A PROJECT REPORT ON
PROBLEMS & PROSPECTS OF ONLINE TRADING IN EQUITY MARKET IN RAJKOT CITY
MARWADI SHARES & FINANCE LIMITED
SUBMITTED BY :BY :MONIKA SORATHIYA KAKKKAD M.B.A. SEMROLL. NO. 2
SUBMITTED TO :SARLABEN VASANTBHAI MALAVIYA SCHOOL OF MANAGEMENT
RAJKOT. YEAR 2011-2012
I , the Undersigned Mrs.MONIKA SORATHIYA, a student of 3rd Semester , MBA, at Saralaben Vasantbhai Malaviya School Of Management, hereby declare that the project work presented in this report is my own work and has been carried out under the supervison of Mr.Rathish Kakkad, professor at Saralaben Vasantbhai Malaviya School Of Management t, Rajkot.
This work has not been submitted to any other University for any other examination.
PLACE:- RAJKOT MONIKA SORATHIYA
Today’s world is competitive world, without a new development one would not be surviving in the competitive world. So new innovations are there in each and every field not only in India but in whole world , to provide comforts to the people. Private companies are trying best to provide satisfaction to the customers. Along with it Government is also helping indirectly companies in development.
As an M.B.A. student I must have practical knowledge in different fields like Finance, Marketing, H.R., etc. prevailing in the market. To get knowledge about practical market I have decided to have summer training project in Marwadi shares & finance ltd. who is spreaded throughout India whose headquarter is at Rajkot and providing services like Equities, Commodities, Depository , IPO, Mutual fund, PMS & Insurance. By getting in to the project of “Problems & prospects of Online trading in Equity market in Rajkot City”. The corporation is one of the leading Broking House and largest Depository Participant in the country.
DATE :- -------------
PLACE:- RAJKOT SORATHIYA]
It gives me immense pleasure and pride to present my summer training report for the 3rd semester of MBA undertaken at Marwadi Shares & Finance Ltd. I am very glad to present this report before you whose works and ideas have been so helpful in working out on this project report. As I carried my way towards the completion of this project, I had many people involved directly or indirectly and all guiding me , directing me and motivating me towards attaining my specific goal. First I would like to thank(--------------------------------) (DIRECTORSARLABEN VASANTBHAI MALAVIYA SCHOOL OF MANAGEMENT), -------------(President), ----------------(Trustee) & -------------(Trustee). I forward my deep sense of Gratitude to Mr.Rathish Kakad (Associate Professor & project Guide )for his valuable guidance in the completion of this project. I would also like to thank Mr. Mihir Bhimani for allowing me to undertake this project under their valuable guidance. I owe my deepest gratitude towards the executives of Marwadi Shares & Finance Ltd., Rajkot, who have provided me immense help, guidance and co-operation. I am very much grateful to my parents, friends and all those who have always been with me throughout this project have been completed.
And lastly, I would like to pass my sincere thanks to all those respondents who gave me their valuable time and making the project works a complete and genuine work.
SR. NO. 1 TOPIC INDUSTRY OVERVIEW • HISTORY OF THE STOCK BROKING INDUSTRY • INTRODUCTION TO STOCK BROKING BUSINESS • MAJOR PLAYERS IN THE INDUSTRY • INDUSTRY ANALYSIS COMPANY OVERVIEW • GENERAL INFORMATION • PROFILE OF MARWADI SHARE & FINANCE LIMITED • HISTORY • DEVELOPMENT • MSFL’S PHILOSOPHY • MISSION & VISION • MANAGEMENT TEAM • MILESTONES • SERVICES • NETWORK • NATIONAL & INTERNATIONAL IMAGE RESEARCH METHODOLOGY • RESEARCH PROBLEM • OBJECTIVES • HYPOTHESIS • SCOPE OF THE STUDY • DATA COLLECTION • LIMITATIONS • ANALYSIS & INTERPRETATIONS • CONCLUSION • FINDINGS & SUGGESTIONS BIBLIOGRAPHY APPENDIX • QUESTIONNAIRE
HISTORY OF THE STOCK BROKING INDUSTRY INTRODUCTION BUSINESS
MAJOR PLAYERS IN THE INDUSTRY
HISTORY OF THE STOCK BROKING INDUSTRY
Indian Stock Markets are one of the oldest in Asia. Its history dates back nearly 200 years ago. The earliest records of security dealings in India are meager and obscure.
By 1830’s Business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Through the trading list was broader in 1839, there was only half a dozen brokers recognized by Banks and Merchants during 1840 and 1850. The 1850’s witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60.
In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the “Share Mania” in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (For Example- Bank of Bombay share which had touched Rs. 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business.
In 1887, they formally established in Bombay, the “Native Share and Stock Brokers’ Association” (which is alternatively known as “The Stock Exchange”). In 1895, the Sock Exchange acquired a premise in the same street and it was inaugurated in 1899.Thus the Stock Exchange at Bombay was consolidated.
Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.
INTRODUCTION TO STOCK BROKING BUSINESS
Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country’s economic state of health. Stock market is a place where securities are bought and sold. It is exposed to a high degree of volatility; prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buy and sell securities on behalf of individuals and institutions for some commission. The Securities and Exchange Board of India (SEBI) is the authorized body, which regulates the operations of stock exchanges, banks and other financial institutions. The past performance in the capital markets especially the securities scam by Harshad Mehta has led to tightening of the operations by SEBI. In addition the international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve , discipline and bring greater transparency in this sector, constant efforts are being made and to a certain extent improvements have been made.
A broker is an intermediary who arranges to buy and sell securities on behalf of the clients (the buyer and the seller). According to Rule 2 of SEBI Rules 1992, a stockbroker means a member of a recognized stock exchange or stock exchanges of which he or she is admitted as a member.
Stock market transactions are carried out on computerized systems and deals are recorded for inspection at any time.
• Stock brokers independently may deal with the following: • Operations for private clients and institutional clients.
Some brokers act only as dealers (client investment managers) while others are principally advisors(equity sales advisors).
• Some brokers provide services for portfolio management and constantly review investments in the light of trends and developments in the market. • Financial services brokers specialize in bond issues, handling institutional accounts or mutual funds.
• In large firms, stock brokers work in the following areas: • Deal with, and advise, smaller firms.
Securities brokers work on behalf of firms with private clients to understand the investment plans and objectives of the client i.e.
expectation for returns and interest in risk taking. They are representatives of brokerage firms and execute orders to buy and sell securities. They are equipped with both knowledge and experience to give advice on the sale and purchase of scripts and management of financial investments. • Advise for investments. • Carry out market transactions.
The financial services in firms’ concerns pre-sales, sales and after sales services. These firms have departments to manage the sales and trading for the owners of securities, investment banking for firms and the government for the issue of securities and capital markets which form an essential arm for trading activities.
As Securities Analysts:- Brokers may be required to advice on flotation of shares in conjunction with the merchant banks. They are expected to have knowledge of the market to be able to anticipate certain trends and make predictions.
As Investment Analysts:- The Investment Analyst provides accurate information to investors and fund managers. There are two major roles as an analyst.
Institutional Analyst:- The process of analysis involves making predictions of the company’s future based on its past and present financial status. Stock Broking Analyst:- Investment Analysts work with firms which provide advise on buying and selling of shares and also with those firms which have funds to be managed. Fund managers in merchant banks, insurance and pension funds are involved with huge investments made by millions of investors. The funds are eventually disbursed as insurance claims, pensions etc. They are specializes financial advisors who provide advise on the how and where of details concerning investment. Investment Analysts study the company’s annual report; visit the organization, interview senior executive to assess statistical information, profits and import and export figures for the industry as a whole. Institutional analysis involves studying the entire sector.
A person holding assets (Securities/Funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange. The order is converted to a trade as soon as it finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading members securities/funds as per settlement cycle. Buyer/Seller delivers funds/securities and receives securities/funds and acquires ownership of the securities. A securities transaction cycle is presented above.
