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THE EMERGENCE OF ONLINE TRADING IN INDIA

This chapter brings up relevant literature required to find answers and connect to our research questions. First, vital literature about online trading along with key concepts of different terms, drivers of growth and the necessity of its existence will be presented so that it becomes easier to understand the research area. Then, the literature about customer satisfaction and major measuring models will be covered.

ICICI DIRECT

ICICIDirect (or ICICIDirect.com) is stock trading company of ICICI Bank. Along with stock trading and trading in derivatives in BSE and NSE, it also provides facility to invest in IPOs, Mutual Funds and Bonds ICICIDirect offers 3 different online trading platforms to its customers:

1. Share Trading Account:


Share Trading Account by ICICIDirect is mainly for buying and selling of stocks in BSE and NSE. This account allows Cash Trading, Margin Trading, Margin Plus Trading, Spot Trading, Buy Today Sell Tomorrow and Call and Trade on phone. They also provide installable application terminal based application for high volume trader.

2. Wise Investment Account:


Along with MF and IPO investing in BSE and NSE, Wise Investment account also provide options to invest in Mutual Funds, around 19 Mutual Fund companies and bonds. ICICI Direct offers various options while investing in Mutual Funds like Purchase Mutual Fund, Redemption and switch between

different schemes, Systematic Investment plans, Systematic withdrawal plan and transferring existing Mutual Funds in to electronic mode. This account also provides facility to invest in Government of India Bonds and ICICI Bank Tax Saving Bonds. ICICIDirect.com website is the primary tool to invest in Mutual Funds, IPOs, Bonds and stock trading.

3. Active Trader Account:


Active Trader account gives more personalized investment options to the investors. It allows investor to use online and offline stock trading. It also provides with independent market expertise and support through a dedicated Relationship Manager from ICICI. Active Trader also provides commodity trading. Brokerage and fees: Brokerage: ICICIDirect.com brokerage varies on volume of trade and inclusive of demats transaction charges, service taxes and courier charges for contract notes. It ranges from 0.1% to 0.15% for margin trades, 0.2% to 0.425% for squared off trades and 0.4% to 0.75% on delivery based trades. Advantages of ICICIDirect: 3-in-1 account integrates your banking, broking and demat accounts. All accounts are from ICICI and very well integrated. This feature makes ICICI the most interesting player in online trading facility. Unlike most of the online trading companies in India which require transferring money to the brokers pool or towards deposits, at ICICI Direct you can manage your own demat and bank accounts through ICICIdirect.com. Investment online in IPOs, Mutual Funds, GOI Bonds, and Postal Savings Schemes all from one website. General Insurance is also available from ICICI Lombard. Trading is available in both BSE and NSE.

Disadvantages of ICICIDirect: Getting access to ICICIDirect.com website during market session can be frustrating. ICICI Direct brokerage is high and not negotiable. Not all stocks are available under Margin Plus Facility for linking account of ICICI Bank Only

RELIANCE MONEY

Reliance Money, A group company of Reliance Capital Limited, is the financial services division of the Rs 10000 crores Reliance Anil Dhirubhai Ambani Group. Reliance Money has over 22 lakhs customers and more than 10'000 branches in around 5000 cities in India. Company is among the largest broking and distribution house of financial products and having share of more than 3% of total stock market volume at BSE & NSE. RelianceMoney.com enables its customer to invest & manage most of the services provided by Reliance Money including Equity (Stock) Trading, Commodity Trading, Derivatives, Mutual Fund Investment, IPO Investment, Life Insurances, General insurances, Money Transfer, Forex exchange, Gold Coins and Credit Cards Services. Company recently entered in to Wealth Management with tools like investment in equity-linked portfolio management services, structured products, insurance and mutual funds. The Reliance Money stock trading websites uses special security features Security Token which makes online trading more secure without complexity. Stock Trading through RelianceMoney.com is available for BSE and NSE stock exchanges. Offline trading is also available through Reliance Money partners in more than 5000 city across India and through phone by dialing 022-39886000 The investment options available with Reliance Money online portal are as below:

