PROJECT REPORT On

THE TRADING METHODS AND RULES IN INDIAN CAPITAL MARKET

SUBMITTED BY:

RUPINDER KUMAR
ROLL NO. 0061401703 BBA, VI SEMESTER IP UNIVERSITY

SUBMITTED TO JAGAN INSTITUTE OF MANAGEMENT STUDIES ROHINI

CONTENT

Project Objective Project hypothesis Scope of project Limitation Methodology Introduction Depository system and regulatory framework Screeples trading in capital market Derivatives: Future and option trading Indabulls Financial Services Ltd. Depository services delivery by different DPs Competitive price list of DPS Data Analysis Findings Conclusion Annexure Abbreviations

 Bibliography

Project Objectives
To know the reasons for introduction of Scripless Trading in India and its scope To know the trading methods and rules in Indian capital market

To know the price structure and services offered by the players in the same industry To analyze the workings in dematerialization era To know the compliances of depository participant with their regulators To know the Pros and Cons of dematerialized mode of trading from different aspects

Project Hypothesis
There is cutthroat competition in the securities market for providing better services to the customers; providing Depository Services is one of part of it. So, each and every competitor is trying to lead in it. I have assumed that Depository services provided by Indiabulls Securities Ltd. are very good and attractive.

Scope of Project
Firstly, this project covers the Scripless trading in India capital market, specially trading in cash and derivatives. And secondly it covers the area of different Depository services provided by different Depositories.

Limitations of Project
Less Responses Time consuming Biased Responses Respondents may not have enough time for response

Benefit of Project for Company

The project will help the company to know the market trends and the services provided by other company. It will show their place in the market and help them to formulate the strategies against their competitors by offering better services.

Project Methodology
Sample Size: In my project the sample size for the research is 17. In which 8 are the Bank DPs, which do not provide the facilities of securities transaction and 9 are securities transaction companies (including those banks which provide the facilities of securities transaction).

Data Collection Method: -

The sources of data collection are books, magazines and various websites.

RESEARCH DESIGN
The research design of my project is a mix of exploratory and descriptive study type: Exploratory research studies are also termed as formulative research studies. The major emphasis in such studies is the discovery of ideas and insights. The main objective of exploratory research is to fine-tune the broad problem (here, depository services) into specific statement (here, depository services provide by Indiabulls and other market players).

Descriptive research studies are those studies, which are concerned with describing the characteristics of a particular individual, or a group or a trend. A sample was taken and statements about the population on the basis of the samples were made. Descriptive research aims at drawing inferences and making predictions (here, knowing the trends of scripless trading in capital market with help of their terminologies).

Scripless Trading
The decades of 1999-2000 have seen a phenomenal growth in Indian Capital Market. India has the largest number of Listed Companies in the world today that has result a large amount of shareholders also. Hence system of settlement based on physical delivery of paper certificate causes big problems to large amount of investors. The need for a new system was felt and Government of India promulgated the Depositories Ordinance in September 1995 thus the paving the way for Depository System in India and ushering in an era of paperless settlement of securities. A depository, an outcome of rapid development in Technology is an important agency playing a very important role in stock markets around the world. A Depository is an organization concerned holding and handling of securities on behalf of investors, both large and small. The advanced trading mechanism is designed not only to provide transparency and control to the regulators but also to provide ease of operation alleviate hardships currently experienced by Investors. Indeed it is hard to believe that depository system which was introduced just four years back is playing now key role in stock market of the country and it has provide greater efficiency and transparency in the capital market, certainly, future belongs to Depository System. Trading in the shares of the Company is compulsory in dematerialized form for all investors. The Company has, therefore, enlisted its shares with both the depositories, viz, NSDL and CDSL. This means that a trader now have the option to hold and trade in the shares of the Company in electronic form; this dematerialized form of trading is termed as Scripless Trading.

Need of Scripless Trading

India has the largest number of listed companies, investor population and substantial volume of trade in the world today. As a result of this investors have to face a lot of problems relating to: Bad delivery. Delay in transfer of shares. Duplicate / Fake / Forged certificates. Loss in transit / Theft / Mutilation. Large paperwork. Disputes on corporate actions. Longer settlement cycles. Heavy stamp duties on transfer.

To obviate these problems the Depositories Act 1996 was enacted to provide for the establishment of depositories with the objective of ensuring free transferability of securities with speed, accuracy and safety by making: a) Securities of public limited companies freely transferable subject to certain exceptions. b) Dematerializing the securities in the depository mode. c) Provision for maintenance of ownership records in an e-book entry form.

Advantages of Scripless Trading

From the Investors point Reduction of risk associated with physical scrips. No stamp duty on transfer. No bad delivery. No loss due to theft / forgery / fake certificates. Reduces transaction costs. Quick settlement cycle. Improved liquidity of stocks. Electronic credit in the case of initial public offer (IPOs), right or bonus issues. Reduction in rate of interest on loans granted against pledging of shares.

From the Clearing Members point Enhanced liquidity, safety and huge turnover in stock markets. Opportunity for the development of retail brokerage business. Improved protection of shareholders rights resulting from more timely communication from the issuer. Reduced transaction costs through efficiency. Elimination of forgery and counterfeit with attendant reduction in settlement risk from bad deliveries. Provide automation to post trade processing. Bringing greater efficiency and transference to the market place. Improved cash in flows. NSDL has started SPEED facility, which enables the clearing members to view the stock positions for Pay in and Pay out to the stock exchange.

From the Issuer Companys point Improved efficiency of Registrar and Transfer agents. Efficient communication with investors. Updated list of shareholders on weekly basis. Better image with global and foreign investors. Updated information of investors name and address. Corporate image and awareness among general public.

Problems in Scripless Trading

Account Opening: Strict guidelines by SEBI have placed many checks for account opening, which causes a lot of problems to the investors. For example different Demat Accounts will have to be opened according to the shareholding pattern in the share certificates; it causes extra cost in term of monetary expense and time.

Delay in Dematerialization: It is other major problem, which is faced by most of investors these days. There are various companies, which are not processing the dematerialization process within the statutory period of 15 days as prescribed by SEBI.

Frauds or Mistakes: Inventors can lose their securities due to the frauds or mistakes done either by employee, officer of the depository participant or other intermediaries in the depository system.

Custody Charges: It is an additional cost to small investors, which deters them to adopt depository mode.

Opportunities Lost: As per SEBI directives, tax on capital gains shall be levied on the FIFO Basis by which investors have lost opportunity of tax planning.

Depository system and Regulatory Framework

REGULATION OF DEPOSITORIES

Depositories Act, 1996

SEBI

SEBI Act, 1992

SEBI (D&P) Regulations, 1996

Depository

Business Rules Bye Laws

Agreements

Application of the other Act

REGULATORY FRAMEWORK The Depositories Act, 1996 provide a legal framework for establishment of depositories to record ownership details in book entry form. The regulation of depositories in India is regulated with the following framework: The Depositories Act, 1996 SEBI (Depositories & Participant) Regulation, 1996 Companies Act, 1956 SEBI Act, 1992 Along with the above-mentioned Acts, following govern the business and operations of the depositories: Bye Laws of Depository Business rules of depository Apart from above, depositories also require the compliance of certain provisions of other act such as: Indian Stamp Act, 1989 Income Tax Act Securities Contract (Regulation) Act, 1956 SEBI (custodian of securities) regulations, 1956

NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL) is the first depository to be set up in India. It was incorporated on December 12, 1996. The IDBI, UTI & NSE, sponsored the setting up of NSDL and subscribed to the initial capital NSDL commenced operations on November 8,1996. NSDL is a public limited company incorporated under the Companies Act, 1956. NSDL has a paid up equity capital of Rs. 80 crores and net worth of more than Rs. 100 crores. NSDL carries out its functions through its business partners who include DPs, issuers/registrars, clearing corporation/houses etc. It is electronically linked to each of these business partners via satellite links. The entire integrated system of the NSDL has been named as the NEST (National Settlement & Transfer) system. The legislative framework governing the operations of NSDL essentially comprises a three-tier structure: Depositories Act, 1996 -- enacted in Aug96, provides the broad framework for the setting up and working of depositories in India. SEBI (Depositories & Participant) Regulations, 1996 -- notified under the Depositories Act 96 provide the regulatory framework for the depositories.

ByeLaws & Business Rules of NSDL govern the functioning and operational procedures of NSDL and its business partners. Following services are provided by NSDL: Maintenance of electronic records of beneficiary ownership of Transfer of beneficial ownership of securities. Dematerialization and rematerilization of securities. Allotment in the electronic mode in case of initial public offerings Distribution of securities to allottees in case of public issues. Distribution of non-cash corporate actions e.g. right/bonus issuses. Pledge and Hypothecation of securities. Automatic landing and borrowing mechanism (ALBM)

securities.

As already stated, NSDL was promoted by IDBI, UTI and NSE. Only a company registered under the Companies Act 56 and sponsored by the specified categories of institutions can set up a depository in India. Presently, the following organizations are shareholders of NSDL. 1. IDBI 2. UTI 3. NSE 4. SBI 5. Global Trust Bank Limited 6. CITI BANK 7. STANCHART GRINDLAYS 8. HDFC BANK 9. HSBC 10.DEUTSCHE BANK

11.DENA BANK 12.CANARA BANK

NSDL Transaction Fee

On February 26, 2002, NSDL, had announced a revision in its fee structure to the Depository Participants (DPs). The new fee structure was to be made effective from April 1, 2002. However, SEBI advised NSDL that the charges be further reviewed by NSDL and may not be made applicable from April 1, 2002. In view of this, the Board of Directors of NSDL reconsidered the matter and decided to reduce the settlement fee from Rs.15 per debit instruction to Rs.10 per debit instruction. There will be no settlement fee for credit instruction, as at present. There is no change in the fee structure in respect of other transactions and these are given below: Fee Type Pledge Creation Pledge Closure Pledge Invocation Securities Borrowing Custody Fee Rematerialisation Charge Rs.25 per instruction Nil Nil Rs.25 per instruction Rs.9 per ISIN* p.a. Rs.10 per certificate

*ISIN (International Securities Identification Number) is a unique identification number for a security.

NSDL at a Glance (as on 24 TH June,2005)

Investor Accounts Accounts having Debt instruments Companies Joined
Demat Custody Quantity (million

65,76,020 1,21,273 5,669 138,143

securities)

Depository Participants
DPs DP Service Centres Demat Custody Shares Debt/Bonds CP Equity Shares Qty (in Million) NSE BSE Total Debt/Bonds Settlement 218 2,855 Instruments Value (in Rs. Million) 5,362 12,036,800 6,973 2,937,656 472 218,418 Value (in Rs. Million) 424 78,485 522 53,538 955 132,153 32,510

Settlement (20/06/2005 - 24/06/2005)

A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialisation of his holdings and transferring securities. The balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the investor, at regular intervals, a statement of account which gives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of securities. The Stock Exchange, Mumbai (BSE) jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank, promoted CDSL. CDSL was set up with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants. CDSL received the certificate of commencement of business from SEBI in February, 1999. All leading stock exchanges like the National Stock Exchange, Calcutta Stock Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmedabad, etc

have established connectivity with CDSL. As on 06TH June, 2005 workings at CDSL is as follows:-

Securities available for demat

Equity Debt instruments including debentures, bonds, Government securities, certificates of deposits, commercial paper & pass through certificates Mutual fund units 4706 5165 8 274 487 124 248 19610 1231060 881 65192 1067808

Depository Participants
Number Number Number Number of of of of Depository Participants branches with LIVE Connectivity cities/ towns with LIVE connectivity locations with LIVE connectivity

Demat Custody
Number of securities in million Value (Rs. in million)

Demat Settlement (April 2005)

Number of securities in million Value (Rs. in million) Investor accounts

CDSL fees structure to its depository participants is as follows:

Activity/Service
Demat Custody /ISIN Fees Settlement: Credit Settlement: Debit

Charges
Nil Nil Nil 0.01% of the transaction value subject to min. of Rs.5/- & max. of Rs.12/- per transaction

Account Maintenance Individual/NRIs/HUFs/Trusts Account Maintenance Corporate /Others Pledge: Set up Pledge: Removal Pledge: Invocation Remat

Nil

Rs.500/- p.a.

