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CHANDRASEKHAR GOUD.G
Roll No. 08J81E0010
Under the Guidance of
MR.SRINIVAS
(Assistant Professor of MBA Dept)
DECLARATION
I here by declare that this project report entitled A STUDY
OF ONLINE TRADING AND STOCK BROKING has been
prepared by me is an original work submitted to
Jawaharlal Nehru Technological University towards
partial fulfillment of the requirement for the award of
Master of Business Administration. I also here by declare
that this project report has not been submitted at any time
to any other university or institute for the award of any
Degree or Diploma.
CERTIFICATE
This is to certify that the project work entitled
A STUDY OF ONLINE TRADING AND STOCK BROKING
MR.D.H.B.R.PRASAD
Head of the department
Master of Business Administration
Chapter 1
Objecti
ves
&
Methodo
logy
Chapter 2
Company
profile
INDUSTRY PROFILE
Following diagram gives the structure of Indian financial system:
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FINANCIAL MARKET:
Financial markets are helpful to provide liquidity in the system and for smooth
functioning of the system. These markets are the centers that provide facilities for
buying and selling of financial claims and services. The financial markets match the
demands of investment with the supply of capital from various sources.
According to functional basis financial markets are classified into two
types. They are:
Money markets (short-term)
Capital markets (long-term)
According to institutional basis again classified in to two types. They are
Organized financial market
Non-organized financial market.
The organized market comprises of official market represented by recognized
institutions, bank and government (SEBI) registered/controlled activities and
intermediaries. The unorganized market is composed of indigenous bankers,
moneylenders, individual professional and non-professionals.
MONEY MARKET:
Money market is a place where we can raise short-term capital.
Again the money market is classified in to
Inter bank call money market
Bill market and
Bank loan market Etc.
E.g.; treasury bills, commercial papers, CD's etc.
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CAPITAL MARKET:
Capital market is a place where we can raise long-term capital.
Again the capital market is classified in to two types and they are
Primary market and
Secondary market.
E.g.: Shares, Debentures, and Loans etc.
PRIMARY MARKET:
Primary market is gener ally referred to the market of new issues or market for
mobilization of resources by the companies and government undertakings, for new
projects as also for exp ansion, modernization, addition, diversif cation and up gradation.
Primary market is also referred to as New Issue Market. Primary market operations
include new iss ues of shares by new and existing compan ies, further and
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right issues to existing shareholders, public offers, and issue of debt instruments
such as debentures, bonds, etc.
The primary market is regulated by the Securities and Exchange Board of India
(SEBI a government regulated authority).
Function:
The main services of the primary market are origination, underwriting, and
distribution. Origination deals with the origin of the new issue. Underwriting contract
make the shares predictable and remove the element of uncertainty in the
subscription. Distribution refers to the sale of securities to the investors.
The following are the market intermediaries associated with the market:
1. Merchant banker/book building lead manager
2. Registrar and transfer agent
3. Underwriter/broker to the issue
4. Adviser to the issue
5. Banker to the issue
6. Depository
7. Depository participant
Investors protection in the primary market:
To ensure healthy growth of primary market, the investing public should be
protected. The term investor protection has a wider meaning in the primary market.
The principal ingredients of investors protection are:
Provision of all the relevant information
Provision of accurate information and
Transparent allotment procedures without any bias.
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SECONDARY MARKET
The primary market deals with the new issues of securities. Outstanding securities
are traded in the secondary market, which is commonly known as stock market or
stock exchange. The secondary market is a market where scrips are traded. It is a
market place which provides liquidity to the scrips issued in the primary market.
Thus, the growth of secondary market depends on the primary market. More the
number of companies entering the primary market, the greater are the volume of
trade at the secondary market. Trading activities in the secondary market are done
through the recognized stock exchanges which are 23 in number including Over The
Counter Exchange of India (OTCE), National Stock Exchange of India and
Interconnected Stock Exchange of India.
Secondary market operations involve buying and selling of securities on the stock
exchange through its members. The companies hitting the primary market are
mandatory to list their shares on one or more stock exchanges in India. Listing of
scrips provides liquidity and offers an opportunity to the investors to buy or sell the
scrips.
