ishan report
TRANSCRIPT
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SUMMER TRAINING PROJECT REPORT
ldquoA STUDY ON ONLINE TRADING AT
EDELWEISS BROKING LTDrdquo
FOR
TOWARDS PARTIAL FULFILMENT OF POST-GRADUATE DIOPLOMA IN MANAGEMENT(PGDM)
(AFFILIATED TO AICTENEW DELHI)
UNDER THE GUIDANCE OF SUBMITTED BYMR ALI ASAD ISHAN ALAMTEAM LEADEREdelweiss Broking LtdLucknow
Session (2010-2011)Department Of Post Graduate Diploma In Management
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Babu Banarasi Das
National Institute of Technology amp Management
LUCKNOW (U P) INDIA
CERTIFICATE
This is to certify that Industrial Internship Report entitled
A study on online trading at edelweiss broking ltd
submitted by
Ishan Alam
Towards the partial fulfillment of the degree of
Post Graduate Diploma in Management (PGDM)( 2 Yearsrsquo Post Graduate Programme duly approved by AICTE MHRD GoI )
in the Academic Year 2010-11
is a record of the studentrsquos own work carried out at
Edelweiss Broking Ltd
Mr Ali Asad Mr Atul Kumar SinghTeam Leader(Client advisory services) Dean PGDMEdelweiss Broking ltd BBDNITM
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Lucknow Lucknow
ACKNOWLEDGEMENT In pursuit of an PGDM degree summer internship is a critical component of the entire
processbdquoEdelweiss Broking Ltd‟Lucknow has given me the opportunity to gain invaluable
experience under the guidance of Mr Apporva Gaur (Sales Manager Lucknow Region) amp Mr
Ali Asad(Team leader- Retail channel)Their continuous support and valuable in hand
experience provided me with the conceptual understanding and practical approach needed to
work efficiently for this project The entire Edelweiss Broking Ltd‟s staff is praiseworthy
Last but not the least I would also like to thank
Ms Anjali Gupta(dealerEdelweiss Broking Ltd) for her guidance and support throughout the
training period DrMayank Srivastava sir(Faculty PGDMBBDNITM) his great advices and
Guidance and also to the entire staff of Edelweiss Broking ltdand all my friends and colleagues
who helped whenever I faced any difficult situation
I hope this report reflecting my learning in the past eight weeks is as beneficial to the
organization as it had been to me
Again I sincerely thank to all of them
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ISHAN ALAM
Table of contents
ACKNOWLEDGEMENT
EXECUTIVE SUMMARYhelliphelliphelliphelliphelliphellip 1
Chapter 1
Objective of The Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 3-4
Chapter 2 INDUSTRY ANALYSIShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 6
FINANCIAL SYSTEMhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7
DIFFERENT TYPES OF MARKEThelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 8-10
STOCK EXCHANGEShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 11-15
SEBI FRAMEWORKhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16-18
Chspter 3 ELECTRONIC SETTLEMENT OF TRADEhelliphelliphelliphelliphelliphelliphelliphelliphellip20-31
Chapter 4 DEFINITIONS AND EXPLANATIONhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip33-38
Chapter 5 COMPANY PROFILEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40-47
Chapter 6 SUBSCRIPTION PLANS FOR DEMAT ACCOUNThelliphelliphelliphelliphellip49-54
Chapter 7 Project Analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 56-57
Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 58
Recommendationhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 59
Bibilographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 60
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EXECUTIVE SUMMARY As per the title suggest the project report has been prepared regarding the growth and
development of online trading in India Online trading was initiated by NSE in India and soon
after the other exchanges also followed it There was a major boom in yr 2000 when lots of
online trading companies came with a bang but only few were survived because of lack of
computer knowledge and low internet penetration There are two types of online trading
companies One is the banking online trading companies and the other is non-banking trading
companies
A few examples of banking online trading companies are HDFC securities ICICI directcom
UTI securities etc
On the other hand non banking trading companies are Edelweiss broking ltdsharekhanAngel
BrokingReliance Money etc
Today online trading contributes are about 8-10 It is continuously growing and has a huge
market potential A study was undertaken to determine the growth of online trading companies
in India in terms of trade done by them through online and services provided by them Major
findings indicates that out of a survey of 50 respondents it was seen that major investors prefer
online trading because of few major factors such as time savingconvenience protection through
Freudian brokers etc although during my research project I‟ve seen that most of the respondents
feel online trading a secure way of investing into stock market still a few of them feel it unsafe
and a bit complicated but they posses information about online trading Today the online trading
companies having cut-throat competition in our offering whose brokerage discounts lower
margin money and zero balance account Due to the rising education awareness and use of
internet there is a huge potential for online trading in future and companies must come up with
innovative offerings to capture the untapped market
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CHAPTER -1
OBJECTIVE OF THE STUDY
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CHAPTER-1
OBJECTIVES OF THE STUDY
It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system
It is to study the functions of EDELWEISS BROKING LTD through various
departmentsTo know the online screen based trading system adopted by EDELWEISS
and about its communication facilities The appropriate configuration to set the network
which would link the EDELWEISS to individual members
To know about the latest and future development in the stock exchange trading system
METHODOLOGY OF THE STUDY
The data collection methods include both primary and secondary collection methods
Primary method This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd and from calling to the customers in the lead
generation process
Secondary method The secondary data collection method includes
The lecturers delivered by the superintendents of respective departments The brochures and
material provided by Edelweiss broking ltd The data collected from the magazines of the NSE
economic times and etc various books relating to the investments capital market and other
related topics
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Babu Banarasi Das
National Institute of Technology amp Management
LUCKNOW (U P) INDIA
CERTIFICATE
This is to certify that Industrial Internship Report entitled
A study on online trading at edelweiss broking ltd
submitted by
Ishan Alam
Towards the partial fulfillment of the degree of
Post Graduate Diploma in Management (PGDM)( 2 Yearsrsquo Post Graduate Programme duly approved by AICTE MHRD GoI )
in the Academic Year 2010-11
is a record of the studentrsquos own work carried out at
Edelweiss Broking Ltd
Mr Ali Asad Mr Atul Kumar SinghTeam Leader(Client advisory services) Dean PGDMEdelweiss Broking ltd BBDNITM
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Lucknow Lucknow
ACKNOWLEDGEMENT In pursuit of an PGDM degree summer internship is a critical component of the entire
processbdquoEdelweiss Broking Ltd‟Lucknow has given me the opportunity to gain invaluable
experience under the guidance of Mr Apporva Gaur (Sales Manager Lucknow Region) amp Mr
Ali Asad(Team leader- Retail channel)Their continuous support and valuable in hand
experience provided me with the conceptual understanding and practical approach needed to
work efficiently for this project The entire Edelweiss Broking Ltd‟s staff is praiseworthy
Last but not the least I would also like to thank
Ms Anjali Gupta(dealerEdelweiss Broking Ltd) for her guidance and support throughout the
training period DrMayank Srivastava sir(Faculty PGDMBBDNITM) his great advices and
Guidance and also to the entire staff of Edelweiss Broking ltdand all my friends and colleagues
who helped whenever I faced any difficult situation
I hope this report reflecting my learning in the past eight weeks is as beneficial to the
organization as it had been to me
Again I sincerely thank to all of them
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ISHAN ALAM
Table of contents
ACKNOWLEDGEMENT
EXECUTIVE SUMMARYhelliphelliphelliphelliphelliphellip 1
Chapter 1
Objective of The Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 3-4
Chapter 2 INDUSTRY ANALYSIShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 6
FINANCIAL SYSTEMhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7
DIFFERENT TYPES OF MARKEThelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 8-10
STOCK EXCHANGEShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 11-15
SEBI FRAMEWORKhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16-18
Chspter 3 ELECTRONIC SETTLEMENT OF TRADEhelliphelliphelliphelliphelliphelliphelliphelliphellip20-31
Chapter 4 DEFINITIONS AND EXPLANATIONhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip33-38
Chapter 5 COMPANY PROFILEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40-47
Chapter 6 SUBSCRIPTION PLANS FOR DEMAT ACCOUNThelliphelliphelliphelliphellip49-54
Chapter 7 Project Analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 56-57
Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 58
Recommendationhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 59
Bibilographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 60
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EXECUTIVE SUMMARY As per the title suggest the project report has been prepared regarding the growth and
development of online trading in India Online trading was initiated by NSE in India and soon
after the other exchanges also followed it There was a major boom in yr 2000 when lots of
online trading companies came with a bang but only few were survived because of lack of
computer knowledge and low internet penetration There are two types of online trading
companies One is the banking online trading companies and the other is non-banking trading
companies
A few examples of banking online trading companies are HDFC securities ICICI directcom
UTI securities etc
On the other hand non banking trading companies are Edelweiss broking ltdsharekhanAngel
BrokingReliance Money etc
Today online trading contributes are about 8-10 It is continuously growing and has a huge
market potential A study was undertaken to determine the growth of online trading companies
in India in terms of trade done by them through online and services provided by them Major
findings indicates that out of a survey of 50 respondents it was seen that major investors prefer
online trading because of few major factors such as time savingconvenience protection through
Freudian brokers etc although during my research project I‟ve seen that most of the respondents