MAJOR PLAYERS IN THE INDUSTRY
There will not be more than ten players, out of which there will be six or seven who will continuously survive. There will be one or two new entrants every year to try and make a lot of money and eventually will find out reality the hard way.
MARWADI SHARES & FINANCE LIMITED:
One of the top-2 stock-broking houses in India, with a dominant position in both institutional and retail broking. The group has proven track record of success during its 16 years journey in the financial services sector.”Win a Trust & have a Faith” are two major elements of their success. MOST is amongst the best capitalized firms in the broking industry in terms of net worth. The institutional business unit has relationships. The website of Marwadi Shares & Finance Ltd, one of the firms licensed to provide online broking, gets 10,000-12,000 enquiries a month about online trading. (www.marwadionline.com)
MOTILAL OSWAL SECURITIES LIMITED:
One of the top-3 broking houses in India, with a dominant position in both institutional and retail broking, MOST is amongst the best-capitalized firms in the broking industry in terms of net worth. The institutional business unit has relationships. The website of Motilal Oswal Securities, one of the firms licensed to provide online broking, gets 7,000-8,000 enquiries a month about online trading.
Sharekhan is an equities focused organization tracing its lineage to SSKI (S S KANTILAL ISHWARLAL SECURITIES PVT. LTD.), a veteran equities solutions company with over 8 decades of experience in the Indian stock markets. Sharekhan
brings the user –friendly online trading facility, coupled with a wealth. Stockbroker S S Kantilal Ishwarlal’s Sharekhan (www.Sharekhan.com) turned the fee structure of the broking industry upside down in July by introducing a trade-as-much-asyou-want scheme of Rs. 1,000 a month.
ICICI Direct (www.icicidirect.com) was the first broker to introduce a brokerage of 0.85 per cent per trade. ICICI’s differentiators are an integrated service encompassing broking, banking and depository services from ICICI Bank. ICICI Direct’s pricing structure depends on how much the investor trades and ranges between 0.85 per cent and 0.4 per cent as trade volume increases.
5paisa is the trade name of India Infoline Securities Private Limited (5paisa) ,member of National Stock Exchange and The Stock Exchange, Mumbai both. 5paisa is a wholly owned subsidiary of India Infoline Ltd, India’s leading and most popular finance and investment portal. 5paisa offers to buy and sell shares on with speeds comparable and at times better than NSE’s NEAT Terminal. This speed and reliability comes only with perseverance of pioneer backed by huge investment in technology! In July, Probity’s 5paisa.com was the next one introducing a brokerage rate , probably the lowest in India, of 0.05 per cent a trade.
Kotak Securities introduced e-broking with the option of trading against securities. Kotakstreet.com is the ideal place for you to trade on since we offer you the following benefits: Kotakstreet.com is the online division of Kotak Securities Ltd., India’s leading stock broking house. Experienced team with stock market expertise to understand your needs Rich content of Stock Research, Company Information, Online Charts, Live
Quotes and Portfolio Manager along with portfolio Advice. KEAT- A powerful trading system offered to every client.
As a mid-sized player now, Elite sees a niche for itself – something that may allow it to co-exist with the biggies. “They (larger players like Marwadi, Motilal Oswal, Kotak securities, Sharekhan) are relatively new in the retail business. We have now grown to over 5,000 clients and have 120 employees,” says Bhandari. Another way of making good in a small size is to follow the route taken by the Delhi-based Quantum Securities. It has built competitive barriers by carving out a niche as a’ boutique shop’. It has a branch in Mumbai and caters to about 500 clients-most of them HNIs and a few institutions –to which it offers portfolio management and research. Though small, the firm has been able to build a strong brand.
There is one option though: the small, standalone players can provide their customers online trading through NSE’s dotexplaza.com platform. Twenty-eight players, out of a total 70 offering online trading on the NSE, are using this facility currently. Another issue stifling the smaller players is the Securities and Exchange Board’s tightening compliance and risk management norms, which have become tougher of late, and increased business costs like support staff. As a result, sub-brokers infamous for their lack of compliance for basic
stuff like books of accounts and issuing proper contract notes have suffered. Each player is supremely confident of the success of his respective pricing strategy and revenue model, even though the services they are offering at such attractive rates seem impractical and unsustainable. Only time will tell whether the confidence is misplaced or not.
Internet-based stock trading, while still in its infancy in the country, has the potential to really benefit the investor, with its ability to offer greater speed and transparency, at a much lower cost. Anup Bagchi, chief operating officer of ICICIdirect , hit the nail on its head: “Stock broking has been a cottage industry, attributed by strong distribution, a good price proposition ,and a ‘know-me’ culture. Corporate brokers – with deeper pockets, emphasis on branding and nationwide presence – are changing all that.”
OVERVIEW OF MARKET LEADER, FOLLOWER, CHALLENGER & NICHER STRATEGY
MARKET LEADER STRATEGY(ICICI):
ICICI is a player, which is completely fighting on the basis of the online trading business. It does not offer the offline trading. ICICI is one of the late entrants. ICICI has been providing three combinations of the facilities like the combination of BROKER-BANKER and DP INTERFACE, which provides it the distinctive advantage. Internet stock trading will be the presence of a wide array of tested and proven technologies to choose from, at low costs. And, as time goes by, value addition will become the norm for the existing software. As ICICI is a bank having its branches nationwide it can have the broking interface in the more and more cities. Thus it can expand its presence in the more and more markets.
• ICICI does not say that the client should have the account in A or in B bank but it is providing the facility of net banking with the wide number of banking options. • ICICI has aggressive marketing strategies. So from offering an assortment of services including portfolio management to vanilla broking, business is booming for broking houses. At ICICIDirect, daily orders have zoomed to 70,000. Six months ago, it was barely touching 30,000.
The challengers are Marwadi, Sharekhan, 5 paisa and India bulls, Motilal oswal, Kotak securities………………….
• EXPANDING THE BRANCHES
• Marwadi plans to expand its network of over 250 to 350 branches.
A Karvey consultant plans to rapidly expand its network of over 200 to 350 branches.
• Kotak claims a presence in all the major cities with 53 branches and 180 franchises. • Sharekhan is now present in 113 cities with 38 branches and 163 franchises.
India bulls have 82 branches in 65 cities.
• APPROACH OF THE PLAYERS
• Marwadi, Sharekhan, Karvey, Indiabulls and Investment believe that online
trading can be just one part of their strategy.
Sharekhan believes that “A strategic combination of branches and franchisees allows us to expand quickly and monitor quality, as the branches become nodal points.” On the other hand, Indiabulls believes that delivering the desired customer experience is not possible through the franchisee route. Instead, he focuses on a company-owned branch network. That is also true for Karvey, which has mostly stuck to the branch route.
• STRATEGY FOR THE INVOLVEMENT IN THE OTHER FINANCIAL SERVICES
• Karvey has positioned itself as all-in-one financial shops. • Sharekhan and Kotak are also into distribution of other financial products like Insurance and Mutual funds. With the setting up electronic exchanges for commodity trading, the big equity brokers are also able to offer commodity futures trading to clients.
• MARKETING STRATEGIES
From extending their branches, strengthening sales force, direct marketing and hiring training consultants, to changing their advertising and even expanding their call centre operations; the players are going all out to woo retail investors.
At ShareKhan they are using different tactics to attract investors. The financial site will soon be kicking off a broking contest as there are prizes to be won in the Sharekhan site. With its “The guide to the financial jungle” positioning, Sharekhan’s Arora says that it is trying up with online financial and general sites for advertising and co-branding exercises. Sharekhan’s marketing spend, which had dipped to Rs. 1 crore (Rs 10 million) last year, will go up to Rs. 4 crore (Rs. 40 million) in current fiscal. “Our marketing outlay is 6 per cent to 7 per cent of our revenue”.
• Kotak Securituies will have fine-turned its positioning with a “You are safe” tagline. And road shows have become big game at Infrastructure Leasing & Financial Services Investment Ltd to lure customers. Kotak Securities has changed its positioning. For what began as Zindagi ka hisab kitaab created by Grey advertising, it shifted to the more high profile agency Ogilvy & Mather when it became a bank early this year.
