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ORGNAIZATION STUDY ON

HEDGE EQUITIES LTD.


Submitted to
MAHATMA GANDHI UNIVERSITY, KOTTAYAM




In partial fulfilment of requirement for the award of
MASTERS DEGREE IN BUSINESS ADMINISTRATION
(2012 - 2014)

By,
VISHAL VINCENT PALATTY
(Reg No: 40872)





RAJAGIRI COLLEGE OF SOCIAL SCIENCES
RAJAGIRI P.O
Kochi 683104




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DECLARATION

I, VISHAL VINCENT PALATTY, Student of Rajagiri College of Social Sciences,
Kochi, hereby declare that this report titled Organizational study on Hedge Equities Ltd.
is a bona fide record of the project work done by me at Hedge Equities Ltd, Kochi and
submitted to Mahatma Gandhi University, Kottayam in the partial fulfillment of the award of
Masters in Business Administration.
I further declare that this project has not been submitted to any other university/board for
the award of any degree/diploma.





Place : Kakkanad VISHAL VINCENT PALATTY
Date : Rajagiri College of Social Sciences










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ACKNOWLEDGEMENT

I would like to express my gratitude to, Dr. Joseph I Injodey, Principal, Rajagiri
College of Social Sciences, and his team for providing me the opportunity to be a part of
Rajagiri College of Social Sciences and undertaking this organization study.
I offer my profound gratitude to my guide Prof. Vinod, faculty of Rajagiri College of
Social Sciences in whole heartedly helping me in successfully completing this project.
I really thank Mr. Benil D.A. (Dean of Hedge School of Applied Economics) and
Mrs. Sini Ralph (Manager, Compliance Department), HEDGE EQUITIES PVT LTD. for
their guidance in collecting necessary information and for their support in successfully
completing this project.
I thank my parents, teachers, GOD and all others who have directly or indirectly
assisted me in doing this project and also for the help, support, interest and valuable hints
they have provided.

VISHAL VINCENT PALATTY











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LIST OF CONTENTS
SERIAL NO: TOPIC PAGE NO
TITLE PAGE
DECLARATION
ACKNOLEDGEMENT
EXECUTIVE SUMMARY 01
SECTION: I ORGANIZATION STUDY 02
1.1 INDUSTRY PROFILE 03
1.1.1 STRUCTURE OF INDIAN FINANCIAL SYSTEM 03
1.1.1.1 FINANCIAL INSTITUTIONS 04
1.1.1.2 FINANCIAL INSTRUMENTS 04
1.1.1.3 FINANCIAL SERVICES 04
1.1.1.4 FINANCIAL MARKETS 05
1.1.1.4.1 MONEY MARKET 05
1.1.1.4.2 CAPITAL MARKET 05
1.1.2 STOCK EXCHANGES 05
1.1.2.1 MAJOR STOCK EXCHANGES 05
1.1.2.1.1 NSE 05
1.1.2.1.2 BSE 06
1.1.3 BROKERAGE FIRMS 06
1.1.3.1 CURRENT SCENARIO 07
1.1.3.2 MAJOR INDIAN BROKERAGE FIRMS 07
1.1.3.3 CHALLENGES FACED BY INDIAN FIRMS 08
2.1 COMPANY PROFILE 08
2.1.1 HISTORY AND INCORPORATION 08
2.1.2 HEDGE GROUP 09
2.1.2.1 HEDGE EQUITIES 09
2.1.2.2 HEDGE COMMODITIES 10
2.1.2.3 HEDGE FINANCE 10
2.1.2.4 HEDGE SCHOOL OF APPLIED ECONOMICS 10
2.1.3 PROMOTERS 11
2.1.4 VISION AND MISSION STATEMENTS 12
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2.1.5 PHYSICAL LOCATION 13
2.1.6 ORGANIZATIONAL STRUCTURE 14
2.1.6.1 REGIONAL ORGANIZATOIN STRUCTURE 15
2.1.7 PRODUCTS AND SERVICES OFFERED 15
2.1.7.1 EQUITIES TRADING 15
2.1.7.2 COMMODITIES TRADING 16
2.1.7.3 CURRENCY TRADING 16
2.1.7.4 MUTUAL FUNDS AND BONDS 16
2.1.7.5 ONLINE TRADING 17
2.1.7.6 INTERNET TRADING 17
2.1.7.7 DEPOSITORY SERVICES 17
2.1.7.8 DERIVATIVE TRADING 17
2.1.7.9 KNOWLEDGE CENTRE 17
2.1.7.10 EQUITIES RESEARCH 18
2.1.7.11 PORTFOLIO MANAGEMENT SERVICES 18
2.1.8 FUNCTIONAL DEPARTMENTS 18
2.1.9 USP OF HEDGE 24
2.1.10 CORPORATE SOCIAL RESPONSIBILTITY 25
2.1.11 INNOVATIVE MANAGEMENT PRACTISES 25
2.1.12 SWOT ANALYSIS 26
2.1.13 OBSERVATIONS 26
SECTION: II RESEARCH REPORT 29
BIBILOGRAPHY 38






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EXECUTIVE SUMMARY

We all live in an economy which is affected by inflation. The value of money
depreciates at a greater pace which puts in dilemma where we have to choose between
various investment options the economy in which we are living has a strong financial
structure and put forward various investment options. Deciding upon an investment option
differs from person to person because of varied risk taking mentality. Investment
opportunities what we have is broad one that includes real estates, equities , capital market
instruments, money market instruments, commodities etc. In India the volume of population
that invests in capital market is very low when comparing it with the investment made in real
estate and gold. Awareness about the product is the initial part in a buying behaviour.
Without awareness various beneficial investments are unseen by the investors.
The organizational study was done at the head office of Hedge Equities Ltd. Hedge
Equities is an established retail and institutional financial services provider in India. Based in
Kochi, Hedge Equities Ltd has a growing pan-India presence with more than 130 retail
outlets India and an overseas office in Dubai. The services folio of hedge equities include
Equity, Mutual Funds, Derivatives, Commodities, Currency, Online trading, Depository
Services, Clearing Services, Fixed Income, Research and Wealth management services
(WMS).
The report includes a detailed study on the organization, the industry in which it
operates, the market scenario, the product and services offered and a SWOT analysis, with
respect to the organization. These details can be used in order to further improve the
organization and its business.