feel online trading a secure way of investing into stock market still a few of them feel it unsafe
and a bit complicated but they posses information about online trading Today the online trading
companies having cut-throat competition in our offering whose brokerage discounts lower
margin money and zero balance account Due to the rising education awareness and use of
internet there is a huge potential for online trading in future and companies must come up with
innovative offerings to capture the untapped market
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CHAPTER -1
OBJECTIVE OF THE STUDY
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CHAPTER-1
OBJECTIVES OF THE STUDY
It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system
It is to study the functions of EDELWEISS BROKING LTD through various
departmentsTo know the online screen based trading system adopted by EDELWEISS
and about its communication facilities The appropriate configuration to set the network
which would link the EDELWEISS to individual members
To know about the latest and future development in the stock exchange trading system
METHODOLOGY OF THE STUDY
The data collection methods include both primary and secondary collection methods
Primary method This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd and from calling to the customers in the lead
generation process
Secondary method The secondary data collection method includes
The lecturers delivered by the superintendents of respective departments The brochures and
material provided by Edelweiss broking ltd The data collected from the magazines of the NSE
economic times and etc various books relating to the investments capital market and other
related topics
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Lucknow Lucknow
ACKNOWLEDGEMENT In pursuit of an PGDM degree summer internship is a critical component of the entire
processbdquoEdelweiss Broking Ltd‟Lucknow has given me the opportunity to gain invaluable
experience under the guidance of Mr Apporva Gaur (Sales Manager Lucknow Region) amp Mr
Ali Asad(Team leader- Retail channel)Their continuous support and valuable in hand
experience provided me with the conceptual understanding and practical approach needed to
work efficiently for this project The entire Edelweiss Broking Ltd‟s staff is praiseworthy
Last but not the least I would also like to thank
Ms Anjali Gupta(dealerEdelweiss Broking Ltd) for her guidance and support throughout the
training period DrMayank Srivastava sir(Faculty PGDMBBDNITM) his great advices and
Guidance and also to the entire staff of Edelweiss Broking ltdand all my friends and colleagues
who helped whenever I faced any difficult situation
I hope this report reflecting my learning in the past eight weeks is as beneficial to the
organization as it had been to me
Again I sincerely thank to all of them
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ISHAN ALAM
Table of contents
ACKNOWLEDGEMENT
EXECUTIVE SUMMARYhelliphelliphelliphelliphelliphellip 1
Chapter 1
Objective of The Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 3-4
Chapter 2 INDUSTRY ANALYSIShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 6
FINANCIAL SYSTEMhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7
DIFFERENT TYPES OF MARKEThelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 8-10
STOCK EXCHANGEShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 11-15
SEBI FRAMEWORKhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16-18
Chspter 3 ELECTRONIC SETTLEMENT OF TRADEhelliphelliphelliphelliphelliphelliphelliphelliphellip20-31
Chapter 4 DEFINITIONS AND EXPLANATIONhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip33-38
Chapter 5 COMPANY PROFILEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40-47
Chapter 6 SUBSCRIPTION PLANS FOR DEMAT ACCOUNThelliphelliphelliphelliphellip49-54
Chapter 7 Project Analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 56-57
Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 58
Recommendationhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 59
Bibilographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 60
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EXECUTIVE SUMMARY As per the title suggest the project report has been prepared regarding the growth and
development of online trading in India Online trading was initiated by NSE in India and soon
after the other exchanges also followed it There was a major boom in yr 2000 when lots of
online trading companies came with a bang but only few were survived because of lack of
computer knowledge and low internet penetration There are two types of online trading
companies One is the banking online trading companies and the other is non-banking trading
companies
A few examples of banking online trading companies are HDFC securities ICICI directcom
UTI securities etc
On the other hand non banking trading companies are Edelweiss broking ltdsharekhanAngel
BrokingReliance Money etc
Today online trading contributes are about 8-10 It is continuously growing and has a huge
market potential A study was undertaken to determine the growth of online trading companies
in India in terms of trade done by them through online and services provided by them Major
findings indicates that out of a survey of 50 respondents it was seen that major investors prefer
online trading because of few major factors such as time savingconvenience protection through
Freudian brokers etc although during my research project I‟ve seen that most of the respondents
feel online trading a secure way of investing into stock market still a few of them feel it unsafe
and a bit complicated but they posses information about online trading Today the online trading
companies having cut-throat competition in our offering whose brokerage discounts lower
margin money and zero balance account Due to the rising education awareness and use of
internet there is a huge potential for online trading in future and companies must come up with
innovative offerings to capture the untapped market
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CHAPTER -1
OBJECTIVE OF THE STUDY
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CHAPTER-1
OBJECTIVES OF THE STUDY
It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system
It is to study the functions of EDELWEISS BROKING LTD through various
departmentsTo know the online screen based trading system adopted by EDELWEISS
and about its communication facilities The appropriate configuration to set the network
which would link the EDELWEISS to individual members
To know about the latest and future development in the stock exchange trading system
METHODOLOGY OF THE STUDY
The data collection methods include both primary and secondary collection methods
Primary method This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd and from calling to the customers in the lead
generation process
Secondary method The secondary data collection method includes
The lecturers delivered by the superintendents of respective departments The brochures and
material provided by Edelweiss broking ltd The data collected from the magazines of the NSE
economic times and etc various books relating to the investments capital market and other
related topics
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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ISHAN ALAM
Table of contents
ACKNOWLEDGEMENT
EXECUTIVE SUMMARYhelliphelliphelliphelliphelliphellip 1
Chapter 1
Objective of The Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 3-4
Chapter 2 INDUSTRY ANALYSIShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 6
FINANCIAL SYSTEMhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7
DIFFERENT TYPES OF MARKEThelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 8-10
STOCK EXCHANGEShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 11-15
SEBI FRAMEWORKhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16-18
Chspter 3 ELECTRONIC SETTLEMENT OF TRADEhelliphelliphelliphelliphelliphelliphelliphelliphellip20-31
Chapter 4 DEFINITIONS AND EXPLANATIONhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip33-38
Chapter 5 COMPANY PROFILEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip40-47
Chapter 6 SUBSCRIPTION PLANS FOR DEMAT ACCOUNThelliphelliphelliphelliphellip49-54
Chapter 7 Project Analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 56-57
Conclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 58
Recommendationhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 59
Bibilographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 60
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EXECUTIVE SUMMARY As per the title suggest the project report has been prepared regarding the growth and
development of online trading in India Online trading was initiated by NSE in India and soon
after the other exchanges also followed it There was a major boom in yr 2000 when lots of
online trading companies came with a bang but only few were survived because of lack of
computer knowledge and low internet penetration There are two types of online trading
companies One is the banking online trading companies and the other is non-banking trading
companies
A few examples of banking online trading companies are HDFC securities ICICI directcom
UTI securities etc
On the other hand non banking trading companies are Edelweiss broking ltdsharekhanAngel
BrokingReliance Money etc
Today online trading contributes are about 8-10 It is continuously growing and has a huge
market potential A study was undertaken to determine the growth of online trading companies
in India in terms of trade done by them through online and services provided by them Major
findings indicates that out of a survey of 50 respondents it was seen that major investors prefer
online trading because of few major factors such as time savingconvenience protection through
Freudian brokers etc although during my research project I‟ve seen that most of the respondents
feel online trading a secure way of investing into stock market still a few of them feel it unsafe
and a bit complicated but they posses information about online trading Today the online trading
companies having cut-throat competition in our offering whose brokerage discounts lower
margin money and zero balance account Due to the rising education awareness and use of
internet there is a huge potential for online trading in future and companies must come up with
innovative offerings to capture the untapped market
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CHAPTER -1
OBJECTIVE OF THE STUDY
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CHAPTER-1
OBJECTIVES OF THE STUDY
It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system
It is to study the functions of EDELWEISS BROKING LTD through various
departmentsTo know the online screen based trading system adopted by EDELWEISS
and about its communication facilities The appropriate configuration to set the network
which would link the EDELWEISS to individual members
To know about the latest and future development in the stock exchange trading system
METHODOLOGY OF THE STUDY
