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ORGANIZATION STUDY

AT
CAPSTOCKS

Submitted In Partial Fulfillment Of The Requirements For The Award Of The


Degree Of
MASTER OF BUSINESS ADMININSTRATION OF KERALA UNIVERSITY
Submitted by
Jugunu S Nair
Under the guidance of
Dr. R Jayalakshmi
Course co-ordinator
IMK-ICM
Poojapura

UNIVERSITY INSTITUTE OF MANAGEMENT


EXTENSION CENTRE
ICM CAMPUS
POOJAPURA
2013-2014

DECLARATION

I, JUGUNU S NAIR, declare that the organization study


report entitled ORGANISATION STUDY CONDUCTED
AT CAPSTOCKS AND SECURITIES (INDIA) PVT LTD
submitted by me for the award for the award of degree of
Master of Business Administration of Kerala
University is my own work. The report has not been
submitted for the award of any other degree of this
university or any other university.

JUGUNU S NAIR
Place: Thiruvananthapuram
Date:
ACKNOWLEDGEMENT

I offer my gratitude to GOD almighty with whose grace I


could successfully accomplish the organization study.

It gives me a greater pleasure to place on record my


sincere thanks and gratitude to Dr. Jayalakshmi, course
coordinator MBA program, ICM campus Poojapura, for her
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valuable and timely assistance during the course of my


study.

I express my sincere thanks to Mr.Rathish, Asst.HR


Manager, Capstocks and Securities (India) Pvt. Ltd,
Thakaraparambu, who guide me throughout the study and
offered valuable advice. I also thank all the staffs at
Capstocks and Securities (India)Pvt Ltd, who has helped me
to complete my study successfully.

I thank my parents for their motivation and support.

JUGUNU S NAIR

CONTENTS
CHAPTER

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CONTENTS

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PAGE NO.

INTRODUCTION

1.1

OBJECTIVE OF STUDY

1.2

METHODOLOGY OF THE STUDY

1.3

SCOPE OF THE STUDY

1.4

LIMITATIONS OF THE STUDY

INDUSTRY PROFILE

5-18

COMPANY PROFILE

19-27

ORGANISATION STRUCTURE

28-30

DEPARTMENTAL ANALYSIS

31-76

SWOT ANALYSIS

77-79

7.1

FINDINGS

81

7.2

CONCLUSION

82

REFERENCES

83

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CHAPTER 1
INTRODUCTION

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INTRODUCTION

A stock broker plays a vital role in the secondary market


helping both the seller and buyer of the securities to enter into
transaction. The buyer and seller may be either a broker or a
client. When executing an order the stock broker may i=on behalf
of his client buy or sell securities from his own account i.e. as
principal or act as agent. For each transaction he has to issue
necessary contract note whether the transaction is entered into
by him as a principal or as an agent for another.

This organizational study is intended to analyse, observe and


learn the functioning of the organization and various
departments. This would enable to learn the real practices in
business and how it differs from the theories we learned in class
rooms. This study was undertaken at Capstocks and Securities
(India) Pvt.Ltd.

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OBJECTIVES OF THE STUDY

o To understand the organization structure of the


company.
o To learn and understand the functions of each
departments in the organization.
o To know about the actual working of a stock broking
company.
o To indentify the strength weakness opportunities of the
stock broking company.

METHODOLOGY

This study is descriptive in nature. The data sources include


primary sources and secondary sources.
a) Primary sources
i.

ii.

Direct personnel interview data was directly gathered


from the personnel of different department in the
organization.
Personal observation of the trading hall of Capstocks
and Securities (India) Pvt.Ltd.

b) Secondary sources
i.
ii.

Data was collected from various publications.


References from website of Capstocks and Securities
(India) Pvt.Ltd

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SCOPE OF THE STUDY

The study analyses the functioning of Capstocks and


Securities (India) Pvt.Ltd. Analyse how a stock broking firm is
working and how it survive and how it works and maintain their
market share in the competitive environment. The study is also
considered beneficial to the future researchers.

LIMITATIONS OF STUDY

The time was limited for a deep study and analysis of the
organization.
The study was conducted on working days were the
concerned officials were busy with trading activities.
Confidentiality makes difficulty in getting the appropriate
data.

