A

Project Report

On

ONLINE TRADING

Of

JRG Securities

Submitted in partial fulfillment of the requirement for the award of degree of

POST GRADUATE DIPLOMA IN MANAGEMENT(FINANCE)

By

RATHNAM RAMCHENDER

PGDM/09-11/25

NOVA BUSINESS SCHOOL

(affiliated to autonomous university)

Hyderabad

2009-2011

1

CERTIFICATE

This is to certify that R.RAMCHENDER, bearing of

reg.no:PGDM/09-11/25 Student of PGDM, from NOVA BUSINESS

SCHOOL, HYDERABAD, has completed the project titled “FINANCE”

Curriculum in our Organization.

He has done the project using ONLINE TRADING during the

period 17-05-2010 to 07-07-2010, Supervision of Mr.V.Bhushan, from

JRG SECURITIES, HYDERABAD.

He has completed the assigned project well within the time

frame. He is sincere, hardworking and his conduct during period is

commendable.

We wish all the best in his future endeavor.

For JRG SECURITIES,

2

DECLARATION

I Ramchender Rathnam here by declare that the project report on “ONLINE

TRADING” submitted by me to “NOVA BUSINESS SCHOOL” as partial

fulfillment for the award of my own and it has not been submitted to any

other institution or published any where before.

Date:

RATHNAM RAMCHENDER

Place : Hyderabad

Ht no:PGDM/09-11/25

3

ACKNOWLEDGEMENT

I take this opportunity to acknowledge, all the people who rendered their

valuable advice in bringing the project to function.

As part of curriculum at NOVA BUSINESS SCHOOL under AUTONOMOUS

UNIVERISTY Hyderabad the project enables us to enhance our skills expand our

knowledge by applying various theories concepts and laws to real life scenario

which would further prepare us to face the extremely competitive corporate

world in near future.

I respectfully express my gratitude for giving me opportunity to undertake this

project work.

I express my gratitude to my faculty guide Miss Sangamitra das (Finance lecturer)

Nova Business School, Hyderabad for his unparallel support through out my

project.

I have tried my level best to put my experience and trading in writing this reports

I am grateful to jrg securities as an organization and its various employees for

helping me to learn and explore may fields.

4

ABSTRACT

The establishment of costs relating the responsibilities of executives to the requirement of a policy and the continuous comparison of actual with cost sheet results either to secure by individual action the objectives of that policy or to provide a basis for its revision

The project is taken up with the object to study “ ONLINE TRADING “ IN JRG SECURITIES.

The project is mainly a study to examine the cost structure to examine the cost structure of product in Sagar Cement Limited to examine which production is more profitable and to compare the position of past with present and to position itself.

It also analyze the variations. The study helps to show the relative importance of fixed cost and Variable cost with the help of breakeven chart. It helps to know the amount over head costs at various levels of operations. This study helps to prepare budgets such as flexible budgets.

INDEX5

chapter Content Page no

3 Company profile 63-73

4 Analysis & Interpretation 74-82

5 Findings & Suggestions 83-90

6 Bibliography & Questionare 91-94

TABLE LIST OF TABLES PAGE NO

6

1 Introduction

BRIEF ABOUT THE STOCK EXCHANGE

NEED FOR STUDY

OBJECTIVES OF THE STUDY

RESEARCH METHODOLOGY

LIMITATIONS OF THE STUDY

09-19

2 Introduction to Online

Trading

DEFFERENCE BETWEEN ONLINE &OFFLINE TRADING

INVESTMENT ADVISORY SEVICES

BENEFITS OF ONLINE BROKING

PROCESS OF ONLINE TRADING

20-62

1 Indian Capital Market at Glance

2020 century

21st century

12-13

2 Share of Online Trading in Total Cash Turnover of National Stock Exchange

Table 1.1(year 2005)

Table 1.2(year 2006)

Table 1.3(year 2007)

Table 1.4(year 2008)

Table 1.5(year 2009)

30-34

TABLE LIST OF FIGURES PAGE NO

1 Problems of Online Broking 53

2 Analysis of Interpretation

For how long you have been trading

75-82

7

with online trading

How will you describe your experience with online trading till date

What amount of money you invest normally

How often do you trade

Which trading you prefer

Whether online trading settled in Indian investor psyche

What shortcomings do you feel in Indian online trading

Which media would you prefer the most for investment

8

CHAPTER-1ONLINE TRADING

9

INTRODUCTION

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 and investments 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 necessary for creating conductive

climate for investment and economic growth.

10

Capital market Segment – Primary And Secondary

Broadly , the comprises of two segments – the new issue market which

is commonly known as primary market and the stock market which is known as

secondary market.

1.PRIMARY

2.SECONDERY

Primary

A primary offering, such as with a corporate bond, means you are buying it

directly from the issuer, at par value, usually. A secondary market is where you

sell or buy existing issues. I.E. If you bought a bond last year, now need to get

your principal, you can sell it in the secondary market. You may not get par

value. If rates are up since you bought the bond, then you will likely have to sell it

at a discount to be able to get rid of it. If rates have fallen since you bought it, you

could get a premium for it.

Secondary

The market where securities are traded after they are initially offered in the

primary market. Most trading is done in the secondary market. To explain further,

it is trading in previously issued financial instruments. An organized market for

used securities. Bombay Stock Exchange (BSE), National Stock Exchange NSE,

bond markets, over-the-counter markets, residential mortgage loans,

governmental guaranteed loans etc

11

Secondary Market refers to a market where securities are traded after being

initially offered to the public in the primary market and/or listed on the Stock

Exchange. Majority of the trading is done in the secondary market. Secondary

market comprises of equity markets and the debt markets. For the general

investor, the secondary market provides an efficient platform for trading of his

securities. For the management of the company, Secondary equity markets

serve as a monitoring and control conduit—by facilitating value-enhancing control

activities, enabling implementation of incentive-based management contracts,

and aggregating information (via price discovery) that guides management

decisions.

12

INDIAN CAPITAL MARKET AT GLANCE

2020th century

1908 Formulation of Calcutta stock exchange

1939 Formulation of Lahore and madras stock exchange

1940 Formulation of U.P and Delhi stock exchange

1956 Securities contract and regulation act enacted

1957 Scam of Haridas Mundhra

1988 Securities and exchange board of India set up

1991 Scam of MS Shoes

1992 SEBI given power Under SEBI act,1992

1993 Formation of National stock exchange

1995 HARSHAD MEHTA Scam

1995 SESA GOA Scam

1997 CRB scam

1998 BPL And Videocon Scam

21st century

2000 Depositories came into existence (electronic form of shares)

13

1800 Trading of shares of east India company in Kolkata And Mumbai

1850 Joint stock company came into existence

1860 Speculation and feverish dealing in securities

1875 Formulation of stock exchange of Mumbai

1894 Formulation of Ahmadabad stock exchange

2001 Ketan Parekh scam

2002 Start of rolling settlement and banning of Badla trading

2002 Introduction of T+3 settlement in April

2003 Introduction of T+2 settlement in April

2005 BSE Sensex touches all time high 6954 in January

2006 BSE Sensex touches all time high 12500,the highest intraday fall of 1100

2007 BSE reaches the level of

2008 BSE touches all time high in January 2008

2008 Sensex saw its highest ever loss of 1,408 points at the end of the session.

2008 Sexsex saw its 15 month low,from its all time high

2009 Sexsex saw its down trend & highest ever loss because of Satyam case.

BRIEF ABOUT THE STOCK EXCHANGES

Stock Exchange is a market like any other centralized market where both

buyers and sellers come and conduct their business of purchase and sale of

shares & securities. In other words, it is a market place for shares and securities

where trading takes place in a controlled and protected environment.

