Download - Project report on online trading and demat
MBA PROGRAMME SIPS
Introduction
The commencement of E-Trading and Demat has transformed the capital
market in India. With the help of Demat and Trading account, buying and selling of
shares has become a much faster and even process than trading with the assistance of
a physical broker. It provides for the assimilation of bank, broker, stock exchange and
depository participants. This helps to get rid of the painstaking procedure of investing
in stock exchange.
Today, if one wants to invest in stock market, he has to contact a broker on
phone or meet him personally to place order. A broker generally gives such
importance and additional service only to high net worth customers. But the
introduction of Internet trading, even a common or a small investor gets an
opportunity to avail the service at an affordable price which is much lesser than what
is charged by a physical broker over the phone. Online trading has given customer a
real time access to account information, stock quotes elaborated market research and
interactive trading. The prerequisites of Internet trading are a computer, a modem and
a telephone connection, registration with broker, a bank a/c and depository account.
The introduction of depository service is considered as the beginning of the
trading of Stocks @ click. This means that you can arrange delivery of scrips sold
anytime, anywhere to anyone by click of a mouse. Dematerialization facilitates to
keep the securities in electronic form instead of paper form. It offers more
advantageous than the physical certificate form. Despite the advantages of
Dematerialization, the awareness levels among the investors relating to Demat
account is not adequate because of numerous reasons. The investors are not
sufficiently responsive of the concept of Demat account and the various financial
institutions providing such services.
This study involves understanding the various concepts of Demat and
analyzing the investment pattern of individuals in India and a study on Analysis of
awareness among investors regarding On Line Trading and Dematerialization has
been submitted to Siddarth Institute of P.G. Studies, Kantepudi in partial fulfillment of
Master of Business Administration.
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Stock Market:
Indian Stock Markets are one of the oldest in Asia. Its history dates back to
nearly 200 years ago. The earliest records of security dealings in India are meager and
obscure. The East India Company was the dominant institution in those days and
business in its loan securities used to be transacted towards the close of the eighteenth
century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses
took place in Bombay. Though the trading list was broader in 1839, there were only
half a dozen brokers recognized by banks and merchants during 1840 and 1850. The
1850's witnessed a rapid development of commercial enterprise and brokerage
business attracted many men into the field and by 1860 the number of brokers
increased into 60. In 1860-61 the American Civil War broke out and cotton supply
from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The
number of brokers increased to about 200 to 250. However, at the end of the
American Civil War, in 1865, a disastrous slump began (for example, Bank of
Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). In 1887,
they formally established in Bombay, the "Native Share and Stock Brokers'
Association" (which is alternatively known as "The Stock Exchange"). In 1895, the
Stock Exchange acquired a premise in the same street and it was inaugurated in 1899.
Thus, the Stock Exchange at Bombay was consolidated. Thus in the same way,
gradually with the passage of time number of exchanges were increased and at
currently it reached to the figure of 24 stock exchanges.
Importance of stock market:
The stock market is one of the most important sources for companies to raise
money. This allows businesses to go public, or raise additional capital for expansion.
The liquidity that an exchange provides affords investors the ability to quickly and
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easily sell securities. This is an attractive feature of investing in stocks, compared to
other less liquid investments such as real estate.
History has shown that the price of shares and other assets is an important part
of the dynamics of economic activity, and can influence or be an indicator of social
mood. Rising share prices, for instance, tend to be associated with increased business
investment and vice versa. Share prices also affect the wealth of households and their
consumption. Therefore, central banks tend to keep an eye on the control and behavior
of the stock market and, in general, on the smooth operation of financial system
functions. Financial stability is the raison d'être of central banks.
Exchanges also act as the clearinghouse for each transaction, meaning that they collect
and deliver the shares, and guarantee payment to the seller of a security. This
eliminates the risk to an individual buyer or seller that the counter party could default
on the transaction. The smooth functioning of all these activities facilitates economic
growth in that lower costs and enterprise risks promote the production of goods and
services as well as employment. In this way the financial system contributes to
increased prosperity.
STOCK EXCHANGE:
Stock exchange is an organized market place where securities are traded. These
securities are issued by the government, semi-government bodies, public sector
undertakings and companies for borrowing funds and raising resources. Securities are
defined as any monetary claims (promissory notes or I.O.U) and also include shares,
debentures, bonds and etc., if these securities are marketable as in the case of the
government stock, they are transferable by endorsement and alike movable property.
They are tradable on the stock exchange.
Stock exchange is defined as “an association, organization or body of individual
whether incorporated or not, Established for the purpose of assessing, regulating and
controlling business in buying , selling and dealing in securities”.
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Under the Securities Contract Regulation Act of 1956, Securities trading
is regulated by the Central Government and such place only in stock exchanges
recognized by the government under this Act. As referred to earlier there are at
present 23 such recognized stock exchanges in India. Of these, major stock exchanges,
like Bombay Stock Exchange , National Stock Exchange ,Inter-Connected Stock
Exchange, Calcutta, Delhi, Chennai, Hyderabad and Bangalore etc. are permanently
recognized while a few are temporarily recognized. The above act has also laid down
that trading in approved contract should be done through registered members of the
exchange. As per the rules made under the above act, trading in securities permitted to
be traded would be in the normal trading hours (9.55 A.M to 3.30 P.M) on working
days in the trading ring, as specified for trading purpose. Contracts approved to be
traded are the following
Spot delivery deals are for deliveries of shares on the same day or the next day
as the payment is made.
Hand deliveries deals for delivering shares within a period of 7 to 14 days from
the date of contract.
Delivery through clearing for delivering shares with in a period of two months
from the date of the contract, which is now reduce to 15 days.(Reduced to 2
days in demat trading)
Special Delivery deals for delivering of shares for specified longer periods as
may be approved by the governing board of the stock exchange.
Except in those deals meant for delivery on spot basis, all the rest are to be put
through by the registered brokers of a stock exchange. The securities contracts
(Regulation) rules of 1957 laid down the condition for such trading, the trading hours,
rules of trading, settlement of disputes, etc. as between the members and of the
members with reference to their clients.
HISTORY OF STOCK EXCHANGES IN INDIA
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The origin of the Stock Exchanges in India can be traced back to the later half of 19th
century. After the American Civil War (1860-61) due to the share mania of the public,
the number of brokers dealing in shares increased. The brokers organized an informal
association in Mumbai Named “The Native Stock and Share Brokers Association in
1875”.later evolved as Bombay stock exchange. Increased activity in trade and
commerce during the First World War and Second World War resulted in an increase
in the stock trading. The Growth of Stock Exchanges suffered a set after the end of
World War. World wide depression affected them most of the Stock Exchanges in the
early stages had a speculative nature of working without technical strength. After
independence, government took keen interest to regulate the speculative nature of
stock exchange working. In that direction, securities and Contract Regulation Act
1956 was passed, this gave powers to Central Government to regulate the stock
exchanges. Further to develop secondary markets in the country, stock exchanges
established at Mumbai, Chennai, Delhi, Hyderabad, Ahmedabad and Indore. The
Bangalore Stock Exchange was recognized in 1963. At present there are 23 Stock
Exchanges.
Till recent past, floor trading took place in all Stock Exchanges. In the floor trading
system, the trade takes place through open outcry system during the official trading
hours. Trading posts are assigned for different securities where by and sell activities
of securities took place. This system needs a face – to – face contact among the
traders and restricts the trading volume. The speed of the new information reflected
on the prices was rather than the investors.
The Setting up of NSE and OTCEI (Over the counter exchange of India with the
screen based trading facility resulted in more and more Sock exchanges turning
towards the computer based trading. BSE introduced the screen based
Trading system in 1995, which known as BOLT (Bombay on – line Trading System)
Madras Stock Exchange introduced Automated Network Trading System (MANTRA)
on October 7, 1996 Apart from Bombay Stock Exchanges have introduced screen
based trading.
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FUNCTIONS OF STOCK EXCHANGE
Maintain Active Trading: Shares are traded on the stock exchanges, enabling the
investors to buy and sell securities. The prices may vary from transaction to
transaction. A continuous trading increases the liquidity or marketability of the shares
traded on the stock exchanges.
Fixation of Prices: Price is determined by the transactions that flow from investors
demand and the supplier’s preferences. Usually the traded prices are made known to
the public. This helps the investors to make the better decision.
Ensures safe and fair dealings: The rules, regulations and bylaw of the Stock
Exchanges provide a measure of safety to the investors. Transactions are conducted
under competitive conditions enabling the investors to get a fair deal.
Aids in financing the Industry: A continuous market for shares provides a favorable
climate for raising capital. The negotiability and transferability of the securities,
investors are willing to subscribe to the initial public offering (IPO). This stimulates
the capital formation.
Dissemination of Information: Stock Exchanges provide information through their
various publications. They publish the share prices traded on their basis along with the
volume traded. Directory of Corporate Information is useful for the investor’s
assessment regarding the corporate. Handouts, handbooks and pamphlets provide
information regarding the functioning of the Stock Exchanges.
Performance Inducer: The prices of stocks reflect the performance of the traded
companies. This makes the corporate more concerned with its public image and tries
to maintain good performance.
Self-regulating organization: The Stock Exchanges monitor the integrity of the
members, brokers, listed companies and clients. Continuous internal audit safeguards
the investors against unfair trade practices. It settles the disputes between member
brokers, investors and brokers.
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REGULATORY FRAME WORK:
This Securities Contract Regulation Act, 1956 and Securities and Exchange board of
India (SEB1) Act, 1992, provides a comprehensive legal framework. A 3-tier
regulatory structure comprising the ministry of finance, SEB1 and the Governing
Boards of the Stock Exchanges regulates the functioning of Stock Exchanges.
Ministry of finance: The Stock Exchange division of the Ministry of Finance has
powers related to the application of the provision of the SCR Act and licensing of
dealers in the other area. According to SEBI Act, The Ministry of Finance has the
appellate and the supervisory power over the SEBI. It has powered to grant
recognition to the Stock Exchange and regulation of their operations. Ministry of
Finance has the power to approve the appointments of executives chiefs and the
nominations of the public representatives in the government Boards of the Stock
Exchanges. It has the responsibility of preventing undesirable speculation.
The Securities and Exchange Board of India:The Securities and Exchange Board of
India even though established in the year 1988. Received statutory powers only on
30th January 1992. Under the SEBI Act, a wide variety of powers are vested in the
hands of SEBI. SEBI has the powers to regulate the business of Stock Exchanges,
other security and mutual funds. Registration and regulation of market intermediaries
are also carried out by SEBI. It has responsibility to prohibit the fraudulent unfair trade
practices and insider dealings. Takeovers are also monitored by the SEBI has the multi
pronged duty to promote the healthy growth of the capital market and protect the
investors.
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The Governing Board of stock exchanges: The Governing Board of the Stock
Exchange consists of elected members of directors, government nominees and public
representatives. Rules, by laws and regulations of the Stock Exchange substantial
powers to the executive director for maintaining efficient and smooth day-to day
functioning of Stock Exchange. The Governing Board has the responsibility to
maintain and orderly and well-regulated market.
The Governing body of the Stock Exchange consists of 13 members of which
Six members of the Stock Exchange are elected by the members of the Stock
Exchange.
Central Government nominates not more than three members.
The board nominates three public representatives.
SEBI nominates persona not exceeding three and
The Stock Exchange appoints one Executive Director
One third of the elected members retire at annual general meeting (AGM). The retired
member can offer himself for election if he is not elected for two consecutive years. If
a member serves in the governing body for two years consecutively, he should refrain
offering himself for another two years.
The members of the governing body elect the president and vice-president.
It needs to approval from the Central Government or the Board. The office tenure for
the president and vice-president is on year. They can offer themselves for re-election,
if they have not held for two consecutive years. In that case they can offer themselves
for re-election after a gap of one-year period
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NATIONAL STOCK EXCHANGE
The National Stock Exchange (NSE) of India became operational in the capital market
segment on third November 1994 in Mumbai. The genesis of the NSE lies in the
recommendations of the pherwani committee (1991). Apart from the NSE. It had
recommended for the establishment of National Stock market System also. The
committee pointed out some major defects in the Indian stock market. The defects
specified are.
Lack of liquidity in most of the markets in terms of depth and breadth.
Lack of ability to develop markets for debt.
Lack of infrastructure facilities and outdated trading system.
Lack of transparency in the operations that affect investors’ confidence.
Outdated settlement system that are inadequate to cater to the growing volume,
leading to delays.
Lack of single market due to the inability of various stock exchanges to
function cohesively with legal structure and regulatory framework.
These factors led to the establishment of the NSE.
The main objectives of NSE are as follows
To establish a nation wide trading facility for equities, debt and hybrid
instruments
To ensure equal access investors all over the country through appropriate
communication network.
To provide a fair, efficient and transparent securities market to investors using
an electronic communication network.
To enable shorter settlement cycle and book entry settlement system.
To meet current international standards of securities market.
Promoters of NSE: IDBI, ICICI, IFCI, LIC, GIC, SBI, Bank of Baroda. Canara Bank,
Corporation Bank, Indian Bank, Oriental Bank of Commerce. Union Bank of India,
Punjab National Bank, Infrastructure Leasing and
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Financial Services, Stock Holding Corporation of India and SBE capital market are the
promoters of NSE.
