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UNDERTAKEN AT
LUDHIANA STOCK EXCHANGE
LIMITED
FEROZE GHANDHI MARKET, LUDHIANA
SUBMITTED TO -
g.n.i.m.t.
IN THE PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR
THE AWARD OF THE DEGREE OF
submitted by
DEEPIKA DHAWAN
REG NO:
1
2008-10
PREFACE
One should always work with an objective in its mind.
In order to make the students competent, all students are required to take a real time
project work. This exposure to real life situation given an insight to the students about what
problem he/she can expect to face during his career.
Studying books and merely passing exams is not worth the education knowledge
and in fact, experience is incomplete without being exposed to what is happening in real.
With the introduction of compulsory trading by SEBI, there has been mushroom growth of
LSE and all the undertaking departments.
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The main intention of this report is to compile the subject matter in such a way
that anybody who has no prior knowledge of elements of LSE and DP can understand
properly without any difficulty.
This report is one of precious opportunity for me to gain knowledge, improve
myself and build confidence. In this I have done my best to make it a genuine study. But as
we all know that “Making error is a part of human attitude”, there may be chance of some
mistakes. I look forward to suggestions from all readers and other teachers for further
improvement.
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Acknowledgement
“EDUCATION IS LIFE AND LIFE IS EDUCATION”
It would be prudent to commence this report with a sincere tribute to all those who played
an indispensable role in the accomplishment of this work and obliged whenever and
wherever their able guidance was required.
My first and foremost note of thanks to Ms. Pooja Sharma (Head Of Training And
Education Cell, Ludhiana Stock Exchange) for giving me opportunities in the esteemed
organization to undertake such type of valuable project.
I would like to express my deep sense of gratitude to my college faculty guide Ms.
Tavleen and other teachers for providing me regular guidance, full cooperation, support
and encouragement throughout the project. Under her experienced teaching and guidance,
my knowledge has increased resulting in achieving better results.
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CONTENTS
• EXECUTIVE SUMMARY/ ABSTRACT
• REVIEW OF LITERATURE
• INTRODUCTION OF STOCK EXCHANGE
Profile of Ludhiana Stock Exchange
Operations of Ludhiana Stock Exchange
Operations of Ludhiana securities limited
Details Of Board Of Directors Of Company
Product And Services Operated At LSE.
Recent Developments And Achievements
Swot Analysis
• INTRODUCTION OF DEPARTMENTS
• ROLE OF DEPOSITORIES
Legal Framework & Functions Of Depositories
Introduction To National Securities Depository Limited
Introduction To Central Depository Service Limited
• RESEARCH METHODOLOGY
Result And Analysis
Limitations
• RECOMMENDATIONS AND SUGGESTIONS
• CONCLUSION
• APPENDIX
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Questionnaire
Glossary of Terms
Abbreviations
Bibliography
Documents
Broadly speaking, the stock market can be divided into two independent and inseparable
segments viz.
• Primary segment market (New issue market)
• Secondary Segment (Stock market)
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The Ludhiana Stock Exchange Limited was established in 1981, by Sh. S.P. Oswal and
Sh. B.M. Munjal, leading industrial luminaries, to fulfil a vital need of having a Stock
Exchange in this region. Since its inception, the Stock Exchange has grown
phenomenally. The Stock Exchange has played an important role in channelizing savings
into capital for the various industrial and commercial units of the State of Punjab and
other parts of the country.
LSE Securities Ltd., was incorporated in 07TH January, 2000 with a view to revive the
capital market in the region and for taking full advantage of the emerging opportunities
being provided by expansion of bigger stock exchanges like NSE and BSE. The company
since its inception has marched forward rapidly and has maintained consistent growth
record.
LSE SECURITIES LIMITED is a subsidiary of the Ludhiana Stock Exchange has
present at various locations to effectively service its large base of individual clients. The
clients of the company greatly benefit from strong research capability, which
encompasses fundamentals as well as technical of LSE Securities Ltd, besides its wide
reach in this part of the country.
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The main aim of LUDHIANA STOCK EXCHANGE is to ensure safety and security to
the investment of the investors and provide the proper services under the prescribed
guidelines of S. 131.
• OPERATIONAL DEPARTMENTS
• SERVICE DEPARTMENTS
DEPOSITORY
The term depository means a place where something is deposited for safekeeping, a bank
in which other deposit funds or securities are kept usually under the terms of specific
depository agreement. A depository is an organization where the securities of
shareholders are held in the electronic form at the request of shareholders through the
medium of depository participant.
Depository means
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Exchange.
performance.
RECOMMENDATIONS
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• NSDL should try to reduce the charges in order to satisfy the investor a more and
more of the investors are of the opinion that dealing in NSDL is costlier over
dealing in physical shares
• More awareness among the public should be created by advertising campaigns.
• reduction in time taken for sending holding statement as well as transaction
purposes.
LITERATURE REVIEW
The role of financial system is considered to be the key to economic growth. A well
developed financial system promotes investment by identifying and financing lucrative
business opportunities, mobilizing savings, allocating resources efficiently, helping
diversify risks and facilitating the exchange of goods and services (Mishkin 2001). A
growing body of literature has affirmed the importance of financial system to economic
growth. Stock market development has assumed a developmental role in global
economics and finance following the impact they have exerted in corporate finance and
economic activity.
Schumpeter 1932, McKinnon 1973 The link between stock markets and economic
growth pivots on a major strand of finance-growth hypothesis with an insight into how
financial intermediation facilitates economic growth. Studies on the link between stock
markets and growth have varied in methods and results.
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Spears (1991) reports that in the early stages of development, financial intermediation
induced economic growth in Sub-Saharan Africa.
Pardy (1992) has noted that even in less developed countries capital markets are able to
mobilize domestic savings and allocate funds more efficiently. Stock markets can play a
role in inducing growth in less-developed countries. Empirical investigations into the link
between stock market development and economic growth is therefore important.
Atje and Jovanic (1993) using cross-sectional regressions conclude that stock markets
have long-run impacts on economic growth and it was also found that stock markets
influence growth through a number of channels: liquidity, risk diversifications,
acquisition of information about firms, corporate governance and savings mobilization
Comincioli (1996) it seems relevant to conduct a research in this topic. The traditional
valuation model of stock prices and the “wealth effect” provide theoretical justification
for stock prices to act as indicator of economic growth. According to fundamental
valuation models, stock prices depend on expectations about the future economy.
Therefore, expected changes in real economy cause the values of stock prices. According
to wealth effect, however, changes in stock prices cause the variation in the real
economy.
Luintel and Khan (1999) study 10 developing economies and find bi-directional
causality between financial development and economic growth in all sample countries.
Levine and Zervos (1998) measure stock market development along various dimensions:
aggregate stock market capitalization to GDP and the number of listed firms (size),
domestic turnover and value traded (liquidity), integration with world capital markets,
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and the standard deviation of monthly stock returns (volatility). The results suggest a
strong and statistically significant relationship between initial stock market development
and subsequent economic growth.
Rousseau and Wachtel (2000) analyze 47 economies and report that greater financial
sector development leads to increased economic activity.
Chief Dennis O. Odife (2000) The state and extent of stock exchange and capital market
development in sub-Saharan African have come under scrutiny arising from increased
global interest in emerging markets. Recent changes in stock exchange and capital market
development all over the world and especially in the emerging economies of Eastern
Europe contain lessons, which African nations need to imbibe for their benefit. These
changes are in the area of ownership and operation of stock exchanges, distribution of
stock exchanges worldwide, trends towards alliances between stock exchanges in Europe,
and in economic literature concerning economic growth. This paper examines some of
these changes and suggests new directions for African economies in their quest for more
rapid and broad based sustainable economic development.