Equity (Stock) Trading at BSE, NSE and NSE F&O IPO Investment Derivatives Trading Forex Trading Commodity Trading (Gold, Silver, Crude etc....) at MCX, NCDEX and NMCE. Mutual Fund Investment Life & General Insurance Pure Swiss' Gold Coins (99.99% pure, 24 carat)

Trading platforms: Reliance Money provides 3 different trading platforms for equity trading: 1. Insta Trade 2. Fast Trade 3. Easy trade Reliance Money Technical Analysis (A paid service): Reliance Money offers a simplified, automated, sophisticated technical analysis to Indian retail broking consumers with the help of Recognia's Technical Analysis tools. Recognia, a Canada based company, has proprietary pattern recognition technology capable of recognizing patterns in the price charts of any publicly traded financial instrument including stocks, bonds, funds, commodities, currencies and indexes. The technical services are available for introductory free 7-day trial period to Reliance Money users. Post the trail period, this service is available to users at a nominal subscription of Rs. 99 for 3 months/ Rs. 179 for 6 months/ Rs. 299 for a year, i.e., less than Re 1 a day. Reliance Money Brokerage and fees: Reliance Money offers lowest brokerage rates in today's online stock trading industry in India. The brokerages are as low as 0.075% for delivery based trading and 0.02 for now delivery. For more detail about Reliance Moneys brokerage and fees visit the below section of this webpage. Advantages of Reliance Money Extra security features with 'Security Token', which is the most secure and tested technology in computer world. Simple, easy and fast online stock trading. Almost all investment options are available under one account including Equity Trading, Derivatives, Forex, Commodity, IPO, Mutual Funds and Insurance. Branches are available in all major cities and the number is growing.

Disadvantages of Reliance Money Customer Service is not that good. Small cap stocks are not available for trading.

SHARE KHAN

Sharekhan is online stock trading company of SSKI Group, provider of India-based investment banking and corporate finance service. Sharekhan is one of the largest stock broking houses in the country. S.S. Kantilal Ishwarlal Securities Limited (SSKI) has been among Indias leading broking houses for more than a century.

Sharekhan's equity related services include trade execution on BSE, NSE, Derivatives, commodities, depository services, online trading and investment advice. Trading is available in BSE and NSE. Along with Sharekhan.com website, Sharekhan has around 510 offices (share shops) in 170 cities around the country. Share khan has state of art web portal providing fundamental and statistical information across equity, mutual funds and IPOs. You can surf across 5,500 companies for in-depth information, details about more than 1,500 mutual fund schemes and IPO data. You can also access other market related details such as board meetings, result announcements, FII transactions, buying/selling by mutual funds and much more. Type of Account:

1. Sharekhan Classic account:


Allow investor to buy and sell stocks online along with the following features like multiple watch lists, Integrated Banking, demat and digital contracts, Real-time portfolio tracking with price alerts and Instant credit & transfer. 2. Sharekhan Speed Trade account

This account for active traders who trade frequently during the days trading session. Following are few popular features of SpeedTrade account: o o o o o Brokerage: Some stock trading companies charge direct percentage while others charge a fixed amount per Rs 100. Sharekhan charges 0.5% for inter day shares and 0.1% for intraday or you could say Sharekhan charges 50 paise per Rs 100. Advantages of Sharekhan: Online trading is very user friendly and one doesn't need any software to access. They provide good quality of services like daily SMS alerts, mail alerts, stock recommendations etc. Sharekhan has ability to transfer funds from most banks. Unlike ICICI Direct, HDFC Sec, etc., so investor not really needs to open an account with a particular bank as it can establish link with most modern banks. Single screen interface for cash and derivatives Real-time streaming quotes with Instant order Execution & Confirmation Hot keys similar to a traditional broker terminal Alerts and reminders Back-up facility to place trades on Direct Phone lines

Disadvantages of Sharekhan: They charge minimum brokerage of 10 paisa per stock would not let you trade stocks below 20 Rs. (If you trade, you will lose majority of your money in brokerage). Hidden conditions and charges. They do not provide facility to book limit order trades during after-hours. Classic account holders cannot trade commodities. Cannot purchase mutual funds online.

