placements Automatic fund transfer with phone banking* Simple and secure IVR based system for authentication No wait time.SPEEDTRADE The speed trade is meant for customers who trade in Equities DIAL-N-TRADE – Toll Free The DNT is a value added services meant for all customers who Want to transact but are not online.m to 9. on entry of Phone Id & TPIN. Professional advice of Tele-brokers Facility to enter After Market Orders online & via Phone CLASSIC/WEBSITE FEATURES • Daily Research newsletter (Investor Eye) Via e-mail 50 .30p.
Easier access to the customer due to largest ground network of 280 branded share shops in 120 cities. Excellent reputation among the business society. 4. 51 .• • • • • • • • Access to new IPO without any paperwork Advanced portfolio monitoring Tools Integrated DP account with trading account Option of linking additional 4 DP accounts to trading account Choice of linking 4 banks to trading a/c for online payments Cash and Derivatives trading in a single account E-mail confirmations for all transactions Choice of electronic/Physical contracts SPEEDTRADE EXE FEATURES ALL THE FEATURES OF CLASSIC *Real – time streaming quotes using 2 Marker Watches *Trade Execution in 2-3 seconds * Instant Order/trade confirmations in the same window *Hot keys similar to a Broker’s Terminal *MULTIPLE Tic-by-Tic Intra-day charts with multiple indicators * Availability of 2 ISP & 6 Servers ensuring maximum uptime * Customized alerts based on multiple parameters * Cancel All/Square Off All Facility * Window for Top Gainers. 5. Capability of providing superior customer service. Top Losers. Quality research team. Strong credibility among investors because of its heritage. 3. and Most Active updated Live SWOT ANALYSIS Strengths 1. 2.
2. 7. Ability to attract and retain superior and quality personnel. Highly sophisticated infrastructure. Limited customer appeal as the company product line does not include mutual funds which is increasingly becoming a preferred customer investment option. Promotional activities conducted by the company are not at par with the other firms. Efficient research and analysis team. 52 . 8. 4. Bullish phase of the market attracts investing public. 2. Abundant information about economy and companies. Brand awareness is low in the financial market. Awareness campaigns about online trading creates new market. 5. Access to the BSE online space for the retail investors creates opportunity to increase clientele base. Inadequate product awareness among the retail investors. Limited customer appeal as the company does not have access to the BSE online space. Hyderabad covers only 2% of investors which gives huge potential for the market penetration. 4. 3. Opportunities 1.6. 3. Weaknesses 1. which by interpreting the economy and company’s performance accurately is enhancing the profitability of the clientele. 9.
2.Threats 1. 53 . Availability of Unit Linked Insurance Policies (ULIP’s) and mutual funds in the market. Threat of entry is high in this industry as the manpower required is less and capital requirement is medium.
7. 2. ICICI direct and geojit. The number of players is increasing at a steady rate and today there are over a dozen of brokerage houses who have opted to offer net trading to their customers and prominent among them are SHARE KHAN. Previously rolling settlement is T+5 days. 5. 54 . 4. New and advanced technologies have breached geographical and cultural barriers. India bulls. now it changed to T+2 days and further it will be changing to T+1 day. Things have changed for the better with the SHAREKHAN going on-line coupled with endeavor to stream line the whole trading system. 6. kotakstreet.CHAPTER 5 FINDINGS AND OBSERVATIONS: 1. CONCLUSION AND RECOMMENDATIONS 1. things have changed dramatically over the last 3 to 4 years. There are more speculators than investors. 2. In the present scenario to compete with the Broker’s would require sound infrastructure and trading as per international standards. The Bombay stock exchange sensex zoomed past the 7700 barrier for the first time in history to achieve new all time high of 7800 intra day trade and ended at a historic close of 7732 points. Information plays a vital role in the secondary market. 3. It was also observed that many broking houses offering internet trading allow clients to use their conventional system as well just ensure that they do not loose them and this instead of offering e-broking services they becomes service providers. Fluctuations are more in secondary market than any other market. and have brought the countrywide market to doorstep.
55 . I recommend the exchange authorities to take steps to educate Investors about their rights and duties. therefore the authorities of the exchange should be more vigilant to curb the speculation. It has helped the brokers handling a vast amount of transactions and this can be an efficient trading. 10.8 crores. The concept of business has changed today. 9. Necessary steps should be taken by the exchange to deal with the situations arising due to break down in online trading. 4. I suggest to the exchange authorities to increase the investors’ confidences. Genuine investors are not at all interested in the speculative gain as their investment is based on the future profits. 5. 7. Due to invention of online trading there has been greater benefit to the investors as they could sell / buy shares as and when required and that to with online trading. this is a service oriented industry hence the survival would require them to provide the best possible service to the clients. 1. The introduction of on-line trading would influence the investors resulting in an increase in the business of the exchange.3. not attracting the genuine investors to the greater extent towards the market. The broker’s has a greater scope than compared to the earlier times because of invention of online trading. settlement system with adequate protection to investors. delivering. 11. The trading of SHAREKHAN of the first day was Rs. The speculative pressures are responsible for the wide changes in the price. 8. 6. I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices.
2. www.Y.com www.Share Khan. 3.sebi.Avadhani Marketing of Financial Services -V.Khan WEBSITES: 1.economictimes.com www.com www. 5.nseindia.Bhalla Investment management -Preethi Singh Security Analysis And Portfolio Management -V. 2.A.com www. 4.bseindia. 3.com www. 4.Avadhani Indian Financial System -M.K. 5.com 56 . 6.moneycontrol. Investment management -V.A.BIBILOGRAPHY: BOOKS: 1.
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