A PROJECT REPORT ON

Future prospects of Broking firms in India

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

MASTERS IN MANAGEMENT STUDIES MMS 2011-2013

SUBMITTED BY

NAME: Rashid Khan MASTERS IN MANAGEMENT STUDIES. ROLL NO. 2011027 BATCH: YEAR 2011 - 2013

DURGADEVI SARAF INSTITUTE OF MANAGEMENT STUDIES MALAD, MUMBAI

DECLARATION
I declare that the Project undergone by me, under the guidance of Prof. Amit Shrivastava, Internal Guide, Durgadevi Saraf Institute of Management Studies (DSIMS), Mumbai, and is an independent work. This report has not been submitted earlier to Mumbai University or to any other Institution. The report is towards the fulfillment of the requirement of the Master in Management Studies (MMS) course of Durgadevi Saraf Institute of Management Studies, Mumbai. The information submitted herin is true and original to the best of my knowledge.

PLACE

: MUMBAI

DATE

--------------------------------

(SIGNATURE)

Rashid Khan
ROLL NO: 2011049

Certificate
This is to certify that the project titled Future prospects of Broking firms in

India is submitted as per the requirement of the degree of Master of Management

Studies by Rashid Khan.

This Project has been carried under the guidance of Prof. Amit Shrivastava.

Prof. Amit Shrivastava (Project Guide)

Prof. Rakesh Singh (Director)

ACKNOWLEDGEMENT
I wish to thank all those who helped me and without whose support, I could not have completed this project successfully. First, I thank our Institute guide Amit shrivastava, who is the Professor of DSIMS whose help, stimulating suggestions and encouragement helped me in all the time in the writing of this project report. Without his patience, encouragement and constant guidance, I could not have completed this report. I would like to thank with immense gratitude Dr. RAKESH SINGH, the Director of Durgadevi Saraf Institute of Management Studies for allowing me to undertake this project. I wish to also acknowledge the contributions from officials of some of the stock broking firms & local people. I contacted for taking time out of their busy schedule to answer some pertinent questions concerning our work. Last, but not the least, I would like to thank our families and friends for their support and encouragement to pursue our interests. We would like to also express our gratitude to all those who have not been mentioned in this report work but gave us the possibility to complete this report.

Rashid Khan MMS (2012-2013) DSIMS

INDEX
Sr.no 1 2 3 4 5 6 Particulars Introduction to International Financial market Introduction to stock market Evolution of Capital and Stock market in India Service provided by stock exchange/ stock broker in India Current Scenario of Stock Broking Firms in India Account opening & Charges, Customer service and Research of 4 unlisted broking firms in India 7 Account opening & Charges, Customer service and Research of 4 listed broking firms in India 8 9 10 11 12 Emergence of online and software based trading Online stock trading in India Net Sales of top 5 Stock broking company in India Conclusion References 19 23 24 27 28 18 Page.no 9 11 12 14 16 17

List of Abbreviations. 1] AMC Annual maintenance charges. 2] BSE - Bombay Stock Exchange. 3] NSE National Stock Exchange. 4] MCX Multi Commodity Exchange. 5] STT Securities Transaction Tax. 6] OTC Over the Counter. 7] NA Not applicable. 8] NCD Non-convertible debentures. 9] IPO Initial public offering. 10] MCA Ministry of corporate affairs. 11] SEBI Securities and Exchange Board of India. 12] RBI Reserve Bank of India. 13] NHB National Housing Banks. 14] IRDA - Insurance Regulatory and Development Authority. 15] M.Cap Market Capitalization. 16] FIIs Foreign Institutional Investors.

Future prospects of Broking firms in India.

Executive Summary:
The report will begin with a brief introduction to the International financial market. The market overview includes information regarding the Indian stock market and the services provided by the stock brokers in India. It also includes the history & growth of Stock Broking Firms in India and indication of the prevailing brokerage structure is included as well as highlights of the business model employed by the brokerage firms. It covers information regarding the brokerage fee structure and other charges and the comparisons of various broker charges and services provide by them. The project will also provide emergence and benefits of online and software based trading. The market overview section also analysis the Stock brokering sector as a whole to understand the opportunities and competitiveness of the market. In conclusion, key takeaways of the report have also been identified and recommendations will be provided.