14

MEANING OF STOCK EXCHANGE

A stock exchange, share market or bourse is a corporation or mutual

organization which provides "trading" facilities for stock brokers and traders, to

trade stocks and other securities. Stock exchanges also provide facilities for the

issue and redemption of securities as well as other financial instruments and

capital events including the payment of income and dividends. The securities

traded on a stock exchange include: shares issued by companies, unit trusts and

other pooled investment products and bonds.

To be able to trade a security on a certain stock exchange, it has to be

listed there. Usually there is a central location at least for recordkeeping, but

trade is less and less linked to such a physical place, as modern markets are

electronic networks, which gives them advantages of speed and cost of

transactions. Trade on an exchange is by members only. The initial offering of

stocks and bonds to investors is by definition done in the primary market and

subsequent trading is done in the secondary market. A stock exchange is often

the most important component of a stock market. Supply and demand in stock

markets is driven by various factors which, as in all free markets, affect the price

of stocks (see stock valuation).

There is usually no compulsion to issue stock via the stock exchange

itself, nor must stock be subsequently traded on the exchange. Such trading is

said to be off exchange or over-the-counter. This is the usual way that bonds are

traded. Increasingly, stock exchanges are part of a global market for securities.

15

CONCEPT OF SHARE TRADING

The concept of share broking emerged after the establishment of the

joint stock companies. The ownership of the companies was divided into small

parts and that every part was called share. So, the term “Share” denominates

some part in the ownership of the company. The shares are freely transferable

subject to the some certain restrictions. When the need was felt to sell the shares

by the owner of the shares, it was difficult to find out the buyers of the shares

who want to buy the shares at the price the seller want to sell. At that time a need

was felt to bring the buyers and sellers on a common platform. To solve this

problem, a group of persons came into picture, which used to bring the buyers

and sellers together for the trade of the shares. These persons are called the

share Brokers who find the persons who wish to buy or sell their securities. The

whole process of finding the buyers and sellers of the securities by the brokers is

called the Share Broking.

The origination of the Indian securities market may be traced

back to 1975, when 22 enterprise brokers under a Banyan tree established the

Bombay Stock Exchange (BSE). Over the last 130 years, the Indian securities

market has evolved continuously to become one of the most dynamic, modern

international standards both in terms of structure and in terms of operating

efficiency.

PERIOD OF THE STUDY

The present study of online trading in motilal oswal financial services limited

covers 5 years from 2005,2006,2007,2008and2009.

NEED FOR STUDY

16

To know the operation of the company

To know the companys online trading in the above mentioned period.

To need for study is to improve the online trading position of the company

To analysis the existing situation of the company .

To improve the grey areas of the company .

The online department can implement and can get position result by

maintaining proper online trading reports.

Sources of data collection are:

For the successful research the manipulation of certain things, concepts, and Symbols

for the purpose of generalization is inevitable. Research is simply the pursuit of truth with

the help of the study

OBJECTIVES OF THE STUDY

1. To understand the appropriate organizational structure of the JRG securities .

17

2. To analyse the online trading and its process.

RESEARCH METHODOLOGY

The basic task of research is to generate accurate information for use in

decision making. Research can be defined as the systematic and objective

process of gathering, recording and analyzing data for aid in making business

decisions.There are basically two techniques adopted for obtaining information:

1. Primary Data

Primary Data is gathered specifically for the project at hand through

personal interviews with the accounts officers.

Secondary data is previously collected and assembled for some project

other than the one at hand. It is gathered and recorded by someone else prior to

current needs of the researcher. It is less expensive than the primary data.

2.SECONDARY DATA

Secondary data was collected from JRG SECURITIES

18

Scope of study:

The study is limited to JRG SECURITIES

Data Collection:

Data is collected from secondary sources.

19

LIMITATIONS

Despite of the training my level best, there were still some

limitation which I think remains there to draw fruitful

conclusion. There were some practical problem which

come across and could not be properly death with

The advisory services being promised by the brokers would

be of little use to investors looking for an insight into the

market.

As a client one will access the NSE through a server of the

online brokerage and this may involve queuing delays

If one like to ask his broker "Aaj kya achcha lag raha hai" he may

not be able to do so. If he want advice on a particular stock in his

portfolio he may not even be able to get that.

20

CHAPTER-2

INTRODUCTION TO ONLINE TRADING

21

INTRODUCTION TO ONLINE TRADING

Meaning of Online Trading

“Change is the law of nature”. There were times when man was a wanderer or

a normal. He himself had to go place to place in search of food, water and now

everything is available at your doorstep just at the click of the mouse. The growth

of information technology has affected almost all sectors of life. Internet has

enabled us to get every information at our doorstep. When Internet has affected

all sectors he could “stock markets” the most important player of the economy,

has remained far behind? Like all other sectors Internet has set its feet in the

stock markets also.

Internet trading commissions are clearly posted on the websites of the various

services, and are typically a fixed rate charge, depending upon the type of

security being traded and the size of trade. In theory, therefore, an Interest

investor always knows what commission he is being charged on each trade.

Internet investors can take as much time as they would like to take prior to

placing a trade order. Similarly the online investor likely does not have to worry

that his broker is making unauthorized trades. Since there is no individual broker

making a commission, the only person who is authorized to trace in a the

account is the actual investor. Furthermore, the internet investor can never

become a victim of excessive trading (where for the broker) since the investor

maintains total control over the number of transactions which take place in the

account.

22

All of these positive features of internet trading may lead the unwary investor to

believe that Internet trading is a way to take control of their finances and save

more money in the process. Unfortunately, this is not always the case. The

advantages of Internet stock trading have also its weaknesses and these

weaknesses present significant drawbacks for the average investor.

First and foremost, the average investor is not an expert in the financial markets.

There is a danger for allowing the autonomy of online trading to hull you into the

belief that you are an expert investor. An online investor sitting at home at a

personal computer also foregoes proper investment advice and financial

planning, perhaps among the most valuable services provided by traditional

brokers.

There are, of course, additional risks relative to performing transactions over the

Internet especially on a shared computer. Those people whom investors have

provided their account number and password can freely trade that account while

the investor will have little, if any, resource against the brokerage firm for the

breach of security.

23

When was online trading introduced in INDIA?

Online trading started in India in February 2000 when a couple of

brokers started offering an online trading platform for their customers.

ONLINE TRADING BY NSE & BSE

The central computer located at the Exchange is connected to the workstations

of the Brokers through satellite using Very Small Aperture Terminals (VSATs).

Orders placed at the Brokers' workstations reach the central computer and are

matched by the computer based on price and time priority.