The data collection methods include both primary and secondary collection methods
Primary method This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd and from calling to the customers in the lead
generation process
Secondary method The secondary data collection method includes
The lecturers delivered by the superintendents of respective departments The brochures and
material provided by Edelweiss broking ltd The data collected from the magazines of the NSE
economic times and etc various books relating to the investments capital market and other
related topics
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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EXECUTIVE SUMMARY As per the title suggest the project report has been prepared regarding the growth and
development of online trading in India Online trading was initiated by NSE in India and soon
after the other exchanges also followed it There was a major boom in yr 2000 when lots of
online trading companies came with a bang but only few were survived because of lack of
computer knowledge and low internet penetration There are two types of online trading
companies One is the banking online trading companies and the other is non-banking trading
companies
A few examples of banking online trading companies are HDFC securities ICICI directcom
UTI securities etc
On the other hand non banking trading companies are Edelweiss broking ltdsharekhanAngel
BrokingReliance Money etc
Today online trading contributes are about 8-10 It is continuously growing and has a huge
market potential A study was undertaken to determine the growth of online trading companies
in India in terms of trade done by them through online and services provided by them Major
findings indicates that out of a survey of 50 respondents it was seen that major investors prefer
online trading because of few major factors such as time savingconvenience protection through
Freudian brokers etc although during my research project I‟ve seen that most of the respondents
feel online trading a secure way of investing into stock market still a few of them feel it unsafe
and a bit complicated but they posses information about online trading Today the online trading
companies having cut-throat competition in our offering whose brokerage discounts lower
margin money and zero balance account Due to the rising education awareness and use of
internet there is a huge potential for online trading in future and companies must come up with
innovative offerings to capture the untapped market
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CHAPTER -1
OBJECTIVE OF THE STUDY
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CHAPTER-1
OBJECTIVES OF THE STUDY
It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system
It is to study the functions of EDELWEISS BROKING LTD through various
departmentsTo know the online screen based trading system adopted by EDELWEISS
and about its communication facilities The appropriate configuration to set the network
which would link the EDELWEISS to individual members
To know about the latest and future development in the stock exchange trading system
METHODOLOGY OF THE STUDY
The data collection methods include both primary and secondary collection methods
Primary method This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd and from calling to the customers in the lead
generation process
Secondary method The secondary data collection method includes
The lecturers delivered by the superintendents of respective departments The brochures and
material provided by Edelweiss broking ltd The data collected from the magazines of the NSE
economic times and etc various books relating to the investments capital market and other
related topics
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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CHAPTER -1
OBJECTIVE OF THE STUDY
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CHAPTER-1
OBJECTIVES OF THE STUDY
It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system
It is to study the functions of EDELWEISS BROKING LTD through various
departmentsTo know the online screen based trading system adopted by EDELWEISS
and about its communication facilities The appropriate configuration to set the network
which would link the EDELWEISS to individual members
To know about the latest and future development in the stock exchange trading system
METHODOLOGY OF THE STUDY
The data collection methods include both primary and secondary collection methods
Primary method This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd and from calling to the customers in the lead
generation process
Secondary method The secondary data collection method includes
The lecturers delivered by the superintendents of respective departments The brochures and
material provided by Edelweiss broking ltd The data collected from the magazines of the NSE
economic times and etc various books relating to the investments capital market and other
related topics
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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CHAPTER-1
OBJECTIVES OF THE STUDY
It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system
It is to study the functions of EDELWEISS BROKING LTD through various
departmentsTo know the online screen based trading system adopted by EDELWEISS
and about its communication facilities The appropriate configuration to set the network
which would link the EDELWEISS to individual members
To know about the latest and future development in the stock exchange trading system
METHODOLOGY OF THE STUDY
The data collection methods include both primary and secondary collection methods
Primary method This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd and from calling to the customers in the lead
generation process
Secondary method The secondary data collection method includes
The lecturers delivered by the superintendents of respective departments The brochures and
material provided by Edelweiss broking ltd The data collected from the magazines of the NSE
economic times and etc various books relating to the investments capital market and other
related topics
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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NEED FOR THE STUDY
The present study is necessary to review the online trading procedureAs the exchange has
changed it‟s trading from the outcry mode to online trading on 20th February 1997 there is need
to assess then performance of the capital market
LIMITATIONS OF THE STUDYThe study is confined to online trading procedure only
Problems of listing are not covered due to limited time and to keep the study in manageable limits
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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CHAPTER 2
INDUSTRY ANALYSIS
FINANCIAL SYSTEM
DIFFERENT TYPES OF MARKET
STOCK EXCHANGES
SEBI FRAMEWORK
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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 institutionsbank
and government (SEBI) registeredcontrolled activities and intermediariesThe unorganized
market is composed of indigenous bankers moneylenders individual professional and non-
professionals
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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
Eg treasury bills commercial papers CDs etc
CAPITAL MARKET
The capital market is the market for securities where companies and the government can raise
long term funds The capital market includes the stock market and the bond market Financial
regulators ensure that investors are protected against fraud The capital markets consist of the
primary market where new issues are distributed to investors and the secondary market where
existing securities are traded
Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country As a result the investors are not constrained by their
individual abilities but by the abilities of the companies which in turn enhance the savings andinvestments in the country liquidity of capital market is an important factor affecting growth
Since projects require long term finance but on the other hand the investor may not like to
relinquish control over their savings for a long time A liquid stock market ensures a quick exit
without incurring heavy losses or costs Thus development of efficient market system is
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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necessary for creating conductive climate for investment and economic growth 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
Primary market and
Secondary market
Eg 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 and 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 and right issues to existing shareholders public offers and issue
of debt instruments such as debentures bonds 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 bankerbook building lead manager
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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2 Registrar and transfer agent
3 Underwriterbroker to the issue
4 Adviser to the issue
5 Banker to the issue
6 Depository
7 Depository participant
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 ldquoThe
secondary market is a market where scrip‟s are tradedrdquo 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
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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 Brokermember of stock exchange ndash buyers broker and sellers broker
2 Portfolio Manager
3 Investment advisor
4 Share transfer agent
5 Depository
6 Depository participants
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies In the stock market purchases and sales of shares are affected in conditions of free
competition Government securities are traded outside the trading ring in the form of over the
counter sales or purchase The bargains that are struck in the trading ring by the members of the
stock exchanges are at the fairest prices determined by the basic laws of supply and demand
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Definition of a stock exchange
ldquoStock 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
securitiesrdquo The securities include
Shares of public company
Government securities
Bonds
History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and
Ahmadabad set up in 1894 These were organized as voluntary non-profit-marking associations
of brokers to regulate and protect their interests Before the control on securities under the
constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of
1925 used to regulate trading in securities Under this act the Mumbai stock exchange was
recognized in 1927 and Ahmadabad in 1937 During the war boom a number of stock exchanges
were organized Soon after it became a central subject central legislation was proposed and a
committee headed by ADGorwala went into the bill for securities regulation On the basis of the
committee‟s recommendations and public discussion the securities contract (regulation) act
became law in 1956