The following are the intermediaries in the secondary market:
1. Broker/member of stock exchange buyers broker and sellers broker
2. Portfolio Manager
3. Investment advisor
4. Share transfer agent
5. Depository
6. Depository participants.
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The only stock exchanges operating in the 19 century were those of Mumbai setup
in 1875 and Ahmadabad set up in 1894. These were organized as voluntary nonprofit-marking associations of brokers to regulate and protect their interests. Before
the control on securities under the constitution in 1950, it was a state subject and the
Bombay securities contracts (control) act of 1925 used to regulate trading in
securities. Under this act, the Mumbai stock exchange was recognized in 1927 and
Ahmadabad in 1937. During the war boom, a number of stock exchanges were
organized. Soon after it became a central subject, central legislation was proposed
and a committee headed by A.D.Gorwala went into the bill for securities regulation.
On the basis of the committees recommendations and public discussion, the
securities contract (regulation) act became law in 1956.
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At present there are 23 stock exchanges recognized under the securities contracts
(regulation), Act, 1956. Those are:
Ahmadabad Stock Exchange Association Ltd.
Bangalore Stock Exchange
Bhubaneshwar Stock Exchange Association
Calcutta Stock Exchange
Cochin Stock Exchange Ltd.
Coimbatore Stock Exchange
Delhi Stock Exchange Association
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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
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NSE's 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.
Ensuring equal access to investors all over the country through an appropriate
communication network.
Providing a fair, efficient and transparent securities market to investors using
electronic trading systems.
Enabling shorter settlement cycles and book entry settlements systems,
and Meeting the current international standards of securities markets.
The standards set by NSE in terms of market practices and technology, have
become industry benchmarks and are being emulated by other market participants.
NSE is more than a mere market facilitator. It's that force which is guiding the
industry towards new horizons and greater opportunities.
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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 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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Governing
Board
having
20
Board
consists
of
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The securities and exchange board of India was constituted in 1988 under a
resolution of government of India. It was later made statutory body by the SEBI act
1992.according to this act, the SEBI shall constitute of a chairman and four other
members appointed by the central government.
With the coming into effect of the securities and exchange board of India act, 1992
some of the powers and functions exercised by the central government, in respect of
the regulation of stock exchange were transferred to the SEBI.
OBJECTIVES AND FUNCTIONS OF SEBI
To protect the interest of investors in securities.
Regulating the business in stock exchanges and any other securities market.
Registering and regulating the working of intermediaries associated with
securities market as well as working of mutual funds.
Promoting
and
regulating
self-regulatory
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order the broker tries to execute the order in his computer terminal. Once matching
order is found, the order is executed. The broker then delivers the contract note to
the investor. It gives the details regarding the name of the company, number of
shares bought, price, brokerage, and the date of delivery of share. In this physical
trading form, once the broker gets the share certificate through the clearing houses
he delivers the share certificate along with transfer deed to the investor. The investor
has to fill the transfer deed and stamp it. The stamp duty is one of the percentage
considerations, the investor should lodge the share certificate and transfer deed to
the register or transfer agent of the company. If it is bought in the DEMAT form, the
broker has to give a matching instruction to his depository participant to transfer
shares bought to the investors account. The investor should be account holder in
any of the depository participant. In the case of sale of shares on receiving payment
from the purchasing broker, the broker effects the payment to the investor.
Share groups: The scrips traded on the BSE have been classified into
A,B1,B2,C,F and Z groups. The A group represents those, which are in the
carry forward system. The F group represents the debt market segment (fixed
income securities). The Z group scrips are of the blacklisted companies. The C
group covers the odd lot securities in A, B1&B2 groups.
ROLLING SETTLEMENT SYSTEM:
Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or
5days) after the trading day. The shares bought and sold are paid in for n days after
the trading day of the particular transaction. Share settlement is likely to be
completed much sooner after the transaction than under the fixed settlement
system.
The rolling settlement system is noted by T+N i.e. the settlement period is n days
after the trading day. A rolling period which offers a large number of days negates
the advantages of the system. Generally longer settlement periods are shortened
gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis of the
criteria that they were in compulsory demat list and had daily turnover of about Rs.1
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The firms online trading and investment site - www.sharekhan.com - was launched on
Feb 8, 2000. The site gives access to superior content and transaction facility to retail
customers across the country. Known for its jargon-free, investor friendly language and
high quality research, the site has a registered base of over one lakh customers. 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 make informed
decisions and to simplify the process of investing in stocks.
On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable
application that emulates the broker terminals along with host of other information
relevant to the Day Traders. This was for the first time that a net-based trading station of
this caliber was offered to the traders. In the last six months Speed Trade has become a
de facto standard for the Day Trading community over the net.
Share khans ground network includes over 1288 centers in 325 cities in India which
provide a host of trading related services.
Sharekhan has always believed in investing in technology to build its business. The
company has used some of the best-known names in the IT industry, like Sun
Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign
Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading
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engine and content. The Morakhiya family holds a majority stake in the company.
