Broking Firms CHAPTER 1 1.

BROKING FIRMS
1.1 INTRODUCTION
A brokerage firm, or simply brokerage, is a financial institution that facilitates the buying and selling of financial securities between a buyer and a seller. Brokerage firms serve a group of investors who trade public stocks and other securities, usually through the firm's agent stockbrokers. A traditional, or "full service", brokerage firm usually undertakes more than simply carrying out a stock or bond trade. The staff of this type of brokerage firm is entrusted with the responsibility of researching the markets to provide appropriate recommendations and in so doing they direct the actions of pension fund managers and portfolio managers alike. These firms also offer margin loans for certain approved clients to purchase investments on credit, subject to agreed terms and conditions. Traditional brokerage firms have also become a source of up-to-date stock prices and quotes. A business whose main responsibility is to be an intermediary that puts buyers and sellers together in order to facilitate a transaction. Brokerage companies are compensated via commission after the transaction has been successfully completed. For example, when a trade order for a stock is carried out, an individual often pays a transaction fee for the brokerage company's efforts to execute the trade.

The real estate industry also operates in a brokerage-company format, as it is common for real estate brokers to work together, each representing one party of the transaction, in order to make a sale. In this case, the commission is split between both brokerage companies. A brokerage firm acts as the legal mediator between a buyer and a seller of financial products. Brokerage firms are usually associated with finance houses, although the terminology has been borrowed by the real estate and insurance industries as well. All
Page 1

Broking Firms
investment trades must be made through a brokerage firm because individuals cannot interact directly with the stock exchange. There are two main types of brokerage firms, traditional brokerage and discount brokerage. Traditional brokerage firms offer a hands-on approach to investment advice guiding clients with expert and in-depth knowledge on the products available. Their agreements often act as a legal power of attorney to conduct trades on behalf of clients as long as they are in-keeping with a previously determined strategy. The associated fees are notoriously high, but proportionate to the extensive services provided.

A traditional brokerage firm usually undertakes more than simply carrying out a stock or bond trade. The staff of a this type of brokerage firm is entrusted with the responsibility of researching the markets to provide appropriate recommendations and in so doing they direct the actions of pension fund managers and portfolio managers alike. These firms also offer margin loans for certain approved clients to purchase investments on credit, subject to agreed terms and conditions. Traditional brokerage firms have also become a source of up-to-date stock prices and quotes.

How Brokerage Firms Make Their Money

1.2 Stock Brokerage Firms Overview
The stock brokerage firms are those entities that are responsible for helping the investors put their money in the stock market. However, the stock brokerage firms are also useful in many other ways, especially for the investors. The stock brokerage firms help their clients, the investors, by providing them with accurate information regarding the workings of a stock market. The stock brokerage firms are useful as they can help the investors get the maximum return from their investments in the stock market.

Page 2

Broking Firms
1.3 Stock Brokerage Firms Types
There are primarily two types of stock brokerage firms, based on their mode of operation - the online stock brokerage firms and the off line stock brokerage firms. The off line stock brokerage firms are the traditional stock brokerage firms. The online stock brokerage firms are those, who offer their services through the Internet.

1.4 Online Stock Brokerage Firms

The online stock brokerages are the predominant form of stock brokerages at present. This has happened owing to the coming of Internet and its increasing influence on the world of today. The online stock brokerage firms are regarded as being extremely popular with the investors, by virtue of, the quality of the services, provided by them.

The services of the online stock brokerage firms save the investor a lot of money and time, which may be invested in other purposes. It is always easy for the investors to gather information on the online stock brokerage firms and their services, as information on them are always found on the Internet.

1.5 Stock Brokerage Firms Procedures

There are certain steps that an investor needs to follow before enlisting the services of a particular stock brokerage firm. It is not advisable to trust a stock brokerage without having done some research on them beforehand. The investors need to thoroughly go through the website of the stock brokerage firm they are looking to do business with. They may also read the testimonials of satisfied customers of that particular stock brokerage firm. Normally these testimonials are available on the websites of these companies.

Page 3

Broking Firms CHAPETER 2 Brokerage Trade Cycle

2.1 Trade Cycle

Investors purchasing securities in their Cash brokerage account are generally given three business days before payment is required for the purchased securities. A business day is defined, as any day the exchanges are open for business. Similarly, brokerage firms also have three business days before payment to the investor is required for securities sold. In theory, either the investor or the brokerage firm can make payment prior to the 3rd business day. However, in practice, the required payments are made on the third business day unless early or extended payment is both specified at the time of the trade and agreed to by both the buyer and seller. The three-day brokerage cycle typically applies to Listed and OTC Equities, Corporate and Municipal Bonds, and Mutual Funds. Options, US Government Securities and Commodities typically require payment on the next business day after the trade is executed. In addition to the movement of funds between the brokerage firm and its client, most securities transactions require the movement of both securities and funds between two broker dealers. The settlement of a securities trade between two brokerage firms follows the same settlement cycle as the trade between the brokerage firm and its client.

Page 4

Broking Firms
The Trade Cycle The typical brokerage cycle for the vast majority of U.S. equities, corporate bonds and municipal bonds is a four-day cycle:

Trade Date Trade Date + 1 Trade Date + 2 Settlement Date

Trades that follow the regular 4 day cycle are referred to as Regular Way Trades. Trade Date The business day on which the trade is executed on a securities exchange or market is known as the Trade Date or simply as T. For the purposes of trade comparison and settlement, the majority of brokerage trades are submitted to the NSCC Clearing Corporation for matching and comparison on Trade Date. It is important to note, that securities purchased (on Trade Date) are not considered to be owned by the investor for the purposes of receiving dividends and other benefits of ownership until the trade Settlement Date. Securities sold on Trade Date remain owned by the investor for the purpose of benefit of ownership until after Settlement Date as well. Trade Date + 1 The business day immediately following Trade Date is known as Trade Date + 1 or T+1. On T+1 the brokerage firms receive back from the NSCC Trade Contract reports that summarize the prior days (T) activity and highlight any transactions that were not successfully matched on Trade Date. Trade Date + 2

Page 5

Broking Firms
The second business day following Trade Date is known as Trade Date + 2 or T+2. On T+2 the brokerage firm receives from the NSCC its preliminary settlement reports. The preliminary settlement reports identify the compared brokerage transactions (from T) for which the brokerage firm must deliver or receive securities and money on Settlement Date.

