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SUMMER TRAINING PROJECT REPORT

A STUDY ON ONLINE TRADING AT EDELWEISS BROKING LTD.

FOR
TOWARDS PARTIAL FULFILMENT OF POST-GRADUATE DIOPLOMA IN MANAGEMENT(PGDM) (AFFILIATED TO AICTE,NEW DELHI)

UNDER THE GUIDANCE OF MR. ALI ASAD


TEAM LEADER Edelweiss Broking Ltd. Lucknow.

SUBMITTED BY ISHAN ALAM

Session (2010-2011) Department Of Post Graduate Diploma In Management

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Babu Banarasi Das


National Institute of Technology & Management
LUCKNOW (U. P.) INDIA

CERTIFICATE
This is to certify that Industrial Internship Report entitled A study on online trading at edelweiss broking ltd submitted by

Ishan Alam
Towards the partial fulfillment of the degree of

Post Graduate Diploma in Management (PGDM)


( 2 Years Post Graduate Programme duly approved by AICTE, MHRD, GoI )

in the Academic Year 2010-11 is a record of the students own work carried out at

Edelweiss Broking Ltd. Mr. Ali Asad


Team Leader(Client advisory services) Edelweiss Broking ltd 1. 2|Page

Mr. Atul Kumar Singh


Dean PGDM BBDNITM

Lucknow.

Lucknow

ACKNOWLEDGEMENT
In pursuit of an PGDM degree, summer internship is a critical component of the entire process.Edelweiss Broking Ltd.Lucknow has given me the opportunity to gain invaluable experience under the guidance of Mr. Apporva Gaur (Sales Manager, Lucknow Region) & Mr. Ali Asad(Team leader- Retail channel).Their continuous support and valuable in hand experience provided me with the conceptual understanding and practical approach needed to work efficiently for this project. The entire Edelweiss Broking Ltds staff is praiseworthy.

Last but not the least; I would also like to thank Ms. Anjali Gupta(dealer,Edelweiss Broking Ltd.) for her guidance and support throughout the training period, Dr.Mayank Srivastava sir(Faculty PGDM,BBDNITM) his great advices and Guidance and also to the entire staff of Edelweiss Broking ltd,and all my friends and colleagues who helped whenever I faced any difficult situation.

I hope this report, reflecting my learning in the past eight weeks, is as beneficial to the organization as it had been to me.

Again, I sincerely thank to all of them.

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ISHAN ALAM Table of contents


ACKNOWLEDGEMENT EXECUTIVE SUMMARY........................................................... 1

Chapter 1 Objective of The Study 3-4 Chapter 2


INDUSTRY ANALYSIS. 6 FINANCIAL SYSTEM.. 7 DIFFERENT TYPES OF MARKET 8-10 STOCK EXCHANGES. 11-15 SEBI FRAMEWORK16-18

Chspter 3
ELECTRONIC SETTLEMENT OF TRADE20-31

Chapter 4
DEFINITIONS AND EXPLANATION..33-38

Chapter 5
COMPANY PROFILE40-47

Chapter 6
SUBSCRIPTION PLANS FOR DEMAT ACCOUNT.49-54

Chapter 7
Project Analysis... 56-57

Conclusion 58 Recommendation. 59 Bibilography. 60

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EXECUTIVE SUMMARY
As per the title suggest the project report has been prepared regarding the growth and development of online trading in India. Online trading was initiated by NSE in India and soon after the other exchanges also followed it. There was a major boom in yr. 2000 when lots of online trading companies came with a bang but only few were survived because of lack of computer knowledge and low internet penetration. There are two types of online trading companies One is the banking online trading companies and the other is non-banking trading companies. A few examples of banking online trading companies are HDFC securities, ICICI direct.com, UTI securities etc. On the other hand non banking trading companies are Edelweiss broking ltd.,sharekhan,Angel Broking,Reliance Money etc. Today online trading contributes are about 8-10%. It is continuously growing and has a huge market potential. A study was undertaken to determine the growth of online trading companies in India in terms of trade done by them through online and services provided by them. Major findings indicates that out of a survey of 50 respondents it was seen that major investors prefer online trading because of few major factors such as time saving,convenience, protection through Freudian brokers etc. although during my research project Ive seen that most of the respondents feel online trading, a secure way of investing into stock market still a few of them feel it unsafe and a bit complicated but they posses information about online trading. Today the online trading companies having cut-throat competition in our offering whose brokerage discounts lower margin money and zero balance account. Due to the rising education awareness and use of internet there is a huge potential for online trading in future and companies must come up with innovative offerings to capture the untapped market.

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CHAPTER -1
OBJECTIVE OF THE STUDY

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CHAPTER-1
OBJECTIVES OF THE STUDY:
It is to analyze the changes in trading after the exchange shifted from outcry to online trading system. It is to study the functions of EDELWEISS BROKING LTD through various departments,To know the online screen based trading system adopted by EDELWEISS and about its communication facilities. The appropriate configuration to set the network, which would link the EDELWEISS to individual / members. To know about the latest and future development in the stock exchange trading system.

METHODOLOGY OF THE STUDY:


The data collection methods include both primary and secondary collection methods.

Primary method: This method includes the data collected from the personal interaction with
authorized members of Edelweiss broking Ltd, and from calling to the customers in the lead generation process.

Secondary method: The secondary data collection method includes:


The lecturers delivered by the superintendents of respective departments. The brochures and material provided by Edelweiss broking ltd. The data collected from the magazines of the NSE, economic times, and etc., various books relating to the investments, capital market and other related topics. 1. 7|Page

NEED FOR THE STUDY:


The present study is necessary to review the online trading procedure.As the exchange has changed its trading from the outcry mode to online trading on 20th February 1997, there is need to assess then performance of the capital market.

LIMITATIONS OF THE STUDY:The study is confined to online trading procedure only. Problems of listing are not covered due to limited time and to keep the study in manageable limits.

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CHAPTER 2
INDUSTRY ANALYSIS FINANCIAL SYSTEM DIFFERENT TYPES OF MARKET STOCK EXCHANGES SEBI FRAMEWORK

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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 nonprofessionals.