Functions of Stock ExchangesStock exchanges provide liquidity to the listed companies By giving quotations to the listed
companies they help trading and raise funds from the market Over the hundred and twenty
years during which the stock exchanges have existed in this country and through their medium
the central and state government have raised crores of rupees by floating public loans Municipal
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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corporations trust and local bodies have obtained from the public their financial requirements
and industry trade and commerce- the backbone of the country‟s economy-have secured capital
of crores or rupees through the issue of stocks shares and debentures for financing their day-to-
day activities organizing new ventures and completing projects of expansion diversification and
modernization By obtaining the listing and trading facilities public investment is increased and
companies were able to raise more funds The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes
Various 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
Bhubaneswar Stock Exchange Association
Calcutta Stock Exchange
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
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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
MAJOR STOCK EXCHANGES
NSE
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 NSEs 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
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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 Its that force which is guiding the industry towards new horizons and greater
opportunities
BSE
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 from the Govt of India under the Securities Contracts
(Regulation) Act 1956The Exchange while providing an efficient and transparent market for
trading in securities debt and derivatives upholds the interests of the investors and ensures
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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 A Governing Board
having 20 directors is the apex body which decides the policies and regulates the affairs of the
Exchange The Governing Board consists of 9 elected directors who are from the broking
community (one third of them retire ever year by rotation) three SEBI nominees six public
representatives and an Executive Director amp Chief Executive Officer and a Chief Operating
Officer
The Executive Director as the Chief Executive Officer is responsible for the dayto- day
administration of the Exchange and the Chief Operating Officer and other Heads of Department
assist him
The Exchange has inserted new Rule No126 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 amp
CEO and Chief Operating Officer has been constituted The Committee considers judicial amp
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
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the ldquoSecurities Contract
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Regulation Act 1956rdquo and ldquoSecurities Exchange Board of India 1952rdquo Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body
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)
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 1992according to this act
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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)
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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
CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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ELECTRONIC SETTLEMENT OF TRADE
ELECTRONIC SETTLEMENT OF TRADE
A Procedure for purchasing dematerialized Securities-
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities
1 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
2 Investor purchases securities in any of the stock exchanges linked to depository through a
broker
3 Broker receives payment from investor and arranges payment to clearing corporation
4 Broker receives credit to securities in clearing account on the payout day
5 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
B Procedure of selling dematerialized securities-
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
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical
certificate form For rematerilisation of scrip‟s the investor has to fill up a demat request form
(RRF) and submit it to the DP The DP forwards the request to depository after verifying the
investor‟s balances Depository in turn initiates the registrars and transfer agent or the issuer
company RTA Company print the certificates and dispatch the same to the investor
Market timings
Normal Market Exercise Market Open time 0900 hours
Normal market close 1530 hours
Set up cut of time for Position limitCollateral value till 1530 hrs
Trade modification end time Exercise Market 1615 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS
Internet based trading on conventional exchanges uses the Internet as a medium for
communicating client orders to the exchange through broker web sites Broker‟s web sites may
serve a variety of functions These may include
Allowing the clients to directly trade through investors
Advertise the broker dealers‟ services to potential investors
Offer market information and investment tools similar to those offered by information
vendor or SRO web sites
Offer real-time or delayed quote information continuously update quotes while the user
visits other sites or allow investors to create a personal stock ticker
Provide market summaries and commentaries analyst reports and trading strategies and
market data on currencies mutual funds options market indices and news and
Offer investors access to portfolio management tools and analytic programs
Information on commission and fees and
Account information and research reports
In an Order Routing system a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security whatever it is to be bought or sold
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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the quantity and whatever the order is a market or limit order Once the broker‟s system receives
this information trading of the security whether it is bought or sell is completed
USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS
(PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE
CONVENTIONAL EXCHANGES)
In foreign jurisdiction Alternative trading systems have been developing outside conventional
securities markets which provide investors with additional proprietary electronic trading
facilities for securities that are traded principally on securities exchanges or other organized
markets They have price discovery functions matching systems and crossing systems The
systems that are currently in use in outside jurisdictions are closed systems and are not accessible
to the general public through the Internet The securities markets regulators abroad the
maintained flexible and open policies designed to encourage innovation in the secondary
securities markets As a result a number of market participants usually brokerdealers have
developed computerized ldquoalternative trading systemsrdquo by which the system centralize display
match cross or otherwise execute trading interest
USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS
Issues of securities of using the Internet to communicate directly with their shareholders
potential investors and analysts by disseminating corporate information In foreign jurisdiction
they are also using the Internet to communicate to the public for the following
Public offerings
Private offerings and
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Disclosure and communication
Issuers are using the Internet to market themselves to potential investors The Internet is also
being used for fulfilling necessary disclosure requirements for disseminating the prospects in
electronics form and even for receiving share applications in public issues electronically In
India SEBI has taken initiative in permitting use of the network of stock exchange for collection
of investor applications in public offerings by the issuer companies
INVESTMENT ADVISORY SERVICES
Brokers as well as other service provides such as investment firms research outfits etc are using
the Internet for marketing and advertising purposes for presenting information on portfolio
analysis and market information and for communicating with and receiving orders from
potential investors The services offered by the service providers to the investors are generally
the following
Advertising
Providing investment information and investment advice
Underwriting
Communicating with the investors
Customer orders and
Record keeping
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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WORKING GROUPS SET UP BY THE COMMITTEE
Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business it was felt that SEBI as a regulator could
strive to identify areas where use of Internet in the capital market is possible within the existing
legal framework One such area identified by the Committee which is also the central within the
existing legal framework One such area identified by the Committee which is also the central
theme of this report is the area of Internet trading on existing electronic exchange In this area
through early introduction of Cyber Laws would be highly describe but their existence is not a
necessary precondition To look into the existing regulatory scenario and to bring out some
ground rules for use of the medium of Internet the Committee therefore constituted the
following two working groups to look into the area of
Security protocols and standardization of interfaces for Interest based securities trading
chaired by Prof Deepak B Phatak IIT Pawai Mumbai
Surveillance and monitoring related issues arising due to Interest based securities
trading chaired by Shri LK Singhvi Sr ED SEBI
The committee also requested Ms D N Raval Executive Director SEBI to examine the legality
of introduction of Internet trading and issue of Alternative trading systems This report of the
standing committee examines the regulatory and security requirements Internet Based Trading
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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on Conventional Exchanges Separate reports (s) will cover the other areas related to Internet
applications in the securitiesmarkets
The report of the first working group on security protocols and standardization of interfaces has
since been submitted and incorporated in the report The committee would like to place on record
its sincere thanks to Dr DB Phatak Ms DN Raval and their team members The global
financial market is undergoing a transformation due to rapid technological developments It thus
becomes imperative that for developing in effective regulatory framework developments in other
parts of the world should be studies and analyzed With nearly who million on-line investors
Internet trading in the United States is growing by leaps and bounds Internet trading is being