2.2 Settlement Date

The business day on which the investor is required to pay for securities purchased or receives payment for securities sold is known as the Settlement Date or S or T+3. Settlement Date is also the day on which brokerage firms settle firm-to-firm trades ie. Firm A sells 200 shares of XYZ Co. to Firm B.

2.3 Regular Way Trades

Brokerage trades executed for the normal trade settlement cycle are called Regular Way Trades. As mentioned previously, the normal trade settlement cycle is dependent on the type of investment security traded. For example, the majority of Equity, Mutual Fund, and Corporate and Municipal bond trades settle on the third business day following trade date. Options, US Government Securities and Commodities, on the other hand, settle on the next business day following trade date. Regular Way Settlement applies to all securities trades unless otherwise specified at the time of the trade. Both the buyer and seller must agree to any special settlement cycles at the time the trade is executed. Several non-Regular Way Settlement options are available to the securities investor. They are:

Cash Trade Next Day Trades Seller's Option Extended Settlement

Page 6

Broking Firms
2.4 Cash Trades
A Cash Trade is a securities transaction where both the trade execution and settlement are processed on the same business day. Certain cash investments follow a Cash settlement cycle. If the normal settlement cycle for the security traded is not cash settlement both the buyer and seller must agree to the terms before the trade is executed.

2.5 Next Day Trades

A Next Day Trade is any trade designated for settlement on the business day immediately following Trade Date or on T+1. If the normal settlement cycle for the security traded is T+3, both parties must agree to the next day settlement at the time of the trade. Sellers Option A Sellers Option is a trade designated for settlement on the second business day after Trade date or T+2. As with other atypical settlement cycles, both buyer and seller must agree on the Sellers Option. Extended Settlement An Extended Settlement trade is any trade designated at the time of the trade to settle on any business day after the normal trade settlement date. Why is there a Settlement Cycle? The primary reason for the trade settlement cycle is to give both the brokerage firm and its clients sufficient time to both:

Compare brokerage trades between brokerage firms and between the firm and its clients

Allow for postal delivery of trade confirmations and payments between the firm and its clients.

Page 7

Broking Firms
T+1 The brokerage industry is currently evaluating an industry wide objective to move the entire brokerage industry to a T+1 or Next Day settlement environment. The conversion to T+1 is expected in the year 2004 and is beyond the scope of this website. To obtain more information concerning the conversion to T+1 you can review the following document issued by the Securities Industry Association: SIA T+1 White Paper

Page 8

Broking Firms CHAPTER 3 FULL SERVICES BROKERS

3.1 Full Service Brokers

These firms are generally large and provide the most extensive list of services. Most allow you to select an individual account advisor. These professional advisors can also act as financial advisors providing guidance on which investment might be right for you. These firms create their own research and recommend stocks to either buy or sell. These firms have traditionally charged a commission each time a stock was bought or sold. Commissions vary according to the number of shares and the dollar involved, but average about 2%. These firms also offer two different but similar types of accounts where you pay a fee vs. a commission:

Asset-Based Fees: An asset-based fee is one where the broker charges a fee based on the size of your portfolio (assets under management), which could be from 1.5% to 0.75%, instead of per transaction commission fee.

Wrap Account Fees: This is similar to an asset-based fee program, where you pay a percentage of your assets vs. commission. You get an outside money manager, vs. a stockbroker. The fee is generally higher than an asset-based fee from .06% to 3% and a minimum portfolio size is

Full service brokers also offer a wide variety of services such as credit cards, bill paying, ATM and other options. Full service brokers are an excellent option for those with large portfolios, users who want to get advice before they make investment decisions, and those seeking comprehensive research that want to be able to pick up a phone or meet with their advisor.

3.2 Discount Brokers

Most of these firms only execute your orders; they dont recommend stocks or do research. Discount Brokers:
Page 9

Broking Firms

Do business over the phone or on the Internet. Since they do not have to support a research department nor spend time with clients, they can charge less.

You will pay less than a full service broker. In order to be more competitive some are now offering limited amounts of research, online investment libraries and some services provided by traditional full-service brokers, but these are for an additional service fees.

Discount brokers also offer no-load mutual funds Mutual Funds with no transaction fee.

Discount brokers charge a minimum commission of at least $20 and a higher rate of $45 for a broker assisted trade.

For small trades these might even be higher than a full service brokerage. If you are willing to complete the trade yourself without assistance using the Internet or touch-tone phone, you may save even more.

3.3 Online Brokers

As the internet world becomes larger and more influential, so do online investment brokers. What once was an industry where people communicated through telephone and mail, now, many investors are conducting business through various online sites, ranging from self-serve options to full-service selections. Big brokerage houses, small independent brokers, and discount companies can all be found online. Whether they are called online investment brokers, electronic brokers, e-brokerages, online brokerages, computer brokers, internet trading, or electronic trading, their websites number in the thousands, and can be found rather quickly by using any search engine.

Page 10

Broking Firms

One of the biggest advantages of finding online investment brokers is that many sites offer free demo accounts. Having the opportunity to learn, and try things out, means that more people can jump into the trading and investing arena. Plus, many sites have training sections, so you can really start investing at your leisure, and at your own pace. Learning from the internet is not quite as intimidating as in the old days when you had to depend on other people or outdated books. Another major benefit that quickly emerged as a result of online investment brokers, is that the industry as a whole became more competitive driving fees down. With so many new trading sites being created on a daily basis, discount brokering, no-frills services, and cheap fees became the norm. Other companies immediately saw the impact of this new type of business on their own bottom lines. As a result, many brokers have had to acquiesce to the new breeds, and the new models of doing business. In relation to competition, the internet also made it easier for brokers to enter other territories. Where previously, independent and small brokerage firms conducted business in their immediate regions, now, as long as they have the required licenses, they can operate in a broader range of locations, crossing state borders if necessary. For the average person who liked to dabble, or even the more experienced trader who preferred to save money by avoiding the fancy offices and personal service, she/he stood to gain from online investment brokers. Truly, the gulf between discount brokerages and full-service brokers has been bridged due to the internet. What is most curious is that not only were the top firms forced to rethink their business models, in order to compete with online rivals, but, the new online
Page 11

Broking Firms
companies were continually pushed to improve their services. That meant that what started out as a no-frills, bare-bones cottage industry, offering services to qualified investors, actually grew into a large discount-services-with-perks movement. Finally, online investment brokers provided more flexibility for traders. Prior to online trading, investors were limited to specific banking or business hours. Now, because of the internet, traders can readily participate in foreign markets, and can check their accounts at any time of the day or night. In reality, international or global markets should operate more effectively and more efficiently, because they have access to a larger and greater range of resources. There are more investors available because the borders and time constraints have been removed. And, now, due to the internet's influence on the trading environment, minimum purchases or deposits are much lower as well, providing a more equal foothold for all types of investors.

