1

SUMMER TRAINING REPORT ON

CUSTOMER SATISFACTION IN
FOREX TRADING MARKET
FOR
SMC GLOBAL SECURITIES LTD.
BY
ABHISHEK JAIN
09617003910
IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE
POST GRADUATE DIPLOMA IN BUSINESS MANAGEMENT
BATCH (2010-2012)
TECNIA INSTITUTE OF ADVANCED STUDIES




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SUMMER TRAINING REPORT ON
CUSTOMER SATISFACTION
For
SMC GLOBAL SECURITIES Ltd.
Under Supervision
OF
Mr. Deepak Sharma (Senior Sales Manager)

Duration: 15
th
June to 10
th
August 2011

Submitted By- Submitted To-
ABHISHEK JAIN Mr. ANIL RAJOURIA
09617003910


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ACKNOWLEDGEMENT
A project, which involves a field study, is some form of a co-operative activity. It is a
vain claim for researcher rather difficult task to venture in to the field all alone. He
has to fall back upon assistance from several people. Naturally it is my duty rather
moral obligation to express my sense of gratitude to all those persons who helped me
in some form and to some extent in completion of this project.
I avail this opportunity to acknowledge my deep sense of gratitude and indebtedness
to Mr. Deepak Sharma (Senior Sales Manager) who rendered me there in valuable
help, suggestions and encouragement with monumental patience and constant
guidance & other staff members of SMC GLOBAL SECURITIES LTD. for their
kindness and valuable guidance and assistance, which helped me in the Completion
of my summer training.
I would also like to thank my project guide Mr. anil Rajouria whose valuable
suggestions, throughout the training session, helped me a lot to understand the real
meaning of such internship.
Lastly, I would like to acknowledge my friends & my batch mates for their generous
co-operation and assistance in carrying out this project and all those peoples who
helped me in the preparation of this project. Without you, there would not be this
project.





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Declaration
I Abhishek Jain student of Tecnia Institute of Advanced Studies Batch 2010-12
declare that every part of the project report on Customer Satisfaction that I have
submitted in original.
I was in regular contact with the nominated guide and contacted 2 times for
discussing the project:
Date of project submission:

Faculty comments:

Signature of faculty
Mr. Anil Rajouria.




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Table of Content
S.NO Particulars Page No.
1 COVER PAGE 1
2 TITLE PAGE 2
3 ACKNOWLEDGEMENT 3
4 DECLARATION 4
5 EXECUTIVE SUMMARY 6
6 INTRODUCTION 7
7 COMPANY BACKGROUND 8
8 OVERVIEW OF INDUSTRY 11-16
9 KEY RESPONSIBILITY 19
10 DETAIL OF WORK DONE 19
11 MAJOR LEARNING 19
12 HISTORY & UTILITY OF CURRENCY 20-22
13 CUSTOMER SATISFACTION 45
14 RESEARCH METHODOLOGY 47
15 CONSTRAINTS FACED 48
16 RECOMMENDATION 48
17 QUESTIONNAIRE 50
18 CONCLUSION 55
19 BIBLIOGRAPHY 56

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Executive Summary

The project involves Study of different investments available in the market and
simultaneously counseling the investors about the best funds and investment options
available and to make them aware about the risk and return parameters of those
investment instruments.
In this project, I have made efforts to look on the Customer Satisfaction. This Project
will highlight the investments in shares and aims to create a balance between
different options by creating a portfolio where the investor would be able to generate
maximum returns from his investments without taking a huge risk and it ultimately
finds the best possible investment mix.
During the eight weeks of my training, I got a chance to interact with different people
with different risk appetites and investment needs.
Limitation of the study
The study can be biased to the extent of personal perception, historical nature of data
collection and of the time limit.


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INTRODUTION
This Project will highlight the investments in Currency Market (Or Forex Market)
and aims to create a balance between different options available by creating a
portfolio where the investor would be able to generate maximum returns from his
investments without taking a huge risk and it ultimately finds the best possible
investment mix.
During the eight weeks of my training, I got a chance to interact with different people
with different risk appetites and investment needs.











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Company Background
SMC GLOBAL SECURITIES LTD.
SMC Group, founded in 1990, is Indias best Equity Broking House and
the Largest Distribution Network, Providing a wide range of financial
services and investment solutions. A blend of extensive experience, diverse
talent and client focus has made us achieve this landmark. Over the years,
SMC has expanded its operations domestically as well as internationally. Existing
network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad,
Jaipur, Hyderabad, Bangalore plus a growing network of 2500+ offices spread across
460 cities/towns in India.
SMC offer a diverse range of financial services which includes
institutional and retail brokerage of equity, currency, commodities,
derivatives, online trading, depository services, fixed Deposits, IPOs and
mutual funds distribution, dedicated desk for NRI and institutional clients,
insurance broking, clearing services, margin funding, investment banking,
portfolio management, wealth advisory & research. We have a highly
efficient workforce of over 4000 employees and over 9000 financial
advisors serving the financial needs of more than 7,00,000 satisfied
investors.
SMC are also amongst the first financial firms in India to expand
operations in the lucrative gulf market, by acquiring license for broking
and clearing member with Dubai Gold and Commodities exchange
(DGCX).