2




SECTION: I
ORGANIZATION
STUDY







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1.1 INDUSTRY PROFILE
The economic development of any country depends upon the existence of a well
organized financial system. It is the financial system which supplies necessary financial
output for the production of the goods and service which in turn promote the well being and
standard of living of the people of a country. The responsibility of a financial system is to
mobilize the savings in form of money and monitory assets and invest them into productive
ventures.
In finance, the financial system is the system that allows the transfer of money
between savers and borrowers. It comprises a set of complex and closely interconnected
financial institutions, markets, instruments, services, practices, and transactions. Financial
systems are crucial to the allocation of resources in a modern economy. They channel
household savings to the corporate sector and allocate investment funds among firms; they
allow inter-temporal smoothing of consumption by households and expenditures by firms;
and they enable households and firms to share risks.
The financial services industry includes companies whose sales come from the
management of money for individuals and institutions. It consist of credit unions, banks,
credit card companies, insurance companies, consumer finance companies, stock brokerages,
investment funds and some government sponsored enterprises.
A brokerage firm, is a financial institution that facilitates the buying and selling of
financial securities between a buyer and seller. Brokerage firms provide services to different
groups of customers and assist them in buying public stocks and securities via their agent
stockbrokers. Brokerage firms based service provided can be classified into 2 groups:
Full service brokers
Discount brokers
Full service brokers:
Provides continuous stock reports and in most cases does buying and selling of
shares on behalf of client. They provide more services than any of discount brokers.

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Discount brokers:
A discount broker or an online broker is a firm that charges relatively small commission by
having its clients perform trades via automated, computerized trading system rather than by
having an actual stockbroker assist with trade.

1.1.1 STRUCTURE OF INDIAN FINANCIAL SYSTEM
The financial system consists of financial institutions, financial markets, financial
instruments and financial services which are regulated by regulators like Ministry of Finance,
the Company Law Board, Reserve Bank of India, Securities and Exchange Board of India,
Insurance Regulatory and Development Authority, Department of Economic Affairs,
Department of company Affairs, etc.,

Fig 1.1 Structure of Indian Financial System

1.1.1.1 FINANCIAL INSTITUTIONS
Financial Institutions are the business organizations that act as mobilizes of savings,
and as purveyors of credit and finance. They also provide various financial services to the
community. These financial business organizations deal in financial assets such as deposits,
loans, securities, and so on. These are further divided into banking and non-banking
institutions.
Indian Financial System
Financial
Institutions
Banking
Non -
Banking
Financial
Instruments
Financial
Markets
Money
Market
Capital
Market
Financial
Services
5

1.1.1.1.1 BANKING FINANCIAL INSTITUTIONS
Banking institutions are those institutions which participate in the economy's
payments system, i.e., they provide truncation services. Some of the major banking
institutions in India include, SBI, UBI, Canara Bank, Yes Bank etc.

1.1.1.1.2 NON-BANKING FINANCIAL INSTITUTIONS
Non-banking financial institutions are those institutions which act as mere purveyors
of credit and they will not create credit. Some examples of Indian non-banking financial
institutions include, LIC, UTI, IDBI, etc.

1.1.1.2 FINANCIAL INSTRUMENTS
Financial instruments are those instruments which are used for raising resources for
corporate entities. The financial instruments may be capital market instruments or money
market instruments. The ones that are used for raising capital through the capital market are
known as capital market instruments. The financial instruments which are commonly used in
India include Government securities, bonds, preference shares, equities etc.

1.1.1.3 FINANCIAL SERVICES
Financial services are an important component of a financial system. Financial
services cater to the needs of financial institutions, financial markets and financial
instruments. The functioning of the financial system very much depend on the range of
financial services provided by the providers, and their efficiency.


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1.1.1.4 FINANCIAL MARKETS
Generally speaking there is no place or location to indicate a financial market.
Wherever a financial transaction take place, it is deemed to have taken place in the financial
markets. Financial markets can be referred to as those centres and arrangement which
facilitate buying and selling of financial assets, claims and services. Financial markets could
be further divided into money market and capital market.

1.1.1.4.1 MONEY MARKET
The money market is a market for short-term funds, which deals in financial assets
whose period of maturity is up to one year. Some of the major financial assets traded in the
Indian money market include, call money, treasury bill, commercial paper, certificate of
deposit and trade bill.

1.1.1.4.2 CAPITAL MARKET
Capital Market may be defined as a market dealing in medium and long-term funds. It
is an institutional arrangement for borrowing medium and long-term funds and which
provides facilities for marketing and trading of securities. It could be further divided into
primary market and secondary markets.

1.2 STOCK EXCHANGES
Stock exchange is the term commonly used for a secondary market, which provide a
place where different types of existing securities. There are 20 exchanges in India which
deals with cash market instruments and seven exchanges which deals with derivative
instruments. Some of the largest exchanges in terms of volume of trade could be National
Stock Exchange, Bombay Stock Exchange, Multi Commodity Exchange of India Ltd. etc.
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1.2.1 MAJOR STOCK EXCHANGES IN INDIA

1.2.1.1 NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (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 NSEs mission is setting the agenda for change in the securities
markets in India. The NSE was set-up with the main objectives of: Establishing a nation-wide
trading facility for equities and debt instruments. NSE Ensures equal access to investors all
over the country through an appropriate communication network and provides a fair, efficient
and transparent securities market to investors using electronic trading system.

1.2.2BOMBAY STOCK EXCHANGE (BSE)
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
redresses of their grievances whether against the companies or its own member-brokers. It
also strives to educate and enlighten the investors by conducting investor education
programmers and making available to them necessary informative inputs.
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1.3 BROKERAGE FIRMS
The Indian brokerage companies are those that primarily act as agents for the buying
and selling of securities (e.g. stocks, shares, and similar financial instruments) on a
commission or transaction fee basis. The basic function of a brokerage firm is to execute buy
and sell orders for clients. Traditionally these firms have offered the investigation of the
quality and the possibilities of investing in a variety of investment products. It is still
accustomed for brokerage firms to offer information about possible investments free of
charge.