Both the exchanges have switched over from the open outcry trading system to a

fully automated computerized mode of trading known as BOLT (BSE On Line

Trading) and NEAT (National Exchange Automated Trading) System. It facilitates

more efficient processing, automatic order matching, faster execution of trades

and transparency. The scrips traded on the BSE have been classified into 'A',

'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent those, which are

in the carry forward system (Badla). The 'F' group represents the debt market

(fixed income securities) segment. The 'Z' group scrips are the blacklisted

companies. The 'C' group covers the odd lot securities in 'A', 'B1' & 'B2' groups

and Rights renunciations. key regulator governing Stock Exchanges, Brokers,

Depositories, Depository participants, Mutual Funds, FIIs and other participants

in Indian secondary and primary market is the Securities and Exchange Board of

India (SEBI) Ltd.

24

DIFFERENCE BETWEEN ONLINE AND OFFLINEDIFFERENCE BETWEEN ONLINE AND OFFLINE TRADINGTRADING

Nevertheless, with all the convenience of online trading there are still

investors who prefer the old fashion way of offline trading. Offline trading has lost

some popularity but it is still the main form of investing. Offline trading offers

many benefits as well.

1. The one benefit that an investor appreciates the most is that they are not alone

when making investment decisions.

2. There are experienced and professional brokerage companies that handle

their investments for them.

3. Investors are not faced with the challenge of making these vital investment

decisions; especially, if they do not have the experience necessary to make the

appropriate investments.

4. Also, there is someone there to answer any questions that may cause

concerns. Not to mention, with offline trading mistakes are less likely to take

place. No one wants to throw their money away or stand by and watch someone

else throw their money away. It may be wise to hire a professional to assist you

in making the correct investment decisions if you feel you lack the knowledge

necessary.

25

Points of difference between online trading and ofline trading are as follows:

1. Online trading is very expensive as compare to manual trading or offline

trading.

2. Online trading consumes less time as compare to manual trading.

3. Online trading has very helpful to finding the records easily but offline trading

takes more time to finding the records.

4. In the help of online trading, there is no chance of any errors while doing the

trading. in offline trading there are some errors exist like barriers of

communication .

5. With the help of online trading, we know the international market rate of share

very easily.

26

DEMATERIALISATION OF SHARES

Dematerialization is the process wherein shares certificates or other securities

held in physical form are converted into electronic form and credited to demat

account of an investor opened with a depository participant. SEBI has made

compulsory trading of shares of all the companies listed in stock exchanges in

demat form with effect from 2nd January 2002.The procedure of opening a demat

account with DP is similar to opening an account with a bank.

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.

27

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 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.

28

REMATERILISATION OF SHARES

Rematerialization is the process of conversion of electronic holdings of

securities into physical certificate form. For rematerilisation of scrips, the investor

has to fill up a remat 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 prints the certificates and dispatches the same to the

investor.

Market timings:

Trading on the derivatives segment takes place on all days of the week (except

Saturdays and Sundays and holidays declared by the Exchange in advance).

The market timings of the derivatives segment are:

Normal Market / Exercise Market Open time : 09:55 hours

Normal market close : 15:30 hours

Set up cut of time for Position limit/Collateral value : till 15:30 hrs

Trade modification end time / Exercise Market : 16:15 hours

29

Advent of online trading

online trade using E*TRADE technology. what began with a single click over 16

years ago has now taken the world by storm. The concept was visualized by one

bill porter, a physicist and inventor with more than dozen of patents to his credit,

who provided online quotes and trading services to fidelity, Charles Schwab, and

quick and Reilly. This led bill to wonder why, as an individual investor, he had to

pay a broker hundreds of dollars for stock transactions. with incredible foresight,

he saw the solution at hand, some day everyone would own computers and

invest through them with unprecedented efficiency and control. And today his

dream has become a reality.

30

SHARE OF ONLINE TRADING IN TOTAL CASH TURNOVER OF NATIONAL STOCK EXCHANGE

Table 1.1(Year 2005)

MONTH CASH TURNOVER(cr.)

ONLINE TURNOVER(cr.)

RATIO(%)

January 64,762.24 1,923.34 2.97

Feb 48,289.18 1,559.07 3.23

March 43,159.93 1,302.69 3.02

April 48,971.31 1,425.83 2.91

May 54,690.14 1,981.36 3.62

June 61,585.35 2,142.41 3.48

July 78,877.63 2,720.59 3.45

August 85,346.58 3,301.88 3.87

September 1,03,345.50 3,825.88 3.70

October 1,15,595.32 4,344.33 3.76

November 92,885.71 4,024.02 4.33

December 1,10,372.64 5,876.21 5.32

Source: Ludhiana stock exchange

31

TABLE-1.2 (Year 2006)

MONTH CASH TURNOVER ONLINE TURNOVER RATIO

January 1,34,268.72 6,015.04 4.48

February 1,08,718.06 5,170.01 4.76

March 1,04,876.53 4,330.23 4.13

April 1,00,951.17 5,244.27 5.20

May 98,919.93 5,187.01 5.24

June 84,898.47 5,358.95 6.31

July 93,836.13 6,819.45 7.27

August 86,855.72 6,192.31 7.13

September 88,508.05 6,976,.41 7.88

October 75,697.32 6,261.90 8.27

November 82,035.27 7,490.16 9.13

December 1,15,593.10 11,000.62 9.52

Source: Ludhiana stock exchange

32

TABLE-1.3 (Year 2007)

Source: Ludhiana stock exchange

33

MONTH CASH TURNOVERONLINE TURNOVER

RATIO

January 68,718.95 1,251.84 . 1.82

February 49,563.77 917.80 1.85

March 44,262.50 868.85 1.96

April 53,320.02 914.73 1.72

May 54,979.06 1,237.28 2.25

June 44,241.07 1,108.66 2.51

July 51,398.43 1,290.57 2.51

August 46,113.05 1,310.78 2.84

September 46,498.62 1,318.01 2.84

October 51,902.22 1,476.51 2.85

November 51,351.48 1,639.28 3.19

December 61,973.34 1,915.65 3.09

TABLE-1.4(Year 2008)

MONTH CASH TURNOVER ONLINE TURNOVER RATIO

January 57,229.44 5.85 0.01

February 1,06,854.21 190.18 0.18

March 79,036.68 29.10 0.04

April 57,229.44 5.85 0.01

May 79,036.68 29.10 0.04

June 1,19,373.43 88.58 0.07

July 1,10,056.22 97.49 0.09

August 1,25,347.04 165.09 0.13

September 1,42,479.78 229.98 0.16

October 1,06,854.21 190.18 0.18

November 1,22,731.11 350.79 0.29

December 1,31,414.65 366.75 0.28

Source: Ludhiana stock exchange

34

TABLE-1.5(year 2009)

MONTH CASH TURNOVER ONLINE TURNOVER

(RS. CRORES)

RATIO

January 1,48,829.84 1,130.49 0.76

February 1,35,932.23 1,573.62 1.16

March 60,226.21 849.81 1.41

April 35,615.63 268.9 0.76

May 48,329.11 343.92 0.71

June 42,783.00 238.47 0.56

July 27,227.76 401.68 1.48

August 29,417.15 388.98 1.32

September 35,322.82 453.58 1.28

October 35,326.454 604.17 1.71

November 42,132.23 805.86 1.91

December 54,467.79 1,048.24 1.92

Source: Ludhiana stock exchange

35

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, the quantity and whatever the order is a market or limit order. Once

the broker’s system receives this information.