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CHAPTER 2
INDUSTRY PROFILE

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STOCK EXCHANGE TRADING MECHANISM

There are 21 stock exchanges at present in India including


Over The Counter Exchange Of India (OTCEI), National Stock
Exchange (NSE) and Inter connected Stock Exchange (ICSE). All
of them are regulated in terms of Securities Contract (Regulation)
Act, 1956 and SEBI Act, 1992 and the rules and regulations made
thereunder. Some of the exchanges started as voluntary nonprofit associations such as Bombay Stock Exchange (BSE) and
Indore Stock Exchange. The stock exchanges at Chennai, Jaipur ,
Hyderabad and Pune were incorporated as companies limited by
guarantee. The other stock exchanges are companies limited by
shares and incorporated under the Companies Act, 1956 or earlier
Acts.

The stock exchanges are managed by Board of Directors or


Council of Management consisting of elected brokers and
representatives of Government and Public appointed by SEBI. The
brokers of stock exchanges are empowered to make and enforce
rules, bye laws and regulations with jurisdiction over all its
members.

Membership of stock exchange is generally given to persons


financially sound and with adequate experience/ training in stock
market. Their enrolment as member is regulated and controlled
by SEBI to whom they have to pay an annual charge. A member
of the stock exchange is called BROKER who can transact on
behalf of his clients as well as on his own behalf. A non member
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can deal in securities only through members. A member as a
Badla financier, commission broker, dealer in odd lots, Govt.
securities, jobber, market maker, or underwriter. He can also take
assistance of sub broker whom he can appoint under the
procedure of organization.

The stock exchange is a key institution facilitating the issue


and sale of various types of securities. It is a pivot around which
every activity of the capital market revolves. In the absence of
stock exchange, the people with people with savings would hardly
invest in corporate securities for which there would be no liquidity.
Corporate investments from the general public would thus have
been lower.

Stock exchanges thus present the market place for buying


and selling of securities and ensuring liquidity of them in the
interest of the investors. The stock exchanges are thus virtually
the nerve centre of the capital market and reflect the health of
the countrys economy as a whole.

Securities are traded in three different ways in stock


exchanges ring, namely settlement basis, spot basis, cash basis.

Shares of companies which are not in the spot list are known
as cash shares or B category shares. They are traded on the
cash basis. The actual delivery of securities and payment has to
be made on or before the settlement date fixed in the case of
cash basis trading.

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As far as spot trading is concerned the actual delivery of
securities must be made to the buying broker within 48 hours of
the contract. It is expected that the seller would be paid by the
buyer immediately on the delivery of securities.

All securities whether specified list or cash list can be traded


on cash basis or spot basis.

TYPES OF SECURITIES
Securities traded in the stock exchange can be classified as
under:

a. Listed cleared securities:


The securities admitted for dealing in stock
exchange after complying with the listing requirements and
played by the board on the list of cleared securities are called by
this name.

b. Permitted securities:
The securities listed in some of the recognized stock
exchange
When permitted to be traded by those stock exchanges where
they are not listed are called permitted securities. Such
permission is given if suitable provision exists in the regulations of
the concerned stock exchanges.

TYPES OF DELIVERY
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Types of delivery in the stock exchanges are spot delivery,


hand delivery, special delivery.

The delivery is said to be spot delivery, if the delivery of and


payment of securities are to be made on the same day or next
day.

The delivery is said to be hand delivery, if the delivery and


payment are to be made on the delivery date fixed by the stock
exchange authorities.

A Special delivery is one were the delivery is to be made


after the delivery date fixed by the stock exchange authorities.

MARGINS

An advance payment of a portion of the value of a stock


transaction. The amount of credit a broker or lender extends to a
customer for stock purchase.

MARGIN TRADING

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Margin trading is introduced by SEBI to curb speculative
dealings in shares leading to volatility in the prices of securities.

Initial margin in this context means the minimum amount,


calculated as a percentage of the transaction value, to be placed
by the client, with the broker, before the actual purchase. The
broker may advance the balance amount to meet full settlement
obligation.

Maintenance margin means the amount calculated as a


percentage of market value of securities, calculated with respect
to last trading days closing price to be maintained by the client
with the broker.