MEMBERSHIP:
Membership is based on factors such as capital adequacy, corporate structure, track
record, education, experience etc. Admission is a two-stage process with applicants
requiring going through a written examination followed by an interview. A committee
consisting of experienced people from the industry to assess the applicant’s capability
to operate as an exchange member, interviews candidates. The exchange admits
members separately to Wholesale Debt Market (WDM) segment and the capital
market segment. Only corporate members are admitted on the debt market segment
whereas individuals and firms are also eligible on the capital market segment.
Eligibility criteria for trading membership on the segment of WDM are as follows.
1). The persons eligible to become trading members are bodies corporate, companies
institutions including subsidiaries of banks engaged in financial services and such
other persons or entities as may be permitted form time to time by RBI/SEBI.
2).The whole-time directors should possess at least two years experience in any
activity related to banking or financial services or treasury.
3).The applicant must possess a minimum net worth of Rs.2 crores.
4).The applicant must be engaged solely ion the business of securities and must not be
engaged in any fund-based activities.
The eligibility criteria for the capital market segment are;
1) Individuals, registered firms, bodies corporate, companies and such other persons
may be permitted under SCRA, 1957.
2) The applicant must be engaged in the business of securities and must not be
engaged in any fund-based activities.
3) The minimum nets worth requirements prescribed are as follows;
a) Individual and registered firms – Rs.100 Lacs.
b) Corporate bodies – Rs. 100 Lacs.
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4) The minimum prescribed qualification of graduation and two years experience of
handling securities as broker, sub-broker, authorized assistant, etc must be fulfilled by
a) Minimum two directors in case the applicant is a corporate
b) Minimum two partners in case of partnership firms and
c) The individual in case of individual or sole proprietary concerns.
The two experienced director in a corporate applicant or trading member should hold
minimum of 5% of the capital of the company.
Present Trading Mechanism
The National system provides single, nation wide Securities. It enables investors in
one part of the country to trade at the best quotes with an investors located in any other
part of the country through the members of the stock exchanges and subsequently
clears and settles the trade in an efficient and cost effective manner.
The primary objective of the stock market is to provide clear opportunity to the
investors throughout the country to trade any securities irrespective of the size of the
order or the broker through whom the order is routed. This provides the facility to
execute the buy out any extra cost to the investors.
There will be no trading floor in the exchanges. Instead, each trading member will
have a computer at his own office any where in India which will be connected to the
central computer system at the NSE through leased lines or VSAT’s (Very Small
Aperture Terminal).
A satellite network makes it possible to connect almost all the parts of the nation
quickly as it is easy to install, as against the ground lines Such as dial up modems
leased lines which are prone to disruptions, satellite links on ther hands ensure high
speed, availability and quality of the connection. This code of trading is known as
“On-line Trading”.
ONLINE TRADING BY NSE:
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To bring in the transparency, efficiency and depth in the market, NSE provides a fully
automated screen based trading system known as National Exchange for Automated
Trading (NEAT) also known as Online Trading. This system is used for trading in the
capital market segment by its trading members across the country to trade
simultaneously with enormous easy and efficiency.
This NEAT or online trading system has lent considerable depth in the market by
enabling large member of members all over the country to trade simultaneously and
consequently narrowed the spreads significantly. A single consolidated order book for
each stock displays, on a real time basis, buy and sell orders originating from all over
the country.
This makes NSE a real national market. It has improved information efficiency by
allowing faster incorporation of price sensitive information into market prices. High
speed of execution of trades has increased operational efficiency. It is possible for
market participants to see the full market, which made the market more transparent,
leading to increased investor confidence.
Since audit trail is absolutely perfect and disputes can be settled by logging the trade
execution process in its entirety, all investors irrespective of their financial standing or
geographical location are assured for fair treatment.
Technology has changed the land scope of the stock markets, they don't require a
trading floor and they can trade from the single location, service investors across the
country.
Before screen based trading was introduces Regional Stock Exchanges were playing a
major role in the capital market as there were local investors. Now all the exchanges
have gone in for online trading as per the stipulations of SEBI.
REASONS FOR INTRODUCTION OF ONLINE TRADING:
Previous when the out cry system of trading existed, the limitations of the system
decrease the level of confidence to investors on the Capital Market. Some of them are:
# Lack of Transparency in the previous system.
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# Delayed receipt of acknowledgement of transaction from the brokers.
# Procedure delays in share transfers.
In the present scenario to compete and to survive, the stock exchange requires strong
and sound infrastructure and trading systems per international standards. So in order to
facilitate that the online system of trading is introduced.
The NSE (National Stock Exchange) has first introduced the Online Trading System in
mid 1990's in India. The online trading system imparted a greater level of transparency
and investors preferred online trading facilities due to following factors;
# The ease of operation from the point of view of both the parties of the
transactions i.e., the members and the investors.
# Increase in the confidence of the investors due to higher level of transparency.
# Facilitates better monitoring of market of the market by the exchange.
EVOLUTION OF ONLINE TRADING:
Online trading has become very popular in the last couple of years because of the
convenience of ease and use. Number of companies have gone online to meet their
customer's demands, enabling them to trade when they want and how they want to.
Trading is the buying and selling of goods and services but in current context it refers
to buying and selling of financial services including securities, through World Wide
Web.
Online trading has basically replaced a phone call with internet. Instead of
interacting with broker's phone, the consumer is clicking the mouse, not to mention
that other options are still available, but at cost. Online trading has given customer
real-time access to account information, stock quotes, elaborate market research and
interactive trading. Further, online trading has led to additional features such as:
# Limit/stop orders that can go unfilled, but there is an extra change for this
leeway facility since it needs to hold a price.
# Market orders that can filled at unexpected prices, but this type is much more
risky since you have to buy stock at the given price.
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# Cash account- were orders can be placed against stocks.
BOMBAY STOCK EXCHANGE:
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich
heritage. Popularly known as "BSE', it was established as "The Native Share & Stock
Brokers Association" in 1875. It is the first stock exchange in the country to obtain
permanent recognition in 1956 from the Government of India under the Securities
Contracts (Regulation) Act, 1956.
The Exchange's pivotal and pre-eminent role in the development of the India
capital market is widely recognized and its Index, SENSEX, is tracked worldwide.
Earlier an Association of Persons (AOP), the Exchange is now a demutualised and
corporative entity incorporated under the provisions of the Companies Act 1956,
pursuant to the BSE (Corporatisation and Demutualised) Scheme, 2005 notified by the
Securities and Exchange Board of India (SEBI).
With demutualization, the trading rights and ownership rights have been de-
linked affectively addressing concerns regarding perceived and real conflicts of
interest. The Exchange is professionally managed under the overall direction of the
Board of Directors. The Board comprises eminent professionals, representatives of
Trading Members and the Managing Director of the Exchange. The Board is inclusive
and is designed to benefit from the participation of market intermediaries.
In terms of organization structure, the Board formulates larger policy issues
and exercised over-all control. The committees constituted by the Board are broad-
based. The Managing Director and a management team of professionals manage the
day-to-day operations of the Exchange.
The Exchange has a nation-wide reach with a presence in 417 cities and towns
of India. The systems as processes of the Exchange are designed to safeguard market
integrity and enhance transparency in operation. During the year 2004-2005, the
trading volumes on the Exchange showed robust growth.
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The Exchange provides an efficient and transparent market fore trading in
equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT)
is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The
surveillance and clearing and settlement functions of the Exchange are ISO 2001:2000
certified.
ONLINE TRADING BY BSE:
Trading in dematerialized securities is quite similar to trading in physical
securities. The major difference is that at the time of settlement, instead of delivery in
the physical form, it is done through account transfer.
Trading at the stock exchange can be done only through registered trade
member's of the stock exchange irrespective of whether the securities are in physical
form of Demat form. DP's role will only be to facilitate the settlement in demat form.
Trading in dematerialized securities is presently available at NSE, BSE, LSE, MSE,
ISE and OCTEL. These exchanges have segments exclusive for trading in
dematerialized securities and a segment where trade could be done either in physical
or demat form as per the choice of the delivering client.
HISTORICAL BACKGROUND OF TRADING:
Earlier records of securities trading in India are available from the end of the
eighteenth century. Before 1850, there was business conducted in Mumbai in shares of
banks and the securities of the East India Company, Which were considered as
Securities for buying, selling and exchange. The shares of the commercial Bank,
Mercantile Bank and Bank of Bombay were some of the prominent shares traded. The
business was conducted under a sprawling banyan tree in front of the Town Hall,
which is now in the Harriman Circle Park.
In 1850, the Companies Act was passed and that heralded the
commencement of the joint stock companies in India. It was the American civil was
that helped Indians to establish broking business. The leading broker, Shri Premchand
Roychand designed and developed the procedure to be followed while dealing in
shares.
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In 1874,. the Dalal Street became the prominent place for meeting of the
brokers to conduct their business. The brokers organized an Brokers Association" to
protect the character, status and interest of the native brokers. That was the foundation
of The Stock Exchange, Mumbai. The Exchange was established with 318 members.
The Stock Exchange, Mumbai did not have to look back as it started riding
high in the ladder of growth. The Stock Exchange is a market place, like any other
centralized market, where buyers and sellers can transact business in securities at a
given point of time in a convenient and competitive manner at the fairest possible
price. In January 1899, Mr., James M.MacLean, M.P., inaugurated the Brokers" Hall.
After the First World Ear, the Stock Exchange was housed property at an old building
near the Town Hall. In 1928, the present premised were acquired surrounded by Dalal
Street, Bombay Samachar Marg and Hamam Street. A new building, the present
location, was constructed and was occupied on 1st December 1930.
In 1950 the regulation of business in securities and stock exchanges became an
exclusively Central government subject following adoption of the Constitution of
India. In Securities Contracts (Regulation) Act was passed by the Parliament of India.
To regulate the securities market, SEBI was initially established on October 12, 1988
as an interim board under control of the Ministry of Finance, government of India, in
1992, the SEBI Act was passed through which the SEBI came into existence.
Hence SEBI acquired statutory on 30th January 1992 passing an ordinance, which was
subsequently converted into an Act passed by the parliament on April 4, 1992.
The main objectives of SEBI are of protect the interest of the investors, regulate and
promote the capital market by creating an environment, which would facilitate
mobilization of resources through efficient allocation, and to generate confidence
among the investors.
As such, SEBI is responsible for regulating stock exchange and other intermediaries
who may be associated with capital market and the process of public companies
raising capital by issuing instruments that will be traded on the capital market, SEBI
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has been empowered by the Central Government to develop and regulate capital
markets in India and there by protect the interest of the investors.
In 1992, Over the Counter Exchange of India (OTCE) came into existence where
equities of small companies are listed. In 1994, National Stock Exchange (NSE) came
into existence, which brought an end to the open cut-cry system of trading securities
which was in vogue for 150year, and introduced Screen Based.
BSEs on line trading system were launched on March 14, 1995. Now the trading in
securities is done using screen based trading method through duly authorized members
of the exchange.
In SBT, investors place buy and sale orders with their brokers who enter the orders in
the automated trading system. Where buy and sale orders match, a trade is generated
and trade details are give to the respective brokers. After a trade has taken place, the
buyer has to pay money and the seller has to deliver securities.
On the stock exchange(s) hundreds and thousands of trades take place every day.
Buyers are spread over a large geographical are due to these problems completing a
trade by paying cash to seller and securities to buyer immediately in execution of
trades on an individual basis in virtually impossible. So the stock exchanges allow
trading to take place for a specified period, which is called as a "Trading Cycle".
A unique settlement numbers identifies each trading cycle. Once trading period is
over, buyer broker pays money and seller broker delivers securities to the CC/CH on a
predefined day. This process is called as pay-in, securities are given to the buyers and
the CC/CH gives money to the seller broker. This process is called as payout. This
process of pay-in and payout is called settlement.
Initially the trading cycle was of one fortnight, which was reduced to one week. The
transactions entered during this period, of a fortnight or one week, were used to be
settled either by payment for purchase or buy delivery of share certificates sold on
notified days one fortnight or one week after the expiry of the trading. The settlement
schedules are made known to the members of the exchange in advance.
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The weekly settlement period was replaced by daily settlements, popularly known as
rolling settlements, in which each day is separate trading day. With effect from
December 2001, T+5, rolling settlement cycle was introduced for all equities were 'T'
is the 'Trading Day' and pay-in and payout for the settlement was done on 5th business
day after trade day. For example, if T was Monday, the pay-in and payout were done
on next Monday, as Saturday and Sunday are not counted as business days. T+5
cycles were further shortened to T+3 settlement cycle w.e.f. April 1, 2002.
TRANSACTION CYCLE:
Decision to Trade
Placing Order
Trade Execution
Clearing of Trades
Settlement of Trades
Funds / Securities
A person holding assets (Securities/Funds), either to meet his liquidity needs or to
reshuffle his holdings in response to changes in his perception about risk and return of
the assets, decides to buy or sell the securities. He selects a broker and instructs him to
place buy/sell order on an exchange. The order is converted to a trade as soon as it
finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to
determine the obligations of the trading member’s securities/funds as per settlement
cycle. Buyer/seller delivers funds/ securities and receives securities/ funds and
acquires ownership of the securities. A securities transaction cycle is presented above.
Just because of this Transaction cycle, the whole business of Securities and Stock
Broking has emerged. And as an extension of stock broking, the business of Online
Stock broking/ Online Trading/ E-Broking has emerged.