36

Use of Internet as Alternative Trading Systems (Provision for price

discovery 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 broker-dealers, have developed

computerized “alternative trading systems” 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

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.

37

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

38

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:

i. Security protocols and standardization of interfaces for Interest based

securities trading, chaired by Prof. Deepak B. Phatak, IIT, Pawai, Mumbai

ii. Surveillance and monitoring related issues arising due to Interest based

securities trading, chaired by Shri. L.K. Singhvi, Sr. ED, SEBI

39

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 on Conventional Exchanges. Separate reports (s)

will cover the other areas related to Internet applications in the securities markets.

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. D.B. Phatak, Ms. D.N. 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.

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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 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 lacks 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 FITTC/DC/CIR-1/98 dated June 16, 1998.

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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.

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.

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 s

tuitions and for review of incoming and outgoing electronic correspondence.

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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 Government/SEBI. 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 for such service specified by SEBI/Exchange 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 any clause that is less

stringent/contrary to the conditions stipulated is the model agreement.

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 site/page on the web site of the relevant stock exchange (s)

displaying rules/ regulations/ circulars. Ticker/quote/order book displayed on the web-

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site of the broker should display the time stamp as well as source of such information

against the given information.

Order/Trade Confirmation:

Order/Trade 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 within which he would like to

receive this information through email. Facility for reconfirmation of orders which are

larger than that specified by the member's 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 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 pre-

defined 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 acceptance/rejection 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. 44

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:

A separate working group has been set to look into the surveillance and enforcement

related issues arising due to Internet based securities trading. However, 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.

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FEATURES OF ONLINE TRADING:

The Online Trading is having many features which make it most suitable for the

investors to go for. Some of these features are as follows:

The Internet can provide a new sense of control over your financial future. The amount

of investment information available online is truly astounding. It's one of the best

aspects of being a wired investor. For the first time in history, any individual with an

Internet connection can:

Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock

markets and the global economy

Conduct extensive financial research on any company

One of the great appeals of using an online trading account is the fact that the account

belongs to you, and is under your direct control. When you want to buy or sell stock, you

no longer need to call your broker on the phone; hope that he is in the office to place

your order; possibly argue with the broker about the order; and hope that the transaction

is executed instantly.

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At the most basic level, an online trading account gives you more agility in buying and

selling stocks. This is through sophisticated information streams, dedicated trading

platforms and sophisticated tools for accessing the markets.

Every broker house aims at providing the investor with the best price available. Also due

to the high level of transparency with regard to display of information relating to the

specific stocks and company profiles, you will be able to get the best quote for your

orders.

Online trading offers you greater transparency by providing you with an audit trail. This

involves a complete integrated electronic chain starting from order placement, to

clearing and settlement and finally ending with a credit into your depository account. All

these stages are subject to inspection, thus bringing in transparency into the system.

Online trading integrates your bank account, your trading account and your demat

accounts, which leads to easy and paperless trading for you.

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You as an Investment online customer will be able to execute the entire trading

transaction, right from logging on to our site, to the execution and settlement of your

bank account, in a very short period of time.

Trading on the net, gives even the smallest retail investor access to information that

earlier was available only to the big traders. This provides a level playing field for all

investors in the securities market.

This method of trading reduces the settlement risk for the investor, as in this case all

short sell orders are squared off at the specified cut-off time and not allowed to be

carried forward.

In the case of a demat account your demat account is checked by us before executing

your sell transaction. This reduces the settlement risk for the buyer, who is assured of

the delivery of the securities and for you as a seller of the securities

Every trade is confirmed immediately and you will receive an on-screen confirmation

following every trade with full details for your records. This avoids costly errors that

would have been discovered when it is too late.

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Your Bank, Depository and online account are integrated for your convenience. Various

broking houses provide access to many of the popular banks.

Broking houses work hard to keep our account and personal information secure. From

updated security technology to advanced fraud prevention measures, they have the

people and tools in place to provide a strong defense against electronic scams and

fraud.

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BENEFITS OF ONLINE BROKING

1) Less Costly:

The most significant advantage of the Online broking is the cost reduction in the

brokerage. Due to the power of the Internet one has the privilege of becoming the

clients of really large brokerages with the benefits of enjoying the low charges hithelio

before enjoyed only by the big players. As the DP account has got linked to the trading

account most players do not charge a minimum transaction cost thus truly allowing one

to buy a single share and achieve meaningful rupee price averaging whatever be your

buying power.

2) Peace of Mind:

One can never have complete peace of mind but online investing does away with the

hassles of filling up instruction slips, visits to the broker for handing over these slips and

consequent costs.

3) Keeping Records:

The site one trades on keeps a record of all transactions down to unexecuted orders

and cancelled orders thus keeping one abreast of all your transactions 24 hours a day.

No paperwork means more time at one’s disposal for research and analysis.

4) Access to Information and investment Tools:

Most online investing sites have a wealth of information for their registered members.

This includes research reports, results, analysis and even gossip and the buzz in the

market.

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5.) Unparalleled Liquidity:

The bank account linked with the trading account invariably has an A TM free.

Most partner banks offer Internet banking as well. This results in one’s money becoming

available to him whenever he like from his trading account. Conversely in case he spot

an opportunity in the market he can immediately allocate money from his savings

account to his trading account and make profits.

6.) Unparalleled Safety:

Most sites are secure using 128-bit algorithms -highest available

commercially anywhere in the world. Moreover even if somebody broke in and

tampered with one’s account the money from the stocks he sold or the stock bought

from the money in his account is in his account only.

7.) Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in

this case no Short sale is possible i.e. the seller will not be able to sell the securities

unless he has their actual possession. In the case of a demat account (required for an

online transaction), when a seller wants to sell the securities, his demat account is

checked by the Depository Participant before executing the sale transaction. This

reduces the settlement risk for the buyer, who is assured of the delivery of the

securities.

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8.) Offers greater transparency:

Online trading gives greater transparency to the investors by providing them an

audit trail. This involves a complete integrated electronic chain starting from order

placement, to clearing and settlement and finally ending with a credit to the depository

account of the investor. All these stages are subject to inspection, thus bringing in

transparency into the system.

9.) Ease of trade:

It is the ease of doing the trade through net, with a click of mouse, one can buy

or sell any share that is dematerialized.

Other than the above-mentioned advantages, Internet trading provides some

additional advantages to the investors, brokers and also helps the nation to channelize

the resources. Net trading would increase competition in the market hence increase in

the bargaining power of the investors. The entire communication between the investor,

broker and exchange would take place within milliseconds.

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PROBLEMS OF ONLINE BROKING

There is a flip side to everything and online trading is no exception.

Chart

27% Loyality is of traditional broker

23% people says that online trading is more costly than manual trading.

21% people not prefer online trading because of lack of knowledge.

So, the main problems of online trading are as follows:

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1.) "Server not found":

This may appear on one’s screens when he is desperately trying to get out of an

unprofitable position. Some of the online sites are providing a telephone number for use

in case their sites are overloaded or their server down.

2.) Connectivity of the Broker with NSE:

Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours

during trading hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of one’s broker he is protected only if

the company is taking proper precautions against such attacks and if proper backup is

regularly been taken. He may like to choose a brokerage that has a stated security

policy and contingency plan in place.

