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DIFFERENCE BETWEEN
ONLINE
AND
OFFLINE
STOCK TRADING
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WHAT IS ONLINE TRADINGInvesting online /self directed investing , has
become the norm for individual investors and
traders over the past decade with many, if notall brokers now offering online services with
unique trading platforms.
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Reliance Securities Limited as a SEBI registered
Trading Member of NSE and BSE offers Internet
trading on the url.www.reliancemoney.com. To trade
online the customer is provided with an user id,
password and also a security token which flashes adynamic password number. This security token
displays a new 6 digit number every 36 seconds.
To facilitate trading the following frontend screenshave been made available.
EXAMPLE:
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WHAT IS OFFLINE TRADING/CALL TRADE
Apart from Internet trading, the customers are also
provided with the option of trading through the
Call & Trade facility. When the customer calls the
Call & Trade number to transact, he needs toauthenticate his identity by providing the user id,
and the dynamic password number from his
security token. Password is not required for Call &Trade transactions.
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DIFFERENCE BETWEEN OFFLINE
AND ONLINE TRADINGThe introduction of the Internet has surprisingly changed our way of life as a society.It has defined the way we do business and the way we correspond. The Internet has
opened many opportunities for online trading. The financial industry revolves around
the Internet. Every thing is just a few clicks away. This makes online trading most
convenient. But there are still investors who prefer the old fashion way of offline
trading and they mainly prefer offline trading for security reasons.
Internet has introduced a way for consumers to manage their money online. Not to
mention, Internet has transformed the way investment companies operate their
business and has made it easy for private investors to gain straight access to a range of
different markets and online tools that were at one point only reserved by the use of
investment professionals. Consumer investing and online trading has dramatically
changed over the last decade. Online trading dynamically continues to be redefined.
Services have expanded to include integrated management of additional financial
accounts. Not to mention, it has subsequently expanded in conjunction with ground-
breaking improvements to the traditional trading interface, such as telephone interface
systems.
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Of course, online trading has many pros. There are several wonderful reasons to invest
online and consider online trading.
1.MONEY SAVING OPPORTUNITIES: The amount of money you save depends
primarily on the online brokerage firm that you choose. No two firms are the same.There may be different regulations, similar to bank regulations. There are minimum
deposits required that must be maintained. As mentioned above, this will depend on the
online brokerage firm.
2. INSTANT ONLINE ACCESS: You can gain instant access to your account, thevalue of your portfolio updates immediately before your eyes.
3. ENTER ONLINE TRADES AT ANYTIME: You can enter online trades at
anytime and from anywhere. This is very convenient if you live in a different time zone
than the country you are trading in. Not to mention, it is especially fit for investors withbusy schedules.
4. WITH ONLINE TRADING YOU ARE IN CHARGE:You are in control of your
investments. No sales pitches and no hassle. You decide where to invest your money.
h l i h ll h i f li di h ill i h
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Nevertheless, with all the convenience of online trading there are still investors who
prefer the old fashion way of offline trading. Offline trading has lost some popularity
but it is still the main form of investing. Offline trading offers many benefits as
well.
1. The one benefit that an investor appreciates the most is that they are not alonewhen making investment decisions.
2. There are experienced and professional brokerage companies that handle their
investments for them.
3. Investors are not faced with the challenge of making these vital investment
decisions; especially, if they do not have the experience necessary to make the
appropriate investments.
4. Also, there is someone there to answer any questions that may cause concerns.
Not to mention, with offline trading mistakes are less likely to take place. No one
wants to throw their money away or stand by and watch someone else throw their
money away. It may be wise to hire a professional to assist you in making the correct
investment decisions if you feel you lack the knowledge necessary.
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LOGICAL COMPARISON
Internet doesn't really change everything but it definitely changes the way we work. We
all learn from the old-style businesses that we have done in the past such as offline
trading. With the advent of internet we have seen a great deal of improvement in the
way trading takes place through online trading. It is one of the most affordable means of
trading now. You necessarily don't have to be present at a Stock Exchange center to
know what is going on in the market. Here you are independent and self-sufficient with
knowledge as well as experience.Your brokerage firm does all that is necessary for you to enter into the market as an
investor. An individual who would be able to conduct accurate research and has good
money management skills will always succeed with the stock trading online. There
have been many benefits rather than limitations in online trading when compared to an
offline trading.