3.4 Exchange brokers

An exchange is the act of giving and receiving, typically for the same value, or at least for the perceived value of the items. In other words, trading one thing for another of equivalent value. An exchange can also be a place or medium where people congregate to swap, sell, buy, auction and trade their assets. A flea market is an example of an exchange. A system of barter is another form of exchange. An exchange is the marketplace. Thus, equities, stocks, commodities, futures, and options are sold on various exchanges throughout the world. And, like other financial transactions, the exchanges or trades require licensed individuals called exchange brokers. Agreeably, there are many types of exchange brokers including foreign currency exchange, over-the-counter exchange, stock exchange, derivatives exchange, and commodity exchange board brokers. FOREX and OTC, however, do not trade on a formal exchange, but rather, through a dealer network. Stocks and commodities, on the other hand, are negotiated on exchanges such as the Boston, Chicago, and New York stock exchanges. The Philadelphia Stock Exchange is the oldest in the US, having commenced operations in 1790. NYSE followed shortly, thereafter, in 1792. And, there have been other regional exchanges that have come and gone through the years. But, one commonality is the existence of exchange brokers. These are real people on the floor of
Page 12

Broking Firms
the exchanges, executing buy and sell orders, as well as negotiating with other exchange brokers.

Further, floor brokers or stock exchange brokers should not be confused with floor traders. Each has completely different roles in the exchanges. Floor brokers, generally, execute the orders from their companies. Clients call their individual brokers who give advice whether they should buy certain stocks or sell stocks they own. The individual brokers send the orders to their firms, and from there, they go to the exchange brokers, who carry out all the clients' wishes. Floor traders, on the other hand, are not dealing in client orders, but rather, are purchasing and selling for their own accounts.

3.5 What is Prime brokerage?

Another classification of broker is the prime brokerage. Briefly, it is a firm that engages in services that are considered out of the ordinary. For example, accounts with very large dollar amounts being committed to trade. Typically, the services are provided to a select group of clients. Additionally, the funds that are managed by these brokers tend to require special attention. Hedge funds were original examples of this concept. Usually, the bigger, major firms are characterized as prime brokerages because they have the leverage and resources to administer these portfolios. They are also well-known, and attract a certain type of clientele. Some of the services that are provided by the leading firms dealing in prime brokerage are securities lending, securities borrowing, financing solutions through hedge funds, new capital acquisition, credit derivatives intermediation, clearance and settlement services, risk analysis and reporting, technological support, consulting, and execution of trade orders in options, securities, foreign exchange, futures, and derivatives. Since prime brokerages are the keepers of the assets, because they are responsible for their clients' monies, in order to improve a fund's performance, they interact with clients to unite financing, capitalization, and borrowing.

Page 13

Broking Firms
Typically, prime brokerage firms work on a global scale, and have experts in all fields throughout the world. Thousands of people work in their various offices in different countries. Their years of expertise, and the volumes of historical data that they hold in proprietary databases is enormous and of great benefit to clients who have the resources to participate or contribute. Traditionally, one of the benefits of prime brokerage has been the ability to stay with one company or custodian, as it is called, but make trades at another. The settlement services are provided by the client's own company, avoiding the issue of having multiple accounts with multiple prime brokers. And, because resources are tight in this economy, the creators of the funds are more than happy to deal with several prime brokers, in order to leverage their access to pools of capital and resources. One concept of prime brokerage that proves interesting to many people is that prime brokerage is a form of currency. Since the funds involved allow access to capital resources, it means that when capital is scarce, the fund creators have the leverage to access resources that normally would not be available to them. Working with an investment bank, for instance, would not be option without the hedge fund. Moreover, clients who use prime brokerage services need more personal service, meaning that their monies must be continually monitored and micro-managed. Activity is a daily and nightly occurrence, and the stakes are high. Other clients, for example, that must raise capital quickly will have access to investors who can help. An important feature of prime brokerage is the limitation of risk. While it is conceded that all investment carries risk, most transactions, especially hedge funds, must exclude high risk ventures. In other words, all start ups are agreeably precarious to an investor, and would not be part of the bundled services or package offered.

Page 14

Broking Firms CHAPTER 4 Dematerialization

4.1 What is Dematerialization?

Dematerialization is the process by which a client can get physical certificates converted into electronic balances. An investor intending to dematerialize its securities needs to have an account with a DP. The client has to deface and surrender the certificates registered in its name to the DP. After intimating NSDL electronically, the DP sends the securities to the concerned Issuer/ R&T agent. NSDL in turn informs the Issuer/ R&T agent electronically, using NSDL Depository system, about the request for dematerialization. If the Issuer/ R&T agent finds the certificates in order, it registers NSDL as the holder of the securities (the investor will be the beneficial owner) and communicates to NSDL the confirmation of request electronically. On receiving such confirmation, NSDL credits the securities in the depository account of the Investor with the DP.