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At the end of the American Civil War, the brokers who thrived out of Civil War in
1874, found a place in a street (now appropriately called as Dalal Street) where they
would conveniently assemble and transact business. In 1887, they formally established
in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively
known as “The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in
the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay
was consolidated.
ROLE OF ONLINE TRADING IN CAPITAL MARKETS:
PRIMARY MARKET:
Primary market refers to the new issue of securities by new companies as
well as the existing companies. Apart from the shares, other instruments commonly
issued are debentures convertible debentures and shares attached with options like
warrants etc.
The primary market, which changelises savings of investors to productive
uses, reflects interplay of the forces that affects the sentiments and confidence of the
corporate sector as well of the investors.
In order to regulate them, there are measures, which are initiated by the
government and the regulating body SEBI. The measures initiated during the year
1998-1999 include.
SEBI GUIDELINES FOR NEW ISSUES IN DIFFERENT CATEGORIES OF
COMPANIES:
The SEBI guidelines for different categories of companies are:
New Company:
A new company is a company, which has not completed 12 months of commercial
production and when ever the promoters do not have a track recode.
These companies have to issue shares only a Par.
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Private and Closely Held Co.:
These companies having a track record of consistent profitability for the past three
years are permitted to price their issues freely.
Existing Listed Companies:
The existing listed companies will be allowed to raise fresh capital by freely pricing its
securities provide the promoter’s contribution is 50% on first Rs.100 cores of Issue.
BOOK BUILDING THROUGH ONLINE IPO SYSTEM:
The normal method of offering securities to the investing public at a price fixed
buy the issuer does not take into account the investor’s demands.
On line other hand, Book Building Method takes into account the demand for
shares at various prices as an important input to finalize the price. In this strive
continuously improving Indian securities. Market, NSE offers its infrastructure for
conducting online IPO’s for Book Building.
It is fully automated screen based bidding system that allows trading members
to enter into bids on behalf of their clients. All the bids received by he system are
numbered, time stamped and stored in the book till the Book Building Process and the
offer price is determined after the bid closing date.
While ensuring efficient price discovery, this system reduces the time taken
for the completion of the issue process.
The merits of this new system are:
The investor parts with money only after the allotment.
It eliminates refunds except incase of direct applications.
It reduces the time taken for the issue process.
The securities can get listed on the stock exchange from the 15 th day from the
closure of the bidding date in the Issue process as against 45days incase of
normal issue.
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NSEs online IPO system launched with the book building process with issue of
Hughes Software System Lid, in September 1999, the book was oversubscribed nearly
26times.
HUL Technologies Ltd. (HUL) was the next issue handled by the NSE in which
189 trading members having 535 users across the country participated in the book
building issue of HUL, Book was opened between November 16th 199- November 24th
1999. Book built portion was 1,2780,000 equity shares of Rs.4 to Rs.820. HTL had
planned to raise Rs.741.24 crores. Instead the co., received a total subscription of
33,54,80,750 share worth of Rs.20,100crore which is 27times of the offer size. Issue
price for the fixed price portion was fixed at Rs.580 per share.
SEBI GUIDELINES FOR ISSUES MADE THROUGH 100% BOOK
BUILDING:
SEBI had issued guidelines in October 1997 for book building, which were
applicable for100% of the Issue size and for Issues aboveRs.100 crore. The guidelines
were revised subsequently to reduce the limit to issue of % Rs.25 crores to encourage
the use of this facility.
However, no Issuer used this facility. SEBI modified the framework for Book
Building fu8rther in October 1999 to make more attractive. The modified framework
did not replace the existing guidelines. The issuer would have option to issue securities
using book-building facility under the existing framework or the modified set up
broadly as:
The present requirement of geographical display of demand at bidding terminal
to syndicate members as well as the investors has been made optional.
The 15% reservation for individual investors bidding for up in 10 marketable
slots may be merged with the 10% fixed prices offer.
Allotments fore the Book Built portions shall be made in DANT form only.
The issue may be allotted to disclosure either the issue size or the number of
securities to be offered to the public.
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Additional disclosure with respect to the scheme for making up the deficit in
the sources of financing and the pattern of deployment of excess funds shall be
made in the offer document.
SECONDARY MARKET:
Secondary market refers to the stock exchanges where an investor can buy or
see the securities. Equity shares have dominated India’s stock markets with the
objectives of improving market efficiency, enhancing transparency, checking unfair
trade practices and bringing the India market to the International standards. A package
of reforms consisting of measures to liberalize, regulate and develop the securities
market introduced.
This measures were taken to broaden the market and make it function with
greater transparency and in the best interest of the investors.
The steps taken are:
Continuous monitoring of stock market operations:
SEBI monitors the operation of stock exchange with a view to ensure that the dealings
are conducted in the best interest of the financial environment in the country. Any
violation of rules and regulations on the part of the stock exchange or the trading
members involves penalties.
Change in management structure:
In the earlier periods, brokers whose decisions were self-centers and served their own
interests dominated the boards of stock exchanges. According to the recent guidelines.
50% of the directors must be not broker’s directors or government representatives and
a non-member professional shall be appointed as the executive director.
Safeguarding the interests the investors:
Stock exchanges are instructed to take timely action for the redresses of
investor grievances. It is mandatory foe stock exchanges to have an “investor’s
services cell” to look into the complaints of investors and take appropriate action
against the guilty.
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Investors have been permitted to form associations and register them under
SEBI. These associations are expected to promote the investors and create awareness
about various investment avenues dealing in stock exchanges, illegal transactions
etc…
Transparency of accounting practices:
To ensure correct pricing mechanism and wider participation, all attempts are being
taken to achieve transparency in trading and accounting procedure.
Prohibition of insider trading:
The ban of insider trading has prevented any insider from dealing in securities of any
listed company on the basis of any unpublished price sensitivity information.
Prevention of price rigging:
SEBI has greater power to curb price rigging on stock exchanges. SEBI has taken
stringent action against the brokers who indulge in price rigging. Thus all efforts are
being made to protect the interest of genuine investors.
Discouraging price manipulation:
The SEBI took all the step to prevent price manipulations in all stock exchanges. It has
instructed all stock exchanges to keep special margins in addition to the normal ones
on the scripts, which are subject to wide price fluctuation.
The stock exchange have been directed to suspend trading in a scrip incase any ones of
the stock exchange suspends trading in that script for more than a day due to price
manipulation or fluctuation.
Introduction of electronic trading:
The OTCEI and NSE started trading through electronic medium. Under this system
investment counters can be spread throughout the country under the electronic
network.
This has created a national market, with no physical location, no trading ring,
no stock exchange building, and no hustle and bustle scenes etc, which are a common
sight in a conventional exchange with a trading ring.
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Introduction of depository system:
A depository participant is an organization where the securities of a shareholder are
held in the electronic form through a process of dematerialization.
The physical transfer of shares is substituted through electronic media. Since
the operations are computer linked, they are transparent, speedier and cost effective.
The introduction of depository system has avoided deliveries, forgeries, theft and
delays in settlement.
Buy back of shares:
To strike a balance between the demand and supply of shares in the market,
companies are permitted to buy back their own shares.
It is expected that the idle cash in the hands of one company will be
channelized to another company having a pressing need and it will be used to correct
the valuation of their stock.
Trading in derivatives:
Dr.L.G.Gupta committee has recommended introducing trading in index futures and
options. The starting of derivative trading has opened a new chapter in history of stock
exchanges.
Rolling settlement:
To start with, SEBI has started rolling settlement on a T+5 cycle, then T+3
cycle, which is now T+2 cycle. It means the transactions on stock exchange have to be
settled 2days after the trade day. From that is further reduced to T+1.
The practice of allocation of resources among different competing entities as
well as its terms by a central authority was discontinued. The secondary market has
overcome the geographical barriers by moving to screen based trading. Physical
security certificates are disappearing very fast. The settlement period was shortened to
one week and it is approaching to one day.
Trading procedures and practices:
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A security is listed any one or more stock exchanges in addition to the
regional exchange, which is compulsory. A security that is listed on the stock
exchange can be permitted for trading from another stock exchange. Every stock
exchange follows its own trading practices and procedures in respect with:
Settlement of transactions.
Payment and delivery dates.
Closure of books.
Marketing of securities.
Control over curb-activity.
Trading hours etc…
Nowadays these procedures are being standardized. The fragmentation of markets,
particularly when the floating stock are not large, this leads to the situation where the same
security may be quoted widely different price at the same time.
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RESEARCH OBJECTIVES
An objective is the brainchild behind any project report. A project report will
always have a certain objective which needs to be accomplished. Following are the
objectives behind the preparation of my project at Shriram Insight Share Brokers Ltd.
To present an overview of the online trading of India.
To examine the buying and selling system of the online trading.
To know the trends involved in the online trading.
To know how we can open a demat, what are the benefits, requirements etc.,
for opening a demat account.
To find out the point of view of Investors regarding the services provided by
DP.
To find the awareness of Demat account among employed investors.
To find Potential customers of SHRIRAM INSIGHT in Guntur City.
To know about problems faced in trading by traders in Guntur city.
To know the challenges faced in trading by traders in Guntur city.
To assess the perception of traders about Shriram Insight Share Brokers
Limited in Guntur City.
To determine the satisfaction levels of consumers with Shriram Insight Share
Brokers Limited in Guntur city.
To assess the satisfaction level of traders regarding services of Shriram Insight
Share Brokers Limited in Guntur city.
To know the market share of SHRIRAM INSIGHT.
To know the competitors of SHRIRAM INSIGHT in Guntur city.
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RESEARCH METHODOLOGY
Sample size - 70
Sources of data - Primary data &
Secondary
Sampling used in data collection - Random sampling
Primary Data:
The required data was collected by way of distribution of questionnaires to
investors at random and by way of telephonic interviews and online distribution of
questionnaire.
Tools/Technique of data collection -
Personal Interview
Close observation
Survey conduction
Secondary data:
Already existing data is called secondary data. I collected them by following
methods–
Internet
Books
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Research Instrument:
Questionnaire , which is used to collect the primary data by personal
interview and the day to day fluctuation in the stock markets of NSE & BSE.
Sampling Procedure:
The sample size is 70. The method of sampling used was random sampling method
due to the busy-ness of the employee and their non-availability because of their market
activities. Random sampling refers to that sampling technique in which each and every
unit of population has an opportunity of being selected in the sample.
Descriptive Approach:
This approach is one of the most popular approaches these days. In this approach, the
researcher using questionnaire to explore new areas of investigation.
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Scope of Study:
It provides a complete knowledge of various fundamental concepts of share
market and online trading.
It will help in analyzing the behavior of consumers and help in Knowing the
parameters of investment on which they would like to invest..
Through this project I am not only bringing long term clients for my
organization but also creating a word of mouth publicity of my organization by
offering the best services to the clients so that more and more potential
customer will come and stick to my organization.
Also through this project I suggest the organization the behavioral pattern of
investor towards different instruments.
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Limitations of study:
The respondents who have not given any information are not included in the
sample but do come under the population.
It was not possible to cover each and every client of each and every broking
house and hence a sample of 70 people was taken.
The market share of all the online share trading products is only for the city
of Guntur. The market share of all the companies may differ in different
cities. It may also differ nationally.
Due to the tough competition each & every broking firm is offering different
schemes like, free opening A/c or different advance brokerage schemes where
SHRIRAM INSIGHT is lacking in this area.
From the study I have learned very much, about the company as well as the
strategy of the customers, which helps me a lot at my working days.
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PRESENTATION OF THE STUDY
The first chapter deals with Introduction relating to ONLINE TRADING AND
DEMAT DEMATERIALIZATION.
The second chapter devoted to objectives and methodology.
The third chapter presents brief profile of financial system and Shriram Insight.
The fourth chapter deals with theoretical frame work relating to ONLINE
TRADING AND DEMATERIALIZATION.
The further chapter discusses Data analysis and interpretations.
The sixth chapter meant for offering findings and suggestions of the study.
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INDUSTRIAL PROFILE
Following diagram gives the structure of Indian financial system:
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FINANCIAL MARKET:
Financial markets are helpful to provide liquidity in the system and for smooth
functioning of the system. These markets are the centers that provide facilities for
buying and selling of financial claims and services. The financial markets match the
demands of investment with the supply of capital from various sources.
According to functional basis financial markets are classified into two types.
They are:
Money markets (short-term)
Capital markets (long-term)
According to institutional basis again classified in to two types. They are
Organized financial market
Non-organized financial market.
The organized market comprises of official market represented by recognized
institutions, bank and government (SEBI) registered/controlled activities and
intermediaries. The unorganized market is composed of indigenous bankers,
moneylenders, individual professional and non-professionals.
MONEY MARKET:
Money market is a place where we can raise short-term capital.
Again the money market is classified in to
Inter bank call money market
Bill market and
Bank loan market Etc.
E.g.; treasury bills, commercial papers, CD's etc.
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CAPITAL MARKET:
Capital market is a place where we can raise long term capital.
Again the capital market is classified in to two types and they are
o Primary market and
o Secondary market.
E.g.: Shares, Debentures, and Loans etc.
PRIMARY MARKET:
Primary market is generally referred to the market of new issues or market for
mobilization of resources by the companies and government undertakings, for new
projects as also for expansion, modernization, addition, diversification and up
gradation. Primary market is also referred to as New Issue Market. Primary market
operations include new issues of shares by new and existing companies, further
E.g.: Shares, Debentures, and Loans etc.