HSBC, Intel & Carlyle are the other investors.
With a legacy of more than 80 years in the stock markets, the SSKI group ventured into
institutional broking and corporate finance 18 years ago. Presently SSKI is one of the
leading players in institutional broking and corporate finance activities. SSKI holds a
sizeable portion of the market in each of these segments. SSKIs institutional broking
arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5%
of all Domestic Institutional portfolio investment in the country. It has 60 institutional
clients spread over India, Far East, UK and US. Foreign Institutional Investors generate
about 65% of the organizations revenue, with a daily turnover of over US$ 2 million.
The Corporate Finance section has a list of very prestigious clients and has many firsts
to its credit, in terms of the size of deal, sector tapped etc. The group has placed over
US$ 1 billion in private equity deals. Some of the clients include BPL Cellular Holding,
Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shoppers Stop.
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Sharekhan ltd.
1925
Headquarter
Sharekhan SSKI
Nature of Business
Services
Number of Employees :
Revenue
Website
www.sharekhan.com
Slogan
Vision
To be the best retail brokering Brand in the retail business of stock market.
Mission
To educate and empower the individual investor to make better investment
decisions through quality advice and superior service.
Sharekhan is infact
Convenience
One can call its Dial-N-Trade number to get investment advice a nd execute his
transactions. Sharekhan ltd. have a dedicated call-centre to provide this service via a
Toll Free Number 1800-22-75 00 & 1800-22-7050 from anywhere in India.
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Customer Service
Sharekhan limiteds customer service team will assist one for any help that one may
require relating to transactions, billing, demat and other queries. Its customer service
can be contacted via a toll-free number, email or live chat on www.sharekhan.com.
Investment Advice
Sharekhan has dedicated research teams of more than 30 people for fundamental and
technical researches. Its analysts constantly track the pulse of the market and provide
timely investment advice to its clients in the form of daily research emails, online chat,
printed reports and SMS on their mobile phone.
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Dinesh Murikya
Tarun Shah
Shankar Vailaya
Director (Operations)
Jaideep Arora
Pathik Gandotra
Rishi Kohli
Nikhil Vora
Head of Research
Equity
and
derivatives
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CLASSIC ACCOUNT
This is a User Friendly Product which allows the client to trade through website
www.sharekhan.com and is suitable for the retail investor who is risk-averse and
hence prefers to invest in stocks or who does not trade too frequently. This
account allow investors to buy and sell stocks online along with the following
features like multiple watch lists, Integrated Banking, Demat and digital contracts,
Real-time portfolio tracking with price alerts and Instant credit & transfer.
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j.
CHARGE STRUCTURE
Fee structure for General Individual:
Charge
Account Opening
Classic Account
Rs. 750/=
Intra-day 0.10 %
Intra-day - 0.10%
Delivery - 0.50 %
Delivery - 0.50%
Brokerage
Depository Charges:
Rs. NIL
Rs. NIL first year Rs. 300/= p.a. from
second calendar year onward
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One can also visit the site www.sharekhan.com and click on the option Open an
Account to fill a small query form which will ask the individual to give details
regarding his name, city he lives in, his email address, phone number, pin code
of the city, his nearest Sharekhan Ltd. shop and his preferences regarding the
type of account he wants.
These information are compiled in the headquarter of the company that is in
Mumbai from where it is distributed through out the countrys branches in the
form of leads on the basis of cities and nearest share shops. After that the
executives of the respective branches contact the prospective clients over phone
or through email and give them information regarding the various types of
accounts and the documents they need to open an account and then fix
appointment with the prospective clients to give them demonstration and making
them undergo the formalities to open the account. After that the forms that has
collected from the clients, is scrutinized in the branch and then it is sent to
Mumbai for further processing where after a few days the clients account are
generated and activated. After the accounts are activated, a Welcome Kit is
dispatched from Mumbai to the clients address mentioned in the documents
provided by them. As soon as the clients receive the Welcome Kit, which
contains the clients Trading ID and Trading Password, they can start trading and
investing in shares.
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GIVING
DEMONSTRATION
YES
NO
DOCUMENTATION
TRADING
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Apart from two passport size photographs, one needs to provide with the following
documents in order to open an account with Sharekhan Limited.:
Photocopy of the clients PAN Card which should be duly attached
Photo copy of any of the following documents duly attached which will serve as
correspondence address proof:
a.
b.
c.
d.
e.
f.
g.