KOTAK SECURITIES

Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, was set up in 1994. Kotak Securities is a corporate member of both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Currently, Kotak Securities is one of the largest broking houses in India with wide geographical reach.

Kotak securities online trading is the online trading portal of the Kotak Securities Ltd, the leading stock broking house of India. The online division of Kotak Securities Limited provides services like internet broking services, online IPO and mutual fund investments. Types of accounts: Kotak offers different account types according to users requirement: 1. Kotak Gateway

Kotak securities gateway account opens the gateway to a world of investing opportunities for beginners. Kotak gateway user can trade anywhere, anytime using internet. Kotak also offers call and trade facility. They provide sms alert, research report, free news and market updates. Best feature of Kotak gateway is call and trade facility. Anybody can activate Kotak securities gateway account with any amount between Rs 20,000 to 5, 00,000. This can be in form of cash deposit or the value of the shares you buy. Brokerage will be charged based on the account type. For intraday trading brokerage is .06% both sides for less than 25 lakhs and .023% for more than 25 crores.

2.

Kotak Privilege Circle This is the premium account for its users. Along with kotak gateway account benefits they provides independent market expertise and support through a dedicated relationship manager and a dedicated customer service desk which provides assistance in opening accounts, handling day-to-day problems, and more. They provides KEAT premium which is an exclusive online tool that lets you monitor what is happening in the market and view your gains and losses in real-time. One can activate Kotak securities privilege circle account with any amount more than Rs. 10, 00,000/- as margin, by way of cash or stock. For intraday trading brokerage is .06% both sides for less than 25 lakhs and .03% for more than 25 crores.

3.

Kotak High Trader This is the best offer for daily trader or intraday traders. This is an Auto Square Off product where you can enjoy the benefits of intra-day trading. Trader can get the 6 times exposure on the margin. They provide all the benefits which kotak gateway and privilege account provides. Trader can apply paper free order for IPO. One can activate Kotak securities high trader with any amount less than Rs 5, 00,000/- as margin, by way of cash or stock. The minimum brokerage that is applicable in the Kotak high trader account is 4 paisa on delivery and 4 paisa in the cash segment.

4.

Kotak Freeway Frequent trader use this account type because freeway account enables its users to trade as many times as they like - at a fixed brokerage. One can activate Kotak securities freeway with any amount less than Rs. 1, 25,000/- as margin, by way of cash or stock. They charge fixed brokerage of Rs.999/- a month and on delivery transaction brokerage is . 59% on less than 1lakhs and .18% on more than 2 crores.

5.

Kotak Flat This product is best suited for the needs of the Indian retail investor who actively invests through the internet. Kotak flat introduces the international trend of charging brokerages on per trade basis. Brokerage rate works up to 0.18% on delivery trades and 0.018% for intraday trades.

6.

Kotak Assist This account most suits to long term investors. This account provides Complete assistance on all your financial investment.

Brokerage and Account opening fees: A trading account in Kotak requires you to have a minimum of Rs.1000 to start with, the bank account to have a minimum of Rs.2500. Brokerage: For Intra-day trading, Kotak brokerage is around 0.05%. For delivery trading, Kotak brokerage is around 0.45%.