The primary market is regulated by the Securities and Exchange Board of India
(SEBI a government regulated authority).
Function:
The main services of the primary market are origination, underwriting, and
distribution. Origination deals with the origin of the new issue. Underwriting contract
make the shares predictable and remove the element of uncertainty in the subscription.
Distribution refers to the sale of securities to the investors.
The following are the market intermediaries associated with the market:
1. Merchant banker/book building lead manager
2. Registrar and transfer agent
3. Underwriter/broker to the issue
4. Adviser to the issue
5. Banker to the issue
6. Depository
7. Depository participant
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Investors’ protection in the primary market:
To ensure healthy growth of primary market, the investing public should be
protected. The term investor protection has a wider meaning in the primary market.
The principal ingredients of investors’ protection are:
Provision of all the relevant information
Provision of accurate information and
Transparent allotment procedures without any bias.
SECONDARY MARKET
The primary market deals with the new issues of securities. Outstanding
securities are traded in the secondary market, which is commonly known as stock
market or stock exchange. “The secondary market is a market where scrip’s are
traded”. It is a market place which provides liquidity to the scrip’s issued in the
primary market. Thus, the growth of secondary market depends on the primary
market. More the number of companies entering the primary market, the greater are
the volume of trade at the secondary market. Trading activities in the secondary
market are done through the recognized stock exchanges which are 23 in number
including Over The Counter Exchange of India (OTCE), National Stock Exchange of
India and Interconnected Stock Exchange of India.
Secondary market operations involve buying and selling of securities on the
stock exchange through its members. The companies hitting the primary market are
mandatory to list their shares on one or more stock exchanges in India. Listing of
scrip’s provides liquidity and offers an opportunity to the investors to buy or sell the
scrip’s.
The following are the intermediaries in the secondary market:
1. Broker/member of stock exchange – buyers broker and sellers broker
2. Portfolio Manager
3. Investment advisor
4. Share transfer agent
5. Depository
6. Depository participants.
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ABOUT STOCK EXCHANGE:
A stock exchange, share market or bourse is a corporation or mutual
organization which provides facilities for stock brokers and traders, to trade company
stocks and other securities. Stock exchanges also provide facilities for the issue and
redemption of securities, as well as, other financial instruments and capital events
including the payment of income and dividends. The securities traded on a stock
exchange include: shares issued by companies, unit trusts and other pooled investment
products and bonds. To be able to trade a security on a certain stock exchange, it has
to be listed there.
Definition of a stock exchange:
“Stock exchange means any body or individuals whether incorporated or not,
constituted for the purpose of assisting, regulating or controlling the business of
buying, selling or dealing in securities.” The securities include:
Shares of public company.
Government securities.
Bonds
ROLE OF STOCK EXCHANGES:
Raising capital for businesses.
Mobilizing savings for investment.
Facilitating company growth.
Redistribution of wealth.
Corporate governance.
Creating investment opportunities for small investors.
Government capital-raising for development projects.
Barometer of the economy.
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STOCK EXCHANGES IN INDIA:
At present there are 23 stock exchanges recognized under the securities contracts
(Regulation), Act, 1956. Those are:
Ahmadabad Stock Exchange Association Ltd.
Bangalore Stock Exchange
Bhubaneshwar Stock Exchange Association
Calcutta Stock Exchange
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Cochin Stock Exchange Ltd.
Coimbatore Stock Exchange
Delhi Stock Exchange Association
Guwahati Stock Exchange Ltd
Hyderabad Stock Exchange Ltd.
Jaipur Stock Exchange Ltd
Kanara Stock Exchange Ltd
Ludhiana Stock Exchange Association Ltd
Madras Stock Exchange
Madhya Pradesh Stock Exchange Ltd.
Magadh Stock Exchange Limited
Meerut Stock Exchange Ltd.
Mumbai Stock Exchange
National Stock Exchange of India
OTC Exchange of India
Pune Stock Exchange Ltd.
Saurashtra Kutch Stock Exchange Ltd.
Uttar Pradesh Stock Exchange Association
Vadodara Stock Exchange Ltd.
Out of these major stock exchanges were:
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NSE (National Stock Exchange)
The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which
recommended promotion of a National Stock Exchange by financial institutions (FI’s)
to provide access to investors from all across the country on an equal footing. Based
on the recommendations, NSE was promoted by leading Financial Institutions at the
behest of the Government of India and was incorporated in November 1992 as a tax-
paying company unlike other stock exchanges in the country. On its recognition as a
stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993,
NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994. The Capital Market (Equities) segment commenced operations in November
1994 and operations in Derivatives segment commenced in June 2000
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NSE's 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 and debt instruments.
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.
The standards set by NSE in terms of market practices and technology, have become
industry benchmarks and are being emulated by other market participants. NSE is
more than a mere market facilitator. It's that force which is guiding the industry
towards new horizons and greater opportunities.
The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as
"The Native Share and Stock Brokers Association". It is the oldest one in Asia, even
older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary
non-profit making Association of Persons (AOP) and is currently engaged in the
process of converting itself into demutualised and corporate entity. It has evolved over
the years into its present status as the premier Stock Exchange in the country. It is the
first Stock Exchange in the Country to have obtained permanent recognition in 1956
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from the Govt. of India under the Securities Contracts (Regulation) Act 1956.The
Exchange, while providing an efficient and transparent market for trading in
securities, debt and derivatives upholds the interests of the investors and ensures
redresses of their grievances whether against the companies or its own member-
brokers. It also strives to educate and enlighten the investors by conducting investor
education programmers and making available to them necessary informative inputs.
The Executive Director as the Chief Executive Officer is responsible for the
day-to-day administration of the Exchange and the Chief Operating Officer and other
Heads of Department assist him.
The Exchange has inserted new Rule No.126 A in its Rules, Byelaws
pertaining to constitution of the Executive Committee of the Exchange. Accordingly,
an Executive Committee, consisting of three elected directors, three SEBI nominees or
public representatives, Executive Director & CEO and Chief Operating Officer has
been constituted. The Committee considers judicial & quasi matters in which the
Governing Board has powers as an Appellate Authority, matters regarding annulment
of transactions, admission, continuance and suspension of memberbrokers, declaration
of a member-broker as defaulter, norms, procedures and other matters relating to
arbitration, fees, deposits, margins and other monies payable by the member-brokers
to the Exchange, etc.
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Members of the stock exchange:
The securities contract regulation act 1956 has provided uniform regulation for the
admission of members in the stock exchanges. The qualifications for becoming a
member of a recognized stock exchange are given below:
The minimum age prescribed for the members is 21 years.
He should be an Indian citizen.
He should be neither a bankrupt nor compound with the creditors.
He should not be convicted for fraud or dishonesty.
He should not be engaged in any other business connected with a company.
He should not be a defaulter of any other stock exchange.
The minimum required education is a pass in 12th standard examination.
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI):
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The securities and exchange board of India was constituted in 1988 under a
resolution of government of India. It was later made statutory body by the SEBI act
1992.according to this act, the SEBI shall constitute of a chairman and four other
members appointed by the central government.
With the coming into effect of the securities and exchange board of India act,
1992 some of the powers and functions exercised by the central government, in
respect of the regulation of stock exchange were transferred to the SEBI.
OBJECTIVES AND FUNCTIONS OF SEBI:
To protect the interest of investors in securities.
Regulating the business in stock exchanges and any other securities market.
Registering and regulating the working of intermediaries associated with
securities market as well as working of mutual funds.
Promoting and regulating self-regulatory organizations.
Prohibiting insider trading in securities.
Regulating substantial acquisition of shares and take over of companies.
Performing such functions and exercising such powers under the provisions of
capital issues (control) act, 1947and the securities to it by the central
government.
SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES):
Board of Directors of Stock Exchange has to be reconstituted so as to include non-
members, public representatives and government representatives to the extent of 50%
of total number of members.
Capital adequacy norms have been laid down for the members of various stock
exchanges depending upon their turnover of trade and other factors.
All recognized stock exchanges will have to inform about transactions within 24
hrs.
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TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the
investors. The orders are of different types.
Limit orders:
Orders are limited by a fixed price. E.g. ‘buy Reliance Petroleum at
Rs.50.’Here, the order has clearly indicated the price at which it has to be bought and
the investor is not willing to give more than Rs.50.
Best rate order:
Here, the buyer or seller gives the freedom to the broker to execute the order at
the best possible rate quoted on the particular date for buying. It may be lowest rate
for buying and highest rate for selling.
Discretionary order:
The investor gives the range of price for purchase and sale. The broker can use
his discretion to buy within the specified limit. Generally the approximation price is
fixed. The order stands as this “buy BRC 100 shares around Rs.40”.
Stop loss order:
The orders are given to limit the loss due to unfavorable price movement in the
market. A particular limit is given for waiting. If the price falls below the limit, the
broker is authorized to sell the shares to prevent further loss. E.g. Sell BRC limited at
Rs.24, stop loss at Rs.22.
Buying and selling shares:
To buy and sell the shares the investor has to locate register broker or sub
broker who render prompt and efficient service to him. The order to buy or sell
specifying the number of shares of the company of investors’ choice is placed with the
broker. The order may be of any type. After receiving the order the broker tries to
execute the order in his computer terminal. Once matching order is found, the order is
executed. The broker then delivers the contract note to the investor. It gives the details
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regarding the name of the company, number of shares bought, price, brokerage, and
the date of delivery of share. In this physical trading form, once the broker gets the
share certificate through the clearing houses he delivers the share certificate along
with transfer deed to the investor. The investor has to fill the transfer deed and stamp
it. The stamp duty is one of the percentage considerations, the investor should lodge
the share certificate and transfer deed to the register or transfer agent of the company.
If it is bought in the DEMAT form, the broker has to give a matching instruction to his
depository participant to transfer shares bought to the investors account. The investor
should be account holder in any of the depository participant. In the case of sale of
shares on receiving payment from the purchasing broker, the broker effects the
payment to the investor.
Share groups:
The scrips traded on the BSE have been classified into ‘A’,’B1’,’B2’,’C’,’F’
and ‘Z’ groups. The ‘A’ group represents those, which are in the carry forward
system. The ‘F’ group represents the debt market segment (fixed income securities).
The Z group scrips are of the blacklisted companies. The ‘C’ group covers the odd lot
securities in ‘A’, ‘B1’&’B2’ groups.
ROLLING SETTLEMENT SYSTEM:
SEBI has since introduced T+2 rolling settlements from April 1, 2003, T+2 settlement
cycle means that the final settlement of transactions done on T, i.e., trade day by
exchanges of monies and securities between the buyers and sellers respectively occurs
on second on second business day after the trade excluding Saturdays, Sunday, bank
holidays and exchange holidays.
DAY ACTIVITY
T Trading and daily downloading statements showing details of Transaction
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and margins at the end of each trading day.
6A/7A* entry by the member-brokers/confirmation by the custodians.
T+1 Confirmation of 6A/7A data by the custodians up to a specified deadline
time. Downloading of securities and funds. Obligation statement by
members.
T+2 Pay-in funds and securities and pay out of funds and securities by per-
specified dead line times. The members are required to submit the pay in
instructions for funds and securities to banks and depositories respectively.
T+3 Action for shortages in delivery of securities
T+4 Action pay-in and pay-out of funds and securities
6A/7A: A mechanism whereby the obligation of setting the transactions done by a
member broker on behalf of a client is passed on it a custodian based on his
confirmation. The custodian can confirm the trades done by the members on-line.
Treading on the on-line screen based system (BSE’s On-line Trading system,
BOLT for BSE and National Exchange for Automated Trading, NETA for NSE) is
conducted from Monday to Friday between 9:55a.m. And 3:30 p.m. the scripts trades
on the Stock Exchange, Mumbai are classified into ‘A’, ‘B1’, ‘B2’, ‘C’, ‘F’, ‘G’, and
‘Z’ groups.
A, B1, B2 and C group’s represent the equity market segment.
F group represents the debt market (fixed income securities) segment.
BSE has commenced trading in Govt. Securities for retail investors under G group
w.e.f, January 16,2003.
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Z group covers the companies, which have failed to comply with listing
requirements and/or failed to resolve investor complains or have not made the required
arrangements for dematerialization of their securities with both the depositories.
As in the physical segment, the clearing corporation at the end of the day
downloads cumulative obligation in the evening of the trade day.
The main purpose of introducing rolling settlement was to eliminate any kind
of manipulation in the prices of the stocks and to reduce the higher volatility in the
stocks by the operators. This was introduced by SEBI for investor protection and with
dematerialization of securities into force, this technique is growing fast.
ABOUT SHRIRAM INSIGHT
The Unique Retail Equity Broking house of India and part of prestigious
Shriram Group companies. We serve investment need of more than 1,00,000 of Indian
investors through country-wide branch base and state of art network backbone.
Shriram insight possesses competitive analytical and fundamental market research
team. We extend our superior market knowledge and Equity analysis to our clients
and help them in achieving their optimum investment requirement. We believe -
customer satisfaction is our living. Please navigate through category buttons above
and left to explore more. And feel free to ask about stock advice service and Stock
market Investment.
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Incorporated in 1995, Shriram Insight Share Brokers Ltd was promoted by
professional entrepreneurs and incubated by Shriram Group.