4.) Non-availability of a seamless interface:

As a client one will access the NSE through a server of the online brokerage and this

may involve queuing delays. If a number of client access the server the server takes its

own time sending the orders to the NSE server. He must check out the seamlessness of

this interface before selecting an online brokerage. The faster the orders are processed

the more seamless is the interface.

5.) Non- availability of personalized advice:

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If

he want advice on a particular stock in his portfolio he may not even be able to get that.

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6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading on

margin. That is where the brokerage firm lends you money by leveraging his account,

allowing him to buy a large amount of securities by putting up only a small amount of

money. He may have forgotten what he read in the small print of his agreement, but the

brokerage firm has the right to change the maintenance margin requirements without

any warning or notice to him. In fact, the firm has the right to liquidate his securities

holdings (and it can pick and choose which ones) without any notice to one if he fail to

meet the margin call. And there he was leveraged to the hilt, hoping to hit a home run

when he discovered that he is required to make a large deposit that he cannot make.

The next thing one know, the firm is selling off his securities at a point in time that is not

the best for him. These are the perils of trading on margin.

7.) Little use of advisory services

The advisory services being promised by the brokers would be of little use to investors

looking for an insight into the market. Many would not like to rely on research reports,

which are there for all. So, net investors will have to do their own research and take

their own decision, whether wild or wise.

8.) Increased charges:

Some of the brokers are of the view that they would have to provide advisory services to

the customers. But with increased volumes, they will have to follow the international

practice of charging a little more than the normal charges from a customer looking for

personal advice.

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WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING

Several broking houses now offer online trading facilities. You can trade online with e-

brokerages such as ICICI Direct, Kotakstreet, India bulls, India info line’s 5paisa.com

and HDFC securities.

If you are already comfortable trading with your regular broker, here are few reasons

why you may consider switching to trading online, or at least another avenue of trading.

an obvious advantage of online trading is that your transaction would be virtually

paperless. Your trading account would be linked to your demat and bank account,

ensuring a smooth transaction process. This is especially helpful in the extent T+2

settlement system, where you have just two days to settle your transaction.

The normal process of issuing of delivery note, in case of a sale, or arranging for a

payment in case of purchaser of shares, is all taken care of the minute your order is

executed online. The absence of manual intervention ensures that you are completely in

control of all transaction.

There is also little room for error, as your order is always confirmed before it is

executed. You can also make better decision as you have a clear record of all your

previous transaction. When you trade offline, a demat statement is normally sent to you

only on a quarterly basis .keeping track of your portfolio can be a hassle in such a case.

The inter net can provide a new sense of control over your financial future. The amount

of investment information available online is truly astounding. Its one of the best aspect

of being a wired investor for the first time in history, any individual with an internet

connection can

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Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock markets and

globe economy.

Conduct extensive financial research on any company

Talk with other investors around the world

At invests mart you can get real-time stock quotes, daily roundups of the stock market,

experts commentary, and a deep community of fellow investors.

Convenience is probably the greatest advantage online trading offers investors. if don’t

have time to trade during market hours ,perhaps you are at work, you can log on the

web-trading site and place your order offline, during off market hours. Your order would

join the queue and be expected the next day. You would need to enjoy a good

relationship with your broker, for you to be able to reach him in the late hours. For non-

resident Indians (NRI), trading online is perhaps their easiest option to invest in the

Indian stock markets.

What is more, the time difference, in some cases, can work to their advantage .Antony,

an NRI-based in New York, places his order in the evening after work, when it is day

time India and the markets are open. We also have access to considerable information

online. By just logging on to ICICI direct online, for instance, we can get the latest news,

market information and company research.

Moreover, if our connection is maddeningly slow and we want to get your order

executed immediately, most e-brokerages also provide a facility to trade offline by

placing our order via the phone.

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PROCESS OF ONLINE TRADING

An investor interesting in trading through Internet shall have to, firstly register himself

with an Internet brokerage firm. Some formalities such as filling the account opening

form of the e-broker, copies of identity proof, copy of residence proof are made to

register himself with the e-trader. Secondly, the investor would be required to open a

bank account with a scheduled bank and sufficient balance should be kept in the

account. Thirdly he would be required to open account with a depository participant

because only dematerialized shares can be traded on Internet.

So, generally following steps are followed while doing the trading through the Internet:

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The client places order via the net by logging on to his

Broker’s site.

The broker accepts and executes the order and places it with the exchange

The exchange accepts the order after checking the share limit for the day.

The broker makes the payment either directly via the client bank account or pays through its own account and recovers it later from the client.

The exchange receives money and completes the settlement.

The client is intimated about the settlement either through the demat or via e-mail.

Step-I:

Those investors interested in doing the trading over Internet system, that is, NEAT - ISX

(NSE), should approach the brokers and register with the Stock Broker.

Step-2:

After registration, the broker will provide to them a login name, password and a personal

identification number (PIN).

Step-3:

Actual placement of an order, Using the place order window as under can then place an

order:

(a) First by entering the symbol and series of stock and other parameters such as

quantity and price of the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step-4:

It is the process of review. Thus, the investor has to review the order placed by clicking

the review option. He may also re-set to clear the values.

Step-5:

After the review has been satisfactory; the order has to be sent by clicking on the send

option.

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Step-6:

The investor will receive an "Order Confirmation" 'message along with the

order number and the value of the order.

Step- 7:

In case the order is rejected by the Broker or the Stock Exchange for

certain reasons such as invalid price limit, an appropriate message will

appear at the bottom of the screen. At present, a time lag of about ten

seconds is there in executing the trade.

Step-8:

It is regarding charging payment, for which there are different modes.

Some brokers will take some advance payment from the, investors and will

fix their trading limits. When the trade is executed, the broker will ask the

investor for transfer of funds by the investor to his account.

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CLIENT BROKER STOCK EXCHANGE

Places an order on the net on the broker’s

website through the distinctive I.D. code

Accepts the order, Checks the client’s Identity and places the order with the

stock exchange

Accepts the order after checking the scrip limit

of the broker for the day

Executes the order

The settlement of the deal (buy/sell order) gets reflected in his Demat account.

The client is intimated about the execution of

the deal by e-mail. Pays the broker

pending physical delivery.

Pays the

Exchange

though his owns account and

receives it from the client account.

Receives the money and

completes the settlement

THE MECHANICS OF ONLINE TRADING

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Rolling Settlement Cycle:

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

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

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

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

bank holidays, NSE/BSE holidays, Saturdays and Sundays are excluded. Typically

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

Thursday and so on.

Concept Of Buying Limit

Suppose you have sold some shares on NSE and are trying to figure out

that if you can use the money to buy shares on NSE in a different settlement cycle or

say on BSE. To simplify things for ICICI Direct customers, we have introduced the

concept of Buying Limit (BL). Buying Limit simply tells the customer what is his limit for

a given settlement for the desired exchange. Assume that you have enrolled for a ICICI

Direct account, which requires 100% of the money required to fund the purchase, be

available.