Outfits like Sharekhan and Motilal Oswal have hired consultants to train their personnel. Some like Motilal even send their managers to the Indian Institutes of Management to keep them abreast of the latest technological developments.
The nicher’s in the online stock broking segment are Geojit Financial Services, Quantum Securities and Elite.
• The Kerala-based Geojit Financial Services has built some strength in commodities trading and is leveraging it to compete nationally.
Delhi-based Quantum Securities. It has built competitive barriers by carving out a niche as a ‘boutique shop’. It has a branch in Mumbai and caters to about 500 clients-most of them HNIs and a few institutions-to whom it offers portfolio management and research. Though small, the firm has been able to build a strong brand.
• Elite sees itself as the niche and is having a base of 5000 clients with 120 employees.
INDUSTRY ANALYSIS BY PORTER’S FIVE FORCES MODEL
Marwadi Shares & Finance Ltd, ICICI Web Trade Ltd, 5 Paisa.com, Kotak Securities Ltd, India Bulls, Motilal Oswal Securities Ltd, HDFC Securities Ltd, Asit C Mehta etc. They have been explained in the earlier portion of this project report under the heading of the “THE MAJOR PLAYERS”.
• Small Investors • Franchise/Business Partners • Mutual Fund Companies • Institutional Investors • HUF • HNIs • NRIs • FIIs
BARGAINING POWER OF BUYERS
• The bargaining power of the buyers is higher as there many potions available for them.
• The clients can bargain on the brokerage charge as well as on the trading limit/exposure limit/deposits. • The brokers will have to remain the negotiable at the rates. • They will have to provide the differential price structure as far as the worth of the client is concerned.
• Offline Trading • Gold’s • Insurance • Bank FD • Mutual Funds • Commodities
THREAT OF SUBSTITUTE PRODUCTS
The attitude of the people for the investment depends on their ability to take risk and to go for the safer side and their past experiences.
Offline trading is the biggest substitute of the online trading. Though online has substituted the offline trading though some of the rigid investors are not ready to enter into the new segment, they are hesitant to use it and still they are stuck to the traditional way of trading.
• There is an option as like the share trading is the commodities trading which can be done in the two ways like National and the International trading. The people who are very much familier with the commodities and their market want to go for the commodities trading. In this market the farmer and the gold merchants are the most interested parties.
The people who have the fear of the share market ups and downs they want to make an investment in the safer side and will invest in the Mutual Funds, which is comparatively safer.
• The other investment option open for the investors is the investment in the Banks by which they are earning regularly a flat rate of interest with the minimal of the risk. • The most traditional way is to invest in the Gold, which is the safest one. The totally risk averse people will invest in the Gold.
As stockbrokers are venturing into other territories, other financial service providers are moving into the broking business. The broker-franchiser faces his biggest challenge yet from banks, which can get into broking using their network of branches. The latest breed to wake up to opportunity is the PSU.
• Bank • Securities Exchange Board of India(SEBI) • Depository • ISPs • BSE • NSE • MCX • NCDEX • NSDL • CDSL • DPs
BARGAINING POWER OF SUPPLIERS
• A broker can go for the vertical integration by providing the facilities like banking, broking and DP services both on the single roof. Generally most of the players are able to give the full facilities with reared to the broker and the DP combination but all are not able to go for the 3way combination.
There is no option left for the SEBI as it is one of the authorities and all the players will have to
follow the rules and the regulations issued by SEBI hook or crook. • There are two depositories in India NSDL and CDSL the DP will have to follow the rules issued by them without any of the argument.
• The Financial Institutions • DPs • Banks
THREAT OF NEW ENTARNTS
It becomes really an easier job for the DP to enter into the business. As the Rajkot branch of SHCIL is providing the DP services but there is surely a threat to enter into the business of broking, as it would be an easier job for it.
• As most of the work of the broker is with banks thus the banker can provide with facilities of the broking under the name of bank. At the same time some of the banks the depository participants which possess power to enter into this segment.
the the the are the
The financial institutions as like Insurance companies, Loan-giving companies can enter
into this business with some of the resource available.
CHARACTERISTICS OF THE INDUSTRY:
Vulnerable to stock market fluctuations:Nearly all of the company’s revenues are derived from stock broking business(online as well as offline), which is a major cause of concern. Stock markets, like any economy, are cyclical in nature. While bull phases are generally accompanied by significant growth in brokerages, during downturns, revenues could fall at a faster rate. While the company has announced its intention to enter the asset management business, presumably to reduce its dependence on one revenue stream, we feel that the company does not have any prior experience in this business and to that extent, risks are enhanced.
Low entry barrier in the online space:It is easy for an established offline player (brokerages, banks and NBFCs) to enter the online trading space. As a matter of fact, most of the current online trading players initially started off with an offline presence. Considering the cost benefits of being in the online space, this segment could attract lot more competition going forward.
Also, India Bulls is hampered by the lack of banking presence, which is an essential part of the whole
online broking transaction process. For instance, almost 15% of the online trading transaction by India Bulls’ customers is carried out through the HDFC Bank’s payment gateway. This in itself might lead to conflict of interest, as the HDFC group also offers its own online trading service through HDFC Securities. There exists the threat of the key bank withdrawing its gateway support in order to promote its own interest. More importantly, there exists the threat of poaching of the current online trading customers of Indiabulls. Banks, due to a captive base of customers are in a better position to offer retail broking services to its clients. The entry of HDFC Bank and ICICI Bank in the online trading space could be viewed in this context.
• This business is changing:-
APPROACH OF CLIENTS:- Clients are looking for Quality guidance, Research and products like Portfolio Management Schemes(PMS), which a big player can provide. Earlier, only persons were just relying on the personal relations with the brokers.
CONSOLIDATION:- In the last two years, India’s 9,500-plus brokers have seen their industry go into a consolidation mode. Many on-the-brink brokers have traded the comfort of independence for the rig ours of a franchisee. In the face of aggressive branding by bigger, corporatized broking houses, the trend is intensifying.
REASONS FOR TRANSFORMATION
The push came from technology:- The regional brokers were rendered redundant by technological advancements. So, their members had to shift business, shut shop, or become sub-brokers of NSE or BSE brokers. The obsolescence of the regional brokers encouraged the larger brokers to look at a national play more enthusiastically:- Thus players like ICICI Web Trade(Owner of ICICIDirect.com), HDFC Securities, ShareKhan, India Bulls securities, Karvy Consultants, IL&FS Investment and Motilal Oswal began to expand nationally. Now, the biggies are getting bigger, while the smaller players are getting marginalized. Branding has become very important:- As firms try to cut through the clutter with the help of a differential. Smaller players have found it difficult to cope with the expenses of research, investor seminars, and aggressive advertising things that are commonplace in today’s broking business. “The quality of research we provide is the core value proposition,” says Motilal Oswal’s vicepresident (equity advisory) Satish Nair. His company’s research services are branded as ‘Inquire’. Broking commissions have gone down:Broking commissions have gone down(from 1% to about 0.5% in five-six years), making the survival of independent brokers difficult. Lower margins mean small brokers have become even more dependent on day traders. Most small brokers even indulge in their own trading to bolster revenues, leaving them exposed to the vagaries of the markets. Many have supplementary businesses too.
The rules of the game have changed:- In 1992, brokers were allowed to function as a corporate with limited liability, but there was no major incentive to corporatize. In 1997, the allowance of capital gains exemptions on becoming a corporate broker removed the major disincentive towards corporatization. The change is evident: out of the 894 current Members of NSE, just 78 are proprietorial or partnerships. Corporatization encouraged professionalism. Indiabulls’ head of national marketing and sales, G. Banga, proudly says that 95% his team consists of postgraduates. Pay packets have also become variable and success-driven.
• TO COPE WITH COMPETITION:
Brokers are also trying to get into investment advisory and wealth management. It is a new area where they will compete with other wealth management players and private banking divisions of banks. It is a specialized area and brokers without strong expertise will not be able to offer this effectively.