Shriram Insight commenced operations with corporate membership on NSE in
cash segment in 1996.
Membership in derivatives segment on NSE acquired in 2003.
Currently registered member of NSE & BSE for equities & derivatives, CDSL
for depository.
Corporate Vision:
Help smallest of Investors to create wealth
Take bourses to the masses through awareness
Provide efficient & transparent services
Build Relationship
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PROFILE OF THE COMPANY:
Name of the company Shriram Insight Share Brokers Ltd.
Founded 1995
Headquarters Kolkata, India.
Key people Akilesh Kumar Singh, Chairman & CEO,
Partha Hazrat, Director.
Industry Financial Services.
Products Depository Services, Online Services
Employees Around 4000
Website
http://www.shriraminsight.com.
Slogan Insightful Investment
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Why Shriram:
India’s one of the largest Financial Services Network
State-of-the- art Technology and Infrastructure
Comprehensive Service Offerings
40,00,000 customers, 5,000 branches & service centers across India
Rs.25,000 crores - assets under management
Active participation in social causes
Products & Services:
The different types of products and services offered by Shriram Insight are as
follows:
INTIAL PUBLIC OFFERING (IPO):
Shriram Insight is a leading primary market distributor across the country.
Their strong performance in IPO has been a result of their vast experience in the
Primary Market, strong distribution capabilities and a dedicated research team.
Shriram Insight research team provides clients with in-depth overviews of
forthcoming IPO’s as well as investment recommendations. Online filling of forms is
also available.
MUTUAL FUNDS:
Shriram Insight is one of Indian’s top mutual fund distribution houses. Their
success lies in their philosophy of providing consistently superior, independent and
unbiased advice to their clients backed by in-depth research. They firmly believe in the
importance of selecting appropriate asset allocations based on the client’s risk profile.
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Shriram Insight have a dedicated mutual fund research cell for mutual funds
that consistently churns out superior investment ideas, packing best performing funds
across asset classes and providing insights into performance of select funds.
INSURANCE:
Shriram Insight provide to their clients comprehensive risk management
techniques, both within the business as well as on the personal front. Risk management
includes identification, measurement and assessment of the risk and handling of the
risk, of which insurance is an integral part. The firm deals with both life insurance and
general insurance products across all insurance companies.
Shriram Insight guiding philosophy is to manage the client’s entire risk set by
providing the optimal level of cover at the least possible cost. The entire sales process
and product selection is research oriented and customized to the client’s needs. They
lay strong emphasis on timely claim settlement and post sales services.
DERIVATIVS:
Shriram Insight provides end-to-end equity solutions to institutional and
individual investors. Consistent delivery of high quality advice on individual stocks,
sector trends and investment strategy has established us a competent and reliable
research unit across the country. Clients can trade through online on BSE and NSE for
both equities and derivative. They are supported by dedicated sales & trading teams in
trading desks across the country. Research and investments ideas can be accessed by
clients either through their designated.
Depository Services:
Depository: A depository holds shares and securities in electronic form in your name,
just as a band holds your deposits in your account. Besides holding securities, a
depository also provides services related to your transactions in securities.
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Central Depository Services (India) Ltd., (CDSL) : It has receives approval from
SEBI in February 1996. It is promoted by the Stock Exchange, MUMBAI (BSE)
jointly with leading banks such as
State Bank of India, Bank of India, Bank of baroda, HDFC Bank, Standard Chartered
Bank, Union Bank of India and Centurion Bank, CDSL commenced its operations
from July 1996. It has depository participants (like agents called branches) through
out India.
We offer following services as D.P.,
Opening of Demat account
Dematerialization
Rematerialization
Maintaining record of holdings in electronic form
Settlement of trades by delivering/receiving underlying Securitas
Settlement of off-market trades
Providing electronic credit in respect of securities allotted under IPO
Receiving non-case corporate benefits, such as, allotment of bonus and rights
shares, stock split, etc.
Pledging/Un-pledging of securities
Providing periodical statement of transaction
Registering nomination.
ADVISOR SERVICES:
Shriram Insight., Advisors assists companies in realizing tangible
improvements in various facets of their businesses by providing a range of corporate
advisory services that includes the entire gamut from financial, organizational and
operational restructuring, to profit improvement and business turnaround strategies.
Highly qualified and thoroughly professional, our specialists, experts and associates
assist you in conceptualizing problems and devising effective solutions, whatever be
your need. Shriram Insight., have successfully handled various assignments.
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MANAGEMENT SERVICES:
As a Management Service Provider Shriram Insight., provides systematic &
timely information to the investors which helps in quick investing and increase
efficiency in business operations.
The company caters mainly to the requirements of corporate clients in the
variety of activities that include the following:
Leasing and Hire purchase finance
Inter corporate deposits
Bill Discounting
Loans Syndication
Placement of Commercial papers
Mergers, Amalgamations and Acquisitions
Project Counseling and Advisory Services
Project Appraisals
Under writings
Merchant Banking
Issue Management
Placement of Securities
Marketing of Public Issue
Placement of share to NRIs/OCBs, FIs, and FIIs
Fund Management
Equity Reassert Analysis
Investment Banking
Why Shriram Insight Demat Account?
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● Lowest fees.
● Demat access through Internet.
● Portfolio valuation on the account statements.
● Online execution of transactions at branches.
● Transactions update from back-office four times a day.
Transfer of shares and settlements:
Transfers of shares and settlements have never been easy. All you need to do is
to fill up the instruction slip and submit the same to your nearest Shriram insight
branch. If you are selling securities, then you have to issue a delivery instruction slip.
If you are purchasing securities, then you are required to issue a receipt instruction
slip or standing instructions for credit to your nearest Shriram branch.
Receipt of Corporate Benefits:
Even securities entitlements like bonus and rights can be credited to your
Demat account electronically. All you have to do is choose the right option in the
share application form. Cash benefits like dividends and interest will be forwarded to
you directly and not through the depository.
Holdings & Transaction Statements:
Shriram insighy provides statement of holding cum transaction statement every
month at Zero cost.
Dematerialization of shares:
At your request, we can convert your physical holdings into electronic form. For this
procedure, you need to open an account with CDSL through us called "Beneficiary
Account" in the name and style in which the shares are held. You have to lodge the
share certificates with us accompanied by a dematerialization request form, separate
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for each scrip. However, you should ensure that CDSL has admitted the scrip which
you want to dematerialize. An up to date list is available at our branches for your
convenience.
Rematerilialisation
You have the option to convert your electronic shares back to physical shares.
Pledge-Hypothecation:
You can also avail loans against your electronic shares.
HOW TO OPEN AN ACCOUNT WITH SHRIRAM INSIGHT?
For online trading with Shriram Insight Share Brokers Limited., investor has to
open an account. Following are the ways to open an account with Shriram Insight
Share Brokers Limited.:
One need to call them at phone number provided below and asks that he want
to open an account with them.
One can call on the Number: (033) 23587188/23594612/4614/4877 to
speak to a Customer Service executive.
Or If one stays in Guntur, he can call on 0863-6454535.
One can visit any one of Shriram Limited’s nearest branches. Shriram has a
huge network all over India (640 centers in 280 cities). One can also log on to
“http://shriraminsight.com” link to find out the nearest branch.
One can send them an email at [email protected] to know about
their products and services.
One can also visit the site www.shriraminsight.com and click on the option
“Open an Account” to fill a small query form which will ask the individual to
give details regarding his name, city he lives in, his email address, phone
number, pin code of the city, his nearest Shriram Insight Share Brokers
Limited. shop and his preferences regarding the type of account he wants.
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These information are compiled in the headquarter of the company that is in Kolkata
from where it is distributed through out the country’s branches in the form of leads on
the basis of cities and nearest share shops. After that the executives of the respective
branches contact the prospective clients over phone or through email and give them
information regarding the various types of accounts and the documents they need to
open an account and then fix appointment with the prospective clients to give them
demonstration and making them undergo the formalities to open the account. After
that the forms that has collected from the clients, is scrutinized in the branch and then
it is sent to Kolkata for further processing where after a few days the clients’ account
are generated and activated. After the accounts are activated, a Welcome Kit is
dispatched from Kolkata to the clients’ address mentioned in the documents provided
by them. As soon as the clients receive the Welcome Kit, which contains the clients’
Trading ID and Trading Password, they can start trading and investing in shares.
Apart from two passport size photographs, one needs to provide with the following
documents in order to open an account with Shriram Insight.:
Photocopy of the clients’ PAN Card which should be duly attached
Photo copy of any of the following documents duly attached which will serve as
correspondence address proof:
Passport (valid)
Voter’s ID Card
Ration Card
Driving License (valid)
Electricity Bill (should be latest and should be in the name of the client)
Telephone Bill (should be latest and should be in the name of the client)
Flat Maintenance Bill (should be latest and should be in the name of the
client)
Insurance Policy (should be latest and should be in the name of the client)
Lease or Rent Agreement.
Saving Bank Statement** (should be latest)
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Two cheques drawn in favour of Shriram insight, one for the Account Opening
Fees and the other for the Margin Money (the minimum margin money is Rs. 5000).
NOTE: Only Saving Bank Account cheques are accepted for the purpose of Opening
an account.
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Charge structure:
Sr.No Particulars Individual
Other Than
Individual
1. Account Opening Charges 500 500
2. Account Maintenance Charges
Rs.290/-(One
Time Payment) Rs. 700/-
3. AMC for Clients with email NIL NIL
4. AMC for Clients without email* Rs.200/- NIL
5. Purchase (Market or OffMarket) Nil Nil
6. Sale (Market or OffMarket)
0.04%,Min Rs.
60/- Per
Transaction(Per
ISIN)
0.04%,Min Rs.
60/- Per
Transaction(Per
ISIN)
7. Custody Charges Nil Nil
8. Dematerialisation Charges
Rs. 3/- Per
Certificate
Rs. 3/- Per
Certificate
9. Postage Per Demat Request Rs. 50/- Rs. 50/-
10. Rematerialisation Charges
CDSL Charges
+ Rs. 100/- Per
Request
CDSL Charges
+ Rs. 100/- Per
Request
11.
Pledge
(Creation/Closure/Invocation) will
be charged seperately
0.02% of the
Value of Shares
(Per ISIN)(Min
Rs 25/-)
0.03% of the
Value of Shares
(Per ISIN)(Min
Rs 25/-)
12. Late Transaction [per Instruction] Rs 50/- Rs 50/-
13.
Settlement Charges for Clearing
Member Nil
Rs 500/- per
month
14. Easi / Easiest Nil Nil
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SWOT ANALYSIS
Strengths:
Very Strong Brand Image.
Low Charges with respect of its Services.
Facility to trade in office.
Very Good Customer Care Unit.
Weaknesses:
Only One branch in Guntur City.
Weak Advertisement Policies.
Lack of awareness campaigns about the company.
Lack of awareness about various financial services
Opportunities:
Large Untapped Market.
Opportunity to educate investors about their products & inspire them to invest
more & encourage others.
Good Opportunity to Cash its Brand Image and People Trust.
Convenience and easy way of online.
Threats:
Presence of very strong competitors Like, ICICI, Angel Broking, Share khan,
Religare etc.
Aggressive marketing by competitors.
Low brokerage offerings by competitors.
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Manual mode of trading (Out Cry System):
Prior to the introduction of online trading, securities used to be traded manually.
Manual mode of trading is also know as "Out Cry System". The process of manual
mode of trading is very laborious and cumbersome with lot of paper work at every
stage right from the order booking, order execution, to back office work. The process
involved the following steps.
* Placing of the order by the client, order can be placed as line order, best market price
or open under.
* Enter in order book by the broker,
* Execution of the order.
* Preparation of contract note.
* Entry in settlement registers, client registers.
* Actual delivery of shares by brokers of client.
* Preparation of bill or order delivery notes.
* Enter in client ledger, scrip ledger.
* Payments.
In the trading whenever an investor wants to sell/buy the shares he has to go to the
stock exchanges and consult the brokers to sell the securities at particular rate. Brokers
take the certificates and will go to trading hall and start shouting the order to one
another i.e., how the manual/outcry system has been arrived. The members who have
similar buy and sell orders will come together and the transaction would take place.
The brokers who wants to sell the securities gives the price and the bid price and both
the brokers strike a balance between the asked and bid price. Finally the securities
have been taken when the deal has strike by the buying broker and the selling order.
While negotiation, it is very important to specify the quantity and date.
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After the deal has truck the seller takes out the name, quantity, rate, selling number
code, buying member code and signs on it. The seller has one copy and buyer has one
copy and original copy is deposited with respective exchange. In the end the brokers
gets the daily volume sheet consisting of list of all the transactions done on that day.
Any discrepancies would be reported to the stock exchange by the members is
verified.
DRAWBACKS OF MANUAL MODE OF TRADING
* Lack of Transparency
* High scope for manipulation and frauds.
* Time consuming process.
* Identification of buyers and sellers is a tedious work.
* Knowing which share was lastly traded could be misleading.
* There was a time lag between trade done and reported.
* Sometimes price discovery could be inefficient, as another buyer may be willing to
pay more or seller willing to sell for fewer amounts.
* Each member was given four authorized assistants who could enter into
transaction on behalf of the member and there is greater exposure to risk factor, as
there is scope for frauds and illegal manipulations.