Suppose you have Rs 1,00,000 in your Bank A/C and you set aside Rs 50,000 for which

you would like to make some purchase. Your Buying Limit is Rs 50,000. Assume that

you sell shares worth Rs 1,00,000 on the NSE on Monday. The BL therefore for the

NSE at that point of time goes up to Rs 1,50,000. This means you can buy shares up to

Rs 1,50,000 on NSE or BSE. If you buy shares worth Rs 75,000 on Tuesday on NSE

your BL will naturally reduce to Rs75,000. Hence your BL is simply the amount set

aside by you from your bank account and the amount realized from the sale of any

shares you have made less any purchases you have made.

62

Your BL of Rs 50,000, which is the amount set aside by you from your Bank account

for purchase is available for BSE and NSE. As you have made the sale of shares on

NSE for Rs.100000, the BL for NSE & BSE rises to 1,50,000. The amount from sale of

shares in NSE will also be available for purchase on BSE. ICICI Direct

Future Agenda:

Under the existing legal and regulatory framework, SEBI registered brokers can offer

trading on Internet through order is routing systems. However, with the rapid

development of the technology, we have to evolve fisher steps in this direction it is

therefore proposed that as the next step link between the depositories and banks shall

be established after the necessary regulations have been passed. This would reduce

the clearing and settlement time and would also minimize the risk of all the participants

involved in the transactions. We have to look forward towards achieving an ideal

scenario where all the services related to securities markets including marketing of

initial public offers on internet, providing investment advisory services to the clients,

broking, clearing and settlement etc., are provided on the Internet by an intermediary. In

a nutshell it can be said that we are moving towards a one-stop service center.

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CHAPTER-3

COMPANY PROFILE

64

COMPANY PROFILE

JRG SECURITIES company profiles provided detailed financial data and key credit information. JRG SECURITIES predominantly operates in the Finance Services sector. The Company is a brokerage house, a member of various exchanges in the capital and commodity markets and the insurance sector. JRG is a member of the National Stock Exchange of India (NSE), Bombay Stock Exchange (BSE), the Multi Commodity Exchange of India Ltd Stock Exchange (MCX-SE), the Colombo Stock Exchange (CSE), and are also the depository participants of the National Securities Depository Ltd (NDSL) and Central Depository Services (India) Limited (CDSL). Duckworth Limited, subsidiary of Baring India Private Equity Fund II Limited, took complete control of the Company. In August 2008, a 100% subsidiary, JRG Business Investment Consultants Ltd was floated to undertake the business of investment advisory services, financial portfolio management and marketing and distribution of financial products.

There are five types of reports available, immediately after purchase. In order to purchase a report, please select a report type from the dropdown list above and Add to Cart. You will be able to download report(s) purchased in PDF format from your Customer Area (you need to be logged in to view) and the links are valid for 14 days. Please remember to save the PDF to your computer.

JRG SECURITIES Quickview Report - A snapshot containing company description, key financial data items and ratios. The report provides a quick company overview for three years, presented in a one page standard company report. Data is presented in local currency and in a standardised GAAP format for easy comparison.

JRG SECURITIES Trader Report - A trading document with concise and objective company information in a consistent format, designed to answer basic trading needs. This report covers six years of financial information and includes shares information, major shareholders, income statement and balance sheet data in addition to key financial ratios.

JRG SECURITIES Dossier Report - Gives you 10 years of financial history up to 150 lines of numerical data, including analytic ratios presented in a five page standard company report. Substantial supplementary information including

65

subsidiaries, directors, major shareholders as well as business and geographical breakdown is also covered.

JRG SECURITIES Business Risk Report - A one-page standard business risk measurement report. The report provides peer-to-peer comparisons of business risk factor analyses including operating, strategic, asset, size & diversity, overall adjustment and industry standard deviation.

JRG SECURITIES Credit Risk Report - Provides an analysis of a company's creditworthiness and debt capacity including a rating and a number of standard ratios analysis & model results. The report includes an analysis of a company's creditworthiness and debt capacity by using a methodology based on well-established academic research. It provides peer-to-peer comparisons of credit risk factors analyses including credit rating, other standard credit scoring measurements, non-financial information, subsidiaries, major shareholders, profitability, interest coverage, capitalization and debt service capacity, liquidity, balance sheet and income statement.

* Wealth Management

* Broking & Distribution

* Commodity Broking

* Portfolio Management Services

* Institutional Equities

* Private Equity

* Investment Banking Services and

* Principal Strategies

66

Today JRG is one of the foremost brokerage houses, being a member of various exchanges in the capital and commodity markets and the insurance sector. JRG is a member of the National Stock Exchange of India (NSE), the Bombay Stock Exchange, the National Multi Commodity Exchange of India Ltd (NMCEIL), the National Commodities Derivatives Exchange Ltd (NCDEX), the Multi Commodity Exchange of India Ltd (MCX) and the Indian Pepper and Spices Trades Association (IPSTA). JRG is a full-fledged depository participant of the National Securities Depository Ltd and Central Depository Services (India) Limited.

JRG is also one of southern India's leading Insurance Brokers. No wonder, we call ourselves, the Financial Supermarket. JRG constantly infuses quality into service. We provide our clients full expertise to play in the market with confidence. They avail full-fledged trading facilities and services through our nation-wide offices in securities and in commodities.

To help our clients better, we have located our offices in major towns and placed highly qualified and experienced financial experts to man them. A team of dynamic finance professionals with decades of experience leads them. These professionals share a common vision not only to transform the company into a highly professional organization, but also make their clients earn the maximum from their hard-earned money.

What has made this remarkable growth possible at JRG?

Trust. Commitment. Integrity.

Our transparency, commitment and integrity in all dealings have earned us trust, which in turn has enabled us to build long term relationships.

67

68

Date of Establishment 1994

Revenue 7.90482 ( USD in Millions )

Market Cap 834.8563795 ( Rs. in Millions )

Corporate Address Velliappallil Buildings,T B Road ,PalaKottayam-686575, Keralawww.jrg.co.in

Management DetailsChairperson - Rahul Bhasin MD - Gaurav Vivek SoniDirectors - B R Menon, Gaurav Vivek Soni, Munish Dayal, P Viswanathan, Pradeep Mallick, Rahul Bhasin, Regi Jacob, S K K Nair, Syam Kumar R, T M Venkataraman

Business Operation Finance - Investment

Background JRG Securities Ltd is a premier brokerage house in India on the fast growth track. In the last one decade, they have emerged as a powerhouse in the financial services industry. They started functioning in the stock market in 1992. Over the years, they grew from strength to strength to become a major player in India’s broking services sector.