Momaya Kumar Mukherjee, Joy Deep (2000) Regional stock exchanges in India have
for a long time, been suffering from low turnover and lack of liquidity. After NSE
launched its screen-based trading through terminals located all over the country, regional
exchanges were facing a very tough time and struggling to survive. This note describes
the status, operations, sources of revenue of one such regional exchange. This note also
provides comparative data on the regional exchanges in India
Goel, Prabhu (2004) National Securities Depository Ltd. (NSDL) is India's first and
largest depository with more than 90% market share. NSDL provides infrastructure
facility to hold and transfer shares, debentures, bonds and such securities in an electronic
book entry form. NSDL provides these services to 48.85 lacs investors from 1700
locations in the country through its network of around 400 Business partners connected to
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its central system over VSAT/Leased line Closed User Group network. NSDL has also
set-up PKI enabled Internet based common infrastructure facility to enable its Business
Partners to receive instructions from depository users in an electronic from. The system
holds records of over Rs. 9 lacs crores securities assets and daily handles close to million
booking transactions and settlement exceeding Rs. 2000 crores. For NSDL, authenticity
of debit instruction, privacy of investor's data, continuity of its service, reconciliation and
system integrity are core area of risk containment.
Adjasi and Biekpe (2005) find that positive influence of stock market development on
economic growth is significant for countries classified as upper middle income
economies from the study of 14 African countries. Similarly, Siliverstovs and Duong
(2006) reveal that even when accounting for expectations, represented by the economic
sentiment indicator, the stock market has certain predictive content for the real economic
activity.
Paudel (2005) states that stock markets, due to their liquidity, enable firms to acquire
much needed capital quickly, hence facilitating capital allocation, investment and growth.
Stock market activity is thus rapidly playing an important role in helping to determine the
level of economic activities in most economies. However, controversy does exist on the
role of stock market as an indicator of future economic activity.
Jain, Tarun and Sharma (2007) Stock Exchanges act as Self Regulatory Organizations
(SROs) and the very nature of this function necessitates acting beyond their own
monetary gains in order to secure good governance. Conflicts of interest are antithetical
to the role of an SRO. Internationally, competition and rapid technological changes have
actuated Stock Exchanges to move from a mutual association model to a public limited
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leaps and bounds, thereby elevating its status to internationally acceptable standards. The
analysis of the progress of National Securities Depository Limited (NSDL) and Central
Depository Services (India) Limited (CDSL) in economic terms clearly reveals that both
the depositories have shown a remarkable progress in terms of Demat Accounts, Demat
value and quantity, Settlement value and quantity and the number of Depository
Participants. In spite of its late emergence, the growth at CDSL is almost at par with that
of NSDL.The exponential spurt in Demat Accounts, both at NSDL and CDSL (i.e., about
100,000 Demat accounts as on 30-6-06) reaffirms the increased reliance of the investors
on the depository System. In this study, an attempt has been made to evaluate the overall
progress of the depository system in India and its impact on the market capitalization
over a period of six years..
Sabharwal, Satneet And Crack, Timothy Falcon(2009) We fill a gap in the literature
by re-examining the performance of value and growth strategies in India. Fama and
French (1998) note that stock returns in India increase with market cap and with P/E.
Their emerging market data are limited, however, and their counterintuitive results for
India are neither statistically nor economically significant. We use a large and recent data
set, and we are surprised to find that these odd results have maintained their sign and
strengthened dramatically. In particular, we find that stock returns in India increase
strongly with both market cap and P/E, and decrease strongly with dividend yield.
International investors need to be aware that Indian markets do not follow the patterns
that we have seen in most other markets and that growth beats value on the Bombay
Stock Exchange.
The Icfai Journal Of Applied Finance (2009) The National Stock Exchange (NSE) is
India's first fully demutualized stock exchange. It is also the largest exchange in India in
terms of volumes in both equity and derivatives segments. This study looks at the pricing
of IPO’s in the NSE, in particular, it seeks to empirically explain the first day under
pricing in terms of the demand generated during the book building of an issue, the listing
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delay between the closure of the book building and the first day listing of the issue, and
the money spent on the marketing of the IPO’s by the firms. The results suggest that the
demand generated for an issue during book building and the listing delay positively
impact the first day under pricing, whereas the effect of money spent on the marketing of
the IPO is insignificant. It is also found that in consonance with the extant literature, the
Post-IPO performance in one month after the listing for the firms under study, is
negative.
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STOCK EXCHANGE
“A market with a trading floor where securities are bought and sold is called a stock
exchange.”
“The market or place, where securities, viz. shares are exchanged / traded or simply
where buying and selling takes place, is called stock exchange or stock market.”
Stock Exchanges are an organised segment of capital market, where members of the
organisation gather to trade company stocks and other securities. The members may act
either as agents for their customers, or as principals for their own accounts.
Stock exchanges also facilitate for the issue and redemption of securities and other
financial instruments including the payment of income and dividends. The record keeping
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is central but trade is linked to such physical place because modern markets are
computerised. The trade on an exchange is only by members and stock broker do have a
seat on the exchange.
There is usually no compulsion to issue stock via the stock exchange itself, nor must
stock be subsequently traded on the exchange. Such trading is said to be off exchange or
over-the-counter. This is the usual way that derivatives and bonds are traded.
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Broadly speaking, the stock market can be divided into two independent and inseparable
segments viz.
• Primary segment market (New issue market)
• Secondary Segment (Stock market)
Primary segment market - The primary market is that part of the capital markets that
deals with the issuance of new securities. Companies, governments or public sector
institutions can obtain funding through the sale of a new stock or bond issue. This is
typically done through a syndicate of securities dealers. The process of selling new issues
to investors is called underwriting. In the case of a new stock issue, this sale is an initial
public offering (IPO). Dealers earn a commission that is built into the price of the
security offering, though it can be found in the prospectus.
Secondary segment market- The secondary market, also known as the aftermarket, is
the financial market where previously issued securities and financial instruments such as
stock, bonds, options, and futures are bought and sold.
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The secondary market for a variety of assets can vary from fragmented to
centralized, and from illiquid to very liquid. The major stock exchanges are the most
visible example of liquid secondary markets. Most bonds and structured products trade
“over the counter,” or by phoning the bond desk of one’s broker-dealer.
ACCORDING TO:
SUPREME COURT OF INDIA
Stock exchanges are the nerve centre of the capital market, which is also said to be a
barometer of the economy. It provides a linkage between the savings of household sector
and investment in corporate sector or economy.
Bombay stock exchange and National stock exchange are two Indian stock exchanges
which come at the 7th and 10th number in ranking respectively.
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• Brokers and sub- brokers act as an intermediate between stock exchange and the
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• Profit sharing
• Corporate governance
The stock exchange discharges these functions by laying down a number of regulations,
which is to be compiled with while making public issues. e.g offering at least a
prescribed percentage of capital to the public, keeping subscription list open at least for 3
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days making provisions for receiving application, allotting shares against on a fair and
unconditional basis etc.
The Bombay Stock Exchange (BSE) is the largest Stock Exchange, in the country,
where maximum transactions, in terms of money and shares take place. Bombay Stock
Exchange Limited is the oldest stock exchange in
Asia. Popularly known as BSE it was established
as "The Native Share & Stock Brokers
Association" in 1875.
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It is the first stock exchange in India to obtain permanent recognition from the
Government of India under the Securities Contracts (Regulation) Act, 1956.
Bombay Stock Exchange played a pivotal role in the development of the Indian capital
market and its index, SENSEX, is tracked worldwide. The Exchange has a nation-wide
reach with a presence in 417 cities and towns of India. BSE provides an efficient and
transparent market for trading in equity, debt instruments and derivatives.