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Recent Achievements of SMCs
1. 4th largest broking house of India in terms of trading terminals (Source: Dun and
Bradstreet)
2. 5th largest sub-broker network in the country (Source: Dun and Bradstreet)
3. 5th largest distributors of IPO in Retail. (Source: Prime Data Rankings)
4. One of the first financial firms in India to expand operations in the lucrative gulf
market, by acquiring valuable license for trading and clearing with Dubai gold and
commodities exchange (DGCX)
5. Amongst a elite group of brokers having proprietary desk for doing risk-free
arbitrage in commodities
6. First trade on DGCX for silver and first currency trade for rupee- dollar
7. Awarded the Best Volume Driver by BSE for the third year in a row i.e. 2005-07


The SMC Advantages:
- Large avenues of investment solutions and financial services under
one roof
- Personalized solution and attention offered to each investors
- Research support and timely advice by our high-tech research wing
- An extensive network of branch offices
- A perfect blend of latest technology and rich experience of over 20
years
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- Honesty, transparency and fairness imbibed in all our dealings
Providers of one of the best trading platforms in terms of speed,
convenience and risk management to trade in NSE, BSE, F&O, NCDEX,
MCX,, MCX-SX, NMCE, ICEX, ACE & DGCX

Recently,SMC AWARD FOR NO.1 FOR THE BEST EQUITY BROKER
2010 BSE-D&B BEST BROKING AWARDS.











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Overview on Industry
Why SMC

SMC Group, having rich experience of more then two decades in financial markets,
is one of the largest & most reputed investment solutions companies that offer a
wide range of option of invest in share/equities , Mutual Fund & IPOs to its client
base of more than 7,00,000+ clients with presence in more than 2500+ branches
across 460+ cities.





Best Equity Broking House (Source: BSE-D&B
Equity Broking Awards, 2010)

Best Currency Broker in India (Source: UTV
Bloomberg Financial Leadership awards, 2011)

Largest distribution network in the country
(Source: BSE-D&B Equity Broking Awards, 2010)

Awarded Fastest Growing Retail Distribution
Network in Financial Services (Source: Business
Sphere, 2008)

Recipient of Major Volume Driver Award from
BSE for last three years consecutively.

Nominated among the top three in the CNBC
Optimix Financial Services Award 2008 under
National Level Retail Category.

One of the largest Proprietary Arbitrage Desk
doing risk free arbitrage in equities &
commodities.



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Commanding turnover of more then 3% in equity
market, 4% in commodity market and 10% in
DGCX.

Transparent and professional management

Relentless focus on investor care

World class in-house research facilities providing
research support to investors

All financial products and services under one roof












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Products of SMC
- Equities
- IBonds
- Mutual Funds
- Derivatives
- Commodities
- FX Trading
- Life Insurance
- General Insurance
- IPO

Services

- Creation of a customized financial strategy
- Diversification of assets based on a formal process of asset allocation
- Active tracking, monitoring and review of portfolios
- Creation of private trusts
- Tax planning
- Estate planning
- Structuring of family wealth

Broking House
Equities & Derivatives
Our experienced team of Research Analysts and Advisory Managers guide
you with appropriate solutions, backed by in-depth research, knowledge
and expertise on a regular basis. We constantly help you with strategies for
equity and derivatives investment, recommendations for trading on futures
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& options, hedging with Nifty and other products and opportunities of near
risk free arbitrage between various segments
SMC Offerings
Online trading: SMC Trading Platform offers online equity & derivatives
trading facilities for investors who are looking for the ease and
convenience of a hassle free trading experience. We pr ovide ODIN
application(For Equity) & Now Software(For Currency), which is a high-
end, integrated trading application for fast, efficient and reliable execution
of trades. You can now trade in NSE and BSE simultaneously from any
destination at your convenience. You can access a multitude of resources
like live quotes, charts, research, advice and online assistance to help you
take informed decisions.You can also avail our state-of-art mobile trading
application "SMC mobitade"
Offline trading: You can also trade through our branch network by
registering as our client. We also provide trade through us on phone by
calling our designated representatives in the branches where you are
registered as a client. Trading in Equities with SMC truly empowers you
for your investment needs. We ensure that you have a superlative trading
experience through:
- A highly process driven, diligent approach
- Powerful research & analysis support.
- One of the "best-in-class" dealing rooms

Mutual funds
SMC is one of India's top mutual fund distribution houses. Our success lies in our philosophy of
providing consistently superior, independent and unbiased advice to our clients backed by in-depth
research. We firmly believe in the importance of selecting appropriate asset allocations based on the
client's risk profile.

We have a dedicated mutual fund research cell for mutual funds that consistently churns out
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superior investment ideas, picking best performing funds across asset classes and providing insights
into performances of select funds.
Depository services
SMC Depository Services provides you with a secure and convenient way for holding your
securities on both CDSL and NSDL.

Our depository services include settlement, clearing and custody of securities, registration of shares
and dematerialization. We offer you daily updated internet access to your holding statement and
transaction summary.
Commodities
Commodities broking - A whole new opportunity to hedge business risk and an attractive
investment opportunity to deliver superior returns for investors.

Our commodities broking services include online futures trading through NCDEX and MCX and
depository services through CDSL. Commodities broking is supported by a dedicated research cell
that provides both technical as well as fundamental research. Our research covers a broad range of
traded commodities including precious and base metals, Oils and Oilseeds, agri-commodities such
as wheat, chana, guar, guar gum and spices such as sugar, jeera and cotton.

In addition to transaction execution, we provide our clients customized advice on hedging
strategies, investment ideas and arbitrage opportunities.
Insurance broking
As an insurance broker, we provide to our clients comprehensive risk management techniques, both
within the business as well as on the personal front. Risk management includes identification,
measurement and assessment of the risk and handling of the risk, of which insurance is an integral
part. The firm deals with both life insurance and general insurance products across all insurance
companies.

