ashok project

7/31/2019 Ashok Project

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CONTENT

Chapter –I Introduction

Need for the study

Objectives of the studyMethodology

Limitations

Chapter –II Industry Profile

Stock markets in India

Financial Markets

Money Markets

Capital Markets

Stock Markets

Derivative Markets

Chapter -III Steel city securities Limited profile .

About the organization

Organization structure

Activities of SCSL

Registration steps

Chapter - IV Theoretical framework of derivative market. Chapter -V Practical aspects of derivative market in Steel City

Securities Ltd.

Chapter - VI Summary and Suggestions .

ANNEXURE Bibliography



Chapter – 1

Overview

Introduction

Need for the study

Objectives of the study

Methodology

Limitations



INTRODUCTION

India can boast of being one of the oldest stock markets in Asia. Earlier in

the initial days trading in securities was done in a Very informal or Unsystematic

manner Company agents or representatives representing different corporate

Companies, already listed in the “Stock Exchange”. These representatives has to

openly outcry the necessary details about the company and give a brief description of

the number of shares allotted to issue and their quoted prices. After this the bidding

process takes Place.

This system was lacking the information technology for immediate

matching or recording of trades. This was time consuming and inefficient. In order to

provide efficiency, liquidity and transparency, NSE(National Stock Exchange)

introduced a nation wide online fully automated screen based trading system(SBTS)

where a member can punch into the computer Quantities of securities and the prices at

which he likes to transact and the transaction is executed as soon as it finds matching

sell or buy orders from a Counter party.

Today India can boast that almost 100% trading takes place through

Electronic order matching. NSE has main computer which is connected through Very

Small Aperture Terminal (VSAT) installed at its office. Brokers have terminals

(identified as PCs) installed at their premises which are connected through VSATS/

Leased Lines/ Modems.

With the emergence of online trading in Indian Stock Exchanges the volume

of the securities traded, the size of the market and the market turnover has increasedtremendously. This accounts for about 2/3rd of the National Income of the Economy.



DERIVATIVES MARKET IN INDIA

Derivatives products initially emerged as hedging devices against

fluctuations in underlying asset. In recent years the market for financial derivatives has

grown tremendously in terms of variety of instruments available and it marks by a

very high volatility. Futures and options on stock indices have gained more popularity

than on individual stocks. Through the use of derivatives products it is possible to

partially (or) fully transfer price risks by locking in asset prices.

NEED FOR THE STUDY

“Performance Evaluation” makes the reader understand about the performance

of the particular scrips since last 2months.

My study can make the investor understand various operations done in Stock

Exchange.

This gives them a clear idea about the performance of the scrips and how and

where to invest.

After going through my study the reader can be very well benefited by not only

knowing about Stock Exchange but also its operation, various guidelines and

by learning the performance on scrips.



OBJECTIVES

To study various operations of various Stock Exchange in India.

To study the fluctuations of selected scrips that is traded regularly in NSE and

suggestions given.

To study the derivatives trading in the Indian Capital Market.

To study the Futures and forwards contract in the derivative markets.

To study the factors which determine or influence the Option price.

To study about Futures and Options as a hedging tools.

To study clearing and Settlement procedure of Futures and Options.

To study the payoff for Future and Options in the long and short run.

METHODOLOGY

The study was under taken in the trading floor of SCSL. The Information

regarding the online trading is collected from both primary as well as secondary

sources of data.

Primary data

Watching the online trading live.

Interacting with the operators at the computer terminal’s the clients trading in

SCSL.

Collecting information from the head of each department and from the staff

working in those departments.



Secondary data

Collecting the data from the website of NSE.

Referring the topics in textbooks and journals relating to stock exchange

operations.

Collecting information through internet and also from Steel City Securities

Limited.

LIMITATIONS

As the subject chosen comparatively new one, the study suffers from

certain limitations.

1. Stock Exchange is an ocean and study is an attempt to understand which a drop in

the ocean. The activities in stock exchange and derivatives market are vast and to

understand all the activities is a difficult task, as there are only few persons who can

provide information.

2. To know the entire activities of stock exchange is very difficult as it takes

a long period to understand.

3. Though the system, people and time were there, some information regarding certain

topics in stock trading was not collected due to non availability of time to the key

persons from their busy schedule.

4. Because of the comprehensive nature of some information is not disclosed though

sources of information are available.



Chapter – 2

Overview

Industry Profile

Stock markets in India

Financial Markets

Money Markets

Capital Markets

Stock Markets

Derivative Markets



INTRODUCTION TO FINANCIAL MARKETS

Finance is the integral part of modern business. Financial markets refer to

the institutional arrangements for dealing in financial assets and credit instruments of

different types, such as currency cheques, bank deposits bills, etc.

The main functions of the financial markets are:

(i) To facilitate creation and allocation of credit and liquidity

(ii) To serve as intermediaries for mobilization of savings;

(iii) To assist the process of balanced economic growth;

(iv) To provide financial convenience;

(v) To cater to the various credits needs of the business houses.

TYPES OF FINANCIAL MARKETS:

Based on credit requirement for short-term and long-term purposes,

financial markets are divided into two categories:

1. Money Market

2. Capital Market



Financial Management

Financial

institutions

Financial

Markets

Financial

InstrumentsFinancial

Services

Money Market Capital Market

UnorganizedOrganized

Stock

MarketTerm Lending Institutions

Gift edged Securitiesmarket Industrial securities

market

Primary market

Secondary market

Stock Exchange

NSE BSE OTCEI OTHERS

Wholesale debt market segmentCapital Market Segment

Cash Segment Derivative segment

OptionFutureInterest

R



STOCK EXCHANGES IN INDIA

At the end of the June 1989, there were 18 recognized stock exchanges in

India. Among the 18 stock exchanges, the first organized stock exchange set up at

Bombay in 1857 is distinguished not only by its size but also it has been recognized

permanently, while the recognition for other markets is renewed every 5 years. Stock

markets are organized either as voluntary, non-profit making associations (Bombay,

Ahmedabad, Indore) or public limited companies (Calcutta, Delhi, Bangalore) or

company limited by guarantee (Madras, Hyderabad).

In India, the growth of stock exchanges has been linked to the growth of

corporate sector. Though a number of stock exchanges were set up before

independence but, there was no All India legislation to regulate they’re working.

Every stock exchange followed its own methods of working .To rectify this situation,

the SECURITY CONTRACTS (REGULATIONS) ACT was passed in 1956.

In 1965, 22 separate provincial stock exchanges were merged into 3 regional

stock exchanges and in 1973 these, in turn, were combined to form the National Stock

Exchange (NSE) under the title of the stock exchange that has trading floors in many

former provincial center. At present, there are 26 stock exchanges in our country. The

over-the counter exchange of India began its operations in 1992. Since 1995, trading

in securities is screen based (on-line)

BOMBAY STOCK EXCHANGE (BSE):

Bombay stock exchange is the first organized stock exchange set up at

Bombay in 1857. It is the premier or apex stock exchange in India as it is

distinguished not only by its size but also it has been recognized permanently while

recognition of other stock exchanges is renewed every 5 years. It is the oldest stock

market.



Bombay Stock Exchange raised the threshold limit for listing to Rs.10

crores, moved on to weekly settlement and quicker actions for each settlement.

Settlement is through the clearinghouse. 12 days carry forward is allowed on BSE.

Index in BSE is ‘SENSEX’. BSE membership fee in 1857 was just Rs1lakh and now it

in about Rs 2crores.

NATIONAL STOCK EXCHANGE (NSE)

National Stock Exchange of India Ltd was started in 1992 with a paid-

up equity of Rs.25 crores. The government recognized it in the same year and NSE

started its operations in wholesale in Nov 1994.

NSE MISSION

NSE mission is setting the agenda for change in the securities markets in

India.

The NSE was set-up with the main objectives of:

establishing a nation-wide trading facility for equities, debt instruments

and hybrids,

ensuring equal access to investors all over the country through an appropriate

communication network,

providing a fair, efficient and transparent securities market to investors using

electronic trading systems,

enabling shorter settlement cycles and book entry settlements systems, and

meeting the current international standards of securities markets.

NSE LOGO

The logo of the NSE symbolizes a single nationwide securities trading facilityensuring equal and fair access to investors, trading members and issuers all over the



country. The initials of the Exchange viz., N, S and E have been etched on the logo

and are distinctly visible. The logo symbolizes use of state of the art information

technology and satellite connectivity to bring about the change within the securities

industry. The logo symbolizes vibrancy and unleashing of creative energy to

constantly bring about change through innovation.

NSE GROUP

NSCCL

NCCL NSETECH

IISL

DotEx Intl. Ltd.

NSE.IT

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NSE Milestones

November 1992 Incorporation

April 1993 Recognition as a stock exchange

May 1993 Formulation of business plan

June 1994 Wholesale Debt Market segment goes live

November 1994 Capital Market (Equities) segment goes live

March 1995 Establishment of Investor Grievance Cell

April 1995 Establishment of NSCCL, the first Clearing Corporation

June 1995 Introduction of centralised insurance cover for all trading members

July 1995 Establishment of Investor Protection Fund

October 1995 Became largest stock exchange in the country

April 1996 Commencement of clearing and settlement by NSCCL

April 1996 Launch of S&P CNX Nifty

June 1996 Establishment of Settlement Guarantee Fund

November 1996Setting up of National Securities Depository Limited, first depository in

India, co-promoted by NSE

November 1996 Best IT Usage award by Computer Society of India

December 1996 Commencement of trading/settlement in dematerialised securities

December 1996 Dataquest award for Top IT User

December 1996 Launch of CNX Nifty Junior

February 1997 Regional clearing facility goes live

November 1997 Best IT Usage award by Computer Society of India

May 1998Promotion of joint venture, India Index Services & Products Limited

(IISL)

May 1998 Launch of NSE's Web-site: www.nse.co.in

July 1998 Launch of NSE's Certification Programme in Financial Market

August 1998 CYBER CORPORATE OF THE YEAR 1998 award

February 1999 Launch of Automated Lending and Borrowing Mechanism

April 1999 CHIP Web Award by CHIP magazine

October 1999 Setting up of NSE.IT

January 2000 Launch of NSE Research Initiative

February 2000 Commencement of Internet Trading

June 2000 Commencement of Derivatives Trading (Index Futures)

September 2000 Launch of 'Zero Coupon Yield Curve'

November 2000Launch of Broker Plaza by Dotex International, a joint venture between

NSE.IT Ltd. and i-flex Solutions Ltd.

December 2000 Commencement of WAP trading

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June 2001 Commencement of trading in Index Options

July 2001 Commencement of trading in Options on Individual Securities

November 2001 Commencement of trading in Futures on Individual Securities

December 2001 Launch of NSE VaR for Government Securities

January 2002 Launch of Exchange Traded Funds (ETFs)

May 2002NSE wins the Wharton-Infosys Business Transformation Award in the

Organization-wide Transformation category

October 2002 Launch of NSE Government Securities Index

January 2003 Commencement of trading in Retail Debt Market

June 2003 Launch of Interest Rate Futures

August 2003 Launch of Futures & options in CNXIT Index

June 2004 Launch of STP Interoperability

August 2004 Launch of NSE’s electronic interface for listed companies

March 2005 ‘India Innovation Award’ by EMPI Business School, New Delhi

June 2005 Launch of Futures & options in BANK Nifty Index

December 2006 'Derivative Exchange of the Year', by Asia Risk magazine

January 2007 Launch of NSE – CNBC TV 18 media centre

March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com

June 2007 NSE launches derivatives on Nifty Junior & CNX 100

October 2007 NSE launches derivatives on Nifty Midcap 50

January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008

March 2008 Introduction of long term option contracts on S&P CNX Nifty Index

April 2008 Launch of India VIX

April 2008 Launch of Securities Lending & Borrowing Scheme

August 2008 Launch of Currency Derivatives

August 2009 Launch of Interest Rate Futures

November 2009 Launch of Mutual Fund Service System

December 2009 Commencement of settlement of corporate bonds

February 2010 Launch of Currency Futures on additional currency pairs

March 2010 NSE- CME Group & NSE - SGX product cross listing agreement

April 2010 Financial Derivative Exchange of the Year Award' by Asian Banker

July 19, 2010 Commencement of trading of S&P CNX Nifty Futures on CME

July 19, 2010 Real Time dissemination of India VIX.

July 28, 2010 LOI signed with London Stock Exchange Group

October 12, 2010 Introduction of Call auction in Pre-open session

October 28, 2010 Introduction of European Style Stock Options

October 29, 2010 Introduction of Currency Options on USD INR

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NSE Technology

Across the globe, developments in information, communication and

network technologies have created paradigm shifts in the securities market operations.