1.3.1 CURRENT SCENARIO
According to the details provided by SEBI there are 1,376 brokers registered with
BSE and 1,423 brokers registered with NSE. According to NSDL and CDSL there are about
2.4 million investor in the country and among them around 7.5 lakh are very active. The
market structure here is perfect competition as there are many players and the products
offered are more or less the same. The revenue of top brokers remained same as that in the
previous year, which is about 105 billion Indian rupees. However the cost was reduced by 7
to 8 percentage leading to a better cost income ratio.

1.3.2 MAJOR INDIAN BROKERAGE FIRMS
Motilal Oswal Securities
ICICI Securities Ltd
Kotak Securities Ltd
Indiabulls Financial Services Ltd
www.sharekhan.com
Fortis Securities (Religare)
Karvy securities
Geojit BNP Paribas
HDFC Securities
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Hedge Equities
JRG Securities
India Infoline
Edelweiss Securities Ltd.
Angel Broking Pvt. Ltd.


1.3.3 CHALLENGES FACED BY INDIAN BROKERAGE FIRMS

Protecting brokerage yields and market share in the highly competitive and
fragmented equity brokerage industry.
Greater dominance of the foreign brokerage houses in the institutional broking
segment.
Increasing investment requirement for purposes like automation and establishment of
advanced risk management and surveillance system.
Achieving a critical scale of operations and managing costs to sustain profitability
even in a prolonged dull phase.

2.1 COMPANY PROFILE
Hedge Equities Private. Limited is one of the leading retail stock broking house
which is running successfully in the country. Hedge offers its customers a wide range of
equity related services including trade execution on BSE, NSE, Derivatives, Depository
services, online trading ,investment advice etc. The firm has an online trading and investment
site, www.hedgeequities.com. The site provides investors information like present share
prices and also contains research reports about performance of each companies share
which could very useful for clients . The content rich and research oriented portal has stood
out among its contemporaries because of its steadfast dedication to offering customers best-
of-breed technology and superior market information. The objective has been to let customers
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make informed decision and to simplify the process of investing in stocks. Hedge equities
have always believed in investing in technology to build its business.

2.1.1 HISTORY AND INCORPORATION
Hedge equities was incorporated under the Companies Act,1956 as Hedge Equities
Private Limited on 17th December 2007. In May 2008 it started its full fledged operations.
Initially it started its service from the head office at Kaloor, Ernakulum. Later it extended its
services to derivatives also. Recently it also received the permission to start a Non- Banking
Financial Company. The aim of the promoters was to establish financial supermarket which
will provide solution to all kinds of financial problems and they are in the process of
achieving it. Founder & Managing Director of HEDGE GROUP is Mr. Alex K Babu, Mr.
Bhuvendran is CEO and Bobby J Arakunnel is COO. The Board members comprises of
veterans from six power houses in their respective fields: FedEx Securities, Baby Marine
Exports, Thakker Developers, Smart Financial, S.M. Hedge(CFO Videocon Industries) and
Padmashree Mohanlal



2.1.2 HEDGE GROUP
Hedge equities Ltd comes under the umbrella of Hedge Group. The other entities
which comes under hedge group include, Hedge commodities, Hedge finance, Hedge school
of applied economics. The hedge group have the same patrons running all its entities. The
structure of hedge group can be given as follows.
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Fig 2.1 Hedge Group Structure
2.1.2.1 HEDGE EQUITIES
Hedge equities one major entity under the hedge group. It is one of initiators
of share trading culture in Kerala. It is the first entity formed under the hedge group It has
35,000 satisfied customers who are reaping the benefits of professionally managed portfolios.
It provides services like online trading in NSE &BSE stocks, investment advises for its
customers, research based reports to assist investors in their decisions, it also provides wealth
management services. It publishes a financial monthly 'Ohari' to educate the investors. It also
conducts 'yuva' program which intends to educate youth about the industry.

2.1.2.2 HEDGE COMMODITY
Hedge Commodities Ltd, formed in 2008 as a fully owned subsidiary of Hedge
Equities, cater to its clients in Commodities market segment. The move to promote
commodities was a carefully taken step by the management, identifying its growth potential
Hedge Group
Hedge
Equities
Hedge Yuva &
Ohari
Publications
Hedge
Commoidities
Hedge
Finance
Hedge School
of Applied
Economics
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and the opportunity commodities provides for the market participants. With membership in
all major national level exchanges, Hedge Commodities provides service to varied set of
clients, which includes investors, Hedgers, Arbitragers and Traders/Speculators. Hedge have
clientele from different segments of the market, be it producers, manufacturers or end users,
with exposure to international, non agri commodities and agricultural commodities.

2.1.2.3 HEDGE FINANCE
One of newest member of hedge group, hedge finance marks the entry of
group into the booming NBFC industry. The company adheres strictly to the RBI
regulations and primarily focuses on the Loan Against Security sector. Hedge Finance will
primarily be focusing in an under tapped segment Securities. The company will look at
providing loans to customers against financial instruments like equities, bonds and
debentures. With LAS (Loan Against Securities model) Hedge Finance looks at unleashing
the potential of a growing segment in the Indian Financial landscape. With many firsts and a
rich history of achievements under its belt Hedge Equities adds sheen to this endeavour.

2.1.2.4 HEDGE SCHOOL OF APPLIED ECONOMICS
It's a place were present and potential stock brokers are molded to international
standards under the guidance of veteran financial experts. Live trading sessions and world
class academic amenities are the highlights of the Hedge School. HSAE is the first ever
educational venture dedicated to creating a class of high-end investment professionals in
Kerala. It aims at fulfilling the following goals, serve the ever increasing need for credential
manpower in the financial services sector globally and help students to nurture and grow
their own investment portfolios. The programs are designed for financial professionals and
investors who would be advocates of smart investments. It provides courses which are mainly
divided according to the target group as, courses for beginning investors, for existing
investors and for graduates for carrier guidance.