Our guiding philosophy is to manage the clients' entire risk set by providing the optimal level of
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cover at the least possible cost. The entire sales process and product selection is research oriented
and customized to the client's needs. We lay strong emphasis on timely claim settlement and post
sales services.
IPO
SMC Securities Ltd. is a leading primary market distributor across the country. Their strong
performance in IPOs has been a result of their vast experience in the Primary Market, a wide
network of branches across India, strong distribution capabilities and a dedicated research team.

They have been consistently ranked among the top 10 distributors of IPOs on all major offerings.
Our IPO research team provides clients with in-depth overviews of forthcoming IPOs as well as
investment recommendations. Online filling of forms is also available.
Global Products
- Structuring of trusts / investment companies
- Offshore Mutual Funds
- Structured Products / Deposits including capital-guaranteed notes on
- Trading in global markets (Equities, Bonds, Commodities)
- Real Estate investments
- Alternative investments (including hedge funds and fund-of-hedge funds)
Our services
- Risk Management
- Due diligence and research on policies available
- Recommendation on a comprehensive insurance cover based on clients needs
- Maintain proper records of client policies
- Assist client in paying premiums
- Continuous monitoring of client account
- Assist client in claim negotiation and settlement.

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Key Management People of SMC

Mr. S C Aggarwal
(Chai rman & Managi ng Di rector, SMC Group)
Co-founder and promoter of the SMC Group, Mr Aggarwal has ri ch and extensi ve experi ence of more
than 23 years. He has an i n-depth knowl edge and strong understandi ng of vari ous i ntri caci es of
Securi ti es Market and Fi nanci al Servi ces. It i s through hi s excepti onal l eadershi p ski l l s and
outstandi ng commi tment towards the company that SMC today has become t he Best Equi ty Brokera ge
and the Largest Di stri buti on houses of Indi a. Hi s efforts have l ed to the di versi fi cati on of group
busi ness from Stock Broki ng and Arbi trage to Commodi ty Broki ng, IPOs & Mutual Funds di stri buti on,
Insurance Products, Merchant Banki ng, Weal th Management and Advi sory Servi ces. Mr Aggarwal i s
the Co-Chai rman of Capi tal Market Commi ttee of ASSOCHAM. He i s al so a fel l ow member of the
Insti tute of Chartered Accountants of Indi a.

Mr. Mahesh C Gupta
(Vi ce Chai rman & Managi ng Di r ector, SMC Gr oup)
Mr. Mahesh C Gupta i s a Co-f ounder and Promoter of the SMC Group wi th more t han 23
years of wi despr ead experi ence i n Secur i ti es Market. He i s al so a f el l ow member of the
Insti tut e of Charter ed Accountants of Indi a. Hi s extr aordi nar y l eadershi p ski l l , astut e
busi ness acumen and di sci pl i ned l i f e st yl e have hel ped SMC strongl y di versi f y to a f ul l y
f l edged f i nanci al ser vi ces f i rm wi th a Pan I ndi a presence across 425+ ci ti es provi di ng
Brokerage servi ces i n equi t y, commodi t y, cur rency & der i vat i ves, deposi t or y ser vi ces,
cl ear i ng ser vi ces, Investment banki ng, portf ol i o & weal t h management, di str i buti on of
Insurance, I POs, Mut ual Funds, Fi xed Deposi tes and other 3r d part y products. Hi s
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pri nci pl es of honest y, t ranspar ency and moral i ntegr i t y have gi ven SMC strong f oundat i on
based on whi ch i t has become the Best Equi t y Broker and the Largest Di str i buti on House i n
Indi a. Mr. Gupt a has al so gi ven hi s vi tal contr i but i on i n var i ous conf erences & semi nars on
securi t i es market.



SMC edge
- Equity advisory team with highly trained equity professionals, who
act as your Equity Advisor and pro-actively help you take informed
equity and derivatives investment decisions and build a healthy
portfolio
- Pan India coverage
- Powerful research support by a pool of highly skilled research
analysts
- Focused services which make investments in equities simple .
- SMS service providing intraday research support to the clients.
- Competitive brokerage rates
- Call & Trade facility through a simple phone call
- A superior trading platform
- Prompt news on stock results, earnings, bonus, share holding
patterns, etc.
- Online trading account which provides exposure against the cash
margin as well as shares lying idle in clients DP account




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Job Title and Key Responsibility
I was working as a Relationship Manager in SMC GLOBAL SECURITIES Ltd.
Located in Daryaganj New Delhi .
My Key Responsibility is to:
1. Understand the concept of Currency Market
2. Calling to Database
3. Client Meeting .
4. Opening Currency Account.
5. Calling to existing Employees.
6. Transfering of share into DMAT A/c.


Details of work done And Major Learning
In the initial days of my Summer internship in SMC Global Securities ltd. I was
making an efforts to understand the concept of currency market. And about SMC
Global Securities Ltd. Products i.e. how to pitch to the customers to sale the
Currency Trading Account , D-mat and Trading Account(equity) ,Mutual Funds and
IPOs. Once I came to know about detail of the product, A database is given to me
for cold calling. Initially I was not success but sooner and day by day I became
success in pitching the customer and take the appointment to meet them and the
meeting successful. Then I have to fill the form according to the document to fulfill
the detail specified in the form. And I have also made efforts to sale the non-
convertible debentures of ShriRam Transport (finance Company Limited). During
my training I got to Learn The Basics Of Online Trading of Shares, Commodities and
Currency.SMC has changed the way of Online Trading and moreover they are
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providing many services to the customers through NOW & ODIN Software that are
remarked as one of the most popular software across the Country.