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aid enterprising promoters in raising finance for new projects in a cost effective manner
and to provide investors with a transparent & efficient mode of trading.
Modelled along the lines of the NASDAQ market of USA, OTCEI introduced many
novel concepts to the Indian capital markets such as screen-based nationwide trading,
sponsorship of companies, market making and scrip less trading. As a measure of success
of these efforts, the Exchange today has 115 listings and has assisted in providing capital
for enterprises that have gone on to build successful brands for themselves like VIP
Advantage, Sonora Tiles & Brilliant mineral water, etc.
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SEBI vide order dated July 06, 2007 has withdrawn the recognition
granted to Saurashtra Kutch Stock Exchange Limited.
23 Uttar Pradesh Stock Exchange Association Ltd. June 02, 2009
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Chandrasekhar Bhaskar Bhave is the sixth chairman of the Securities Market Regulator.
SEBI has to be responsive to the needs of three groups, which constitute the market:
• The investors
SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-
executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its judicial
capacity. Though this makes it very powerful, there is an appeals process to create
accountability. There is a Securities Appellate Tribunal which is a three member tribunal
and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi.
A second appeal lies directly to the Supreme Court.
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PROFILE
The Ludhiana Stock Exchange Limited was established in 1981, by Sh. S.P. Oswal and
Sh. B.M. Munjal, leading industrial luminaries, to fulfil a vital need of having a Stock
Exchange in this region. Since its inception, the Stock Exchange has grown
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phenomenally. The Stock Exchange has played an important role in channelizing savings
into capital for the various industrial and commercial units of the State of Punjab and
other parts of the country.
The Ludhiana Stock Exchange is a technology savvy, forward looking and modern
Regional stock exchange. The stock exchange has introduced latest technological
developments in the capital markets to keep itself in pace with the changes sweeping
across the stock exchanges through out the country.
The Ludhiana Stock exchange was incorporated in the year 1983. It was granted
recognition in the year 1993.
Exchanges among the Regional Stock Exchanges of the country, and has been providing
trading platform for the investors situated in Punjab, J&k, Himachal Pradesh &
Chandigarh. At present, it has 380 listed companies and among them, 249 are listed as
regional companies.
The Council of Management of the Exchange consists of nine members, out of whom
two are Government Nominees; four are Public Representatives and one Executive
Director who is also Ex-officio member of the Board. At every Annual General Meeting,
one third of the elected Directors retire by rotation. Administration of the Exchange is
managed by the Executive Director who is assisted by a Company Secretary and a team
of Executives, Assistants, Technicians and Sub-staff. The Exchange has four Statutory
Committees namely Disciplinary Committee, Arbitration Committee and Defaults
Committee and Investor Services Committee. In addition, it has Advisory and Standing
committees to assist the administration.
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As stated in the preceding Para, the Exchange acquired the membership of NSE & BSE
through its subsidiary, the LSE Securities Limited, with the objective of providing an
enabling mechanism to its member brokers to trade on NSE and BSE as sub-brokers of
LSE Securities Limited. Trading at BSE and NSE was commenced through the
subsidiary route from September 2000 and December 2000, respectively, and the trading
in F&O segment of NSE commenced in February 2002.
Trading In Commodities
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The Ludhiana Stock Exchange has also facilitated the formation of LSE commodities
Trading Services Company for providing a platform for trading in commodities like
bullion, cereal, crude etc. The company has grown in size and scale and is attaining
newer heights daily. The daily turnover of the company has already crossed Rs.100
crores and the company is providing trading in commodities through both MCX and
NCDEX two leading National Commodities Exchanges in India.
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Investor Service Centre is also equipped with a Terminal for providing "live" rates of
trading at NSE and BSE. A large number of the investors visit the centre to utilize the
services being provided by the Exchange.
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OPERATIONS OF L S E
• TURNOVER
Ludhiana Stock Exchange is one of the leading Stock Exchanges among the Regional
Stock Exchanges of the country, and has been providing trading platform for the
investors situated in Punjab, J&k, Himachal Pradesh & Chandigarh. At present, it has 380
listed companies and among them, 249 are listed as regional companies. It had been
generating significant amount of the business in the secondary market. It recorded a peak
turnover of Rs.9154 crores during the year 2000-2001. The structural changes that took
place in the recent past in the Capital Market of the country had a negative impact on the
trading volume of the Regional Stock Exchanges. There has been a significant reduction
of turnover during the financial year 2001-2002, but the reduction in the turnover of the
Exchange has been more than adequately compensated by substantial rise in the turnover
of LSE Securities Limited, a subsidiary of Ludhiana Stock Exchange.
• LISTING
Listing is one of the major functions of a Stock Exchange wherein the securities of the
Companies are enlisted for trading purpose. Any Company incorporated under
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Companies Act, 1956, coming out with an IPO, has to mandatorily list its shares on a
Stock Exchange. The Listing Department of Ludhiana Stock Exchange deals with listing
of securities, further listing of issues like bonus and rights issues, post listing compliance
of the companies which is already listed with Ludhiana Stock Exchange. The Companies
desirous of listing its securities on the Exchange have to sign a Listing Agreement with
the Stock Exchange. After getting the listing approval, the Company has to ensure and
report compliance of the post listing requirements. The listing section of the LSE
monitors the post-listing compliance of all the listed companies and follows up with the
companies, which are found deficient in compliance.
• END OF AN ERA
The management of the Stock Exchange apprehended that the smaller regional Stock
Exchanges would not be able to meet the challenges imposed by expansion of bigger
Stock Exchanges like NSE and BSE and might end up losing their entire business to
VSAT counters of the bigger Stock Exchanges. In order to prepare for such an
eventuality, Stock Exchange set up a broking arm in the name of LSE Securities Limited
(a Subsidiary Company of the Stock Exchange) in January 2000 and built infrastructure
and IT based sophisticated systems to enable its members and investors to trade on NSE
and BSE through the subsidiary route. The Stock Exchange was thus able to convert the
"threat" it faced from expansion of NSE and BSE into an opportunity for its members and
investors. As expected, there was a marked shift in the trading volumes from the Stock
Exchange to the NSE and BSE through the Subsidiary Company. This shift became more
prominent when SEBI introduced compulsory Rolling Settlement and banned the deferral
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products like Badla, MCFS and ALBM w.e.f. July 2, 2001 causing thereby an end to
arbitrage opportunities between the Stock Exchange and NSE/BSE. Ultimately, there was
complete shift of trading from the Stock Exchange to the LSE Securities Limited in
January 2002.
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LSE Securities Ltd., was incorporated in 07TH January, 2000 with a view to revive the
capital market in the region and for taking full advantage of the emerging opportunities
being provided by expansion of bigger stock exchanges like NSE and BSE. The company
since its inception has marched forward rapidly and has maintained consistent growth
record.
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permits a stock exchange to float a subsidiary, which can take up membership of larger
stock exchanges, such as the National Stock Exchange of India Ltd. (NSE), and Bombay
Stock Exchange Ltd. (BSE). LSESL has been registered by SEBI as a Trading-cum-
Clearing Member in the Capital Market segment and Futures & Options segment of NSE
and Capital Market segment of BSE and Trading member of MCX-Stock Exchange
Limited. Trading Members of LSE can access NSE and BSE by registering themselves
with SEBI as Sub-brokers of LSESL.
LSE Securities Limited is a subsidiary of the Ludhiana Stock Exchange, which was
formed with an objective to enhance business and investment opportunities for the
investors and members of Ludhiana Stock Exchange at large, through innovative
products by encompassing a variety of activities related to the capital market. The
company has a paid-up capital of Rs. 5.55 crores.