The objectives of the project:

The prime objective of this study carried out was to examine the growth and opportunity of stock broking firms in India. 1. To know the Role of a Broking Firm in India. 2. To review the history & growth of Stock Broking Firms in India. 3. To review the emergence of Online trading and software based trading. 4. To know about the preferences and interest of potential investors for choosing particular Broking firm.

Scope and Coverage of the study:

The Project is based on secondary data which has been collected various sources such as NSE, SEBI, Chittorgarh.com, etc. and will only focus on Indian Broking Companies and their charges, services and trends.

Research Methodology:
The research will utilize both quantitative and qualitative secondary data collection tools to achieve the objective of this project. The Data collection The secondary data will be collected from the following sources. 1] www.chittorgarh.com (comparison of charges and services of various brokers) 2] www.dnb.co.in 3] www.dnb.co.in 4] www.nseindia.com 5] www.sebi.gov.in

Introduction to International Financial market:

A financial market is a market where financial assets are traded or exchanged. The interaction of buyers and sellers through the help of financial intermediaries determines the price of the trade securities. This is called the price discovery process. A financial market provides a mechanism for an investor to sell a financial asset. Because of this features, it is said that a financial market is liquid or it offers liquidity, an attraction feature when circumstances either force or motivate an investor to sell. If there were not liquidity, the owner would be forced to hold the debt instrument until it matures and an equity instrument until the company is either voluntarily or involuntarily liquidated or dissolved. While all financial markets provide some form of liquidity, the degree of liquidity is one of the factors that characterize different markets across the countries. The economic function of the financial market is that it reduces the cost of transacting. There are two costs associated with transacting a) search cost and b) information costs. A search costs represent explicit costs, such as the money spent on advertise ones intention to sell or purchase a financial securities. And the implicit costs, such as the value of time spent in locating counterparty. The presence of some form of organized financial market reduces search costs. Information costs are costs associated with assessing the investment merits of financial securities that is the amount and the likelihood of than cash flow expected to be generated. In an efficient market, prices reflect the aggregate information collected by all market participants. Financial markets may be classified on the basis Types of claims debt and equity markets. Maturity money market and capital market. Trade spot market and delivery market. Deals in financial claims primary market and secondary market. Regulators of Indian financial market: Sr.no Categories of companies Regulators 1 Banks RBI 2 Chit Funds Respective State Government 3 Insurance companies IRDA 4 Housing Finance Companies NHB 5 Venture capital Funds SEBI 6 Merchant banking companies SEBI 7 Stock broking companies SEBI 8 Nidhi Companies MCA, Government of India

The financial market can be broadly classified into Money market and Capital market. A money market is a market were short term instrument are traded (less than 1 year) and the capital market is the market were long term securities or instrument are traded (more than 1 year). Money Market: Money market is a market for debt securities that pay off in the short term usually less than one year, for example the market for 90/180 days treasury bills. This market encompasses the trading and issuance of short term non equity debt instruments including treasury bills, commercial papers, bankers acceptance, certificates of deposits, etc. Capital Market: Capital market is a market for long-term debt and equity shares. In this market, the capital funds comprising of both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as organized markets like stock exchanges. Capital market includes financial instruments with more than one year maturity. A capital market is place were an Individuals and institutions trade securities. It includes 1] Equity shares. 2] Preference shares. 3] Corporate debts. 4] Government bonds. Need for investment in capital market: To earn return on your idle resources. To generate a specified sum of money for a specific goal in life. To make a provision for an uncertain future. The main objectives of capital market are: To mobilize resources for investments. To facilitate buying and selling of securities. To facilitate the process of efficient price discovery. To facilitate settlement of transactions in accordance with the predetermined time. A capital market can be classified into primary and secondary market. Primary market : It deals with new securities being issued for the first time. Eg: IPO, FPO, etc. Secondary Market : It is a market where existing share are traded with the help of stock exchanges.
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Introduction to stock market:

Stock markets are market where stocks (shares) are bought and sold. Stocks (or shares) are issued by companies and sold to investors in order to raise capital. In contrast to debt, capital collected via issuance of shares does not ever need to be returned. Shareholders are co-owners of the company, and have the right to influence corporate decision-making by exercising their votes at shareholders meetings, the right to collect dividends (a part of company profits paid out to shareholders), and in case of the company going bankrupt, the right to obtain a share of proceeds from the sale of corporate assets left over after the repayment of debts. In addition to equity stocks (ordinary shares), which give owners one vote and identical dividend rights per share, companies can issue preferred shares (issued to less than 50 members), with multiple votes and/or special dividend rights. When stocks are bought from the company that issues them, we refer to such transactions as the primary stock market. Shares sold and bought between investors and traders themselves constitute secondary stock markets. Primary stock markets cannot survive without secondary markets, where investors trade shares and thus modify their investment portfolios. Trading can take place directly between investors, on an Over-The-Counter (OTC) market, but an overwhelming share of it became centralized in meeting places of professional stock traders, who collect orders from investors or trade on their own account. The concentration of trading in space and time, making it easier for traders to find a counterpart, judge their reputation, and exchange information, led to the creation of stock exchanges, with stocks being listed and traded according to established rules. Firms listing their shares on a stock exchange for the first time are referred to as going public, a process mostly combined with the issuance of new shares known as the Initial Public Offering (IPO). The first major stock exchange was established in Amsterdam in 1602 in order to trade the stocks of the Dutch East India Company. The London Stock Exchange (LSE) emerged as the premier market when French troops invaded Amsterdam in 1795, and maintained its dominance until 1914, when the New York Stock Exchange (NYSE) took over the lead in terms of size.

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Evolution of Capital and Stock market in India:

The history of the Indian capital market and the stock market can be traced back to 1861 when the American Civil War began and in 1875 when first stock exchange (BSE) was established, which was the first stock exchange in Asia. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. An informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay from the mid-1850s. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is also known as "The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. The most crucial period in the history of the BSE took place after 1992. In the outcome of a major scandal with market manipulation and scandal involving a BSE member named Harshad Mehta, BSE responded to calls for reform with inflexibility. The foot-dragging by the BSE helped radicalize the position of the government, which encouraged the creation of the National Stock Exchange (NSE), which created an electronic marketplace. NSE started trading on 4 November 1994. Within less than a year, NSE turnover exceeded the BSE. BSE rapidly automated, but it never caught up with NSE spot market turnover. The second strategic failure at BSE came in the following two years. NSE embarked on the launch of equity derivatives trading. BSE responded by political effort, with a friendly SEBI chairman (D. R. Mehta) aimed at blocking equity derivatives trading. The BSE and D. R. Mehta succeeded in delaying the onset of equity derivatives trading by roughly five years. But this trading, and the accompanying shift of the spot market to rolling settlement, did come along in 2000 and 2001 and helped by another major scandal at BSE involving the then President Mr. Anand Rathi (Chairman of Anand Rathi Securities Private Limited and Rathi Global Finance
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Limited). NSE scored nearly 100% market share in the runaway success of equity derivatives trading, thus consigning BSE into clearly second place. Today, NSE has roughly 66% of equity spot turnover and roughly 100% of equity derivatives turnover. Sr. no 1 2 3 4 5 6 7 8 9 10 Market participants FY 2010 27 9,772 1,705 1,459 75,378 17 164 5 243 2 FY 2011 (As on 30,Sep 2011) 27 10,248 2,240 2,083 79,797 19 192 3 248 2

Number of Stock Exchange Broker (cash segment) Broker (Equity derivatives) Broker (Currency derivatives) Sub- brokers Custodian Merchant Bankers Underwriters Portfolio Managers Depositories ( NSDL & CDSL)

(Source: SEBI & RBI)

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Service provided by stock exchange/ stock broker in India:

There are 25 stock exchange in India out of which 4 stock exchange which are de-recognized. The Securities Contract (Regulation) Act, 1956 [SCRA] defines Stock Exchange as anybody of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. Stock exchange means (a) Anybody of individuals, whether incorporated or not, constituted before corporatisation and demutualisation under sections 4A and 4B, or (b) A body corporate incorporated under the Companies Act, 1956 (1 of 1956) whether under a scheme of corporatisation and demutualisation or otherwise, for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. A stock broker can be defined as Stock-broker means a person, who has either made an application for registration or is registered as a stock broker, in accordance with the rules and regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992). (Section 65(101) of Finance Act, 1994 as amended). In India broking firm primarily work as agent for buying and selling of stock and other financial instruments and takes commission for each transaction done by the broking firms. Stockbroker is a member of a recognized stock exchange who buys sells or deals in securities. To work as a stockbroker registration with SEBI is mandatory. SEBI is empowered to impose conditions while granting the certificate of registration. Types of broker on the basis of services they provides to their clients: There are two major types of broker; full-service broker and discount broker in India. Both of them have their own benefits and consequences. 1. Full-service broker (Full Service Brokerage): Full-service are also known as Full price brokers, they are the traditional broker's who offers almost all kind of investment options and advisory to its customers. This includes trading in stock (equity), Future & Options, commodities and currency derivatives, Investment in Mutual Funds, IPO's, Fixed Deposits and Bonds, Life Insurance and General Insurance. They also provide Wealth Management and Investment Planning, underwriting services to individual as well as corporate customers. Full Service Brokers have their own research teams which helps the customer in their financial planning. They regularly publish newsletters like market watch where they provide research reports, stock tips and recommendations to their customers. The service
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they offer comes at a cost. There services charges, fees and brokerages are higher from discount brokers. They charges brokerage based on a certain % of the trade value. Most of the stock brokers in India are full-service brokers. Some popular names are Edelweiss financial services, ICICI Securities Pvt Ltd, HDFC Securities Ltd, Kotak Securities Ltd, etc. 2. Discount Broker (Discount Brokerage): An increasing popular discount broker's provides less number of services but at a much cheaper price. They offer no-frill services and specialized into few investment options. Discount brokers are good for 'do-it-yourself' kind of investors or well trained and experienced investors. While the services offered by them varies from broker to broker, many of the discount stock brokers do not provide services like stock research, investment in IPO's, Mutual Funds, FD's, Bonds and NCD's. They generally do not have their own research teams (not necessarily) and thus do not provide wealth management related services. Discount Brokerage is a new concept in India and its picking up very quickly. There are two sub categories of discount brokers in India by the way they charge the brokerage: A] Brokers charging Fixed Price per Trade: These are the brokers who charges 'fixed price brokerage per trade' irrespective to the size of trade. i.e. Zerodha, R K global, etc. B] Brokers charging Fixed Monthly Fees for unlimited Trades: These are the brokers who charge 'fixed monthly fees' and offers unlimited trading in selected segments and exchanges. R K Global Shares & Securities Ltd and RKSV Securities Ltd are two popular brokers who provide unlimited brokerage services based fixed monthly rates.

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Current Scenario of Stock Broking Firms in India:

There were 10,203 trading members (including corporate brokers) registered with SEBI at the end of March 2011. The brokerage charges charged by stock broking firm for delivery trades in equity segment or cash segment have come down to 0.10- 0.30% from 0.75-0.5% over the past one year. Equity intra-day trading charges have come down from 0.05% levels a year-ago to about 0.03%. While trading commission in futures segment has fallen from 0.05% to 0.03%, the average spread a broker gets writing option contracts has fallen to about Rs 20-30 per lot from Rs 50-75 a few years ago.

[Shailesh Menon, ET Bureau on Dec 11, 2012] Current taxes of securities and commodities at various exchanges: Sr. 1] 2] 3] 4] 5] 6] Taxes Transaction charges Stamp duty on Intraday Stamp duty on delivery STT on Trading STT on Delivery Service Tax {on brokerage} BSE 0.00335% 0.001% 0.010% 0.025% 0.125% 12.36% NSE 0.00335% 0.002% 0.010% 0.025% 0.125% 12.36% F&O 0.0020% 0.001% NA 0.017% NA 12.36% MCX 0.0025% 0.001% NA NA NA 12.36%

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Account opening & Charges, Customer service and Research of 4 unlisted broking firms in India.
A/c opening and brokerage charges. A/c opening charges Annual maintenance charges Cash delivery Cash Intraday Future Options Minimum brokerage charges Customer services offered Email Support Phone Support Online Live Chat Toll Free Number Branches Ratings Research and Tips offered Daily Market Report Quarterly Result Analysis Free Tips News Alerts Ratings Investment option available Equity (stocks) Commodity Currency Initial Public Offers (IPO) Bond / NCD Debt Mutual Funds Ratings Kotak securities 750 600 0.49% 0.049% 0.049% Rs.100/lot Rs.4 paisa/share Sharekhan 750 400 0.50% 0.10% 0.10% Rs.100/lot Rs.10paisa/share Angel broking Nil 347 0.40% 0.04% 0.04% 0.04% Nil Ventura Nil 420 0.20% 0.03% Rs.50/lot Rs.50/lot Nil