The more aggressive ones are not stopping just there. Indiabulls proposes to use a part of the issue proceeds to diversify in segments like housing finance, consumer goods lending, non-bank deposits and insurance services. The company has already forayed into insurance through its subsidiary.
• TACTICS TO ACHIEVE IN THE INDUSTRY:
The players-whether big or small –get all of 330 minutes to trade every trading day. But in the same time, bigger players rake in much more money per employee than smaller players.
Mass market:- In a Mass-market model, a maximum of 150 orders can be placed by a single dealer in a day. The dealers employed, who are not supposed to offer advice, are not very expensive. The big players have more terminalsthey generate more volumes, and hence, higher profits. The total volume makes up for the smaller orders
High Net worth Individuals (HNIs):- A big broker can hire expensive staff, provide valueadded services, and still book more profits per employee than a small broker. It is the big player who can plough back big money and expand.
For premium service, qualitative advisory is offered. A big brokerage house employs relationship managers (RMs). Other costs are Infrastructure and Support. Big brokers can employ many RMs. The common costs, which include Advertising, Infrastructure and Research, get spread over and the profit per employee goes up. A qualified RM, costing up to Rs 3 lakh a year, can earn the company Rs 12 lakh a year. The offering would be focused on personalized advisory and consultation. The facilities can be provided online or through branches offering personalized solutions.
IMPACT OF ONLINE TRADING ON BROKING INDUSTRY
• The advent of Internet-based trading in the country will change the face of the Indian capital market very soon in terms of the volume of transactions, the nature and settlement of trade, and the profile of market participants.
Soon, Internet brokers will announce a flat rate per transaction instead of the present system of calculating brokerage as a percentage of the value. If the system enables the Internet broker to have seamless trading and settlement through the network, there is no cost differential between a trade of Rs 50 lakh and a trade of Rs 5. The broker will straightway announce his per-trade brokerage in absolute numbers. When this happens, it will be a rude shock to the broking community unless it changes very fast. Today, as per NSDL statistics, we have only 2.5 million investors with demat accounts in the country. Considering various investor combinations that are holding accounts, we can presume the country has roughly 5-8 lacs active investors now. This figure is unbelievably small compared to the potential number of investors, which is anything between 300 million and 350 million.
• When we take into consideration the way transaction risk and cost in the Indian Capital Market is coming down, there will be a massive surge in the number of investors and also in volumes.
The only way to manage this kind of potential growth is to adopt state-of-the-art trading techniques. The growth of
the Internet-based trading as a mass trading technique in the country is unstoppable, going by the indicators available and the signals for the future. When it ultimately gathers momentum, the biggest beneficiary will be the investor, who will be able to trade with greater speed and transparency, and at lower costs.
BSE (THE BOMBAY STOCK EXCHANGE):
The stock exchange, Mumbai, popularly known as “BSE” was established in 1875 as “The Native Share and Stock Broker’s Association”. It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualized and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country to have obtained permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.
The Exchange while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redress of their grievances whether against the companies or its own memberbrokers. It also strives to educate and enlighten the investors by conducting investor education programme and making available to them necessary informative inputs.
A Governing Board having 20 Directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected Directors, who are from the broking community( one third of them retire every year by rotation), Three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.
NSE (NATIONAL STOCK EXCHANGE):
NSE was incorporated in 1992 and was given recognition as a Stock Exchange in April 1993. It started operations in July 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments. NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access to investors’ irrespective of geographical location. The high level of information dissemination through online system has helped in integrating retail investors on a nation-wide basis. The standards set by Exchange in terms of Market Practices, Products; Technology and Service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time,
NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Market to Its present form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of Market Practices, Infrastructure, Technology, Risk Management, Clearing and Settlement and Investor Service.
• GENERAL INFORMATION • PROFILE OF MARWADI SHARES & FINANCE LIMITED • HISTORY • DEVELOPMENT • MSFL’S PHILOSOPHY • MISSION & VISION • MANAGEMENT TEAM • MILESTONES
• SERVICES • NETWORK • NATIONAL & INTERNATIONAL IMAGE
Marwadi Group is a widely renowned financial services group in Saurashtra. It had its genesis in the year 1992 with the incorporation of Marwadi Shares &Finance Pvt. Ltd. (MSFPL). In the year 1996, it became a corporate member of National Stock Exchange of India Ltd. (popularly known as NSE), which was then an untested platform for securities trading. MSFPL’s perspicacity had it that in future this new platform – which was highly leveraged on technology – would be the main liquidity purveyor in securities business. Marwadi Group’s Vision now stands proven with NSE now at the commanding heights of Indian securities market. Marwadi Group has built up customer trust and reliability, speed of execution, research advice, personalized services through qualitative service and prompt redress of queries. Marwadi Group has more than 100000 customers, whose various investment needs Marwadi Group are servicing, indicates their index of customer credibility. The company has always been driven by a desire to create values for its customers by ethical and transparent business and practices, reverence of for professionalism technology. Marwadi Group is driven by its three founder directors SHRI KETAN MARWADI, a Civil Engineer by profession and the major brain behind Marwadi Group, SHRI DEVEN MARWADI an expert at risk management systems and SHRI SANDEEP MARWADI who is guiding the technology and systems in the Company.
At present 30% of the Company owned by Caledonia Investments plc and the India Capital Growth Fund – highly respected UK listed institutions. Marwadi Group has immersed growth with a team of more than 1100 dedicated employees serving more than 1750 pin codes, 1,20,000 Broking clients and 1,41,000 DP clients. With a Network of more than 70 branches and more than 700 Franchisee/Sub-brokers, having above 4,900 Concurrent Trading Terminals its turnover on exchange reaches 1.51% and in Retail Segments 3.02%.
A convincing index of its customer loyalty is that nearly 75% of its customers have been with Marwadi Group for many years. Marwadi group strength lies in its team of confident, young, talented, qualified & experienced professionals to carry out different functions under the able leadership of its management.
PROFILE OF MARWDI SHARES & FINANCE LIMITED
Marwadi is a Gujarat based financial service group dealing in equities / commodities broking and portfolio management services. Marwadi Shares and Finance Limited is a huge and very reputed organization in the world of securities and finance. The organization enjoys a large market share with highly loyal customers, who in-turn provides a huge business to them. The company has been famous for its various services in different sectors viz. cash market, derivatives and commodities. The Marwadi Group has emerged as one of the top 20 stock broking houses in India, having membership on:-
From a decade, all financial service groups are offering stock -broking and commodity - broking through NSE, BSE, NCDEX and MCX. Marwadi also offer depository services as DP of NSDL and CDSL.
Marwadi Shares And Finance Pvt. Ltd. was in corporated in the year 1992. In the year 1996, it became a corporate member of National Stock Exchange of India Ltd. (popularly known as NSE), which was then an untested platform for securities trading. Soon it became a member of SKSE and also started its depository services. Marwadi Sales and Finance P. Ltd. when acquired membership of National Stock Exchange of India Ltd., it was the time when Govt. had just started liberalization. Capital market being at the base of every thing else was among the first few sectors taken up for liberalization and alignment with global benchmarks. NSE was therefore a result of Government’s policy to modernize stock market and give our investors a cost - effective trading and settlement system. They enter into the stock market coincided with Government's initiative to give a modern Stock exchange. Marwadi had then very presciently felt that this development would change the very structure and content of the market. Then, when Depository system was introduced to automate the settlement system, we became the first Corporate DP in 1998 to bring this concept to investor's doorstep in Saurashtra. Marwadi had very early on seen that the future lay in the ability to network and use technology to its fullest possible extent. Relying on your judgment, we used technology extensively which resulted in efficient client servicing. It also saw the synergy that lay in providing a bouquet of services under one roof. It is this realization that led us in the year 2003 to go for membership of National Level Commodity
Exchanges, which were set up as part of Govt's policy to bring commodity market on par with the capital market in terms of integrity and practices.