The Major Learning about Currency Market :-
HISTORY OF CURRENCY DERIVATIVES

Currency futures were first created at the Chicago Mercantile Exchange (CME) in
1972.The contracts were created under the guidance and leadership of Leo
Melamed, CME Chairman Emeritus. The FX contract capitalized on the U.S.
abandonment of the Bretton Woods agreement, which had fixed world exchange
rates to a gold standard after World War II. The abandonment of the Bretton
Woods agreement resulted in currency values being allowed to float, increasing
the risk of doing business. By creating another type of market in which futures
could be traded, CME currency futures extended the reach of risk management
beyond commodities, which were the main derivative contracts traded at CME
until then. The concept of currency futures at CME was

revolutionary, and gained credibility through endorsement of Nobel-prize-
winning economist Milton Friedman.

Today, CME offers 41 individual FX futures and 31 options contracts on 19
currencies, all of which trade electronically on the exchanges CME Globex
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platform. It is the largest regulated marketplace for FX trading. Traders of CME FX
futures are a diverse group that includes multinational corporations, hedge funds,
commercial banks, investment banks, financial managers, commodity trading
advisors (CTAs), proprietary trading firms; currency overlay managers and
individual investors. They trade in order to transact business, hedge against
unfavorable changes in currency rates, or to speculate on rate fluctuations.

UTILITY OF CURRENCY DERIVATIVES

Currency-based derivatives are used by exporters invoicing receivables in foreign
currency, willing to protect their earnings from the foreign currency depreciation
by locking the currency conversion rate at a high level. Their use by importers
hedging foreign currency payables is effective when the payment currency is
expected to appreciate and the importers would like to guarantee a lower
conversion rate. Investors in foreign currency denominated securities would like
to secure strong foreign earnings by obtaining the right to sell foreign currency at
a high conversion rate, thus defending their revenue from the foreign currency
depreciation. Multinational companies use currency derivatives being engaged in
direct investment overseas. They want to guarantee the rate of purchasing
foreign currency for various payments related to the installation of a foreign
branch or subsidiary, or to a joint venture with a foreign partner.

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A high degree of volatility of exchange rates creates a fertile ground for foreign
exchange speculators. Their objective is to guarantee a high selling rate of a
foreign currency by obtaining a derivative contract while hoping to buy the
currency at a low rate in the future. Alternatively, they may wish to obtain a
foreign currency forward buying contract, expecting to sell the appreciating
currency at a high future rate. In either case, they are exposed to the risk of
currency fluctuations in the future betting on the pattern of the spot exchange
rate adjustment consistent with their initial expectations.


The most commonly used instrument among the currency derivatives are
currency forward contracts. These are large notional value selling or buying
contracts obtained by exporters, importers, investors and speculators from banks
with denomination normally exceeding 2 million USD. The contracts guarantee
the future conversion rate between two currencies and can be obtained for any
customized amount and any date in the future. They normally do not require a
security deposit since their purchasers are mostly large business firms and
investment institutions, although the banks may require compensating deposit
balances or lines of credit. Their transaction costs are set by spread between
bank's buy and sell prices.

Exporters invoicing receivables in foreign currency are the most frequent users of
these contracts. They are willing to protect themselves from the currency
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depreciation by locking in the future currency conversion rate at a high level. A
similar foreign currency forward selling contract is obtained by investors in
foreign currency denominated bonds (or other securities) who want to take
advantage of higher foreign that domestic interest rates on government or
corporate bonds and the foreign currency forward premium. They hedge against
the foreign currency depreciation below the forward selling rate which would
ruin their return from foreign financial investment. Investment in foreign
securities induced by higher foreign interest rates and accompanied by the
forward selling of the foreign currency income is called a covered interest
arbitrage.

INTRODUCTION TO CURRENCY DERIVATIVES

Each country has its own currency through which both national and international
transactions are performed. All the international business transactions involve an
exchange of one currency for another.

For example,
If any Indian firm borrows funds from international financial market in
US dollars for short or long term then at maturity the same would be refunded in
particular agreed currency along with accrued interest on borrowed money. It
means that the borrowed foreign currency brought in the country will be
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converted into Indian currency, and when borrowed fund are paid to the lender
then the home currency will be converted into foreign lenders currency. Thus,
the currency units of a country involve an exchange of one currency for another.

The price of one currency in terms of other currency is known as exchange rate.

The foreign exchange markets of a country provide the mechanism of exchanging
different currencies with one and another, and thus, facilitating transfer of
purchasing power from one country to another.

With the multiple growths of international trade and finance all over the world,
trading in foreign currencies has grown tremendously over the past several
decades. Since the exchange rates are continuously changing, so the firms are
exposed to the risk of exchange rate movements. As a result the assets or liability
or cash flows of a firm which are denominated in foreign currencies undergo a
change in value over a period of time due to variation in exchange rates.

This variability in the value of assets or liabilities or cash flows is referred to
exchange rate risk. Since the fixed exchange rate system has been fallen in the
early 1970s, specifically in developed countries, the currency risk has become
substantial for many business firms. As a result, these firms are increasingly
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turning to various risk hedging products like foreign currency futures, foreign
currency forwards, foreign currency options, and foreign currency swaps.