Yes Yes Yes Yes Yes 5/5 Yes No Yes No 2/4 Yes Yes Yes Yes Yes No Yes 6/7

Yes Yes Yes Yes Yes 5/5 Yes Yes Yes Yes 4/4 Yes Yes Yes Yes Yes Yes Yes 7/7

Yes Yes Yes No Yes 4/5 Yes Yes Yes Yes 4/4 Yes Yes Yes Yes No Yes Yes 6/7

Yes Yes Yes No yes 4/5 No Yes No No 2/4 Yes Yes Yes No No Yes Yes 5/7

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Account opening & Charges, Customer service and Research of 4 listed broking firms in India.
A/c opening and brokerage charges. A/c opening charges Annual maintenance charges Cash delivery Cash Intraday Future Options Indiabulls securities 950 450 0.40% 0.04% 0.04% 2.5% or Rs 100 per lot whichever is higher. Rs.4paisa/share India Infoline [IIFL] 750 300 0.50% 0.05% 0.05% 1% or Rs 100 per lot whichever is higher. Rs.5paisa/share Religare enterprises 500 300 0.25% 0.025% 0.05% 1% or Rs 50 per lot whichever is higher. Rs.1paisa/share Motilal Oswal Nil 441 0.50% 0.10% 0.10% Rs.100/lot

Minimum brokerage charges Customer services offered Email Support Phone Support Online Live Chat Toll Free Number Branches Ratings Research and Tips offered Daily Market Report Quarterly Result Analysis Free Tips News Alerts Ratings Investment option available Equity (stocks) Commodity Currency Initial Public Offers (IPO) Bond / NCD Debt Mutual Funds Ratings

Nil

Yes Yes No No Yes 3/5

Yes Yes No No Yes 3/5

Yes Yes No Yes Yes 4/5

Yes Yes No No Yes 3/5

No No No No 0/4

Yes Yes Yes Yes 4/4

Yes Yes No Yes 3/4

Yes Yes No No 2/4

Yes Yes Yes Yes Yes Yes Yes 7/7

Yes Yes Yes Yes No Yes Yes 6/7

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Yes Yes Yes Yes Yes Yes Yes 7/7

Yes Yes No Yes No Yes Yes 5/7

Customer service and Research of 4 unlisted broking firms in India in below diagrams [Assuming yes = 2 and No = 1].
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Email Support Phone Support Online Live Chat Toll Free Number Branches Kotak securities Sharekhan Angel broking Ventura

Customer services offered

In the segment of customer services, all five services are offered by all four brokers except toll free number for dial and trade are not provide by Angel broking and Ventura.

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Kotak securities Sharekhan Angel broking Ventura

Research and Tips offered

Daily Market Report Quarterly Result Analysis Free Tips News Alerts

In the category of research and tips Sharekhan and Angel broking are providing all four kinds of research and tips i.e. daily market report, quarterly result analysis, free tips and news alert. While

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kotak securities do not provide quarterly result analysis and news alert on the other hand Ventura provides only quarterly result analysis.

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Kotak securities Sharekhan Angel broking Ventura

Investment option available

The equity, commodity, currency and mutual funds are provided by all four brokers. Investment options in IPO and Bonds are not provided by Ventura. Bonds/ NCD options are not provide by Angel broking and Debt options are not provided by Kotak securities.

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Customer service and Research of 4 listed broking firms in India in below diagrams [Assuming yes = 2 and No = 1].
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Email Support Phone Support Online Live Chat Toll Free Number Branches Indiabulls securities India Infoline [IIFL] Religare enterprises Motilal Oswal

Customer services offered

In the segment of customer services, email support, phone support and branch trading are provided by all four listed broking firms. While, online live chart are not provided by any of the above four brokers and toll free number are provide only by Religare enterprise.