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LSE Securities Ltd., was incorporated in January, 2000 with a view to revive the capital
market in the region and for taking full advantage of the emerging opportunities being
provided by expansion of bigger stock exchanges like NSE and BSE. The company since
its inception has marched forward rapidly and achieved many milestones in a short span
of existence.
• GOVERNING COUNCIL
The Council of the management of the Company comprises of 10 directors of which 3 are
broker members and 7 non-brokers. Five non broker members are Independent Directors
of eminent status from the field of finance, law and management and remaining two are
Chief Executive Officer of LSE Securities Limited and Executive Director of the holding
company (Ludhiana Stock Exchange), who is on the Board of the company as ex-officio
Directors. Thus the council of management has representation of sub-brokers as well as
professionals and subject specialists representing various fields of business activities.
Operations of the company are run in a professional, transparent and fair manner keeping
in view of the interest of investors as well as other stake-holders.
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•
Sr.No. Name Designation Date of Appointment
1. Mr. Krishan Kant PurI Chairman 29.09.2007
2. Mr. Manoj Sarna Vice-Chairman 29.09.2007
3. Mr. Manjit Singh Sarna Member-Director 27.09.2008
4. Mr. Vishal Goomber Member-Director 27.09.2008
5. Mr. Lalit Kishore Member-Director 27.09.2008
Public Representative Director-
6. Dr. Anil Kumar Angrish 19.07.2007
Independent Director
Public Representative Director-
7. Mr. Vijay K. Bansal 12.03.2008
Independent Director
Public Representative Director-
8. Mr. Susheel Bhakoo 12.03.2008
Independent Director
Public Representative Director-
9. Mr. Pawan Kumar Garg 27.08.2008
Independent Director
Public Representative Director-
10. Dr. Prem Kumar 14.02.2009
Independent Director
11. Mrs. Pooja M. Kohli LSE-Representative Director 14.02.2009
•
•
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•
•
•
•
•
•
•
•
•
• Capital Market:
We are the leading broker of NSE and BSE and have been providing capital market and
derivatives services to our clients. You can avail the following services by associating
yourself to ourselves.
• Fundamental and Technical Research to guide you in Capital Creation.
• Efficient Execution through our term of experienced dealers.
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• Transparent Dealings.
• Attractive Cost Structure.
• Derivatives:
Derivatives (Futures & Options) are ideal instruments to protect your portfolio against
risk. You can trade with index movements, hedge and leverage your portfolio by limiting
risk but keeping your upside unlimited.
• Depository Services:
A depository can be defined as an institution where the investors can keep their financial
assets such as equities in the dematerialized form and transactions could be effected on it.
Besides providing custodial facilities and dematerializations, depositories are offering
various transactional services to its clients to effect buying, selling, transfer of shares etc.
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Screen Based Trading: Screen based trading in scrips was commenced at Ludhiana Stock
Exchange on 18th Nov, 1996. It became the SUI Stock Exchange in India to introduce
screen based trading at a capital coast of 5.50 crores. Its software was providing by CMC
LTD. After that start of screen based trading volume of turnover at LSE has arisen
substantially from an average of 26 scrips to 41 scrips.
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Derivative Trading:
In June, 2000 financial derivatives are traded for the maximum time period for 3 months.
And the minimum limit of trading is Rs. 21lacs.
Trading on BSE:
LSE started it trading on BSE through MULTEX by a way of subsidiary - LSE Securities
Ltd.
Normal Trading:
Buying – Selling = Trading
Other Developments:
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• LSE though of dealing with MCX for survival and growth of members and
investors of LSE in face of threat from expansion of BSE/BNSE VSAT counters
STRENGTHS OF LSE
• It has an ultra modern infrastructure.
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Weaknesses of LSE
• It has no different products and services from other stock exchanges.
• At LSE there is no trading of regional and non- regional companies.
• Investors and traders are not interested to trade at LSE because of lack of depth.
• LSE is not able to compete NSE and BSE.
• The value of LSE’s ticket is Rs. 4 lac, which were Rs. 50 lacs in 1992. This is
because of no trading at LSE.
LSE can introduce new products and services, which can benefit the exchange.
The merger with another stock exchange can improve it.
It can better utilize its assets by leasing.
The subsidiary of LSE has a bright future at NSE and BSE.
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DEPARTMENTS OF LUDHIANA
STOCK EXCHANGE
The main aim of LUDHIANA STOCK EXCHANGE is to ensure safety and security to
the investment of the investors and provide the proper services under the prescribed
guidelines of S. 131. So to maintain the proper system of working of exchange, there are
so many different departments in which particular functions are performed, assigned to
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OPERATIONAL DEPARTMENTS
• Margin section
• Clearing house
• Market surveillance
• Computer section and Information System Department
SERVICE DEPARTMENTS
• Legal department
• Secretarial Department
• Membership Department
• Listing Department
• Accounting Section
• Investor Grievance Cell
• Personnel Department
• Maintenance Department
• Know your client (KYC) Department
• Depository Department
All the section performs specific function. There is nowhere duplication of work; even
then all the sections are interconnected with each other. There is an organized network of
recording of activities performed there. But before studying the inter depositories of
section here is the detail of all department i.e. actually what function is performed by
each and every section
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OPERATIONAL DEPARTMENTS
MARGIN SECTION
Margin Section is an important section. At present the head of this department is Mr.
Parshant Saluja. This section apart from dealing in the regulating the trading of brokers
keeps a check on excessive trading in speculation. Margin is the amount, which is
collected from tile brokers for the safety of transactions. As the transactions are to be
finalized on basis, in the mean time the rates may fluctuate which may lead to default. So
to make the transaction safe, daily margins are collected from brokers. When a member
gets registered in the exchange and with securities exchange board of India (SEBI), Then
before starting trading he is supposed to deposit some fixed by SEBI as security. Now in
SEBI rolling settlement prevails. Ultimately margin is the difference between the limit
and trade done by the member. The security deposit by member is called Base Minimum
Capital. If any member wants to do trade up to greater limit then he can deposit
Additional Base Minimum Capital.
CLEARING HOUSE
The head of this department is Mr. Vipin Goel. Clearing house takes care of pay-in and
pay-out securities. At this time there is weekly trading system (Monday to Friday)
prevails. And securities are settled by rolling settlement. Means pay-in and pay out of
securities is done on T+2 basis. T means Trade day on which transaction has been done.
The main task of this section to see the market sanctity and maintenance so that the
investors are not cheated. So Market Surveillance entails scientifically identifying points
in a stock price movement for trading volumes, which don’t match with the company’s
fundamentals. So the price and volumes trends in stock exchange are checked for
abnormalities scientifically
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COMPUTER SECTION
The growing technicalities and the increase workload have enhanced the importance of
this department at LSE. This department is also referred to as Electronic Data Processing
Section. This section is the backbone of entire stock exchange as the functioning of the
other departments would come to half if this department becomes inactive.
SERVICE DEPARTMENTS
LEGAL DEPARTMENT
The objective of legal section is to make effective bylaws and regulation for the stock
exchange and to see that the guidelines, circular and any amendments in rules made by
the SEBI are enforced at appropriate time so that the future complication may be reduced
or avoided. Each of the matter involving legality is to be solved by the legal department.
SECRETARIAL SECTION
The functions and duties of the secretarial department include maintenance of record of
minutes of the meetings like:
• Recruitment of staff.
• Maintaining employee’s record e.g. attendance leave, overtime etc.
• Maintaining employee’s service book up to date and other details as per the
requirements of auditors, at the time of inspection.
• Other activities like staff farewell party and Diwali Puja.
Since LSE does not have a separate personnel department in its organizational chart,
therefore all activities relating to personnel are carried out by the secretarial department.