facilitated by large brokerage houses thus changing the total concept of securities trading A
team comprising of members from stock exchanges and SEBI visited the United States to these
development and had interactions with brokerages houses Internet service providers and other
agencies involved in facilitating Internet trading The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and
Exchange Commission officials They were also tripped of the various initiatives taken by SEC
in this regard These inputs have been utilized while drafting this report
RECOMMENDATIONS OF THE COMMITTEE
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services will be
required to apply to the respective stock exchange for a formal permission The stock exchange
should grant approval or reject the application as the case may be and communicate its decisions
to the number within 30 calendar days of the date of completed application submitted to the
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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exchange The stock Exchange before giving permission to brokers to start Internet based
services shall ensure the fulfillment of the following minimum conditions
Net worth Requirement
The broker must have a minimum net worth of Rs 50 lacs if the broker is providing the Internet
based facility on his own However if some brokers collectively approach a service provider for
providing the interest trading facility net worth criteria as stipulated by the stock exchange will
apply The net worth will be computed as per the SEBI circular no FITTCDCCIR-198 dated
June 16 1998s
Operational and System Requirements
Operational Integrity
The stock Exchange must ensure that the system used by the broker has provision for security
reliability and confidentiality of data through use of encryption technology This stock exchange
must also ensure that records encryption technology The stock Exchange must also ensure the
records maintained in electronic from by the broker are not susceptible to manipulation ldquo
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup systems and data
storage capacity The stock Exchange must also ensure that the workers have adequate system
capacity for handling data transfer and arranged for alternative means of communications in
case of Internet link failure
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Qualified Personnel
The stock Exchange must lay down the minimum qualification fro personnel to ensure that the
broker has suitably qualified and adequate personnel to handle communication including
instructions as well as other back office work which is likely to increase because of higher
volumes
Written Procedures
Stock Exchange must develop uniform written procedures to handle contingency Tuitions and
for review of incoming and outgoing electronic correspondence
Signature Verification Authentication
It is desirable that participants use authentication technologies For this purpose is should be
mandatory for participants to use certification agencies as and when notified by
GovernmentSEBI They should also clearly specify when manual signatures would be required
Client Broker Relationship
Know Your Client
The stock Exchange must ensure that brokers have sufficient verifiable information about
clients which would facilitate risk evaluation of clients
Broker- Client Agreement
Brokers must enter into an agreement with clients spelling out all obligations and rights This
agreement should also inter alia the minimum service standards to be maintained by the broker
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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for such service specified by SEBIExchange for the internet based trading from time to time
Exchange will prepare a model agreement for this purpose The broker agreement with clients
should not have
Investor Information
The broker web site providing the internet based trading facility should contain information
meant for investor protection such as rules and regulations affecting client broker relationship
arbitration rules investor protection rules etc The broker web site providing the Internet based
trading facility should also provide and display prominently hyper link to the web sitepage on
the web site of the relevant stock exchange (s) displaying rules regulations circulars
Tickerquoteorder book displayed on the web-site of the broker should display the time stamp as
well as source of such information against the given information
OrderTrade Confirmation
OrderTrade confirmation should also be sent to the investor through email at client‟s discretion
at the time specified by the client in addition to the other made of display of such confirmation of
real time basis on the broker web site The investor should be allowed to specify the time interval
on the web site itself with in which he would like to receive this information through email
Facility for reconfirmation of orders which are larger than that specified by the members risk
management system should be provided on the internet based system
Handling Complaints by Investors
Exchanges should monitor complaints from investors regarding service provided by brokers to
ensure a minimum level of service Exchange should have separate cell specifically to handle
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Internet trading related complaints It is desirable that exchanges should also have facility for on-
line registration of complaints on their web site
Risk Management
Exchanges must ensure that brokers have a system-based control on the trading limits of clients
and exposures taken by clients Brokers must set predefined limits on the exposure and turnover
of each client The broker systems should be capable of assessing the risk of the client as soon as
the order comes in The client should be informed of acceptancerejection of the order within a
reasonable period In case system based control rejects an order because of client having
exceeded limits etc the broker system may have a review and release facility to allow the order
to pass through
Contract Notes
Contract notes must be issued to clients as per existing regulations within 24 hours of the trade
execution
Cross Trades
As a matter of abundant precaution the committee seeks to reiterate that as III the case of
existing system brokers using Internet based systems for routing client orders will also not be
allowed to cross trades of their clients with each other All orders must be offered to the market
for matching It is emphasized that in addition to the requirements mentioned above all existing
obligations of the broker as per current regulation will continue without changes Exchanges may
also like to specify more stringent standards as they may deem fit for allowing Internet based
trading facilities to their brokers
Enforcement
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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A separate working group has been set to look into the surveillance and enforcement related
issues arising due to Internet based securities tradingHowever general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations 1995) would apply to all transactions
involving securities or financial services regardless of the medium
Chapter-4
DEFINITIONS AND EXPLANATION
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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DEFINITIONS AND EXPLANATIONS
1 SHARES-
In everyday language when we talk of shares we normally refer to equity shares or ordinary
shares of a company The terms shares and stock essentially means the same things the letter
being a more common American usage
An equity share is evidence of ownership in a company The physical evidence of this ownership
of this document is called the Share Certificate Now days shares are usually kept in electronic
or dematerialized form with a depository participant (Banks brokers financial institutions) of
the National Securities Depository Limited (NSDL) However if one wants one can still hold the
share in the physical form which has your name endorsed on it and is proved that you are a part
owner of the company Your ownership rights are proportionate to the number of share you own
Companies issue shares of a certain fixed denomination called face value or par value of that
share which is clearly indicated on a share certificate in the physical form
2 INVESTMENT -
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Investment essentially refers to what you do with your savings in order to preserve them and
make them grow or yield an income If you keep your savings in the form of cash they are
certainly going to diminish in value because the purchasing power of money is constantly going
down as a result of inflation (The value of money is judged by the quantity of goods and
services you can buy with it) Therefore if you want to maintain or increase the value of your
savings you have to keep them in forms other than cash This is what investment is all about
deployment of your saving with the intentions of preserving or increasing their value This
deployment can be done by using your savings to buy land residential properties commercial
properties gold jewelry works of art fixed deposits in banks and companies shares bonds
infact anything whose value is likely to either remain constant or appreciate with time
Investment also refers to using ones savings with the intention of earning an income
3 DEMAT AC -
On doing an online business ever customer has to open and demat account in any bank
whichever he likes Demat account is the account in which the trading done by the customer is
mentioned If the customer sales or purchases any share the details of this sale and purchasing
are in demat account This account contents the name of the shares and also the number of shares
held Or sold and also the rate of the share with this demat account It is also
compulsory for every customer to open a saving account in the bank because the amount which
is to be received when the customers sales the shares are transferred from the demat account to
the saving account It is the responsibility of the customers that the share which he purchased or
sales are properly transferred in demat account from the stock exchange whichever he deals The
amount of dividend whichever to be received on the shares when held for one or more year are
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1 38 | P a g e
also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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also transferred in this demat account It is compulsory for every customer to have a PAN no
For opening a demat account If PAN no Is not there is no chance for the customer to do any
trading on line There is no limit of amount to deal in this account
4 CIRCUIT LIMIT-
While issuing the shares to the public the company has to fix a particular limit of the rate of the
per share this limit is called as circuit limit This circuit limit is generally fixed on the percentage