Passport (valid)
Voters ID Card
Ration Card
Driving License (valid)
Electricity Bill (should be latest and should be in the name of the client)
Telephone Bill (should be latest and should be in the name of the client)
Flat Maintenance Bill (should be latest and should be in the name of the
client)
h. Insurance Policy (should be latest and should be in the name of the client)
i. Lease or Rent Agreement.
j. Saving Bank Statement** (should be latest)
Two cheques drawn in favour of Sharkhan Limited, one for the Account Opening
Fees and the other for the Margin Money (the minimum margin money is Rs.
5000).
** A cancelled cheque should be given by the client if he provides Saving Bank
Statement as a proof for correspondence address.
NOTE: Only Saving Bank Account cheques are accepted for the purpose of
Opening an account.
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Chapter 3
Project
Analysis
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PROJECT ANALYSIS
OUTCRY SYSTEM
The broker has to buy or sell securities for which he has received the orders. For
this, the broker or his authorized representatives goes to the stock exchange. This
method is called the open outcry system. Basically the brokers shout while buying or
selling the securities. The floor of the stock exchange is divided into a number of
markets also known as post pit or wing based on particular securities dealt there.
In the post pit or wing, the broker using open outcry method makes an offer or bid
price. For making the necessary bargain, he quotes his purchase or sale price, also
known as offer or bid price. The dealer, to whom the price is quoted, quotes his own
price when the quotation of the dealer suits the broker, he may loose the bargain. If
he is not satisfied with the quote price, he may turn to some other dealer. On the
close of the bargain, the dealer as well as the broker makes a brief note of the
particulars of the deal. Such notes are made on some pad and on it the number of
shares, the price agreed upon, the name of the party, what membership number
etc., are noted.
DISADVANTAGES OF OUTCRY SYSTEM:
It lacks transparency.
The scope of manipulation, speculation and mal practice is more.
Signal were more important in the outcry system any member who could not
interpret the buy/sell signal correctly often landed himself in disaster situation.
In audibility was another disadvantage of the outcry system.
Due to the above disadvantages of the outcry system the SHAREKHAN has
th
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MANUAL TRADING
Trading procedure before introduction of online trading:
Trading on stock exchanges is officially done in the trading ring. In the trading ring
the space is provided for specified and non-specified sections, the members and
their authorized assistants have to wear a badge or carry with them an identity card
given by the exchange to enter the trading ring. They carry a sauda book or
confirmation memos, duly authorized by the exchange and carry a pen with them.
The stock exchanges operations are floor level are technical in nature .Nonmembers are not permitted to enter in to stock market. Hence various stages have
to be completed in executing a transaction at a stock exchange .The steps involved
in this method of trading have given below:
Choice of broker:
sell shares and transact business, have to act through member brokers only. They
can also appoint their bankers for this purpose as per the present regulations.
Placement of order:
The next step is the The prospective investor who wants to buy shares or the
investors, who wants to placing order for the purchase or sale of securities with a
broker. The order is usually placed by telegram, telephone, letter, fax etc or in
person. To avoid delay, it is placed generally over the phone. The orders may take
any one of the forms such as At Best Orders, Limit Order, Immediate or Cancel
Order, Limited Discretionary Order, and Open Order, Stop Loss Order.
Execution of order or contract:
Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30
P.M on all working days Monday to Friday, and a special one-hour session on
Saturday. The members or the authorized assistants have to wear a badge given by
the exchange to enter into the trading ring. They carry a sauda Block Book or
conformation memos, which are duly authorized by the exchange when the deal is
struck; both broker and jobber make a note in their sauda block books. From the
sauda book, the contract notes are drawn up and posted to the client. A contract
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note is written agreement between the broker and his clients for the transaction
executed.
Drawing Up and Bills:
Both sale and purchase bills are prepared along with the contract note and it is
posted on the same day or the next day. This in a purchase transaction, once the
shares are delivered to the client effects payment for the purchases and pays the
stamp fees for transfer, a bill is made out giving the total cost of purchase, including
other expenses incurred by the broker in the price itself. With this, the process ends.
DEMATERLIZATION:
Dematerialization is the process by which physical certificates of an investor are
converted to an equipment number of securities in electronic from and credited in
the investor account with his DP. In order to dematerialize the certificates, an
investor has to first open an account with a DP and then request for the
Dematerialization Request Form, which is DP and submit the same along with the
share certificates. The investor has to ensure that he marks Submitted for
Dematerialization on the certificates before the shares are handed over to the DP
for demat. Dematerialization can only be done to those certificates, which are
already registered in your name and belong to the list of securities admitted for
Dematerialization at NSDL.