In the last 15 years Marwadi group has grown into a network of more than 70 branches with an 850+ committed professional people and 475+ channel partners across India. Marwadi has kept the faith of over 1.90 lacs investors and it's growing. After establishing supremacy in Gujarat, now expanding nationwide and to fuel growth plans they recently raised capital from UK-based investment companies. Marwadi got 5th rank in best broking houses also. Its bold initiatives starting with the journey from capital market up to commodities market has given them synergies in operations, enabling it to pass on the advantage to customers. As an organization, have achieved a leader's position by ensuring total satisfaction of customers through world class services. Utilize ultra modern technology for timely, seamless and accurate data processing. Proactively seek customer’s feedback in improving upon our service delivery modes. Promptly respond to customer issues in order to maximize client’s satisfaction. Caledonia Investments plc. , and Marwadi Shares and Finance Limited has announced that Caledonia has acquired 19.67% equity stake in Marwadi.
Caledonia is an investment trust listed on the London Stock Exchange with net assets in excess of £1.2 billion. Commenting on the investment, Mr. Tim Ingram, Chief Executive of Caledonia, said, “We are very pleased to have made this investment which we believe will assist Marwadi in realizing the great potential this business has for further growth in India.” Mr. Ketan Marwadi, Chairman & Managing Director of Marwadi Group, said, “We are delighted to welcome Caledonia as a shareholder. We look forward to a long-term association with them and are confident that with their valuable support, we can realize our vision to make Marwadi one of India’s leading retail brokerage houses.” Mr. Ketan Marwadi further states that earlier in the month of December 2006, India Capital Growth Fund Limited, a Guernsey (UK) registered investment Company listed on AIM in London had subscribed for 15.66% stake Equity in Marwadi through its Mauritius subsidiary, ICGU Limited. American Orient Capital Partners India was advisors to Marwadi on this transaction.
The Group has its basic philosophy, “YOUR MONEY IN SAFE HANDS”, which proves the transparency of Marwadi Group in business.
MISSION & VISION
“ To Be a world-class financial services provider By arranging all conceivable financial services Under one – roof at affordable costs. Through cost effective delivery
systems, And achieve organic growth in Business by adding newer lines of Business”.
CHAINRMAN & MANAGING DIRECTOR WHOLE TIME DIRECTORS DIRECTOR CTO SR. VP-BUSINESS DEV. & HR
VP-ACCOUNTS & FINANCE VP-OPERATIONS JOINT VP – DP JOINT VP –SYSTEM CHIEF COMPLIANCE OFFICER & CS JOINT VP-FINANCE & ACCOUNTS JOINT VP-FINANCE & ACCOUNTS ASST. V.P. ASST. V.P. ASST. V.P. SR. MANAGER-ADM./GENERAL & HR SR. MANAGER-AUDIT & COMPLIANCE SR. MANAGER-COMMODITY SR. MANAGER-DP FRONT/BACK OFFICE SR. MANAGER-BRANDING SR. MANAGER-PAY-IN-COLLE SR. MANAGER-OPERATION SR. MANAGER-MARKETING SR. MANAGER-MARKETING SR. MANAGER-TRAINING SR. MANAGER- RISK MGT. MANAGER-IPO & MF MANAGER-MARKETING MANAGER- IBT ASST. MANAGER-EDP 46
: MR. KETAN MARWADI : MR. DEVEN MARWADI : MR. SANDEEP MARWADI : MR. LAKHAN BAMBHANIA : MR. HARESH MANIAR
: MR. SANJAY THAKRAR : MR. GOVIND CHAVAN : MR. ARVIND GAMOT : MR. LAXMAN SONAGARA : MR. TUSHIT MANGUKIYA : MR.SURESH VINCHHI : MR.JAYANT VITHLANI : MR.BHARATBHUSHAN ARORA : MR. HASMUKH PIPALIA : MR. BHARGAV PATHAK : MR. AKSHAY GOSWAMI : MR. JATIN VORA : MR. SARFARAZ MUNSHI : MR. RAJIV BHATT : MR. MIHIR BHIMANI : MR. JAYANTILAL SARDHARA : MR. HASMUKH PIPALIYA : MR. MANOJ MANKAD : MR. DIGANT PATEL : MR. MIHIR BHIMANI : MR. VINOD RATHOD : MRS. LEENA PUROHIT : MR. RUSHI VASHU : MR. ARJUN MEHTA : MR. DUSHYANT RAVAL
ASST. MANAGER-IPO & MF
: MR. PRASHANT SORATHIYA
1992… Marwadi Shares And Finance Pvt. Ltd was incorporated. 1996… 1998… Became a corporate member of NSE . Became a member of Saurashtra Kutch
Stock Exchange (SKSE). 1999… 2000… 2003… 2004… 2004… 2005… 2006… 2006… Launched Depository services under NSDL. Started derivatives trading on NSE. Became corporate member of NCDEX & MCX. Became a corporate member of BSE. Launched Depository Services under CDSL. Launched Portfolio Management Services. MSFPL Converted to public limited. The company raised private equity from
ICGU Limited, a wholly Owned subsidiary of India Capital Growth Fund. 2006… service. 2007 … companies .
Raised capital from a UK-based investment
Received Approval from FMC to open
commodity business at Chicago, London, Dubai & Singapore. 2008… by D&B . 2009… Ranked Top 10 broking company by D&B. Ranked 5 th largest stock broking company
MSFL’S EFFICIENT SERVICES
• STOCK BROKING • COMMODITIES BROKING • DEPOSITORY SERVICES • PORTFOLIO MANAGEMENT SERVICES • MUTUAL FUND PRODUCTS • IPO SUBSCRIPTION SERVICES • INSURANCE SERVICE • QUALITATIVE RESEARCH IN STOCK & COMMODITIES • NEW PAN CARD SERVICE • DEMAT & REMAT • COMMODITY TRADING • DERIVATIVE TRADING
ONLINE TRADING (www.marwadionline.com)
• RESEARCH BASED INFORMATION • DPs
SERVICES OF MSFL
Equities & Services Looking for an easy and convenient way to invest in equity and take positions in the futures and options market using our research and tools. To start trading in Equity, all you need to do is open an online trading account. You can get help opening the account and get guidance on how to trade in Equity.
Also have a various scheme to open Demat a/c. like A1 for short term investment, B1 for small investors. And Z1 for long term investment. Some lifetime refundable scheme also available that are mention below.
Enter the whole new world of commodity futures. Investors looking for a fast-paced dynamic market with excellent liquidity can NOW trade in Commodity Futures Market. The Commodity Exchange is a Public Market forum and anyone can play in these vital Commodity Markets. Marwadi Commodity Broker (P) Ltd can certainly be your point of entry to the Commodity Markets. Marwadi is a registered trading-cumclearing member of NCDEX and MCX. Participation is not difficult. All you need is to open an account with us. We shall offer you advice and research on investments. Internet Trading
Making the right trade at the right time! Welcome to E-Broking service which brings an experience of online buying and selling of shares with just a click. A detail resource like live quotes, charts, research and advice helps you take proper decisions. Our robust risk management system and 128 bit encryption gives you a complete security about money, shares, and transaction documents.
Depository Participant In the times of T+2 having a Demat account linked to your trading account becomes more convenient. The non-trading members also can avail of our Depository services. You receive regular account reports and an efficient service at all times. Marwadi is a member of both NSDL and CDSL. IPO IPO or Initial Public Offer presents good
opportunities for netting high returns on your investments in a relatively short period of time - if you invest early. Get information on IPO news, Forthcoming IPO’s and a lot more . Mutual Funds
Transact in a wide range of Mutual Funds. Mutual Funds are an attractive means of saving taxes and diversifying your investment portfolio. So if you are looking to invest in mutual funds, Marwadi offers you a host of mutual fund choices under one roof; backed by in-depth information and research to help you invest smartly.