basis This circuit limit is applied to both the ends of the share That is to the upper limit also and
also to the lower limit actually circuit limit is of two types
1) Upper limit
2) Lower limit
It is compulsory for every company to fix the circuit limit This limit is beneficial to both The
customer and also to the company generally every company fix below 10of the rate of per
share
5 UPPER LIMIT -
While issuing the shares to the public the company has to fix the upper limit this limit is also
calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor
that the customer doing the trading can sell above the level
For ex Customer wants to sell a share which is of Rs10 and its
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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upper limit is fixed at 10 so in this case the person will have to sell it at Rs11 or the rate which
ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit
to the rate of share the maximum amount of the shares is Rs 11 only and not above
6 LOWER LIMIT -
At the time of issuing share the company has to fix the lower limit also This lower limit is
calculated on the basis of the rate of the shares This limit bears the same percentage which is
mentioned for the upper limit of the share Like upper limit in this limit also the share minimum
rate of the share is fixed the customer who wants to see the holding shares has to first consider
the upper amp lower limit of the share he cannot sell the share below the lower limit and not above
the upper limit like the upper limit Percentage generally in this limit also the percentage is below
10 of the face value of the shares the percentage is below 10 of the face value of the shares
the percentage of the upper amplower limit is equal to every type of share
For ex Suppose the person wants to sell the shares and the rate of the share is Rs 10- and the
lower limit percentage is 10 of the rate So in this case the person cannot sell the share at
below Rs 9- He will have to sell at above Rs 9- or up to the upper limit of the share
7 SENSEX-
When the shares are issued to the public the stock exchange gives a particular group to the
company For ex The Reliance Group is given the group ldquoArdquo like this there are several
companies which fall in ldquoArdquo Group The weightage mean is calculated according to its equity
when all the companies of Group ldquoArdquo has calculated this weightage mean they are added all
together when this addition is done the result which comes down is known as ldquoSensexrdquo
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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The trading of shares of ldquoArdquo group is totally depended on this sensex value The price of the
share rises this sensex value also rises and when the price of this share comes down the sensex
value also comes down With the sensex
8 SCRIPTS-
The company which has more than one working area it has to issue the share separately than
that company is the company which has the script of its name For Ex The Reliance this
company has its several working area Namely Reliance Capital Reliance Infocom Reliance
Energy Reliance Industry So reliance company issues separate share for separate working area
but the bold name which is given to the working area is ldquoReliancerdquo So in this case Reliance has
its own scripts Other example Ambuja Birla Etc
9 GROUPS-
When the shares are issued by the company they are given the particular group by the Stock
exchange according to its demand in the market There are mainly 7 groups The scripts traded
on the BSE have been classified into bdquoA‟‟B1‟‟B2‟‟C‟‟F‟ and bdquoZ‟ groups The bdquoA‟ group
represents those which are in the carry forward system The bdquoF‟ group represents the debt market
segment (fixed income securities) The Z group scripts are of the blacklisted companies The bdquoC‟
group covers the odd lot securities in bdquoA‟ bdquoB1‟amp‟B2‟ groups
10 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
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
822019 Ishan Report
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1 44 | P a g e
Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
822019 Ishan Report
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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Orders are limited by a fixed price Eg bdquobuy Reliance Petroleum at Rs50‟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 Rs50
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 ldquobuy BRC 100 shares around Rs40rdquo
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 Eg Sell BRC limited at Rs24 stop loss at Rs22
11 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
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
822019 Ishan Report
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
822019 Ishan Report
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1 49 | P a g e
Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
822019 Ishan Report
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1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
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1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
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or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
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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 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
chapter-5
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COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
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1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
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1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
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1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
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1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
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1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
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1 43 | P a g e
COMPANY PROFILE
Overview
Edelweiss A rare flower found in Switzerland You will discover in our identity A graphic
flower that represents ideas Around it the protective arms of the letter bdquoe‟ We believe ideas
create wealth but values protect it
It is the practice of this core thought that has led to Edelweiss becoming one of the leadingfinancial services company in India Its current businesses include investment banking securities
broking and investment management We provide a wide range of services to corporations
institutional investors and high net-worth individuals
The core inspiring thought of bdquoideas creating wealth and values protecting it‟ is translated into an
approach that is led by entrepreneurship and creativity and protected by intellectual rigour
research and analysis
Edelweiss Broking Limited is one of the leading and fastest growing financial services company
in India Founded in 1996 Edelweiss Capital including its subsidiaries offers a wide array of
multi-line solutions including Investment Banking Institutional Equities Asset Management
Wealth Management Private Client Business Insurance Brokerage Wholesale Financing and
Treasury Operations
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1 44 | P a g e
Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
822019 Ishan Report
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1 45 | P a g e
expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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1 46 | P a g e
Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
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1 47 | P a g e
Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
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Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
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ldquoIdeas Create
Value Protectrdquo
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Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
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50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
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1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
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1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
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1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
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1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
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1 44 | P a g e
Edelweiss Asset Management Limited constitutes a team of experienced professionals from the
Financial Services industry The management team is highly qualified and carries a rich
experience of working in the mutual fund industry and finance related areas Edelweiss Asset
Management Limited will follow a research based and process oriented investment approach
Edelweiss Asset Management Limited will observe the highest ethical standards while deploying
investors‟ monies and servicing investors and dealing with business partners
Service Approach
Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients
We work closely with our clients to equip them with the ability to address large fast-growingmarket opportunities Our emphasis on long-term relationships also means that we have a
significant ongoing involvement with almost all of the clients that we work with
Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of
professionals Each team is led by senior personnel and is highly research and ideas driven Weplace strong emphasis on confidentiality and integrity in a sensitive business environment Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes
teamwork and intellectual rigour Our team is encouraged to display higher levels of initiative
drive and hunger for learning and taking on additional responsibility
Professional Integrity
We place a strong emphasis on confidentiality honesty and integrity in our business dealings We
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 4564
1 45 | P a g e
expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
822019 Ishan Report
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Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
822019 Ishan Report
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1 48 | P a g e
Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
822019 Ishan Report
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1 49 | P a g e
Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
822019 Ishan Report
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1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
822019 Ishan Report
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1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
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1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