Technology has enabled organisations to build new sources of competitive advantage,

bring about innovations in products and services, and to provide for new business

opportunities. Stock exchanges all over the world have realised the potential of IT and

have moved over to electronic trading systems, which are cheaper, have wider reach

and provide a better mechanism for trade and post trade execution.

NSE believes that technology will continue to provide the necessary impetus

for the organization to retain its competitive edge and ensure timeliness and

satisfaction in customer service. In recognition of the fact that technology will

continue to redefine the shape of the securities industry, NSE stresses on innovation

and sustained investment in technology to remain ahead of competition. NSE IT set-up

is the largest by any company in India. It uses satellite communication technology to

energies participation from around 400 cities spread all over the country. In the recent

past, capacity enhancement measures were taken up in regard to the trading systems so

as to effectively meet the requirements of increased users and associated trading loads.

With up gradation of trading hardware, NSE can handle up to 1 million trades per day.

CIRCUIT BREAKERS

The Exchange has implemented index-based market-wide circuit

breakers in compulsory rolling settlement with effect from July 02, 2001

INDEX-BASED MARKET-WIDE CIRCUIT BREAKERS

The S & P CNX The index-based market-wide circuit breaker system applies at

3 stages of the index movement, either way viz. at 10%, 15% and 20%. These circuit

breakers when triggered bring about a coordinated trading halt in all equity and equity

derivative markets nationwide. The market-wide circuit breakers are triggered by



movement of either the BSE Sensex or the NSE S&P CNX Nifty, whichever is

breached earlier.

In case of a 10% movement of either of these indices, there would be a one-

hour market halt if the movement takes place before 1:00 p.m. In case the

movement takes place at or after 1:00 p.m. but before 2:30 p.m. there would be

trading halt for ½ hour. In case movement takes place at or after 2:30 p.m. there

will be no trading halt at the 10% level and market shall continue trading.

In case of a 15% movement of either index, there shall be a two-hour halt if the

movement takes place before 1 p.m. If the 15% trigger is reached on or after

1:00p.m. but before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger

is reached on or after 2:00 p.m. the trading shall halt for remainder of the day.

In case of a 20% movement of the index, trading shall be halted for the

remainder of the day.

S&PCNX NIFTY:

NIFTY is based upon solid economic research it the new world of financial

product on the index like index futures, index options and index funds. A trillions

calculations were expanded to evolve the rules inside the S&P CNX Nifty index.

The result of this work is remarkably simple:

The correct size is to use is 50.

Stocks considered for the S&P CNX Nifty must be liquid by the 'Impact

cost criterion.

The largest 50 stocks that meet the criterion go into the index.

The nifty is uniquely equipped as an index for the index market owing to its

Low market impact cost



High edging effectiveness

Chapter – 3

Overview

ORGANISATION PROFILE

PROFILE OF SCSL

HISTORICAL BACKGROUND OF SCSLORGANIZATION STRUCTURE



FUNCTIONS OF SCSL

DEPARTMENTS IN SCSL

HISTORICAL BACKGROUND OF THE COMPANY:

Confidence As Strong as Steel

Steel City Securities Limited was incorporated on 22nd February 1995

and raised equity of Rs.105 lakh on 24th June 1995 and obtained the membership of

the largest and prestigious National Stock Exchange of H-Limited (NSE) and Bombay

Stock Exchange (BSE) in 2000, in its capital market segment. The 1st VSAT for its

trading workstation (TWS) at Hyderabad was installed in 1995 and the 2nd at

Visakhapatnam in April 1996.



Presently, there are 64 VSATS installed at more than 50 centers in Andhra

Pradesh, Orissa, Tamilnadu and Karnataka. There are 219 computer trading terminals

put together connected to their VSAT at the centers (each VSAT can have 5 TWS

connected). Since its inception the service of this organization is prompt and there is

not a single instance of payout of funds / deliveries delay to any client, from the

beginning the firm is committed to continue the same service in future also.

Companies’ basic principle is total commitment in service to all clients with all

transparency and ensures that is it their sacred policy not to indulge in own trading,

there are no self-motives or necessity to cancel or delay anything.

Every branch is fully equipped and independently connected to the NSEHub at Mumbai, every branch is having 2 to 5 trading terminals connected to VSAT.

The company performance has not parallel on NSE.

Steel City Securities Ltd. follows a functional organization system. It

provides various services which are provided through different departments. They are:

Trading system:

Deals with online trading facility through the VSAT

Registration of clients and interaction with clients

Dealing with new sub brokers and making them conversant with the system

Provides updated information of a day’s trading activities.

Data Processing:

Opening of the account after the fulfillment of various formalities.

Shares are credited to the De-Mat account by dematerializing the physical

shares and those brought from the secondary market.

The process of settling the selling and buying obligations takes places through

the delivery instruction slip to their respective clients.

Deliveries:



This department acts as an intermediary between stock exchange and clients.

Hence proper knowledge is very essential. Proper records of all inward and outward

stocks should be maintained failing which there may be improper deliveries leading to

penalties and disagreements with clients. NSCCL is extended the responsibility of

settling the delivery obligations of sellers and buyers dealt in a given settlement

period.

Board of Directors of Steel City Securities Limited

1. Mr. G. Sree Ram Murthy

Chairman Cum

Managing Director

2. Mr. G. Raja Gopal Reddy Executive Director

3. Mr. K. SatyanarayanaExecutive Director

(Surveillance)

4. Mr. Satish Kumar Arya Director (Operations)

5. Mr. G. Satya Ram Prasad Director

THE VARIOUS SERVICE DEPARTMENTS IN SCSL ARE:

♦ Systems Departments

♦ Inspection Department

♦ H.R. Department

♦ Accounts

♦ Deliveries

♦ Depository Participant

♦ Research and Development

ACTIVITIES OF STEELCITY:

STEEL CITY SECURITIES LIMITED



STRUCTURE OF THE COMPANY

The total control of the organisation is under the Chairman who is also the

Managing Director. Under him there are three Executive Directors for surveillance &

operations and also a Sleeping Director.

Mr.G.Sree Ram Murthy is the Chairman cum Managing Director, Mr.G.Raja

Gopal Reddy the Executive Director looks after the market development and opening

of new franchisees. He also looks after requirements of new and existing branches.

Mr.K.Satyanarayana the Executive Director, surveillance has an inspection team under

him for the purpose of vigilance in branches and franchises.

Mr.Satish Kumar Arya is the Director Operations. He controls the trading

limits, margins etc. All office related matters are dealt by him. He is also responsible

for meeting the requirements and following the rules set by the stock exchanges.

Mr.G.S.R.Prasad is the fourth Director who does not play any role in the day to day

working of the company.

General Manager (Operations) is Mr.Murali is responsible for De-Mat with

NSDL / CDSL. General Manager (Systems) is Mr.V.Srinivas who looks after the

Networking, Software, Hardware and trading related requirements and VSAT

connectivity. Finance and accounts were looked after by Mr.Ramu who is a Chartered

Accountant.

Mr. Samba Murthy is responsible for the trading and registration of new

clients. He is the Trading Manager. Mr. Krishna Naga Bhutan is the Marketing

Manager. He is also responsible for conduction various awareness seminars. The

legal section deals with the investor’s problems and legal issues with the company.

Even without relation to the company they render legal services.



ORGANISATIONAL STRUCTURE

D i r e c t o r( O p e r a t io n s )

C h a i r m a n & M a n a g in g D i r e c t o r

P o r t f o l i o

M a n a g e m e n t

S e r v ic e s

G e n e r a M a n a g e rO p e r a t io n s &

S e c u r i t i e s

S r M a n a g e r

S y s t e m s

A s s tM a n a g e r H R

G e n e r a l

M a n a g e r I T

D e a le r s

S o f t w a r eP r o j e c t L e a d e r

S o f t w a r eD e v e l o p e r

D B A

H a r d w a r e

E n g i n e e r

S y s t e m s

A d m i n i s t r a t o r

H a r d w a r eT r a in e e

B r a n c hM a n a g e r

R e g io n a lM a n a g e r

B u s i n e s sD e v e l o p m e n t&

M a r k e t i n g

S r M a n a g e rL e g a l

B r a n c hM a n a g e r

E x e c u t i v eD i r e c t o r

R e g i o n a lM a n a g e r

T e c h n i c a lA n a l y s t

M a n aL o g i s

S r M a n( S u r v e i

M a n a I n s p e c

B r a n M a n a

E x e c u t i v eD i r e c t o r

( S u r v e i l la n c e )

R e g i oM a n a

S r M a n a g e rA c c o u n t s

D y M a n a g e rA c c o u n t s

G e n e r a lM a n a g e r

( F & A )

S t o r e s

A s s t M a n a g e r(L i a i s o n)M u m b a i

S r M a n a g e rS u r v i e l l a n c e

M a n a g e rT r a d i n g

S r M a n a g e r

O p e r a t io n s

C o o r d i n a t o r

D PO p e r a t o r s

M a n a g e rC o m m o d i t i e s

B r a n c h

M a n a g e r

R e g io n a lM a n a g e r

R & DE q u i t y

R & DD e r iv e t iv e s

R e s e a r c hE d i t o r

R e s e a r c hE d i t o r



The different branches and franchisees of the company report directly to the

Head Office in Visakhapatnam and any activity taken up by these should be brought to

the notice of the Head Office. Every branch has a Branch Manager, Accountant,

Trading Manager and Trading Operator. The company has various functional

departments for its smooth functioning.

COMPANY POLICY:

The basic policy of SCSL, is not to indulge in own trading. The basic

principle of SCSL is total commitment in service to all clients. The service of SCSL is

prompt and hence there are not delays in payout of funds or deliveries to any client.

SCSL collects pay in T+1 and its payout in T+3 days. Through SCSL, trade in NSE

per day is 200 crores whereas, trade in BSE per day is 4 crores.

CAPITAL:

The base capital is set up a trade center is 1 crore, SCSL raised equity of

Rs.105 lakhs during its incorporation. Earlier, SCSL paid Rs.75 lakhs as base capital

to NSE when it was set up. Every trade corporation has to maintain a reserve of some

amount with NSE. At present, SCSL has 7.5 crores as margin with NSE.

WORKING STAFF:

There is 100 to 150 staff employed in SCSL. The staff draws a salary basing

on the cadre they are employed. The salaries in SCSL vary from Rs.2000 to Rs.20000

per month basing on the cadre of the employee.



EMPLOYEE RECRUITMENT:

In SCSL, the top managements select the candidate and the letter of

appointment or rejection is sent to the Board of Directors. The Directors do the

placement in SCSL. The placement can either be in the Head Office or in any other

branches of SCSL.

PLANNING:

It involves planning of Human Resource Department i.e. recruitment, selection,

training etc. it also involves forecasting of personnel changing values, attitudes and

behavior of employees.

DIRECTING:

In this company, the personnel manager co-ordinates various managers at

different levels as the personnel functions are concerned. The wilting and effective

co-operation of employees for the attainment of organization goals is possible through

proper direction.

CONTROLLING:

In SCSL, the top management does the controlling. In this aspect, they do

auditing training programmes; directing moral surveys are some of the functions of the

top management.

RECRUITMENT:

It is the process of searching for prospective employees and simulating them to

apply for jobs in the organization. In SCSL, if they want any person, they will give

notification in newspaper in order to simulate eligible persons to apply for that job.



EMPLOYEE RELATION:

The employee relations at all levels remains cordial. Training, Promotion and

Transfers are done in SCSL to motivate and increase the morale of the staff. All the

employees in SCSL from top to bottom perform their services with sincerity, hard

work, dedication and with team spirit due to which SCSL is considered as one of the

best stock trading firm in India.

SELECTION, PLACEMENT AND TRAINING:

The top management shall do the selections. Placement is in the head office

and in the branches of SCSL, which are in different places. Selected candidates are

placed in one of the branches of SCSL and gives proper training.

FUNCTIONS OF THE SCSL:

SCSL provides mock trading to its clients and members.

SCSL provides complete automated system both in trading and settlement

process.

SCSL enables clients to trade both in NSE and BSE.

SCSL converts the paper shares into electronic shares through DMAT process.

SCSL provides market information.

SCSL acts as clearing member for trades taking place through its self.

SCSL is a depository participant of NSDL & CDSL and it is a trading and

clearing member of NSE & BSE.

FACILITIES PROVIDED TO CLIENT IN SCSL:

Gross exposure facility given in SCSL is 5 times. But, up to 10 times, it is

relaxed to clients. Turnover facility given in SCSL to clients is 33.33 times. But, the

restrictions are not considered. Minimum of Rs.20,000 margin money is collected



from professional clients who trade for speculation purpose. For deliver purpose, no

margin money is collected. Due to the total commitment in service to its clients,

SCSL is considered to be one of the best Stock Broking Companies in India.