Most of the active scrips in the market including all the scrips of S&P CNX NIFTY
and BSE SENSEX have already joined NSDL. This list is steadily increasing. Briefly,
the process is as follows: after completion of transfer, the investor gets the option to
dematerialize such shares. Investors willing to exercise this option sends a Demat
request along with the option letter sent by the company to his DP. The company or
its R&T agent would confirm the Demat request on its receipt from the DP to reduce
risk of loss in transit.
Dematerialized shares do not have any distinctive or certificate numbers. These
shares are fungible-which means that 100 shares of a security are the same as any
other 100 shares of the security. Odd lot shares certificates can also be
dematerialized.
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ONLINE TRADING
Before getting in to the online trading we should know some things about the
internet, e-commerce and etc.
1) What is Internet?
Internet is a worldwide, self-governed network connecting several other smaller
networks and millions of computers and persons, to mega sources of information.
This technology shrinks vast distances, accelerating the pace of business reforms
and revolutionizing the way companies are managed. It allows direct, ubiquitous
links to anyone anywhere and anytime to build up interactive relationships.
A combination of time and space, called the Internet promises to bring
unprecedented changes in our lives and business. Internet or net is an interconnection of computer communication networks spanning the entire globe, crossing
all geographical boundaries. It has re-defined the methods of communication, work
study, education, business, leisure, health, trade, banking, commerce and what not it
is virtually changing every thing and we are living in dot.com age. Net being an
interactive two way medium, through various websites, enables participation by
individuals in business to business and business to consumer commerce, visit to
shopping arcades, games, etc. in cyber space even the information can be copied,
downloaded and retransmitted.
The use of Internet has grown 2000 percent in last decade and is currently growing
at 10 percent per month. In India, growth of Internet is of recent times. It is expected
to bring changes in every functional area of business activity including management
and financial services. It offers stock trading at a lower cost. Internet can change the
nature and capacity of stock broking business in India.
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2. E-commerce
Electronic commerce is associated with buying and selling over computer
communication networks. It helps conduct traditional commerce through new way of
transferring and processing of information. Information is electronically transferred
from computer to computer in an automated way. E-commerce refers to the
paperless exchange of business information using electronic data inter change,
electronic technologies. It not only reduces manual processes and paper
transactions but also helps organization move to a fully electronic environment and
change the way they operated.
PCs and networking attempts to introduce banks of the tools and technologies
required for electronic commerce. The computers are either workstations of
individual office works or serves where large databases and information reside.
Network connects both categories of computers; the various operating systems are
the most basis program within a computer. It manages the resources of the
computer system in a fair and efficient manner.
Now we can enter in to the concept known as online trading.
In the past, investors had no option but to contact their broker to get real time access
to market data. The net brings data to the investor on-line and net broking enables
him to trade on a click of mouse. Now information has become easily accessible to
both retail as well as big investor.
EVOLUTION OF BROKING IN INDIA:
The evolution of a broking in India can be categorized in three phases Stockbrokers will offer on their sites features such as live portfolio manager,
live quotes, market research and news, etc. to attract more investors.
Brokers will offer online broking and relationship management by providing
and offering analysis and information to investors during broking and nonbroking hours based on their profile and needs, i.e. customized services.
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Brokers (now e-brokers) will offer value management or services like initial
public offering online, on-line asset allocation, portfolio management, financial
planning, tax planning, insurance services, etc. and enables the investors to
take better and well considered decisions.
The actual definition of Online Trading is as explained below:
Online trading is a service offered on the internet for purchase and sale of shares.
In the real world you place orders on your stockbroker either verbally (personally or
telephonically) or in a written form (fax). In online trading, you will access a
stockbrokers website through your internet enabled PC and place orders through
the brokers internet based trading engine. These orders are routed to the stock
exchange without manual intervention and executed thereon in a matter of a few
seconds.
The net is used as a mode of trading in internet trading. Orders are communicated to
the stock exchange through website.
In India:
Internet trading started in India on 1
st
permission for online trading. The SEBI committees on internet based securities
trading services has allowed the net to be used as an Order Routing System (ORS)
through registered stock brokers on behalf of their clients for execution of
transaction. Under the ORS the client enters his requirements (security, quantity,
price buy/sell) on brokers site.
Objectives:
Internet trading is expected to
Increase transparency in the markets,
Enhance market quality through improved liquidity, by increasing quote
continuity and market depth,
Reduce settlement risks due to open trades, by elimination of mismatches,
Provide management information system,
Introduce flexibility in system, so as to handle growing volumes easily and to
support nationwide expansion of market activity.