MEMBERSHIP DEPARTMENT
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AGE LIMIT:
To be member of stock exchange there is age limit minimum age is 21 years.
EXPERIENCE:
To be a member of stock exchange there is a need of experience of three years.
QUALIFICATION:
In stock exchange qualification of a member is minimum 10+2 is necessary.
LISTING DEPARTMENT
This department plays an important role in the stock exchange as it helps the company to
raise money from the capital market. Presently it is mandatory for regional companies to
get themselves listed at LSE. The schedule of annual listing fee and up front listing fee
payable is given below:
Up to 1 crore 7,000
1 crore to 5crore 10,000
5 crore to 10 crore 18,000
10 crore to 20 crore 36,000
20 crore to 50 crore 54,000
Above Rs. 50 crore 90,000
Company which have a paid up share, debenture capital of more then 50 Rs. Crore will
pay additional fee of Rs.2500 for every increase of Rs.5 crore paid thereof. If stock
exchange is not a regional stock exchange then fee will be 50% of fee indicated above.
ACCOUNTING SECTION
Most of the work in account section of LSE is done manually, although help is taken
through computers for the purpose of making trail balance income and expenditure
statement and Balance sheet. The annual report of LSE is generally published in August
every year
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• To make and receive payments to the outside agencies, include companies listed
at LSE brokers working at LSE,
• To disburse personnel expenses,
• To keep the records of all incoming and outgoing money depreciation of financial
statements at the end of financial Year,
• To get their accounts audited from the third party.
LSE has a separated investor’s grievance cell, which receives complaints from investors
and follows up the complaints with companies and member broker to ensure their
satisfactory redresses. For proving better services to the investors the stock exchange has
maintained investor protection fund Rs. 500 is collected and 10% interest covered on
company deposits is also transferred to the investor protection fund.
PERSONNEL DEPARTMENT
LSE does not have a personnel department in its organization chart. This department
carries out all activities relating to the recruitment of the personnel, whenever and
wherever a vacancy arises, and employees attendance on register.
This department also deals with appointment or removal of floor clerks or authorized
representatives of brokers. These departments also maintain records of leaves and
overtime of employees.
This department of LSE is regulating the activities related to the files of electrical,
mechanical and civil engineering besides having other functions like that of security.
Here are some of the important aspects.
• Electrification of Building.
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The electricity bill of stock exchange is 8 Lakh to 10 Lakh per month. It has given its
some portion on rent to three banks i.e.4500 sq feet to HSBC, 3000 sq feet to HDFC and
7000 sq feet to City Bank. Stock exchange gets rental income of Rs. 9 to 10 Lakh
securities. This is an additional charge given to this to this department. The supervision
staff maintenance of mental detectors is also under preview.
At the ground floor of LSE there are many transformers, generators. These transformers
cover all these building’s electricity.
• Client’s ID proof.
• Client’s voter ID.
• Client’s passport.
• Client’s proper address.
• PAN is most important.
• Signature is important of a client.
• Driving license, electricity bills, telephone bills are the necessary to attach with
the form.
DEPOSITORY SECTION
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• Account Maintains
• Transfer& transmission
• Dematerialization
• Rematerialization
• Pledge creation& closure
• Settlement of trades
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INTRODUCTION TO DP
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National securities depository Ltd (NSDL) is the country ‘s first depository which
provides electronics’ depository facilities for securities traded in the equity and debt
markets. The launch of NSDL is a significant reform in the capital market and shall play
a crucial role in driving market efficiency. The second depository is central depository
services (India) Ltd (CSDSL) while investor will continue to exercise the option of
holding securities in the physical form, those preferring rematerialization of scrip are
permitted to withdraw from the depository by requesting the issue of physical certificated
again. Share transaction cost in the depository shall be lower than the cost of buying and
selling physical shares.
Depository system is not mandatory is it optional and is left to the investor to decide
whether he want the securities to be dematerialized but SEBI has made riding in certain
stocks to be compulsory settled in electronic form. It is certain that a large quantity of
existing floating stock shall get immobilized. Mutual funds shall also opt for depositories
and foreign investor are expected to increase exposure in India and domestic capital
market will have a highly efficient settlement and clearance system like American and
European exchanges.
In a bank the exchange is done by the medium of money, where as in depository it is den
with securities. In a bank money is given for safekeeping In depository securities are kept
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safely. Banks hold and transfer founds, depositories perform the same function with
securities Bank can transfer founds from one account to another without handling cash in;
a depository can do the same with physical securities just as in a bank account is opened
to avail of the banking services; an account has to be opened with a DP for holding
scripts in the depository segment.
DEPOSITORY PARTICIPANT
Depository participant (DP) is the agent of the depository and is the interface between the
depository and the investor. A DP can offer depository services only after it gets proper
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Both NSDL and CDSL have launched the facility for delivering instructions to DP over
Internet, called SPEED-e and EASI respectively. The facility can be used by all
registered users after paying the applicable charges.
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LEGAL FRAMEWORK
The operations of the depositories are primarily governed by the depositories Act, 1996,
securities and Exchange Board of Indian (Depositories and participants Regulations,
1996, Bay laws approved by SEBI, and business rules framed in accordance with the
regulations and byelaws.
The depositories Act passed by parliament received the President’s assent on August 10,
1996. It was notified in a Gazette on august 12 of the same year. The act enables the
setting up of multiple depositories in the country. This was to provide competition in the
service. At present, two depositories are registered with SEBI – the national securities
depositories Limited (NSDL) and central Depositories services (India) limited (CDSL).
Only a company registered under the companies Act, 1956 and sponsored by the
specified categories of by the specified categories of institutions can set up a depository
in India., Before commencing operations, depositories should obtain a certificate of
registration and a certificate of commencement of business from SEBI. The depository
offers services relating to holding of securities and facilitate processing of transactions in
such securities in book-entry form. The transactions handled by depositories include
settlement of market trades, securities lending and borrowing, pledge and hypothecation
etc. the rights and obligations of depositories, DP’s issuers and beneficial owners are
spelt out clearly in the depositories Act, 1996.
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AS PER ACT:
• Section 4: DP is an agent of NSDL: A DP is an agent of the depository, who
provides various services of the depository to this effect any investor ho would
like to avail the services of a depository has to enter into an agreement with any
DP of his choice. The DP will then make the depository services available to the
investor.
• Section 7: Free Transferability: The Securities held by an investor in the
depository are freely transferable from one beneficial owner to another.
• Section 8: Option to hold securities in demat form: In the depository system,
every investor subscribing to securities offered by an issuer has an option to
receive the same in physical form or dematerialized form. If an investor opts for
receiving the securities in dematerialized form, the issuer intimates the depository
the details of allotment of security as the beneficial owner of the at security in its
records.
• Section 9: Securities held in a depository are fungible: All securities held by the
depository are in dematerialized and fungible form.
• Section 10: Registered owner and beneficial owner: The depository is deemed to e
the registered owner for the purpose of affecting transfer of ownership of security
on behalf of a beneficial owner. But as a registered those securities. The
beneficial owner is entities to all rights and benefits as well as subject to all
liabilities in respect of the securities held in the depository.
• Section 14: Choice to opt out of depository: A beneficial owner opt out of a
depository in respect of any security by giving requisite intimation to the
depository.
• Section 16: Depository to indemnify losses: A depository shall indemnify a
beneficial owner of any loss cause due to negligence of the depository of
participant.