JRG is one of the foremost brokerage houses, being a member of

Financials Total Income - Rs. 403.674134 Million ( year ending Mar 2009) Net Profit - Rs. -10.993871 Million ( year ending Mar 2009)

Company Secretary Syam Kumar R

Bankers

Auditors BSR & Associates

JRG is one of the foremost financial services companies in India, being a member of various exchanges in the capital and commodity markets and the insurance sector. JRG is a member of the National Stock Exchange of India (NSE), the Bombay Stock Exchange, the National Multi Commodity Exchange of India Ltd (NMCEIL), the National Commodities Derivatives Exchange Ltd (NCDEX)

Commodity Broking

Through JRG securities Commodities Broker (P) Ltd MOFL fully owned subsidiary; JRG

provide commodity trading facilities and related products and services on MCX and

NCDEX. Besides access to the best of research in the form of Daily Fundamentals &

Technical Reports on highly traded commodities, MOFL clients also get access to

MOFL exclusive Customized Trading Advice on both the trading platforms.JRG offer

these services through MOFL branches, Business Partner locations, the internet and

mobile channels

Portfolio Management Services

Jrg securities Portfolio Management Services offer a range of investments solutions

through discretionary services. At jrg have helped create Wealth for MOFL customers

through MOFL Portfolio Management Services. MOFL knowledge of the markets

together with MOFL understanding of MOFL customers and their risk profiles has

helpedMotilaldesign a range of portfolio offerings for MOFL clients. These include the

Value Strategy, Bulls Eye Strategy, Trillion Dollar Opportunity Strategy and Focused

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Strategy Series I. As of December 31st, 2009, the Assets Under Management of MOFL

various portfolio schemes stood at Rs.5.04 bn.

jrg group has applied to the regulatory bodies for a license to operate as a Domestic

Asset Management Company (Mutual Fund) and Motilal expect to begin operations

soon.

Institutional Equities

jrg offer equity broking services in the cash and derivative segments to institutional

clients in India and overseas. These clients include companies, mutual funds, banks,

financial institutions, insurance companies, and FIIs. As at December 31st, 2009, jrg

Were empanelled with over 300 institutional clients including 200 FIIs. jrg service these

clients through dedicated sales teams across different time zones.

Investment Banking

Motilal offer financial advisory services relating to mergers and acquisitions (domestic

and cross-border), divestitures, restructurings and spin-offs through JRG securities

Investment Advisors Private Ltd. (MOIAPL)

Motilal also offer capital raising and other investment banking services such as the

management of public offerings, private placements (including qualified institutional

placements), rights issues, share buybacks, open offers/delistings and syndication of

debt and equity.

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MOIAPL has closed 23 transactions in 2008-09 worth US$ 1.8 billion and had 18

mandates in hand as at March 31, 2009.

Private Equity

In 2006, MOFL private equity subsidiary, JRG SECURITIES Private Equity Advisors

Private Ltd (MOPEAPL) was appointed as the investment manager and advisor to a

private equity fund, India Business Excellence Fund, which was launched with a target

of raising US$100 mn. The fund is aimed at providing growth capital to small and

medium enterprises in India, with investments typically in the range of US$3 mn to

US$7 mn.

MOPEAPL will manage and advise the fund and other private equity funds, which may

be raised in the future. In its final closing, in December 2008, the fund obtained

commitments of US$125 mn (Rs.4,875 mn) from investors in India and overseas. The

Fund has deployed/ committed $ 58 mn across 8 deals.

MOPEAPL has recently launched an INR 750 crores domestic Real Estate Private

Equity Fund called “India Realty Excellence Fund” sponsored by JRG SECURITIES

Financial Services Ltd.

Principal Strategies Group

For effective management of treasury operations and to capitalize on market

opportunities, the Group has set up a 30 member team which would be responsible for

effective deployment of funds into different trading and arbitrage strategies.

Focus on Research

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Research is the solid foundation on which JRG Securities advice is based. Almost 10%

of revenue is invested on equity research and Motilal hire and train the best resources

to become advisors. At present JRG have 23 equity analysts researching over 27

sectors. From a fundamental, technical and derivatives research perspective; jrg

securities research reports have received wide coverage in the media (over a 1000

mentions last year). MOFL consistent efforts towards quality equity research has

reflected in an increase in the ratings and rankings across various categories in the

AsiaMoney Brokers Poll over the years

Awards and Accolades

Jrg securities Financial Services has received many accolades in the year gone by.

Some of them are:

* Rated ‘Best Overall Country Research’ for a Local Brokerage in the 2008

AsiaMoney Brokers poll

* Rated India’s top broking house in terms of total number of trading terminals by the

Dun & Bradstreet survey

* Rated ‘Outstanding Commodity Broking House-2008’ by Globoil India

* Ranked second best for Customer Responsiveness in the Financial Sector at the

Avaya GlobalConnect Customer Responsiveness awards

Strong Management Team

The organization finds its strength in its team of young, talented and confident

individuals. Qualified professionals carry out different functions under the able

leadership of its promoters, MOFL talented pool of people comprises qualified and

experienced professionals with an established track record. Motilal believe that MOFL

management's entrepreneurial spirit, strong technical expertise, leadership skills, insight

into market/customer needs provideMotilalwith a competitive strength which will

helpMotilalimplement MOFL business strategies.re Capital Management.

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‘MOFSL Code of Conduct’ – applicable to all Directors & the Senior Management

The Board of Directors (“the Board”) and the Senior Management of jrg securities

Financial Services Limited (“the Company”) subscribe to the ‘MOFSL Code of

Conduct’ adopted by Company.

This Code of Conduct is applicable to all the Directors and to the Senior

Management of the Company (from CEO level up to the Associate Director level).

It is expected that all concerned would:

i) Dedicate sufficient time, energy and attention to the Company so as to ensure diligent

performance of their duties of office and in exercising their powers attached to that

office;

ii) act honestly and use their powers of office, in good faith and in the best interests of

the Company as a whole and fulfill their obligations to the

Company’s shareholders;

iii) enhance shareholders value and comply with all regulations and laws that govern

shareholders’ rights. To inform shareholders about all relevant aspects of the

Company’s business and disclose such information in accordance with the respective

regulations and agreements;

iv) ensure the confidentiality of information and proper use of information for the

purpose the information is provided for or received whilst being in office of Director. Any

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confidential information is only disclosed if authorised by the Company, or the person

from whom the information is provided, or as required by law;

v) disclose potential conflicts of interest that they may have regarding any matter that

may come before the Board and abstain from discussion and voting on any matter in

which the Director has or may have a conflict of interest;

vi) not engage in conduct likely to bring discredit upon the Company;

vii) ensure adequacy of systems and controls to protect the Company’s assets and

property and ensure its efficient use for business purposes;

viii) ensure that use of intellectual properties of the Company and ‘MOFSL’/‘MOSL’

brand and logo’s shall be governed by the manual/code prepared in this behalf by the

Company and in accordance with the Agreement(s), if any, entered/to be entered by the

Company in this behalf;

ix) report the suspected violations of this Code to the Chairman of the Board;

x) not accept gifts from persons or firms who deal with the Company where the gift is

being made in order to influence the Directors/Senior Management actions as a

member of the Board/Company, or where acceptance of gifts could create the

appearance of a conflict of interest;

xi) affirm the compliance with the code on annual basis to the Company Secretary, in

the ‘Form - A’ given in the Annexure to this Code. The Annual Report of the Company

shall carry a declaration to this effect signed by the Chief Executive Officer of the

Company;

xii) In addition to this code, comply with all the applicable laws, regulations, Company’s

Policies and Codes of the Company including the ‘Code of Conduct for Prevention of

Insider Trading in Shares of Motilal Oswal Financial Services Limited’ and the Corporate

Press Norms for communication.

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CHAPTER-4Analysis and Interpretation

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Analysis and Interpretation

1. For how long you have been trading with on line-trading?

(a)1 year (b) 2 year

(c) 3 year (d) 4 year

Sample size 100

According to this survey we find that 44% people says that we are investing the money online from one year and 26% people says that we are investing the money online from 2 years and 19% to 11% people says that we are investing money online from 3 to 4 year. so we can say that now online trading is very popular in the modern market.