NSE BRANCHES OF SCSL: NSE FRANCHISEES:

1. BACKOFFICE

To know the trade position of the client, back-office is done in SCSL everyday

immediately after the trade ends. ‘STEEL PACK’ is the package used in back office

system. Steel City Software team was designed and maintained this “STEELPACK”

Package.

The main modules of back office system are:

Trading

Finance

Importing Exporting

Margins

Clearing

Business Controls

Payin-Payout

House Keeping

Rourkela Berhampur (2)

Srikakulam Visakhapatnam

Chennai Kukatpalli

Anantapur Bakaram

Chittor Tenali

Amalapuram Pidiguralla

Madanapalli Hanumakonda

Panjagutta Erragadda

Mumbai Gudiwada

Secunderabad Kakinada

Gajuwaka Cuddapah

Vizianagaram Guntur

Tirupathi Prodduttur

Bhimavaram Narsaraopet

Vijayawada Chilakalurpet

Nellore Eluru

Nandyala Ongole



In the back office, first the Import Export module is opened where the

trade file of the day’s trade is collected and the text file was imported to the system.

There, the old closing prices are inserted by new prices from the Bhavcopy file.

Bhavcopy is the average of last half-an-hour prices of the scrips.

To calculate the net mark to market value, Bhavcopy file is imported from

NSE/BSE/NCDEX/MCX. Net mark to market value is to be known to know the profit

or loss position of the client, basing on which the Trading Manager of SCSL will

decide whether the client can trade or not for the next day on comparing it with the

margin paid by the client.

After importing the Bhavcopy file, the trading module is opened. In trading

module, the sauda status is known from the Sauda Manager’. Sauda manager is the

number of trade confirmations recorded. Confirmation of trading transaction with

brokerage commission is known as ‘Sauda’.

After Sauda Manager, Net positions process is done. In the net positions

process, cumulative net position reports, client-wise net position reports and other

reports are made and are given to clients and to the accounts department. The bills are prepared and sent to the respective clients.

2. REPORTS:

After selecting ‘REPORTS’ option from main menu, the member has to

specify the criteria for which the report is needed. The types of reports that may be

generated are: Net Position Reports Client Wise and Scrip Wise; Contract Note

reports; Client Wise Confirmation reports; Bills Summary reports; bad deliveries

reports; auctions reports; objections reports; margins reports; securities reports and

miscellaneous reports. The daily reports of various aspects relating to the trading

activities are maintained.

3. CLEARING:



Settlement of trades transacted on an exchange requires smooth, preferably

instantaneous, movement of securities and funds in accordance with the prescribed

schedule of pay-in / pay-out. Movement of securities has been almost instantaneous in

the dematerialized environment. Two depositories are in place to provide electronic

transfer of securities. 10 major stock exchanges accounting for about 99% of turnover

have been connected to depositories. All actively traded scrips are held, traded and

settled in de-mat form. NSE follows a different model where a clearing corporation

guarantees settlement obligations emanating from trades.

4. SETTLEMENT:

The trades accumulated over a trading cycle are clubbed together at the end of

the trading cycle, positions (trades) are netted and the balance obligations are settled.

THE ONE TYPE OF SETTLEMENT

ROLLING SETTLEMENT:

In a rolling settlement, each trading day is considered as a trading period

and trades executed during the day are settled based on the net obligations for the day.

At NSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd

working day. For arriving at the settlement day all intervening holidays, which include

bank holidays, NSE holidays, Saturdays and Sundays are excluded. Typically trades

taking place on Monday are settled on Wednesday, Tuesday's trades settled on hursday

and so on.

The following table and figure represent rolling settlement process.

A tabular representation of the settlement cycle for rolling settlement is given below:

Table-4.1

Activity Day



Trading Rolling Settlement Trading T

Clearing Custodial Confirmation T+1 working days

Delivery Generation T+1 working days

Settlement Securities and Funds pay in T+2 working days

Securities and Funds pay out T+2 working days

Valuation Debit T+2 working daysPost Settlement Auction T+3 working days

SETTLEMENT AGENCIES:

The NSCCL, with the help of clearing members, custodians, clearing

banks and depositories settles the trades executed on exchanges. The roles of each of

these entities are explained bellow:

a. NSCCL

b. CLEARING MEMBERS

c. CUSTODIANSd. CLEARING BANKS

e. DEPOSITORIES

f. PROFESSIONAL CLEARING MEMBER

EXPLANATIONS:

1. Trade details from Exchange to NSCCL (real-time and end of day trade file).

2. NSCCL notifies the consummated trade details to CMs/custodians who affirm

back. Based on the affirmation, NSCCL applies multilateral netting and

determines obligations.

3. Download of obligation and pay-in advice of funds/securities.

4. Instructions to clearing banks to make funds available by pay-in-time.

5. Instructions to depositories to make securities available by pay-in-time.



6. Pay-in of securities (NSCCL advises depository to debit pool account of

custodians/CMs and credit its account and depository does it).

7. Pay-in of funds (NSCCL advises Clearing Banks to debit account of

custodians/CMs and credit its account and clearing bank does it).

8. Pay-out of securities (NSCCL advises Clearing Banks to credit account of

custodians/CMs and debit its account and depository does it).

9. Pay-out of funds (NSCCL advises Clearing Banks to credit account of

custodians/CMs and debit its account and clearing bank does it).

10. Depository informs custodians/CMs through DPs.

11. Clearing Banks inform custodians/CMs.

5. COST OF TRADING:

The various costs involved in the process of online trading in Steel City

Securities Limited, Visakhapatnam are as follows:

a. MARGINS:

The base capital to set up a trade center is one crore rupees. Earlier,

SCSL paid Rs.75 lakhs as base capital when it was set-up. The Trade Corporation has

to maintain a reserve of some amount with NSE where 30% - 50% will be in the form

of cash and the remaining in the form of bank guarantees (securities), FDR’s etc.

SCSL has 7.5. crores as margin with NSE at present.

Gross intra-day turnover (buy and sell) of a member shall not exceed 25 times

the base capital. Gross exposure of a member at any time shall not exceed 8.5 times

the free base capital of one crore rupees and not exceed 12 times over the free base

capital of one crore rupees.

Minimum of Rs.20000 is collected as margin money from professional

clients in SCSL. For delivery purpose no margin money is collected. Client margin

collection is calculated in 16 types known as ‘Span calculation’ and the maximum

margin is collected from the clients. SCSL collects 25% margin money in futures



from clients. For trading in index 15% margin is charged. For retail clients, the full

amount of the value of shares is calculated and collected to allow them to purchase the

shares.

Table-5.1

Gross Exposure Margin Payable ( Rs. Crore)

<= 1 Nil

> 1 <=3 2.5% in excess of Rs. 1 crores

> 3& <= 6 Rs. 5 lakh plus 5% in excess of Rs. 3crores

> 6& <= 8 Rs.20 lakh plus 10% in excess of Rs. 6 crores

> & <=20 Rs.40 lakh plus 15% in excess of Rs. 8 crores

> 20 Rs. 220 lakh plus 20 % in excess of Rs.20

b. BROKERAGE:

Brokerage is of two types:

i. Speculation brokerage or square up commission:

This brokerage is charged where buying and selling of shares is done in

one day only and at the end of the days trade, the position is zero. The speculation

brokerage is charged from 0.01% to 0.03%.



ii. Delivery Brokerage:

This brokerage is charged where there may be buying or selling lot

remaining at the end of the days trade. The delivery brokerage is charged from 0.03%

to 0.30%.

As per SEBI, maximum brokerage shouldn’t exceed 2.5% both in BSE and

NSE. For retail clients, the brokerage charged is 0.7%. A sub-broker charge 2.5%

from the clients to sell or buy the shares out of which, SCSL charges 1% from the sub-

broker.

Service tax:

In SCSL, 10.3% service tax on brokerage is collected from the clients.

Stamp duty:

If the stamp duty of 0.006% on turnover is Rs30 or more, only Rs30 is

collected in NSE. In BSE, the minimum is 1Re and the maximum stamp duty is

unlimited.

Security Transaction Tax

This has reference to the Securities Transaction Tax (STT) introduced in the

Finance Act 2004. As per the Finance Act 2004, STT on the transactions executed on

the Exchange will be as under:

NSE, BSE:

• Square up -------------0.25% on Turnover

• Delivery --------------0.125% on Turnover

• F&O

0.017% (Its calculate on Turnover only on Selling )

Options

0.017% (Based only on Premium)



Exercise (only for options)

0.125% (Strike + Premium Multiplied by quantity)

6)ACCOUNTS:

The Accounts/ Finance department maintains the accounts in SCSL.

The accounts are prepared in three forms. They are:

a.Client-wise net positions,

b.Scrip-wise net positions,

c.Pay-in and Pay-out settlement of funds.

7)DEMATERIALIZATION AND ELECTRONIC TRANSFER OF SECURITIES:

Though de-mat was introduced in 1994, it came into existence in 1996.

The depositories Act, 1996 was passed to provide for the establishment of

depositories in securities with the objective of ensuring free transferability of

securities with speed, accuracy and security by dematerializing the securities in the

depository model. A depository holds securities in dematerialized form. It

maintains ownership records of securities and effects transfer of ownership through

book entry.

The two depositories, National Securities Depository Limited (NSDL) and

Central Depository Services Limited (CDSL) provide services to investors and

clearing members through Depository Participants (DPs). They do not change the

investors and clearing members directly but charge their DPs, who are free to have

their own charge structure for their clients.

De-mat Process:

When a client places his physical shares for de-mat, SCSL after inputting the

information in depository participants sends the physical shares to the company, which



issued the shares. The client code number and the information and the clients

signature is sent to Share Holding Registrar.

When a client enters into DP for de-mat purpose, he is given a unique code

member. He can know his share position easily. It is known as client ID number.

6) INTERMEDIARIES:

There are no intermediaries in between SCSL and NSE, BSE, NCDEX

and MCX. Similarly there are no intermediaries in between SCSL and professional

clients. Since SCSL is a share broker to NSE, BSE ,NCDEX and MCX the clients

operating in SCSL directly, on behalf of other clients are sub-brokers to the ultimate

clients who doesn’t operate the trade directly. So, there may be subbrokers as

intermediaries in between SCSL and clients who do not trade directly in SCSL.

As mentioned earlier, SCSL is depository participant. So, SCSL acts as an

intermediary between clients and NSDL & CDSL.

7) MARKET INFORMATION:

In SCSL, daily the research analyst collects the market information and it is

analyzed. The market information is used to forecast the index movement, price

movement of the shares and enables the clients to make use of the information in

trading to get better results.

The research analyst in forecasting the market movement follows the technical

analysis, fundamental analysis and efficient market hypothesis. The research analyst



collects the information about the company, the industry and the economy through

different media to know the company’s position.

Since, the NSE & BSE are markets with strong form efficiency, as the market

discounts the information itself very quickly and changes as per the information, the

research analyst has only fewer jobs to do here.

The research analyst not only analyses the marketing information but, every

day in SCSL an edition of the research analyst’s, suggestions on scrips that have to be

bought and sold is also printed which helps the clients of SCSL to invest in shares that

are profitable.

Chapter – 4

Overview



Theoretical framework of derivative market

INTRODUCTION TO DERIVATIVES:

The emergence of the market for derivative products, most notably forwards,

futures and options, can be traced back to the willingness of risk-averse economic

agents to guard themselves against uncertainties arising out of fluctuations in asset

prices. As instruments of risk management, these generally do not influence the



fluctuations in the underlying asset prices. However, by locking-in asset prices on

the profitability and cash flow situation of risk-averse investors.

DEFINITION

Derivative is a product whose value is derived from the value of one or more

basic variables called bases (underlying asset, index, or reference rate), in a

contractual manner. The underlying asset can be equity, forex, commodity or any

other asset. For example, wheat farmers may wish to sell their harvest at a future date

to eliminate the risk of a change in prices by that date. Such a transaction is an

example of a derivative is driven by the spot price of wheat which is the "underlying".

In the Indian context the Securities Contracts (Regulation) Act, 1956 (SC(R)A)

defines "Derivative" to include-

A security derived from a debt instrument, share, loan whether secured or unsecured,

risk instrument or contract for differences or any other form of security.

A contract that derives its value from the prices, or index of prices, underlying

securities.

Index futures

• One-month

• Two-month

• Three-month

Individual Stock Futures

• One-month

• Two-month

• Three-month

• Options

• Call Option

Index Options

•

One-month• Two-month



• Three-month

Individual Stock options

• One-month

• Two-month

• Three-month

• Put Option

Index Options

• One-month

• Two-month

• Three-month

Individual Stock options

• One-month

• Two-month

• Three-month

PARTICIPANTS IN A DERIVATIVE MARKET

Derivatives attract three types of participants

Hedgers

Speculators

Arbitrageurs

GLOBAL DERIVATIVES MARKETS

Futures history can be traced back to middle ages where markets were meant to

address the needs of the farmers and the merchants. The Chicago Board Of

Trade(CBOT) was established in 1848 to bring farmers and merchants together.