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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.

CAPITAL MARKET:
The capital market is the market for securities, where companies and the government can raise long term funds. The capital market includes the stock market and the bond market. Financial regulators ensure that investors are protected against fraud. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded. Capital market thus plays a vital role in channelizing the savings of individuals for Investment in the economic development of the country. As a result the investors are not constrained by their individual abilities, but by the abilities of the companies, which in turn enhance the savings and investments in the country, liquidity of capital market is an important factor affecting growth. Since projects require long term finance, but on the other hand, the investor may not like to relinquish control over their savings for a long time. A liquid stock market ensures a quick exit without incurring heavy losses or costs. Thus development of efficient market system is

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necessary for creating conductive climate for investment and economic growth. 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 generally 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 expansion, modernization, addition, and diversification and up gradation. Primary market is also referred to as New Issue Market. Primary market operations include new issues of shares by new and existing companies, further and 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

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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.

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

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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.

STOCK MARKETS IN INDIA:


Stock exchanges are the perfect type of market for securities whether of government and semigovt bodies or other public bodies as also for shares and debentures issued by the joint-stock companies. In the stock market, purchases and sales of shares are affected in conditions of free competition. Government securities are traded outside the trading ring in the form of over the counter sales or purchase. The bargains that are struck in the trading ring by the members of the stock exchanges are at the fairest prices determined by the basic laws of supply and demand.

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Definition of a stock exchange:


Stock exchange means any body or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. The securities include: Shares of public company. Government securities. Bonds

History of Stock Exchanges:


The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and Ahmadabad set up in 1894. These were organized as voluntary non-profit-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.

Functions of Stock Exchanges:


Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed companies, they help trading and raise funds from the market. Over the hundred and twenty years during which the stock exchanges have existed in this country and through their medium, the central and state government have raised crores of rupees by floating public loans. Municipal

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corporations, trust and local bodies have obtained from the public their financial requirements, and industry, trade and commerce- the backbone of the countrys economy-have secured capital of crores or rupees through the issue of stocks, shares and debentures for financing their day-today activities, organizing new ventures and completing projects of expansion, diversification and modernization. By obtaining the listing and trading facilities, public investment is increased and companies were able to raise more funds. The quoted companies with wide public interest have enjoyed some benefits and assets valuation has become easier for tax and other purposes.

Various Stock Exchanges in India:


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 Bhubaneswar Stock Exchange Association Calcutta Stock Exchange Cochin Stock Exchange Ltd. Coimbatore Stock Exchange Delhi Stock Exchange Association Guwahati Stock Exchange Ltd Hyderabad Stock Exchange Ltd. Jaipur Stock Exchange Ltd Kanara Stock Exchange Ltd Ludhiana Stock Exchange Association Ltd Madras Stock Exchange Madhya Pradesh Stock Exchange Ltd. Magadh Stock Exchange Limited Meerut Stock Exchange Ltd. Mumbai Stock Exchange

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National Stock Exchange of India OTC Exchange of India Pune Stock Exchange Ltd. Saurashtra Kutch Stock Exchange Ltd. Uttar Pradesh Stock Exchange Association Vadodara Stock Exchange Ltd.

MAJOR STOCK EXCHANGES NSE


The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000 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.

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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.

BSE 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

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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. A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer. The Executive Director as the Chief Executive Officer is responsible for the dayto- day administration of the Exchange and the Chief Operating Officer and other Heads of Department assist him. The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to constitution of the Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting of three elected directors, three SEBI nominees or public representatives, Executive Director & CEO and Chief Operating Officer has been constituted. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authority, matters regarding annulment of transactions, admission, continuance and suspension of memberbrokers, declaration of a member-broker as defaulter, norms, procedures and other matters relating to arbitration, fees, deposits, margins and other monies payable by the member-brokers to the Exchange, etc.

REGULATORY FRAME WORK OF STOCK EXCHANGE


A comprehensive legal framework was provided by the Securities Contract

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Regulation Act, 1956 and Securities Exchange Board of India 1952. Three tier regulatory structure comprising Ministry of finance The Securities And Exchange Board of India Governing body

MEMBERS OF THE STOCK EXCHANGE:


The securities contract regulation act 1956 has provided uniform regulation for the admission of members in the stock exchanges. The qualifications for becoming a member of a recognized stock exchange are given below: The minimum age prescribed for the members is 21 years. He should be an Indian citizen. He should be neither a bankrupt nor compound with the creditors. He should not be convicted for fraud or dishonesty. He should not be engaged in any other business connected with a company. He should not be a defaulter of any other stock exchange. The minimum required education is a pass in 12th standard examination.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)


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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 organizations. Prohibiting insider trading in securities. Regulating substantial acquisition of shares and take over of companies. Performing such functions and exercising such powers under the provisions of capital issues (control) act, 1947and the securities to it by the central government.

SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES):

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Board of Directors of Stock Exchange has to be reconstituted so as to include nonmembers, public representatives and government representatives to the extent of 50% of total number of members.

Capital adequacy norms have been laid down for the members of various
stock exchanges depending upon their turnover of trade and other factors. All recognized stock exchanges will have to inform about transactions within 24 hrs.

CHAPTER 3
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ELECTRONIC SETTLEMENT OF TRADE

ELECTRONIC SETTLEMENT OF TRADE


A. Procedure for purchasing dematerialized Securities:The procedure for purchasing dematerialized securities is also similar to the procedure for buying physical securities. 1. Investor instructs DP to receive credits into his account in the prescribed form. There may be one time standing instruction or separate instruction each time to receive credits. 2. Investor purchases securities in any of the stock exchanges linked to depository through a broker. 3. Broker receives payment from investor and arranges payment to clearing corporation. 4. Broker receives credit to securities in clearing account on the payout day. 5. Broker gives instructions to DP to debit clearing account and credit clients account. Investor receives shares into his account by way of book entry.