4.2 PROCESS OF DEMAT The client (registered owner) will submit a request to the DP in

the Dematerialization Request Form for dematerialization, along with the certificates of securities to be dematerialized. Before submission, the client has to deface the certificates by writing "SURRENDERED FOR

DEMATERIALISATION". The DP will verify that the form is duly filled in and the number of certificates, number of securities and the security type (equity, debenture etc.) are as given in the DRF. If the form and security count is in order, the DP will issue an acknowledgement slip duly signed and stamped, to the client. The DP will scrutinize the form and the certificates. This scrutiny involves the following

Page 15

Broking Firms
Verification of Client's signature on the dematerialization request with the specimen signature (the signature on the account opening form). If the signature differs, the DP should ensure the identity of the client. Compare the names on DRF and certificates with the client account. Paid up status ISIN (International Securities Identification Number Lock - in status Distinctive numbers In case the securities are not in order they are returned to the client and acknowledgment is obtained. The DP will reject the request and return the DRF and certificates in case: A single DRF is used to dematerialize securities of more than one company. The certificates are mutilated, or they are defaced in such a way that the material information is not readable. It may advise the client to send the certificates to the Issuer/ R&T agent and get new securities issued in lieu thereof. Part of the certificates pertaining to a single DRF is partly paid-up; the DP will reject the request and return the DRF along with the certificates. The DP may advise the client to send separate requests for the fully paid-up and partly paid-up securities. Part of the certificates pertaining to a single DRF is locked-in, the DP will reject the request and return the DRF along with the certificates to the client. The DP may advise the client to send a separate request for the locked-in certificates. Also, certificates locked-in for different reasons should not be submitted together with a single DRF In case the securities are in order, the details of the request as mentioned in the form are entered in the DPM (software provided by NSDL to the DP) and a Dematerialization Request Number (DRN) will be generated by the system. The DRN so generated is entered in the space provided for the purpose in the dematerialization request form.

Page 16

Broking Firms
A person other than the person who entered the data is expected to verify details recorded for the DRN. The request is then released by the DP which is forwarded electronically to DM (DM - Depository Module, NSDL's software system) by DPM. The DM forwards the request to the Issuer/ R&T agent electronically. The DP will fill the relevant portion viz., the authorization portion of the demat request form. The DP will punch the certificates on the company name so that it does not destroy any material information on the certificate. The DP will then dispatch the certificates along with the request form and a covering letter to the Issuer/ R&T agent. The Issuer/ R&T agent confirms acceptance of the request for dematerialization in his system DPM (SHR) and the same will be forwarded to the DM, if the request is found in order. The DM will electronically authorize the creation of appropriate credit balances in the client's account. The DPM will credit the client's account automatically. The DP must inform the client of the changes in the client's account following the confirmation of the request. The issuer/ R&T may reject dematerialization request in some cases. The issuer or its R&T Agent will send an objection memo to the DP, with or without DRF and security certificates depending upon the reason for rejection. The DP/Investor has to remove reasons for objection within 15 days of receiving the objection memo. If the DP fails to remove the objections within 15 days, the issuer or its R&T Agent may reject the request and return DRF and accompanying certificates to the DP. The DP, if the client so requires, may generate a new dematerialization request and send the securities again to the issuer or its R&T Agent. No fresh request can be generated for the same securities until the issuer or its R&T Agent has rejected the earlier request and informed NSDL and the DP about it

Page 17

Broking Firms

CHAPTER 5 Types of brokerage firms

5.1 ICICI SECURITIES

ICICI direct is an online trading and investment platform on ICICI Securities, the largest stock broker firm in India providing a wide range of investment options to the retail and institutional customers. ICICI Securities is part of ICICI Group, India's top financial service provider offering banking and other financial services.

ICICI Securities (I-Sec) is the top equity house in India with over 20 lakh customers. ICICIDirect.com is the flagship website of I-Sec. This website was the first online trading platform lunched in India to provide browser based equity, commodity and currency trading; all under one login. ICICIdirect.com is the most visited investment portal in India and by NRI's living across countries. It is one website which provides options to invest in over 20 financial

Page 18

Broking Firms
products including Equity, Derivatives, Currency Futures, IPO, Mutual Funds, ETF, Fixed Deposits, Loans, Tax Services, New Pension Systems and Insurance. ICICI direct also provide current stock market information which includes stock prices, news, market research reports, stocks tips, events, IPO News and company results. Its 'Centre for Financial Learning' initiative offers number of online and classroom programs for investors. The 3-in-1 account, which includes ICICI Bank Account, ICICI Direct Trading Account and ICICI Demat Account, is the best offering for retail investors in India as it provides easiest way to invest in stock market and other financial instruments. The customers can visit any of the over 1500 ICICI Bank branches to get help on financial products which are sold through ICICI direct.

ICICI Direct Trades In: BSE and NSE ICICI Direct's Trading Platforms ICICI Direct offers 2 trading platforms to its customers :
1. Share Trading Account (Website Based Trading) Website based online Share Trading Account by ICICI Direct is primarily for buying and selling of stocks at BSE and NSE.

The ICICI Direct website allows Cash Trading, Margin Trading, Margin PLUS Trading, Spot Trading, Buy Today Sell Tomorrow, IPO Investment, Mutual Fund Investment etc. ICICIDirect.com website is the primary Investment vehicle of ICICI Limited. 2. Trade Racer (Trading Terminal) Trade Racer is a power packed Trading platform which provides an investor with Live streaming quotes & Research Calls, integrated fund transfer system along
Page 19

Broking Firms
with multiple watch list facility. Investor can also do technical analysis with the help advance charting tools. Single Order entry page for Equities and Derivatives, Technical Analysis, Integrated Fund Transfer System, Customized Interface, Intra-day and EOD Charts and Shortcut keys for faster access to markets are some of the key features of Trade Racer Terminal. ICICIDirect Brokerage Charges 2013

Trading Account Opening Charges (One Time): Rs. 975 Trading Annual maintenance charges (AMC): Rs 0 Latest brokerage information on ICICIDirect website. Demat Account Opening Charges (One Time): Rs. 100 (for Agreement Stamp Paper) Demat Account Annual Maintenance Charges (AMC): Rs. 500 (Rs 0/- for 1st year with 3 in 1 Account) Other Demat Service Charges & Fees

ICICI offers 2 types of brokerage plans to its customer : 1. I-Secure Plan (Flat brokerage Plan)
This plan offers Flat Brokerage (in %) irrespective of turnover value. This plan is suitable for traders / investors looking at secured and fixed brokerage.

2. I-Saver Plan (Variable brokerage plan)

This plan offers brokerage based on the trading volume i.e. high brokerage for low volume and low brokerage for high volume trades. This plan suitable for traders / investors who trade in high volumes and can benefit from low brokerage.