Initially, its main task was to standardize the quantities and qualities of the grains that

were traded. The first futures type contract developed was called " to-arrive contract".

The CBOT now offers on many different underlying assets in commodities and

financial markets.

Many other exchanges in the world now offer futures contracts. Eurex, the German-

Swiss derivatives exchange, was the world's biggest financial futures exchange at the



end of 1999, overtaking the Chicago Board Of Trade for the first time after a huge

increase in contracts traded in 1999. Eurex traded more than 379 million contracts

during 1999, 53% more than in 1998. This is expected to be well above the

comparable figure for the CBOT, where officials are expecting a fall of about 10%

from the 1998 total, when record 281.2 million contracts were traded.

LIFFE, the London market, is also expecting a sharp fall in volumes to some 120

million contracts, compared with 194 million in 1998. MATIF, the French derivatives

market traded 183 million contracts in 1999, more than double its 1998 total. LIFFE

lost its European lead when trading in the futures contracts on 10-year German

government bonds (bunds) migrated to the electronic Eurex system two years ago.

Like the CBOT, trading volumes are also likely to be lower at the Chicago Mercantile

Exchange, the second biggest US futures market.Major Equity Derivative Exchanges

in the World

1. Chicago Mercantile Exchange (CME)4

2. Eurex

3. Hong Kong Futures Exchange

4. The London Int. Financial Futures and Options Exchange (LIFFE)5. Singapore Exchange

6. Sydney Futures Exchange

DERIVATIVES MARKET IN INDIA

Derivatives markets broadly can be classified into two categories, those that are traded

on the exchange and those traded one to one or 'over the counter 7. They are hence

known as

Exchange Traded Derivatives

OTC Derivatives (over the counter)

OTC Equity Derivatives

Traditionally equity derivatives have a long history in India in the OTC

market.

Options of various kinds (called Teji and Mandi and Fatak) in

unorganized markets were traded as early as 1900 in Mumbai.



The SCRA however banned all kind of options in 1956.

The following factors have been driving the growth of financial derivative:

1. Increased volatility in asset prices in financial markets.

2. Increased integration of national financial markets with the international

markets.

3. Marked improvement in communication facilities and sharp decline in their

costs.

4. Development of more sophisticated risk management tools, providing economic

agents a wider choice of risk management strategies.

TYPES OF DERIVATIVES:

Forwards:

A forward contract is an agreement to buy or sell an asset on a specified date

for a specified price. One of the parties to the contract assumes a long position and

agrees to buy the underlying asset on a certain specified future date for a certain

specified price. The other party assumes a short position and agrees to sell

the asset on the same date for the same price. Other contract details like delivery date,

the parties to the contract negotiate price and quantity bilaterally. The forward

contracts are normally traded outside the exchanges. This process of standardization

reaches its limit in the organized futures market. Forward contracts are very useful in

hedging and speculation.

STRATEGIES TO USE DERIVATIVES TRADING

1. HEDGINGThe classic hedging application would be that of an exporter who expects to receive

payment in dollars three months later. He is exposed to the risk of exchange rate

fluctuations. By using the currency forward market to sell dollars forward, he can lock

on to a rate today and reduce his uncertainty. Similarly an importer who is required to

make a payment in dollars two months hence can reduce his exposure to exchange rate

fluctuations by buying dollars forward.

2. SPECULATOR



If a speculator has information or analysis, which forecasts an upturn in a

price, then he can go long on the forward market instead of the cash market. The

speculator would go long on the forward, wait for the price to rise, and then take a

reversing transaction to book profits. Speculators may well be required to deposit a

margin upfront. However, this is generally a relatively small proportion of the

value of the assets underlying the forward contract. The use of forward markets here

supplies leverage to the speculator.

They are bilateral contracts and hence exposed to counter-party risk.

Each contract is custom designed, and hence is unique in terms of contract

size, expiration date and the asset type and quality.

On the expiration date, the contract has to be settled by delivery of theasset.

If the party wishes to reverse the contract, it has to compulsorily go to the

same counter party, which often results in high prices being charged.

FUTURES:

History:

Futures markets were designed to solve the problems that exist in forward markets. A

futures contract is an agreement between two parties to buy or sell an asset at a certain

price. But unlike forward contracts, the futures contracts are standardized and

exchange traded.

The first exchange that traded financial derivatives was launched in Chicago in the

year 1972. A division of the Chicago Mercantile Exchange, it was called the

International Monetary Market (IMM) and traded currency futures. The brain behind

this was a man called Leo Me lamed, acknowledged as the "father of financial futures"

who was then the Chairman of the Chicago Mercantile Exchange. Before IMM opened

in 1972, the Chicago Mercantile Exchange sold contracts whose value was counted in

millions. By 1990, the underlying value of all contracts traded at the Chicago

Mercantile Exchange totaled 50 trillion dollars.

These currency futures paved the way the way for the successful marketing of a

dizzying array of similar products at the Chicago Mercantile Exchange, the Chicago

Board of Trade, and the Chicago Board options Exchange. By the 1990's these

exchanges were trading futures and options on everything from Asian and American



stock indexes to interest –rate swaps, and their success transformed Chicago almost

overnight into the risk-transfer capital of the world.

Marking-to-market: In the futures market, at the end of each trading day, the margin

account is adjusted to reflect the investor's gain or loss depending upon the futures

closing price. This is called Marking-to-market.

Maintenance margin: This is somewhat lower than the initial margin. This is set to

ensure that the balance in the margin account never becomes negative. If the

balance in the margin account falls below the maintenance margin, the investor

receives a margin call and is expected to top up the margin account to the initial

margin level before trading commences on the next day.

Difference between Futures & Forwards

FUTURES FORWARDS

1 Traded on an Organized exchange 1 Over the Counter in nature

2 Requires Margin payments 2 No margin payments required

3 Daily settlement 3 Settlement takes place at the end of the

period

4 Standardized Contract terms 4 Customized Contract terms

5 Higher Liquidity 5 Lesser liquidity

Options:



History:

Options made their first major mark in financial history during the tulip-bulb mania in

seventeenth century Holland. It was one of the most spectacular get rich quick binges

in history. The first tulip was brought into Holland by a botany professor from Vienna.

Over a decade, the tulip became the most popular and expensive item in Dutch

gardens. The more popular they became, the more tulip bulb prices began rising. That

was when options came into the picture. They were initially used for hedging. By

purchasing a call option on tulip bulbs, a dealer who was committed to a sales contract

could be assured of obtaining a fixed number of bulbs for a set price. Similarly, tulip-

bulb growers could assure themselves of selling their bulbs at a set price by purchasing

put options.

Although options have existed for a long time, they were traded OTC, without much

knowledge of valuation. The first trading in options began in Europe and the US as

early as the seventeenth century. It was only in the early 1900s that a group of firms

set up what was known as the put and call Brokers and Dealers Association with the

aim of providing a mechanism for bringing buyers and sellers together. If someone

wanted to buy an option, he or she would contact one of the member firms. The firm

would then attempt to find a seller or writer of the option either from its own clients or

those of other member firms. If no seller could be found, the firm would undertake to

write the option itself in return for a price. This market however suffered from two

deficiencies.

First, there was no secondary market and

Second, there was no mechanism to guarantee that the writer of the option

would honor the contract.

In 1973, Black, Merton and Scholes invented the famed Black-Scholesformula. In April 1973, CBOE was set up specifically for the purpose of trading

options. The market for options developed so rapidly that by early '80s, the number of

shares underlying the option contract sold each day exceeded the daily volume of

shares traded on the NYSE. Since then, there has been no looking back.

CRITERIA FOR STOCKS ELIGIBLE FOR OPTIONS TRADING:



The following criteria will have to be met before a stock can be considered eligible for

options trading.

The stock should be amongst the top 200 scrips, on the basis of average

market capitalization during the last six months and the average free float market

capitalization should not be less than Rs. 750 Crore. The free float market

capitalization means the non-promoter holding in the stock. The non-promoter holding

in the company should be at least 30%.

The stock should be amongst the top 200 scrips on the basis of average daily

volume (in value terms), during the last six months. Further, the average daily volume

should not be less than Rs. 5 Crore in the underlying cash market.

The stock should be traded on atleast 90% of the trading days in the last six

months.

The ratio of the daily volatility of the stock vis-a-vis the daily volatility of the

index should not be more than4, at any time during the previous six months.

Based on these criteria, SEBI approved trading in option contracts on 31

stocks.

Index options: These options have the index as the underlying. Some options are

European while others are American. Like indexing futures contracts, indexing options

contracts are also cash settled.

Stock options: Stock options are options on individual stocks. Options currently trade

on over 500 stocks in the United States. A contract gives the holder the right to buy or

sell shares at the specified price.

Buyer of an option: The buyer of an option is the one who by paying the option

premium buys the right but not the obligation to exercise his option on the

seller/writer.

Writer of an option: The writer of a call/put option is the one who receives the option

premium and is thereby obliged to sell/ buy the asset if the buyer exercises on him.

Option price: Option price is the price, which the option buyer pays to the option

seller. It is also referred to as the option premium.

Expiration date: The date specified in the options contract is known as the expiration

date, the exercise date, the strike date or the maturity.

Strike price: The price specified in the options contract is known as the strike price or the exercise price.



American options: American options are options that can be exercised at any time

upto the expiration date. Most exchange-traded options are American.

European options: European options are options that can be exercised only on the

expiration date itself. European options are easier to analyze than American options,

and properties of an American option are frequently deduced from those of its

European counterpart.

In-the-money option: An in-the-money (ITM) option is an option that would lead to a

positive cash flow to the holder if it were exercised immediately. A call option

on the index is said to be in-the-money when the current index stands at a level

higher than the strike price (i.e. spot price > strike price). If the index is much higher

than the strike price, the call is said to be deep ITM. In the case of a put, the put is

ITM if the index is below the strike price.

At-the-money-option: An at-the-money (ATM) option is an option that would lead to

zero cashflow if it was exercised immediately. An option on the index is at-the-money

when the current index equals the strike price (i.e. spot price = strike price).

Out-of-the-money option: An out-of-the-money (OTM) option is an option that

would lead to a negative cashflow it was exercised immediately. A call option on the

index is out-of-the-money when the current index stands at a level that is less than the

strike price (i.e. spot price < strike price). If the index is much lower than the strike

price, the call is said to be deep OTM. In the case of a put, the put is OTM if the index

is above the strike price.

Intrinsic value of an option: The option premium can be broken down into two

components-intrinsic value and time value. The intrinsic value of a call is the amount

the option is ITM, if it is ITM. If the call is OTM, its intrinsic value is zero. Putting it

another way, the intrinsic value of a call is Max [0, (St -K)] which means the intrinsic

value of a call is the greater of 0 or (St -K). Similarly, the intrinsic value of a put is

Max [0, (K -S t). K is the strike price and St is the spot price.

Time value of an option: The time value of an option is the difference between its

premium and its intrinsic value. Both calls and puts have time value. An option that is

OTM or ATM has only time value. Usually, the maximum time value exists when the

option is ATM. The longer the time to expiration, the greater is an option's time value,

all else equal. At expiration, an option should have no time value.



Differences between Futures and Options

Table1

Futures Options

1 Price is zero, Strike price moves 1 Strike price is fixed, price moves

2 Price is zero 2 Price is always positive

3 Linear pay-off 3 Non-Linear pay-off

4 Both long & short at risk 4 Only short at risk.

Similarities between Futures & Options

Table2

Futures & options

1 Exchange traded

2 Exchange defines the product

TYPES OF OPTIONS

There are two basic types of options, call options and put options.

Call Option: A call option gives the holder the right but not the obligation to buy an

asset by a certain date for a certain price.

Put Option: A put option gives the holder the right but not the obligation to sell an

asset by a certain date for a certain price.

There are a minimum of 5 strike prices, two 'in-the-money', one 'at-the-money' and

two 'out-of-the-money' for every call and put option. At any point of time there are

only three contracts available for trading, with 1 month, 2 months and 3 months to

expiry. These contracts expire on last Thursday of the expiry month and have a

minimum of 3 month expiration cycle.

RISK MANAGEMENT

Four steps in risk management:



Understand the nature of various risks.

Define a risk management policy for the organization and quantifying

Maximum risk that organization is willing to take if quantifiable.

Measure the risks if quantifiable and enumerate otherwise.

Build internal control mechanism to control and monitor all risks.

Step 1 - Understand Risks

Risks can be classified into three categories.