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Voter ID card
Driving license
PAN card( in case of to trade more than 50000)
Ration card
Bank pass book
Telephone bill
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investors can see themselves the price at which the deal takes place.
The time gap has narrowed in every stage of operation. Confirmation and execution
of trade reaches the investor within the least possible time, mostly within 30
seconds. Instant feedback is available about the execution. Some of the websites
also offer;
News and research report
BSE and NSE movements
Stock analysis
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Individuals benefit by saving comparatively a lot more when trading online as the
cost per trade is less.
6) Individuals can invest in a variety of products, unlike earlier when people bought
bonds, mutual funds, and stock for long-term basis and sat on them. Now they
can invest in stocks, stock and index options mutual funds, government, and
even insurance.
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They have control over their accounts, can make their own decisions and dont
have to give reasons for their actions. They are independent.
2) They have a reason to participate in the market and learn about it.
3) It is interesting, cheap, easy, fast, and convenient.
4) A lot of information is online so they can keep up-to-date with what is happening
in the trading world.
5) It will give investors a greater choice and better realization.
6) The immediate impact will be competition and benefits will accrue to the
investors.
7) It will lead to brokerage commissions going down and brokers striving to increase
business afloat.
8) Investors will now go to place, which have better trading conditions and also
members to offer them better facilities.
9) They have access to numerous tools to invest, and can create their own portfolio.
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automatically after completion of trading time. The carry forward transactions (Good
Till cancellation) are forwarded to the next day. Even if the match is not found with in
the prescribed period, the order will not cancel.
Useful links about Sharekhan:
1.
2.
3.
4.
5.
6.
7.
TRADING SESSION
Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period.
Monday to Friday is the trading period in all the stock exchanges. SEBI has
stipulated that all the stock exchanges in India must have same trading period.
BROKER WORK STATION:
At the broker workstation the BBOs, the last traded price, the days opening price,
previous days closing price, highest and lowest prices, the weighted average price
and total trade value will be available continuously, as the BBO for each scrip.
Other information will be available on query from the BWS. These include top
gainers /losers of the day. Trader-wise, scrip wise net position, client wise net
position, top scrip by the volume/value, market summary etc.
Brokers are also provided with information relating to the companies in the matter of
Book closure, Dividend declarations, resolutions in board meeting, information about
liquidated companies, company report etc.
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ORDERS:
Orders can be done one at a time or in a batch mode.
The submitted order will be accepted at the CTS, after validation if it finds any invalid
reason the order is return back to the BWS, with the appropriate error message. If
Accepted at the CTS it will be added to the local pending order book.
The order will then be taken up for matching, if it is a buy order the system tries to
find a sell order, which fits the requirement of the buy order, when such match is
found a trade gets executed. Each trade involves two brokers and respective traders
who sent the order. Both these traders are informed of the trade being executed at
their respective BWS.
At the BWS the trade is added to the local trade
book. Orders sent by the brokers are two types:
1) Good for the day (GFD)
2) Good till cancellation(GTC)
Good for the day:
This is also called as market order. For an order if the member selects the deal as
good for the day, the order is treated as market order. If a best bid founds match
with best order then the transaction gets executed. If the match is not found then
after trade time the order gets cancelled that day. Next day he has to place a new
order.
For example if a member wants to purchase 1000 shares of satyam info @ 400 each
through Good for Day order. If the correct match is not found, order gets cancelled
automatically and new quotation has to be placed the next day.
Good till cancellation:
This order is forwarded to the last trading day of that settlement period. This is also
called as carry forward order like GFD; broker has to select the option of GTC for the
order. If the order finds match with in the trading settlement period, the order is
executed. If no match is found, the order is cancelled on the last day of settlement
period. This order is not carried forward to the next settlement period.
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For example, if a member a place purchase order of 500 shares of SBI @ 690 per
share and selects the order as GTC and place an order. If the match is not found on
that day it will be forwarded to the next day until trading settlement period day.
SETTLEMENT OF TRANSACTIONS:
Clearing of transaction in the form of shares and cash is called settlement. Buyers
will take the delivery of shares through the depository participants like SHARE
KHAN and others.
Finally, the settlement is made by means of delivering the share certificates along
with the transfer deeds. The transferor (or the seller) duly signed transfer deed. It
bears a stamp of the selling broker. The buyer then fills up the certificates fills up the
particulars in the transfer deed. Settlement can be done in the following way.
Spot settlement: under this method, the delivery of securities and payment for them
are affected on the day of the contract itself.