Page 20

Broking Firms

ICICI Direct Brokerage in Cash

I - Saver Plan Total Eligible Turnover Effective Total Eligible

I - Secure Plan Effective

Brokerage Brokerage on Turnover (Per Brokerage Brokerage on Intraday Square off calendar Quarter) Irrespective of turnover (%) Intraday Square off

(Per calendar (%) Quarter) Above Rs. 5 Crores Rs.2 Crores to 5 Crores Rs.1 Crores to 2 Crores Rs.50 Lakhs to 1 Crores Rs.25 Lakhs to 50 Lakhs

0.25

0.125%

0.55

0.275%

0.30

0.150%

0.35

0.175%

0.45

0.225%

0.55

0.275%

Page 21

Broking Firms
Rs.10 Lakhs to 25 Lakhs Less than Rs.10 Lakhs 0.70 0.350%

0.75

0.375%

ICICI Direct Brokerage in Future & Future Plus

I - Saver Plan / I - Secure Plan Equity Future and Future Plus

For Equity/Currency Futures

Currency Futures

Total Eligible Turnover per month Above Rs. 20 Crores Rs.10 Crores to 20 Crores Rs.5 Crores to 10 Crores Less than Rs.5 Crores

Brokerage (%)

Brokerage on Second leg Brokerage on Second leg of Intraday square off (per lot) of Intraday square off (per lot)

0.030

Rs.15/-

Rs.10/-

0.035

Rs.15/-

Rs.10/-

0.040

Rs.15/-

Rs.10/-

0.050

Rs.15/-

Rs.10/-

Page 22

Broking Firms

ICICI Brokerage in Margin & Margin Plus

I - Saver Plan / I - Secure Plan Total Eligible Turnover per month Brokerage (%) Above Rs. 20 Crores Rs.10 Crores to 20 Crores Rs.5 Crores to 10 Crores Less than Rs.5 Crores 0.030 0.035 0.040 0.050

ICICI Direct Brokerage in Options

I - Saver Plan / I - Secure Plan Brokerage in Options Total Eligible Lots per month Above 600 Flat brokerage per contract lot (Rs.) 65/Brokerage on Second leg of Intraday square off (per lot) Rs.15/-

Page 23

Broking Firms
301-600 151-300 61-150 0-60 70/75/85/95/Rs.15/Rs.15/Rs.15/Rs.15/-

5.2 INDIA INFOLINE LTD

Incorporated in 1995, India Infoline (IIFL) is the brokerage firm of India Infoline Group, a fastest growing financial services solution provider in India. India Infoline is listed on BSE (532636) and NSE (INDIAINFO) for securities trading. IIFL offers trading platform and research-based advice for entire range of financial products including Stocks, Derivatives, Commodities, Insurance, FD's, Loans, Bonds etc. Equity / Commodity Broking and Research is the key offering of India Infoline. IIFL has a wide network of 4000+ branches spread over 900+ cities across India (as of Dec

Page 24

Broking Firms
2012). IIFL is very popular among retail investors and traders as their branches are spread all over India. In Oct 2012, IIFL reported the average daily turnover of Rs 4,355 cr in equity and Rs 2,254 Cr in commodities. IIFL won the 'Best Broker with Global Presence' award at the BSE IPF D&B Equity Broking Awards 2012. IIFL has presence through its subsidiaries in Colombo, Dubai, New York, Mauritius, London, Singapore and Hong Kong.

India Infoline (IIFL)'s Trading Platforms

IIFL offers 2 different online trading terminals to its customers :
1. Investor Terminal (IT) Investor Terminal is 5Paisa's equity trading terminal for low volume trader. This is web based terminal and could access from anywhere. This product provides limited features in comparison of Trader Terminal, which is another product provided by 5Paisa. 2. Trader Terminal (TT) Trader Terminal is design for high volume equity traders or day traders. Trader Terminal provides high volume trading with powerful interface and fast order execution.

Few popular features of trader terminal are:

o o o o o

Fast trade execution with instant trade confirmation. Live streaming quotes and price watch on any number of stocks. Intraday charts, updated live, tick-by-tick. Live margin, position, marked to market profit & loss report. Set any number of price alerts on any number of scrips.
Page 25

Broking Firms
o o o o o o o o

Flexibility to customize screen layout and setting. Facility to customize any number of portfolios & watch lists. Facility to cancel all pending orders at one click. Facility to square off all transactions at one click. Top Gainers, Top Losers, Most Active, updated live. Index information; index chart, index stock information live. Market depth, i.e. Best 5 bids and offers, updated live for all stocks. Online access to both accounts and DP to check live updated Order and Trade Book.

o o

Facility to place after market orders. Online fund transfer facility from leading Banks including ICICI, HDFC, CITI and UTI banks.

o o o o

Online intra-day technical calls. Historical charts and technical analysis tools. India Infoline's world - acclaimed news service and research. And many more.

India Infoline (IIFL) Brokerage Charges 2013

Account Opening Fees & Annual maintenance charges (AMC)

Trading Account Opening Charges (One Time): Rs 750 Trading Annual maintenance charges (AMC): Demat Account Opening Charges (One Time): Rs 555 Demat Account Annual Maintenance Charges (AMC): Rs. 300

Trading Brokerages

Intra-day Trades: 0.05% on the buy side and 0.05% on the sell side.
Page 26

Broking Firms

Delivery Based Trades: 0.50% or 5 paise per share whichever is higher. F&O Trades: 0.05% Options Trades: 1% of Premium or Rs 100 per lot whichever is higher. Minimum Per Share Brokerage: Rs 0.05 Auction Brokerage: 1.00% VAS SMS Facility: Rs 249 per month

5.3 SHAREKHAN SECURITIES LTD

Incorporated in February 2000, Sharekhan is India's 2nd largest stock broker providing brokerage services through its online trading website Sharekhan.com and 1950 Share shops which includes branches & Franchises in more than 575 cities across India. Sharekhan has seen incredible growth over last 10+ years though it's very successful online trading platform and the chain of franchises located in almost every part of India. Sharekhan has over 10 lakhs retail and institutional customers. Sharekhan.com is the finest investment portal for India stock market. The well designed website provides wide range on investment options, latest stock market updates and many tools for investors.
Page 27