Price or Market Risk

Counterparty or Credit Risk

Operating Risks

Price Risks

This is the risk of loss due to change in market prices. Price risk can increase further

due to Market Liquidity Risk, which arises when large positions in individual

instruments or exposures reach more than a certain percentage of the market,

instrument or issue. Such a large position could be potentially illiquid and be capable

of being replaced or hedged out at the current market value and as a result may be

assumed to carry extra risk.Counter party Risks

This is the risk of loss due to a default of the Counter party in honoring its

commitment in a transaction (Credit Risk). If the Counter party is situated in another

country, this also involves Country Risk, which is the risk of the Counter party not

honoring its commitment because of the restrictions imposed by the government

though counter party itself is capable to do so.

Dealing Risk

Dealing Risk is the sum total of all unsettled transactions due for all dates in future. If

the Counter party goes bankrupt on any day, all unsettled transactions 1ould have to

be redone in the market at the current rates. The loss would be the differenced between

the original contract rate and the current rates. Dealing risk is therefore limited to only

the movement in the prices and is measured as a percentage of the total exposure.

Settlement Risk



Circular trading

Undisclosed Personal trading

Insider trader

Routing deals to select brokers

Custodial

Custodial risk is the loss of prime documents due to theft, fire, water,

termites etc. This risk is enhanced when the documents are in transit.

Systems

Systems risk is due to significant deficiencies in the design or operation of supporting systems; or inability of systems to develop quickly enough to meet rapidly

evolving user requirements; or establishment of a great many diverse, incompatible

system configurations, which cannot be effectively linked by the automated

transmission of data and which require considerable manual intervention.

Step 1 - Define Risk Policy

Decide the basic risk policy that the organization wants to have. This may

vary from taking no risk (cover all) to taking high risks (open all). Most organizations

would fall somewhere in between the two extremes. Risk and reward go hand in hand.

Cost Center vs. Profit Center

A cost center approach looks at exposure management as insurance against adverse

movements. One is not looking for optimization of cost or realization but meeting

certain budgeted or targeted rates. In a profit center approach, the business is taking

deliberate risks to make money out of price movements.

Step 2- Risk Measurement

There are a number of different measures of price or market risk, which is mainly,

based on historical and current market values Examples and Value At Risk (VAR),

Revaluation, modeling, Simulation, Stress Testing, Back Testing, etc.

Step 3- Risk Control



Control of Price Risk

Position limits are established to control the level of price or market risk taken by the

organization. Diversification is used to reduce systematic risk in a given portfolio.

Control of Credit Risk

Credit limits are established for each counter party, for both Dealing Risk and

Settlement Risk separately depending upon the risk perception of the counter party.

Control of Operating Risk

Establishment of an effective and efficient internal control structure over the trading

and settlement activities, as well as implementing a timely over and accurate

management information system (MLS)

A. FUTURES:

A future contract is an agreement between two parties to buy or sell an asset at certain

time. In the future at a certain price. Future contrasts are special types of forward

contrasts, in the sense that the former are standardized exchange-trade contrasts.

a. INDEX FEATURES.

b. INDIVIDUAL STOCK FEATURES.

a. INDEX FUTURES:

NSE trades nifty futures contract having expiry cycle for index futures. All the

contrasts expiry date is last Thursday of every month.

1. One - Month

2. Two - Month

3. Three - Month

b. INDIVIDUAL STOCK FUTURES:

Trading in individual stock futures commenced on the NSE November 2001. These

contrasts are cash settled on T+l basis.

Expiry cycle for stock futures

1. One - month

2. Two -month

3. Three – month



A new contract is introduced on the trading day following the expiry of the

near month contract.

B. OPTIONS:

Options are fundamentally different from towards and futures contracts. An options

dues the holder of the option the right to do some thing. The holder dose not have to

exercise this right. In contrast, in a forward or futures contract, the two parties have

committed them selves to doing some thing.

OPTIONS ARE TWO TYPES

a. Call option

b. Put option

A. CALL OPTION: A call option means gives the holder the right but not the

obligation to sell an asset by a certain date for certain price.

1. INDEX OPTION

2. INDIVIDUAL STOCK OPTION

1. INDEX OPTION: these options have index as the underlying. Some options are

European while others are American.

Expiry cycle for index option:

1. One - Month

2. Two - Month

3. Three -Month

2. INDIVIDUAL STOCK OPTION:

Stock options are options on individual stocks. Options currently trade on

over 500 stocks in the United States. A contact gives the holder the right to buy or sell

a share at the specified price.

Expiry cycle for stock options:

1. One -Month

2. Two -Month

3. Three –Month



B. PUT OPTIONS:

A put option gives the holder the right but not the obligation to sell and asse5t y a

certain date for a certain price.

The put option is two types:

a. INDEX OPTION

b. INDIVIDUAL STOCK OPTION

A. INDEX OPTION:

On NSE index option market, contracts at different strikes.

Expiry cycle for index option:

1. One -Month

2. Two -Month

3. Three -Month

B .INDIVIDUAL STOCK OPTION:

Trading in stock option commence on the NSE from July 2001 these contracts are

American style and or settled in cash.

Expiry cycle for stock option:

1. One - Month

2. Two -Month

3. Three -Month

FUTURES AND OPTIONS MARKET TRADING SYSTEM

The software for Futures and Options Market has been developed to facilitate

efficient and transparent trading in futures and options instruments. Keeping in view

the familiarity of trading members with the current Capital market trading system,

modifications have been performed in the existing capital market trading system so as

to make it suitable for trading futures and options.



Basic Trading Terminology

BASIS OF TRADING

The NEAT-F&O system supports an order driven market, wherein orders

match automatically. Order matching is essentially on the basis of security, its price,

time and quantity. All quantity fields are in units and price in rupees. The Exchange will

notify the regular lot size and ticks size for each of the contracts traded on this segment

from time to time.

When any order enters the trading system, it is an active order. It tries to find a match on

the other side of the book. If it finds a match, a trade is generated. If it does not find a

match, the order becomes passive and goes and sits in the respective outstanding order

book in the system.

Member type

1. TM

2. CM+TM

3. PCM + TM

4. PCM

Case (I): Clearing Member Corporate Manager:

(i) Can view outstanding orders, previous trades and Net position of his client Trading

Members by putting the TM ID and leaving the Branch Id and dealer id blank.

Case (II): Clearing Member and Trading Member Corporate Manager:

(i) Can view outstanding orders, previous trades and Net position of his client Trading

Members by putting the TM ID and leaving the Branch Id and dealer id

blank.

(ii) Can view outstanding orders, previous trades and Net positions entered for himself

by entering his own TMID, Branch Id and User Id. This is his default

Case (III): Clearing Member and Trading Member Dealer:

(1) Can only view requests entered by him.

Case (IV): Trading Member Corporate Manager:

1. Can view outstanding requests and activity log for requests entered by him by

entering his own Branch and User Ids. This is his default screen.

2. Can view outstanding requests entered by his dealers and/or branch managers

by either entering the Branch and/or User Ids or leaving them blank



MARKET TYPE

• The Futures and Options Market system has one type of market i.e. the Normal

Market

Normal Market

Normal market consists of various book types wherein orders are segregated as

Regular lot orders and Stop Loss orders depending on their order attributes. All orders

have to be of regular lot size or multiples thereof.

ORDER BOOKS

As and when valid orders are entered or received by the system, they are firstnumbered, time stamped and then scanned for a potential match. This means that each

order has a distinctive order number and a unique time stamp on it. If a match is not

found, then the orders are stored in the books as per price/time priority.

Price priority means that if two orders are entered into the system, the order having the

best price gets priority. Time priority means if two orders having the same price are

entered; the order entered first gets priority.

Best price for a sell order is the lowest price and for a buy order, it is the highest price.

The Futures and Options Market segment has following types of books:

Regular Lot Book

The Regular Lot Book contains all regular lot orders. The system first attempts to

match an active regular lot order against passive orders in this book.

Stop-Loss Book

Stop Loss orders are stored in this book till the trigger price specified in the order is

reached or surpassed. When the trigger price is reached or surpassed, the order is

queued for entry into the Regular lot book.

The stop loss condition is met under the following circumstances:

Sell Order - A sell order in the Stop Loss book gets triggered when the last traded

price in the normal market reaches or falls below the trigger price of the order.

Buy Order - A buy order in the Stop Loss book gets triggered when the last traded

price in the normal market reaches or exceeds the trigger price of the order.



ORDER TYPES AND CONDITIONS

The system allows the trading members to enter orders with various conditions

attached to them as per their requirements. These conditions are broadly divided into

the following categories:

• Time Conditions

• Price Conditions

• Other Conditions

Several combinations of the above are allowed thereby providing enormous flexibility

to the users. The order types and conditions are summarized below.

Time Conditions

DAY ORDER - A DAY order, as the name suggests is an order which is valid

for the day on which it is entered. If the order is not executed during the day, the

system cancels the order automatically at the end of the day.

•IOC - An Immediate or Cancel (IOC) order allows the user to buy or sell a

contract as soon as the order is released into the system, failing which the order

is cancelled from the system. Partial match is possible for the order, and the

unmatched portion of the order is cancelled immediately.

Price Condition

STOP-LOSS - This facility allows the user to release an order into the system, after

the market price of the security reaches or crosses a there sold price

THE TRADING DAY

The system is normally made available for trading on all days except Saturdays,

Sundays and other Exchange notified holidays.

A trading day typically consists of a number of discrete stages as explained below:

PRE-OPEN PHASE

The Pre-Open period is applicable only to regular lot orders in the normal market. At

the start of Pre-Open session, market watch and messages are downloaded at the trader

workstations. For the trading member, all functions are available except quick order



cancellation. Order matching takes place based on which a potential opening price is

computed and displayed although no trades are generated.

The Trading Member can carry out the following activities at this stage:

• Set up Market Watch (contracts which the user would like to view on screen)

• Inquiries

• Order Entry

• Order Cancellation (Quick Order Cancellation is not allowed)

• Order Modification

At the start of the Pre-Open phase, a message is displayed indicating that the market is

in Pre-Open phase.

OPENING

This is a transition phase between pre-open and open phases. This phase immediately

follows the end of market pre-open phase. A user who does not login before the end of

pre-open period will not be able to do so until normal market opens for trading. Users

can enter orders during the opening phase. However, the system confirms these orders

only after the normal market opens for trading.

During this phase the system generates actual trades across all contracts fromvarious buy / sell orders present in the system. All the trades in a given contract will be

executed at the opening price of that contract. The opening price will be the LTP value

calculated when the pre-open phase ends. The start and end of the opening phase is

indicated by the following system messages:

Start Message: The Pre-open period has ended. Please wait for contracts to

be opened for trading.

End Message: The Normal market has opened.OPEN PHASE

The open period indicates the commencement of trading activity. To signify the start

of trading, a message is sent to all trader workstations. Order entry is allowed when all

contracts have been opened. During this phase, orders are matched on a continuous

basis. Trading in all instruments is allowed unless Exchange specifically prohibits

them.

The following activities are allowed at this stage:

• Inquiries



• Order Entry

• Order Modification

• Order Cancellation (Including quick order cancellation)

• Trade Cancellation Requests

NORMAL MARKET CLOSE

When market closes, normal trading in all instruments for that market comes to an

end. No further orders are accepted, but the user is permitted to perform activities like

inquiries, report requests and trade cancellation/ modification requests.

CLOSING PRICE GENERATION

During this period of the market, closing prices for all contracts are generated. These

prices are then updated in the market watch overwriting the field displaying the LastTraded Price. At the end of this period, a Market Statistics report is also sent to all

users of the system. Users can request for trade reports and trade

cancellation/modification during this period.

HOW TO START

TWO TYPES OF SOFTWARE

There are two types of software in the system:

• NEAT-F&O

• NEAT-F&O Help

These software are in a group called F&O or Futures & Options Market under

Program Manager in Windows. NEAT-F&O is the main trading software. NEAT Help

offers a quick way to seek information on various features of the NEAT-F&O system.

Starting the application is simple.

• Open the window that contains the applications program-item icon

• Choose the program-item icon and press [Enter] key or double click on it

using the mouse

On starting NEAT-F&O, the logon screen appears.

On starting NEAT Help, a contents page appears for further selection.

LOGIN PROCESS

On starting NEAT-F&O application, the logon screen appears with the following

details:

• User ID



• Trading Member ID

• Password

• New Password

In order to logon to the system, the user must specify a valid User ID, Trading

Member ID and corresponding password. A valid combination of User ID, Trading

Member ID and password is needed to access the system.

Press [Tab] key to move to the next field. [Shift+Tab] keys can be used to move to

the previous field(s).

After entering IDs and password, press the [Enter] key to complete the logon

procedure.

LOGIN PROCESS



MARAKET WATCH

User ID

Each Trading Member can have more than one user. The number of users allowed for

each Trading Member is notified by the Exchange from time to time. Each user of a

Trading Member must be registered with the exchange and is assigned an unique user

ID.