Rs.12/- to pledgor. Rs.12/- to pledgor. Nil Rs.10/- per certificate

NOTES: Fees payable by DPs or their branches having connectivity with CDSL (a) Established connectivity before 01-04-2003: Rs.500/- or the amount of

the bill for a given month whichever is higher. (b) Established connectivity on / after 01-04-2003: Rs.1000/- or the amount of the bill for a given month whichever is higher. Fees for Clearing Members CDSL collects only Rs. 500/ - per month from its DPs for a CM except for CM Investors securities Account. Further, a fee of 0.01% on the transaction value subject to a minimum of Rs.5/and maximum of Rs.12/- will be payable - (a)For credit of securities in pay-out declared by an exchange into a CM a/c meant for other exchange, (b)For transfer from a CM a/c to any CM a/c.

CDSL in a Glance (as on June 06, 2005) Companies Depository Participants Debt Instruments Demat Quantity (in million) Demat Value (in million) Settlement Quantity (in million) Settlement Value (in million) 5159 274 5269 20250 1287370 309 21203

Depository System
India is in the midst of an era of liberalization, deregulation and globalization of economy and financial markets. With the objective of improving market efficiency, enhancing transparency, checking unfair trade practices and bringing the Indian market up to the international standards, a package of reforms consisting measures to liberalize, regulate and develop the securities market was introduced during the 1990s. This has changed corporate securities market beyond recognition in that decade. The secondary market overcame the geographical barriers by moving to screen based trading. The passing of the Depository Act 1996 is another milestone in the securities market reform process within the country. The Indian Capital Market has seen unprecedented boom in its activity in the last decade. We can now boast of a very large investor population and substantial volumes of trade. However, this surge in activity has brought with it numerous problems that threatened the very survival of the Capital Market in the long run. A closer inspection of the problems would reveal that most of them arose due to the intrinsic nature of paper based trading and settlement. The century old system of trading and settlement requiring handling of huge volumes of paper leading to increased costs and inefficiencies. Simultaneously, they exposed the investors to greater risks like delays in transfers, forgery, thefts of certificates etc. This has made the investors, both retail and institutional, wary of entering the Indian Capital Market. In this scenario, it was felt that the setting up of a depository and the introduction of scripless trading and settlement is imperative for the efficient functioning of the market.

Dematerialisation
Dematerialisation (Demat in short form) signifies conversion of a share certificate from its physical form to electronic form for the same number of holding which is credited to clients demat account which they open with a Depository Participant (DP). Dematerialisation is a process by which the Company takes the physical share certificates of an investor back and an equivalent number of securities are credited in electronic form at the request of the investor. An investor will have to first open an account with a Depository Participant and then request for the dematerialisation of his share certificates through the Depository Participant so that the dematerialised holdings can be credited into that account. This is very similar to opening a Bank Account. Dematerialisation of shares is optional and an investor can still hold shares in physical form. However, he / she has to demat the shares if he / she wishes to sell the same through the Stock Exchanges. Similarly, if an investor purchases shares, he / she will get delivery of the shares in demat form.

Depository: Meaning
Depositories are an important intermediary in the securities market that is scripless or moving towards such a state. The Depository Act has been enacted with a particular aim to strengthen the move towards professionalisation of the securities market and provision for a national securities transfer system. The Depositories Act 96 defines a depository to mean A Company formed and registered under the Companies Act 56 and which has been granted a certificate of registration under sub section (IA) of section 12 of the SEBI Act 92.

The above definition doesnt however explain the meaning of a depository completely. It can be explained as

A Depository is an institution which maintains the custody and transfer of securities in the electronic form, on behalf of its participants.
Thus, the principal function of a depository is to dematerialized securities and enables their transactions in book entry form. Dematerialization of securities occurs when securities issued in the physical form is destroyed and an equivalent number of securities are credited into the beneficiary owners account. In a depository system, the investors stand to gain by way of lower costs and lower risks of theft or forgery etc. They also benefit in terms of efficiency of the process. A depository established under the Depository Act 96 could provide any service connected with recording of allotment of securities or transfers of ownership of securities in the record of a depository. A depository cannot directly open the accounts and provide services to clients. Any person willing to avail of the services of the depository can do so by entering into an agreement with a depository through any of its depository participant.

Depository: Depository & Bank

It can be compared with a bank, which holds the funds for depositors. A Bank Depository Analogy is given in the following table: BANK Holds funds in an account Transfers funds between accounts on the instruction of the account holder DEPOSITORY Hold securities in an account Transfers securities between accounts on the instruction of the account holder

Facilitates transfer without having to handle money Facilitates safekeeping of money

Facilitates transfer of ownership without having to handle securities Facilitates securities safekeeping of

Depository: Depository Participant

Similar to the brokers who trade on clients behalf in and outside the Stock Exchange; a Depository Participant (DP) is clients representative (agent) in the depository system providing the link between the Company and his client through the Depository. Clients Depository Participant will maintain clients securities account balances and intimate to him the status of their holding from time to time. According to SEBI guidelines, Financial Institutions like banks, custodians, stockbrokers etc. can become participants in the depository. A DP is one with whom a beneficiary needs to open an account to deal in electronic form. While the Depository can be compared to a Bank, DP is like a branch of his/her bank with whom he/she can have an account. The minimum net worth stipulated by SEBI for a depository is Rs. 100 crore. As on 31/03/2005, total of 477 DPs are registered with SEBI.

Depository: How Depository System Operates?

The Depository System functions very much like the banking system. A bank holds funds in accounts whereas a Depository holds securities in accounts for its clients. A Bank transfers funds between accounts whereas a Depository transfers securities between accounts. In both systems, the transfer of funds or securities happens without the actual handling of funds or securities. Both the Banks and the Depository are accountable for the safe keeping of funds and securities respectively.

Account Opening & other Activities with Depository

As per the available statistics at BSE and NSE, 99.9% settlement takes place in demat mode only. Therefore, in view of the convenience in settlement through demat mode, it is advisable to have a beneficiary owner (BO) account to trade at the exchanges. Account opening To avail the services of a depository an investor is required to open an account with a depository participant of any depository. Firstly an investor has to approach a DP and fill up an account opening form. The account opening form must be supported by copies of any one of the approved documents to serve as proof of identity (PoI) and proof of address (PoA) as specified by SEBI. All applicants should carry original documents for verification by an authorized official of the depository participant, under his signature. Further, the investor has to sign an agreement with DP in a depository prescribed standard format, which details rights and duties of investor and DP. DP should provide the investor with a copy of the agreement and schedule of charges for their future reference. The DP will open the account in the system and give an account number, which is also called BO ID (Beneficiary Owner Identification number).

The DP may revise the charges by giving 30 days notice in advance. SEBI has rationalised the cost structure for dematerialisation by removing account opening charges, transaction charges for credit of securities, and custody charges vide circular dated January 28, 2005.

It is for the protection of investors interest. The bank account number will be mentioned on the interest or dividend warrant, so that such warrant cannot be encashed by any one else. Further, cash corporate benefits such as dividend, interest will be credited to the investors account directly through the ECS (Electronic Clearing Service) facility, wherever available, by the company. An investor can open more than one account in the same name with the same DP and also with different DPs. The investor has not to keep any minimum balance of securities in his/her accounts. It is not necessary to have account with the same DP as broker has. Depository / DP can be chosen by investor as per convenience irrespective of the DP of the broker. The demat account must be opened in the same ownership pattern in which the securities are held in the physical form. e. g. if one share certificate is in the individual name and another certificate is jointly with somebody, two different accounts would have to be opened. In this case the investor may open only one account with A & B as the account holders and lodge the security certificates with different order of names for dematerialisation in the same account. An additional form called "Transposition cum Demat" form will have to be filled in. This would help a client to effect change in the order of names as well as dematerialise the securities. The demat account cannot be operated on "either or survivor" basis like the bank account. Benefits of Demat A/c a. Trading in the shares of the Company is now under the compulsory demat segment. With SEBI making demat mandatory on most of the traded scrips, electronic transaction will be the only way everyone will trade. b. No stamp duty for transfer of securities in the electronic form. In case of transfer of physical shares, stamp duty of 0.5 percent is

payable on the market value of shares being transferred. c. All risks associated with physical certificates such as delays, loss, in transit, theft, mutilation, bad deliveries, etc. eliminated. Beneficiarys shares can be kept in the Frozen Mode by his/her Depository Participant under his/her specific instructions. d. The concept of an odd lot in respect of dematerialized shares stands abolished, i.e. in the demat mode, market lot becomes one share. e. Dematerialised securities are most preferred by banks and other financiers for providing credit facility against securities. Generally, demat securities attract lower margin and lower rates of interest compared to physical securities. f. Even in the electronic mode of trading, the payment mechanism (usually through a broker) between the buyer and seller continues to be as before. Also the usual brokerage charges would have to be incurred. However, after the settlement, pay in and pay out are on the same day for scripless trading which means he/she can get his/her securities as well as cash immediately. g. Shares bought or sold are transferred in his/her name on the very next day of pay out. In case of physical shares, transfer of ownership takes 30 days or sometimes even more. h. No courier / postal charges for sending share certificates / transfer deeds.

i.

Facility for freezing / locking of investor accounts, which enables him/her to make his/her account non-operational, for instance if he/she is abroad. j. Facility to pledge and hypothecate his/her securities available. As the Depository System becomes popular, brokers will be increasingly reluctant to deal with physical shares.

k.

l.

Investors prefer to buy shares which are already in dematerialised form.

Dematerialisation In order to dematerialise physical securities one has to fill in a DRF (Demat Request Form), which is available with the DP, and submit the same along with physical certificates one wishes to dematerialise. Separate DRF has to be filled for each ISIN Number. The complete process of dematerialisation is outlined below:

Surrender certificates for dematerialisation to investors depository participant.

Depository participant intimates Depository of the request through the system.

Depository participant submits the certificates to the registrar of the Issuer Company.

Registrar confirms the dematerialisation request from depository.

After dematerialising the certificates, Registrar updates accounts

and informs depository of the completion of dematerialisation.

Depository updates its accounts and informs the depository

participant. Depository participant updates the demat account of the investor. Rematerialisation When electronic holdings be converted back into Physical certificates, the process is called Rematerialisation. If one wishes to get back his securities in the physical form one has to fill in the RRF (Remat Request Form) and request his DP for rematerialisation of the balances in his securities account. The process of rematerialisation is outlined below: One makes a request for rematerialisation. Depository participant intimates depository of the request through the system. Depository confirms rematerialisation request to the registrar. Registrar updates accounts and prints certificates. Depository updates accounts and downloads details to depository participant. Registrar dispatches certificates to investor. Trading / Settlement The procedure for buying and selling dematerialised securities is similar to the procedure for buying and selling physical securities. The difference lies in the process of delivery (in case of sale) and receipt (in case of purchase) of securities.