INTRODUCTION TO CURRENCY FUTURE
A futures contract is a standardized contract, traded on an exchange, to buy or
sell a certain underlying asset or an instrument at a certain date in the future, at a
specified price. When the underlying asset is a commodity, e.g. Oil or Wheat, the
contract is termed a

commodity futures contract

. When the underlying is an

exchange rate, the contract is termed a

currency futures contract

. In other
words, it is a contract to exchange one currency for another currency at a
specified date and a specified rate in the future.
Therefore, the buyer and the seller lock themselves into an exchange rate for a
specific value or delivery date. Both parties of the futures contract must fulfill
their obligations on the settlement date.
Currency futures can be cash settled or settled by delivering the respective
obligation of the seller and buyer. All settlements however, unlike in the case of OTC
markets, go through the exchange.
Currency futures are a linear product, and calculating profits or losses on
Currency Futures will be similar to calculating profits or losses on Index futures. In
determining profits and losses in futures trading, it is essential to know both the
contract size (the number of currency units being traded) and also what the tick
value is. A tick is the minimum trading increment or price differential at which
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traders are able to enter bids and offers. Tick values differ for different currency
pairs and different underlying. For e.g. in the case of the USD-INR currency
futures contract the tick size shall be 0.25 paise or 0.0025 Rupees. To
demonstrate how a move of one tick affects the price, imagine a trader buys a
contract (USD 1000 being the value of each contract) at Rs.42.2500. One tick
move on this contract will translate to Rs.42.2475 or Rs.42.2525 depending on the
direction of market movement.
Purchase price: Rs .42.2500
Price increases by one tick: +Rs. 00.0025
New price: Rs .42.2525
Purchase price: Rs .42.2500
Price decreases by one tick: Rs. 00.0025
New price: Rs.42. 2475

The value of one tick on each contract is Rupees 2.50. So if a trader buys 5
contracts and the price moves up by 4 tick, she makes Rupees 50.
Step 1: 42.2600 42.2500
Step 2: 4 ticks * 5 contracts = 20 points
Step 3: 20 points * Rupees 2.5 per tick = Rupees 50



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Introduction
Foreign exchange market
The foreign exchange market (forex, FX, or currency market) is a global, worldwide
decentralized financial market for trading currencies. Financial centers around the
world function as anchors of trading between a wide range of different types of
buyers and sellers around the clock, with the exception of weekends. The foreign
exchange market determines the relative values of different currencies.
The primary purpose of the foreign exchange is to assist international trade and
investment, by allowing businesses to convert one currency to another currency.
For example, it permits a US business to import British goods and pay Pound
Sterling, even though the business' income is in US dollars. It also supports direct
speculation in the value of currencies, and the carry trade, speculation on the
change in interest rates in two currencies.
In a typical foreign exchange transaction, a party purchases a quantity of one
currency by paying a quantity of another currency. The modern foreign exchange
market began forming during the 1970s after three decades of government
restrictions on foreign exchange transactions (the Bretton Woods system of
monetary management established the rules for commercial and financial relations
among the world's major industrial states after World War II), when countries
gradually switched to floating exchange rates from the previous exchange rate
regime, which remained fixed as per the Bretton Woods system.
The foreign exchange market is unique because of
its huge trading volume representing the largest asset class in the world leading to
high liquidity;
its geographical dispersion;
its continuous operation: 24 hours a day except weekends, i.e. trading from
20:15 GMT on Sunday until 22:00 GMT Friday;
the variety of factors that affect exchange rates;
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the low margins of relative profit compared with other markets of fixed income; and
the use of leverage to enhance profit and loss margins and with respect to account
size.
As such, it has been referred to as the market closest to the ideal of perfect
competition, notwithstanding currency intervention by central banks. According to
the Bank for International Settlements,[3] as of April 2010, average daily turnover in
global foreign exchange markets is estimated at $3.98 trillion, a growth of
approximately 20% over the $3.21 trillion daily volume as of April 2007. Some firms
specializing on foreign exchange market had put the average daily turnover in
excess of US$4 trillion.[
The $3.98 trillion break-down is as follows:
$1.490 trillion in spot transactions
$475 billion in outright forwards
$1.765 trillion in foreign exchange swaps
$43 billion Currency swaps
$207 billion in options and other products








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MCX Stock Exchange

MCX Stock Exchange

Type Private
Industry Business Services
Founded 2008
Headquarters Exchange Square, Suren
Road, Chakala, Andheri
(East),Mumbai, India
Key people U Venkataraman, CEO , MD
& CEO
Products Currency futures exchange
Website www.mcx-sx.com
MCX Stock Exchange (MCX-SX) is an India-wide electronic platform for trading in
currency futures under the regulatory control of Securities and Exchange Board of
India (SEBI) and Reserve Bank of India (RBI). It is jointly promoted by Financial
technologies and MCX. It started operations on the 6th of October 2008 .
Products
MCX-SXs product is a currency futures contract. It started live operations on 7
October, 2008, by launching monthly contracts in the USD/INR currency pair. Each
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USD/INR contract on MCX-SX has a life of 12 months from the month in which it was
launched. Specifications of the MCX-SX USDINR contract are as stipulated by RBI and
Securities SEBI, and are as follows:
Symbol USDINR
Instrument Type FUTCUR
Unit of trading 1 (1 unit denotes 1000 USD)
Underlying The exchange rate in Indian Rupees for a US Dollar
Tick size Tick size Rs.0.25 paise or INR 0.0025
Trading hours Monday to Friday 9.00 a.m. to 5.00p.m.
Contract trading
cycle
12 month trading cycle.
Last trading day
Two working days prior to the last business day of the expiry
month at 12 noon.
Final settlement
day
Last working day (excluding Saturdays) of the expiry month.
The last working day will be the same as that for Interbank
Settlements in Mumbai.
Highlights
MCX-SX initiated trading on Oct 7, 2008
Total Turnover - Rs. 43,571.98 crore*
Total number of contracts traded - 8,876,100*
Recorded highest turnover - Rs. 1593.04 crore on Jan 22, 2009
Highest number of contracts traded - 324,885 on Jan 22, 2009
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Average Daily Volume - 158,501 contracts*
Average Daily Turnover - Rs. 778.07 crore*
Garnered over 50 % market share in two months of operations
Growth of 187% by clocking an average daily turnover of Rs.1003.38 crore at the
end of 2nd month over average daily turnover of Rs. 349.38 crore for the 1st month
As on December 31, 2008 since inception Total Volumes Currency Futures volume
traded on the Indian Exchanges.