B. Procedure of selling dematerialized securities:The procedure for selling dematerialized securities in stock exchanges is similar as selling physical securities. The only major difference is that instead of delivering physical securities to the broker, the investor instructs his DP to debit his demat account with the number of securities 1. 24 | P a g e

sold by him and credit the brokers clearing account. The procedure for selling dematerialized securities is given below: 1. Investor sells securities in any of the stock exchange linked to depository through a broker. 2. Investor instructs his DP to debit his demat account with the number of securities sold and credit the brokers clearing account. 3. Before the pay-in-day, broker of the investor transfers the securities to clearing corporation. 4. The broker receives payment from the stock exchange. 5. The investor receives payment from the broker for sale of securities in the same manner as received in case of sale of physical securities.

REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities into physical certificate form. For rematerilisation of scrips, the investor has to fill up a demat request form (RRF) and submit it to the DP. The DP forwards the request to depository after verifying the investors balances. Depository in turn initiates the registrars and transfer agent or the issuer company. RTA/ Company print the certificates and dispatch the same to the investor.

Market timings:
Normal Market / Exercise Market Open time : 09:00 hours Normal market close : 15:30 hours Set up cut of time for Position limit/Collateral value : till 15:30 hrs Trade modification end time / Exercise Market : 16:15 hour
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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS


Internet based trading on conventional exchanges, uses the Internet as a medium for communicating client orders to the exchange, through broker web sites. Brokers web sites may serve a variety of functions. These may include; Allowing the clients to directly trade through investors; Advertise the broker dealers services to potential investors; Offer market information and investment tools similar to those offered by information vendor or SRO web sites; Offer real-time or delayed quote information, continuously update quotes while the user visits other sites, or allow investors to create a personal stock ticker; Provide market summaries and commentaries, analyst reports and trading strategies and market data on currencies, mutual funds, options, market indices and news; and Offer investors access to portfolio management tools and analytic programs; Information on commission and fees; and Account information and research reports. In an Order Routing system, a broker offering Internet trading facility provides an electronic template for the customer to enter the name of the security, whatever it is to be bought or sold, 1. 26 | P a g e

the quantity and whatever the order is a market or limit order. Once the brokers system receives this information trading of the security whether it is bought or sell is completed.

USE OF INTERNET AS ALTERNATIVE TRADING SYSTEMS (PROVISION FOR PRICE DISCO VERY AND MATCHING OUTSIDE CONVENTIONAL EXCHANGES)
In foreign jurisdiction, Alternative trading systems have been developing outside conventional securities markets, which provide investors with additional proprietary electronic trading facilities for securities that are traded principally on securities exchanges, or other organized markets. They have price discovery functions, matching systems and crossing systems. The systems that are currently in use in outside jurisdictions are closed systems and are not accessible to the general public through the Internet. The securities markets regulators abroad the maintained flexible and open policies designed to encourage innovation in the secondary securities markets. As a result, a number of market participants, usually brokerdealers, have developed computerized alternative trading systems by which the system centralize, display, match, cross or otherwise execute trading interest.

USE OF INTERNET FOR MAKING INITIAL PUBLIC OFFERINGS


Issues of securities of using the Internet to communicate directly with their shareholders, potential investors and analysts by disseminating corporate information. In foreign jurisdiction, they are also using the Internet to communicate to the public for the following: Public offerings; Private offerings; and 1. 27 | P a g e

Disclosure and communication

Issuers are using the Internet to market themselves to potential investors. The Internet is also being used for fulfilling necessary disclosure requirements, for disseminating the prospects in electronics form and even for receiving share applications in public issues electronically. In India, SEBI has taken initiative in permitting use of the network of stock exchange for collection of investor applications in public offerings by the issuer companies.

INVESTMENT ADVISORY SERVICES


Brokers as well as other service provides such as investment firms, research outfits etc. are using the Internet for marketing and advertising purposes, for presenting information on portfolio analysis and market information, and for communicating with and receiving orders from potential investors. The services offered by the service providers to the investors are generally the following: Advertising Providing investment information and investment advice; Underwriting Communicating with the investors; Customer orders; and Record keeping

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WORKING GROUPS SET UP BY THE COMMITTEE


Considering the present state of capital markets in India and keeping in view the ongoing developments in Internet based securities business, it was felt that SEBI as a regulator could strive to identify areas where use of Internet in the capital market is possible within the existing legal framework. One such area identified by the Committee, which is also the central within the existing legal framework. One such area identified by the Committee, which is also the central theme of this report, is the area of Internet trading on existing electronic exchange. In this area, through early introduction of Cyber Laws would be highly describe but their existence is not a necessary precondition. To look into the existing regulatory scenario and to bring out some ground rules for use of the medium of Internet, the Committee therefore constituted the following two working groups to look into the area of:

Security protocols and standardization of interfaces for Interest based securities trading, chaired by Prof. Deepak B. Phatak, IIT, Pawai, Mumbai Surveillance and monitoring related issues arising due to Interest based securities trading, chaired by Shri. L.K. Singhvi, Sr. ED, SEBI The committee also requested Ms D N Raval, Executive Director, SEBI to examine the legality of introduction of Internet trading and issue of Alternative trading systems. This report of the standing committee examines the regulatory and security requirements Internet Based Trading

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on Conventional Exchanges. Separate reports (s) will cover the other areas related to Internet applications in the securitiesmarkets. The report of the first working group on security protocols and standardization of interfaces has since been submitted and incorporated in the report. The committee would like to place on record its sincere thanks to Dr. D.B. Phatak, Ms. D.N. Raval and their team members. The global financial market is undergoing a transformation due to rapid technological developments. It thus becomes imperative that for developing in effective regulatory framework developments in other parts of the world should be studies and analyzed. With nearly who million on-line investors, Internet trading in the United States is growing by leaps and bounds. Internet trading is being facilitated by large brokerage houses, thus changing the total concept of securities trading. A team comprising of members from stock exchanges and SEBI visited the United States to these development and had interactions with brokerages houses, Internet service providers and other agencies involved in facilitating Internet trading. The team also discussed the developments in the emerging regulatory and supervisory framework in United States with the Securities and Exchange Commission officials. They were also tripped of the various initiatives taken by SEC in this regard. These inputs have been utilized while drafting this report .