PMS Can you analyze the prices of 1,500 shares every morning? Can you afford to gamble only on the recommendations from your friends and the information overload from magazines and financial dailies? And, of course, more importantly, if you happen to be a High Net worth Individual, do you have the time to judge which advice is reliable, authentic and has the least chance of failure? With Marwadi PMS, you can be assured that your investments are in safe hands! Give your portfolio the expert edge to smoothly steer towards wealth creation. Research Welcome to the Marwadi Online Research ‘Habit’ - the special research cell where some of
India's finest financial analysts bring you intensive research reports on how the stock market is faring, when is the right time to invest, when to execute your order and more. Study reports on Capital Market, Commodity Market, Mutual Funds, IPO’s and Economy on daily, weekly or monthly basis. And last, but not the least, you can get these expert tips and recommendations as SMS on to your mobile phone.
MARWADI SHARES & FINANCE LIMITED MARWADI COMMODITY BROKER PRIVATE LIMITED Registered & corporate Office: ‘Marwadi Financial Plaza’ Nr. Nana Mava Main Road, Off, 150ft Ring Road, Rajkot-360005, www.marwadionline.com PH:- 3011000,2332001 E-mail: email@example.com / Web:
Corporate Head office at Rajkot
• Located in the prime location of the city
• 9 storied building • Three level parking facilities
To establish national level Tele-caller center
• 75,000 sq feet area • High speed elevators
• To establish national level library • Facility for Gym and recreation • Head Office at Rajkot over 12,000 sq feet of built up area.
450 plus computers with fiber optic connectivity and 60 servers across our offices
• Capacity of 2 mbps at a time • Gen Set with 125 KVA load capacity, automatically starts functioning in 3 seconds in case primary electricity supply fails
• Team of More than 1100+ dedicated employees • Network of More than 69 branches • Serving more than 1750 pin codes • Having more than 768 Franchisee / Subbrokers • Serving about 1,20,000 Broking clients • Serving about 1,41,000 DP clients • Having 3538 Concurrent Trading Terminals
WHY YOU SHOULD INVEST WITH MARWADI
Trust & Reliability:- We maintain a high degree of integrity and commitment to help achieve your financial goals, even when the going gets tough. Perhaps that's why 75% of our customers have stayed with us for many years.
Speed of Execution :- Marwadi Group has 1200+ professionals who have built robust systems and processes that enable swift action and prompt service like quick demat transfers, timely payments, instant SMS alerts etc.
Research Advice: - Our investment advice is based on indepth research done in collaboration with the renowned market-expert Mr. Rajesh Jain our stock market research periodical, has made sound investing a habit with our clients.
Personalized Services :- Every person's need is unique. We take it upon ourselves to first understand your needs and then deliver to make their investing experience comfortable, secure & rewarding.
TRADITIONAL IN VALUES, NOT IN BUSINESS
This group is founded by three brothers - KETAN, DEVEN & SANDEEP Marwadi. Now 30% of the Company owned by Caledonia Investments plc and the India Capital Growth Fund – highly respected UK listed institutions.
We value your money (and trust us, we'll do everything to make it grow) but we value your relationship more. all our clients feel at home while trading with us, knowing fully well that their financial aspirations are being handled with care. we hope you'll let us have the honor of serving you soon…
NETWORK OF MSFL
Ahmedabad (C G Road) Ahmedabad (Panjarapore) Ahmedabad (Maninagar) Amreli Anand Ankleshwar Jamnagar Jamshedpur Jetpur Junagadh Jodhpur Jaipur
MARWADI Bangalore Baroda Bharuch Bhavnagar Bhuj Chandigarh Chennai Cochin Coimbatore Delhi Dhoraji Dahod Dhrangdhra Disha Gandhidham Gondal Godhra Hyderabad Indore Jamkhambhaliya Kadi Kalol Keshod Pune Rajkot (Star chamber) Rajkot (Pedak road) Rapar Salem Savarkundla Surat Surendranagar Una Unjha Upleta Valsad Vapi Veraval V.Vidhyanagar Visnagar Wankaner
• LUNAWADA • SIDHPUR • HIMATNAGAR • KHEDBRAHMA
NATIONAL & INTERNATIONAL IMAGE
The Marwadi Group has emerged as one of the top 20 stock broking houses in India. Received Approval from FMC to open commodity business at Chicago, London, Dubai and Singapore. In the year 2007, raised capital from a UK-based investment companies. At present 30% of the Company owned by Caledonia Investments plc and the India Capital Growth Fund – highly respected UK listed institutions. Among BSE’s top ten volume Drivers in the equity segment during the year 2007-08. Ranked 5th leading Brokerage House of India by Dun & Bradstreet. Among BSE’s top ten Volume drivers in F&O segment in the year 2006-07. Ranked 23rd among the most trusted companies of Gujarat by SARA in association with Zee Business.
• • • • •
ONLINE TRADING DESCRIPTION
“ Online Trading has the potential to turbo-change the time you spend in front of your computer. There is nothing more exhilarating, more daring, and
more conceivably rewarding than making the right trades at the right time”. 1) INTRODUCTION: Gone are the days when you left orders with your broker, received conformations on the price and quantity of the shares at the end of the day and the payment made upfront or received after delays. Your securities settlement took days to reflect in your account. Internet has changed the way do trading. The entire process is speedy with limited to zero paper work. The process of online trading has become seamless. Internet trading in stocks eliminates the hassles of running around the broker, uncertainty over the exact price of purchase, writing out cheques and giving instructions to depository participants (a broker with a demat account). An investor can do his own research on the Net before making a deal. The websites offering ebroking have all the information needed to make an informed purchase or sale. Till recently, such information was the exclusive preserve of big investors. Internet trading in India is expected to account for 10% of the trading volume of the stock exchanges in a year and would grow to 25 to 30% in the next few years.
Though the spread of the Internet has been slow in India, players are catching on fast, at least in the online stock trading business. Internet trading or e-broking seems to have passed through its teething troubles and more players are now entering the fray. Given the suitability of the product and rising demand, therefore, it is no surprise that E-broking has captive the imagination of the consumer and created a new breed of investor- the day- trader- whose impulse to buy, own and sell is, and must be, matched by swift transaction processes. Online brokerage houses aim to provide realtime quality information and research, high transaction efficiency and customer service. This include stock analysis tools like technical analysis charts provided by Marwadi, stock tips, latest research reports, company analysis, trends in the market, real-time market commentary, market scoops and breaks etc. all these tools will help in making the investor better informed and better equipped to make intelligent investments. Online brokerage houses in India might offer folio services sooner than most people expected. It is predicted that with net trading becoming important, we could be a year away from active trading. And another year away from online traders moving into sophisticated activities like folio services. Online brokerage houses abroad are already offering folio services. Foliofn.com, a foreign online brokerage firm, for instance, allows its investors to buy fractional
shares and treats a portfolio trade as a single order. Unlike the conventional portfolio management services, these are less expensive. These are charged like any other stock trading services. While substantial progress has been made by stock exchanges and SEBI with screen based trading and dematerialization, a typical retail investors still feels the pinch of high brokerage. With his regular broker, sitting in and mortar set-up, he did not have access to real time, quality research and information. E-broking is yet another milestone in trading, which has substantially reduces brokerage charges and transaction costs to the investors. The online brokerage houses play on volumes, not margins and brokerage. Flexible systems with high levels of connectivity are vital to e-broking. But with increasing bandwidth and laying of optical fibers for transmission of data, this problem will also solved. Traditional brokerage was previously a personalized industry with individual brokers operating through firms. Then the business went through a process of corporatization.
2) THE FEATURES FOR THE ATTRACTIVENESS FOR
FREE RESEARCH:- Online investors are the free research provided by the online firms. Previously this was available only to large institutional investors. In
addition to fundamental information about stocks, bonds and mutual funds sophisticated tools like technical analysis reports and charts are also available for free. Some of these are also customizable, either fully or partly. The problem for investors is one of information overload and how to absorb all the information provided as well as analyze and act upon it. Recognizing this need, some firms have taken concrete
information to meet with individual requirements. PRICE ALERTS:- Price alerts are a standard feature with most brokers. The new online brokers do not have any legacy systems and in spite of making heavy investments in technology (which is the backbone of any online trading system) have very low transaction costs, typically about less than 10% of full service brokers cost.