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2. How will you describe your experience with on-line trading till date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

Sample size 100

According to this survey we find that 60% of people find very easy to operate and 15% people find diffcuilt two operate and 10% and 15% people find no secure and any other. so we can say that online trading is very simple to operate and easy to understand.

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3. what amount of money you invest normally ?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount

Sample size 100

According to this survey we find that 35% of people invest money normally 50000 and 28% of people invest money 100000to150000 and 23% and 14% of people invest money between 150000to200000 and any other. So we can say that the people are not invest more money in the share market because there is a great risk involved while doing the trading.

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4. How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month

Sample Size 100

According to this survey we find that 10% of people do trade Daily and 40% people do trade weekly and 32% and 18% people do trade month and more than month. So we can say that people are generally invest in stock market weekly basis.

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5. which trading you prefer?

(a) On line trading (b) Manual trading

(c) Both

Sample Size 100

According to this survey we find that 20% people prefer online trading and 32% people prefer offline trading rest of 48% people prefers both. So we can say that mostly people are awareness about the on line trading and because of this reason the mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

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(a) Yes (b) No

Sample Size 100

According to this survey we find that 30% people says yes and 70% people says no. so we can find that on line trading is not settled in the Indian psyche because some people are not experience towards online trading.

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7. What shortcomings do you feel in Indian On-Line trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(c) any other

Sample Size 100

According to this survey we find that 15% of people says lack of awareness 49% says Shortage of expertise and 14% people says Shortage Of Infra structure and 22% says any other. So we can say that mostly people are shortage of experience about the Indian derivatives market or share market.

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8. Which media would you prefer the most for investment?

(a) T.V (b) Newspaper

(c) Magazines (D) Journals

According to this survey we find that 55% people Prefer T.V and 25% people prefer newspaper and 10% people prefer magazines and 10% people prefer journals. So we can suggest that mostly people are very easily grapped the knowledge through T.V.

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CHAPTER-5FINDINGS

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FINDINGS

1. For how long you have been trading with on line-trading?

According to this survey we find that 44% people says that we are investing the money online from one year. 11% people says that we are investing money online from 4 year. so we can say that now online trading is very popular in the modern market.

2. How will you describe your experience with on-line trading till date?

According to this survey we find that 60% of people find very easy to operate. and15% people find no secure. so we can say that online trading is very simple to operate and easy to understand

3. what amount of money you invest normally ?

According to this survey we find that 35% of people invest money normally 50000. 14% of people invest money between 150000to200000. So we can say that the people are not invest more money in the share market because there is a great risk involved while doing the trading.

4. How often do you trade?

According to this survey we find that 10% of people do trade Daily. 18% people do trade more than month. So we can say that people are generally invest in stock market weekly basis.

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5. which trading you prefer?

According to this survey we find that 20% people prefer online trading and 32% people prefer offline trading. So we can say that mostly people are awareness about the on line trading and because of this reason the mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

According to this survey we find that 30% people says yes and 70% people says no. so we can find that on line trading is not settled in the Indian psyche because some people are not experience towards online trading.

7. What shortcomings do you feel in Indian derivatives market?

According to this survey we find that 37% of people says lack of awareness 49% says Shortage of expertise and 14% people says any other. So we can say that mostly people are shortage of experience about the Indian derivatives market or share market.

8. Which media would you prefer the most for investment?

According to this survey we find that 41% people Prefer T.V and 39% people prefer newspaper and 20% people prefer magazines. So we can suggest that mostly people are very easily grapped the knowledge through T.V.

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CONCLUSION

Online trading is the new concept in the stock market. In India, online

trading is still at its infancy stage. Online trading has made it easy to trade

in the stock market as now people can trade while sitting at their home.

Now stock market is easily accessible by the people. There are some

problems while doing the trade through the internet. Major problem faced

by online trader is that the investors are loyal to their traditional brokers,

they rely upon the suggestions given by their brokers. Another major

problem is that the people don't have full knowledge regarding online

trading. They find it difficult to trade them selves, as a wrong entry made by

them, can bring them huge losses.

Nevertheless to say that online trading has the bright future as the

percentage of the trade done through online trading is increasing day by

day.

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SUGGESTIONS

The introduction of the Internet has surprisingly changed our way of life as

a society. It has defined the way we do business and the way we

correspond. The Internet has opened many opportunities for online trading.

The financial industry revolves around the Internet. Every thing is just a few

clicks away.

This makes online trading most convenient. But there are still investors who

prefer the old fashion way of offline trading and they mainly prefer offline

trading for security reasons.

Internet has introduced a way for consumers to manage their money

online. Not to mention, Internet has transformed the way investment

companies operate their business and has made it easy for private

investors to gain straight access to a range of different markets and online

tools that were at one point only reserved by the use of investment

professionals.

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Consumer investing and online trading has dramatically changed over the

last decade. Online trading dynamically continues to be redefined. Services

have expanded to include integrated management of additional financial

accounts. Not to mention, it has subsequently expanded in conjunction with

ground-breaking improvements to the traditional trading interface, such as

telephone interface systems.

Of course, online trading has many pros. There are several wonderful

reasons to invest online and consider online trading.

1. Money saving opportunities the amount of money you save depends

primarily on the online brokerage firm that you choose. No two firms are the

same. There may be different regulations, similar to bank regulations.

There are minimum deposits required that must be maintained. As

mentioned above, this will depend on the online brokerage firm.

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2. Instant online access You can gain instant access to your account, the

value of your portfolio updates immediately before your eyes.

3. Enter online trades at anytime You can enter online trades at anytime

and from anywhere. This is very convenient if you live in a different time

zone than the country you are trading in. Not to mention, it is especially fit

for investors with busy schedules.

4. With online trading you are in charge You are in control of your

investments. No sales pitches and no hassle. You decide where to invest

your money.

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CHAPTER-6

BIBLIOGRAPHY

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BIBLIOGRAPHY

MAGAZINES

Business World

INTERNET SITES

www.nseindia.com

www.bseindia.com

www.on-linetrading.com

www.sebi.gov.in

www.nsdl.com

www.cdsl.com

www.jrgsecurities.com

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Questionaire

Dear respondent,

I am student of PGDM. I am working on the project of “On-Line trading”. You are requested to fill the questionnaire to enable, to undertake the study on the said Project.

Name……………………….

Occupation………………

Address ……………………

Phone no………………….

1. For how long you have been trading with on line-trading?

(a) 1 year (b) 2 year

(c) 3 year (d) 4 year

2 .How will you describe your experience with on-line trading till date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

3. What amount of money you are invested normally ?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount

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4. How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month

5. In which trading you will prefer?

(a) Online trading (b) offline trading

(c) Both

6. According to you online trading setteled in Indian investor psyche

(a) Yes (b) No

7. What shortcomings do you feel in Indian On-line Trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(d) If any other

8. Which media would you prefer the most for investor?

(a) T.V (b) Newspaper

(c) Magazines (d) Journals

9. Do you have any of the 80(C) and 80(D) tax plans?

a) Yes b) No

If yes, please mention.

a) Child plan

b) Pension plan

c) Endowment plan

d) Protection plan

others, specify: ____________________

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