RECOMMENDATIONS OF THE COMMITTEE


Application for Permission by Brokers SEBI registered Stock Brokers interested in providing Internet based trading services will be required to apply to the respective stock exchange for a formal permission. The stock exchange should grant approval or reject the application as the case may be, and communicate its decisions to the number within 30 calendar days of the date of completed application submitted to the

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exchange. The stock Exchange, before giving permission to brokers to start Internet based services shall ensure the fulfillment of the following minimum conditions.

Net worth Requirement The broker must have a minimum net worth of Rs. 50 lacs if the broker is providing the Internet based facility on his own. However, if some brokers collectively approach a service provider for providing the interest trading facility, net worth, criteria as stipulated by the stock exchange will apply. The net worth will be computed as per the SEBI circular no FITTC/DC/CIR-1/98 dated June 16, 1998.s Operational and System Requirements: Operational Integrity: The stock Exchange must ensure that the system used by the broker has provision for security, reliability and confidentiality of data through use of encryption technology. This stock exchange must also ensure that records encryption technology. The stock Exchange must also ensure the records maintained in electronic from by the broker are not susceptible to manipulation. System Capacity The stock Exchange must ensure that the brokers maintain adequate backup systems and data storage capacity. The stock Exchange must also ensure that the workers have adequate system capacity for handling data transfer, and arranged for alternative means of communications in case of Internet link failure.

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Qualified Personnel: The stock Exchange must lay down the minimum qualification fro personnel to ensure that the broker has suitably qualified and adequate personnel to handle communication including instructions as well as other back office work which is likely to increase because of higher volumes. Written Procedures: Stock Exchange must develop uniform written procedures to handle contingency Tuitions and for review of incoming and outgoing electronic correspondence. Signature Verification/ Authentication: It is desirable that participants use authentication technologies. For this purpose is should be mandatory for participants to use certification agencies as and when notified by Government/SEBI. They should also clearly specify when manual signatures would be required. Client Broker Relationship Know Your Client: The stock Exchange must ensure that brokers have sufficient, verifiable information about clients, which would facilitate risk evaluation of clients. Broker- Client Agreement: Brokers must enter into an agreement with clients spelling out all obligations and rights. This agreement should also inter alia, the minimum service standards to be maintained by the broker

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for such service specified by SEBI/Exchange for the internet based trading from time to time. Exchange will prepare a model agreement for this purpose. The broker agreement with clients should not have

Investor Information: The broker web site providing the internet based trading facility should contain information meant for investor protection such as rules and regulations affecting client broker relationship arbitration rules, investor protection rules etc. The broker web site providing the Internet based trading facility should also provide and display prominently, hyper link to the web site/page on the web site of the relevant stock exchange (s) displaying rules/ regulations/ circulars. Ticker/quote/order book displayed on the web-site of the broker should display the time stamp as well as source of such information against the given information. Order/Trade Confirmation: Order/Trade confirmation should also be sent to the investor through email at clients discretion at the time specified by the client in addition to the other made of display of such confirmation of real time basis on the broker web site. The investor should be allowed to specify the time interval on the web site itself with in which he would like to receive this information through email. Facility for reconfirmation of orders which are larger than that specified by the member's risk management system should be provided on the internet based system. Handling Complaints by Investors: Exchanges should monitor complaints from investors regarding service provided by brokers to ensure a minimum level of service. Exchange should have separate cell specifically to handle

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Internet trading related complaints. It is desirable that exchanges should also have facility for online registration of complaints on their web site. Risk Management: Exchanges must ensure that brokers have a system-based control on the trading limits of clients, and exposures taken by clients. Brokers must set predefined limits on the exposure and turnover of each client. The broker systems should be capable of assessing the risk of the client as soon as the order comes in. The client should be informed of acceptance/rejection of the order within a reasonable period. In case system based control rejects an order because of client having exceeded limits etc., the broker system may have a review and release facility to allow the order to pass through. Contract Notes: Contract notes must be issued to clients as per existing regulations, within 24 hours of the trade execution. Cross Trades: As a matter of abundant precaution, the committee seeks to reiterate that as III the case of existing system, brokers using Internet based systems for routing client orders will also not be allowed to cross trades of their clients with each other. All orders must be offered to the market for matching. It is emphasized that in addition to the requirements mentioned above, all existing obligations of the broker as per current regulation will continue without changes. Exchanges may also like to specify more stringent standards as they may deem fit for allowing Internet based trading facilities to their brokers. Enforcement:

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A separate working group has been set to look into the surveillance and enforcement related issues arising due to Internet based securities trading.However, general anti-fraud provisions (SEBI Fraudulent and Unfair Trade Practices Regulations, 1995) would apply to all transactions involving securities or financial services, regardless of the medium.

Chapter-4
DEFINITIONS AND EXPLANATION

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DEFINITIONS AND EXPLANATIONS


1. SHARES:In everyday language, when we talk of shares we normally refer to equity shares or ordinary shares of a company. The terms shares and stock essentially means the same things, the letter being a more common American usage. An equity share is evidence of ownership in a company. The physical evidence of this ownership of this document is called the Share Certificate. Now days, shares are usually kept in electronic, or dematerialized, form with a depository participant (Banks, brokers, financial institutions) of the National Securities Depository Limited (NSDL). However, if one wants one can still hold the share in the physical form which has your name endorsed on it, and is proved that you are a part owner of the company. Your ownership rights are proportionate to the number of share you own. Companies issue shares of a certain fixed denomination, called face value or par value of that share, which is clearly indicated on a share certificate in the physical form.

2. INVESTMENT: -

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Investment essentially refers to what you do with your savings in order to preserve them and make them grow or yield an income. If you keep your savings in the form of cash, they are certainly going to diminish in value because the purchasing power of money is constantly going down as a result of inflation. (The value of money is judged by the quantity of goods and services you can buy with it). Therefore, if you want to maintain or increase the value of your savings, you have to keep them in forms other than cash. This is what investment is all about, deployment of your saving with the intentions of preserving or increasing their value. This deployment can be done by using your savings to buy land, residential properties, commercial properties, gold, jewelry, works of art, fixed deposits in banks and companies, shares, bonds, infact, anything whose value is likely to either remain constant or appreciate with time. Investment also refers to using one's savings with the intention of earning an income.