Rolling settlement: Under this rolling settlement the trading is on T+2,basis i.e. if
Monday is trading day then Wednesday is the paying day . In case on non-delivery,
the securities will go for auction.
DETAILS OF PROCEDURES:
Delivery in : The members who are in pay-out position delivers share certificates in
to clearing house within the settlement period along with the delivery Chelan filled in
with the details of share certificates which has folio numbers or distinctive numbers
etc.
Delivery out: The buyer of shares who made pay in position will take delivery of
shares from the clearing house.
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Pay-in: The member who is in paying position shall pay for value of shares with in
the trading settlement period (T+2).
Payout: The cheques paid in the clearinghouse will be paid to members who are in
paying position.
All disputes arising between members regarding non-deliveries, non-payments,
good and bad deliveries pertaining to the settlement will be settled by the settlement
committee of the exchange.
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The given flow chart clearly explains the process of online trading:
Login
Buy transcation
Sell transcation
The system will check your
Orders accepted
dp account quantity
orders accepted
on execution
of your orders
flashed on your
conformationcoul
screen immediately
d be send to your
be sent to by mail
on execution
or hand delivery
62
Chapter 4
Compar
ative
Analysis
63
5paise
Sharekhan
Motilal oswal
ICICI Direct
HDFC
Indiabulls
Kotak
Others
Th
e
im
ag
The
imag
e
can
The image
cannot
be
displayed.
Your co
119 13.45%
194 21.92%
38
4.29%
192 21.69%
46
5.20%
121 13.67%
59
6.67%
116 13.11%
64
HDFC SECURITIES:
Company Background:
HDFC Securities Ltd is promoted by the HDFC Bank, HDFC and Chase Capital
Partners and their associates. Pioneers in setting up Dial-a-share service with
the largest team of Tele-brokers.
65
ICICI Direct:
Demat: NIL, 1 year charges included in Account Opening Plus a facility to open
st
0.70%
50 lakhs 2 Cr
25 50 lakhs
0.55%
2Cr-5Cr
50 lakhs - 1 Cr
0.45%
5Cr- 10 Cr
Brokerage
.10% Both Sides
.08% Both Sides
.05% Both Sides
.04% Both Sides
1 Cr 2 Cr
0.35%
10Cr -20 Cr
2 Cr 5 Cr
0.30%
> 20 Cr
> 5 Cr
0.25%
----
66
--------
INDIABULLS:
Company Background:
India Bulls is a retail financial services company present in 70 locations covering 62
cities. It offers a full range of financial services and products ranging from Equities to
Insurance. 450 + Relationship Managers who act as personal financial advisors.
Pricing of IB Accounts:
Signature Account
* Brokerage: Negotiable
* Brokerage: Negotiable
PAID Research:
SCHEME
FACILITY
WebBased-1-Month-500:
WebBased-1-Month-6000:
PrintReport-1-Month-750:
+ 10 Reports
Delivered PrintReport-1-Month-9000: View & Print on Website
+ 10 Reports Delivered
Kotakstreet:
Company Background:
Kotakstreet is the retail arm of Kotak Securities. Kotak Securities limited is a joint
venture between Kotak Mahindra Bank and Goldman Sachs.
Online Account Type
Twin Advantage / Green Channel : 2 DPs, Limit against shares
Free Way: Flat Rs 999 Cover Charge p.m, 0.03% per transaction
High Trader : 6 Times Exposure Cash & Derivatives, Auto sq off 2:55
Cash Expressway : Spot payment, additional 0.5% charges
For Kotak FastLane / Keat Lite / Keat Desktop are trading interfaces.
Keat Desktop with advanced tools comes at a charge of Rs 500 p.m, Non
refundable.
PRICING OF KOTAK
Account Opening : Rs
500 Demat: Rs 22.5 p.m
Initial Margin : Rs 5000(Compulsory)
Min Margin Retainable : Rs 1000
Brokerage Slab wise: Higher the volume, lower the brokerage.
Even older customers (on 0.25% & 0.40%) have been moved to the slab wise
structure w.e.f 1/4/2004
68
< 1 lakhs
0.65%
< 10 lakhs
1 lakhs 5 lakhs
0.60%
5 lakhs 10 lakhs
0.50%
25 lakhs - 2 Cr
10 lakhs - 20 lakhs
0.40%
2 Cr
20 lakhs 60 lakhs
0.30%
60 lakhs - 2 Cr
0.25%
>2
0.20%
- 5 Cr
> 5 Cr
---do------
* DP Charges Extra
* Min Brokerage of Rs 0.05 per share
Derivatives Vol off p m
Brokerage
< 2 Cr
2 Cr - 5.5 Cr
5.5 Cr 10 Cr
> 10 Cr
69
5paisa
Company Background
Indiainfoline was founded in 1995 and was positioned as a research firm
In 2000 e-broking was started under the brand name of 5paisa.com.