Title: India / U.S. Foreign Exchange Rate
Series ID: EXINUS
Source: Board of Governors of the Federal Reserve System
Release: G.5 Foreign Exchange Rates
Frequency: Anually
Units: Indian Rupees to One U.S. Dollar
Date Range: 1973-01-01 to 2010-04-01

DATE VALUE
1973-01-01 8.0041
1974-01-01 8.4377
1975-01-01 8.1300
1976-01-01 8.9471
1977-01-01 8.9052
1978-01-01 8.2010
32


1979-01-01 8.2091
1980-01-01 7.9882
1981-01-01 7.9576
1982-01-01 9.1525
1983-01-01 9.7938
1984-01-01 10.7152
1985-01-01 12.6119
1986-01-01 12.2433
1987-01-01 13.0295
1988-01-01 13.0395
1989-01-01 15.0925
1990-01-01 16.9633
1991-01-01 18.3390
1992-01-01 25.8629
1993-01-01 29.0432
1994-01-01 31.4400
1995-01-01 31.3736
1996-01-01 35.8117
1997-01-01 35.9037
1998-01-01 39.3910
1999-01-01 42.5453
2000-01-01 43.5895
33


2001-01-01 46.6138
2002-01-01 48.3533
2003-01-01 47.9571
2004-01-01 45.4560
2005-01-01 43.6150
2006-01-01 44.2010
2007-01-01 44.2062
2008-01-01 39.2676
2009-01-01 48.6995
2010-01-01 45.8944
2011-09-04 45.8650










34



Most traded currencies by value
Currency distribution of global foreign exchange market turnover
[3]

Rank Currency
ISO 4217 code
(Symbol)
% daily share
(April 2010)
1 United States dollar USD ($) 84.9%
2 Euro EUR () 39.1%
3 Japanese yen JPY () 19.0%
4 Pound sterling GBP () 12.9%
5 Australian dollar AUD ($) 7.6%
6
Swiss franc
CHF (Fr) 6.4%
7 Canadian dollar CAD ($) 5.3%
8 Hong Kong dollar HKD ($) 2.4%
9 Swedish krona SEK (kr) 2.2%
10 New Zealand dollar NZD ($) 1.6%
11 South Korean won KRW () 1.5%
12 Singapore dollar SGD ($) 1.4%
13 Norwegian krone NOK (kr) 1.3%
14 Mexican peso MXN ($) 1.3%
15 Indian rupee INR ( ) 0.9%
Other 12.2%
Total
[15]
200%




35



CURRENCY OUTLOOK FOR THE DAY


Note: The above levels are only for intraday trading.
Major Market Update

The situation with Greeces debt was hurting the euro during this week, but
by the end of the week
traders glimpsed a light in the end of the tunnel. New hopes for Greece
emerged and that helped
the European currency to erase losses.

The Pound trimmed losses against the U.S. dollar on Monday, easing off
the daily low, after U.K. property
website Right move said prices for houses in England and Wales were likely
to rise overall in 2011.

The Euro trimmed losses against the U.S. dollar on Monday, but remained
under broad selling
36


pressure after euro zonefinance ministers delayed a final decision on
emergency loans for Greece.

The dollar gains this week spread after the European leaders failed to
reach an agreement for a
new rescue package for Greece, where the nation government was falling
apart intensifying fears,
which pushed investors to demand the dollar as a safe haven in the times of
crisis.


The U.S. dollar was broadly higher against its major counterparts on
Monday, as risk aversion remained
elevated as markets waited for a resolution to Greeces sovereign debt crisis.


The broadly stronger U.S. dollar edged higher against the yen on Monday,
but gains were limited
as investors remained cautious after euro zone finance ministers delayed a
decision on a bailout
package for Greece until next month.

The Australian dollar was sharply lower against its U.S. counterpart on
Monday, as concerns over a
Greek default continued after euro zone finance ministers deferred a decision
on a bailout package
for the indebted nation.




et
37


FUTURE TERMINOLOGY

SPOT PRICE :
The price at which an asset trades in the spot market. The transaction in
which securities and foreign exchange get traded for immediate delivery.
Since the exchange of securities and cash is virtually immediate, the term,
cash market, has also been used to refer to spot dealing. In the case of
USDINR, spot value is T + 2.

FUTURE PRICE :
The price at which the future contract is traded in the future market.

CONTRACT CYCLE :
The period over which a contract trades. The currency future contracts in
Indian market have one month, two month, three month up to twelve month
expiry cycles. In NSE/BSE will have 12 contracts outstanding at any given point
in time.

VALUE DATE / FINAL SETTELMENT DATE :
The last business day of the month will be termed the value date /final settlement date of
each contract. The last business day would be taken to the same as that for inter bank
settlements in Mumbai. The rules for inter bank settlements, including those for known
38


holidays and would be those as laid down by Foreign Exchange Dealers Association of
India (FEDAI).

EXPIRY DATE :
It is the date specified in the futures contract. This is the last day on which
the contract will be traded, at the end of which it will cease to exist. The last
trading day will be two business days prior to the value date / final settlement
date.

CONTRACT SIZE :
The amount of asset that has to be delivered under one contract. Also called
as lot size. In case of USDINR it is USD 1000

BASIS :
In the context of financial futures, basis can be defined as the futures price
minus the spot price. There will be a different basis for each delivery month
for each contract. In a normal market, basis will be positive. This reflects that
futures prices normally exceed spot prices.