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2.1.3 PROMOTERS
The promoters of hedge group are, FedEx Securities, Baby Marine Exports, Thakker
Developers, Smart financial, SM Hegde and Padmashree Lt.Col Mohan Lal.

FEDEX SECURITIES
Managed by a team of ex-bankers, Fedex is a SEBI registered category 1 merchant
banker. The company concentrates on non fund based activities like structuring, tie up of
project financing, financial restructuring, investment banking, corporate and advisory
services. The core management team consists of bankers with rich experience of decades
and exposure to volatile situations in commercial and investment banking. With offices at
Nariman Point and Vile Parle East, Mumbai, FedEx Securities envisages a phenomenal
growth in this sector for its clients.

BABY MARINE EXPORTS
Baby Marine Group, started its operations in 1977 from Kozhikode and through
innovation and hard work has grown into three units and related industries spanning both
the west and east coast of Indian. Baby Marine Exports, B.M products, and Baby Marine
(Eastern) Exports are efficiently aided by pre processing units, ice factories, and a fleet of
insulated and refrigerated trucks for sea food transportation. Due to constant upgrading of
machinery, better links with raw material suppliers, and an established network of
purchasers have obviously made Baby Marine Group a leading Exporter of processed
marine Products to various international markets.

SMART FINANCIAL
Smart Financial entered the financial market only in 1992 but over this brief span
has covered a niche for itself by becoming leading financial service provider. The company
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offers guidance to investors as to equities, commodities, mutual funds, portfolio
management services and insurance. It offers complete range of financial solutions that
encompasses every sphere of the life. aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa


THAKKER GROUP
Starting off as a land developer and builder in 1962, Thakkers group diversified into
commercial production of agricultural and horticultural products, housing real estate
marketing, plantations.etc. They have provided shelter to more than 40000 families by
offering residential plots and premises. Thakker developer is the flagship company of the
group. It was established as private limited in 1987 and later went on to become the only
public limited company in North Maharashtra engaged in housing, commercial construction
and land development.

S.M.HEGDE
Mr. S.M Hegde, a chartered accountant by profession is the Chief Finance Officer of
the Indian Multinational Videocon International and has been at the helm of affairs for the
last 20 years.

PADMASHREE LT.COL BHARAT MOHANLAL
Mohanlal, the south Indian movie superstar has become a legend, a brand, and
cultural ambassador owing to various factors. Versatility and a natural flair for donning
complex characters have won him numerous accolades not to speak of some unforgettable
films contributed by him. A multifaceted personality, he has some business ventures also
which include Vismaya Max Film Post Production Studio, College for Dubbing Artists at
the Kinfra film and Video Park, Thiruvanathapuram. He is also the director of Uni Royal
Marine Exports; a Kozhikode based major Seafood Export Company.
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2.1.4 VISION/MISSION STATEMENTS

VISION
Hedge Equities, endeavour to become a well reputed financial services super-mart
catering to the evolving needs and unique requirements of our clientele, and partnering with
them to Build, Manage, and grow the customers Wealth.


MISSION
To create an ethical and sustainable financial services platform for our customers and
partner them to build business, to provide employees with meaningful work, self-
development and progression, and to achieve a consistent and competitive growth in profit
and earnings for our shareholders and staff.
The hedge equities ltd wishes to help their customer to increase their wealth. They
have done many actions in this direction, most of which are aimed at customer education they
include, starting of the hedge school of applied economics, the television program 'market
watch', the monthly magazine 'Ohari' etc. They also tries to develop their employees by
giving them exposure to the newest advancements in the market. They have successfully
completed five years in action and they are getting nearer to achieving their mission and
focuses on their mission in every step that they make.





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2.1.5 PHYSICAL LOCATIONS

HEAD OFFICE
Hedge Equities
Hedge House
Palarivattom, Cochin - 682025
Kerala, India.

REGIONAL OFFICE
Office No.202
2nd floor, Raghuveer,
Chamunda Circle,
S.V.P Road,
Borivali (West), Mumbai 4000092

It has 54 branches and 52 franchises spread across the four southern states (Kerala,
Tamil Nadu, Karnataka and Andhra Pradesh) of India. In addition to this it has one branch in
Dubai in U.A.E to cater to the needs of Indians over there.



2.1.6 ORGANIZATIONAL STRUCTURE
The organizational structure in hedge equities can be given as follows, it follows a
matrix structure as it uses group of employees to do multiple of its functions.




17























Fig 2.2 Organization Structure


Front Office
House
Keeping
HR
RMS


Dealing
IT
Franchise
Admin
Accounts
Compliance
Research
Overseas Op
SD
HSAE
WMS

HSAE
SIP
Marketing
Online

VP
BDG
Reg. Mang.
Dispatch
MD

CEO

COO

PCG
KYC
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2.1.6.1 REGIONAL ORGANIZATION STRUCTURE



2.1.8 FUNCTIONAL DEPARTMENTS
Hedge Equities consists of fourteen major departments. Each of the department is
headed by a Department Head and has adequate number of Asst. Managers and executives to
support in the operations. At times trainees and interns are also placed under various
departments. Each of the employees should report to the corresponding department head and
to the HR manager, via the department head.
The departmental chart of Hedge Equities can be given as:
REGIONAL
MANAGER
BRANCH
MANAGER
SUPPORT
STAFFS
DEALER
COMMODITY
EQUITY
ADVISOR
RELATIONSHIP
MANAGER
19








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ACCOUNTS DEPARTMENT
The financial activities of a firm are often under the direct control of the board of
directors. The CFO is the key person as far as this department is concerned. Chartered
Accountants and other highly qualified professionals work hand in hand to generate error free
accounts for the firm. Lower level employees delegate the other routine activities in this
department.

ADMINISTRATION

The department of administration is mainly responsible for ensuring the day to day
activities of the firm. This department performs various tasks and functions such as branch
support, bill payments and requests, branch expense regulation, complaints & rectification,
shop & commercial establishment registration, record on office inventory, co-ordination of
advertisement related works, renewal of rent agreement, branch closure rent termination,
etc.