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S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
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Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
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1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
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1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
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Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
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30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
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Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
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Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
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expect our people to maintain high ethical standards both in their professional and personal lives
We strive to be fair in all our dealings We respect our competitors
Research Driven
All our businesses are built on a research and analytics foundation Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability toidentify emerging trends and themes early We seek to provide the highest quality research and
investment opinions to our clients
Board of Directors
Mr Rashesh Shah Chairman CEO and Founder of Edelweiss MrRashesh Shah has previously worked for ICICI
(now ICICI Bank India‟s largest private sector financial conglomerate) where he handled a
World Bank aided program for export-oriented projects
Mr Venkat Ramaswamy
Executive Director and Head of Investment Banking and Co-Founder of Edelweiss Mr Venkat
Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI
where he worked on project-based lending to large corporates analyzing and evaluating
investment decisions He subsequently managed the Spartek Fund that focused on
making equity investments in small and emerging companies
Mr Narendra JhaveriMr Jhaveri on his return from UK after a brief stint with NCAER as Senior Economist joinedthe Economics Dept of the Reserve Bank of India in 1965 He shifted to ICICI in 1974 as Chief
Economist and then moved to project finance He also serves as the Chairman of the IMC
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1 46 | P a g e
Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
822019 Ishan Report
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1 47 | P a g e
Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
822019 Ishan Report
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1 48 | P a g e
Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
822019 Ishan Report
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1 49 | P a g e
Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
822019 Ishan Report
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1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5164
1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
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1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
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1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
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1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
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1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
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1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
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1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
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1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
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1 46 | P a g e
Economic Research and Training Foundation
Mr Kunna Chinniah
Mr Kunna Chinniah is Executive Vice President with GIC Special Investments (GIC SI) GIC
SI is the private equity arm of the Government of Singapore Investment Corporation (GIC)Mr Chinniah oversees the Asian private equity business for GIC SI Mr Chinniah began his
career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the MiddleEast
Mr PN Venkatachalam
Mr PN Venkatachalam has over 40 years of experience in the banking sector in India and
abroad Mr Venkatachalam joined the State Bank of India as a probationary officer on April
1967 and retired on March 2004 as a managing director
Mr Navtej S Nandra
Mr Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd
where he is a member of the audit and remuneration committees He is also Senior Advisor toDTZ Holdings plc a global real estate management and consultancy company headquartered inLondon Mr Nandra brings a wealth of global experience in helping financial services
companies define and implement performance improvement and achieve growth
Mr Berjis Desai
Mr Berjis Desai is an Independent Director on the Board of Directors of the Company Mr
Desai is the Managing Partner J Sagar amp Associates one of Indias leading law firms He holdsa Masters in Law He is an Advocate and a Solicitor
822019 Ishan Report
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1 47 | P a g e
Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
822019 Ishan Report
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1 48 | P a g e
Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 4964
1 49 | P a g e
Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5064
1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5164
1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
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1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
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1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
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1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
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1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
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1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
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1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
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1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
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1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
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1 47 | P a g e
Senior Management Team
Rashesh Shah
Chairman amp CEO
Deepak Mittal
CEO Edelweiss Tokio Life
Insurance Company Limited
Naresh Kothari
President amp Co-head
Institutional Equities
Private Client Services
Peeyoosh Chadda
Co-head - Asset Management
Vikas Khemani
Executive Vice President amp
Co-head - Institutional Equities
Venkat Ramaswamy
Executive Director
Himanshu Kaji
CFO amp Group COO
Rujan Panjwani
President amp Co-head - Asset
Management
Rajeev Mehrotra
Executive Vice President amp
Head - Special Opportunities
Investments
Ravi Bubna
Executive Vice President
amp Co-Head - ECL Finance
822019 Ishan Report
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1 48 | P a g e
Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 4964
1 49 | P a g e
Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5064
1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5164
1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5264
1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5364
1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
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1 48 | P a g e
Our Principles
Thinking and transparent organization
Fair to our investors partners and employees
Ethical in all our actions
Focus on growth
Our assets are our stakeholders reputation and capital
Creativity and innovation in everything we do
822019 Ishan Report
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1 49 | P a g e
Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5064
1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5164
1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5264
1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5364
1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 4964
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Business Principles
bdquoIdeas create values protect‟ is how we define what Edelweiss believes in But when we saybdquovalues protect‟ what do we mean Here‟s a handy guide to the values and principles we will live
by and live up to
We will be a Thinking Organization We will constantly bring bdquothought‟ to everything we
do Our clients‟ and our own success depends on our ability to use greater ideation andmore imagination in our approach
We will be Fair to our clients our employees and all stake holders We want our clients
and our employees to be bdquoricher‟ for their relationship with us
We will take care of our People seriously Our policies ndash in spirit and in letter ndash willensure transparency and equal opportunity for all We will go beyond the normal goals of
attracting recruiting retaining and rewarding fine talent We will ensure that everyindividual in Edelweiss has an opportunity to achieve their fullest potential
We will operate as a Partnership internally and externally Though individuals are veryoften brilliant we believe teamwork and collaboration will always ensure a better and
more balanced organization We will also treat our clients as partners and show them the
same respect and consideration that we would toward our internal team membersWe will focus on the Long Term Though the world will change a lot in the coming years
and our assumptions for the future may not hold up we will reflect on the long-term
implications of our actions Even when making short-term decisions we will be aware of
the long-term implicationsWe will focus on Growth for our clients employees and shareholders
Our Reputation and image is more important than any financial reward Reputation ishard to build and even harder to rebuild Reputation will be impacted by our ability tothink for our clients maintain confidentiality and by our adherence to our value system
We will Obey and Comply with the rules of the land We will maintain the higheststandard of integrity and honesty When we are unclear we will seek clarifications
We will respect Risk Our business is going to be a constant challenge of balancing risk
and reward Our ability to constantly keep one eye on risk will guide us through this fine
balance
Our Financial Capital is a critical resource for growth We will Endeavour to growprotect and use our financial capital wisely
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5064
1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5164
1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5264
1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
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1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
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1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5064