COST OF CARRY :
The relationship between futures prices and spot prices can be summarized in
terms of what is known as the cost of carry. This measures the storage cost
39


plus the interest that is paid to finance or carry the asset till delivery less the
income earned on the asset. For equity derivatives carry cost is the rate of
interest.

INITIAL MARGIN :
When the position is opened, the member has to deposit the margin with the
clearing house as per the rate fixed by the exchange which may vary asset to
asset. Or in another words, the amount that must be deposited in the margin
account at the time a future contract is first entered into is known as initial
margin.




MARKING TO MARKET :
At the end of trading session, all the outstanding contracts are reprised at the
settlement price of that session. It means that all the futures contracts are
daily settled, and profit and loss is determined on each transaction. This
procedure, called marking to market, requires that funds charge every day.
The funds are added or subtracted from a mandatory margin (initial margin)
that traders are required to maintain the balance in the account. Due to this
adjustment, futures contract is also called as daily reconnected forwards.
40



MAINTENANCE MARGIN :
Members account are debited or credited on a daily basis. In turn customers
account are also required to be maintained at a certain level, usually about
75 percent of the initial margin, is called the maintenance margin. This is
somewhat lower than the initial margin.

This is set to ensure that the balance in the margin account never becomes
negative. If the balance in the margin account falls below the maintenance
margin, the investor receives a margin call and is expected to top up the
margin account to the initial margin level before trading commences on the
next day.


PRODUCT DEFINITIONS OF CURRENCY FUTURE ON NSE/BSE

Underlying
Initially, currency futures contracts on US Dollar Indian Rupee (US$-INR) would be
permitted.

41


Trading Hours
The trading on currency futures would be available from 9 a.m. to 5 p.m.

Size of the contract
The minimum contract size of the currency futures contract at the time of
introduction would be US$ 1000. The contract size would be periodically aligned to
ensure that the size of the contract remains close to the minimum size.

Quotation
The currency futures contract would be quoted in rupee terms. However, the
outstanding positions would be in dollar terms.

Tenor of the contract
The currency futures contract shall have a maximum maturity of 12 months.

Available contracts
All monthly maturities from 1 to 12 months would be made available.


42


Settlement mechanism

The currency futures contract shall be settled in cash in Indian Rupee.

Settlement price
The settlement price would be the Reserve Bank Reference Rate on the date of
expiry. The methodology of computation and dissemination of the Reference Rate
may be publicly disclosed by RBI.
Final settlement day
The currency futures contract would expire on the last working day (excluding
Saturdays) of the month. The last working day would be taken to be the same as
that for Interbank Settlements in Mumbai. The rules for Interbank Settlements,
including those for known holidays and subsequently declared holiday would be
those as laid down by FEDAI







43


The contract specification in a tabular form is as under:
Underlying Rate of exchange between one USD and
INR
Trading Hours
(Monday to Friday)
09:00 a.m. to 05:00 p.m.
Contract Size USD 1000
Tick Size 0.25 paisa or INR 0.0025
Trading Period Maximum expiration period of 12 months
Contract Months 12 near calendar months
Final Settlement date/
Value date
Last working day of the month (subject to
holiday calendars)
Last Trading Day Two working days prior to Final Settlement
Date
Settlement Cash settled








44


Terminal Screen-shot of Now Software






45


Customer Satisfaction

Website design, it's important to work closely with your customers to make sure the
site or system you create for them is as close to their requirements as you can
manage. Because it's critical that you form a close working relationship with your
client, customer service is of vital importance.

1. Encourage Face-to-Face Dealings
This is the most daunting and downright scary part of interacting with a customer. It's
important to meet your customers face to face at least once or even twice during the
course of a project. My experience has shown that a client finds it easier to relate to
and work with someone they've actually met in person, rather than a voice on the
phone or someone typing into an email or messenger program. When you do meet
them, be calm, confident and above all, take time to ask them what they need. I
believe that if a potential client spends over half the meeting doing the talking, you're
well on your way to a sale.
2. Respond to Messages Promptly & Keep Your Clients Informed
This goes without saying really. We all know how annoying it is to wait days for a
response to an email or phone call. It might not always be practical to deal with all
customers' queries within the space of a few hours, but at least email or call them
back and let them know you've received their message and you'll contact them about
it as soon as possible. Even if you're not able to solve a problem right away, let the
customer know you're working on it.
3. Be Friendly and Approachable
This is very true. It's very important to be friendly, courteous and to make your
clients feel like you're their friend and you're there to help them out. There will be
times when you want to beat your clients over the head repeatedly with a blunt object



I



46


- it happens to all of us. It's vital that you keep a clear head, respond to your clients'
wishes as best you can, and at all times remain polite and courteous.
4. Have a Clearly-Defined Customer Service Policy
A clearly defined customer service policy is going to save you a lot of time and effort
in the long run. If a customer has a problem, what should they do? If the first option
doesn't work, then what? Should they contact different people for billing and
technical enquiries? If they're not satisfied with any aspect of your customer service,
who should they tell? So make sure your customer service policy is present on your
site -- and anywhere else it may be useful.
5. Attention to Detail (also known as 'The Little Niceties')
These little niceties can be time consuming and aren't always cost effective, but
remember to do them. Even if it's as small as sending a Happy Holidays email to all
your customers, it's something. It shows you care; it shows there are real people on
the other end of that screen or telephone; and most importantly, it makes the
customer feel welcomed, wanted and valued.
6. Anticipate Your Client's Needs & Go Out Of Your Way to Help Them Out
Sometimes this is easier said than done! However, achieving this supreme level of
understanding with your clients will do wonders for your working relationship.
7. Honours Your Promises
It's possible this is the most important point in this article. The simple message: when
you promise something, deliver. The most common example here is project delivery
dates.
Clients don't like to be disappointed. Sometimes, something may not get done, or you
might miss a deadline through no fault of your own. Projects can be late, technology
can fail and sub-contractors don't always deliver on time. In this case a quick apology
and assurance it'll be ready ASAP wouldn't go a miss.