Advantages of Kotak Securities Limited: Kotak provides a Call & Trade facility to its customers wherein they can place and track their orders through phone when they are away from home. They provide daily SMS alerts, market pointers, periodical research reports, stock recommendations etc. Kotak provides exclusive online tool to monitor what is happening in the market and also investor can view gains/losses in real-time. Disadvantages of Kotak Securities Limited: In online trading sometimes delay comes. So it can be frustrating

INDIABULLS

Indiabulls is India's leading Financial Services and Real Estate Company having presence over 414 locations in more than 124 cities. Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock Exchange Types of account: 1. Indiabulls Equity Trading Account Indiabulls Equity Trading Account is standard Online trading account from India bulls and along with online trading it also provides priority telephone access that gives you direct access to your Relationship Manager and full access to 'Indiabulls Equity Analysis'. 2. Power Indiabulls Power Indiabulls trading terminal is the most advanced new generation trading platform with great speed. This trading terminal is built in JAVA. Power Indiabulls is extremely reach in features including Live Streaming Quotes, Fast Order Entry and execution, Tic by Tic Live Charts, Technical Analysis, Live News and Alerts, Extensive Reports for Real-time Accounting.

Brokerage and fees: Account opening fees: Rs 1200/- (One time, non-refundable) as below: 250/- Equity Trading Account opening charge 200/- Demat Account opening charge 750/- Software changes

Advantages of Indiabulls

Brokerage is less compare to other online trading companies. Provide trading terminal 'powerbulls', a java based software. It's very fast in terms of speed and execution.

Disadvantages of Indiabulls Faces lots of complaints regarding portal breakdown.

MOTILAL OSWAL

Motilal Oswal Financial Services (MOSL), a leading brokerage firm, has exhibited robust and consistent growth in both institutional and retail broking. An established brand name and extensive geographic network covering 1,339 locations in over 426 cities and towns would provide it ample opportunities to cross-sell products and services. It has also forayed into related businesses like investment banking, private equity and asset management. We believe the stock offers quality exposure to the domestic equity broking and financial services market, which has impressive growth potential. Strong competitive positioning MOSL is one of the leading stock broking firms in India with a rapidly growing client base and wide distribution network. A respected research presence and extensive reach has resulted in robust growth in its retail business. The company also has a strong institutional equity business. It has consistently improved its market share in terms of traded volumes on the stock exchanges Diversifying into related businesses MOSL has forayed into related business like investment banking, private equity and asset management. Though all these business are linked to capital market, we believe the move would bring in various diversification benefits for the company going forward Customized investment management services MOSL offers customized investment management services to its retail clients. These services include planning, advisory, execution and monitoring a range of investment products. It also provides wealth management services. The company has classified its clients into three segments Mass Retail, Mid-Tier Millionaire and (PCG) Private Client Group. According to the needs of each segment, products and services are offered through the companys business locations and online channels. MOSL has a discretionary portfolio management business. The company is seeking to build this business rapidly. The target customer segment for wealth management business would largely be the HNW (high networth) segment. The growing client bases of its broking and distribution businesses would be a captive source for crossselling these products. MOSL has recently launched a separate branded product (Purple) for catering to the needs of this segment. Strategy adopted by Motilal Oswal

RELIGARE

Religare Securities Ltd is a Ranbaxy promoter group company, is one of Indias largest and fastest growing integrated financial services institutions. The company offers a large and diverse bouquet of services ranging from equities, commodities, insurance broking, to wealth advisory, portfolio management services, personal finance services, Investment banking and institutional broking services. Religares retail network spreads across the length and breadth of the country with its presence through more than 900 locations across more than 300 cities and towns. Having spread itself fairly well across the country and with the promise of not resting on its laurels, it has also aggressively started eyeing global geographies Unique features and benefits of trading through Religare: Trade Reward - Trade Rewards is a unique offering from Religare that gives you dual benefits of hassle free investment experience online and an opportunity to earn while you invest. Zero Brokerage - Break the shackles. Get freedom from brokerage and avail zero brokerage on your trades through us. Exposure up to 20 times on your margin - Allowing you the freedom to trade without hassles throughout the day without having to worry about your cash margin. You can get exposure (on cash Segment) as high as 20 times for intraday trades. Of course conditions apply on above two. Interest on cash margin - Even while you are waiting to make your next trade or online investment, your unutilized cash does not lie idle with us. You earn interest on your unutilized cash margin.