HUMAN RESOURCES DEPARTMENT

Even at this age of advanced automation & mechanization, Human resource is often
considered as the back bone of an organization. Since virtual organizations are not very much
popular in our part of the world, it is very important for any organization to have a HR
department.
Human resource management is defined as asset of practices, policies and
programmes designed to maximize both personal and organizational goals. The presence of
an excellent HR department increases the efficiency of Hedge Equities considerably.
Some of the major functions of the HR Department are:

a) Training & Induction
The selected employees will undergo three days continuous induction. During this
period, he will undergo training with all the department of Hedge Equities. There will also be
classroom induction within three months.


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b) Wages and Salary Administration
The wages and salaries of the employees are fixed and granted by the HR
department with the proper consent of the finance department
c) Performance Appraisal
It is the Human Resources department which makes up the report suggesting
promotions to employees, making transfers and taking disciplinary actions if needed

d) Grievance Handling
The grievances of the employees are received only through proper channels i.e.,
through the particular department heads. The HR department will try to figure out solutions
to the complaints as per the rules and regulations of the company, in line with the judiciary of
the country.

SYSTEMS DEPARTMENT

The systems department plays a vital role in the day to day operations of the
company. It is through the systems department that the clients can avail the facilities of
Internet trading. Optic fiber cables and high bandwidth connections from the Hedge
Equities office to the ISP, a dedicated server and back-up ISDN connections are maintained
directly by the systems department. For the purpose of trading they have made use numerous
software systems, the prime one being ODIN (Open Dealers Integrated Network).


SOFTWARE DEVELOPMENT DEPARTMENT

The Software development department is involved in developing indigenous software
systems for the company. This department is filled with technocrats who are engaged in the
design and development of both simple and sophisticated software tools. This department
ensures the cross platform independency of the software systems in the company. Many of
the so developed systems provide Hedge Equities a better competitive edge over its
competitors



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DEPOSITORY/ CLEARING AND SETTLEMENT DEPARTMENT

Delivery becomes crucial for those shares that are bought on a particular day and not
sold on that day itself. For holding these shares for an appreciation in the value of the security
and to trade it on a future date the shares need to be transferred to ones depository. Deliver
Instruction Slip, which is a slip the client should fill and give to the dealer, is vital in buying
the shares and delivering it to a depository.

Hedge Equities offers depository services from both NSDL and CSDL. The Delivery
& Depository Department is mainly responsible with the day to day operations with the
depository services utilized by the clients.


SYSTEMATIC INVESTMENT PLAN

The department of SIP provides with a common platform in the form of Monthly
Investment Plan. It helps one to invest systematically without huge amount. It is often
considered a stepping stone to build ones future.

The SIP department offers different options in Account Opening (Gold, Silver,
Direct- Equity, Debt Market, and Mutual Fund). Some of the various other functions include
Code Change -operations, SIP Renewal Clients, Branches Follow up, Bank follow up for auto
debit or ECS, Form filling, Pay in, Payout, etc


RESEARCH DEPARTMENT

The function of the department is to study the details regarding the share or security
and to make predictions regarding the future performance of the company.

Hedge equities constantly strive to deliver insightful research to enable pro-active
investment decisions. The research department is broadly divided into two divisions-
Fundamental Analysis Group (FAG) and Technical Analysis Group (TAG).
23

The fundamental analysts are continuously scanning the entire economy for
discovering what they call the hidden gems in stock market terminology and present it to our
clients for profitable investments. A good fundamental analysis team has the capability to
identify emerging businesses before such businesses become the talk of the street and Hedge
Equities can be proud of processing one such fundamental analysis team.

Timing the market has always been the most difficult task for all analysts and The
Hedge Technical Analysis Group has merged to predict the market movements well in
advance using complex analytical methods. The department is equipped with cutting-edge
technologies for technical charting which assist the technical analysts to predict both upside
and downside movements efficiently for the benefit of the clients.

WEALTH MANAGEMENT SERVICES

Hedge Equities Ltd provides a comprehensive and unique wealth management service
to help their clients build, manage and grow their wealth. Hedge Equities is a SEBI registered
portfolio manager with a high caliber to analyze in detail the needs of individual clients and
come up with tailored portfolio solutions to meet clients risk appetite and evolving needs. In
addition to deducting appropriate conclusions out of the research data, WMS shares valuable
insights with the client through various communication channels, both traditional and
modern, as well.

RISK MANAGEMENT SURVEILLANCE

The department of Risk Management Surveillance has two basic functions which
can be given as; To reduce the risk of various investments by channeling the investment
decisions properly through the research department and to reduce the risk involved for the
company in making the investor invest in a particular financial product, which the company
regards harmful. This department is key in making out various checklists and other such
mechanisms which ensure smooth operations of the company.


24

KNOW YOUR CLIENT /ACCOUNT OPENING

The KYC department assists the client or customer to open an account in Hedge
Equities securities. This department is also responsible for the various front office activities.
A client has to sometimes open two types of accounts to trade and own securities in the NSE
& BSE. It should also be noted that a separate commodity account should be opened by a
client in order to trade in commodities, even though he/she has a valid trading account. The
KYC department helps and assists the clients in completing the various processes and
formalities that is associated with the same.

COMPLIANCE

The compliance department is a very important department in each and every
organization because it is this department that ensures that each and every department,
individual, activities and processes are in line with the rules and regulations of the company,
industry and judiciary of the country. This department is also responsible to ensure that the
various activities, processes and procedures of the company strictly coincides with the
objective of the firm.

BUSINESS DEVELOPMENT GROUP

Some of the various functions of the BDG department can be given as:

a) Business associate development: the Department is responsible for marketing activities at
the various branches. It also ensures that an efficient marketing arena exists at all branches.
The company encourages better relations with its branches and promotes development and
formulation of various marketing strategies.

b) Brand promotion: Another important function of BDG department is to promote the brand
of the company. Hedge Equities does it through the different promotional activities including
advertisements and various campaigns. This department is vital in ensuring that the Hedge
Equities brand as a stock broking firm is made known to the outside world.
25

c) Investment promotion: The main clients of Hedge Equities are its investors. Hence the
marketing department tries to capture as many investors as possible to encourage them to
invest.

d) Delivery Promotion: Intraday trading is not always profitable and might involve a lot of
risk hence Hedge Equities promotes for delivery, where the shares are kept to be sold for a
later date after analyzing the profitability factors.