When the balance deposit in the clients margin account falls


below the required maintenance, the broker shall promptly make
margin calls. However, no further exposure can be granted to the
client on the basis of any increase in the market value of the
securities.

The broker may liquidate the securities if the client fails to


meet the margin calls made by the broker or fails to deposit the
cheque on the day following the day on which the margin calls
has been made or the cheque has been dishonored.

The broker may also liquidate the securities in case the


clients deposit in the margin account fails to 30% or less of the
latest market value of the securities, in the interregnum between
making of the margin cell and receipt of payment from the client.
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The broker must disclose to the stock exchange details on


gross exposure including the name of the client, unique
identification number, name of the scrip and if the broker has
borrowed funds for the purpose of providing margin trading
facilities, name of the lender and the amount borrowed, on or
above 12 noon on the following day.

The broker must disclose to the stock exchange details on


gross exposure including the name of the client, unique
identification number, name of the scrip and if the broker has
borrowed funds for the purpose of providing margin trading
facilities, name of the lender and the amount borrowed, on or
before 12 noon on the following day.

Stock exchange discloses scrip wise gross outstanding in


margin accounts with all brokers to the market. Such discloses
regarding margin trading done on any day shall be made
available after the trading hours on the following day through the
website.

Thus, margin trading acts as a check on the tendency of


clients to manipulate markets by placing orders on brokers
without having adequate money or securities to backup the
transaction.

Margin trading will also act as a curb on short selling and


short buying.

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The reduction in above tendencies on the part of clients
reduces volatility of prices on the stock exchange and provides
stability to the common investors.

Margin trading mechanism also ensures transparency in


dealing in securities and public exposures of the information
regarding the backing behind all major securities transactions.

In the Indian capital markets particularly excessive short


selling and market positioning have been rampant. Margin trading
has acted as a stabilizing force.

BOOK CLOSURE AND RECORD DATE

Book closure is the periodic closure of the register of


members and transfer books of the company, to take a record of
shareholders to determine their entitlement to dividends or to
bonus or right shares or any other rights pertaining to shares.
Record date on which the records of a company are closed for the
purpose of determining the stock holders to whom dividends,
proxies rights etc. are to be sent.
In accordance with section 154 of the Companies Act 1956 a
company may close the register of its members for a maximum of
45 days in a year and for not more than 30 days at any one time.
Book closure become necessary for the purpose of paying
dividend, making right issue or bonus issue. The listed company is
required to give notice of book closure in a news paper at least 7
days before the commencement of the book closure. The
members whose name appear in the register of members on the
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last date of book closure are entitled to receive the benefits of
dividend, right shares or bonus shares as the case may be.

TRADING OF PARTLY PAID SHARES AND DEBENTURES

Companies fix the last date for payment of allotment or call


money in case of partly paid shares or debentures and intimate
this to all the stock exchange wherein such shares or debentures
are listed. Based on the date fixed by the company, the stock
exchanges determine the settlement date upto which
transactions in the scrip will be deemed to be good for delivery.
After the said date transactions in the securities take place only if
they are paid up to the extent money has been called up.

TRADING LINE

When the price of the shares move in a particular direction


which persists for a period of time, a price line is regarded as
established. When the movement is upward, the trend is bullish
and when the movement is downward, the trend is bearish. Bear
market is a week or falling market characterized by the
dominance of sellers. Whereas bull market is a rising market with
abundance of buyers and relatively few sellers.

Secondary movements that reverse the uptrend temporarily


are known as reactions. The movements that reverse the down
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trend temporarily are known as rallies. When an upward breaks in
the downward direction, it is called trend reversal.

SETTLEMENT SYSTEM

Settlement is the process of netting of transactions and


actual delivery/ receipt of securities and transfer deeds against
receipt / payment of agreed amount. It is necessary to make a
settlement to know the net effect of a series of transaction during
a given period.

Settlement date is the date specified for delivery of


securities
between
securities
firms.
For
administrative
convenience, a stock exchange divides an year into a number of
settlement periods so as to enable the members to settle their
trades. All transactions executed during the settlement period are
settled at the end of the settlement period.