Online Trading and Demat:
Change is the law of nature”. There were times when man was a
Wanderer or a normal. He himself had to go place to place in search of food, water
and now everything is available at your doorstep just at the click of the mouse. The
growth of information technology has affected almost all sectors of life. Internet
has enabled us to get every information at our doorstep.
When Internet has affected all sectors he could “stock markets” the most important
player of the economy, has remained far behind? Like all other sectors Internet has
set its feet in the stock markets also.
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The Stock Market system provides single, nation wide securities. It enables LAN
investors in one part of the country to trade at the best quotes with an investor located
in any other part of the country through the members of the stock exchange and
subsequently clears and settle the trade in an efficient and cost effective manner. The
primary objective of the Stock Market is to provide clear opportunity to the investors
throughout the country to trade any security irrespective of the size of the order or the
broker through whom the order is routed. This provides the facility to execute the buy
order at the lowest price in the stock market located anywhere in the country without
any extra cost to the investors.
There will be no trading floor in the exchange. Instead, each trading member
will have a computer at his own office anywhere in India which will be connected to
the central computer system at the NSE through leased line or VSATs (very small
aperture terminals), for an interim transition period of 6 months & subsequently by
satellite link. VSATs are relatively smaller dishes similar to dish antenna for cable TV
& have the benefit of not being very expensive. A satellite network makes it possible
to connect almost all the parts of the nation quickly as it is easy to install, as against
the ground lines such as dial up modems leased lines, which are prone to disruptions,
satellite links, on the other hands ensure high speed, availability and quality of the
connection. This mode of trading is known as "Online Trading"
Online trading and Demat is nothing but a trader can trade where he
wants, when he wants, and conivent, flexible, easy Online trading India is the
internet based investment activity that involves no direct involvement of the broker.
There are many leading online trading portals in India along with the online trading
platforms of the biggest stock houses like the National stock exchange and the
Bombay stock exchange. The total portion of online share trading India has been
found to have grown from just 3 per cent of the total turnover in 2003-04 to 16 per
cent in 2006-07. Facilities of the online trading India.
The investor has to register with an online trading portal and get into an
agreement with the firm to trade in different securities following the terms and
conditions listed down on the agreement. The order processing is done in correct
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timings as the servers of the online trading portal are connected to the stock exchanges
and designated banks all round the clock. They can also get updates on the trading and
check the current status of their orders either through e-mail or through the interface.
Brokerages also provide research content on their websites, such that the clients can
take their own decisions on stocks before investing.
HISTORY OF ONLINE TRADING:
Online stock trading is very old concept for big institutions who trade thru
private networks owned by Reuter's "Instinet" and a system called "Posit" since 1969.
But it becomes internet based for lay men only in late 90s. Funny, that actually idea
was first time used by a company making Beer called "WIT beer" to help its
shareholders trade its shares. That’s how "WIT Capital" was born which is considered
pioneer of this concept. It was made mainstream and household name by a offshoot of
Charles Schwab & Co called eSchwab which is used by millions of people in USA.
Lot of NRI's i know play in US stock market even when they come to India for
holidays via website of eSchwabe. There are other serious players like E*trade,
DATEK online etc. All this companies ask you to start account with US $5000 and
you can buy and sell stock using these funds. They also issue you a check book which
you can use to make payments from this account. Or use their ATM card to withdraw
cash from your stock trading account. Today practically every big name brokerage
firm offers online stock trading as it reduces their costs. Earlier they had army of
brokers on phone with clients executing trade, which is done by computers accepting
orders from clients directly. This firm now offers human access to high net worth
accounts, and to rest at charge per trade.
Online trading started in India in February 2000 when a couple of brokers
started offering an online trading platform for their customers.
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INTERNET TRADING IN INDIA:
In the past, investors had no option but to contact their broker to get real time
access to market data. The Net brings data to the investor on line and net broking
enables him to trade on a click. Now information has become easily accessible to both
retail as well as big investors.
The development of broking in India can be categorized in 3 phases:
Stock brokers offering on their sites features such as live portfolio manager,
live quotes, market research and news to attract more investors.
Brokers offering on line broking and relationship management by providing
and offering analysis and information to investors during broking and non-
broking hours based on their profile and needs, that is, customized services.
Brokers (now e-brokers) will offer value management or services such as initial
public offerings on line, asset allocation, portfolio management, financial
planning, tax planning, insurance services and enable the investors to take
better and well- considered decisions.
In the US, 82 per cent of the deals are done on line. The European on line broking
market is expected to be of $8 billions and is likely to raise five fold by 2002. In India,
presently Internet trading can take place through the order routing system, which will
route client orders to exchanges trading systems for execution of trades on stock
exchanges (NSE and BSE). This will also require interface with banks to facilitate
instant cash debit or credit and the depository system for debit or credit of securities.
OBJECTIVES OF INTERNET TRADING:
Reduce and eliminate operational inefficiencies inherent in manual system
Increased trading capacity in Stock Market Improve market transparency
Eliminate unmatched trades and delayed reporting Provide for on-line and off-line monitoring control and surveillance of the market.
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Promote fairness and speedy matching Smooth market operations using technology while retaining the flexibility of conventional treading practices
Set up various limits, rules and controls centrally.
Consolidate the trades data on electronic media to interface will the broker‘s back office system
Provide public information on scrip prices, indices for all users of the system
Provide analytical data for use of Stock Market.
Online trading by NSE & BSE:
The central computer located at the Exchange is connected to the workstations
of the Brokers through satellite using Very Small Aperture Terminals (VSATs).
Orders placed at based on price and time priority. Both the exchanges have switched
over from the open outcry trading system to a fully automated computerized mode of
trading known as BOLT (BSE On Line Trading) and NEAT (National Exchange
Automated Trading) System. It facilitates more efficient processing, automatic
order matching, faster execution of trades and transparency. The scrips traded on the
BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups.
The 'A' group shares represent those, which are in the carry forward system
(Badla). The 'F' group represents the debt market (fixed income securities) segment.
The 'Z' group scrips are the blacklisted companies. The 'C' group covers the odd lot
securities in 'A', 'B1' & 'B2' groups and Rights renunciations. key regulator governing
Stock Exchanges, Brokers, Depositories, Depository participants, Mutual Funds, FIIs
and other participants in Indian secondary and primary market is the Securities and
Exchange Board of India (SEBI) Ltd.
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MECHANICS OF ONLINE TRADING:
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CLIENT BROKER STOCK EXCHANGE
Places an order the net of the Broker’s website through the distinctive Id code
Accepts theorder, Checksthe client’sIdentity and Places theOrder
Accepts the orderafter checking thescrip limit of the
broker for the day
The settlement of the deal (buy/sell order) gets reflected in hisDemat account.
Pays theExchangethrough his owns accountand receives itfrom the clientaccount.
Receives themoney andcompletes thesettlement
The client is intimated aboutthe execution of the deal by e-mail.
MBA PROGRAMME SIPS
FEATURES OF ONLINE TRADING:
The Online Trading is having many features which make it most suitable for
the investors to go for. Some of these features are as follows:
Freedom of Information:
The Internet can provide a new sense of control over your financial future. The
amount of investment information available online is truly astounding. It's one of the
best aspects of being a wired investor. For the first time in history, any individual with
an Internet connection can:
Know the price of any stock at any time
Review the price history of any stock in chart format
Follow market events in-depth
Receive a wealth of free commentary and analysis about stock
markets and the global economy
Conduct extensive financial research on any company
Control our money:
One of the great appeals of using an online trading account is the fact that the
account belongs to you, and is under your direct control. When you want to buy or sell
stock, you no longer need to call your broker on the phone; hope that he is in the
office to place your order; possibly argue with the broker about the order; and hope
that the transaction is executed instantly.
Access to the market:
At the most basic level, an online trading account gives you more agility in
buying and selling stocks. This is through sophisticated information streams,
dedicated trading platforms and sophisticated tools for accessing the markets.
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Offers greater transparency:
Online trading offers you greater transparency by providing you with an audit
trail. This involves a complete integrated electronic chain starting from order
placement, to clearing and settlement and finally ending with a credit into your
depository account. All these stages are subject to inspection, thus bringing in
transparency into the system.
Reduces the settlement risk:
This method of trading reduces the settlement risk for the investor, as in this
case all short sell orders are squared off at the specified cut-off time and not allowed
to be carried forward.
Instant trade order confirmations:
Every trade is confirmed immediately and you will receive an on-
creen confirmation following every trade with full details for your records.
This avoids costly errors that would have been discovered when it is too late.
Integrated Accounts:
Our Bank, Depository and Trading account are integrated for our
convenience. Various broking houses provide access to many of the popular banks.
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BENEFITS OF ONLINE TRADING:
1) Less Costly:
The most significant advantage of the Online broking is the cost reduction in
the brokerage. Due to the power of the Internet one has the privilege of becoming the
clients of really large brokerages with the benefits of enjoying the low
charges before enjoyed only by the big players. As the DP account has got linked to
the trading account most players do not charge a minimum transaction cost thus truly
allowing one to buy a single share and achieve meaningful rupee price
averaging whatever be your buying power.
2) Peace of Mind:
One can never have complete peace of mind but online investing does away
with the hassles of filling up instruction slips, visits to the broker for handing over
these slips and consequent costs.
3) Keeping Records:
The site one trades on keeps a record of all transactions down to unexecuted
orders and cancelled orders thus keeping one abreast of all your transactions 24 hours
a day. No paperwork means more time at one’s disposal for research and analysis.
4.) Ease of trade:
It is the ease of doing the trade through net, with a click of mouse; one can buy
or sell any share that is dematerialized. Other than the above-mentioned
advantages, Internet trading provides some additional advantages to the
investors, brokers and also helps the nation to Channelize the resources.
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Net trading would increase competition in the market hence increase in the
bargaining power of the investors. The entire communication between the investor,
broker and exchange would take place within milliseconds.
PROBLEMS OF ONLINE TRADING:
.1) Server not found:
This may appear on one’s screens when he is desperately trying to get out of an
unprofitable position. Some of the online sites are providing a telephone number for
use in case their sites are overloaded or their server down.
2.) Connectivity of the Broker with NSE:
Recently ICICI Direct had a connectivity problem with the NSE for two and
halfhours during trading hours. This problem is rare but be alive to its possibility.
3.) Cyber attack:
In the event of a malicious attack on the systems of one’s broker he is protected
only if the company is taking proper precautions against such attacks and if proper
backup is regularly been taken. He may like to choose a brokerage that has a stated
security policy and contingency plan in place.
4) Non-availability of a seamless interface:
As a client one will access the NSE through a server of the online brokerage
and this may involve queuing delays. If a number of client access the server the server
takes its own time sending the orders to the NSE server. He must check
out the seamlessness of this interface before selecting an online brokerage. The faster
the orders are processed the more seamless is the interface.
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5.) Non- availability of personalized advice:
If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able
to do so. If he wants advice on a particular stock in his portfolio he may not even be
able to get that.
6.) Margin:
If Internet trading alone is not fast and furious enough; many people are trading
on margin. That is where the brokerage firm lends you money by eraging
his account, allowing him to buy a large amount of securities by putting up only a
small amount of money. He may have forgotten what he read in the small print of his
agreement, but the brokerage firm has the right to change the maintenance margin
requirements without any warning or notice to him. In fact, the firm has the right to
liquidate his securities holdings (and it can pick and choose which ones) without any
notice to one if he fail to meet the margin call. And there he was leveraged to the hilt,
hoping to hit a home run when he discovered that he is required to make a large
deposit that he cannot make. The next thing one know, the firm is selling off his
securities at a point in time that is not the best for him. These are the perils of trading
on margin.
THE MAJOR PLAYERS IN ONLINE TRADING IN GUNTUR
The main players in retail brokerage business right now are,
Angel Broking
India info line
Religare Securitie
ICICI Direct
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Angel Broking
Criteria Angel stock broking
Demat a/c opening charges 750
Brokerage intra day, delivery 5 paise,50 paise
AMC(Annual Maintenance Charges) Rs.300
Trading funding intra day, delivery 6times,4 times(minimum stock Rs
50000)
Debit period T+2 Days
Mode of trading Both online and offline
Margin money 5000
Software installation charges No extra charges
IndiaInfoline
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Criteria India infoline
Demat a/c opening charges 550
Brokerage intra day, delivery 5 paise,50 paise
AMC(Annual maintaince charges) NIL
Trading funding,intraday,Delivery 10 times, 4times
Debit period T+2
Mode of trading Both online and offline
Margin Money 2000
Software Installation charges No extra charges
Religare Securities
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Criteria Religare Securities
Demat a/c opening charges 550
Brokerage intra day, delivery 4 paise,40 paise
AMC(Annual maintaince charges) 250
Trading funding,intraday,Delivery 6times,4 times(minimum stock Rs
50,000)
Debit period T+2
Mode of trading Both online and offline
Margin Money No limit
Software Installation charges No Extra charges
ICICI Direct
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Criteria ICICI Direct
Demat a/c opening charges Rs.975
Brokerage intra day, delivery 50Paise,75Paise
AMC(Annual maintaince charges) Rs.500
Trading funding,intraday,Delivery 6times,4 times(minimum stock Rs
50,000)
Debit period T+2
Mode of trading Both online and offline
Margin Money No limit
Software Installation charges No Extra charges
DEMATERIALISATION:
DEFINITION:
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Dematerialization is the process by which a BO can get his physical securities
converted into electronic form.