• Trading Member ID

The exchange assigns a Trading Member ID to each Trading Member. The Trading

Member ID is unique and functions as a reference for all orders/trades of different

users. This ID is common for all users of a particular Trading Member. The Trading

Member ID and User ID form a unique and valid combination.

• Password



When a user logs in for the first time, he has to enter the default password provided by

the exchange. On entering this password, the system requests the user to enter a new

password in the 'New Password' field. On entering the new password, the system

requests for a confirmation of this new password. The user knows this new password

only. The password should contain minimum of six characters and maximum of eight

characters. A combination of characters and numbers is allowed in the password. The

password can be changed if the user desires so and a new password can be entered.

The new password must be different from the old password. Password appears in the

encrypted form and thus complete secrecy is maintained.

The system ensures that the change in password for all users (password expiry period

is parameterised by the Exchange). The user can logon by entering a new password as

per the procedure outlined above.

In the event of a user forgetting his password, the Trading Member is required to

request the exchange in writing to reset the password of that user id. On receiving this,

the user password is reset to the default password set by the exchange (i.e. NEAT-

F&O). The user can then logon by entering a new password as per the procedure

outlined above.

LOG OFF/EXIT FROM THE APPLICATION

Press [Alt+F4] keys or select the [Exit] button to log off/exit the application.

At the Log-on Screen

One can exit from the application by pressing [AU+F4] keys at the log-on screen.

Press [Alt+F4] keys to invoke the log-off screen. The log-off screen displays the

following options:

•

Permanent sign off • Temporary sign off and

• Cancel

Permanent Sign Off:

As the name suggests, a user can log-off permanently from the trading system by

selecting this option. The user is logged-off and the log-on screen appears.

Temporary Sign-Off

Temporary sign-off is a useful feature which allows a user to disallow temporary

access to the trading software without actually logging out of the trading system.



During a temporary sign-off period, the application continues to receive all market

updates in the background. However, the user cannot enter orders or make inquiries.

This allows the user to leave the trading system temporarily inactive and prevent

unauthorized access to the system.

On selecting the temporary sign-off option, a password entry screen is displayed. The

use of the NEAT-F&O system is enabled on entering the correct password.

Cancel

On selection of this option, the user comes out of Sign off screen.

FUTURES AND OPTIONS TRADING SYSTEM:

In SCSL the futures and options trading systems in NSE called NEAT -f & O

trading system provides a fully automated screen - based trading for Nifty futures 7

options on a national wide basis as well as online monitoring and surveillance

mechanism. It supports an order driven market and provides Complete transparency of

trading operations. It is similar to that of trading of equities in the cash market

segment.

The software for the F&O market has been developed to facilitate efficient and

transparent trading in futures and options instruments. Keeping in view the familiarity

of trading numbers with the current capital market trading system, modifications have

been performed in the existing capital market trading system so as to make it suitable

for trading futures and options.

CONTRACT SPECIFICATIONS FOR INDEX FUTURES:

NSE trades Nifty futures contracts having one - month, two - month and three

- month expiry circles. All contracts expire on the last Thursday of every month. Thus

a January expiration contracts would expire on the last Thursday of January and

February expiry contracts would cease trading on the last Thursday of February. On

the Friday following the last Thursday a new contract having three - month expiry

would be introduced for trading.



Jan feb mar apr may

Jan 29 contract

----------------------►

Feb 26 contract

--------------------------------------------►

Mar 26 contract

◄--------------------------------------------------------------------------------------------------

Apr 30 contract

◄--------------------------------------------------------------------------------------------------

May 28 contract

◄--------------------------------------------------------------------------------------------------

June 25 contract

The figure shows the contract cycle for future contracts on NSE 's derivatives

market. As can be seen, at any given point of time, three contracts are available for

trading - a near - a month, a middle -month and a far - month as the

January contract expires on the last Saturday of the month a new three month contract

starts from the trading from the following day, once more making available three

9index future contracts for trading.

CONTRACT SPECIFICATIONS FOR INDEX OPTIONS:

On NSE index options market, contracts at different strikes, having one-month, two-

month expiry cycles are available for trading there are typically one-month two-month

& three-month options each with five different strikes available for trading hence at a

given point in time there are minimum 3 * 5 * 2 or 30 options products

CONTRACTS SPECIFICATIONS FOR STOCK FUTURES:

Trading in stock futures commenced on the NSE November 2001. These contracts are

cash settled on T+1 basis. The expression cycle for stock futures in the same as for

index futures, index options and stock options. A new contract is introduced on thetrading day following the expiry of the near month contract.



CONTRACTS SPECIFICATIONS FOR STOCK OPTIONS

Trading in stock options commence on the NSE from July 2001 these contacts

are American style and are settled in cash .The expiry cycle for stock options is the

same as for index futures and index options two in-the-money contracts, two out-of-

the-money contracts and one at-the-money contracts available for trading.

SWOT ANALYSIS

Table-3

63

STRENGTH

Hedging

Risk can be quantified among

Call & Put

WEAKNESS

Minimum lot size is Two lakh

High fluctuations

less liquidity

Complex system when compared

to stock market

Adequate margin

OPPORTUNITY

Hedging

Opportunity for big money

THREATS

Lack of knowledgeamonginvestors

Cash market



INQUIRY:

Inquiry about the market status, the shares and derivatives and their prices.

ORDER ENTRY:

Placing an order to buy or sell the scripts by coating the price and quantity of the shares

and derivatives.

ORDER MODIFICATION:

Modifying the order that has been already placed. The modification may be with respect

to price or quantity.

ORDER CANCELLATION:

The order placed already can also be cancelled if the price or the quantity of scrip is not

satisfactory. Order cancellation also includes quick order cancellation.

MARKET CLOSE:

Where the market closes, trading in all instruments for that market comes to an end. No

further orders are accepted, but the user is permitted to perform activities like inquiries.

SURCON:

Surveillance and control (SURCON) is the period after the market close during which the

user have inquiry access only. After the end of SURCON period the system processes the

data for making the system available for the next trading day. When the system start

processing data, the interactive connection with the NEAT system is lost and then

message to that effect is displaye3d at the trader work station.

NEAT system enables members from across the country to trade simultaneously with

enormous ease and efficiency. A number punches into the c is executed through the

mainframe computer of the exchange as soon as the order from punched by him finds

a matching sell or busty order from a counter party.

Computer quantity of securities and the price at which he wants and the transaction.The

NSE opens at 9:55 AM and the trading starts at 10:00 AM 5 min is given for the stock

brokers to quote their prices and to get a recap of the yesterday prices of different scrip's,

the trading ends at 3:30 PM. The auction market starts at 4:00 PM. And continues till

4:30PM after normal trading and derivatives trading.

64



In BSE the trade starts at 9:55AM and end at 3:30 PM. A grace time of 20 min from

3:40PM to 4:00 PM is given in BSE as "end of the section" for trading.

MOCK TRADING:

NSE conducts mock trading for all its trading members. The mock trading usually takes

place once in a month or in two months

Mock trading is the process where the regular d3erivatives trading to done at all the wok

stations, which are registered with NSE. Though the derivatives trading are done

payments of funds and deliveries don't take place. Though the trade results in turn over in

crores there is no transfer of funds or shares or derivatives certificates. The Mock-trading

process is similar to the regular trading process.

Mock trading is generally done on Saturday as it is not a working day for the stock

exchange and it doesn't affect the daily trade in NSE.

Mock -trading enables the operators operate efficiently and to adjust to the changes made

if any in the trading system.

REQUIREMENTS FOR OPENING THE ACCOUNT:

The following requirements for opening the account

Photo

Identification proof (like driving license, passport, voter identity card,

PAN card)

Address proof (telephone bill, electricity bill)

Bank account (must be compulsory attestation of the bank manager)

PUTTING THE ORDER:

There are two types of orders in derivatives market

Selling order

Buying order

SELLING ORDER:

If selling order means how many scrip's will in the share market.

BUYING ORDER:

If buying order means how much scrip will buy in the share market.

65



MARGINS:

The margin of SCSL stock broking limited is RS 10,000,00 and derivatives market

margin is RS 2 lack minimum. The exposure we give four times.

CLIENT CODE:

The SCSL stock broking limited the client code is five digits. One alphabet and four

digits.

PAY - OFFS FOR FUTURES:

What is a pay-off?

A payoff is the likely profit/loss that would accrue to a market participant with change in

the price of the underlying asset. This is generally depicted in the form of payoff

diagrams, which show the price of the underlying asset on the X-axis and the profit/losses

on the Y-axis.

1. Payoff for buyer of futures: Long futures

The payoff for a person who buys a futures contract is similar to the payoff for a person

who holds an asset. He has a potentially unlimited downside. Take the case of the

speculator who buys a 2-month NIFTY index futures contract when the NIFTY stands at

1220. The underlined asset in this case is the NIFTY portfolio. When the index moves

up, the long futures position starts making profits, and when the index moves down it

starts making losses.

Profit

1220

Nifty

Loss

66



Graph shows the profit and losses for a long futures position. The investor bought

futures when the index was 1220. If the index goes up, his futures position starts making

profit. If the index falls , his futures position starts showing losses.

Payoff for seller of futures: Short futures

The payoff for a person who sells a futures contract is similar to the payoff for a person

who shorts an asset. He has a potentially unlimited upside as well as a potentially

unlimited downside. Take the case of a speculator who sells a two months NIFTY index

futures contract when the NIFTY stands at 1220.

Profit

1220

Nifty

Loss

The underlying asset in this case is NIFTY portfolio. When the index moves down, the

short futures position starts making profits, and when the index moves up it starts making

losses.

The graph shows the profits or losses for a short futures position. The investor sells

futures when the index was 1220 if the index goes down.

EQUITY INDEX FUTURES

A futures contract on the stock market index gives its owner the right and obligation to

buy or sell the portfolio of stocks characterized by the index. Stock index futures are cash

settled; there is no delivery of the underlying stocks. In their short history of trading,

index futures have had a great impact on the world's securities markets. Indeed, index

futures trading have been accused of making the world's stock markets more volatile than

ever before. The critics claim that individual investors have been driven out to the equity

markets because the actions of institutional trader5s in both the spot and futures markets

67



cause stock values to gyrate with no links to their fundamental values. Whether stock

index futures trading are a blessing or a curse is debatable. It is certainly true, however,

that its existence had revolutionized the art and science of institutional equity portfolio

management.

OPTION PAYOFFS

The optiotnality characteristic of options results in a non-linear payoff for options. In

simple words, it means that the losses for the buyer of an option are limited; however the

profits are potentially unlimited. For a writer, the pay off is exactly the opposite. His

profits are limited to the option premium; however his losses are potentially unlimited.

These non-linear payoffs generate various payoffs by using combinations of options and

the underlying. We look here at the six basic payoffs.

PAYOFF: LONG NIFTY

profit

60 1160 1220

0

60

loss

68



Payoff profile of buyer of asset: Long asset

In this basic position an investor buys the underlying asset, Nifty for instance, for 1220,

and sells it at a future date at an unknown prices, St Once it is purchased the investor is

said to be "long" the asset.

PAYOFF: SHORT NIFTY

Profit

60

1160 1220 1230

0 nifty

-60

Loss

Payoff profile for seller of asset: Short asset

In this basic position, an investor shorts the underlying asset, Nifty for instance, for 1220,

and buy6s it back at a future date at an unknown price St Once it is sold the investor is

said to be "short" the asset.

Payoff profile for buyer of call options: Long call

A call option gives the buyer the right to buy the underlying asset at the strike price

specified in the option. The profit/loss that the buyer makes on the option depends on the

spot price exceeds the strikes price he makes a profit. Higher the spot price more is the

profit he makes. If the spot price of the underlying is less than the strike price he lets his

options expire un-exercised. His loss in this case is the premium he paid for buying the

option.

69



Profit

1250

0

NIFTY

86.60

Loss

The graph shows the profits/losses for the buyer of a three-month Nifty 1250 call

option. As can be seen, as the spot Nifty rises, the call option is in-the-money. If upon

expiration, Nifty closes above the strike of 1250, the buyer would exercise his options

and profit to the extent of the difference between the Nifty-close and the strike price. The

profit possible on this option is potentially unlimited.

However if Nifty falls below the strike of 1250 he lets the option expire. His losses are

limited to the extent of the premium he paid for buying the option

Payoff profiles for writer of call options: Short call

A call option gives the buyer the right to buy the underlying asset at the strike price

specified in the option. For selling the option, the writer of the option changes a premium.

The profit/loss that the buyer makes on the option depends on the spot price of the

underlying. Whatever is the buyer's profit is the seller's loss. If upon expiration the spot

price exceeds the strike price, the buyer will exercise the option on the writer. Hence as

the spot price increases the writer of the option starts making losses. Higher the spot pricemore is the loss he makes. If upon expiration the spot price of the underlying is less than

the strike price, the buyer lets his option expire unexercised and the writer gets to keep

the premium.