3. DEMAT A/C:On doing an online business ever customer has to open and demat account in any bank whichever he likes. Demat account is the account in which the trading done by the customer is mentioned. If the customer sales or purchases any share the details of this sale and purchasing are in demat account. This account contents the name of the shares and also the number of shares held Or sold and also the rate of the share with this demat account. It is also compulsory for every customer to open a saving account in the bank because the amount which is to be received when the customers sales the shares are transferred from the demat account to the saving account. It is the responsibility of the customers that the share which he purchased or sales are properly transferred in demat account from the stock exchange whichever he deals. The amount of dividend whichever to be received on the shares when held for one or more year are

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also transferred in this demat account. It is compulsory for every customer to have a PAN no. For opening a demat account. If PAN no. Is not there is no chance for the customer to do any trading on line. There is no limit of amount to deal in this account.

4. CIRCUIT LIMIT:While issuing the shares to the public the company has to fix a particular limit of the rate of the per share this limit is called as circuit limit. This circuit limit is generally fixed on the percentage basis. This circuit limit is applied to both the ends of the share. That is to the upper limit also and also to the lower limit actually circuit limit is of two types 1) Upper limit 2) Lower limit It is compulsory for every company to fix the circuit limit. This limit is beneficial to both. The customer and also to the company generally every company fix below 10%of the rate of per share. 5. UPPER LIMIT: While issuing the shares to the public the company has to fix the upper limit this limit is also calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor that the customer doing the trading can sell above the level. For ex. Customer wants to sell a share which is of Rs10 and its

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upper limit is fixed at 10% so in this case the person will have to sell it at Rs11 or the rate which ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit to the rate of share the maximum amount of the shares is Rs 11 only and not above. 6. LOWER LIMIT: At the time of issuing share the company has to fix the lower limit also. This lower limit is calculated on the basis of the rate of the shares. This limit bears the same percentage, which is mentioned for the upper limit of the share. Like upper limit in this limit also the share minimum rate of the share is fixed the customer who wants to see; the holding shares has to first consider the upper & lower limit of the share he cannot sell the share below the lower limit and not above the upper limit like the upper limit Percentage generally in this limit also the percentage is below 10% of the face value of the shares the percentage is below 10% of the face value of the shares the percentage of the upper &lower limit is equal to every type of share For ex. Suppose the person wants to sell the shares and the rate of the share is Rs. 10/- and the lower limit percentage is 10% of the rate. So in this case the person cannot sell the share at below Rs. 9/-. He will have to sell at above Rs. 9/- or up to the upper limit of the share.

7. SENSEX:When the shares are issued to the public the stock exchange gives a particular group to the company. For ex. The Reliance Group is given the group A like this there are several companies which fall in A Group. The weightage mean is calculated according to its equity when all the companies of Group A has calculated this weightage mean they are added all together when this addition is done the result which comes down is known as Sensex.

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The trading of shares of A group is totally depended on this sensex value. The price of the share rises this sensex value also rises and when the price of this share comes down the sensex value also comes down. With the sensex

8. SCRIPTS:The company, which has more than one working area, it has to issue the share separately than that company is the company which has the script of its name. For Ex. The Reliance this company has its several working area Namely Reliance, Capital Reliance, Infocom Reliance Energy, Reliance Industry. So reliance company issues separate share for separate working area but the bold name which is given to the working area is Reliance. So in this case Reliance has its own scripts. Other example Ambuja, Birla, Etc. 9. GROUPS:When the shares are issued by the company they are given the particular group by the Stock exchange according to its demand in the market. There are mainly 7 groups. The scripts 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 scripts are of the blacklisted companies. The C group covers the odd lot securities in A, B1&B2 groups.

10. TYPES OF ORDERS: Buy and sell orders placed with members of the stock exchange by the investors. The orders are of different types. Limit orders:

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Orders are limited by a fixed price. E.g. buy Reliance Petroleum at Rs.50.Here, the order has clearly indicated the price at which it has to be bought and the investor is not willing to give more than Rs.50. Best rate order: Here, the buyer or seller gives the freedom to the broker to execute the order at the best possible rate quoted on the particular date for buying. It may be lowest rate for buying and highest rate for selling.

Discretionary order: The investor gives the range of price for purchase and sale. The broker can use his discretion to buy within the specified limit. Generally the approximation price is fixed. The order stands as this buy BRC 100 shares around Rs.40. Stop loss order: The orders are given to limit the loss due to unfavorable price movement in the market. A particular limit is given for waiting. If the price falls below the limit, the broker is authorized to sell the shares to prevent further loss. E.g. Sell BRC limited at Rs.24, stop loss at Rs.22.

11. BUYING AND SELLING SHARES: To buy and sell the shares the investor has to locate register broker or sub broker who render prompt and efficient service to him. The order to buy or sell specifying the number of shares of the company of investors choice is placed with the broker. The order may be of any type. After

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receiving the 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

chapter-5
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COMPANY PROFILE

Overview
Edelweiss, A rare flower found in Switzerland. You will discover in our identity: A graphic flower that represents ideas. Around it, the protective arms of the letter e: We believe ideas create wealth, but values protect it. It is the practice of this core thought that has led to Edelweiss becoming one of the leading financial services company in India. Its current businesses include investment banking, securities broking, and investment management. We provide a wide range of services to corporations, institutional investors and high net-worth individuals. The core inspiring thought of ideas creating wealth and values protecting it is translated into an approach that is led by entrepreneurship and creativity and protected by intellectual rigour, research and analysis. Edelweiss Broking Limited is one of the leading and fastest growing financial services company in India. Founded in 1996, Edelweiss Capital including its subsidiaries offers a wide array of multi-line solutions including Investment Banking, Institutional Equities, Asset Management, Wealth Management, Private Client Business, Insurance Brokerage, Wholesale Financing and Treasury Operations.