WELL EQUIPED SYSTEMS PROVISIONS:- The main challenge facing online brokers is to build new revenue streams. Trading volumes is the primary driver and not account balances as in the case of typical full service brokers. Also with growth rates ranging from 50% to 100% per annum, managing such growth is a major challenge. Systems have to be equipped to handle the surge in trading volumes, have adequate capacity, financial controls to manage risk, customer service and quality.
ADDITIONAL CAPACITY TO TAKE ADDITIONAL LOAD DURING PEAK TRADING TIMES:- During peak trading times the system must be equipped to take on additional load without compromising on speed of execution. Online customers, especially the day traders who provide the bulk of the volume, are now extremely careful about these matters and their expectation levels have significantly increased over time. Online firms are selling basically virtual products and do not have a lot of storage or shipping costs as they are brokering information that can and is sent out over the internet at minimal or zero cost.
• OTHERS:• To eliminate the risks and hassles associated with paperwork. • To come out of the risk of losing the shares certificates. • Freedom dealings. • To make trading faster and safer with the help of different facilities. • To ensure the safety and soundness of the capital market. from bad delivery and counterfeit
PARTICIPANTS IN ONLINE TRADING
Individual investors, Institutional investors, broker and just about anyone having access to a computer and an account with
a broker (in case of non broker participants) can trade online. As explained earlier the requirements are minimal and the biggest advantage of online trading is the do it yourself method giving one a sense and feeling of control. Of course reduced transaction costs, free research and anytime trading are some of the other added benefits. In many cases there are no commissions for transactions up to 1000 shares, irrespective of value. The broker dealer earns his revenue typically by market making. A point to be noted is that in no case can an individual investor trade directly with another investor, all orders are routed through a broker only.
HOW PARTICIPANTS DO INDULDGE INTO THE ONLINE TRADING
The sale or purchase of shares involves three steps: placement of order (for sale or purchase), payment (for purchase) and delivery of shares. Since payments through the Internet are not yet legally valid in India, for most small investors e-trading is currently restricted to the placement of order. However, once cyber laws are passed by parliament – which is likely to happen in a couple of months – entire trading could happen online,
Says D. R. Mehta, chairman of the Securities and Exchange Board of India (SEBI): “The complete cycle of Internet trading, from booking orders to payments, will go online only after cyber laws are passed by Parliament”. • With the onset of Online trading the Investor can place his or her orders through the Internet by logging on to the broker’s site and entering orders for execution directly. • Due to technological advances, which have made this possible in the first place, orders are executed directly without manual intervention (in most cases, as during high volatility days online brokers may execute orders manually). The broker dealer may have an open trading system or a proprietary system for execution of the trades. • These orders placed by investors are routed through the broker dealer who forwards it to the exchange for execution.
In case the broker dealer is not a market maker in that particular stock the order is normally routed to another market maker for execution.
• Investors place open or market orders or limit orders (which typically attract a higher commission).
In online trading the orders are simply consolidated by the broker and routed through the firms systems to the
exchange for execution. The whole concept is one of consolidation and high-speed automatic execution, without manual intervention (in most cases). This is possible on account of the technological advances in Information and Communication Technology. • Once an order is executed it becomes a trade, which is settled. The clearing and settlement procedures are the same as for a normal trade executed manually by a broker, the order for which may have been placed either in person or on the phone. Net trading involves a major and paradigm shift in convenience electronic risk. for investors all and the participants. participants An and link between
investors could increase the security and decrease
SECURITY IISUSES FOR ONLINE TRADING
Online trading is anonymous and the concerns about security are well founded. The major issue is that of impersonation for placing
confidential data. The dealings are impersonal as the computer and a complex set of relationships replace the interaction with the the customer. of Technological security advances customer. permit Today design several
features to safeguard privacy and genuineness of the digital certification, encryption through a SSL (Secure Socket Layer), dynamic HTML for stock order verification can also be used. In fact the new Pentium III microprocessor chip has a serial number, which could also be used to trace and verify transactions. Emerging new technologies like Voice recognition software, biometrics can easily be used for identification and verification purposes. Also the traditional methods of establishing limits for individual clients, based on their deposits, past behavior, credit rating, etc. can be effectively utilized to control and manage risk. Issues like online surveillance, control and risk management are critical and various systems to address this problem have been developed and are in use. The laws for E-trading are not clearly enacted as yet and only draft legislation has been prepared. In India two drafts bills have been prepared, one for ECommerce and one the Information Technology bill. Internationally also no clear picture has emerged especially with regard to Cross border dealings and taxation. Surveillance systems will also have to cope with the high speed and high volume of transactions generated
by online trading. This will need to be done at the broker’s end as most exchanges have online surveillance systems in place. The stock exchanges themselves will not be exposed to additional risks as all the risk is borne by the stockbrokers directly. In any case stock exchanges have pre set exposure limits for all brokers; these are linked to capital adequacy and margins.
• RESEARCH PROBLEM • OBJECTIVES • HYPOTHESIS • SCOPE OF THE STUDY • DATA COLLECTION • LIMITATIONS • ANLYSIS & INTERPRETATION • CONCLUSION • FINDINGS & SUGGESTIONS
Although the information technology revolution has reduced distances and created a global village, only a few, isolated pockets in India are privy to these facilities and the inherent advantages that stem from the NET. And yet, for the business savvy stockbroker, these isolated IT villages have thrown up tremendous opportunities. With just two technologies to choose from, Internet-based stock trading is still in its infancy in the country. Thus, there is limited choice for early entrants – NSE.IT and Financial Technologies. These technologies offer front-end trading software, by providing the investor with a trading platform. For the broker, they act as an interface between the stock exchange, the bank and the Depository Participant (DP) for executing banking and securities transactions. As like the other financial services like “Net Banking”, the stock trading has also entered into the online segment with the big expectation for the positive response from the stockbrokers. Thus our research study is to make focus on the problems like to know the problems faced by the online brokers and the to find out the prospect of the online trading in the Rajkot City.
OBJECTIVES OF RESEARCH
This study mainly concentrates on the Potentiality of the Online Trading in the Rajkot city. Therefore, the study has been carried out keeping in view the following objectives: • To know the prospects and problems of online trading. • Review the awareness level for the online trading among the traders. • To know the expectations of the traders from the online brokers. • Analyze the satisfaction level from the current brokers.
To identify the most preferred media to attract for the online trading.
1) Null Hypothesis:H0 :- “Online Trading is problematic and not a prospective Trading for the Rajkot City. 2) Alternative Hypothesis:H1 :- “Online Trading is problematic but it is prospective in the Rajkot City.
H2 :- “Online Trading is a problematic and also there are no chances for the prospects of the online trading in the Rajkot City. H3 :at the same time there is a huge prospects for the online trading in the near future for the Rajkot City. “Online Trading consists no problems and
SCOPE OF THE STUDY
This study will be useful to :• Online and Offline clients • The persons who want to enter into the stock markets. • The financial or other corporate wishing to enter into the Online Trading. • Different brokers and sub-brokers. • Students
A)SECONDARY DATA :The secondary data has been collected from the study of the different materials as follows:
• Web sites • Marwadi Rajkot Head Office Literature • Discussion with the manager
B)PRIMARY DATA :•
Sampling Design :- The sampling design selected is the “ Simple Random Sampling” method. The whole data has been collected randomly without any kind of the selection.
Instrument :- The research has been conducted with the help of the Questionnaire. Questionnaire was the unit through which the whole information has been collected. The whole questionnaire has been divided into 4 parts and each part was headed under the different headings. The 1st part was telling about the General trading or investing experience of the respondent/trader. The 2nd part was related with the Experience /Awareness of Online Trading. The 3rd part was the main and it was concentrating mainly on the Online Trading section which is full of the questions that given us the guideline to complete our study. And the 4th part was relating to Personal Details of the respondents, which was optional.
Sampling Universe :- The sampling universe was the finite sample space. The sampling universe chosen is “The Share-Traders”.