In case of purchase: The broker will receive the securities in his account on the payout day The broker will give instruction to its DP to debit his account and credit investor's account

Investor will give Receipt Instruction to DP for receiving credit by filling appropriate form. However one can give standing instruction for credit in to ones account that will obviate the need of giving Receipt Instruction every time.

In case of sale: The investor will give delivery instruction to DP to debit his account and credit the brokers account. Such instruction should reach the DPs office at least 24 hours before the pay-in as other wise DP will accept the instruction only at the investors risk. Standing Instruction In a bank account, credit to the account is given only when a 'pay in' slip is submitted together with cash/cheque. Similarly, in a depository account 'Receipt in' form has to be submitted to receive securities in the account. However, for the convenience of investors, facility of 'standing instruction' is given. If client says 'Yes' for standing instruction, he/she need not submit 'Receipt in' slip everytime he/she buy securities. If investor is particular that securities can be credited to his/her account only with his/her consent, then do not say 'yes' [or tick ] to standing instruction in the application form. To give the delivery one has to fill a form called Delivery Instruction Slip (DIS). DIS may be compared to cheque book of a bank account. The following precautions are to be taken in respect of DIS:-

Ensure and insist with DP to issue DIS book. Ensure that DIS numbers are pre-printed and DP takes acknowledgment for the DIS booklet issued to investor. Ensure that investor account number [client id] is pre-stamped. If the account is a joint account, all the joint holders have to sign the instruction slips. Instruction cannot be executed if all joint holders have not signed. Avoid using loose slips Do not leave signed blank DIS with anyone viz., broker/sub-broker. Keep the DIS book under lock and key when not in use. If only one entry is made in the DIS book, strike out remaining space to prevent misuse by any one. Investor should personally fill in target account -id and all details in the DIS. Pledging Pledging dematerialised securities is easier and more advantageous as compared to pledging physical securities. The procedure to pledge electronic securities is as follows:

Both investor (pledgor) as well as the lender (pledgee) must have depository accounts with the same depository ;

Investor has to initiate the pledge by submitting to DP the details of the securities to be pledged in a standard format ; The pledgee has to confirm the request through his/her DP; Once this is done, securities are pledged. All financial transactions between the pledgor and the pledgee are handled as per usual practice outside the depository system.

Transaction Statement The DP gives a Transaction Statement periodically, which will detail current balances and various transactions made through the depository account. If so desired, DP may provide the Transaction Statement at intervals shorter than the stipulated ones, probably at a cost. Lending and borrowing of demat securities If any person required to deliver a security in the market does not readily have that security, he can borrow the same from another person who is willing to lend as per the Securities Lending and Borrowing Scheme. Lending and borrowing has to be done through an 'Approved Intermediary' registered with SEBI. The approved intermediary would borrow the securities for further lending to borrowers. Lenders of the securities and borrowers of the securities enter into separate agreements with the approved intermediary for lending and borrowing the securities. Lending and borrowing is effected through the depository system. Nomination Only individuals holding beneficiary accounts either singly or jointly can make nomination. Non-individuals including society, trust, body corporate, karta of Hindu Undivided Family, holder of power of attorney cannot nominate. Transmission of demat securities Transmission is the process by which securities of a deceased account holder are transferred to the account of his legal heirs / nominee. Process of transmission in case of dematerialised holdings is more convenient as the transmission formalities for all securities held in a demat account can be completed by submitting documents to the DP, whereas in case of physical securities the legal heirs/nominee/surviving joint holder has to independently correspond with each company in which securities are held.

SCRIPLESS TRADING IN CAPITAL MARKET

As mentioned above, in a Scripless Trading traders have the option to hold and trade in the shares of the Company in electronic form. So that the problems like bad delivery, delay in transfer of shares, duplicate / fake / forged certificates, loss in transit / theft / mutilation, large paperwork, disputes on corporate actions, longer settlement cycles, etc. can be removed. There are two ways for trading in securities market. First is cash market and second is derivative market. NSE provides the facility of both the trading in cash as well as in derivatives market but BSE provides only the facility of trading in cash market. In the cash market we easily sell or purchase the securities in a simple manner. But in a derivative market we have to know deeply the terminologies used in capital market for trading in derivatives. But before discussing on the derivatives market, its terminologies and what are the sources of getting securities in individuals account; I want to describe few things about the BSE & NSE. Although there are many exchanges in India but these two are most popular in the India and having highest number of trading volumes, listed companies and market capitalizations. Few more facts about these two are as follows:

The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.

Turnover of the Exchange

Month/Year
No of companies listed No. of companies permitted

Jun-2005
987 1

May-2005
977 1 842 22 875 412 56,516 86,802 3,946 21,020 56,516 86,802 1,654,995

No. of companies available for trading 854 No. of trading days No. of companies traded No. of trades (lakh) Traded Quantity (lakh) Turnover (Rs.cr) Average Daily Turnover (Rs.cr) Average Trade Size Demat Securities Traded (lakh) Demat Turnover Market Capitalisation (Rs.cr) 23 861 477 70,485 111,397 4,843 23,374 70,485 111,397 1,727,502

Bombay Stock Exchange of India Limited

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education programmes and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and

an Executive Director & Chief Executive Officer and a Chief Operating Officer. The Executive Director as the Chief Executive Officer is responsible for the dayto-day administration of the Exchange and he is assisted by the Chief Operating Officer and other Heads of Departments. The Exchange has inserted new Rule No.126 A in its Rules, Bye-laws & Regulations pertaining to constitution of the Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting of three elected directors, three SEBI nominees or public representatives, Executive Director & CEO and Chief Operating Officer has been constituted. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authority, matters regarding annulment of transactions, admission, continuance and suspension of member-brokers, declaration of a member-broker as defaulter, norms, procedures and other matters relating to arbitration, fees, deposits, margins and other monies payable by the member-brokers to the Exchange, etc.

Turnover of the Exchange

The average daily turnover of the Exchange during the financial year 2000-2001 (April-March), was Rs.3984.19 crores and the average number of daily trades was 5.69 lakhs.

The average daily turnover of the Exchange in the subsequent two financial years, i.e., 2001-02 & 2002-03, has declined considerably to Rs. 1248.15 crores and Rs. 1251.29 crores respectively.

The average number of daily trades recorded during 2001-02 and 2002-03 numbered 5.17 lakhs and 5.63 lakhs respectively.

The average daily turnover and average number of daily trades during the quarter April-June 2003 were Rs. 1101.05 crores and 5.70 lakhs respectively. The ban on all deferral products like Borrowing & Lending of Securities Scheme (BLESS) and Automated Lending & Borrowing Mechanism (ALBM) in the Indian capital markets by SEBI w.e.f. July 2, 2001, abolition of account period settlements, introduction of Compulsory Rolling Settlements in all scrips traded on the Exchanges w.e.f. December 31, 2001, etc. have adversely impacted the liquidity in the market and consequently there is a considerable decline in the average daily turnover at the Exchange as reflected in above statistics.

Sources of getting the Securities in Individuals (beneficiary) Account

Dematerialization Primary Market Allotment Secondary Market Allotment

Dematerialization Dematerialization is the process by which the physical securities are converted in electronic balances in the clients account maintained with a depository participant. The process of demat can be understood with the help of the following chart: INVESTOR DP

R&T AGENT

NSDL

I)

Client submits the DRF & physical certificates to DP. DP checks if the securities are available for demat. Client defaces the certificate by stamping Surrendered for Dematerialization . DP punches two holes on the name of the company and draws two parallel lines across the face of the certificate.

II) III)

DP enters the demat request in his system to be sent to NSDL. DP dispatches the physical certificates along with the DRF to the R&T Agent. NSDL records the details of the electronic request in the system forwards the request to the R&T Agent.

IV) V)

R&T Agent on receiving the physical documents and the electronic request verifies and checks the same and confirms to NSDL. NSDL credits the demat securities to the beneficiary account of the investor and intimates the DP electronically. The DP issues a statement of transaction to the client.

Primary Market Allotment In case of a primary issuse, securities in electronic form can be obtained abinitio. The client applies in the application form along with his client ID and DP ID details and the issuer credits the quantity allotted to him, through depository, in his account with the DP. The process is as follows:

ISSUER

NSDL

DP

CLIENT

Secondary Market Allotment The secondary market transfers are settled through a clearing corporation. Once the trade is executed by the broker on the stock exchange, the seller gives a delivery instruction to his DP to transfer securities to his brokers account. The broker has to then complete the pay-in before the deadline prescribed by the stock exchange. The broker moves the securities from his account to CC/CH of the stock exchange concerned. The CC/CH gives pay-out and the securities are transferred to the buying brokers account. The broker then gives delivery instructions to his DP to transfer securities to the buyers account. The movement of funds takes place outside the NSDL system. The various steps in the transactions are: I) II) III) Seller gives delivery instructions to his DP, to move securities from his account to his broker. Securities are transferred from brokers account to CC on the basis of a delivery out instruction. On pay-out, securities are moved from CC to buying brokers account.

Buying broker gives instructions and securities move to the buyers account.

Derivatives: Future and Option Trading

Derivatives: Meaning The term "Derivative" indicates that it has no independent value, i.e. its value is entirely "derived" from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else. In other words, Derivative means a forward, future, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities. With Securities Laws (Second Amendment) Act, 1999, Derivatives has been included in the definition of Securities. The term Derivative has been defined in Securities Contracts (Regulations) Act, as:-

A Derivative includes: a. a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security; b. a contract which derives its value from the prices, or index of prices, of underlying securities;
In a nutshell, Derivatives is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. For example, wheat farmers may wish to sell their harvest at a future date to eliminate the risk of a change in prices by that date. Such a transaction is an

example of a derivative. The price of this derivative is driven by the spot price of wheat which is the underlying. Derivatives: Types The most common derivative instruments traded at the stock exchange are: 1) Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts. 2) Options: Options are of two types calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.

Future Contract Futures Contract means a legally binding agreement to buy or sell the underlying security on a future date. Future contracts are the organized/standardized contracts in terms of quantity, quality (in case of commodities), delivery time and place for settlement on any date in future. The contract expires on a pre-specified date which is called the expiry date of the contract. On expiry, futures can be settled by delivery of the underlying asset or cash. Cash settlement entails paying/receiving the difference between the price at which the contract was entered and the price of the underlying asset at the time of expiry of the contract. Option contract Options Contract is a type of Derivatives Contract which gives the buyer/holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at end of a specified period. The buyer / holder of the option purchases the right from the seller/writer for a consideration which is called the premium. The seller/writer of an option is obligated to settle the option as per the terms of the contract when the buyer/holder exercises his right. The underlying asset could include securities, an index of prices of securities etc. Under Securities Contracts (Regulations) Act, 1956 options on securities has been defined as "option in securities" means a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future, and includes a teji, a mandi, a teji mandi, a galli, a put, a call or a put and call in securities, etc.; An Option A stock option is a contract, which gives the buyer the right, but not the obligation, to buy or sell shares of the underlying security or index at a specific price for a specified time. Stock option contracts generally are for

100 shares of the underlying stock. There are two types of options, calls and puts. Call Option A call option gives the buyer the right, but not the obligation, to buy the underlying security at a specific price for a specified time. The seller of a call option has the obligation to sell the underlying security should the buyer exercise his option to buy. Put Option A put option gives the buyer the right, but not the obligation, to sell an underlying security at a specified time. The seller of a put option has the obligation to buy the underlying security should the buyer choose to exercise his option to sell. Option Holder The buyer of the option is called Option Holder. Option Writer The seller of the option is called Option Writer.