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Edelweiss Asset Management Limited constitutes a team of experienced professionals from the Financial Services industry. The management team is highly qualified and carries a rich experience of working in the mutual fund industry and finance related areas. Edelweiss Asset Management Limited will follow a research based and process oriented investment approach. Edelweiss Asset Management Limited will observe the highest ethical standards while deploying investors monies and servicing investors and dealing with business partners.

Service Approach

Client Focus
Edelweiss is driven by the emphasis we place on building long-term relationships with our clients. We work closely with our clients to equip them with the ability to address large, fast-growing market opportunities. Our emphasis on long-term relationships also means that we have a significant ongoing involvement with almost all of the clients that we work with.

Execution Orientation
We focus obsessively on delivering high quality execution through our experienced team of professionals. Each team is led by senior personnel and is highly research and ideas driven. We place strong emphasis on confidentiality and integrity in a sensitive business environment.

Culture
Edelweiss fosters a culture that is entrepreneurial and results-driven and that emphasizes teamwork and intellectual rigour. Our team is encouraged to display higher levels of initiative, drive, and hunger for learning and taking on additional responsibility.

Professional Integrity
We place a strong emphasis on confidentiality, honesty and integrity in our business dealings. We 1. 44 | P a g e

expect our people to maintain high ethical standards, both in their professional and personal lives. We strive to be fair in all our dealings. We respect our competitors.

Research Driven
All our businesses are built on a research and analytics foundation. Our understanding of underlying market trends and strong analytical expertise has resulted in a demonstrated ability to identify emerging trends and themes early. We seek to provide the highest quality research and investment opinions to our clients.

Board of Directors
Mr. Rashesh Shah
Chairman, CEO and Founder of Edelweiss. Mr.Rashesh Shah has previously worked for ICICI (now ICICI Bank, Indias largest private sector financial conglomerate) where he handled a World Bank aided program for export-oriented projects.

Mr. Venkat Ramaswamy


Executive Director and Head of Investment Banking and Co-Founder of Edelweiss. Mr. Venkat Ramaswamy has previously worked with the Spartek Emerging Opportunities Fund and ICICI, where he worked on project-based lending to large corporates, analyzing and evaluating investment decisions. He subsequently managed the Spartek Fund that focused on making equity investments in small and emerging companies..

Mr. Narendra Jhaveri


Mr. Jhaveri, on his return from U.K., after a brief stint with NCAER as Senior Economist, joined the Economics Dept. of the Reserve Bank of India in 1965. He shifted to ICICI in 1974 as Chief Economist and then moved to project finance.. He also serves as the Chairman of the IMC 1. 45 | P a g e

Economic Research and Training Foundation

Mr. Kunna Chinniah Mr. Kunna Chinniah is Executive Vice President with GIC Special Investments ("GIC SI"). GIC SI is the private equity arm of the Government of Singapore Investment Corporation ("GIC"). Mr Chinniah oversees the Asian private equity business for GIC SI. Mr Chinniah began his career in 1982 as a Senior Field Engineer with Schlumberger Wireline Services in the Middle East.

Mr. P.N. Venkatachalam Mr. P.N. Venkatachalam has over 40 years of experience in the banking sector in India and abroad. Mr. Venkatachalam joined the State Bank of India as a probationary officer on April 1967 and retired on March 2004 as a managing director

Mr. Navtej S. Nandra Mr. Nandra is currently serving as an Independent Board member at Edelweiss Capital Ltd., where he is a member of the audit and remuneration committees. He is also Senior Advisor to DTZ Holdings plc, a global real estate management and consultancy company headquartered in London. Mr. Nandra brings a wealth of global experience in helping financial services companies define and implement performance improvement and achieve growth.

Mr. Berjis Desai Mr. Berjis Desai, is an Independent Director on the Board of Directors of the Company. Mr. Desai is the Managing Partner, J. Sagar & Associates, one of India's leading law firms. He holds a Masters in Law. He is an Advocate and a Solicitor.

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Senior Management Team

Rashesh Shah Chairman & CEO Deepak Mittal CEO, Edelweiss Tokio Life Insurance Company Limited Naresh Kothari President & Co-head Institutional Equities, Private Client Services Peeyoosh Chadda Co-head - Asset Management Vikas Khemani Executive Vice President & Co-head - Institutional Equities

Venkat Ramaswamy Executive Director Himanshu Kaji CFO & Group COO Rujan Panjwani President & Co-head - Asset Management Rajeev Mehrotra Executive Vice President & Head - Special Opportunities Investments Ravi Bubna Executive Vice President & Co-Head - ECL Finance

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Our Principles:

Thinking and transparent organization Fair to our investors, partners and employees Ethical in all our actions Focus on growth Our assets are our stakeholders, reputation and capital Creativity and innovation in everything we do

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Business Principles
Ideas create, values protect is how we define what Edelweiss believes in. But when we say values protect what do we mean? Heres a handy guide to the values and principles we will live by and live up to. We will be a Thinking Organization. We will constantly bring thought to everything we do. Our clients and our own success depends on our ability to use greater ideation and more imagination in our approach. We will be Fair to our clients, our employees and all stake holders. We want our clients and our employees to be richer for their relationship with us. We will take care of our People seriously. Our policies in spirit and in letter will ensure transparency and equal opportunity for all. We will go beyond the normal goals of attracting, recruiting, retaining and rewarding fine talent: We will ensure that every individual in Edelweiss has an opportunity to achieve their fullest potential. We will operate as a Partnership, internally and externally. Though individuals are very often brilliant, we believe teamwork and collaboration will always ensure a better and more balanced organization. We will also treat our clients as partners and show them the same respect and consideration that we would toward our internal team members. We will focus on the Long Term. Though the world will change a lot in the coming years and our assumptions for the future may not hold up, we will reflect on the long-term implications of our actions. Even when making short-term decisions we will be aware of the long-term implications. We will focus on Growth for our clients, employees and shareholders. Our Reputation and image is more important than any financial reward. Reputation is hard to build and even harder to rebuild. Reputation will be impacted by our ability to think for our clients, maintain confidentiality and by our adherence to our value system.