Broking Firms
Sharekhan also offers 'Sharekhan Trade Tiger', one of the most popular trading terminals, for retail investors. The Trade Tiger is quite similar to Broker Terminal and allows frequent traders to place and execute their orders at a high speed. It also provides live data and other tools on the same screen to help the users with their trades. Sharekhan's 'ShareMobile' platform offers trading facility though mobile application. Mobile apps are available for popular iPhone, iPad, Blackberry, Android and other phones. Services offered by Sharekhan include trading in equity, F&O and Commodity and investment in IPO's, Mutual Funds, Insurance, Bonds and NCD's. Company also provide Sharekhan Demat Account and registered as a depository participant with NSD and CDS. Sharekhan offers verity of accounts to suite customer requirement. These accounts include Sharekhan First Step Account, Sharekhan Classic Account, Sharekhan Trade Tiger Account and Portfolio Mgmt Services (PMS) though Sharekhan Platinum Circle Account. Sharekhan has its own research teams which regularly publishes investment advices, stock tips, quarterly company result analysis and news alerts to its customer though email, SMS and on Sharekhan.com. Sharekhan has an excellent knowledge center on its website to help stock and commodity market investors of all kind. It also offers free online and classroom seminars / workshops to investors. Each Sharekhan

Accounts comes with online and in-person help from Sharekhan representative.

Account Types
1. Classic account Allow investor to buy and sell stocks online along with the following features like multiple watch lists, Integrated Banking, demat and digital contracts, Real-time portfolio tracking with price alerts and Instant credit & transfer.

Page 28

Broking Firms
a. Online trading account for investing in Equities and Derivatives b. Free trading through Phone (Dial-n-Trade) I. Two dedicated numbers for placing your orders with your cell phone or landline. II. Automatic funds transfer with phone banking (for Citibank and HDFC bank customers) III. Simple and Secure Interactive Voice Response based system for authentication IV. V. get the trusted, professional advice of our tele brokers After hours order placement facility between 8.00 am and 9.30 am

c. Integration of: Online trading + Bank + Demat account d. Instant cash transfer facility against purchase & sale of shares e. IPO investments f. Instant order and trade confirmations by e-mail g. Single screen interface for cash and derivatives

2. Trade Tiger account

This is a net based executable application for active traders who trade frequently during the day's trading session. Following are few popular features of Trade Tiger account. a. A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX, NCDEX b. Multiple Market Watch available on Single Screen c. Hot keys similar to a traditional broker terminal d. Tie-up with 12 banks for online transfer of funds

Page 29

Broking Firms
e. Different tools available to gauge market such as Tick Query, Ticker, Market Summary, Action Watch, Option Premium Calculator, Span Calculator f. Graph Studies are available including Average, Band- Bollinger, Know Sure Thing, MACD, RSI, etc

Sharekhan Brokerage Charges 2013

Account Opening Fees & Annual maintenance charges (AMC)

Trading Account Opening Charges (One Time): Rs 750 (Classic Account), Rs 1000 (Trade Tiger Account)

Trading Annual maintenance charges (AMC): Rs 400 (First year remains free) Demat Account Opening Charges (One Time): Included in trading account opening charges

Demat Account Annual Maintenance Charges (AMC): Rs. 400 (Free for 1st year with trading account.)

Trading Brokerages

Intra-day Trades: 0.1% on the buy side and 0.1% on the sell side. Delivery Based Trades: 0.5% or 10 paise per share or Rs. 16/- per scrip whichever is higher.

F&O Trades: 0.1% on the first leg and 0.02% on the second leg if squared off on the same day and 0.1% if squared off on any other day.

Page 30

Broking Firms

Options Trades: Rs. 100/- per contract or 2.5% on the premium (which ever is higher).

Sharekhan Post Paid Plans

Sharekhan offers following post paid plans. To get the offer customer has to deposit the margin money with Sharekhan based the plan they choose. The brokerage reduces as the margin money is high. Future Leg 2 same day

Margin Scheme

Cash Cash Leg 1 Leg 2

Delivery

Future Leg1

Future next day

Option

Higher of 25 K 0.1 0.1 0.5 0.1 0.02 0.1 2.5% of premium or Rs 100 Higher of 30 K 0.1 0 0.5 0.1 0 0.1 2.5% of premium or Rs 100 40 K 0.09 0 0.45 0.09 0 0.09 Higher of
Page 31

Broking Firms
2.25% of premium or Rs 95 Higher of 50 K 0.07 0 0.4 0.07 0 0.07 1.5% of premium or Rs 80 Higher of 1% 1 Lakhs 0.05 0 0.25 0.05 0 0.05 of premium or Rs 70 Higher of 1% 3 Lakhs 0.04 0 0.2 0.04 0 0.04 of premium or Rs 50 Higher of 5lakhs 0.03 0 0.18 0.03 0 0.03 0.75% of premium or Rs 40 Higher of 10 Lakhs 0.02 0 0.15 0.02 0 0.02 0.60% of premium or Rs 30 Higher of 20 Lakhs 0.015 0 0.1 0.015 0 0.015 0.55% of premium or Rs 25

Page 32

Broking Firms

Sharekhan Pre Paid Plans

Sharekhan offers following pre paid plans. The plans are available for 6 month and 1 year as shown below:
Future Amount (Rs) Period Cash Cash Leg 1 Leg 2 Delivery Future Leg 2 Leg 1 same day

Future next day Option

Intraday transaction

Delivery transaction

Higher of Default 0.1 0.1 0.5 0.1 0.02 0.1 2.5% of premium or Rs 100 Higher of 750 6 months 0.1 0 0.5 0.1 0 0.1 2.5% of premium or Rs 100 Higher of 1000 6 months 0.09 0 0.45 0.09 0 0.09 2.25% of premium or Rs 95 11,11,111 2,22,222 7,50,000 1,50,000