Sampling Unit :- The sampling unit selected is “The Share market Traders of the Rajkot City.” Sample Size :- The sample size for research has been 200 share traders of the Rajkot City. Focus Group :The Online as well as Offline traders
were supposed to respond to this questionnaire.
MODE OF COLLECTION OF DATA
A) PERSONAL :-
The print copy of the Questionnaire has
been presented before the respondents personally in order to note the behavior of the people while filling in the questionnaire. There were 100 of the respondents who were personally filled the questionnaire.
B) MAIL :-
The direct mail has been sent to the e-mail
address of the target audience. The e-mail addresses of the people who were trading into the share market has been collected and they were directly sent the mail which they are supposed to submit online. The e-mail addresses were collected from the Marwadi office, from the google group search and to some of the relatives who are indulged in this field.
LIMITATIONS OF THE STUDY
1) SIZE :-
The objective of the study is to find out the
problems and the prospects of the online trading within the Rajkot City. The sample size taken is just 200 respondents, which may not be the perfect for the research. But this is our limitation. The Rajkot City is the very big area and for that the size of the 200 respondents might be very less.
The respondents might be bias in
responding or on the other hand we might be biased indirectly in selecting the sampling the design. The respondents might conceal or give the wrong information to us and which might cause on the result of this research. Thus this is one of the limitation of our research.
3) REPRESENTATION :- As we have gone for the sample
survey and not for the population survey all the trader of this City are not being selected. The sample size is just 200 respondents. There might be the wrong selection of the sample. Sometimes, the sample selected may or may not be the representative of the whole mass. This might draw the research into the different direction.
DATA ANALYSIS AND INTERPRETATION
1) Do you invest in stock market ? No Answ 1 2 er Yes No Total Frequen cy 200 0 200
Percenta ge 100% ----100%
2) If yes, in which stock do you trade ? No Answer 1 2 3 NSE BSE Both Total Frequenc y 59 42 99 200 Percenta ge 29.5% 21% 49.5% 100%
Generally you are doing which type of transaction? No Answer 1 2 Intraday Delivery based Total Frequency Percenta 89 111 200
ge 44.5% 55.5% 100%
Through which of the following company(s) do you trade online? N o 1 2 3 4 Answer Marwadi Sharekha n Angel Bro Asit C Frequenc Percenta y 36 69 95 ----ge 18% 34.5% 47.5% ----80
5 6 7 8 9
Mehta India Bulls ----Kotak ----Secu ICICI Direct 5 Paisa Others Total ------------200
Since how many Years you are dealing? No Answer 1 2 3 4 5 6 Months 1 Year 1-3 Years 3-5 Years More than 5 Yrs Total Frequen cy 31 14 24 56 75 200 Percenta ge 15.5% 7% 12% 28% 37.5% 100%
Do you know computers? N o 1 2 Answe Frequen r Yes No Total cy 200 ----200 Percenta ge 100% ----100%
Are you aware of online trading facility; Up coming & available in India now-a-days? No Answe Frequen 1 2 r Yes No Total cy 200 ----200 Percenta ge 100% ----100%
5% 0% YES NO 95% NOT MUCH
8) Do you trade online ? No Answer Frequen 1 2 Yes No Total cy 200 ----200 Percenta ge 100% ----100%
9) If yes, Do you possess sufficient knowledge about online trading ? No Answ 1 2 er Yes No Total Frequen cy 200 ----200 Percenta ge 100% ----100%
Is online trading simple for you ? Answ er Yes No Total Frequen cy 200 ----200 Percenta ge 100% -----100%
N o 1 2
Which media would you prefer most for investment? Frequen cy 34 25 29 4 ----37 71 ----200 Percenta ge 17% 12.5% 14.5% 2% ----18.5% 35.5% ----100%
No Answer 1 2 3 4 5 6 7 8 Telecallin g News paper TV Magazines Journals Reference Personal Exp Other Total
4 3 2 1 0 Telecalling Newspaper T.V. Magazines Journals Reference Personal Experience Others
What induced you to begin online share trading? Answer Reference by friends Online advertisements Advice by financial consultant Total Frequen cy 59 67 74 200 Percenta ge 29.5% 33.5% 37% 100%
N o 1 2 3
29% 37% Reference by friends Online Advertisem entd Advice byFinancial Consultant
How often do you do online share trading ? Frequenc Percenta y 89 --------111 200 ge 44.5% --------55.5% 100%
No Answer 1 2 3 4 Daily Basis Weekly Basis Monthly Basis Irregular Total
Daily Basis 44% 56% WeeklyBasis Monthly Basis Irregular
Does the site guide you online trading ?
No Answe Frequenc Percenta 1 2 r Yes No Total y 200 ----200 ge 100% ----100%
Is the information provided by your online stock
broker Sufficient ? No Answ 1 2 er Yes No Total Frequen cy 200 ----200 Percenta ge 100% ----100%
Does your broker’s site provide you with up-to-date
news about IPOs ? No Answ 1 2 er Yes No Total Frequenc y 200 ----200 Percenta ge 100% ----100%
17) N o 1 2
Are you aware of T+2 method of trading ? Answ er Yes No Total Frequen cy 200 ----200 Percenta ge 100% ----100%
Do you feel that there is more transparency in online
share trading ? No Answe Frequen 1 2 r Yes No Total cy 116 84 200 Percenta ge 58% 42% 100%
Do you find problems of time delay between filling an
application form & getting user name & password ? No 1 2 Answ er Yes No Total Frequen cy 65 135 200 Percenta ge 32.5% 67.5% 100%
32% YES NO 68%
20) ? N o 1 2 3
Have you ever experienced irregularity in ticker price
Answer Frequen Yes No Can’t say Total cy 65 96 39 200
Percenta ge 32.5% 48% 19.5% 100%
20% 32% YES NO CAN'T SAY 48%
Have you ever experienced disappearance of shares
from your demat account ? No Answer 1 2 3 Yes No Don’t know Total Frequenc Percenta y 20 180 ----200 ge 10% 90% ----100%
YES NO DON’T KNOW
What do you do when you have purchased some
shares & want to sell it BUT your computer not working properly ? N o 1 2 3 4 Answer Try @ another cyber café Wait until computer gets ready Tell your broker about pending transaction Ask your broker to square up your account Total Frequen cy 14 ----26 160 200 Percenta ge 7% ----13% 80%
0% 7% 13% Try@ another cyber café Wait until com puter gets ready Tell your broker about pending transaction Ask your broker to square up your account
How would you rate the Internet &
Telecommunication facility ? N o 1 2 3 Answer Frequenc Percenta y Poor ----Averag 26 e Good Total 174 200 ge ----13% 87% 100%
Do you feel that the trading volume will increase in
near future ? N o 1 2 Answ er Yes No Total Frequen cy 75 125 200 Percenta ge 37.5% 62.5% 100%
What short comes do you feel in Indian Online
Trading ? N o 1 2 3 4 Answer Lack of awareness amongst investors about Online Trading Shortage of domestic technical expertise Shortage of Infrastructure facilities Any other Total Frequen cy 148 49 3 ----200 Percenta ge 74% 24.5% 1.5% ----100%
How will you describe your experience with online
trading till date ? N o 1 2 3 4 Answer Very easy to operate Very difficult to operate Not secure Any other Total Frequen cy 104 ----96 ----200 Percenta ge 52% ----48% ----100%
No 1 2 Answer MALE FEMALE Total Frequency 67 133 200 Percentage 33.5% 66.5% 100%
No Answer 1 2 3 4 Below 25Yrs 25-35Yrs 35-45Yrs Above 45Yrs Total Frequenc Percenta y 45 53 30 72 200 ge 22.5% 26.5% 15% 36% 100%
THE SEGMENTS IN WHICH THE RESPONDENTS ARE SPREAD
N o 1 2 3 4 5 6 Answer Employed Self employed Business Service House wife Others Total Frequenc Percenta y 24 32 52 69 23 ----200 ge 12% 16% 26% 34.5% 11.5% ----100%