PRIORITY CLIENT GROUP

As the name suggest this department mainly deals with the clients with high priority,
often with a higher investment, or highly influential personalities. This department also deals
with the trading related activities of the company. Trading refers to buying and selling of
shares. This department is the most important part of the organization. There are two types of
trading. They are:

A) Online Trading:

These are the prime trading terminals of the organization. Each computer of the
department with the terminal software and connectivity is termed as the trading terminal.
Each terminal is assigned with NCFM certified dealers, who is in charge of each portal and
will do the trade according to the client request. The terminal is managed by either NEAT
(National Exchange for Automated Trading) software or ODIN (Open Dealers Integrated
Network) software. The client can also place his through written request or through the
telephone.

B) Internet trading:

It is a facility provided by the company in order to trade the securities from
convenient place like his office, home etc. The order will be placed by the client itself, and
he/she can make changes before the trade is done. ie, changing the price, cancellation of the
order, etc.
26

2.1.7 PRODUCT AND SERVICE OFFERED

2.1.7.1 EQUITY TRADING
In finance, equity trading is the buying and selling of company stock shares. Equity
Market, at present, is a rewarding field for the investors and investing in Indian stocks are
profitable for not only the long and medium-term investors, but also the position traders,
short-term swing traders and also very short term intra-day traders. Fundamentally, stock
market is an avenue for business people to meet shareholders. Other than bank loans, they
now have another option to finance their businesses. This is possible by offering the
company's equities in exchange of shareholders cash. The company is never required to repay
the capital, but the new shareholders have a right to future profits distributed by the company.
For shareholders, they have alternatives to where they should put their money into. In the
same time, they get the opportunity to participate in capital intensive businesses at an
affordable price. Equity is an investment area which can capitalize on with proper assistance
regardless of the market circumstances. Hedge Equities opens the door to this highly lucrative
investment opportunity that could provide a feasible solution to all your financial queries.

2.1.7.2 COMMODITY TRADING
In economics, a commodity is a marketable item produced to satisfy wants or needs.
Economic commodities comprise goods and services. The more specific meaning of the term
commodity is applied to goods only. It is used to describe a class of goods for which there
exist a demand, but which is supplied without qualitative differentiation across a market. In
case of commodity, the market treats its instances as equivalent or nearly so with no regard to
who produced them. At Hedge Equities one can trade in futures like gold, silver, crude oil,
rubber etc and take advantage of the extended trading hours (10 am to 11 pm) in commodities
trading.


27

2.1.7.3 CURRENCY TRADING
Currency derivatives can be described as contracts between the sellers and buyers,
whose values are to be derived from the underlying assets, the currency amounts. These are
basically risk management tools in force and money markets used for hedging risks and act as
insurance against unforeseen and unpredictable currency and interest rate movements.
Any individual or corporate expecting to receive or pay certain amounts in foreign currencies
at future date can use these products to opt for a fixed rate- at which the currencies can
exchanged now itself. Currency derivatives serve the purpose of financial risk management
encompassing various market risks. An upfront premium is payable for buying a derivative.
Currency futures will bring in more transparency and efficiency in price discovery, eliminate
counterparty credit risk, provide access to all types of market participants, offer standardized
products and provide transparent trading platform.

2.1.7.4 MUTUAL FUNDS, BONDS ETC
A mutual fund is nothing more than a collection of stocks and/or bonds. You can
think of a mutual fund as a company that brings together a group of people and invests their
money in stocks, bonds, and other securities. Each investor owns shares, which represent a
portion of the holdings of the fund. It is often measured in terms of NAV.
A debenture or bond is like a certificate of loan or a loan bond evidencing the fact that
the company is liable to pay a specified amount with interest and although the money raised
by the debentures becomes a part of the company's capital structure, it does not become share
capital. In some countries the term is used interchangeably with bond, loan stock or note.
Hedge equities also offer Mutual funds and bonds. One can select from a wide range of
Mutual funds and bonds available in the market today.

2.1.7.5 ONLINE TRADING
Hedge equities have a large network of branches with online terminals of NSE and BSE
in the capital market and Derivative segments. The clients are assured of prompt order
execution through dedicated phones and expert dealers at our offices.
28

2.1.7.6 INTERNET TRADING
Hedge equities offer internet trading through their site. One can trade through the internet
from the comforts of your office or home, anywhere in the world. The dedicated IT systems
ensure service up time and speed, making internet broking through Hedge equities hassle-
free.
Using the easiest facility provided by NSDL, the clients can transfer the shares sold by
them online without delivery instruction slips. Additionally, digitally signed contract notes
can be sent to clients through E-mail.

2.1.7.7 DEPOSITORY SERVICES
Hedge equities is a member of Central Depository Services Ltd.(CDSL), offer
depository services with minimum annual maintenance charges and transaction charges
Account holders can view their holding position through the internet. It also offer the
easiest facility provided by CDSL through which clients can give delivery instructions via
the internet.

2.1.7.8. DERIVATIVE TRADING
Hedge offers trading in the futures and options segment of the National Stock
Exchange (NSE). Through the present derivative trading an investor can take a short term
view on the market for up to a three months perspective by paying a small margin on the
futures segment and a small premium in the options segment. In the case of options, if the
trade goes in the opposite direction the maximum loss will be limited to the premium paid.

2.1.7.9 KNOWLEDGE CENTRE
Knowledge centre activities are intended to provide systematic and structured
services mainly to new investors and also to young aspirant aiming for a career in financial
markets. The centre has three functional areas: the publication division, the training centre,
29

and wealth management advisory service which provides complete investment solutions to
investments through knowledge based personalized services.

2.1.7.10 EQUITY RESEARCH
Hedge equities constantly strive to deliver insightful research to enable pro-active
investment decisions. The research department is broadly divided into two divisions-
Fundamental Analysis Group (FAG) and Technical Analysis Group (TAG).
The fundamental analysts are continuously scanning the entire economy for
discovering what they call the hidden gems in stock market terminology and present it to our
clients for profitable investments. A good fundamental analysis team has the capability to
identify emerging businesses before such businesses become the talk of the street and Hedge
Equities can be proud of processing one such fundamental analysis team.
Timing the market has always been the most difficult task for all analysts and The
Hedge Technical Analysis Group has merged to predict the market movements well in
advance using complex analytical methods. The department is equipped with cutting-edge
technologies for technical charting which assist the technical analysts to predict both upside
and downside movements efficiently for the benefit of the clients.