We will Obey and Comply with the rules of the land. We will maintain the highest standard of integrity and honesty. When we are unclear we will seek clarifications. We will respect Risk. Our business is going to be a constant challenge of balancing risk and reward. Our ability to constantly keep one eye on risk will guide us through this fine balance. Our Financial Capital is a critical resource for growth. We will Endeavour to grow, protect, and use our financial capital wisely.

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Ideas Create Value Protect


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Chapter-6
SUBSCRIPTION PLANS FOR DEMAT ACCOUNT
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ADB PLANS OF EDELWEISS BROKING LTD.


Edelweiss broking offers various subscription plans, which are suited to the different trading patterns of clients. Clients, depending on their expected turnover can choose a subscription plan which will determine the brokerage rate applicable to them. These are value plans and offer clients with high turnovers a decrease in their effective brokerage rate. Each plan has an associated equivalent delivery turnover limit and validity period. Equivalent Delivery Turnover = Delivery Turnover + (Futures + Intraday Turnover) / 10 + ((Options Strike Price + Premium) X Lot size / 10).
Plan Subscription Fee Equivalent Delivery Turnover Limit Validity Period Brokerage rates on crossing equivalent delivery Turnover Limit Delivery
6 Months 12 Months 12 Months 12 Months 12 Months 12 Months 0.45% 0.40% 0.30% 0.25% 0.18% 0.13%

Futures and Intraday Cash


0.045% 0.040% 0.030% 0.025% 0.018% 0.01%

S01 S02 S03 S04 S05 S06

Rs 1,250 Rs 2,450 Rs 4,950 Rs 9,950 Rs 15,000 Rs 50,000

Rs 2,00,000 Rs 7,50,000 Rs 18,00,000 Rs 45,00,000 Rs 90,00,000 Rs 4,50,00,000

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S07 S08

Rs 1,10,000 Rs 1,11,111

Rs 12,50,00,000 Rs 20,00,00,000

12 Months 3 Months

0.10% 0.10%

0.01% 0.01%

Rs 1,250 subscription plan includes account opening fee at a discounted rate of 400 against a standard rate of Rs 750. For higher value subscription plans, account opening fee is waived off and then entire value translates into equivalent delivery turnover limit. Subscription fee also includes service tax. Thus a client does not have to pay anything extra towards service tax under a subscription plan, which at prevailing rates is 10.30% of Brokerage Amount. On completion of the Validity Period of the Plan, the client can either renew or upgrade the Plan. If the client does not renew or upgrade the Plan, the client will be shifted to Silver slab of the standard brokerage plan offered by Edelweiss and thus lose the benefits of being in a subscription plan.

NEW ADB PLANS Comparison with competitors

Longer validity period Validity of edelweiss plans is 1 year.Competitors IIFL and KOTAK securities have subscription plans with 6 months validity.

Minimum per share brokerage is least in the industry We charge 1 paisa Others like Share khan,ICICI and IIFL charge 5 paisa on smaller denomination plans

All plans inclusive of service tax so effectively we are charging less as compared to competitors

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Comparison with competitors India Infoline (IIFL)


Edelweiss - Effective rates IIFL - Effective rates Min/sha re brokera ge Validity

Subs fees inc. Of ST

Delivery(%) Intraday(%) Futures(%) Option(rs/lot) Validity

Subs fees inc. Of ST DElivery Intraday

Futures

Option High of 1% or Rs 90

2,450

0.32

0.032

0.032

81.6

12 M

2,50 0

0.3 5%

0.040%

0.04 0%

6 M

4,950

0.28

0.028

0.028

72.5

12 M

5,00 0

0.3 0%

0.030%

0.03 0%

High of 1% or Rs 80

6 M

9,950

0.24

0.024

0.024

63.5

12 M

10,0 00

0.2 5%

0.030%

0.03 0%

High of 1% or Rs 70

6 M

15,000

0.18

0.018

0.018

54.4

12 M

15,0 00

0.2 0%

0.020%

0.02 0%

High of 1% or Rs 60

6 M

30,000

0.15

0.015

0.015

40.8

12 M

25,0 00

0.1 5%

0.020%

0.02 0%

High 0.5% Rs 60

of or

6 M

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50,000

0.12

0.012

0.012

36.3

12 M

45,0 00

0.1 0%

0.010%

0.01 0%

High 0.5% Rs 50

of or

6 M

75,000

0.10

0.010

0.010

27.2

12 M

75,0 00

0.1 0%

0.009%

0.00 9%

High 0.4% Rs 35

of or

6 M

100,000

0.09

0.009

0.009

22.7

12 M

100, 000

0.1 0%

0.009%

0.00 9%

Hig 0.3% Rs 25

of or

6 M

Validity of India Infoline plans is just 6 months. For comparison, 2500 Rs plan of IIFL should be compared with 4950 Rs plan of Edelweiss as client will have to buy a 2500 plan twice in a year and wrt that we offer better pricing to clients

IIFL charges Service Tax separately. Our plans are inclusive of Service Tax

Comparison with competitors - ShareKhan


Edelweiss - Effective rates ShareKhan - Effective rates

Subs Fee Delivery Intraday inc. of ST (%) (%)

Futures (%)

Min/sh Options Deliver are Subs Fee (Rs per Validity Delivery yMin Intraday Broker excl of ST lot) (paisa) age (p)

Intra dayM in Futures (paisa )

Future s Min Options (p)

Validity

2,450

0.32

0.032

0.032

81.6

12 M

2000

0.40 %

10

0.035 %

0.035 %

Higher of 1.50% or Rs. 80 Higher of 1% or Rs. 70 Higher of 1% or Rs. 60 Higher of 1% or Rs. 50