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1.The first being the costs involved in hiring a broker and paying him. In offline
trading the costs of the broker are comparatively higher. You have to pay them on
every trade you do. And you cannot be a day trader when you are trading offline. It
becomes very expensive for you to pay the broker on every transaction as a daytrader. In online trading you do not have to pay the broker anything at all. You would
save a lot on the trading commissions.
2. The major difference between the two is the involvement of middlemen. While in
offline trading you are surrounded by brokers, in online trading brokers enteronly when you need them.
3. The most logical benefits are that you as an online trader are taking control of your
own decisions and your own future. You can call your own shot numerous times or
just one time and then you can call it a day. There have been lots of changes in trade
ever since trading went online. Anyone could practically invest in a company of
their choice. And they are wise enough to invest in a company that can control the
market.
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4. While we know that internet has brought a revolution in every field that exists, it
has done a great deal of help to trading as well. Stock trading online is absolutely
paper less. The entire activity takes place on a common platform which can be
accessed by investors online. Share trading is done by brokers at one corner of the
place and the investor interacts with the broker from the other corner of the world.Online trading or eTrade is also interactive. It is not just one side reacting to the
changes. Whatever is happening on the account is visible to both the broker as well
as the investor - while in offline trading you tend to wait for your broker to do your
errands for you.
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5. One of the most reasonable advantages in online trading is that you can watch the
international stock markets move right from your doorstep. You don't have to call
anyone or wait for the newspaper the next day to check out the international listings.You can even trade at the same time from another part of the world. If you are still
an offline trader, it would still remain a dream for you to explore the international
markets.
6. Online trading is electronic which means that the trade of securities, bonds, shares,stock , debentures, certificates, etc. is through an online broker. This is the modern
day world trading. Bill Gates truly said with his experience that Internet will help
achieve "Friction free Capitalism" by putting buyer and seller in direct contact and
providing more information to both about each other. This is what practically
happens while you do stock trading online.
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ONLINE STOCK TRADING BEATS
OFFLINE TRADING FOR SPEED
As the internet's popularity has continued to rise, many small jobs can be performedmuch more simply and quickly online, when in the past they would have needed to be
carried out in person or over the telephone. A good example is online stock trading,
which previously was done through brokers. However, investing stocks online has
become the method of choice for many investors. Making wise investment decisions
and finding a good online company are essential things to think about when choosing
to trade online.
Online stock trading has spurned a plethora of online trading companies willing to
assist you in investing your money. Checking into these companies is important when
going through an online brokerage. Search the internet for previous user's experiences
to figure out whether a company is reputable. It is also a good idea to inspect theterms of service and customer service policies. A good online stock trading company
will clearly lay out their policies and have customer service available to investors.
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If you are trading offline, you may benefit from discussing with your financial advisor
the benefits of trading online. Opening a discourse with your financial advisor will
allow you to maintain a consistent trading style, roll over any previously invested
funds, and obtain other useful insight into reputable sites. Your finanical advisor may
even maintain his own internet trading company as well.
If you choose to trade without the help of an online advisor, this freedom will also
come with important risks and responsibility. Before choosing to trade on your own,
make sure you fully understand what trading entails. This may involve taking classes
or reading books. This is the most critical part of becoming an online trader. Many
people have lost money trading online because they no longer have the benefit of their
financial advisor's education.
The best way to minimize your risk while still making money is to invest in a variety
of companies. This means to have some high risk stocks and to have some stocks in a
lower risk group. It is always important into keep these kinds of things in mind and tobalance risk and reward. An advisor's knowledge and training can help you do this
because many investors forget to keep the risks in mind when faced with the chance to
make lots of money fast. This is why online stock trading can be too risky without a
personal advisor.
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DEMATERIALIZATION
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Dematerialization is the process by which a client can get physical
certificates converted into electronic form.
An investor intending to dematerialize its securities needs to have an account with
a DP.
The client has to deface and surrender the certificates registered in its name to the DP.
After intimating NSDL electronically, the DP sends the securities to the concerned
Issuer/ R&T agent.
NSDL in turn informs the Issuer/ R&T agent electronically, using NSDL Depository
system, about the request for dematerialisation.
If the Issuer/ R&T agent finds the certificates in order, it registers NSDL as theholder of the securities (the investor will be the beneficial owner) and communicates
to NSDL the confirmation of request electronically.
On receiving such confirmation, NSDL credits the securities in the depository
account of the Investor with the DP.