INDIA INFOLINE

The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial space with offerings ranging from Equity research, Equities and derivatives trading,

Commodities trading, portfolio management services, Mutual Funds, Life Insurance, Fixed Deposits, Gold Bonds and other small savings instruments to loan products and investment banking. Website of India Infoline for trading is www.5paisa.com. The company has a network of 976 business locations (branches and Sub-brokers) spread across 365 cities and towns. Today it has more than 800000 clients Trading Platform. 5Paisa offers 2 different online trading terminals to its customers: 1. Investor Terminal (IT): Investor Terminal is 5Paisa's equity trading terminal for low volume trader. This is web based terminal and could access from anywhere. This product provides limited features in comparison of Trader Terminal, which is another product provided by 5Paisa. Trader Terminal (TT): Trader Terminal is for high volume equity traders. Trader Terminal provides high volume trading with powerful interface and fast order execution

2.

Brokerage and Account opening fees: Account opening fees Rs 500/- onetime non refundable Brokerage. 5 paisa offers charge only 5 paisa for Rs100 of intraday trade done, which is 0.05% brokerage. In case of in delivery trade, they charge an additional 0.20% for back office and securities handling.

Earlier the organizations which provided the facility of online trading was not safe enough to invest but some of the changes in the past years in the Indian share market have created the interest of trading in the shares by the people. Broadly we can classify three important factors which have contributed to the development of online trading in IndiaFirstly the major step was taken by the National Stock Exchange (NSE) in the year 1994 which allowed the electronic trading and seeing to this various other stock exchanges in India followed soon. This helped in making the fast, accurate and transparent transactions saving a lot of time then the traditional method of trading. The investors were also saved by the clutches of the fraud brokers at the times when the clients were not aware of the true prices of the shares. Secondly, in the year 1996 the dematerialization of the shares came (also known as DEMAT) which avoided the online presence of shares in an electronic form avoiding them from theft, pilferage or from other losses like counterfeiting and frauds regarding share transfer. The third step was the rapid growth of computer education and learning of internet by the people. With the evolving of internet the online trading became a hit and the investors became confident in investing just with a click of a mouse. With the happening of such events the ratio of trading has improved a lot. As it takes less time people praise this technology for trading purposes. Some people who traded rarely now even trades 2-3 times every day as it provides edge of researching about companies on the internet. The number of small investors is increasing on the daily basis that trades on the internet. If a person invests or trades in equities, derivatives, commodities etc through the use Internet it is known as online trading enabling the investor to connect electronically to buy or sell stocks, derivatives etc with the other investors. This can be done with the help of online service providers like investsmart, indiaInfoline etc. A person can access a stockbroker's website through a PC connected to Internet and can place his orders. The benefits areA person can see the latest market movement through streaming quotes. Reduces time lag due to self-execution and instant confirmation. Empowers traders to have a complete control over their trading decisions. A person can access his accounts and related information on the Website Provides greater convenience of trade as a person can trade from home or other convenient location. It is cheap in terms of cost associated and offers reduction in overheads A trader can view the historical charts on his computer The Internet revolution has changed the way to communicate and the way to do business in todays society bringing us closer and closer to vital sources of information. It provides us with means to directly interact with service-oriented computer systems tailored to our specific needs; therefore, we can serve ourselves better by making our own decisions This new access by the online trading customers to low-cost transactions and cutting-edge, real-time market information

that formerly belonged only to brokers has opened up extraordinary new investment opportunities as well as a crucial need for state-of-the-art information. Today the investors use the Internet Client-Server technology to buy and sell the securities at an instant at any point of time. People investing online have reached the proportions. Online trading allows an investor to buy and sell shares on the exchange through Internet and helps in the direct control of his investments.