Option Premium The premium is the price at which the contract premium trades. The premium is the price of the option and is paid by the buyer to the writer or seller, of the option. In return, the writer of the call option is obligated to deliver the underlying security to an option buyer if the call is exercised or buy the underlying security if the put is exercised. The writer keeps the premium whether or not the option exercised. Strike Price or Exercise Price The strike or exercise price of an option is the specified share price at which the shares of stock can be bought or sold by the buyer if he exercise the right to buy (in case of a call) or sell (in case of a put). In a nutshell the fixed price at which the option holder can buy and/or sell the underlying asset is called the exercise price or strike price. Money Option When the price of the underlying security is equal to the strike price, an option is at the money (ATM). A call option is in the money (ITM) if the strike is less than the market price is less than market price of the underlying security. A call is out of the money (OTM) if the strike price is greater than the market price of the underlying security. A put option is out of the money (OTM) if the strike price is less than the market price of the underlying security. Call Option Put Option At the Money Exercise price=Market Price Exercise price=Market Price In the Money Exercise price<Market Price Exercise price>Market Price Out of the Exercise price>Market Price Exercise price<Market Price Money Contract Size of an Equity Option The amount of the underlying asset covered by the options contract. This is 200 contracts in case of Index Options but different in case of Stock Options depending on the value. Open Interest

Open interest refers to number of outstanding option contracts in the exchange market or in a particular class or series. Exercising or Assigning the Option Contract When an investor buys an option he/she have the right to either purchase or sell stock at a predetermined price (strike price). When and if he/she choose to purchase or sell Stock at that predetermined price (strike price) he/she is said to be exercising his/her right. When he/she sell an option he/she now have the obligation to sell or purchase stock. He/she have or may not have to fulfill that obligation. He/she is considered to be assigned if he/she is being required to fulfill that obligation. Typically this occurs when the option is in the money. Option in case of Doing Nothing If he/she bought a call or put he/she would lose the Premium he/she paid for the option plus whatever commissions and fees incurred on that transaction. If he/she sold a call or a put and his/her option is in the money he/she will most likely be assigned and he/she will have to sell or buy stock. Anticipation of Being Assigned An investor can anticipate being assigned any time his/her option becomes in the money as the buyer of the option may exercise to earn profit. Expiration Date The last day upto which a buyer of an option can exercise his option. At NSE option contract expires on last Thursday of the expiry month. At any moment of time three types of contracts are traded, current month (expiring on last Thursday of the current month). A new contract starts on next day of expiry of the current month contract. American and European Option If an option that is exercisable on or before the expiry date is called

American option and one that is exercisable only on expiry date, is called European option.

Therefore, in the case of American options the buyer has the right to exercise the option at anytime on or before the expiry date. This request for exercise is submitted to the Exchange, which randomly assigns the exercise request to the sellers of the options, who are obligated to settle the terms of the contract within a specified time frame. As in the case of futures contracts, option contracts can be also be settled by delivery of the underlying asset or cash. However, unlike futures cash settlement in option contract entails paying/receiving the difference between the strike price/exercise price and the price of the underlying asset either at the time of expiry of the contract or at the time of exercise / assignment of the option contract. Exchange-Traded Option and Over-The-Counter Option Options traded on an exchange are called exchange-traded options and options not traded on an exchange are called over-the-counter options.

Index Futures and Index Option Contracts Futures contract based on an index i.e. the underlying asset is the index, are known as Index Futures Contracts. For example, futures contract on NIFTY Index and BSE-30 Index. These contracts derive their value from the value of the underlying index. Similarly, the options contracts, which are based on some index, are known as Index options contract. However, unlike Index Futures, the buyer of Index Option Contracts has only the right but not the obligation to buy / sell the underlying index on expiry. Index Option Contracts are generally European Style options i.e. they can be exercised / assigned only on the expiry date.

An index, in turn derives its value from the prices of securities that constitute the index and is created to represent the sentiments of the market as a whole or of a particular sector of the economy (Sectoral Index). By its very nature, index cannot be delivered on maturity of the Index futures or Index option contracts therefore, these contracts are essentially cash settled on Expiry.

Derivatives: Minimum Contract Size The Standing Committee on Finance, a Parliamentary Committee, at the time of recommending amendment to Securities Contract (Regulation) Act, 1956 had recommended that the minimum contract size of derivative contracts traded in the Indian Markets should be pegged not below Rs. 2 Lakhs. Based on this recommendation SEBI has specified that the value of a derivative contract should not be less than Rs. 2 Lakh at the time of introducing the contract in the market.

Derivatives: Lot Size of a Contract Lot size refers to number of underlying securities in one contract. Additionally, for stock specific derivative contracts SEBI has specified that the lot size of the underlying individual security should be in multiples of 100 and fractions, if any, should be rounded of to the next higher multiple of 100. This requirement of SEBI coupled with the requirement of minimum contract size forms the basis of arriving at the lot size of a contract (See Annexure-1). For example, if shares of XYZ Ltd are quoted at Rs.1000 each and the minimum contract size is Rs.2 lacs, then the lot size for that particular scrips stands to be 200000/1000 = 200 shares i.e. one contract in XYZ Ltd. covers 200 shares.

Derivative Markets in India

Derivative trading in India takes can place either on a separate and independent Derivative Exchange or on a separate segment of an existing Stock Exchange. Derivative Exchange/Segment function as a Self-Regulatory Organization (SRO) and SEBI acts as the oversight regulator. The clearing & settlement of all trades on the Derivative Exchange/Segment would have to be through a Clearing Corporation/House, which is independent in governance and membership from the Derivative Exchange/Segment.

Trading Terminal for Cash Market

Trading Terminal for Future & Option

Introduction- Power IndiaBulls (PIB)

In this continuously changing business environment managing risks has become an inevitable part of any finance related organisation from Banking to Sharebroking. Risk Management has gained a lot of importance in the last half decade. With risk managers handling risks from Rs. 20 million to Rs. 200 million its absolutely essential for Indiabulls to understand the role of Risk Management in their organisation. Since managing market risks on client positions is critical to their business their in-house technology team of engineers has designed the Risk Management System around real time technology requiring minimal human intervention. The PIB Software has a risk management logic built into it that continuously marks to market the clients position & doesnt allow the client to take a fresh position beyond the stipulated limits. This risk management logic takes into account all the assets of the client (cash & shares), updated real time, lying with us to get an allowable exposure value. Margin call alerts are automatically generated & relayed to the client & the administrators from the system. For the other part of the business, the back-office system provides the centralized controls & risk management team with all information for generating margin calls & managing risk of the client. CTCL & NEAT softwares have been installed at branches to manage risk at the time of order entry.

Power Indiabulls Terminal

Logic for Limit Calculation Indiabulls Financial Services Ltd. acts as a NBFC to all clients of Indiabulls Securities Ltd. providing funding to all its clients against shares and cash balance available with them thereby providing them ample opportunity to earn that extra amount of profit in a positive market environment. The RMS Dept. of Indiabulls has carefully bifurcated companies listed in the exchange based on their performance & liquidity in the market into two categories viz. 1) A# Category Scrips where we provide margin funding to the clients.* 2) Z Category Scrips where we provide no margin funding to the clients. The list of scrips provided for funding are subject to changed from time to time based on the performance & liquidity of the co. in the stock market. * A link to the list of these scrips is available at the website and also at the

PowerIndiabulls Admin & Client Terminals.

# More than 314 scrips in this category In order to make a distinction between a frequent Investor and an infrequent investor, Indiabulls has provided special limits to those clients who demand extra exposure and who give a high amount of turnover in order to encourage them to trade. (see Financial Agreement) The infrequent investor comes under 3T or 3-Times exposure limits which is calculated as under: - (the limit is for delivery trade)

L1 = 3.00 * [CB + (0.67 * S1) + (0.00 * S2) (1.50 * S3) (2.00 * S4)] L2 = L1 / 3.00
Where, L1 = Max. Limit Available for Trading in A Category Scrips L2 = Max. Limit Available for Trading in Z Category Scrips CB = Cash Balance in the Clients Account S1 = Total Market Value of A Category Scrips S2 = Total Market Value of Z Category Scrips S3 = Market Value of sold A Category Scrips not lying with Indiabulls S4 = Market Value of sold Z Category Scrips not lying with Indiabulls

Note Scrips lying in Demat A/c. of Indiabulls are not given any exposure unless transferred to Margin A/c. Limit Calculation in Derivatives Segment Incase of derivatives, Indiabulls provides no margin funding instead a limit to the extent of the amount available for buying Z Category shares is available for trading. For example: if a client has purchases a futures contract , Indiabulls provides 0% limit but instead charges him 100% margin to trade further in A or Z Category shares. That means if the client has bought futures contract worth Rs. 10,000/no amount would be considered as limit for buying any more shares either of A or Z Category or any F&O contracts and he would have to shell out more funds to buy any shares or F&O contracts. (i.e. 10,000 / 1) If one looks at the net exposure report one would realise that total available limit to trade in A Category shares is 3-times or 4-times that of MARGIN REQUIREMENT in F&O segment. Logic for Intraday & Delivery Trading in Equity & Derivatives As the most popular phrase in the business world goes Time is Money it applies very aptly to the working of the Stock Market where every minute can translate into monetary gains or losses. It is in this fast paced & volatile market that provides ample opportunity for making gains in the short run. In order to enable their clients to take advantage of these short-term opportunities and maximize their gains, we have provided limits and exposures for Intra-settlement and Delivery Trading in their PowerIndiabulls Software.

Intra-settlement trade & Delivery trade

In the PIB terminal or the browser based terminal, at the time of order entry, the client would have to specify whether the order being placed is for Intrasettlement trade or Delivery trade.

Delivery Trade is the trade which is done with the intension of holding the scrip for investment purposes. Normally a client buys a particular scrip on delivery basis if he expects the price of the share to go up in the near or distant future. The amount of brokerage generally charged for this kind of transaction is 0.50% on the total turnover. The exposure provided for this kind of trade is mentioned in the earlier chapter of Limit Calculations (for illustration refer to Slide nos. 9 & 10 for 3T Clients and Slide nos. 14 & 15 for 4T Clients). The client can even short-sell the shares if he wishes to but he would be charged 150% margin against A Category Shares and 200% margin incase of Z Category shares. Intraday or Intra-settlement Trade means that the shares which are bought or sold with the intension of buying or selling them on the same day. This kind of trade is done with the intension of speculation. The scrips could be either bought earlier and sold later or sold earlier and bought later. The amount of brokerage generally charged for this kind of transaction is 0.10% of the total turnover of Intraday trade.The exposure provided for this kind of trade is 2 times that of delivery trade in A Category as well as Z# Category shares. An intra-settlement trade or delivery trade can be done by choosing the appropriate option from the drop down combo box on the Browser based Terminal or the PowerIndiabulls Admin or Client Terminal. Only selected scrips are traded in intraday in Z Category group. Short-selling When an investor feels that due to certain market conditions the price of particular scrip is going to fall he can short-sell the shares at a high price and buy them again when the price is much lower than before. This gap between the sale price and the purchase price of the share after deducting brokerage, sales tax and turnover tax would be the gains which the investor can make. Shortselling could be done in Intra-settlement as well as Delivery trading.