Pre- requisites for dematerialization are:
1. Investor should have a demat account with any DP of CDSL.
2. Securities to be dematerialized must have been admitted in CDSL i.e.
ISIN for the securities should be available in CDSL.
Investor should be the registered holder for the securities in the books of the Company.
The BO submits a request to the DP in the Dematerialization Request Form(DRF)
along with the certificates. The DP verifies the information on the DRF and physical
certificates and enters the details in the system to setup a request electronically. The
DP sends the physical documents to the concerned issuer/RTA. If the Issuer/RTA find
the DRF and certificates in order, it registers CDSL as the registered holder of the
securities and confirms the DRF electronically to CDSL. On receiving such
confirmation, CDSL credits the BO account. The process flow of a demat request is
given below.
If the issuer/RTA rejects all or some of the certificates in a demat request the
same are sent back to the DP mentioning the rejection reasons(s).
DP will then ask the BO to rectify the reason of rejection and send the
certificates again for dematerialization under a fresh demat request.
Dematerialization can be normal dematerialization as explained above or it can
be "Transfer-cum-Dematerialization (TCD)" or "Transposition-cum-
Dematerialization".
PROCEDURE TO DEMATERIALIZE THE SECURITIES:
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To dematerialize the securities, initially the Dematerialization Request
Form(DRF) is to be duly filled, which is available with the depository participants.
Later the following steps are to be followed:
1. Ensure that the ISINs of the company indicated in the DRF are Activated.
2. Ensure that separate DREs are filled for partly paid up and fully paid up holdings.
3. Ensure that separate DRFs are filled for ISINSs Company.
4. Ensure that the investors deface the share certificates Surrendered for
dematerialization.
5. Ensure that all joint holders have signed the DRF.
6. Ensure that the signatures on the DRF match the ones indicating in the account
opening form or the record maintained at branch.
7. Ensure the share certificates along with the DRF.
8. Receive credit for the dematerialized shares into Beneficiary owner's account in
15days.
This investor can dematerialize only those certificates those are already
registered in his name and belong to the list of securities admitted for
dematerialization at NSDL.
If the shares the investor wants to dematerialize does not belong to the list of
the securities eligible for dematerialization specified by NSDL, can approach the
company and request them to sign up with NSDL to make their securities available for
dematerialization. Odd lots share certificates can also be dematerialized.
BENEFITS OF DEMAT SECURITIES:
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Various merits that associate the DEMAT securities are:
1. It reduces the risk of bad deliveries, in turn saving the cost and wastage of time
associated with follow up for rectification this had lead to reduction on brokerage to
the extent of 0.05% by quiet a few brokerage firms.
2. In case of transfer of electronic share, investor can save 0.05% in stamp duty. The
cost of courier/Notarization is avoided.
3. The investor can receive the Bonuses and rights into their DP as a direct credit, thus
eliminating the risk of loss on transit.
4. The investor can expect the lower interest charge for loans taken against DMAT
shares as compared to interest for loans on physical ones.
OPENING A DEMATERIALIZATION ACCOUNT (DEMAT A/C)
Demat refers to a dematerialized account. Just as we have to open an account with a
bank if we want to save your money, make cheque payments etc, we need to open a
demat account if we want to buy or sell stocks. So it is just like a bank account where
actual money is replaced by shares. We have to approach the DPs (remember, they are
like bank branches), to open our demat account.
Demat account allows you to buy, sell and transact shares without the endless
paperwork and delays. It is also safe, secure and convenient.
Let’s say our portfolio has 100 of Satyam, 50of Suzlon, 20 of ICICI BANK, 50 of
Tech Mahindra and 100 of TCS shares. All these will show in our demat account. So
we don’t have to possess any physical certificates showing that us own these shares.
They are all held electronically in our account. As we buy and sell the shares, they are
adjusted in our account. Just like a bank passbook or statement, the DP will provide
you with periodic statements of holdings and transactions.
Individuals, companies, Trusts, Partnership firms, NRIs, HUF, Banks and Institutions
are allowed to open a depository account with any depository through a depository
participant. The investor would need to execute a standard form giving all his details,
bank details, instruction details, nomination details and off-course photograph and
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signature. Along with this form, the investor would also have sign an agreement with
the depository participant which usually forms a standard part of the account opening
process. The details on the form have to be matched with a photocopy of the
investor‘s passport, driving license etc. to certify the mentioned details. If the investor
is an NRI, then the client will have to provide overseas address, provide copy of RBI
Approval, if any. The RBI Approval is not mandatory for opening of a DP. Account
but is required to receive shares into the account when purchased through the
secondary market.
Procedure for purchasing dematerialized securities:
The procedure for purchasing dematerialized securities is also similar to the procedure
for buying physical securities.
Investor instructs DP to receive credits into his account in the prescribed
form. There may be one time standing instruction or Separate
instruction each time to receive credits.
Investor purchases securities in any of the stock exchanges linked to
Depository throuth a broker.
Broker receives payment from investor and arranges payment to
Clearing corporations.
Broker gives instructions to DP to debit clearing account and credit Client’s
account. Investor receives shares into his account by way of book entry.
Procedure of selling dematerialized securities:
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The procedure for selling dematerialized securities in stock
exchanges is similar as selling physical securities. The only major difference is that
instead of delivering physical securities to the broker, the investor instructs his DP to
debit his demat account with the number of securities sold by him and credit the
brokers clearing account. The procedure for selling dematerialized securities
is given below:
1. Investor sells securities in any of the stock exchange linked to depository through a
broker.
2. Investor instructs his DP to debit his demat account with the number
of securities sold and credit the broker’s clearing account.
3. Before the pay-in-day, broker of the investor transfers the securities to
clearing corporation.
4. The broker receives payment from the stock exchange.
5. The investor receives payment from the broker for sale of securities in
the same manner as received in case of sale of physical securities.
BENEFITS OF DEMATERIALIZATION ACCOUNT:
Primary benefits:
1- Safety: If we are holding our shares, bonds etc in physical (paper) form, there
are chances of its theft, mutilation, and loss. Moreover, we are also exposed to
the risks of fake papers, bad-delivery or delays at the time of transfer of
physical securities. However, in DEMAT accounts; we can preserve our long-
term investments safely and securely.
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2- Convenience: When we want to sell our dematerialized shares or redeem our
debentures in DEMAT account; there are no hassles of filling up transfer
forms, sending redemption requests or any other messy, costly and time-
consuming paper work. We can conveniently transfer our securities through
electronic transfers or just by signing one ‘Delivery Instruction Slip’, which is
nothing but our chequebook for DEMAT Accounts.
Other Benefits:
Apart from the safety and convenience, there are lot more advantages of
opening DEMAT accounts. Here are few of the most necessary reasons for having a
DEMAT account.
We can park most of our investments including shares, bonds, debentures, Gold
Units, NSC and bonds in our DEMAT account. We might not immediately
realize the benefits of having all the investments in DEMAT form. For
instance, if we change our residence, we just have to write to the DP
(Depository Participant), which automatically gets our new address registered
with all the companies where we have invested our money.
We do not have to remember the due dates of maturity of bonds, NSC and
debentures, as the redemption proceeds are automatically credited to our bank
account, which is linked with our DEMAT account.
We receive all the dividends and interests directly in our linked bank account.
In case of bonus, rights, split, merger or any other corporate actions, everything
takes place automatically. We do not have to do anything except to file the
physical intimation letters sent by the Registrar and Transfer Agents.
Nowadays with the advent of online trading, we can perform online all the
activities associated with buy, sell and transfer of shares.
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With a single nomination in your DEMAT account, we are nominating our
legal heirs to all the investments held by us.
For many public issues of bonds and debentures of reputed and trustworthy
companies, it is necessary to have a DEMAT Account, as the companies do not
allot securities in paper form.
Since most of the process of buying and selling dematerialized securities is
electronic, there are no chances of signature mismatch.
Elimination of problems related to selling securities on behalf of a minor.
Elimination of problems related to change of address of investor, transmission
etc.
Reduction in handling of huge volumes of paper periodic status reports.
So with Dematerialized Securities, the entire process of transferring shares, bonds and
other financial assets has become smooth and swift. DEMAT Accounts offer
numerous advantages and hence it makes sense for the retail investors to open
DEMAT Accounts as early as possible.
DIPOSITORY SYSTEM:
A Depository can be compared to a bank. A depository hold securities like
shares debentures, bonds, govt. Securities, unit's etc., of investors in electronic form.
Besides holding securities, a Depository also provides services related to transactions
in securities.
How to Avail the Services of a Depository?
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A Depository interfaces with the investors through its agents called
DEPOSITORY PARTICIPANTS (DP). If the investor wants to avail the services, he
has to open an account with the DP.
OPENING AN ACCOUNT WITH DEPOSITORY PARTICIPANT (DP):
Initially fill up the Account Opening Form, which is available with the DPs.
Sign the d-client Agreement, which defines the rights and duties of the person
wishing to open an account.
The investor receives the Client Account Number (Client ID), this client ID
along with the investor's DP ID gives the unique identification in the depository
system. There is no restriction on the number of depository accounts a person
can open.
However if the existing physical shares are joint names, the investor have to
open the account in the same order of names before the share the shares are
submitted for the DMAT.
A sole holder of the share certificates cannot add more names as joint holders at
the time of dematerialization of his share certificates.
A Beneficial Owner(BO) can open one or more accounts with one or more participants
and may close one or more account with any or all the participants or transfer his
securities in one account with a participant to another account with the same
participant for with other ones.
The BO shall pay fee, charges and deposits to the DP, as may be mutually
agreed upon, for carrying out the instructions and for rendering such other services as
are incidental or consequential to the BO holding securities in and transacting through
the said account with the DP. The DP shall be entitled to change or revise the said fees
charges or deposits or deposits form to time to time subject to such prior notice as may
be agreed between the parties.
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The main objectives of account opening are to allow the investors to perform:
Dematerialize physical securities currently held by them and reflect security
ownership by electronic book entries in the NSDL.
Buying and selling dematerialized securities, which are admitted in NSDL and
other depository.
Receive statements of all dematerialized holdings of securities as OBs.
Receive securities in electronic form in case of initial public offerings, rights
issued, bonus issue, mergers and acquisitions and amalgamations etc.,
BENEFITS IN DEPOSITORY PARTICIPATION:
Immediate transfer of securities.
No stamp duty on transfer of securities.
Elimination of risks associated with physical certificates such as bad delivery,
Reduction in paperwork involved in transfer of securities.
Reduction in transportation cost.
Nomination facility.
Change in address recorded with DP gets registered electronically with all
companies in which investor holds securities eliminating the need to correspond
with each of them separately.
DP eliminating correspondence with companies does transmission of securities.
Convenient method of consolidation of portfolios/accounts.
Holding investments in equity, debt instruments and government securities in a
single account.
Automatic credit into DMAT account of share, arising out of
split/consolidation/merger etc.
At present there are two depositories in India, NATIONAL SECURITIES
DEPOSITORIES LIMITED (NSDL) and CENTRAL DEPOSITORY
SERVICES LIMITED (CDSL).
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NATIONAL SECURITIES DEPOSITORIES LIMITED: (NSDL)
NSDL commenced its operations from November 1996. Holding and handling
of securities in the electronic form eliminates problems that normally associated with
physical certificates, like mutilation loss in transit, problem of bad delivery etc.,
Further it facilitates settlement cycles. number of users of NSDL depository system is
steadily increasing. It is our endeavor-to keep all the present and prospective uses of
NSDL depository system.
The shareholders of National Securities Depository Limited (NSDL) are
Industrial Development Bank of India (IDBI) Unit Trust of India (UTI), HDFC Bank,
Deutsche Bank Deena Bank, Global Trust Bank, Standard Chartered Bank, Citibank
NA and Hong Kong & Shanghai Banking Corporation Limited (HSBC). All the
shareholders of NSDL depository facilities.
FACILITIES OFFERED BY NSDL:
Some of the facilities offered by NSDL are:
Dematerialization i.e., converting certificates in electronic form.
Dematerialization i.e., conversion of securities in DMAT form into physical
certificates.
Facilitating repurchase/redemption of units of mutual funds.
Electronic settlement of trades in stock exchangers connected to NSDL.
Pledging/hypothecation of dematerialized securities against lone.
Electronic credit of securities allotted in public issues, rights issue.
Receipt of non-cash corporate benefits such as bonus, in electrical form.
Freezing of DMAT accounts, so that debits from the account are not permitted.
Nominations facility for DMAT accounts.
Services related to change of addressed, change in bank account details, and
change in nominee.
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Effecting transmission of securities.
Instructions to your DP over Internet through SPEED-e facility.
ONTIME PAYMENT SCHEME:
NSEL has announced the scheme under which of company as on time payment
of 5 basis point (0.05%) of the average market capitalization during the proceeding 26
weeks, then NSDL will not future issues by such companies would require a payment
pay any additional amount, if they make a bond issue.
Other Services:
Besides DMAT and trading depositories also offer other services.
Pledging/hypothecation of dematerializes securities.
Electronic credit in public offering of the companies.
Receipt of non- cash corporate such as bonus rights in electronic form.
Stock lending and borrowing.
Transmission of securities.