2.1.7.11 PORTFOLIO MANAGEMENT SERVICES (PMS)
Hedge equity is a SEBI-approved portfolio manager offering discretionary and non-
discretionary schemes to its clients. Hedge equities portfolio management team keeps track
of the markets on a daily basis and is exposed to a lot of information and analytic tools which
an investor would not normally have access to. Other technicalities pertaining to shares like
dividends, rights, bonus, buy-back, Mergers and Acquisitions and are also taken care of. PMS
provides the clients an avenue to maximize their returns.


30

2.1.9 THE USPS OF THE HEDGE:
SEBI registered portfolio manager
Expert team of research analysts
Execution excellence, transparency, and visibility
Trust and goodwill of over 35000 satisfied customers
Strong risk management practices
Customer Oriented Wealth Management Services desk.
Members of BSE, NSE, MCX, MCXSX, NMC and depository participant in CDSL.
Rated as the top brand by the investor community of asianet channel
A global outlook blended with a local flavour.

2.1.10 CORPORATE SOCIAL RESPONSIBILTY

Being a Responsible Corporate Citizen, Hedge Equities has initiated a Non Profit
movement HEDGE YUVA which focuses on educating the masses about Stock Market. The
movement has also formulated various scholarship programs for young and dynamic youth.

The Hedge School of Applied Economics also provides various courses, workshops
and projects to create a better pool or market educated citizens and thus contributes its part
towards the Indian Economy.

The Human Resource Department has initiated several steps in the cause of nature. It
frequently circulates messages reminding the employees about the need for conservation of
mother earth. One small but a giant leap is the movement to reduce the number of emails that
are being printed and thus to reduce the usage of paper and other resources.

2.1.11 INNOVATIVE MARKETING PRACTICES
Hedge Equities follows a innovative marketing concept called the family tree concept
in which an individual is made to plot down his family tree. The roots of the family tree are
dug deeper and deeper and proves to be virtually infinite in nature. A software called as the
Free Mind is used in this regard. The power of relations is exploited here in order to bring
31

in more business for the company. This marketing strategy has proven to be one of the best in
the world. Since there exists a stronger bonding among the relations the firm will get more
loyal and trustworthy client base. This marketing practice can help each and every business
model to bring in more bossiness and thus is an example for every marketing organization.



Fig 2.4 Free Mind Screen Shot




2.1.12 SWOT ANALYSIS

STRENGTH
catering to the beginners
in the stock market.
Efficient DBMS: customer data usage and retrieval
WEAKNESS





OPPORTUNITIES market


32

THREATS
Economic slowdown both domestic and international




2.1.13 OBSERVATIONS
It is one among the many prospective start ups in India, with a higher growth
potential.
Hedge Equities Ltd. can be proud of having a very descent work culture and a great
employer brand.
The organization has been successful in attracting some of the best masterminds in the
industry to its portfolio.
This organization makes sure that each employee in the organization stays motivated
and satisfied and this is evident from the employee turnover rate.
The organization lays great importance to client relationships and that is probably one
of the reasons for higher volume of trade per individual and the loyalty of its clients
that it enjoys..
The organization has a very positive sense of commitment to the society, which is
primarily established through quality of service and client education. Programmes like
Hedge Yuva and Ohari are classic examples for this.
The Hedge School of Applied economics also play a key role in shaping the
employees of the organization and also provides a lot to its face of social
commitment.
Basic human values and ethics are strictly followed by the organization and it makes
sure that all its activities are oriented in this line.
Hedge group basically follows a need based marketing concept, wherein the needs of
the clients are the centre of focus.
Customer wealth maximization is given prime importance, rather than just business
development and hence the organization tries to educate the clients about their
33

investments and thus assist in their investment decision making process. This is in
turn used as a strategic tool in order to reduce the risk of the company also.
Power is basically centralized among the top level management and almost all tactical
and operational strategies are also directed directly from the top level management.
The organization is also very good at incorporating new technologies and practices at
a very fast pace and thus always tries to gain a competitive advantage.
Hedge Equities Ltd. also invests a lot and depends heavily on the research department
for its day to day operational activities.
This organization is also very keen about developing and bringing in new and unique
products and services like SIP in Equities.









34





SECTION II:
RESEARCH REPORT
LEGAL AND COMPLIANCE
STATEMENTS WITH RESPECT TO
HEDGE EQUITIES




35

PURPOSE OF THE STUDY

The purpose of the study is to know whether the departments of HEDGE EQUITIES
properly complied with the various rules, byelaws and various circulars of the Exchange. If
not, what are the reasons for the non-compliance and also implications for the non-
compliance of various rules, byelaws and various circulars of the Exchange?


OBJECTIVE

To study whether the functions of every department are strictly in accordance with the
rules, bye-laws and circulars of the exchange.
To study the reasons for deviations.
To find the implications or consequences for the non-compliance of the rules,
byelaws, and various circulars of the exchange.


METHODOLOGY


The methodology of preparing ANNUAL COMPLIANCE REPORT includes Studying the
various rules, bye-laws and circulars as specified by Exchange. It includes making a detailed
study of the previous years ANNUAL COMPLIANCE REPORT in order to know how to
prepare ANNUAL COMPLIANCE REPORT.

Sorting the whole data according to various departments is the next step in the preparation of
Annual Compliance Report. Followed by going to each department and enquiring with
department head whether the department is properly compiled with rules, bye-laws and
circulars as specified by the Stock Exchange.

The next step is that if the functions of the departments in not properly compiled with rules,
bye-laws and circulars of the Exchange stating the reasons for the same. After receiving all
the information from all departments, preparing a detailed report including all the collected
information from the depart
36


After preparing a detailed report taking signature from each department head to ensure that
the report is clear and accurate. Finally updating the information in the website of Exchange
and submitting the report.