In order to Short-sell the user would have to choose a particular scrip by clicking on it, then he can either right click and choose Sell Now or Press Function key 12 or the minus ( - ) sign from the number pad keys and key in the details of the quantity, price and Intra-settlement or Delivery Trade. If it is Delivery Trade the investor would presented with 3 options viz. Shares Not With Indiabulls, Sell From Margin Only & Sell From Margin & DP Logic of Short-Selling for Derivatives Segment Incase of derivatives segment, the underlying instrument could be either bought or sold. There is no concept of Short-Selling in Derivatives Segment. Incase of Futures contracts, if the client is bearish he can sell his contract earlier during the month and choose to buy it later at a lower price. The difference in price would be the gain for the client. Incase of Options contracts, the client has an option of a Call or Put option. He can either take a call option if he bullish and expects the price to appreciate or take a put option if he bearish and expects the price to fall. Logic for Stop-Loss Orders In today's world of rising inflationary prices & increasing costs a penny saved is a penny earned". This phrase has not only a lot of relevance to the urban middle class consumer but it is also important in understand the working of stock exchange whenever there is a sudden fall or rise in the prices of the scrips leading to high volatility. A stop loss order is generally placed in order to minimize the loss against such abnormal market conditions. When a purchase or sale position is taken in the market it is always recommended that a trader places orders with a reasonable margin of stop loss in order to avoid heavy losses in the market 'coz in today's times a well-educated investor is a smart investor. Screen Shot of a buy order being placed along with stop loss during mkt hours. Stop-Loss Orders for Buy Positions

Incase of Stop-Loss order for buy positions, a client would have to make a decision whether he expects the price to show some resistance beyond a certain price level. If yes, he could place a stop-loss order and the trade would be executed only if the price goes beyond the stop-loss price. For example:- If Mr. X feels that BIOCON (spot price Rs. 490) is worth buying only above Rs. 500/- he can place a stop loss of Rs. 495/- and purchase of Rs. 500/-. This means that only if the share price of BIOCON surpasses Rs. 495/- it would be considered for trade and if it reached Rs. 500/- the shares would be bought. Screen Shot of a sell order being placed along with stop loss during market hours. Stop-Loss Orders for Sell Positions Incase of Stop-Loss orders for Sell Positions, a client could place a stop-loss order for his buy position taken and can get his exposure released against earlier positions taken. For a buy positions taken, if a sell slide market stop loss order is placed then it is treated as a square off of the position at a price which is 5% below the specified trigger price. For example- if 1 share is bought at Rs 100 and a sell stop loss order at market with trigger price of 95 is placed then only 4* (100-90) =40 rupees are blocked and 60 are released. Logic for Stop-Loss in Derivatives Segment To trade in derivatives segment, the client should first add the particular F&O scrip by pressing the shift & insert key together. After choosing the required F&O contract (the contract has to be highlighted) the client can either use plus + key (for buy) or minus - key (for sell) from the number pad or press Function Key 11 for buy or Function Key 12 for sell. Incase of Derivatives Segment, the concept of stop-loss is exactly the same as it is in equity. The only difference is that in equity the field name specified is Stop

Loss whereas the field name specified in derivatives segment is Trigger Price. Screen shot of order being placed in F&O segment along with a stop-loss. Logic for Margin Calls Every area of business has certain kinds of limitations or restrictions and although Indiabulls has provided exposures and limits for their clients it has to monitor these clients so that they dont exceed the limits and violate SEBI rules and regulations. Margin Calls are reminders sent by the Risk Management team to the Client or the appropriate Client Relationship Managers to reduce their clients position incase if their clients have taken any margin or loan from Indiabulls to carry his\her position to the next day. Generally, if a client takes margin from Indiabulls he would be in Margin Call 1, but depending on the amount borrowed the client could possibly be in Margin Call 2, Margin Call 3, or Square-up Call. The formula for computing Margin Call is as follows: Cash Remaining*100 / MLP Stocks Cash Remaining is calculated on real time basis which means that it is the current position at any given point of time (after last pay-in payout) depicting the amount remaining of the client up till the last trade initiated by the client on that given day. Cash Remaining is usually not displayed in the PIB software and is calculated using the FOCUS software used by the Risk Management Team. Incase, if any trade is initiated after the last pay-in payout or any amount is deposited in the clients account it will be reflected in Cash Remaining. MLP Stocks is the total value of the Margin Lending Product or A Category shares held by the client after the last pay-in payout. This also includes any shares bought by the client on the day of trade. The percentage computed after using the given formula determines in which margin call the client comes under.

Margin Call Margin Call 1 Margin Call 2 Margin Call 3 Square-up Call

Percentage Squared Off 60% - 69.99% 70% - 79.99% 80% and above

Action Taken Alert sent to clients Alert sent to clients Alert sent to client & their respective RMs Alert sent to client & their respective RMs to reduce position immediately Position Squared Off by RMS Dept.

Squared Off

80% and above

Margin Calls are of 2 types viz. 1) Where the risk management team monitors clients on real time basis during market hours and sends margin call alerts to their respective client relationship managers. 2) Where the risk management team runs the EOD (End Of Day) Process, computes the limits and sends margin call alerts to the clients and sends a report to their respective client relationship managers. Logic for Square-up Process And in the end there were none this famous line taken from one of Agatha Christies book briefly describes that if a client has taken a buy or sell position in intraday he has to square-off his position or transfer his position to delivery else the square-up process run at 3.15 p.m. would eventually square-off the clients intraday portfolio (to leave no shares in client in intra-settlement). Square-up process means a trade to counter the previous trade of a client for particular scrip in intraday which was entered earlier during the day. In squareup process shares bought in intraday are sold and vice-versa. During the squareup process a client is not allowed to take any intraday positions and all outstanding intraday positions are blocked.

Square-up Process

Indiabulls is India's leading retail financial services company with 135 locations spread across 95 cities. While their size and strong balance sheet allow them to provide their clients with varied products and services at very attractive prices, their over 750 Client Relationship Managers are dedicated to serving their clients unique needs. Indiabulls is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides their clients with real-time service & 24/7 access to all information and products. Their flagship Indiabulls Professional Network offers real-time prices, detailed data and news, intelligent analytics, and electronic trading capabilities, right at clients finger-tips. This powerful technology is complemented by their knowledgeable and customer focused Relationship Managers. They are Creating a world of Smart Investor. Indiabulls offers a full range of financial services and products ranging from Equities to Insurance to enhance clients wealth and hence, achieve their financial

goals. Indiabulls' Relationship Managers are available to help with clients financial planning and investment needs. To provide the highest possible quality of service, Indiabulls provides full access to all products and services through multichannels.

Services at Indiabulls
Equities & Derivatives: Comprehensive services for independent investors, active traders & Non-Resident Indians. Indiabulls Equity Analysis TM Premium: research on 401+ companies updated daily. Depository Services: Value added services for seamless delivery. Insurance: Take care of your life while you take care of business.

Their Retail Equity Business caters to the needs of individual Indian and NonResident Indian (NRI) investors. Indiabulls offers broker assisted trade execution, automated online investing and access to all IPO's.

Through various types of brokerage accounts, Indiabulls offers the purchase and sale of securities which includes Equity, Derivatives and Commodities Instruments listed on National Stock Exchange of India Ltd (NSEIL), The Stock Exchange, Mumbai (BSE) and NCDEX. Indiabulls is providing following investors services:

Indiabulls Signature Account - Comprehensive services including research and investing guidance for independent investors.

Power Indiabulls TM - Indiabulls is dedicated to empower Active Traders through personal service and advanced trading technology. Non-Resident Indian (NRI) Investor Services - With an extensive range of investment products, a customer will discover an unwavering commitment to helping him/her invest in India.

Building and maintaining clients ideal portfolio demands objective, dependable information. Indiabulls Equity AnalysisTM helps satisfy that need by rating stocks based on carefully selected, fact-based measures. And because they are not focused on investment banking, they don't have the same conflicts of interest as traditional brokerage firms. This objectivity is only one: The Indiabulls Equity AnalysisTM model attempts to gauge investor expectations, since stock prices tend to move in the same direction as changes in investor expectations. Stocks with low and potentially improving investor expectations tend to receive A or B ratings Stocks with high and potentially falling investor expectations tend to receive D or E ratings Stocks lying in-between the investor expectations tend to receive C ratings Over the next 12 months, A-rated stocks have a return outlook of strongly outperforming the market while E-rated stocks have a return outlook of strongly underperforming the market Indiabulls' systematic approach is dependent on the accuracy of financial data provided by third parties. Indiabulls Equity AnalysisTM may not capture more subjective, qualitative influences on return and risk, such as management changes and pending lawsuits. Indiabulls Equity AnalysisTM also do not reflect the possible impact of latebreaking news since the ratings are updated daily. Thus, it is important to conduct additional research prior to making a trading decision.

Indiabulls is a depository participant with the National Securities Depository Limited and Central Depository Services (India) Limited for trading and settlement of dematerialized shares. Indiabulls performs clearing services for all securities transactions through its accounts. They offer depository services to create a seamless transaction platform execute trades through Indiabulls Securities and settle these transactions through the Indiabulls Depository Services. Indiabulls Depository Services is part of their value added services for their clients that create multiple interfaces with the client and provide for a solution that takes care of all their needs.

When it comes to business, they are right up there. Taking all those split second decisions, avoiding pitfalls and making sure clients money works hard for them. But the business of life requires just as much attention and probably even more. That's they are proud to bring to market an offer exclusively for their clients. As a part of theri endeavor to provide their clients with world-class products and services, Indiabulls gives them the opportunity to avail of the whole range of Birla Sunlife Insurance Products through the Indiabulls network of 750 Relationship Managers over 135 locations nationwide. This means, they can take care of life, while taking care of business.

SCHEDULE OF CHARGES FOR OPENING OF TRADING ACCOUNT AT INDIABULLS

The client would have to send a demand draft or cheque of Rs.500 along with this registration kit towards account opening fees. The account should activate in about 7 working days after receipt of complete account opening kit (registration kit) from the client. A client can also opt to open a net enabled Bank Account with Indiabulls. Indiabulls have net banking tie ups with IDBI bank, UTI bank, HDFC Bank, OBC and Citibank and a client can make use of their payment gateways to effect instant/online fund transfer between his (clients) Trading Account and his Bank Account. The brokerage charges applicable are as below: 0.5% for trades that result into delivery 0.1% for intra-settlement trades for either leg of the transaction This is subject to 5 paise per share in case of intra-settlement trade and 10 paise per share in case of trades resulting into delivery. (minimum brokerage for delivery trades below Rs. 3600/-, is Eighteen Rupees per scrip). In addition to the above a client will have to pay the following taxes: Turnover tax: Rs. 600 per Crore [variable charge] Security Transaction Tax: Rs.75 per Lakh [fixed charge] Service tax: 10.20% on Brokerage (10% Service Tax + 2% Surcharge on Service Tax) [fixed charge]

Indiabulls Depository Services

Indiabulls is a depository participant with the National Securities Depository Limited and Central Depository Services (India) Limited for trading and settlement of dematerialised shares. Indiabulls performs clearing services for all securities transactions through its accounts. We offer depository services to create a seamless transaction platform execute trades through Indiabulls Securities and settle these transactions through the Indiabulls Depository Services. Indiabulls Depository Services is part of our value added services for our clients that create multiple interfaces with the client and provide for a solution that takes care of all your needs.