Page 33

Broking Firms
Higher of 2000 Annual 0.07 0 0.4 0.07 0 0.07 1.5% of premium or Rs 80 Higher of 6000 Annual 0.05 0 0.25 0.05 0 0.05 1% of premium or Rs 70 Higher of 18000 Annual 0.04 0 0.2 0.04 0 0.04 1% of premium or Rs 50 Higher of 30000 Annual 0.03 0 0.18 0.03 0 0.03 0.75% of premium or Rs 40 Higher of 60000 Annual 0.02 0 0.15 0.02 0 0.02 0.50% of premium or Rs 30 Higher of 100000 Annual 0.015 0 0.1 0.015 0 0.015 0.55% of premium or Rs 25 200000 Annual 0.005 0.005 0.08 0.005 0.005 0.005 Flat Rs 10 2,00,00,00,000 25,00,00,000 66,66,66,667 10,00,00,000 30,00,00,000 4,00,00,000 10,00,00,000 1,66,66,667 4,50,00,000 90,00,000 1,20,00,000 24,00,000 28,57,143 5,00,000

Page 34

Broking Firms

5.4 KOTAK SECURITIES LTD

Incorporated in 1994, Kotak Securities is a full services broker part of popular India based Kotak Mahindra Bank. The bank has over 1400 branches across India servicing more than 8 lakhs customers. Kotak Securities Limited is among the largest traditional broker in India providing wide range of investment options to its customers including Trading in Equity & Derivatives, Investment in IPO's, Mutual Funds, Fixed Deposits, Bonds and many more share market related investment products. Kotak Sec is the member of BSE and NSE, the popular stock exchanges in India. Company provides stock trading facilities though many ways including trading terminal, website, mobile application, trading though branches and call & trade.

Page 35

Broking Firms
Like other tradition brokers in India, Kotak offers facility of Margin Finance, Margin against Securities, Fundamental and Technical analysis, Research Reports & Tips, SMS alerts and Portfolio Management Services (PMS). Kotak Security is also the member of National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) and provides its own depository services to the customers. The 3-in-1 account is the key offering of Kotak Securities. The Trinity Account [3 in 1 Account] offers the combination of broker account, bank account and a demat account. All these accounts are linked together and work seamlessly to make stock market investment very easy.

Kotak Securities's Trading Platforms

Kotak Securities offers multiple trading platforms to suite investor's requirement. Following are the trading platforms available by Kotak Sec: 1. Website Based Trading A stock treading website which can be accessed though any popular Web Browser. This is the most convenient and popular way to invest with Kotak Securities. Kotak also offers a light weight trading website 'Xtralite', which can be used by investors with slow speed internet. 2. Trading Terminals (KEAT ProX and FASTLANE) Kotak offers two different trading terminal based application which are very popular among stock traders. KEAT ProX is an exe based installable desktop application providing fastest trading experience. FASTLANE is a Java applet based application which gives you a trading terminal kind of experience without any installation on your computer. FASTLANE gives KEA TProX like features and the benefits of website based trading as it can be access from anywhere though web browser. 3. Mobile Stock Trading Kotak offers high speed mobile based application to trade in Stock Market. Through this mobile app, customers can Execute Trades, Monitor Portfolio, View Streaming Quotes and Intraday Charts.
Page 36

Broking Firms
4. Branch Advisory and Call & Trade Kotak also offers trading facility though its 1400+ branches and though call centers using call & trade facility.

Account Types Kotak offers different account types according to users requirement:
1. Auto Invest Auto Invest is a unique Online Trading Account which provide investment planning in Gold ETFs (Exchange Traded Funds), Equities and Mutual Funds to their customers. Gold ETFs are mutual fund schemes that will invest the money collected from their investors in standard gold bullion. Kotak's advisor gives the recommendation according to investor's risk capability and investment plans. Minimum investment of Rs 5000 required for Auto Invest account. 2. Kotak Gateway Kotak Gateway account opens the gateway to a world of investing opportunities for beginners. Kotak Gateway user can trade anywhere, anytime using internet. Kotak also offers call and trade facility. Investor can also trade Currency Derivative using Kotal gateway account. Kotak Securities provide SMS alert, research report, free news and market updates to the account holders. Best feature of Kotak gateway is call and trade facility. Anybody can activate Kotak Gateway account with any amount between Rs 20,000 to 5, 00,000. This can be in form of cash deposit or the value of the shares you buy. Brokerage will be charged based on the account type. For

Page 37

Broking Firms
intraday trading brokerage is .06% both sides for less than 25 lakhs and .023% for more than 25 cores. 3. Kotak Privilege Circle Kotak Privilege Circle is the premium investment account offed by Kotak Securities. Along with Kotak Gateway account benefits Kotak provides independent market expertise and support through a dedicated relationship manager and a dedicated customer service desk which provides assistance in opening accounts, handling day-to-day problems, and more. They provides KEAT premium which is an exclusive online tool that lets you monitor what is happening in the market and view your gains and losses in real-time. One can activate Kotak Privilege Circle account with any amount more than Rs. 10, 00,000 as margin, by way of cash or stock. For intraday trading brokerage is .06% both sides for less than 25 lakhs and .03% for more than 25 cores. 4. Kotak Freedom for Mutual Fund Investments. 5. Kotak Super Saver, a Flat Brokerage and a Low Margin account. 6. PMS (Portfolio Management Service), an account for people who need an expert to help to manage their investments. 7. NRI Account, a online trading an investment account for NRI investors. 8. Trinity Account [3-in-1 Account]

Page 38

Broking Firms

Trinity Account is an integrated account that helps investors enjoy the benefits of a Online Trading Account, Bank Account, Demat Account on a single platform for your securities transaction. This account gives convenience of fund transfer and online trading.