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The depository act makes provision for the setting up to multiple depositors to India. The
investor has been granted the option of holding securities in a physical of decentralized
form. Thus it is matter of choice for the investor as to whether he wants to avail of the
depository services. Depository act, 1996 provide a legal trade work for establishment of
depository mode will be fungible. They will cases to have distinctive numbers. The act
provides for detailed regulations to be framed by SEBI as well as detailed by laws to be
laws to be framed by depositories with the approval of SEBI. SEBI has been given power
under section 18 (call for information and inquiry), section 19 (direction) and section
25( power of depository to make bye-laws) of the depository act.
COMMENCEMENTY OF BUSINESS
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COMMENCEMENT OF BUSINESS
• The depository has a net worth of not less than Rs.100 lacks.
• The bye-laws of the depository have been approved by SEBI.
• The automatic against data processing system of the depository have been
protected against unauthorized access, alteration, destruction, disclosure or
dissemination of records and data;
• The network, network through which continuous electtronic means of
communications are established between the depository, DPs, issuers and R&T
agents;
• the depository has established standard transmission and encryption formats for
electronic communication of data between the depository, DPs, issuers and R&T
agents;
• The physical and electronic access to the premises, facilities, automatic data
processing systems , data storage sites and facilities including back up sites, and
to the electronic data communication network connecting the DPs issuers and
R&T agents is controlled monitored and recorded.
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• The depository has detailed operational manual explaining all aspects or its
functioning including the interface and methods of transmission if information
between the depository, issuers, R&T agents, DPs and beneficial owners.
• The depository has established adequate procedures and facilities to ensure that its
records are protected loss or destruction and arrangements have been made for
maintaining back-up facilities at a location different from that of the depository;
• The depository has made adequate arrangements, including insurance, for
indemnifying owners for any loss that may be caused to such beneficial owners
by the wrongful act, negligence or default of the depository or its DPs participants
or any employee of the depository or participants; and
• The granting of certificate of commencement of business in the interest of
investors securities market.
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RIGHT& OBLIGATION
Depositories have the rights & obligations conferred upon them under the depositories
Act 1906 the regulations made under the depositories act bye laws approved by SEBI &
the agreement made with DP’s issuers & their R&T agents.
Every depository must have adequate mechanisms for reviewing monitoring & evaluating
its control, system procedures & forward a copy of the inspection report to SEBI. The
depository is also required to ensure that the integrity of the automatic data processing
systems is maintained to ensure all time & take all precaution necessary to ensure that the
records are not lost, destroyed or tempered with. In the event of loss or destruction
sufficient back up of records should be available at a different place. Adequate measure
should be taken, including insurance, to protect the interests of beneficial owners against
any risk
Every depository is required to all such co-operations to the beneficial downers, issuers
R&T agents, custodian of securities other depositories and cleaning organization as is
necessary for the effective prompt and accurate clearance and settlement of security
transaction and conduct of business
The depository should indemnify beneficial owners of securities for any los cause to
them due to the negligence of the DP however, where the loss is caused due to the
negligence of a DP, the depository shall have the right to recover it from such DPs.
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BYE-LAWS: A depository is required to make bye laws governing its operation. The
byelaws have to be in conformity with depositories act, 1996 and the regulations made
there under and need to e approved by SEBI before becoming effective.
SERVICES OF DEPOSITORY
A depository established under the depository act, 1996 can provide any services
connecting with recording of the allotment of securities or transfer of ownership of
securities in the record of the depository. A depository can provide services through DP.
Generally the following securities are eligible for dematerialization.
• Share, scripts, stock, bonds, debentures or other marketable security of alike
nature.
• Units of mutual funds, rights under collective investment scheme and venture
capital funds, commercial paper, certificates of deposit, securities debt, money
market instrument, government securities and unlisted securities.
• Securities admitted to NSDL depository are notified to all DPs through circulars
and sent email every day. Investors are informed about these securities through
NSDL’s www.nsdl.co.in and Nest update a monthly newsletter of NSDL.
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FUNCTIONS OF DEPOSITORIES
DEMATERIALIZATION
One of the methods for preventing all the problems that occur with physical
securities is through dematerialization. India has demat route in which the book entry is
made electronically against securities that are cancelled, the share certificate are shredded
(destroyed) and corresponding credit entry of the number of securities is made in the
account opened with the DPs Dematerialization is the process by which a client can get
physical certificates converted into electronic balances maintained in its account with DP.
Securities held in dematerialized form are fungible i.e. they do not bear any
distinguishing features.
REMATERIALIZATION
Rematerialization is the process of converting electronics holding of investors back into
share certificates in paper form. The process of remat is also carried out through DP.
Once the securities are dematerialized it is not necessary that the investors to continue in
depository mode for all the time to come. He can switch over to remat. The depository
confirms rematerialization request to R&T agents.
ACCOUNT TRANSFER
The depository gives effect to the transfers resulting from the settlement of trades and
other transaction between various beneficial owners by recording entries in the account of
such beneficial owners.
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CORPORATE ACTION
A depository may handle corporate actions in two ways. In the first case, it merely
provides information to the issuer about the persons entitled to receive corporate benefits.
In the other case, depository itself the responsibility of distribution of corporate benefits.
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the clearing system from the selling brokers and delivery of securities from the clearing system
to buying broker is done by the depository. To achieve this, depositories and
ADMISSION OF PARTICIPANTS
To know properly about the admission of participants, it requires to know firstly
depository participants (DP's).Depositor participants are described as an agent of the
depository. They are the intermediaries between depository and the investor. The
relationship between the depository and the investor. The relationship between and the
depository is governed by an agreement made between the two under the depositories Act
In a strictly legal sense, a DP is an entity who is registered as such with SEBI
under the provisions of the SEBI Act. As per the provision of this Act, a DP can offer
depository related services only after obtaining a certificate of registration from SEBI.
ADMISSION OF PARTICIPANTS
Any person or institute desiring to become a participant shall file an application with the
SEBI. The applicant should submit form 'E' specified under SEBI (depository and
participants) regulations, 1996 and the annexure specific there under along with the
following documents.
• Business history of the applicant for last three years.
• Net worth as certified by charted accountant as per the latest audited accounts.
• Copies of the annual reports of the last three years.
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ELIGIBILITIES:
• The applicants have a minimum worth of Rs.lcr.
• The applicant should not have been convicted inlays of the five years immediately
preceding the filling of true application in any matter involving misappropriation
of funds and securities, theft, embezzlement of fund fraudulent conversion of
forgery.
• The applicant shall be required to furnish details of its board of
directors/authorized officials, who shall be responsible for acting on behalf of the
participants.
• The depository may conduct entrance examination and or interviews to examine
the knowledge of the participant and its staff related to the depository's
operational, functional and technical aspects.
• The applicant should have adequate office space exclusively for operations and
adequate infrastructure.
• The participant should follow the hardware and software requirements as specified
and the participants which are a CC shall follow the hare ware and software
requirements for the purpose.
• For the purpose of satisfying it self regarding the eligibility of the applicant to
become a participant.
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TYPES OF ACCOUNTS
House Non-House
Beneficiary Account
It is an ownership account the holders of securities in this type of account hold these securities
POOL ACCOUNT
Settlement wise balance of all the scrip's regarding the payout securities are maintained in this
account Further, holders of these accounts are not eligible to receive any monetary as well as
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non Monetary benefits like decided & bonus. A member can make only the concerned DP's
generates ODC pool A/C member only & numbers is known as client DP.
INTERMEDIARY ACCOUNTS
As per SEBI regulations on stock lending & brown with qualified intermediary can lend &
borrows stocks from clients. The depository intermediary borrows from lenders & leads to
borrow. Intermediary accounts with DP of its choice, for executing stock lending & balance
transaction made through them. An intermediary accounts may issued in only after obtaining
registration from SEBI under an approved lending scheme & getting the approval for the
depository for opening the account. The process of opening an intermediary account is
same as for opening a corporate beneficiary account. The Company Name depository may
transfer to or from an intermediary accounts only as per the procedure prescribed for this
securities.