SCHEDULE OF CHARGES (NSDL-DPID : IN302236)

Charge Head Stamp Paper Charges AMC Custody Charges Transaction Charges Buy (Market / OffMarket) Transfers Transaction Charges Sell (Market / OffMarket) Transfers Failed Inst. Pledge Creation / Confirmation / Closure/Invocation D'MAT D'MAT Rejections Re'mat Charges Delivery Instruction Book Charges Account with POA Account without POA Rs.200/Rs.100/Nil Rs.250/Nil Nil Nil Nil Rs. 17/- per Transaction Nil Rs.25/- per Transaction Re.1/- per certificate (max Rs.250 /-)+ Rs.25 courier charges Rs.20 per rejection + Rs.25 courier Rs.15 request or 0.02% whichever is higher. Nil Rs. 17/- per Transaction Rs.20/- per instruction. Rs.25/- per Transaction Rs.3/- per certificate (max Rs.250 /-)+ Rs.25 courier charges Rs.20 per rejection + Rs.25 courier Rs.15 request or 0.02% whichever is higher. Rs.10/No charges for first book.

Fax Indemnity N.A. Actual (Optional) CHARGES ON NON PAYMENT OF DUES : Penalty and Interest A penalty of 2% per month on the value Charges outstanding on the bill after one month from the due date. Non-Payment of bill The depository services for the account will be after 30 days from the temporarily withdrawn. The renewal charges due date of the for resuming the depository operations will be payment Rs.100 per account.

SCHEDULE OF CHARGES (CDSL) DP Id: 12029900

Charge Head Stamp Paper Charges AMC Custody Charges Transaction Charges Buy (Market / OffMarket) Transfers Transaction Charges Sell (Market / OffMarket) Transfers Failed Inst. Pledge Creation / Confirmation / Closure/Invocation D'MAT D'MAT Rejections Re'mat Charges Delivery Instruction Book Charges Account with POA Account without POA Rs.200/Rs.100/Nil Rs.250/Nil Nil Nil Nil Rs. 17/- per Transaction Nil Rs.25/- per Transaction Re.1/- per certificate (max Rs.250 /-)+ Rs.25 courier charges Rs.20 per rejection + Rs.25 courier Rs.15 request or 0.02% whichever is higher. Nil Rs. 17/- per Transaction Rs.20/- per instruction. Rs.25/- per Transaction Rs.3/- per certificate (max Rs.250 /-)+ Rs.25 courier charges Rs.20 per rejection + Rs.25 courier Rs.15 request or 0.02% whichever is higher. Rs.10/No charges for first book. Actual

Fax Indemnity N.A. (Optional) CHARGES ON NON PAYMENT OF DUES : Penalty and Interest A penalty of 2% per month on the value Charges outstanding on the bill after one month from the due date.

Non-Payment of bill after 30 days from the due date of the payment Note :

The depository services for the account will be temporarily withdrawn. The renewal charges for resuming the depository operations will be Rs.100 per account.

In case of delays in the payment of charges, the demat account will be frozen for all operations till such time all dues are cleared subject to 30 days notice from the payment due date.

All instructions for transfer must be received in physical form from the clients upto 4:00pm on T+1 for pay in of securities. Late instructions would be accepted at the account holders sole risk and responsibility.

Charges are subject to revision at the companys sole discretion and as per revisions in NSDL charges and are subject to 30 days notice from the date of applicability.

All payments to be made in the name of Indiabulls Securities Ltd. Via a cheque/DD payable at the local branch where the account is opened. Outstation cheques will not be accepted.

Out of pocket expenses incurred on the dispatch of securities for Dematerialisation and communication charges incurred on out-station calls/faxes made specifically on request of the client will be charged on actuals.

Any advance payment over and above the normal amount due can also be made. Any such higher amount paid than the minimum amount payable at the time of account opening shall be adjusted against the bills raised from time to time.

Motilal Oswal Securities Ltd.

MODES (Motilal Oswal Depository Service) DP Tariff
Charges Head Economy Types of Charges Investor

Account Opening Account maintenance**

Rs.100 Rs.200/-

Rs.100 Rs.500/-

Advance (A/c opening + Rs.300/AMC) Custody charges Dematerializations Nil Rs.3/per certificate

Rs.600/-

Nil min Rs.3/per certificate min

Rs.25/- per request Transaction Charges Within Modes(Buy) Transaction Charges Within MODES (Sell)
Transaction Charges Outside Modes (Buy) Transaction Charges

Rs.25/- per request Nil Nil

Rs.5/Rs.10/-

Nil

Nil

Rs.15/-

Rs.15/-

Outside MODES (Sell)

Rematerialisation

Rs.35/-

Rs.35/-

Pledge Creation

Rs.25/-

Rs.25/-

Pledge Closure

Rs.25/-

Rs.25/-

Account closing

Nil

Nil

Special annum)

report

(Per Rs.300/Rs.200/-

Crossweb charges

access Rs.50/-

Nil

Extra statement charges Rs.15/- per statement for first 10 pages and thereafter Rs.2/- per page Shift in scheme will be effected from the subsequent billing at a charge of Rs 100/Rates are subject to revision as per decided by CDSL & MOSL For CORPORATE Accounts additional Rs.500/- P.A. will be charged for AMC**

Stock Holding Corporation of India Limited (SHCIL)

Particulars
Annual Membership Charge Purchase (Market & Off Market) Sale (Market & Off Market) Custody Charges Dematerialisation Postage per Demat Request Postage per Remat Request Creation/Confirmation of Creation of Pledge Closure/Confirmation of Closure of Pledge Invocation of Pledge Late Transaction Charges (per transaction)

Charges
Rs.500/Nil 0.05% (min. Rs.25/-) plus NSDL / CDSL charges Nil Rs.3/- per certificate Rs.25/- per certificate Rs. 25/0.02% plus NSDL / CDSL charges 0.02% plus NSDL / CDSL charges Rs.50/- per txn. Rs.10/-

Payment Options: Option 1: Client pays an Imprest of Rs.1000/- per depository account, which will be adjusted against depository charges. The Imprest option is payable by cheque/cash and is non-interest bearing. The client undertakes to replenish the balance before it falls below Rs.250/-. Option 2: Client authorises SHCIL to collect the dues through ECS facility

Notes: All the percentages in the above tariff would be applied on the value of the transaction as computed by NSDL/CDSL. Annual Maintenance Charges are non-refundable and are levied upfront for a period of one year at the beginning of the year. Late charges would be collected for all instructions received after 4 p.m. for same day execution or execution date as pay in date. Transaction cum billing statements will be sent once a month, provided there is a transaction else once in a quarter. Any extra statement would be charged @ Rs.15/- per statement for first 10 pages, thereafter it would be charged @ Rs.2/- per page. Alternatively, you may register on our site www.shcil.com to view your holding, transaction cum billing statements. The rates depend on the existing NSDL/CDSL charges and will be revised on revision by NSDL/CDSL. The charges are also subject to revision by SHCIL. Please note that in case we are unable to recover charges due to nonmaintenance of adequate balances in the bank account/inadequate Imprest Account/ invalid bank account, depository services for your account will be temporarily discontinued. Any request to resume the services will be charged Rs.250/- and the services will be resumed in a minimum of three working days from the date of receipt of request at SHCIL branch. All taxes / levies / cess as applicable.

Industry Analysis COMPETITIVE PRICE LIST OF DPs

S.No. Particular 1 Annual Manufacturi ng Charges HDFC BANK Rs. 299 OBC Rs. 300 IDBI BANK Rs. 250 BoP Rs.299 ICICI BANK Rs. 300 UTI BANK Rs.200 CENTURIAN BANK Rs.300 INDUSIND BANK Rs.250 Abhipra Capital Ltd. Rs. 200 or 1500 (Security Deposit)

Transaction Charges Buying 0.04% on value Min. Rs. 25 Selling 0.04% on value Min. Rs. 25 Custody Charges Rs. 1.25 per ISIN per month Min. Rs. 1.25 p.m.

0.03% on 0.02% on Rs. 15 0.03% on value Min value Min. value Min. Rs.20 Rs. 20 Rs. 25 0.03% on 0.02% on 0.04% on 0.04% on value Min value Min. value Min. value Min. Rs.20 Rs. 20 Rs. 25 Rs. 25

Rs.10 Rs.25

0.03% on value Min.Rs15 0.03% on value Min.Rs25

0.03% on value Rs.3 (Nil in case Min Rs.20 of Intra-DP) 0.03% on value Min Rs.20 0.03%on value Min. Rs. 17

NIL upto 5 Rs. 1.25 Rs. 1 per Rs. 0.50 Rs. 0.75 Rs. 1.50 per ISIN Rs. 1.50 per Rs.1per ISIN per ISIN, per ISIN ISIN per per ISIN per ISIN per month Min. Rs. ISIN per month month above 5 Rs. per month month Min. per month per month 1.50 p.m. Min. Rs. 1.50 1per ISIN Min. Rs. Rs. 1 p.m. p.m. per month. 1.25 p.m.

Pledge Charges Creation 0.02% on Rs. 50 per 0.05% on 0.02% on 0.02% on 0.02% on value request value value value value Min. Rs. 25 Min. Rs. 50 Min. Rs. 35 Min. Rs. 35 Min. Rs. 50

0.03% on value Min. Rs. 50

0.03% on value Min. Rs. 100

0.03% on value Min Rs.50

Closure

0.02% on Rs. 25 per 0.05% on 0.02% on 0.02% on Rs. 50 per value request value value value request Min. Rs. 25 Min. Rs. 25 Min. Rs. 35 Min. Rs. 35 0.02% on value Min Rs. 25 Nil Rs. 25 per request 0.15% on 0.02% on 0.02% on Rs. 50 per value value value request Min. Rs. 25 Min. Rs. 35 Min. Rs. 35

0.03% on value Min. Rs. 50

0.03% on value Min. Rs. 100

0.03% on value Min Rs.50

Invocation

0.03% on value Min. Rs. 50

0.04% on value Min. Rs. 100 NIL or Rs. 250 If no. S/B A/c Rs. 3 per cert. + Rs. 25 postage.

0.03% on value Min Rs.50 Nil Rs 2 per cert. Min. Rs.20+postage

5 6

Account Opening Demat

Rs. 1500 Nil or Rs. NIL NIL If no. S/B 200 If no. A/c S/B A/c Rs. 3 per Rs. 40 0.2% +Rs. Rs. 3 per Rs. 2 per cert. + Rs. (per 35 postage cert. + Rs. cert. + Rs. 35 postage. request) 25 postage. 25 postage. Rs. 10 per cert.

Remat

8 9 10 11 12

Additional Statement Min. Balance Bank Account Speed-e Facility Trading Facility

Rs. 25 Rs.1000

NIL or Rs. Nil 200 If no. S/B A/c Rs. 2.5 per Rs. 40 per request cert. + Rs. 50 per Request Rs. 25 per 0.04% on Rs. 25 per Rs. 50 per Rs. 20 per Rs. 25 per request request value + 20 request request cert. + Rs. per cert. 50 per Request Rs. 10 Rs. 25 Rs. 10 Rs. 25 Nil Nil Rs.1000 Rs.1000 Rs.1000 Rs.1000 Rs.1000 Rs.1000 Compulsory Not Available Not Available

Rs.100 per cert. 0.02% on value Min Rs.15

Rs.10 Rs.1000 Compulsory Not Available Not Available

Nil

Compulsory Compulsary Not Available Available Not Available Not Available

Not Compulsory Compulsory Not Required Required Not Not Not Not Available Available Available Available Not Not Available Not Available Available Available

Not Required Available Available

COMPETITIVE PRICE LIST OF DPs

S.No. Particular CHOLAMANDALA M SEC. LTD. DSP MERRIL LYNCH JK SECURITIES PVT. LTD. Rs. 150 /- p.a. KOTAK MOTILAL SECURITIES OSWAL LTD. SECURITIES LIMITED Rs. 20/- per month Rs 500 p.a S.S.K.I. STOCK SECURITIES HOLDING PVT. CORPORATIO LIMITED N OF INDIA LIMITED Rs 350 p.a Rs. 350/Indiabulls Securities Pvt. Limited Rs.250

Annual Manufacturing Charges Transaction Buying

Rs.500/- p.a

NIL

Rs.20 or .02% whichever is higher

Selling

Rs.20 or .04% whichever is higher

(Intra DP) Inted0.04% of the depository value transactionsof securities 0.05 % of the minimum value of Rs.25/- (Inter transaction OR DP) 0.08% of Minimum rs. 15 the value /- per of securities Transaction minimum Rs.50/(Intra DP) Inted0.04% of the depository value transactionsof securities 0.05 % of the minimum value of Rs.25/- (Inter transaction OR DP) 0.08% of Minimum rs. 15 the value /- per of securities Transaction minimum Rs.50/-

0.04% of the value of securities min Rs.15/-

N.A.