70



Profit

86.60

0

1250

Nifty

Loss

The graph shows the profits/losses for the seller of a three-month Nifty 1250 call

option., as the spot Nifty rises, the call option is in-the money and the writers starts

making losses. If upon expiration, Nifty closes above the strike of 1250 the buyer would

exercise his option on the writer who would suffer a loss to the extent of the difference

between the Nifty-close and the strike price. The loss that can be incurred by the writer of

the option in potentially unlimited, whereas the Rs.86.69 charged by him.

Payoff profile for buyer of put options: Long put

A put option gives the buyer the right to sell the underlying asset at the strike price

specified in the option. The profit/loss that the buyer makes on the option depends on the

spot price of the underlying. If upon expiration, the spot price is below the strike price, he

makes a profit. Lower the sport price more is the profit he makes. If the spot price of the

underlying is higher than the strike price, he lets his option expire un-exercised. His loss

in this case is the premieum; he paid for buying the option.

71



Profit

0

1250

61.70

Nifty

Loss

The graph shows the profits/losses for the buyer of a three-month Nifty 1250 put option.

As can be seen, as the spot Nifty falls, the put option is in the money. If upon expiration,

Nifty closes below the strike of 1250 the buyer would exercise hisOption and profit to the

extent of the difference between the strike price and Nifty-close. The profits possible on

this option can be as high as the strike price. However if Nifty rises above the strike of

1250 he lets the option expire. His losses are limited to the extent of the premium he paid

for buying the option.

Payoff profile for writer of put options: Short put

A put option gives the buyer the right to sell the underlying asset at the specified in the

option. For selling the option, the writer of the option changes a premium. The profit/loss

that the buyer makes on the option depends on the spot price of the underlying. Whatever

is the buyer's profit is the seller's loss. If upon expiration, the spot price happens to be

below the strike price, the buyer will exercise the option on the writer.

72



Profit

1250

61.70

Nifty

0

Loss

The graph shows the profits/losses for seller of a three-month Nifty 1250 put option.

As the spot Nifty falls, the put option is in the money and the writer starts making losses.

If upon expiration, Nifty closes below the strike of 1250 the

Buyer would exercise his option on the writer who would suffer a loss to the extent

of the difference between the strike price and Nifty-close.

MARKET INFORMATION:

In SCSL the daily research analyst collects the market information and it is analyzed. The

market information is used to forecast the index moment, price moment of the share and

enables the client to make use of information in trading

to get better results.

The research analyst in forecasting the market moment follows the technical analysis

fundamental analysi8s and efficient market hypothesis and derivatives market and risk

management. The research analyst collects the information about the company, the

industry, economy and the economy through different media to know the company, the

industry, economy and the economy through different media to know the company's

position.

73



The research analyst follows the market closely by watching the price moment of the

shares and derivatives in the market. The technical analysis is very helpful in making

industry decisions. The research analyst follows different tools of technical analysis

Japanese candlestick method ELLIBOT were theory, Dow theory, price trends and

volume trends, volatility, floating stock and volume of trade etc., to access the market.

Technical analysis reveals the moment of the scrip. It explains when to buy share and

derivative and when to sell. So, the resear5ch analyst gives must to the importance to the

technical analysis to forecast the price moment of the script accurately. Since, the NSE &

BSE are markets with strong from efficiency as the market discounts the information

itself very quickly and changes as per the information the research analyst has only fewer

jobs to do here.The research analyst not only analysis the marketing information but,

everyday in SCSL an edition of research analyst's suggestions on scrip's that have to be

bought an sold is also printed which help the clients of SCSL to invest in shares that are

profitable. Mostly, the predictions of the research analyst about the market movement

prove to be accurate. So market information in SCSL is trust worthy.

74



CLEARING AND SETTLEMENT

NATIONAL STOCK EXCHANGE (NSE)

The futures and Options trading system at NSE is called NEAT-F & O trading system

(National Stock Exchange Automated Trading for Nifty futures & Options and stock

futures & Options on a nationwide basis and an online monitoring and surveillance

mechanism. It support an anonymous order driven market which provides complete

transparency of trading operations and operates on strict price-time priority. The NEAT -

two types of users access F& O trading system.

1. Trading Members

2. Clearing Member.

MEMBERSHIP CRITERIA

NSE and BSE admit members on its derivatives market in accordance with the rules &

regulations of their respective exchanges and the norms specified by SEBI. These are

SEBI guidelines for a membership to trade in derivatives market.

NSE

Clearing Member (CM)

Net worth-300 lakh

Interest - free Security Deposits - Rs. 25 lakh

Collateral Security Deposit - Rs. 25 lakh

In addition for every TM he wishers to clear for the CM has to deposit Rs. 10 lakh

Trading Member (TM) Net

worth -Rs. 100 lakh

Interest - Free Security Deposit - Rs. 8 lakh

Annual Subscription free - Rs. 25 thousand

The Non-refundable fee paid by the members is exclusive and will be a total of Rs. 8

lakhs if the member has both Clearing and Trading rights

Participants

A participant is a client of trading members like financial institutions. These

clients may trade through multiple trading members but settle through a single

clearing members.

75



1. PCM-Clear for others

2. CM+TM -Traders and Clear for Self and Others

3. TM +SCM- Traders and Clear for self

4. TM-Trades for Self and clear through others.

NCCL undertake clearing and settlement of all deal executed on the NSE s F&O

segment. It acts as legal counter party to all deal on the F&O segment and guarantees

settlement.

All futures and options contr45acts are cash settle., i.e. through exchange of cash. The

underlying for index futures/options of the Nifty index cannot be delivere4d. These

contracts, therefore have to be settled in cash. Futures and options on individual securities

can be delivered as in the spot market. However, it has been currently mandated that

stock opt9ions and futures would also be cash settled. The settlement amount for a clear

ingmemember /clients in respect of MTM, premium, and final exercise settlement.

NSE RISK CONTROL MEASURES

The NSCCL rias developed a comprehensive risk containment mechanism for the F&O

segment. The salient features of risk containment mechanism on F&O segment are:

1. CM and whenever a TM exceed the limits, it stops that particular TM from further

trading.

2. A separate settlement guarantee fund for this segment has been created out of the

capital members. The fund had a balance of Rs.648 crore at the end of March

2002. the most critical component of risk containment mechanism for F&O

segment is the margining system and on-line position monitoring. The actual

position monitoring and margining is carried out on-line through parallel Risk

Management System (PRISM). PRISM uses SPAN ® (Standard Portfolio

Analysis of Risk) system for the purpose of computation of on-line margins, based

on the parameters defined by SEBI.

76



NSE - SPAN

The objective of NSE-SPAN is to identify overall risk in a portfolio of all futures

and options contracts for each member. The system treats futures and options contracts

uniformly while at the same time recognizing the unique exposures associated with

options portfolios, like extremely deep out -of- the -money short positions and inter-

month risk. Its over-riding objective is to determine the largest loss that a portfolio might

reasonably be expected to suffer from one day

to the next day based on 99% VaR methodology. SPAN considers

uniqueness

• The financial soundness of the members is the key to risk management. Therefore,

the requirements for membership in terms of capital adequacy (net worth, securitydeposits) are quite stringent.

• NSCCL charges an up front margin

• The open position of the members are marked to market based on contract

settlement price for each contract. The difference is settled in cash on a T+l basis.

CMs are provided a trading terminal for the purpose of monitoring the open

position of all the TM s clearing and setting through him. A CM may set exposure limits

for a TM clearing and settling through him. NSCCL assists the CM to monitor the intra-

day exposure limits set up by a of options portfolios.

The following factors affect the value of an

option:

1. Underlying market price

2. Strike price

3. Volatility (variability) of underlying instrument

4. Time to expiration

5. Interest rate

As these factors change, the value of options maintained within a portfolio also changes.

Thu8s, SPAN constructs scenarios of probable changes underlying prices and volatilities

in order to identify the largest loss a portfolio might suffer from one day to" the next. It

77



then sets the margin requirement to cover this one-day loss. The complex calculations

(e.g. the pricing of options) in SPAN are executed by NSCCL. The results of these

calculations are called risk arrays. Risk arrays, and other necessary data inputs for margin

calculations are provided to members daily in a file called the SPAN risk parameter file.

Members can apply the data contained in the risk parameter files, to their specific

portfolios of futures and options contracts to determine their SPAN margin requirements.

Hence, members need not execute a complex option pricing calculation, which is

performed by NSCCL. SPAN has the ability to estimate risk for5 combined futures and

options portfolios, and also re-value the same under various scenario of changing market

condition.

78



Chapter – 5

Overview

Practical aspects of derivative market in Steel City Securities Ltd.

79



ANALYSIS OF THE DATA BUSSINESS GROWTH IN DERIVATIVES SEGMENT

80

Year Index

Futures

Stock

Futures

Index

Options

Stock

Options

Total Avera

Daily

Turno

(Rs. cr

No. of

contracts

No. of

contracts

No. of

contracts

Notional

Turnover

(Rs. cr.)

No. of

contracts

Notional

Turnover

(Rs. cr.)

No. of

contracts

2010-

11

2009-

10

2008-

09

165023653

178306889

210428103

186041459

145591240

221577980

650638557

341379523

212088444

18365365

8027964

3731501

32508393

140162270

13295970

1030344

506065

229226

1034212062

6792939049

7

657390497

115150

72392

45310

2007-

08

156598579 203587952 55366038 1362111 9460631 359137 425000000 52153

2006-

07

81487424 104955401 25157438 791906 5283310 193795 217000000 29543

2005-

06

58537886 80905493 12935116 338469 5240776 180253 158000000 19220

2004-

05

21635449 47043066 3293558 121943 5045112 168836 77017185 10107

2003-

04

17191668 32368842 1732414 52816 5583071 217207 56886776 8388

2002-

03

2126763 10676843 442241 9246 3523062 100131 16768909 1752

2001-

02

1025588 1957856 175900 3765 1037529 25163 4196873 410

2000-

01

90580 - - - - - 90580 11



ANALYSIS & INTERPRETATION

Derivatives Trading on the NSE commenced with S&P CNX Nifty Index

Futures on 12/06/2000.The Trading in Index Options commenced on

4/06/2001.NSE is the largest Derivatives Exchange in India. We trade Nifty in

Derivatives as Future Index. There is a facility for small investors in derivatives

i.e. Options . Options plays only with premium we have to pay only premium

but not full amount. Index is the behaviour of market

81



Data for FUTIDX-NIFTY from 01-04-2011 to 28-04-2011

Date Expiry Open High Low Close LTPSettlePrice

Turnover

Open IntChange

in OI

in

Lacs

01-Apr-11

28-Apr-11 5865.1 5884.7 5837 5861.4 5865 5861.35 947696.8 24680200 -23355

04-Apr-11

28-Apr-11 5874 5955.3 5850 5943.3 5948 5943.3 1011339 27004600 232440

05-Apr-11

28-Apr-11 6000 6000 5871.7 5932.6 5926 5932.6 1172140 26905350 -9925

06-Apr-11

28-Apr-11 5933.05 5971.05 5880.3 5911 5912 5910.95 1147387 26908300 295

07-Apr-

11

28-Apr-

11 5910 5932.4 5881.3 5902 5902.1 5902 728239.4 26738800 -1695008-Apr-

1128-Apr-

11 5904.95 5927 5831.6 5854.9 5859.3 5854.9 1127774 25447700 12911011-Apr-

1128-Apr-

11 5836.9 5848.6 5796.5 5803.7 5798 5803.65 937901.3 24331750 11159513-Apr-

11

28-Apr-

11 5758.8 5947.6 5750.7 5938.1 5944 5938.1 1458728 26039650 17079015-Apr-

1128-Apr-

11 5923.8 5923.8 5820.7 5834.2 5825 5834.15 1237361 25448700 -5909518-Apr-

1128-Apr-

11 5831.5 5920.95 5727.1 5736 5739 5736 1734853 24802350 -6463519-Apr-

1128-Apr-

11 5712 5781.95 5703 5760.3 5760.1 5760.3 1097331 24315150 -4872020-Apr-

1128-Apr-

11 5800.25 5875 5767.3 5870.6 5874 5870.6 1264319 23191800 11233521-Apr-

1128-Apr-

11 5905.7 5931.65 5880.1 5903.6 5901.6 5903.55 991777.9 22808700 -3831025-Apr-

1128-Apr-

11 5890 5925 5875.6 5886.5 5877 5886.5 733543.7 21315200 149350

26-Apr-11

28-Apr-11 5393.45 5907.9 5393.5 5881.1 5875 5881.1 1771224 14379900 693530

27-Apr-11

28-Apr-11 5902 5904.9 5820.1 5836.6 5835.9 5836.55 1122505 13357750 102215

82



GRAPH FUTIDX-NIFTY from 01-04-2011 to 28-04-2011


From the above graph Futidx nifty open price at the starting of Apr contract in

5860.40.At the middle of the month future index swings to 5943.60.But the

open interest position decreases from the middle of month which indicates

profit taking of traders short covering makes future index slowly down to

5735.90. at that moment price slightly increases and

it closing at 5839.