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SPEED-e:
NSDL launched SPEED-e (pronounced as speedy) in September, 2001. Any Participant of
NSDL can subscribe to SPEED-e, the common infrastructure of NSDL. SPEED-e enables
demat account holders (including Clearing Members) to submit delivery instructions
directly on the Internet through SPEED-e website https://speed-e.nsdl.com. SPEED-e is
available only to those participants who have subscribed to it and the users sign an
agreement with the participant.
IDEAS:
IDEAS (Internet based Demat Account Statement) is the facility for viewing balances and
transaction in the demat account updated on an online basis with a delay of maximum 30
minutes. This facility is available to the Users of SPEED-e, Clearing Members who have
subscribed to IDEAS and to those clients whose Participants are registered for IDEAS. A
demat account holder or a Clearing Member will have the option to access IDEAS either
as a Password or as Smart Card User.
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NSDL
ABOUT NSDL
NSDL, the first depository in India, established in August 1996 and promoted by
institutions of national stature responsible for economic development of the country has
since established a national infrastructure of international standards that handles most of
the securities held and settled in dematerialized form in the Indian Capital Market.
Although India had a vibrant capital market which is more than a century old, the paper-
based settlement of trades caused substantial problems like bad delivery and delayed
transfer of title till recently. The enactment of Depositories Act in August 1996 paved the
way for establishment of NSDL, the first depository in India. This depository promoted by
institutions of national stature responsible for economic development of the country has
since established a national infrastructure of international standards that handles most of
the securities held and settled in dematerialized form in the Indian capital market.
JOINING NSDL.........
NSDL carries out its activities through service providers like Depository Participants
(DPs). Issuing companies and their Registrars and Share Transfer Agents,
Clearing corporations / Clearing Houses of Stock Exchanges. These entities are called
business 'partners in NSDL terminology. These entities need to get integrated into NSDL
depository system to be able to provide various services to the investors and Clearing
Members.
The investor can obtain depository services through a depository participant of
NSDL, Just as one opens a bank account in order to avail of the services of a bank, an
investor opens a depositors7 account with a depository participant in order to avail of
Depository facilities. A clearing member can open a special account in the depository
system for the purpose of settling trades done on stock exchanges. The clearing account
enables the clearing member to receive securities from its clients for delivery to the
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Clearing House / Clearing Corporation as pay-in, and to distribute the pay-out to its clients
received from the Clearing House / Clearing Corporation.
Issuer can make dematerialization services available to their shareholders by
signing an agreement to that effect with NSDL. After the agreement is entered into, and
electronic link is established NSDL, Issuer or its R & T Agent. The clearing
corporations / houses of stock exchanges also have to be electronically linked to the
depository in order to electronically receive securities delivered by clearing members
towards pay-in and to give out securities to clearing towards pay-out.
Just as one opens a bank account in order to avail of the services of a bank, an investor
opens a depository account with a DP in order to avail of depository facilities. Though
NSDL commenced operations with just three DPs, Depository Participant Services are
no\* available in most of the major cities and towns across the country.
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ACCOUNT OPENING:
In order to avail of depository facilities, an investor has to open a beneficiary account with
a depository participant of his choice. This is similar to opening a bank account to use the
banking services. Just as one can hold funds in a bank account and transfer funds across
accounts without actually handling cash; one can hold securities in a depository account
and transfer securities across depository accounts without actually handling share
certificates.
The account holder is called 'beneficial owner' in a depository system and the account is
known as 'beneficiary account'.
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CERTIFICATION PROGRAMME:
NSDL HAS LAUNCHED CERTIFICATION PROGRAMME ON
DEPOSITORY.
This programme helps the candidate to understand and assimilate the procedures to be
followed in conducting various transactions in the NSDL depository system. NSDL has
made it mandatory for all branches of Depository Participants (DPs) to have atleast one
person qualified in the Certification Programme. For the benefit of- the staff of the DPs,
NSDL conducts training programmes which cover all aspects of depository services.
NSDL is using the National Stock Exchange of India Limited's (NSEIL) Certification in
Financial Markets (NCFM) infrastructure for conducting the "NSDL-Depository
Operations Module". NSE"s Certification in Financial Markets (NCFM) is an on-line
testing system. The entire process of testing, assessing and scores reporting in the NCFM
is fully automated. The test is conducted on weekdays at all six NSE Offices.
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CHARGES:
NSDL provides depository, services to investors through Depository Participants Ps).
NSDL does not charge investors directly but charges its DPs, who in turn charge
investors. DPs have their own charge structure for services rendered by them to the
investors, charges that NSDL lies on DPs are as under:
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CDSL
ABOUT CDSL.......
The Central Depository Services India Limited (CDSL) was established in 1999 and is
the second securities depository in India. Its objective is to provide convenient, dependable
and depository services and facilitates holdings of Demat (securities in electronic form.
It5 network covers 100 cities always-on connectivity to around 500 centers nationwide.
The company has handled Demat for over 8000 million securities settlements. The
number is still growing and will continue since the government plans to phase out
physical trading of shares. This will exchange to be processed at an online depository.
CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading
banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard
Chartered Bank, Union Bank of India and Centurion Bank.
CDSL connects to 372 depository participants (DPs) nationwide through its network.
Every branch has access to the company's online database. A minute's downtime will
severally affect the daily operations of the capital market. To ensure efficient operations
which is reliable, free from downtime and able to support the growing number of users.
CDSL had to strengthen its network elements like connectivity applications and hardware.
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CLEARING BANKS;
During the year, Indusind Bank was admitted as a new clearing bank to provide wider
choice in clearing and settlement service to the clearing members. This brings the number
of clearing banks to four.
Professional clearing membership: NSCCL started professional clearing membership and
stock holding clearing corporation limited has been admitted as the first professional
clearing membership on CM segment.
1. Account opening-.
To open your Demat Account, you first need to select a Depository Participant, or DP. of
your convenience. CDSL has a host of top-notch DP's spread across the length and breadth
of the country. Use our search engine below to find a D? who is located closest to your
home or place of work.
Once you make your selection, you will be taken to an informative page of your chosen
DP. If you are satisfied with what you read, use my of the two options in the top-right of
the DP page to open your demat account.
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EASI FACILITY:
CDSL has introduced Electronic Access to Securities Information (easi) facility. Easi
enables Beneficial Owners / Clearing Members having demat account with CDSL system
to view their holdings and obtain transaction status through the internet. Easi is accessible
from anywhere. anytime through CDSL website - vvvw.cdslindia.com which is a self-
service channel accessible 24x7.
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For Main DPs : Rs. 3,000 per month or the amount of the actual bill for a given month
Whichever is higher.
For DP-Branches: Rs. 2,000 per month or the amount of the actual bill for a given
month whichever is higher
Fees for Clearing Members:
CDSL collects only Rs. 500/- per month from its DPs for a CM except for CM Investor
Securities Account. Further, a fee of Rs. 6/- will be payable:- For transfer from a CM a/c
to any CM a/c For credit of securities in pay-out declared by an exchange into a CM a/c
meant for other exchange.
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RESEARCH METHODOLOGY
INTRODUCTION:
SYSTEMATIC because there is a definite set of procedures and steps which we will
follow. There are certain things in the research process which are always done in order to
get the most accurate results.
FINDING ANSWERS is the end of all research. Whether it is the answer to a hypothesis
or even a simple question, research is successful when we find answers. Sometimes the
answer is no, but it is still an answer.
QUESTIONS are central to research. If there is no question, then the answer is of no use.
Research if focused on relevant, useful, and important questions. Without a question,
research has no focus, drive, or purpose.