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Indiabulls securities India Infoline [IIFL] Religare enterprises Motilal Oswal

Research and Tips offered

Daily Market Report Quarterly Result Analysis Free Tips News Alerts

In the segment of research and tips, Indiabulls securities do not provide any research and tips. India Infoline provides all four research and tips i.e. daily market report, quarterly result analysis, free tips and news alert. Religare enterprises do not provide free tips, while Motilal Oswal does not provide free tips and news alerts.

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2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

Investment option available

Indiabulls securities India Infoline [IIFL] Religare enterprises Motilal Oswal

The equity, commodity, IPO, debt and mutual funds are provided by above listed all four brokers. Motilal Oswal does not provide Currency and Bond options. India Infoline does not provide investment options in Bond/NCD.

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Emergence of online and software based trading:

Traditionally stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading. Online Stock Market Trading is an internet based stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker. In Online stock trading the trading is done by using computer and internet connection. Online trading is nothing but trading via the Internet with the help of the trading software provided by the broker. Advantages of Online or Website based trading Platform: It helps in real time stock trading without calling or visiting broker's office. Easy to operate and manage account No geographical limits or location constraints. It displays real time market watch, historical datas, graphs etc. You can check the trading history; demat account balance and bank account balance at any time. It provides online tools like market watch, graphs and recommendations to do analysis of stocks. Set alert to inform you certain activity on the stock through email or sms. Customer service through Email or Chat. It helps in securing transactions. Low brokerages because of less involvement by broker.

Disadvantages of Online or Website based trading Platform: Sometime the website is too slow or not enough user friendly. Difficult for those who dont know much about computer and internet. You cannot trade if you are not on the computer where you have installed trading terminal software. It requires high speed internet connection. It becomes difficult when you are at job or on travel.

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Online stock trading in India:

There are 415 stock broker who have been granted permission for Internet trading by NSE. NSE is the first exchange to grant approval to its members for providing Internet based trading services. The Members of stock exchange [stock broker] can procure the Internet trading software from software vendors who are empanelled with NSE or they may develop the software through their own in-house development team or may procure the software from other nonempanelled vendors. Members can also avail of services provided by Application Service Providers (which may interalia include providing / maintaining software / hardware etc.) for providing Internet based trading services subject to the Application Service Provider (ASP) being empanelled with the Exchange for providing such services.

Features of online or web based trading in India:

LOGIN ID AND PASSWORD: The online trading platform should be protected by a login id given to you by the broker and a password of your choice. Password should be changed frequently. Generally, software prompts you to change your password every 15 days. In addition to that you also have transaction password to confirm transaction for every first time you trade in that day. THE MARKET SCREEN: Market screen is the most important window that will help you get your trading done. This window gives a tabular representation of the current market position for selected shares of your choices. It contains last traded price, last traded quantity, best bid rate, best offer rate, total volume, day high, day low, etc. INDICES DISPLAY Trading screen should have indices displayed at a convenient location on the screen. It should display all popular Indices like Sensex and Nifty. The indices display should be capable of being customized to show other indices which you follow. An investor should keep track of the market indices so as to get an overall picture of the market sentiment. CHARTS A chart represents the historical prices of securities. Normally, good trading software will provide the following facilities to chart: Streaming intraday tick-by-tick charts & historical data. Ability to chart multiple companies and open unlimited charts.
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Unique draw tools including trend line customization and Fibonacci tools. Different chart type options such as Line, Bar and Candlestick.

REPORTS The reports comprise of Order Book, Trade Book, Net Positions, Margin, Exercise Book and Holdings. In any trading terminal, all these reports are dynamically updated without the need to refresh or pull information. From the Reports window you can Modify, Cancel, Square Off or Exercise. MARKET ANALYSER Market analyzer feature would provide top traded, top gainers and top losers with percentage change, value and total quantity. It would also provide the list of shares that have touched their 52 week High or 52 week low.