83



Data for FUTSTK-HDFCBANK from 01-04-2011 to 28-04-2011

Date Expiry Open High Low Close LTPSettlePrice Open Int

Changein OI

01-Apr-11 28-Apr-11 2365 2374.8 2336.5 2350.9 2358.45 2350.9 2385375 7775004-Apr-

1128-Apr-

11 2350 2421.7 2350 2414.2 2419.5 2414.2 2587125 201750

05-Apr-11

28-Apr-11 2399 2419.65 2376.8 2405.3 2395 2405.3 2540625 -46500

06-Apr-11

28-Apr-11 2404.05 2407.75 2361.1 2387.7 2387.15 2387.7 2470250 -70375

07-Apr-11

28-Apr-11 2385 2386.75 2352 2368.75 2369 2368.75 2408625 -61625

08-Apr-11

28-Apr-11 2365 2393.8 2355 2361.65 2360 2361.65 2379500 -29125

11-Apr-11

28-Apr-11 2335 2348 2302 2308.55 2308.9 2308.55 2321500 -58000

13-Apr-11

28-Apr-11 2287.45 2393.5 2281.35 2383.65 2392 2383.65 2298875 -22625

15-Apr-11

28-Apr-11 2379 2401 2353.45 2370 2373.8 2370 2318125 19250

18-Apr-11

28-Apr-11 2370.5 2412 2315.1 2322.4 2322.5 2322.4 2315250 -2875

19-Apr-11

28-Apr-11 2349 2367 2330.5 2353.85 2352 2353.85 2037875 -277375

20-Apr-11

28-Apr-11 2368.6 2399.5 2354 2386.75 2392.05 2386.75 1925375 -112500

21-Apr-11

28-Apr-11 2397.25 2424.6 2392.6 2416.8 2416 2416.8 1844125 -81250

25-Apr-11

28-Apr-11 2390 2445 2390 2401.3 2400.3 2401.3 1771875 -72250

26-Apr-11

28-Apr-11 2400.3 2400.3 2346.1 2366.8 2368 2366.8 1311875 -460000

27-Apr-11

28-Apr-11 2376.35 2383.45 2333.35 2357 2362.8 2357 1319875 8000

84



GRAPHFUTSTK-HDFCBANK from 01-04-2011 to 28-04-2011


Banks Yet to reduce interest rates public sector entities and private Corporate

have began rushing to the corporate bond markets. Bankers said the funds

raised at least Rs.13,000 crores was through Bonds and Insurance. Since the

beginning of the Current Financial year.

The interest rates continued to show downward trend and this will also

reflect in Positive Credit growth in the Financial Year 2011 for instance

HDFCBANK sees a Credit growth about 20% in Financial Year 2011.

85



Data for FUTSTK-WIPRO from 01-04-2011 to 28-04-2011

Date Expiry Open High Low Close LTPSettlePrice Open Int

Changein OI

01-Apr-11

28-Apr-11 480 482.85 473.45 479.55 479 479.55 2838000 164000

04-Apr-11

28-Apr-11 480.25 491.95 480.25 484.9 485 484.9 3286500 448500

05-Apr-11

28-Apr-11 486.15 487.45 474.95 483.6 483.95 483.6 3209500 -77000

06-Apr-11

28-Apr-11 485.3 485.75 463.05 467.8 466.85 467.8 3410000 200500

07-Apr-11

28-Apr-11 466 474.75 461.25 473.75 474.4 473.75 3177500 -232500

08-Apr-11

28-Apr-11 471.55 473 460.3 467.7 467 467.7 3237000 59500

11-Apr-

11

28-Apr-

11 466.65 467 459.3 462.6 462.5 462.6 3272000 3500013-Apr-

1128-Apr-

11 461 476.85 457.65 475.15 475 475.15 3516000 24400015-Apr-

1128-Apr-

11 473.9 473.9 448.4 450.25 448.95 450.25 3593500 7750018-Apr-

1128-Apr-

11 451.55 457.1 444.25 445.6 445.4 445.6 3414000 -179500

19-Apr-11

28-Apr-11 443.4 453.4 440.8 451.45 452.5 451.45 3371000 -43000

20-Apr-11

28-Apr-11 454 466.9 454 465.05 463.05 465.05 3275000 -96000

21-Apr-11

28-Apr-11 465.95 473.4 460.5 462.65 463.25 462.65 3189000 -86000

25-Apr-11

28-Apr-11 462.65 469 462 466 466.05 466 3173000 -16000

26-Apr-11 28-Apr-11 465.2 467.7 454 464.7 464.15 464.7 2198500 -97450027-Apr-

1128-Apr-

11 449.95 455.45 445.3 450.9 450.15 450.9 1680500 -518000

86



Data for FUTSTK-RELIANCE 01-04-2011 TO 28-04-2011

Date Expiry Open High Low Close LTP

Settle

Price

Turnover

Underlying

Value

in

Lacs01-Apr-

1128-Apr-

11 1054 1071.15 1040 1043.95 1043.4 1043.95 46116.45 1036.404-Apr-

1128-Apr-

11 1045.8 1062.8 1034.05 1057.9 1059.95 1057.9 41164.61 1050.6505-Apr-

1128-Apr-

11 1060 1063.8 1044.5 1052.3 1051.75 1052.3 30264.18 1047.6506-Apr-

1128-Apr-

11 1051.65 1060.4 1043.8 1049.5 1051.9 1049.5 31251.06 1044.8507-Apr-

1128-Apr-

11 1050 1051.65 1040.45 1045.65 1045 1045.65 22307.57 1041.9

08-Apr-11

28-Apr-11 1047.3 1055.4 1025.65 1028.75 1029.05 1028.75 34020.39 1023.9

11-Apr-11

28-Apr-11 1020.5 1024.3 1010 1010.95 1011.6 1010.95 24395.68 1005.3

13-Apr-

11

28-Apr-

11 1005.5 1029.8 1001 1027.6 1028.1 1027.6 48580.62 1021.815-Apr-

1128-Apr-

11 1022.25 1026.45 1010.25 1022.75 1020.4 1022.75 37337.23 1020.9518-Apr-

1128-Apr-

11 1021.3 1048.6 1010.55 1014.25 1012.85 1014.25 59510.32 1009.1519-Apr-

1128-Apr-

11 1010.5 1021.8 1002.1 1016.05 1014.5 1016.05 46284.72 1011.6520-Apr-

1128-Apr-

11 1020.05 1033 1010.9 1030.4 1032.2 1030.4 35735.3 1025.921-Apr-

1128-Apr-

11 1034.5 1048.45 1032.8 1044.8 1044 1044.8 50207 1040.625-Apr-

1128-Apr-

11 1015 1026 1009.1 1012.3 1012 1012.3 69216.01 1009.3526-Apr-

1128-Apr-

11 1012 1012.8 998.7 1004.65 1003.95 1004.65 72114.04 1001.15

27-Apr-11

28-Apr-11 1009.7 1009.9 982 987.25 989 987.25 49706.89 986.1

88



GRAPH FUTSTK-RELIANCE from 01-04-2011 to 28-04-2011


From the above graph market opening price has rise in the beginning but there

in downfall in open interest due to profit booking of investors. At the middle of

the month future price fall down drastically but open interest is slightly down

due to heavy selling. At the end future price rise up but open interest has been

drastically fall down due to the creation of short position Reliance this month is

having high volatility due to the high expectation on the budget

89



FINDINGS

Steel City Securities Limited established in the year 1995 is a stock broking company

operating in Andhra Pradesh, Orissa, Karnataka and TamilNadu.

In SCSL, trading in NSE, BSE, NCDEX, MCX and MCX-SX is done on different

terminals.

Trading in NSE is done through National Exchange for Automated Trading (NEAT)

system.

In this month market rise up from 18thMay and to 7th June, it is falling from 8th june

and get, back to the positive trends in the market. The reason for the Nifty rise is due

to positive results of elections.The particular day is called as “GOLDEN MONDAY”

As soon as the trade ends, back office system is done in SCSL to know the trade

positions.

From 2001 to till now derivatives has grown tremendously.

Indian markets are literally on the top of the world,going their returns so far in 2009.

In the month of june,the share price of wipro was drastically fall down because of

due to the impact of global market.

At the end of may contract the Chambal fertilizers, open interest was fall down,but

the price is swings due to heavy profit booking.

90



SUGGESTIONS

I n order to increase its customer base SCSL. Has to educate the existing and new

investors through awareness programs, which can be conducted periodically. For an effective trading process SCSL should provide more and perfect sources of

information for the investors or traders.

There is a need to create awareness in the women/housewife investors in order to

make the capable of entering into the securities market.

SCSL can increase its business by reaching more potential investors by appointing

sales persons and proper advertisements and setting up new branches in potential

areas. It would be more advantageous for SCSL if it can explore global stock markets like

NASDAQ by introduction of a terminal.

To overcome the competition from other companies SCSL must offer better

service for the investors and provide good infrastructure for the investors.In

addition to that they need to issue identity cards for better recognition.

A Griveance cell must be opened and meeting must be conducted for every 15

days.so that investors can put forward their problems and it can get resolved.

91



SUMMARY

The focus of the study was on Online Trading in Steel City Securities Limited,

Visakhapatnam with an objective to study and understand the real process of stock trading.

The on-line trading in NSE is done through National Exchange for Automated Trading

(NEAT) system. Trading is done in the 2 types of markets of the NEAT system namely capital

market and derivatives market.

SCSL, which was set up in November 1995, is a stock broking company. It is a trading

member of NSE, BSE, MCX and NCDEX.

Screen based trading system electronically matches the buyer and seller in an order-driv

system or finds the customer the best price available in quote driven system.

Today, in India almost 100% trading takes place through electronic order matching.

In online trading Back Office provide the clients with all the trading related

services in the post market session.

92



CONCLUSION

This study is about what is an derivative market, different financial instruments thatwill be available for trading, its derivative terminology, what is a equity market, the

instruments available for trading , the monitoring and controlling authority of equity and

derivative markets.

It includes the online mode of trading with stock exchanges like NSE & BSE,

analysis of various service providers for online trading and the differentiating factors or

different products and services offered, comparative to steel city securities limited.

Superiority of steel city securities limited over its competitors particularly with

special reference to scsl.com Visakhapatnam Branch was analysed.

93



BIBLIOGRAPHY

I. BOOKS

1. Derivatives core module work book - National stock exchange

2. Future, options and other derivatives products -

John.C.hull

II. REPORTS

1. STEEL CITY SECURITIES LTD - Annual Report

III. JOURNALS & MAGAZINES

1. Business line

2. Hindu

3. India today

IV. WEB-SITES

1. www.nseindia.com

2. www.bseindia.com

3. www.moneycontrol.com

4. www.scsl.com

5. www.sebi.gov.in

6. www.derivativesindia.com

ABBREVATIONS

ALBM Automated Lending & Borrowing MechanismBSE Bombay Stock Exchange

CDSL Central Depositary Services Limited

CM’s Clearing Members

CM-BP-ID Clearing Member Business Partner Identification

94

http://www.nseindia.com/

http://www.bseindia.com/

http://www.moneycontrol.com/

http://www.scsl.com/

http://www.sebi.gov.in/

http://www.derivativesindia.com/

http://www.nseindia.com/

http://www.bseindia.com/

http://www.moneycontrol.com/

http://www.scsl.com/

http://www.sebi.gov.in/

http://www.derivativesindia.com/



number

DI Delivery Instructions Slip

DP Depository Participant

DRF Dematerialisation Request Form

FII’s Foreign Institutional Investors

ISIN International Securities Identification Number

IPO Initial Public Offer

LAN Local Area Network

NBFC’s Non - Banking Finance Companies

NCFM National Certification in Financial Market

NEAT National Exchange for Automated Trading

NSCCL National Securities Clearing Corporation Limited

NSDL National Securities Depository Limited

NSE National Stock Exchange

RAS Remote Access Service

SCSL Steel City Securities Limited

SCCSPL Steel City Capital Services Private Limited

SCCPL Steel City Commodities Private Limited

SEBI Securities and Exchange Board of India

SEBI Act Securities and Exchange Board of India Act

SHCIL Stock Holding Corporation of India Limited

TWS Trading Work Station

VSAT Very Small Aperture Terminal

ashok project

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