RESEARCH DESIGN:
Research design provides the glue that holds the glue that holds the research project
together. A design is used to structure the research, to show how all of the major parts of
the research project - the samples or groups, measures, treatments or programs, and
methods of assignment -work together to try to address the central research questions.
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DATA COLLECTION:
Utmost care must be energized while collecting data because data constitute the
foundation on which the superstructure of statistical analysis is built. The result obtained
from the analysis are properly interpreted and policy decisions are taken. Data may be
obtained either from the primary source or the secondary source.
Primary Data: Primary data are obtained by a study specifically designed to fulfil the
data needs of the problem at hand. Such data are original in character and are generated
in large number of surveys conducted mostly by government and also by some
individuals, institutions and research bodies.
Secondary Data: Data which are not originally collected but rather obtained from
published or unpublished sources are known as secondary data. The secondary data
constitute the chief material on the basis of which statistical work is carried out in many
investigations.
RESEARCH INSTRUMENTS:
The main research instrument in collection the primary data is "The Questionnaire". This
is by for the most common instrument in collection primary data which has been used for
fulfilling our objectives for obtaining further information. Secondary information has
been obtained from websites, magazines, bulletins, books etc.
SAMPLING DESIGN:
Where secondary data is not available for the problem under study or decision may be
taken to collect primary data. The required information may be obtained by following the
sample methods.
SAMPLING PLAN:
Sampling is an effective step in collection primary data and has a great influence on the
quality of results. The sampling plan includes the population, sample size, sample unit
and sampling technique.
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POPULATION:
Population is our study is all the investors.
SAMPLE SIZE:
Sample size for research is 100 investors.
SAMPLE UNIT:
The sample unit or research is taken as the single individual investor.
SAMPLE TECHNIQUE:
Selection of the investor is done on the basis of convenience sampling.
AREA OF STUDY:
The study is limited to LSE only. The main reason behind this is convenience in
conducting the research.
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Exchange.
performance.
• To know the option of investor regarding the services of NSDL and CDSL
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Interpretation:
From the above analysis. it is clear that most of the respondents like long period
transaction at stock exchange as 83% respondents have & like ore than 2 years
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Interpretation
The above diagram shows that most of the respondents like the demat account
under NSDL depository as 60^ respondents shows their willingness towards NSDL, 25%
towards both & 15% towards CDSL
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Services respondent
percentage %
Demat 50 50%
Pledge 8 8%
Stock lending & Borrowing 3 3%
Traders 33 33%
All of Above 6 6%
total 100 100%
Interpretation
From the above it is clear that dematerialization of securities is the most favourable
among the respondents as it includes 50% of the shares followed by traders which has
33% share. Stock lending & borrowing has the minimum share of 3%
4. Who much satisfied are you with the services provided by DP?
levels response s percentage %
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highly satisfied 18
18%
satisfied 78 78%
neutral 4 4%
dissatisfied 0 0
highly dissatisfied 0 0
total 100 100
Interpretation
From the above it is clear that major respondents are satisfied from the
services provided by DP, 18l% respondents are highly satisfied from the services
provided by DP, 18% respondents are highly satisfied 4% are neutral 7 no any
respondents is dissatisfied from the services provided by DP
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half yearly 1
1%
Interpretation
Most of the respondents they receive the statement of their account every
month
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Interpretation
Majority respondents are the view that their DP is good as their consent is
8% towards good, 8% towards excellent 10% average and 2% bad.
7. What are your views’ about the amount charged by your DP?
Level response s percentage %
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high charges 18
18%
reasonable charges 82 82%
low charges 0 0
total 100 100
Interpretation
As 82% respondent says that charges which are charged by theirs DP is
reasonable 7 18l% says high charges.
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8. Why do you like the depository in which you have the account?
Options responses percentage %
less demat charges 10 10%
quick feedback 10 10%
efficient services 80 80%
any other 0 0%
total 100 100
Interpretation
80% respondents like the depository because of efficient services provided
by DP 10% respondents like DP because of lesser demat charges & 10% because of
quick feed back
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Depository response s
percentage %
NSDL 40 40%
CDSL 60 60%
total 100 100
Interpretation
Majority of respondents suggest CDSL as a bet depository as the decision
of 60^% respondents towards CDSL 40% towards NSDL
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good infrastructure 9
9%
minimum processing time 19 19%
loss service charges 32 32%
total 100 100
Interpretation
From the above analysis most of the respondents refer low service charges
as the first parameters fro selecting their depository as it has been rated 32% of the
respondents 28% of the respondents choose the particular DP for their convenience.
Good infrastructure 7 safety factors have the minimum criteria
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Both 12
12%
total 100 100
Interpretation
Most of the respondents want to open more new demat accounts as 56^
respondents are willing to open new demat accounts in NSDL depositary & 32%
respondent like CDSL.
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Interpretation
It is clear from the above analysis that there are very few respondents who
are not satisfied with their DP 7 want to shift to new DP. as 96% respondents want to be
with the same DP.
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No study is complete in itself however good it may be 7 every study has some limitations
some of the limitations are as follows:
• Due to shortage of time as well as resources the survey was stickled only to
Ludhiana & due to small number of investors the study may not represent the
accurate data.
• The respondent’s bias might have crept in while filling the questionnaire
• Some of the respondents of the survey were unwilling to share the information so
some of the information may have been left due to time shortage.
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SUGGESTIONS /
RECOMMENDATIONS
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CONCLUSION
From the study conducted at it is concluded that the introduction of depository in India
in 1996 has totally transformed the Indian market from dull land slow market to speedy
and computerized market.
Depository established under the depository act can provide various services connected
with recording of allotment of securities or transfer of ownership of securities in the
record of a depository
Moreover, with the introduction of Demat facility the investor as well as brokers are not
finding and difficulty in the sale and purchase of shares. Today’s investors are more
conscious and intelligent about he services begin provided by DP’s therefore paper
working of DP plays an important role in the choice of selecting a DP by investor.
As far as the working of the LSE security ltd. is concerned, the investors are enjoying the
services of LSE security ltd. they feel and perceive that they are in safe hands.
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QUESTIONAIRE
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A) Fortnightly b) Monthly
C) Quarterly d) Half Yearly
8. What are you views about the amount charged by your DP?
A) High Charges B) Reasonable Charges C) Low charges
9. Why do you like the depository in which you have the account?
A) Lesser Demat Charges
B) Quick Feed Back
C) Efficient Services
D) Any Other ________
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_______________________________________________________
_______________________________________________________
14. Give an opportunity where would you like to open a new demat account?
A) With Same Old DP (specify name ) ______________
B) Any Other DP (specify name) _________________
Name :
Age
Occupation
Signature
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GLOSSARY
MARGIN is the amount, which is collected from tile brokers for the safety of
transactions.
DERIVATIVE is a financial instrument that is derived from some other asset, index,
event, value or condition (known as the underlying)
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BROKER- A broker is a party that mediates between a buyer and a seller. A broker who
also acts as a seller or as a buyer becomes a principal party to the deal.
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IPO- The first sale of stock by a private company to the public. IPOs are often issued by
smaller, younger companies seeking the capital to expand, but can also be done by large
privately owned companies looking to become publicly traded.
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ABBREVIATIONS
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BIBLIOGRAPHY
Books
• Aggarwal Sanjiv , Bharati Guide to Indian capital market, Bharat law house
printers, 2000
• Chandra Prasanna financial management theory & practice Tata mc. Graw Hill
publishing company ltd. 2005
Websites
• www.nsdl.co.in
• www.nsdlindia.com
• www.cdsl.co.in
• www.sebigov.com
Magazines
• LSE Bulletin
• Home Book for NSDL depository
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