Future and growth of online trading platform in India:

When we talk about the future of online stock trading, it will continue to evolve in several areas and is likely grow and expand. It is expected to see more development of streamlined software applications for trading. For example, many brokerages now offer trading applications (apps.) for cell phones that have mobile web browser capabilities. The mobile trading services provide basically the same services as those that investors access now using their personal computers. The future also holds greater access too many different investing products and expanding markets. For example, continued access to a wide range of investing opportunities like mutual funds, Futures, ETFs, Options, Forex market as well as an expanding group of products and greater access to trading in Indian financial markets. The history of online stock trading has developed so quickly, a stronger, knowledge-based approach for investors that expands beyond the traditional buy and hold strategy or day trading is very important. Most online investment brokerages are beginning to offer enhanced educational programs because they understand that the more successful stock trading is for investors, the better opportunity online brokerages have to increase their business.

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Revenue {Net sales} of top 5 Stock broking company in India {All the figure are in Crore} Sr Name 1 Religare entreprises 2 Edelweiss capital 3 India Infoline 4 JM financial 5 Motilal Oswal M.cap 4,565 2,364 1,780 1,221 1,115 2012 56.63 166.32 548.55 13.80 46.43 2011 126.66 448.74 698.95 43.72 49.53 2010 101.59 244.12 665.99 95.23 51.09 2009 12.55 191.39 542.27 24.46 55.71

The above historical or past result shows that the net sales of all top 5 five broking firms (in terms of market capitalization) has declined because various reasons such as increase in competition, decrease in volumes, etc. and because of the above reasons many stock broking firm are trying diversify their business and services.

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Conclusion: Sr 1 2 3 4 5 Parameters Resource mobilization in primary market Market capitalization(BSE+NSE) All-India Equity market turnover All-India Equity Derivatives notional turnover* Net Investment by FIIs CAGR{2000-01 to 2010-11 27.18% 27.12% 17.99% 87.15% 30.88% (Source SEBI)
Note: All-India Equity Derivatives notional turnover is calculated from 2001-02 to 2010-11. The Indian equity market has made progress due to development of better and secured instruments and modern market mechanisms. The key strengths of the sector include fullyautomated trading system on all stock exchanges, a wide range of products, integrated platform for trading in both cash and derivatives. Stock markets in India have gone through tremendous improvements in recent time with the introduction of various norms. These norms are for greater transparency in operations and the international trading and investment process. Besides the market slowdown, stock brokers are facing multiple challenges in the form of structural changes that are sweeping the industry. A declining profits and reduced commission in financial products because of huge competition in Stock broking market in India. A number of Indian stock brokerages have entered into real estate broking as profits from their core equity broking business fall and commissions from the distribution of financial products shrinked. Mumbai-based IIFL (India Infoline) and Anand Rathi Financial Services have entered into commercial and residential real estate broking. Hyderabad-based Karvy stock broking [karvy group] has revamped its real estate broking business in the last few months. Many Stock broking firms have shown a major fall in net profit in 2011-12 compared with that in the previous year. The main reason for this is the fall in trading volume, and the overall volume is shifting from the cash market, which offers a decent brokerage, to the derivatives market, where the brokerage rates are very low. The competition from foreign players is increasing, especially in the institutional side which reduces the commission and other fees of Local and small broking firms. Hence, to sustain and grow in this competitive business environment the Indian stock broking firms needs to widen their customer base and increase their products and services to cater to all kinds of investors and provide advisory and consultancy services to corporate and Institutional investors.
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Reference:
1] Foundation of Financial markets and institutions (3rd edition, Frank j. fabozzi, Franco Modigliani, Frank j. Jones and Michael G.ferri) 2] Introducing the Map of the Global Stock Market by Dariusz Wojcik 3] www.yeahindia.com/c-india1. 4] www.chittorgarh.com/newportal/online-stock-brokers-list.asp 5] Handbook on Basics of Financial Markets on www.nesindia.com 6] Article on Stock brokers slash charges as trading volumes nosedive/ Shailesh Menon, ET Bureau Dec 11, 2012. 7] www.sebi.gov.in/acts/contractact.pdf 8] http://vinodkothari.com/tutorials/Notes on Indian Financial Markets final 9] http://shodhganga.inflibnet.ac.in/bitstream/10603/2027/7/07_chapter 2 10] http://www.stockmarketindian.com/online_stock_market_trading.html 11] http://www.sharemarketschool.com/understanding-the-online-trading-software/ 12] http://www.dnb.co.in/EquityBroking2011/overview.asp 13] http://www.nseindia.com/content/us/ismr2011ch1.pdf

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