12 M

4,950

0.28

0.028

0.028

72.5

12 M

6000

0.25 %

0.025 %

0.025 %

12 M

9,950

0.24

0.024

0.024

63.5

12 M

10000

0.22 %

0.022 %

0.022 %

12 M

15,00 0 30,00 0

0.18

0.018

0.018

54.4

12 M 12 M

18000

0.20 % 0.18 %

0.020 % 0.015 %

0.002 % 0.015 %

12 M

0.15

0.015

0.015

40.8

30000

Higher of 0.5%

12 M

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or Rs. 40

50,00 0

0.12

0.012

0.012

36.3

12 M

60000

0.15 %

0.010 %

0.010 %

Higher of 0.5% or Rs. 30 Higher of 0.5% or Rs. 25

12 M

100,0 00

0.10

0.010

0.010

27.2

12 M

10000 0

0.10 %

0.007 %

0.007 %

12 M

Lower Delivery rates for plans above 30K Effective delivery rates for lower plans are also competitive as Min. share brokerage for SK starts from 10p Options rates are competitive as we charge flat rate while SK charges higher of fixed rate or % of premium SK charges Service Tax separately. Our plans are inclusive of Service Tax

Comparison with Competitors Kotak Securities


Edelweiss - Effective rates Kotak - Effective rates

Subs Fee inclusive of ST

Deliv ery (%)

Intra day (%)

Futu res (%)

Opti ons (Rs per lot)

Valid ity

Subs Fee exclus ive of ST

Deliver y

Intra day

Futures

Options

Validity

1,000

0. 35%

0. 04%

0. 04%

Higher of 1% or Rs. 100 Higher of 1% or Rs. 80 Higher of 1% or Rs. 60

6M

2,450

0.32

0.032

0.032

81.6

12 M

2,500

0. 30%

0. 036%

0. 036%

6M

4,950

0.28

0.028

0.028

72.5

12 M

4,000

0. 25%

0.030 %

0.030%

6M

9,950

0.24

0.024

0.024

63.5

12 M

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Validity of Kotaks plans is just 6 months. For comparison, 2500 Rs plan of Kotak should be compared with 4950 Rs plan of Edelweiss as client will have to buy a 2500 plan twice in a year. With respect to that our new plans are competitive

Kotak charges Service Tax separately. Our plans are inclusive of Service Tax

Life time validity plans..

Inclusive of Service Tax Val Subs idit Fee y after Per conside iod Subs ring S (Ye Deli Fee(Rs T@10. ars very ) 3% ) (%) 15,000 13,599 15
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Exclusive of Service Tax Op tio ns (R s Intra Opt pe day ions r Deliv Trad Futu (Rs lot ery ing res per ) (%) (%) (%) lot)

Intra day Trad Futu ing res (%) (%)

0.45

0.045 0.045 75 0.41 0.041 0.041 68

30,000 27,199 15 50,000 45,331 15 75,000 67,996 15 100,00 0 90,662 15

0.30 0.25 0.20

0.030 0.030 65 0.27 0.027 0.027 59 0.025 0.025 55 0.23 0.023 0.023 50 0.020 0.020 45 0.18 0.018 0.018 41 0.015 % 0.015 35 0.14 0.014 0.014 32

0.15

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Chapter 7
PROJECT ANALYSIS

PROJECT ANALYSIS

SWOT ANALYSIS OF EDELWEISS BROKING LTD. Strengths Strong credibility among investors because of its heritage. Excellent reputation among the business society. Capability of providing superior customer service. Quality research team(EDELSTAR). Abundant information about economy and companies. Ability to attract and retain superior and quality personnel. Highly sophisticated infrastructure.
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Efficient research and analysis team, which by interpreting the economy and companys
performance accurately is enhancing the profitability of the client.

Weaknesses Inadequate product awareness among the retail investors. Brokerage is high when compared to its competitors like Indiainfoline and Religare. Brand awareness is low in the financial market. Promotional activities conducted by the company are not at par with the other firms.

Opportunities Lucknow covers only 2% of investors which gives huge potential for the market
penetration.

Bullish phase of the market attracts investing public. Access to the BSE online space for the retail investors creates opportunity to increase
client base.

Awareness campaigns about online trading create new market. Threats Availability of Unit Linked Insurance Policies (ULIPs) and mutual funds in the market.

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Threat of entry is high in this industry as the manpower required is less and capital
requirement is medium.

OBSERVATIONS: Fluctuations are more in secondary market than any other market. There are more speculators than investors. Information plays a vital role in the secondary market. Previously rolling settlement is T+5 days, now it changed to T+2 days. It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this instead of offering e-broking services they becomes service providers.

The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent among them are EDELWEISS BROKING LTD,Share khan, India bulls, kotakstreet, ICICI direct and indiainfoline.

CONCLUSION: Things have changed for the better with the EDELWEISS going on-line coupled with
endeavor to stream line the whole trading system, things have changed dramatically over the last 3 to 4 years. New and advanced technologies have breached geographical and cultural barriers, and have brought the countrywide market to doorstep.

In the present scenario to compete with the Brokers would require sound infrastructure
and trading as per international standards.

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The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange. It has helped the brokers handling a vast amount of transactions and this can be an efficient trading, delivering, settlement system with adequate protection to investors. The trading of EDELWEISS of the first day was Rs. 1.8 crores.

Due to invention of online trading there has been greater benefit to the investors as they
could sell / buy shares as and when required and that to with online trading.

The brokers has a greater scope than compared to the earlier times because of invention
of online trading.

The concept of business has changed today, this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients.

RECOMMENDATIONS: I recommend the exchange authorities to take steps to educate Investors about their rights
and duties. I suggest to the exchange authorities to increase the investors confidences. I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices.

The speculative pressures are responsible for the wide changes in the price, not attracting
the genuine investors to the greater extent towards the market.

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.

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Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading.

Effective monitoring of transaction have to be done in avoid uncertainties. Internet cost have to be reduced in order attract online trading users. Transparency has to maintain in the Share Markets.

BIBILOGRAPHY BOOKS:
Security Analysis And Portfolio Management -

WEBSITES: www.edelweiss.in www.Share Khan.com www.bseindia.com www.sebi.com www.moneycontrol.com www.economictimes.com www.nseindia.com


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