47




RESEARCH METHODOLOGY

TYPE OF RESEARCH
In this project Descriptive research methodologies were used.
The research methodology adopted for carrying out the study was at the first
stage theoretical study is attempted and at the second stage observed online
trading on NSE/BSE.

SOURCE OF DATA COLLECTION
Secondary data were used such as various books, report submitted by
RBI/SEBI committee and NCFM/BCFM modules.

OBJECTIVES OF THE STUDY
The basic idea behind undertaking Currency Derivatives project is to
gain knowledge about currency future market.

To study the basic concept of Currency future
To study the exchange traded currency future
48


To understand the ways of considering currency future price.
To analyze different currency derivatives products.

LIMITATION OF THE STUDY
The limitations of the study were:-
The analysis was purely based on the secondary data. So, any error in the
secondary data might also affect the study undertaken.
The currency future is new concept and topic related book was not available
in library and market.













49


Constrained Faced
Well some time, I face constrained when I was doing calling and many a time its
results to Not interested without listening to the talks. Sometime I feels very irritating
to call again for the sale of product. But its really interest way of learning.

Recommendation
It was a great experience in SMC Global Securities Ltd. particularly in my branch.
My Team Head Mr. Deepak Sharma has help throughout the entire summer
internship. I am very thankful to him. And looking forward for the further contact in
future.
Mr. Deepak Sharma
(Senior Sales Manager)









50


QUESTIONNAIRE
Study of consumer perception about Currency market
(Please Mark (\ ) in the box of your choice)

1. Name ___________________________

2. Sex:
a) Male b) Female

3. Occupation:
a) Student b) Professional c) Serviceman d) Businessman
e) House wife f) Other specify..

4. Age:
a) Below 20 b) 21-30 c) 31-45 d) above 45

5. Income (per month):
a) Below 5000/- b) 5001-10000 c) 10001-20000 d) Above 20000

6. Do you understand what Currency is?
Yes No



7. Which different Brokerage companies are you aware of?
Companies I am aware New for me
51


SMC Global Securities Ltd
India Infoline
Share Khan
Indiabulls
Reliance Money
Angel Broking
Baj aj Capi tal
Kotak securities Ltd
Motilal Oswal
ICICI Direct.com
Karvy Stock Broking Ltd
IL&FS Investment Limited
Anand Rathi Securities Limited












52


8. Have you ever open any Currency Account?
Yes No
Please also specify company?
Companies Yes
SMC Global Securities Ltd
India Infoline
Share Khan
Indiabulls
Reliance Money
Angel Broking
Baj aj Capi tal
Kotak securities Ltd
Motilal Oswal
ICICI Direct.com
Karvy Stock Broking Ltd
IL&FS Investment Limited
Anand Rathi Securities Limited

Will you open currency account from the same company in future?
Yes No

9. What type of Account do you have? (Put tick mark)
Equity | | Commodity | | Mutual Fund | |
Currency | | IPO | |
Other, specify..
53


10. What do you look for, while opting for an Currency Account?
Return on Investment | | Knowledge | |
Additional Benefits | | Security | |
Others, specify

11. What do you look for, while opting for an Currency Account?
Return on Investment | | Knowledge | |
Additional Benefits | | Security | |
Others, specify

12. Do you think online currency trading is superior to other forms of tradings?
Yes | | No | |

13. Is return on investment is important consideration while opening for a currency account?
Yes | | No | |

14. Are you planning to open currency account in near future?

Yes No




54


15. If you neither have taken nor are you planning to open a Currency Account, then why so?
Reason Thats true Not actually
We dont know about it
So many legal formalities
Its not a good investment of money
Is it too risky
Confusing to me


16. Did any representative from broking Company visit you for business?
Yes No
If yes, was he able to fully explain the different life insurance policies of his company?
Yes

17.While choosing a Broking company, what factors are important for you?

Different factors We will
go for it
Preferable but
not compulsory
We dont think it
is important
Trustworthy RMs
Mouth Advertising
Suitability
Premium rate
Benefits offered
Service offered
55


Financial strength of company
Reliability of company
How long company exists
Certified reports about companies


18. Any suggestions to improve the services offered by various brokers?





Thank you for Your Valuable Time and Inputs


Conclusion
Customer service, like any aspect of business, is a practiced art that takes time and
effort to master. All you need to do to achieve this is to stop and switch roles with the
customer. What would you want from your business if you were the client? How
would you want to be treated? Treat your customers like your friends and they'll
always come back.


56


BIBLIOGRAPHY
Company Profile and Industry Overview www.smconlineindia.com.
Our Group Websites www.smctradeonline.com

Financial Derivatives (theory, concepts and problems) By: S.L. Gupta.
NCFM: Currency future Module.
BCFM: Currency Future Module.
Center for social and economic research) Poland
Recent Development in International Currency Derivative Market by: Lucjan T. Orlowski)
Report of the RBI-SEBI standing technical committee on exchange traded currency futures) 2008
Report of the Internal Working Group on Currency Futures (Reserve Bank of India, April 2008)


Websites:
www.sebi.gov.in
www.rbi.org.in
www.frost.com
www.wikipedia.com
www.economywatch.com
www.bseindia.com
www.nseindia.com
57