FINDINGS


Major findings are:

I. Almost all departments are performing as per the rules and regulations of
exchange.
II. In the case of non- compliance, proper reasons are given by HEDGE
EQUITIES.
III. Penalties for non- compliance are payed.



SUMMARY OF FINDINGS
Byelaw
no
Circular
no
Specification Comp
lied
(yes/n
o)
If yes
(how)
If no
(why)
Implications
a 1,2,3 Sauda book Yes Properly
maintaining
Sauda book
- -
a 3,2,4,5 Exchange wise
client ledgers
Yes Properly
maintaining
exchange
wise client
ledgers
- -
a 5,2 General ledger Yes Properly
maintaining
general
ledger
- -
a 5,2 Journals Yes Properly
maintaining
journals
- -
a 5,2 Cash book Yes Properly - -
37

maintaining
cash book
a 5,2 Bank pass book Yes Properly
maintaining
bank pass
book
- -
a 5,2,3 Register of
transactions
Yes Properly
maintaining
register of
transactions
- -
a 5 Bank book Yes Properly
maintaining
bank book
- -
a 5,3 Margin deposit
book
Yes Properly
maintaining
margin
deposit
book
- -
a 5,3 Trade log Yes Properly
maintaining
trade log
- -
a 5,3 Order log Yes Properly
maintaining
order log
- -
a 6 Evidence of
client placing
order
Yes Properly
maintaining
evidence of
client
placing
order
- -
a 5,3 Register of
commodities
No - No
physical
delivery
i
a,b 5 Records of
Deliveries
received
No - No
physical
delivery
i
a 5 Records in
respect of
premium
No - No
physical
delivery
i
a 5 Records in
respect of
brokerage
Yes Records in
respect of
brokerage
properly
maintained
- -
a 5 Records in
respect of
service tax
Yes Records in
respect of
service tax
properly
maintained
- -

38

- 2,7,8 Obtained KYC
application
forms
Yes KYC
application
forms
properly
maintained
- -
- 9,10,11 Not placed
orders of the
clients whose
mobile numbers
and email id is
not uploaded
Yes Placing
only those
orders of
the clients
whose
mobile no
and email
id is
uploaded
- -
- 12,13,14 Not placed
orders in inactive
clients accounts
Yes Not placing
any orders
in inactive
clients
accounts
- -
- 15,16,17,2 PAN details of
all clients
obtained and
uploaded to the
Exchange
Yes PAN details
of all
clients is
obtained
and
subsequentl
y uploaded
to the
Exchange
- -
c,d 2,7 Issued to all
clients Uniform
Risk Disclosure
Documents
Yes Uniform
Risk
Disclosure
Documents
is issued to
all clients
- -
e 5,2,18,
19,4
Collection of
initial margin
from clients
before
entertaining any
order from them
Yes Before
entertaining
any order,
initial
margin is
collected
from clients
- -
- 20 Pre-funded
instruments (pay
orders and
demand
draft)/Electronic
fund transfer
Yes Pre-funded
instruments
/Electronic
fund
transfer are
maintained
- -
f 21,22,23,2
4,25
Allotment of
unique client
codes to clients
Yes Allotting
clients with
unique
- -
39

client codes
- 22,23,2,26 Not allotted
multiple client
codes to the
same client
Yes Multiple
client codes
is not
allotted to
the same
client
- -



DESCRIPTION OF THE FINDINGS


1 MCX/012/2006 dated 5/1/2006
2 MCX/COMP/113/2010 dated 5/4/2010
3 MCX/357/2006 dated 2/9/2006
4 MCX/358/2011 dated 11/10/2011
5 MCX/012/2006 dated 10/1/2006
6 MCX/399/2009 dated 30/9/2011
7 MCX/COMP/469/2011 dated 22/12/2011
8 MCX/COMP/089/2012 dated 14/3/2012
9 MCX/T&S/413/2012 dated 11/12/2012
10 MCX/T&S/434/2012 dated 27/12/2012
11 MCX/T&S/050/2013 dated 14/2/2013
12 MCX/T&S/149/2008 dated 23/4/2008
13 MCX/COMP/513/2009 dated 15/12/2009
14 MCX/COMP/298/2010 dated 21/8/2010
15 MCX/T&S/155/2007 dated 26/4/2007
16 MCX/COMP/206/2008 dated 16/6/2008
17 MCX/COMP/029/2009 dated 19/1/2009
18 MCX/COMP/429/2010 dated 4/12/2010
19 MCX/C&S/214/2011 dated 9/6/2011
20 MCX/COMP/348/2011 dated 4/10/2011
21 MCX/342/2006 dated 24/8/2006
22 MCX/COMP/088/2008 dated 4/3/2008
23 MCX/COMP/317/2008 dated 7/10/2008
24 MCX/T&S/405/2008 dated 20/12/2008
25 MCX/T&S/355/2011 dated 10/10/2011
26 MCX/T&S/074/2011 dated 4/3/2011
a 11.5
b 4.8
c 14.1.1
d 14.1.2
40

e 8.2.2
f 5.21
i For non maintain of register, Rs.1000/- for one/few instances and Rs.2500/- for
multiple instances. For non availability of prescribed information in register and non
availability of register, advice for one/few instances and warning for multiple
instances.

SUGGESTIONS


Various suggestions put forward are as report is prepared manually, it is better to install
appropriate software to be installed for preparing the ANNUAL COMPLIANCE REPORT.



As it requires analysis of every department, it is better that each department can update the
information by compiling Yes/No in the appropriate software if it is available.

LIMITATIONS OF THE STUDY

One of the major limitation of the study is report is prepared manually. Another limitation
includes need to visit each department and consult department head for the compliance.

Lengthy and time consuming process is a major limitation for the study. Study of each law,
bye-law and circulars of the Exchange and preparing the ANNUAL COMPILANCE
REPORT takes a long time.







41


BIBLIOGRAPHY
Indian Financial System, By D. K. Murthy, Dr. D.K. Murthy
SEBI Hand Book 2012
www.rbi.org.in
www.investopedia.
www.wikipedia.com
www.sebi.gov.in