CENTRAL DEPOSITORY SERVICE LIMITED (CDSL):
A depository facilitates holding of securities in the electronic form and enables
securities transactions to be processed by book entry by a Depository participant (DP),
Who as an agent of the depository, offers depository services to investors. According
to SEBI guidelines, financial institutions, bank custodians, stockbrokers etc., are
eligible to act as DPs. The investor who is knows as Beneficial owner (BO). Has to
open a DMAT account through any DP for dematerialization of his holdings and
transferring securities.
The balances in the investors account is recoded and maintained with CDSL
can be obtained through the DP. The DP is required provide the investor, at regular
intervals, a statement of account, which gives the details of the securities holdings and
transactions. The depository system has effectively eliminated paper certificates,
which are prone to be fake, forged counterfeit resulting in bad deliveries. CDSL,
offers an efficient and instantaneous transfer of securities.
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The Bombay Stock Exchange (BSE) promoted CDSL, jointly with leading
banks such as SBI, Bank of India, Bank of Baroda, HDFC bank, and Standard Charted
Bank, Union Bank of India and Centurion Bank.
CDSL was set up with the objective of providing convenient dependable and
secure depository services at affordable cost to all market participants.
Some of the important milestones of CDSL system are:
CDSL was set up with the objective of commencement of business form SEBI
in February 1999.
Honorable the then Union Finance Minister, Sri Yashwanth Sinha flagged off
the operations of CDSL on July 15, 1999.
Settlement of trades in the DMAT mode through BIO Share Holding Limited,
the clearinghouse of BSE, started in July 1999.
All leading stock exchanges like the NSE, BSE, Ahmedabad stock exchange
etc., have established connectivity with CDSL.
At the end of December 2005, over 5000 issuers were admitted their securities
(equities, bonds, debentures and commercial papers), units of mutual funds,
certificate of deposits etc., into CDSL system.
SETTLEMENT:
The Clearing Corporation/Clearing house of the corresponding stock
exchanges undertakes the settlement of trade in the stock exchange. While the
settlement of DMAT securities affected through Depository, the fund settlement is
effected through the clearing banks. The clearing members directly with the CC/CH
settle the physical securities.
Exclusively segment follows rolling settlement (T+2) cycle and the unified
segment follows account period settlement cycle.
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In case of settlement of trades done in DAMT segments the pay-in and payout
of he funds and securities are affected on the blockage of the funds and limiting
exposure to the clearing corporation.
Settlement of funds is effected through the clearing banks and the depository
plays no role in this.
PROCEDURE:
A BO wishing to become an account holder should approach a Depository
In order to have an account, the investors need to duly fill in the application
furnishing all the required information.
The BO and the DP will enter in to an agreement abiding by the terms of
agreement, however a BO belonging to any one of the categories specified
under the National Securities Depository Limited (NDL) bylaws need not enter
into an agreement as the DP has entered with the BO pursuant to SEBI
Regulations 1996.
The account opened for Individual Investors, intuitional Investors, Corporate
Investors, and CMS can be common. How ever a DP may print separate forms
for each type of BO if it is necessary or convenient.
The sections of the application form, which is not relevant to any particular
type of BO, should be marked Not Applicable (NA).
The documents specified in the instructions at the end of the account opening
from to be submitted alone with the account opening form.
The BOs DP may also specify additional documents to be supplied with the
account opening form.
A DP shall, before opening may account of any BO make enquires as may be
necessary and exercise due care and caution in ascertaining the benefited of the
intending BO, scrutinize the documents relating to the securities in respect of
which account is intended to be opened, for authentication.
The DP’s should ensure separate BO’s account fore different ISIN.
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The DP should obtain and maintain photocopies on regular paper
The DP must ensure that the BO’s desires to have their cash corporate
beneficiary like dividend, interest etc. On a reportable basis, must forward a
certified true copy of RBI approval to the R&Ts/issues where the BO is holding
the securities.
The DP will send the account opening form along with the relevant documents
to the DP.
The DP will check all the papers as correct and send the information to the BO.
Here, the DP accepts all the papers, and they will be sent back a conformation
to the BO.
The DP enters the account opening information to the front End system
provided by NSDL, from the account opening form duly filled by BOs. The DP
should accurately collect the BO details.
The DP will scan the signatures of the BOs as well as maximum of 2 power of
attorney signatures.
Once the DP commits the transactions, the date is collected and stored at
NSDL. A unique BO number is generated by the system and this can be seen at
the DP Front-End system. This will be done online and the information gets
transmitted to NSDL instantaneously. The DP should record the BOs ID, the
original application form and the DP BO agreement for future cross-reference.
The BOs account number is unique with the system and will serve as a
reference number for the BO in all his future dealing with the DPs.
The DP should ensure that the information entered into its Front-End system is
correct.
BOs status indicates if the BO is an individual minor, NRI, corporate body,
bank.
The field to be captured for each BO will be different. The system will allow
capturing only the relevant fields as per the BO status with help of “status
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codes”. By defining status codes, a user can decide which status code to use for
the set up of BO. Only these fields, which are defined in the status code, will
come up on the screen for the user to enter.
All correspondence/querying relating to BO account will be sent to the first
holder only.
Settlement of securities is affected through NSDL, depository system.
Clearing and settlement of the regular market trades is affected through the
clearing member of the clearinghouses of the respective stock exchange.
Clearing members of the clearinghouse, dealing in DMAT securities are expected to
open a clearing with any DP for the purpose of settling trades is dematerialized
securities. If there is any short delivery at the time of pay in the securities, these short
positions are auctioned in the DMAT segment as done in the unified segment.
DATA ANALYSIS AND INTRPRETATION
Questions regarding problems in trading:-
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Q.1) Do you invest in share market?
a) Yes
b) No
Interpretation: -35% people invest in share market in Guntur city
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Q.2) Please tick the following:-
a.) Type of trading you generally do intraday / delivery /both
Interpretation: - 26% people prefer intraday trading, 42. % prefer delivery and 32% do
both type of trading.
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b.)Time period of investment less 1 month/ 1-6 month /more than 6 month.
Interpretation: - Maximum people prefer to invest for 1 to 6 months and amount of
investment for majority of people was found to be between Rs. 20,000 to Rs. 1 lac.
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Q.3) In your opinion what is biggest problem in trading:-
a.) Lack of knowledge or experience
b.) Unsatisfactory services of broking firms
c.) Market uncertainty
d.) Charges by broking firm
Interpretation: - Most of the people facing biggest problem in trading, Lack of
knowledge and believe that unsatisfactory services by their broking firms create
problem in trading while 25 % people consider charges of broking firm as a problem
in trading.
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Q.4) What is your opinion about the problem of market uncertainty in trading?
a.) It's a big challenge
b.) It's manageable
c.) It's an opportunity
Interpretation: - majority of people consider market uncertainty as a big problem,
around 19% people consider it as an opportunity and rest says it is manageable.
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Q.5) Does unsatisfactory services provided by the broking firm create problem in
trading?
a.) Yes
b.) A little
c.) No
Interpretation :- 54.5% consider the Unsatisfactory services provided by the broking
firm create problem in trading, 20.5% people consider it a little and 25% were not
agree to that.
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Q.6) Which charge do you consider charged by the broking firms is a problem in
trading?
a.) Broking charge
b.) Undisclosed hidden charge
c.) Annual maintenance charge
Interpretation: - Most people considered undisclosed hidden charges and annual
maintenance charge as their problem in trading.
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Questions regarding perception of traders regarding SHRIRAM INSIGHT:-
Q.1) Name of the broking firm with which you are making your investment?
a.) Shriram Insight
b) Indian Bulls
c) Angel Broking
d) Religare
e) Karvy
f) Others
Interpretation: - Market share of SHRIRAM INSIGHT is around 35% in Guntur.
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Q.2) Are you satisfied in trading with your broking firm?
a.) Satisfied
b.) Neither satisfied nor dissatisfied
c.) Dissatisfied
Interpretation: - Most of the people are satisfied with their broking firm.
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Q.3) Are you aware of products and services offered by Shriram Insight?
a.) Yes
b.) No
Interpretation: - 47.1% of people are aware of products and services offered by
Shriram Insight.
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Q.4) Are you satisfied with them?
a.) Satisfied
b.) Neither satisfied nor dissatisfied
c.) Dissatisfied
Interpretation: - Majority of people are satisfied with them.
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Q.5) Are you satisfied with the charges charged by Shriram Insight for opening D-Mat
account?
a.) Satisfied
b.) Neither satisfied nor dissatisfied
c.) Dissatisfied
Interpretation: - Most of people are satisfied with the charges charged by Shriram
Insight for opening Demat account.
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Q.6) What is your perception regarding SHRIRAM INSIGHT?
a.) Good
b.) average
c.) Bad
Interpretation: - Except 12 people (17.7%) perceive positive perception about
SHRIRAM INSIGHT.
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Q.7) Please specify reasons?
a.) Services good /average / bad
b.) Brokerage good /average / bad
c.) Relationship manager's support good /average / bad
d.) Transparency good /average / bad
Interpretation: - In case of transparency and services SHRIRAM INSIGHT is
considered good and average in case of brokerage and relationship manager's support.
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a.)Service b.)Brokeragec.)Relationship
manager's supportTransparency
MBA PROGRAMME SIPS
FINDINGS
Most of the investors don’t have minimum knowledge about where he invests
his money.
Most of the people are unaware of what is DEMAT and how it is useful.
Most of the traders consider unsatisfactory services of broking firm as biggest
problem in trading.
Most of traders perceive SHRIRAM INSIGHT as a good broking firm.
In case of transparency and services SHRIRAM INSIGHT is considered good
and average in case, of brokerage and relationship manager's support.
People aware about SHRIRAM INSIGHT are satisfied regarding product and
services by SHRIRAM INSIGHT.
Market share of SHRIRAM INSIGHT in Guntur is about 35%
The main feature of SHRIRAM INSIGHT is that it provides best
security, hasslefree, convient, than other broking houses.
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SUGGESTIONS:
SHRIRAM INSIGHT has to improve on the customer service that it is
providing to its customers.
They have to give publicities in Newspapers, Hoardings, and Stallings.
Broking charges should revise to make them more competitive.
More relationship managers should be appointed to increase market share.
Relationship manager's support to the clients should be improved.
SHRIRAM INSIGHT should conduct some kind of mock Classes for new
Investors who even don’t know about share market.
There should be employee ID-Card for them so that when they go on it shows
good impression and Identity of employee.
SHRIRAM INSIGHT Organize training Program for their existing clients once
or twice in a year.
As long as a market is acting right, don't rush to take profits.
Don't watch or trade too many stocks at once
CONCLUSION:
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Before as we didn’t have proper growth the traders used to go near the brokers
and placed orders. But now as there is a drastic change and with the things like
globalization, liberalization, privatization. The things have changed. Now in this era
the trader can place his own orders and can do everything individually which saves
money for him but he must have sound knowledge about the issues. Online stock
trading sites offer investors access to a variety of tools and research that just a few
years ago were only available through full service brokerage accounts. Online trading
in shares has brought transparency to the business and attracted a whole new range of
investors into share trading and investment. Ordinary people with restricted amounts
of savings are educating themselves in the business and learning to make their small
investments grow steadily without taking too many risks.
ANNEXURE
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Questionnaire:
Q.1) Do you invest in share market:
a.)Yes
b) No
Q.2) Please tick the following:
a.)Type of trading you generally do intraday / delivery /both
b.)Amount of investment less than 20 k / 20k-l lacs /more than 1 lacs
c.)Time period of investment less than 1 month/1-6 month /more than 6 months
Q.3) In your opinion what is biggest problem in trading:
a.) Lack of knowledge or experience
b.)Unsatisfactory services of broking firms
c.)Market uncertainty
d.) Charges by broking firm
Q4) What is your opinion 'about the problem of market uncertainty in trading?
a.) It's a big challenge
b.) It's manageable
c.) It's an opportunity
Q.5) Does unsatisfactory services provided by the braking firm create problem in
trading?
a.) Yes
b.) Partially
c.) No
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Q.6) Which charge do you consider charged by the companies is a problem in
trading?
a.)Broking charge
b.) Undisclosed hidden charge
c.)Annual maintenance charge
Q.7) Name of the company with which you are making your investment?
a.) Shriram Insight
b.) Reliance money
c.) Share khan
d.) Other
Q.8) Are you satisfied in trading with your broking firm?
a.) Satisfied
b.)Neither satisfied nor dissatisfied
c) Dissatisfied
Q.9) Are you aware of products and services offered by Shriram Insight?
a.) Yes
b.) No
Q.10) Are you satisfied with the charges charged by Shriram Insight for opening
D-Mat account (with annual maintenance charge)?
a.) Satisfied
b.) Neither satisfied nor dissatisfied
c.) Dissatisfied
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Q.11) What is Your perception regarding Shriram Insight?
a.) Good
b.) Average
c.) Bad
Q.12) Please specify reasons?
a.) Services good/average / bad
b.) Brokerage good / average / bad
c.) Relationship manager's support good / average / bad
d.) Transparency good / average / bad
BIBLIOGRAPHY
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www.shriraminsight.com
www.investopedia.com
www.bseindia.com
www.nseindia.com
www.moneycontrol.com
Books:
1. Investment management
-V.K.Bhalla
2. Investment management
-Preethi Singh
3. Security Analysis And Portfolio Management
-V.A.Avadhani
4. Marketing of Financial Services
-V.A.Avadhani
5. Indian Financial System
-M.Y.Khan
If there are any quarries’ regarding this project mail me:
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