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PROCEDURE:
The client (registered owner) will submit a request to the DP in theDematerialisation Request Form for dematerialisation, along with the certificates
of securities to be dematerialized.
Before submission, the client has to deface the certificates by writing
"SURRENDERED FOR DEMATERIALISATION".
The DP will verify that the form is duly filled in and the number of certificates,
number of securities and the security type (equity, debenture etc.) are as given in
the DRF.
If the form and security count is in order, the DP will issue an acknowledgement
slip duly signed and stamped, to the client.
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THE DP WILL SCRUTINIZE THE FORM AND THE
CERTIFICATES. THIS SCRUTINY INVOLVES THE
FOLLOWING
Verification of Client's signature on the dematerialisation request with the specimen
signature (the signature on the account opening form). If the signature differs, the DP
should ensure the identity of the client.
Compare the names on DRF and certificates with the client account.
ISIN (International Securities Identification Number)
Lock - in status
Distinctive numbers
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FEATURES:
Holdings in only those securities that are admitted for dematerialisation by
NSDL can be dematerialized.
Only those holdings that are registered in the name of the account holder can be
dematerialized.
Names of the holders of the securities should match with the names given for the
Demat account.
Check the Demat performance of the companies whose shares are to be given for
dematerialisation.
A client may, in the normal course, receive Demat confirmation in about 30 days
from the date of submission of Demat request to the DP. There are special
processes for Securities issued by Government of India and simultaneous
transmission and Demat.
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If the same set of joint holders held securities in different sequence of names, these
joint holders by using ' Transposition cum Demat facility' can dematerialize the
securities in the same account even though share certificates are in different
sequence of names. e.g., If there are two share certificates one in the name of X first
and Y second and another in the name of Y first and X second, then these shares canbe dematerialized in the depository account which is in any name combination of X
and Y i.e., either X first and Y second or Y first and X second. Separate accounts
need not be opened to demat each share certificate. If shares are in the name
combinations of X and Y, it cannot be dematerialized into the account of either X or
Y alone.
Demat requests received from client (registered owner) with name not matching
exactly with the name appearing on the certificates merely on account of initials not
being spelt out fully or put after or prior to the surname, can be processed, provided
the signature of the client on the Dematerialisation Request Form (DRF) tallies with
the specimen signature available with the Issuers or its R & T agent.
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REMATERIALIZATION
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Rematerialisation is the process by which a client can get his
electronic holdings converted into physical certificates.
The client has to submit the Rematerialisation request to the DP with whom he has an
account.
The DP enters the request in its system which blocks the client's holdings to that extent
automatically.
The DP releases the request to NSDL and sends the request form to the Issuer/ R&T
agent.
The Issuer/ R&T agent then prints the certificates, dispatches the same to the client and
simultaneously electronically confirms the acceptance of the request to NSDL.
Thereafter, the client's blocked balances are debited.
PROCEDURE
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PROCEDURE
The client will submit a request to the DP for Rematerialisation of holdings in its
account.
On receipt of the request form, the DP will verify that the form is duly filled in andissue to the client, an acknowledgement slip, signed and stamped.
The DP will verify the signature of the client as on the form with the specimen
available in its records.
If the signatures are different the DP will ensure the identity of the client.
If the form is in order the DP will enter the request details in its DPM (software
provided by NSDL to the DP). While entering the details, if it is found that the
client's account does not have enough balance, the DP will not entertain the request.
The DP will intimate the client that the request cannot be entertained since the client
does not have sufficient balance.
If there is sufficient balance in the client's account, the DP will enter the request in
the DPM will generate a Rematerialisation Request Number (RRN).
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The RRN so generated is entered in the space provided for the purpose in the
Rematerialisation request form.
Details recorded for the RRN should be verified by a person other than the person who
entered the data. The request is then released to the DM by the DP.
The DM forwards the request to the Issuer/ R&T agent electronically.
The DP will fill the authorization portion of the request form.
The DP will then dispatch the request form to the Issuer/ R&T agent.
While processing the request, the Issuer/ R&T agent may report some objections.
Depending on the nature of objection, the Issuer/ R&T agent may reject the request or
process it partially, seeking rectification for the remaining, and send an objection memo
to the DP.
The Issuer/ R&T agent accepts the request for Rematerialisation prints and dispatches
the certificates to the client and sends electronic confirmation to the DM.
The DM downloads this information to the DPM and the status of the
R t i li ti t i d t d i th DPM