0.02% or Rs. 0.05% (Min Rs 13/- per 15/- plus NSDL Transaction charges)

NIL

0.04% of the value of securities min Rs.15/-

N.A.

0.02% or Rs. 0.05% (Min Rs Rs. 17/- per 23/- per 15/- plus NSDL Transaction Transaction charges)

Custody Charges

N.A.

Rs. 0.50 per ISIN per month.

Re. 1 /- Per ISIN

Rs 1.25 per month per ISIN held in the account

NIL

Re 1 per ISIN/month

Rs 1/- per ISIN per month

NIL

Pledge Creation

Rs.50 or .04% whichever is higher Rs.50 or .04% whichever is higher NIL

Rs.100/- per request

Rs. 50 /-

0.05% of the value of securities NIL

Rs. 25/-

0.02% the value of securities 0.02% the value of securities 0.02% the value of securities Rs 500/Rs 3 per cert.

0.02% plus NSDL charges

Rs.25/- per Transaction

Closure

Rs.100/- per request

NIL

Rs. 25/-

0.02% plus NSDL charges

Rs.25/- per Transaction

Invocation

Rs.100/- per request NIL

NIL

0.04% of the value of securities NIL

Rs. 25/-

0.02% plus NSDL charges NIL Rs. 3/- per certificate

Rs.25/- per Transaction Rs.500 Rs.3/- per certificate (max Rs.250 /-)+ Rs.25 courier charges Rs.15 request or 0.02% whichever is higher

5 6

Account Opening Demat

Rs.100 Rs.50/- per request

Rs. 200 /-

Rs 100 p.a Rs.3/- per certificate min Rs.25/- per request

Rs.3/- per Rs. 4 /- Per Rs. 20/- per Certificate, plus Certificate(Mini month Rs. 25 per mum Rs. 30/-) Request Inclusive of postal Charges Rs.20/- per Rs. 20 /- Per 0.04% of Certificate, plus Certificate(Mini the value of Rs.25/- per mum Rs. 30/-) securities request. Inclusive of Min Rs.15/postal Charges

Remat

Rs.20/- per request

Rs.35/-

Rs 15 per certificate

Rs 10/- per certificate

Additional Statement

Rs. 50

Rs. 25

Rs. 50

NIL

9 10 11 12

Min. Balance Bank Account Speed-e Facility Trading Facility

Rs.1000 Not Required Available Available

Rs.1000 Not Required Available Available

Rs.1000 Not Required Available Available

Rs.1000 Not Required Available Available

Rs.1000 Not Required Available Available

Rs.15/- per statement for first 10 pages and thereafter Rs.2/- per page Rs.1000 Not Required Available Available

Rs. 50

Rs.100

Rs.1000 Not Required Available Available

Rs.1000 Not Required Available Available

Data Analysis
HF B N DC A K OC B

In ia u d b lls Sc 2 0 e ., 5 30 5 30 5 50 0 20 4 100 5 50 0

ID I B N B AK

29 9

30 0 20 5 29 9 30 0 20 0

BP o IC I B N IC A K U IB N T AK C N U IA B N ET R N A K IN U IN B N DS D A K A h ra b ip C o mn a m h la a d la D PM rril L n h S e yc J S . K ec K ta S . o k ec M tila O S . o l . ec S .K S . .S .I. ec S .C . .H .I.L In ia u S . d b lls ec

20 0

20 5

30 0

1. Annual Manufacturing Charges (in Rs.)

HF B N DC A K OC B

1 5 1 5 2 5 2 0 3 2 0

In ia u d b lls 5e ., 0 1S c 0

ID I B N B AK

2 5 2 0 2 0 1 5 2 5

BP o IC I B N IC A K UIB N T AK C N U IA B N ET R N A K IN U IN B N DS D A K A h ra b ip C o mn a m h la a d la D PM rril L n h S e yc J Sc K e. K ta S c o k e. M tila O S c o l . e. S .K S c .S .I. e . S .C . .H .I.L In ia u S c d b lls e .

1 5

1 0

2. a. Transaction Buying (in Rs.) (Minimum)

HF B N DC A K OC B

In ia u d b lls Sc 1 e 1 ., 5 5 2 3 0 1 5 1 5 2 5 2 0 1 7 2 0

ID I B N B AK

2 5

BP o

2 0 2 0 2 5 2 5 2 5

IC I B N IC A K UIB N T AK C N U IA B N ET R N A K IN U IN B N DS D A K A h ra b ip C o mn a m h la a d la D PM rril L n h S e yc J Sc K e. K ta S c o k e. M tila O S c o l . e. S .K S c .S .I. e . S .C . .H .I.L In ia u S c d b lls e .

2 5

2. b. Transaction Selling (in Rs.) (Minimum)

HF B N DC A K OC B

0 12 .5 1 05 . 0 1

I d bls nia u l Sc, 1 e. 0

I BB N DI A K

12 .5 1 12 .5 1 05 . 07 .5

BP o I I IBN C C AK UI B N T AK CNUI N A K ET R B N A I DS D A K NUI B N N Ah r bi a p C o mn aa h l a dl m a DP e rl L n h S Mr i y c J Sc K e. Kt kS c oa e . Mtl lO S c oi a . e . S . . .S c . K e. S I S . .. . . CL H I I d b l sS c ni u a l e.

15 .

15 .

3. Custody Charges (in Rs.) (per ISIN per Month)

25 25 50 50 100 50 50 100 25 25 25 50 50 35 35 50 50

HDFC BANK OBC IDBI BANK BoP ICICI BANK UTI BANK CENTURIAN BANK INDUSIND BANK Abhipra Cholamandalam DSP Merril Lynch JK Sec. Kotak Sec. Motilal O. Sec. S.S.K.I. Sec. S.H.C.I.L. Indiabulls Sec.

4. a. Pledge Creation (in Rs.) (Minimum)

HDFC BANK OBC IDBI BANK BoP

25 25 25 25 0 100

25

50

50 35 35

ICICI BANK UTI BANK CENTURIAN BANK INDUSIND BANK Abhipra Cholamandalam DSP Merril Lynch JK Sec. Kotak Sec. Motilal O. Sec. S.S.K.I. Sec. S.H.C.I.L. Indiabulls Sec.

50

50

100

50

50

4. b. Pledge Closure (in Rs.) (Minimum)

HDFC BANK OBC IDBI BANK

25 50 0 100

BoP

25 25 25

25

25 25

35 35 50

ICICI BANK UTI BANK CENTURIAN BANK INDUSIND BANK Abhipra Cholamandalam DSP Merril Lynch JK Sec. Kotak Sec. Motilal O. Sec. S.S.K.I. Sec. S.H.C.I.L. Indiabulls Sec.

0 50

100

50

4. c. Pledge Invocation (in Rs.) (Minimum)

1600 1400 1200 1000 800 600 400 200 0 0

5. Account Opening (in Rs.)

H D FC B A N

1500

K ID O B BC IB A N K IC B IC o C IB P EN U AN TU T I K IN RIA BA D U N B NK SI N AN D K B A C N ho la Ab K D SP ma hip M nda ra er ri lam lL yn JK ch K S M ota ec ot . i la k S ec l S. O. . S. S K ec .I . . S. Se In di H. c. ab C. ul I.L ls . Se c.

200 200 250 200 100 100 0 0 0 0 0 0 0 500 500

Series1

4 3

20

33 3 3 3

40 3 3 2

50 2 3
6. Dematerialisation Charges (in Rs.) (Per Request)

40

2.5

HDFC BANK OBC IDBI BANK BoP ICICI BANK UTI BANK CENTURIAN BANK INDUSIND BANK Abhipra Cholamandalam DSP Merril Lynch JK Sec. Kotak Sec. Motilal O. Sec. S.S.K.I. Sec. S.H.C.I.L. Indiabulls Sec.

HDFC BANK

1510 15 10 25 20 35 25 15 20 50 20 20 15 100 20 25

OBC IDBI BANK BoP ICICI BANK UTI BANK CENTURIAN BANK INDUSIND BANK Abhipra Cholamandalam DSP Merril Lynch JK Sec. Kotak Sec. Motilal O. Sec. S.S.K.I. Sec. S.H.C.I.L. Indiabulls Sec.

7. Rematerialisation Charges (in Rs.) (Per Request)

H D

100 80

120

FC

20 0 25 10 25 10

60 40

8. Additional Statement (in Rs.)

25 0 0 10 0 50 25 50 0 50 15 50 100 Series1

B A N K ID O B BC IB A N K IC B IC o C IB P EN U AN TU T I K IN RIA BA D U N B NK SI N AN D K B A C N ho la Abh K D SP ma i p M nda ra er ri lam lL yn JK ch K S M ot ec ot ak . i la S ec l S. O. . S. S K ec .I . . S. Se In di H. c. ab C. ul I.L ls . Se c.

1000 1000 1000 1000 1000 1000 1000 1000

HDFC BANK

1000

OBC

1000 1000 1000 1000 1000 1000

IDBI BANK BoP ICICI BANK UTI BANK CENTURIAN BANK INDUSIND BANK Abhipra Cholamandalam DSP Merril Lynch JK Sec. Kotak Sec. Motilal O. Sec. S.S.K.I. Sec. S.H.C.I.L. Indiabulls Sec.

1000

1000

9. Minimum Balance Required (in Rs.)

6, 35% 11, 65%

Compulsory Not required

10. Bank A/c

8, 47% 9, 53%

Available Not Available

11. Speed-e-facility

6, 35% 11, 65%

Available Not Av ailable

12. Trading Facility

FINDINGS
Strengths of The Indiabulls Sec. Ltd. In Providing DP Services :
1. Annual Maintance Charges are less in comparison of major players who are providing trading facility. 2. Trading charges for buying is nil and for selling is Rs.15 (minimum), these both take the company apart from the crowd. It is good for the company because only few are ahead of him. 3. Custody charges are nil which is again very beneficial for the company. 4. Pledge Creation, Closure and Invocation charges are quite less and are good for attracting the customers. 5. Rematerialisation Charges are lower then the major players of the market, i.e., Kotak Sec. (Rs.35), J. K. Sec. (Rs.20), etc. 6. Bank a/c is not required. Which is good for the company because he is with the 65% of the market players. 7. Company is providing the speed-e-facility. Which is good for the company because he is with the 53% of the market players. 8. Company is providing the trading facility. Which is good for the company because he is again with the 65% of the market players.

Weaknesses of The Indiabulls Sec. Ltd. In Providing DP Services:

1. Additional Statement Charges are very high. 2. Dematerialisation charges are very high in comparison to other players of the market. 3. Account Opening charges are again very high, which is a major drawback of the company. Hence, company is providing good services to its customers. If company can overcome from its weaknesses by controlling reducing its a/c opening and other charges , it can be very successful.