Kotak Securities Brokerage Charges 2013 Account opening fees:

Trading Account Opening Charges (One Time): Rs 750 Trading Annual maintenance charges (AMC): Rs 0 Demat Account Opening Charges (One Time): Demat Account Annual Maintenance Charges (AMC): Rs 600 per annum

Trading Brokerages:

Page 39

Broking Firms

Kotak Gateway (Variable Brokerage) (* All charges are on both sides)

Delivery Based Trades Brokerages: 0.59% - 0.18% (For trading amount of '< 1lakh' to '> 2 crore')

Intra-day Trades Brokerages: 0.06% - 0.03% (For trading amount of '< 25 lakhs' to '> 5 crore')

F&O Trades Brokerages (Intraday): 0.07% - 0.023% (For trading amount of '< 2 crores' to '> 25 crores')

F&O Trades Brokerages (Settlement): 0.09% - 0.032% (For trading amount of '< 2 crores' to '> 25 crores')

Options Trades: Rs. 100/- per lot

Kotak Gateway (Fixed Brokerage) (* All charges are on both sides)

Delivery Based Trades: 0.49% Intra-day Trades: 0.049% Futures Trades: 0.049% Options Trades: Rs. 100/- per lot or 1% on premium whichever is higher

Kotak Securities Demat Account Charges:

Sr Account Head

Rate Rs.50/- per request and Rs.3/per certificate Rs.10/- for 100 shares

Minimum Payable

1 Dematerialization

--

2 Dematerialization

Rs. 15/-

Page 40

Broking Firms
Debit Transactions - On Market and Off Market 0.04% of the value of securities Rs. 27/- (Plus NSDL (Plus NSDL charges as applicable) charges as applicable)

Account Maintenance 4 Charges Resident Indian and NRI 5 Pledge Charges 6 Invocation of Pledge Charge for Client Master change intimation

Rs. 50/-per month Rs. 75/-per month

--

0.05% of the value of securities Rs. 30/0.04% of the value of securities Rs. 30/-

Rs.25/-

5.5 RELIANCE SECURITIES LTD

Reliance Securities, A Reliance Capital Limited Company, is the financial services division of Reliance Anil Dhirubhai Ambani (ADA) Group. Reliance ADA group is among top 3 business houses in India with wide range of presence across various sectors.
Page 41

Broking Firms
Group's major interests ranges from communications (Reliance Communications) and financial services (Reliance Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and entertainment. Reliance Securities has over 22 lakhs customers and more than 10'000 branches in around 5000 cities in India. Company is among the largest broking and distribution house of financial products and having share of more than 3% of total stock market volume at BSE & NSE. Rsec.co.in is the web based investment portal (with Online Stock Trading) from Reliance Securities. This website enables its customer to invest & manage most of the services provided by Reliance Securities including Equity (Stock) Trading, Commodity Trading, Derivatives, Mutual Fund Investment, IPO Investment, Life Insurances, General insurances, Money Transfer, Currency Derivatives, Gold Coins and Credit Cards Services. Company recently entered in to Wealth Management with tools like investment in equity-linked portfolio management services, structured products, insurance and mutual funds. The Reliance Securities website uses special security features 'Security Token', which makes your online trading experience more secure without complexity. Trade In: NSE, BSE & MCX-SX, MCX, NCDEX, NMCE

Investment Options
The investment options available with Reliance Securities are as below: 1. Equities Trading - Delivery, Intraday, leveraged trading based on Cash Collaterals, Cover order along with stop loss, After market Hours Orders, Regular Stock Purchase Plans, R-Mobile Trading 2. Equities Derivatives Trading 3. Currency Derivatives Trading

Page 42

Broking Firms
4. IPO Investment 5. Commodity Trading (Gold, Silver, Crude etc....) at MCX, NCDEX and NMCE 6. Mutual Fund, Liquid funds, Bonds, FD's Investment, Structured Products, Wealth Management and Portfolio Management Services, Premium Research 7. Life & General Insurance 8. My Gold Plan, Gold ETF's, NRI Investment Services, QFI Investment Services

Reliance Securitass Trading Platforms

Reliance Securities provides different platforms for trading: 1. Easy Trade Easy Trade is a browser based platform for first time investors. 2. Insta Plus Insta Plus is a web browser based trading system which helps you to directly place orders through market watch and helps to apply online in various products such as MF, FD, Bonds, IPO, OFS, AMO orders, Stop loss cover order, Systematic equity plans, etc. 3. Insta Xpress - Live streaming quotes Insta Xpress is an EXE based, high speed trading tool that allows you to monitor what is happening in the market at real time speed. It provides an investor with Live streaming quotes & Research Calls, integrated fund transfer system along with multiple watch list facility. Investor can also do technical analysis with the help advance charting tools. 4. R Mobile Xpress (Mobile Trading)

Page 43

Broking Firms
RMobile Xpress is a smart mobile trading application that allows you to be in touch with market anytime and anywhere during market hours at your finger tips.

Reliance Securities Research Desk

Reliance Securities Research Desk provides independent Equity Research to Retail Clients. It has a strong and highly experienced team of Analysts enjoying a rich blend of youth and experience. In terms of sector coverage we cover sectors like Automotives, Auto Components, Capital Goods, Engineering, Cement, Infrastructure, Banking, Software, Pharma, Telecom, FMCG, Media and Oil. The Fundamental Research is broadly idea based and gives a mix of large-cap and mid-cap ideas.

Reliance Securities Brokerage Charges 2013

Account opening fees:

Trading Account Opening Charges (One Time): Rs 950 Free for individuals working in Top 500 corporates / Free for prepaid accounts

Trading Annual maintenance charges (AMC): Rs 0 Demat Account Opening Charges (One Time): Demat Account Annual Maintenance Charges (AMC): Rs 200 per annum

Trading Brokerages:
R-FIXED (Fixed Brokerage) (* All charges are on both sides)

Delivery Based Trades: 50 paise Intra-day Trades: 5 paise Futures Trades: 5 paise Options Trades: Rs. 70/- per lot

Page 44

Broking Firms
Reliance Securities Demat Account Charges:
DP Charges Rs. 200/-

Fee Head

Annual Services Charges - For Individuals / HUFs / Trust

Annual Services Charges - For NRIs / Foreign Nationals, Corporate / Others Rs. 1000/Transaction Charges - SELL (Market & Off Market) For instructions given in physical form. Transaction Charges - SELL (Market & Off Market) For instructions received through Internet/ online trading through Reliance Securities Ltd. Rs. 12/-

Rs. 25/-

Page 45

Broking Firms CONCLUSION

Broking firms have now taken shape of important intermediaries in modern economy which guide investors from purchase of security to knowledge regarding manner and limits within which they must conduct trading in securities. Broking firms are now considered as important part of financial system which provides investors all the services regarding trading in securities.

Page 46

Broking Firms BIBLIOGRAPHY

Page 47