Apart from offering online trading in stock market the company offers
mutual funds online.
It also acts as a distributor of various financial services i.e. GOI
securities, Company Fixed Deposits, Insurance.
Limited ground network, present in 20 cities
Online Account Types
Investor Terminal : Investors / Students
Trader Terminal : Day Traders / HNIs
PRICING FOR RETAIL CLIENTS
Investor Terminal
Account Opening : Rs 500
st
Demat 1 Yr : Rs 250
Initial Margin : Rs 2500 (Compulsory)
Min Margin Retainable : Rs 1000
Brokerage :
Trading 0.10% each side + ST
Delivery 0.50% each side + ST
Sharekhan
Company Background
Sharekhan is the retail broking arm of SSKI Securities Pvt Ltd. SSKI owns 56%
in Sharekhan, balance ownership is HSBC, First Caryle, and Intel Pacific
Into broking since 80 years
Focused on providing equity solutions to every segment
Largest ground network of 210 Branded Share shops in 90 cities
Online Account Types
Classis Account / Applet : Investor in equities
Speed Trade : Trader in equities & derivatives
71
Demat 1 Yr : NIL
Initial Margin : NIL
Min Margin Retainable : NIL
Brokerage:
Trading 0.10% each side + All Taxes
Delivery 0.50% each side + All Taxes
Sharekhan online Trading Interfaces
The customer can choose the online trading interface that meets his requirement
based on his trading habits and preferences
CLASSIC / APPLET
The website is meant for customers who Invests in Equities
SPEEDTRADE
The speed trade is meant for customers who trade in Equities
DIAL-N-TRADE Toll Free
The DNT is a value added services meant for all customers who
Want to transact but are not online.
DNT TOLL FREE FERTURES
Dedicated Toll Free number for Order placements
Automatic fund transfer with phone banking*
Simple and secure IVR based system for authentication
No wait time, on entry of Phone Id & TPIN, the call is transferred
Trusted, professional advice of Tel-brokers who offer undiluted Sharekhan
Research Inputs
After-hours order placement facility **
Transfer of money using phone banking is available with Citibank only
72
SWOT ANALYSIS
Strengths
1. Strong credibility among investors because of its heritage.
2. Excellent reputation among the business society.
3. Capability of providing superior customer service.
4. Quality research team.
5. Easier access to the customer due to largest ground network of 280 branded
share shops in 120 cities.
6. Abundant information about economy and companies.
7. Ability to attract and retain superior and quality personnel.
8. Highly sophisticated infrastructure.
9.
Efficient research and analysis team, which by interpreting the economy and
companys performance accurately is enhancing the profitability of the clientele.
Weaknesses
1. Limited customer appeal as the company product line does not include mutual
funds which is increasingly becoming a preferred customer investment option.
2. Inadequate product awareness among the retail investors.
74
3. Limited customer appeal as the company does not have access to the BSE
online space.
4. Brand awareness is low in the financial market.
5. Promotional activities conducted by the company are not at par with the other
firms.
Opportunities
1. Hyderabad covers only 2% of investors which gives huge potential for the market
penetration.
2. Bullish phase of the market attracts investing public.
3. Access to the BSE online space for the retail investors creates opportunity to
increase clientele base.
4. Awareness campaigns about online trading create new market.
Threats
1.
Availability of Unit Linked Insurance Policies (ULIPs) and mutual funds in the
market.
2. Threat of entry is high in this industry as the manpower required is less and
capital requirement is medium.
75
Chapter 5
Finding
&
Observa
tions
76
77
Conclusio
n
&
Recommen
dations
78
79
10. Genuine investors are not at all interested in the speculative gain as their
investment is based on the future profits, therefore the authorities of the
exchange should be more vigilant to curb the speculation.
11. Necessary steps should be taken by the exchange to deal with the situations
arising due to break down in online trading.
80
BIBLIOGRAPHY
Books:
1.
Investment management
-V.K.Bhalla
2.
Investment management
-Preethi Singh
5.
81
www.sharekhan.com
www.economictimes.com
www.moneycontrol.com
www.bseindia.com
www.nseindia.com
www.sebi.gov.in
www.investors.com
www.investopedia.com
chandu9041@gmail.com
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