1 50 | P a g e
ldquoIdeas Create
Value Protectrdquo
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5164
1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5264
1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5364
1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5164
1 51 | P a g e
Chapter-6SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5264
1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5364
1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5264
1 52 | P a g e
ADB PLANS OF EDELWEISS BROKING LTD
Edelweiss broking offers various subscription plans which are suited to the different trading
patterns of clients Clients depending on their expected turnover can choose a subscription plan
which will determine the brokerage rate applicable to them These are value plans and offerclients with high turnovers a decrease in their effective brokerage rate Each plan has an
associated equivalent delivery turnover limit and validity period
Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) 10 +
((Options Strike Price + Premium) X Lot size 10)
Plan SubscriptionFee
EquivalentDeliveryTurnover
Limit
ValidityPeriod
Brokerage rates on crossing equivalentdelivery Turnover Limit
Delivery Futures and IntradayCash
S01 Rs 1250 Rs 200000 6 Months 045 0045
S02 Rs 2450 Rs 750000 12 Months 040 0040
S03 Rs 4950 Rs 1800000 12 Months 030 0030
S04 Rs 9950 Rs 4500000 12 Months 025 0025
S05 Rs 15000 Rs 9000000 12 Months 018 0018
S06 Rs 50000 Rs 45000000 12 Months 013 001
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5364
1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5364
1 53 | P a g e
S07 Rs 110000 Rs125000000
12 Months 010 001
S08 Rs 111111 Rs200000000
3 Months 010 001
Rs 1250 subscription plan includes account opening fee at a discounted rate of 400against a standard rate of Rs 750 For higher value subscription plans account opening
fee is waived off and then entire value translates into equivalent delivery turnover limit Subscription fee also includes service tax Thus a client does not have to pay anything
extra towards service tax under a subscription plan which at prevailing rates is 1030 of
Brokerage Amount
On completion of the Validity Period of the Plan the client can either renew or upgrade the Plan
If the client does not renew or upgrade the Plan the client will be shifted to Silver slab of the
standard brokerage plan offered by Edelweiss and thus lose the benefits of being in asubscription plan
NEW ADB PLANS ndash Comparison with competitors
Longer validity period
Validity of edelweiss plans is 1 yearCompetitors IIFL and KOTAK securities havesubscription plans with 6 months validity
ldquoMinimum per share brokeragerdquo is least in the industry
We charge 1 paisa Others like Share khanICICI and IIFL charge 5 paisa on smaller denomination plans
All plans inclusive of service tax so effectively we are charging less as compared to
competitors
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5464
1 54 | P a g e
Comparison with competitors ndash India Infoline (IIFL)
Edelweiss - Effective rates IIFL - Effective rates
Subs fees inc
Of ST
Delivery() Intraday() Futures() Option(rslot) ValiditySubs fees
inc Of ST DElivery Intraday Futures Option
Minshare
brokera
ge Vali
2450032 0032 0032 816 12 M
250
0
03
50040
004
0
High of 1 or Rs
90
5
4950028 0028 0028 725 12 M
500
0
03
00030
003
0
High of
1 or Rs80
5
9950024 0024 0024 635 12 M
100
00
02
50030
003
0
High of 1 or Rs
70
5
15000018 0018 0018 544 12 M
15000
020
00200020
High of 1 or Rs
60
4
30000015 0015 0015 408 12 M
250
00
01
50020
002
0
High of 05 or
Rs 60
3
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5564
1 55 | P a g e
50000012 0012 0012 363 12 M
450
00
01
00010
001
0
High of
05 or
Rs 50
1
75000 010 0010 0010 272 12 M750
00
01
0 0009000
9
High of
04 orRs 35
1
100000009 0009 0009 227 12 M
100
000
01
00009
000
9
Hig of
03 orRs 25
1
Validity of India Infoline plans is just 6 months
ndash For comparison 2500 Rs plan of IIFL should be compared with 4950 Rs plan
of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt
that we offer better pricing to clients
IIFL charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with competitors - ShareKhan
Edelweiss - Effective rates ShareKhan - Effective rates
Subs Fee
inc of ST
Delivery
()
Intraday
()
Futures
()
Options(Rs perlot)
Minshare
Broker
age (p)
ValiditySubs Fee
excl of STDelivery
DeliveryMin(paisa)
Intraday
Intra
dayMin(paisa
)
FuturesFutures Min(p)
Options Va
2450 032 0032 0032 816 112
M2000
040
10
0035
5
0035
1
Higher
of 150or Rs 80
4950 028 0028 0028 725 112M
6000025
50025
50025
1
Higher
of 1 or
Rs 70
9950 024 0024 0024 635 1 12M
10000 022
4 0022
4 0022
1 Higherof 1 or
Rs 60
1500
0018 0018 0018 544 1
12
M18000
020
4
0020
4
0002
1
Higher
of 1 orRs 50
3000
0015 0015 0015 408 1
12
M30000
018
3
0015
3
0015
1 Higher
of 05
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5664
1 56 | P a g e
or Rs 40
50000
012 0012 0012 363 112M
60000015
20010
20010
1
Higher
of 05
or Rs 30
100000
010 0010 0010 272 1 12M
100000
010
2 0007
2 0007
1 Higherof 05
or Rs 25
Lower Delivery rates for plans above 30K
Effective delivery rates for lower plans are also competitive as Min share brokerage
for SK starts from 10p
Options rates are competitive as we charge flat rate while SK charges higher of
fixed rate or of premium
SK charges Service Tax separately Our plans are inclusive of Service Tax
Comparison with Competitors ndash Kotak Securities
Edelweiss - Effective rates Kotak - Effective rates
Subs Fee inclusive
of ST
Deliv
ery()
Intra
day
()
Futu
res()
Opti
ons
(Rsper
lot)
Valid
ity
Subs
Fee
exclusive of
ST
Deliver
y
Intra
dayFutures Options Vali
1000 0 350
040 04
Higher of
1 or Rs
100
6 M
2450 032 0032 0032 816 12 M 2500 0 300
0360 036
Higher of
1 or Rs
80
6 M
4950 028 0028 0028 725 12 M 4000 0 250030
0030
Higher of
1 or Rs
60
6 M
9950 024 0024 0024 635 12 M
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5764
1 57 | P a g e
Validity of Kotak‟s plans is just 6 months
ndash For comparison 2500 Rs plan of Kotak should be compared with 4950 Rs plan of
Edelweiss as client will have to buy a 2500 plan twice in a year With respect tothat our new plans are competitive
Kotak charges Service Tax separately Our plans are inclusive of Service Tax
Life time validity plans
Inclusive of Service Tax Exclusive of Service Tax
Subs
Fee(Rs)
Subs
Fee
after
conside
ring S
T103
Val
idit
y
Per
iod
(Ye
ars)
Deli
very()
Intra
day
Trad
ing()
Futu
res()
Op
tio
ns
(R
s
pe
r
lot)
Deliv
ery()
Intra
day
Trad
ing()
Futu
res()
Opt
ions
(Rs
perlot)
15000 13599 15 045 0045 0045 75 041 0041 0041 68
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5864
1 58 | P a g e
30000 27199 15 030 0030 0030 65 027 0027 0027 59
50000 45331 15 025 0025 0025 55 023 0023 0023 50
75000 67996 15 020 0020 0020 45 018 0018 0018 41
10000
0 90662 15 015
0015
0015 35 014 0014 0014 32
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 5964
1 59 | P a g e
Chapter ndash 7 PROJECT ANALYSIS
PROJECT ANALYSIS
SWOT ANALYSIS OF EDELWEISS BROKING LTD
Strengths
Strong credibility among investors because of its heritage
Excellent reputation among the business society
Capability of providing superior customer service
Quality research team(EDELSTAR)
Abundant information about economy and companies
Ability to attract and retain superior and quality personnel
Highly sophisticated infrastructure
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6064
1 60 | P a g e
Efficient research and analysis team which by interpreting the economy and company‟s
performance accurately is enhancing the profitability of the client
Weaknesses
Inadequate product awareness among the retail investors
Brokerage is high when compared to its competitors like Indiainfoline and Religare
Brand awareness is low in the financial market
Promotional activities conducted by the company are not at par with the other firms
Opportunities
Lucknow covers only 2 of investors which gives huge potential for the market
penetration
Bullish phase of the market attracts investing public
Access to the BSE online space for the retail investors creates opportunity to increase
client base
Awareness campaigns about online trading create new market
Threats
Availability of Unit Linked Insurance Policies (ULIP‟s) and mutual funds in the market
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6164
1 61 | P a g e
Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium
OBSERVATIONS
Fluctuations are more in secondary market than any other market
There are more speculators than investors
Information plays a vital role in the secondary market
Previously rolling settlement is T+5 days now it changed to T+2 days
It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers
The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are EDELWEISS BROKING LTDShare khan India bulls kotakstreet
ICICI direct and indiainfoline
CONCLUSION
Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system things have changed dramatically over
the last 3 to 4 years New and advanced technologies have breached geographical and
cultural barriers and have brought the countrywide market to doorstep
In the present scenario to compete with the Broker‟s would require sound infrastructure
and trading as per international standards
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6264
1 62 | P a g e
The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading delivering settlement system with
adequate protection to investors The trading of EDELWEISS of the first day was Rs 18
crores
Due to invention of online trading there has been greater benefit to the investors as they
could sell buy shares as and when required and that to with online trading
The broker‟s has a greater scope than compared to the earlier times because of invention
of online trading
The concept of business has changed today this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients
RECOMMENDATIONS
I recommend the exchange authorities to take steps to educate Investors about their rights
and duties I suggest to the exchange authorities to increase the investors‟ confidences I
recommend the exchange authorities to be vigilant to curb wide fluctuations of prices
The speculative pressures are responsible for the wide changes in the price not attracting
the genuine investors to the greater extent towards the market
Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits therefore the authorities of the exchange should be more
vigilant to curb the speculation
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6364
1 63 | P a g e
Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading
Effective monitoring of transaction have to be done in avoid uncertainties
Internet cost have to be reduced in order attract online trading users
Transparency has to maintain in the Share Markets
BIBILOGRAPHY
BOOKSSecurity Analysis And Portfolio Management
-
WEBSITES wwwedelweissin
wwwShare Khancom wwwbseindiacom wwwsebicom wwwmoneycontrolcom wwweconomictimescom wwwnseindiacom
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464
822019 Ishan Report
httpslidepdfcomreaderfullishan-report 6464