CONCLUSION
The good times at Indian Stock Market appear to be here to stay. Fair valuations, Impressive growth of Indian Companies and continued inflows of FII funds will ensure that. Monday is famous for creating the history in the stock market. On Monday, May 17, 2004, sensex crashed by 800-plus points. For the first time in life sensex dropped in such a way and the day is remember as Bloodbath of Black Monday. But one year later on Monday June 27, 2005 the sensex crossed 7,200 for the first time in life and closed at 7,151.08 (a new lifetime closing). Again on Monday July 04, 2005 it reached on all-time high 7277.30. These all are the good signs for trading in Indian Capital Market. The basket of stock derivatives in India has grown bigger recently. There has been a more than two-fold rise in the number of stocks where futures and options will be allowed. In 2001, when stock future trading began in India, it was introduced in only 32 stocks, which were largely in the large-cap category. In 2002,12 more were added. But since April 2005, 70 new stocks have been added, taking the total to 126. These numbers are going up with passage of time. No doubt speculators have dominated the derivative market, but there are many who regard this as a management tool. If we look through records at NSE, which controls almost 90percent of the trading volumes in derivatives and a survey says that it is retail investors who are driving up the volumes. NSE reports shows that retail investors accounted for more than 50 percent of its business, while institutions contribution has been below 10 percent. An investor can join this game and minimize risk of his stock profile. For example, where returns are concerned, the risk involved in futures is higher than in options, because the margin payments are adjusted to the daily market price

of the stock/index and the margin rate may also be revised by the exchanged. For example, If an investor thinks that share of Arvind Mills has a great future and will go up to Rs. 300, he buy a future contract at Rs. 270. For the contract value of Rs. 2.16 lakh he pays just Rs. 43,200, assuming a 20 percent margin. This margin will be reset on the basis of daily market price. So if the stock rises to Rs. 350, the new margin requirement will be Rs. 56,000 and he pay the difference of Rs. 12,800. Or if the ranks to Rs. 200, he get back the excess above the margin requirement. Also, if the exchanges decide to increase the margin from. Lets say, 20 percent to 35 percent, the blow will be the much more severe, especially in the falling market. So, trading in derivatives can be use as a risk minimizing tool. Theories and technical books abound, which may not guarantee instant success in investing, but there are some tips from experienced investors to be kept in mind before investing: Take exposure only up to that amount, which you can afford to lose. Invest time in finding a good professional stockbroker, who is an old hand at the game. Long-term investors should stay away if the short-term swings and losses upset their mind or can not bear. Trade into derivatives only if you understand the underlying stock markets. Analyze the company through which are planning to invest, i.e., check their past records, their present position, their charges, schemes, etc.

ANNEXURE :1
Permitted Lot Sizes of Contracts at NSE for trading in Derivative Market S. No. A B Underlying S&P CNX Nifty CNX IT Symbol NIFTY CNXIT Market Lot 100 100

Derivatives on Individual Securities 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 ABB Ltd. Associated Cement Co. Ltd. Allahabad Bank Andhra Bank Alok Industries Ltd. Arvind Mills Ltd. Ashok Leyland Ltd Aurobindo Pharma Ltd. Bajaj Auto Ltd. Bank of Baroda Bank of India Bharat Electronics Ltd. Bharat Forge Co Ltd Bharti Tele-Ventures Ltd Bharat Heavy Electricals Ltd. Ballarpur Industries Ltd. Bongaigaon Refinery Ltd. Bharat Petroleum Corporation Ltd. Cadila Healthcare Limited Canara Bank Century Textiles Ltd CESC Ltd. Chambal Fertilizers Ltd. Chennai Petroleum Corp Ltd. Cipla Ltd. Kochi Refineries Ltd Colgate Palmolive (I) Ltd. Corporation Bank Dabur India Ltd. Divi's Laboratories Ltd. Dr. Reddy's Laboratories Ltd. Escorts India Ltd. ABB ACC ALBK ANDHRABANK ALOKTEXT ARVINDMILL ASHOKLEY9 AUROPHARMA BAJAJAUTO BANKBARODA BANKINDIA BEL BHARATFORG BHARTI BHEL BILT BONGAIREFN BPCL CADILAHC CANBK CENTURYTEX CESC CHAMBLFERT CHENNPETRO CIPLA COCHINREFN COLGATE CORPBANK DABUR DIVISLAB DRREDDY ESCORTS 200 750 2450 2300 3350 2150 550 700 200 1400 1900 550 200 1000 300 1900 2250 550 500 1600 850 1100 6900 950 1000 1300 1050 600 1800 250 400 2400

33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68

Essar Oil Ltd. Federal Bank Ltd. GAIL (India) Ltd. Great Eastern Shipping Co. Ltd. Glaxosmithkline Pharma LtD. Gujarat Narmada Fertilizer Co. Ltd. Grasim Industries Ltd. Gujarat Ambuja Cement Ltd. HCL Technologies Ltd. Housing Development Finance Corporation Ltd. HDFC Bank Ltd. Hero Honda Motors Ltd. Hindalco Industries Ltd. Hindustan Lever Ltd. Hindustan Petroleum Corporation Ltd. ICICI Bank Ltd. Industrial development bank of India Ltd. I-FLEX Solutions Ltd. IFCI Ltd. Indian Hotels Co. Ltd. India Cements Ltd. Indian Rayon And Industries Ltd Indusind Bank Ltd. Infosys Technologies Ltd. Indian Petrochemicals Corpn. Ltd. Indian Overseas Bank Indian Oil Corporation Ltd. ITC Ltd. IVRCL Infrastructure & Projects Ltd. J & K Bank Ltd. Jet Airways (India) Ltd. Jindal Steel & Power Ltd Jaiprakash Hydro-Power Ltd. Jindal Stainless Ltd. Cummins India Ltd The Karnataka Bank Ltd.

ESSAROIL FEDERALBNK GAIL GESHIPPING GLAXO GNFC GRASIM GUJAMBCEM HCLTECH HDFC HDFCBANK HEROHONDA HINDALC0 HINDLEVER HINDPETRO ICICIBANK IDBI IFLEX IFCI INDHOTEL INDIACEM INDRAYON INDUSINDBK INFOSYSTCH IPCL IOB IOC ITC IVRCLINFRA J&KBANK JETAIRWAYS JINDALSTEL JPHYDRO JSTAINLESS KIRLOSKCUM KTKBANK

5650 1300 1500 1350 300 2950 175 550 650 300 400 400 150 2000 650 700 2400 600 15750 350 2900 500 3850 100 2200 2950 600 150 400 600 200 250 6250 2000 1900 2500

69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106

Lic Housing Finance Ltd Mahindra & Mahindra Ltd. Maharashtra Seamless Ltd. Maruti Udyog Ltd. Matrix Laboratories Ltd. Mphasis BFL Ltd. Mangalore Refinery and Petrochemicals Ltd. Mahanagar Telephone Nigam Ltd. National Aluminium Co. Ltd. Nagarjuna Fertiliser & Chemicals Ltd. NDTV Ltd. Neyveli Lignite Corporation Ltd. Nicolas Piramal India Ltd Ispat Industries Ltd. National Thermal Power Corporation Ltd. Oil & Natural Gas Corp. Ltd. Orchid Chemicals Ltd. Oriental Bank of Commerce Patni Computer Syst Ltd Pfizer Ltd. Punjab National Bank Polaris Software Lab Ltd. Ranbaxy Laboratories Ltd. Reliance Energy Ltd. Reliance Capital Ltd Reliance Industries Ltd. Satyam Computer Services Ltd. State Bank of India Shipping Corporation of India Ltd. Siemens Ltd SRF Ltd. Strides Arcolab Ltd. Sterlite Industries (I) Ltd Sun Pharmaceuticals India Ltd. Syndicate Bank Tata Chemicals Ltd Tata Consultancy Services Ltd Tata Power Co. Ltd.

LICHSGFIN M&M MAHSEAMLES MARUTI MATRIXLABS MPHASISBFL MRPL MTNL NATIONALUM NAGARFERT NDTV NEYVELILIG NICOLASPIR NIPPONDENR NTPC ONGC ORCHIDCHEM ORIENTBANK PATNI PFIZER PNB POLARIS RANBAXY REL RELCAPITAL RELIANCE SATYAMCOMP SBIN SCI SIEMENS SRF STAR STER SUNPHARMA SYNDIBANK TATACHEM TCS TATAPOWER

850 625 600 800 1250 800 4450 1600 1150 14000 1100 2950 950 8000 3250 300 700 600 650 300 600 2800 200 550 1100 600 600 500 1600 150 1500 850 350 450 3800 1350 250 800

107 108 109 110 111 112 113 114 115 116 117 118

Tata Tea Ltd. Tata Motors Ltd. Tata Iron and Steel Co. Ltd. Titan Industries Ltd. TVS Motor Company Ltd. Union Bank of India UTI Bank Ltd. Videocon International Ltd. Vijaya Bank Videsh Sanchar Nigam Ltd Wipro Ltd. Wockhardt Ltd.

TATATEA TATAMOTORS TISCO TITAN TVSMOTOR UNIONBANK UTIBANK VDOCONINTL VIJAYABANK VSNL WIPRO WOCKPHARMA

550 825 675 800 2950 2100 900 3200 3450 1050 300 600

ABBREVIATIONS
HSBC ALBM AOP BO BO ID BoB BoI BoP BSE CD CDSL HongKong & Shanghai Banking Corporation Automatic landing and borrowing mechanism Association of Persons beneficial owner Beneficiary Owner Identification number Bank of Baroda Bank of India Bank of Punjab Bombay Stock Exchange certificates of deposits Central Depository Securities (India) Limited

client ID Client Identity CMClient Manager CP D&P Demat DIS DP DP ID DPs DRF ECS FIFO FOCUS GTB commercial paper Name of Softwares Depository & Participant Dematerialisation Delivery Instruction Slip Depository Participant Depository Participant Identity Depository Participants Demat Request Form Electronic Clearing Service First In First out FOCUS software Global Trust Bank CTCL & NEAT

FIsFinancial Institutions

HDFC HSBC HUFs ICICI IDBI ISIN MODES NCDEX NRIs NSDL NSE OBC PIB POA PoA PoI RRF SBI SEBI SHCIL SRO SSKI UBI UTI WDM

Housing Development Financial Corporation HongKong & Sanghai Banking Corporation Hindu Undivided Family Industrial Credit & Investment Corporation of India Industrial Development Bank of India International Securities Identification Number Motilal Oswal Depository Service National Commodity Index Non-Resident Indians National Securities Depository Limited National Stock Exchange Oriental Bank of Commerce PowerIndiabulls Software Power Of Attorny proof of address proof of identity Relationship & Trading Agent Remat Request Form State Bank of India Securities Exchange Board of India Stock Holding Corporation of India Limited Self-Regulatory Organization S. S. Kantilal Ishwarlal Securities Pvt. Ltd. Standard Chartered Union Bank of India Unit Trust of India Wholesale Debt Market

R&T Agent

STANCHART

BIBLIOGRAPHY
1. www.nsdl.co.in 2. www.cdsl.co.in 3. www.sebi.com 4. www.bseindia.com 5. www.nseindia.com 6. www.indiabulls.com 7. Study material of NSDL 8. Chandra Prasanna Projects-Planning, Analysis, Financing, Implementation and Review fifth edition. 9. Michael & Jorden Securities Analysis 10. Business World, 27 June, 2005