Settlement risk or principal risk is the risk that the seller of a


security or funds delivers its obligation but does not receive
delivery. In this event, the full principal value of the securities of
the funds transferred is at risk.
BOMBAY STOCK EXCHANGE LIMITED

Bombay stock exchange ltd., popularly known as BSE was


established in 1875 as The Native Share and Stock Brokers
Association. It is the oldest one in Asia, even older than the Tokyo
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Stock Exchange, which was established in 1878. It is a voluntary
nonprofit making Association of Persons (AOP) and is currently
engaged in the process of converting itself in to demutualized and
corporate entity. It has evolved over the year in to its present
status as the premier stock exchange in the country. It is the first
Stock exchange in the country. It is the first stock exchange in the
country has obtained permanent recognition in the in 1956 from
the Govt. of India under the Securities Contract (Regulation) Act,
1956.

The exchange provides market for trading in securities, debt


and derivatives uphold the interest of the investors and ensure
redressal of their grievances whether against the companies or its
own member brokers. It also strives to educate and enlighten the
investors by conducting investor education programmes and
making available to them necessary informative inputs.

The BSE Index, SENSEX, is Indias first stock market index


that enjoys an iconic stature, and is tracked worldwide. It is an
index of 30 stocks representing 12 major sectors. The SENSEX is
constructed on a free float methodology, and is sensitive to
market sentiments and market realities. Apart from SENSEX, BSE
offers 2 indices, including 12 sectoral indices. BSE provides an
efficient and transparent market for trading in equity, debt
instruments and derivatives.

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TRADING AT BSE

The scrips traded on BSE have been classified into various


groups.
BSE has, for the guidance and benefit of the investors,
classified the scrips in the equity segment into A, B, T, and Z
group on certain qualitative and Z groups on certain quantitative
and qualitative parameters.
The F group represents the fixed income securities.
The T group represrnts scrip which are settled on a trade
to trade basis as a surveillance measure .
Trading in govt. securities by the retail is done under G
group .
The z group was introduced by BSE in July 1999 and
includes companies which have failed to comply with its listing
requirements or have failed to resolve investor complaints and/or
have not made the required arrangements with both the
Depositories, viz., Central Depository Services (I) Ltd. (CDSL) and
National Securities Depository Ltd. (NSDL) for dematerialization of
their securities.

BSE also provides a facility to the market participants for online trading of odd-lot securities in physical form in A, B,T,
and Z group and in rights renunciations in all groups of scrips in
the equity segment.

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With effect from December 31,2001, trading in all securities
listed in equity in the equity segment takes place in one market
segment, viz., Compulsory Rolling Settlement Segment (CSR).

The scrips of companies which are in demat can be traded in


market lot of 1. However, the securities of the companies which
are still in the physical form are traded in the market lot of
generally either 50 or 100. Investors having quantities of
securities less than the market lot are required to sell them as
odd lots. This facility offers an exit route to investors to dispose
of their odd lot of securities, and also provides them an
opportunity to consolidate their securities into market lots.

This facility of selling physical shares in compulsory demat


scrip is called as Exit Route Scheme. This facility can also be used
by small investors for selling up to 500 shares in physical form in
respect of scrips of companies where trades are required to be
compulsorily settled by all investors in demat mode.

COMPUTATION OF CLOSING PRICEE OF SCRIPS IN THE


CASH SEGMENT

The closing price of scrips is computed by the exchange on


the basis of weighted average price of all trades executed during
the last 30 minutes of continuous trading session. However, if
there is no trade recorded during the last 30 minutes, then last
traded price of a scrip in the continuous trading session is taken
as the official closing price.

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COMPULSORY ROLLING SETTELMENT

All transactions in all group of securities in the equity


segment and fixed income securities listed on BSE are required to
be settled on T+2 basis (w.e.f. April 1, 2003). The settlement
calendar, which indicates the dates of the various settlement
related activities, is drawn by BSE in advance and is circulated
among the market participants.

Under rolling settlements, the trades done on a particular


day are settled after a given number of business days. A T+2
settlement cycle means that the final settlement of transactions
done on T, i.e., trade day by exchange of monies and securities
between the buyers and sellers respectively take place on second
business day after the trade day.

NATIONAL STOCK EXCHANGE OF INDIA LTD. (NSEIL)

Based on Phervani committee report submitted in June 1991,


the National Stock Exchange of India Limited was established to
provide an efficient system eliminating all the deficiencies of
stock exchanges and is geared to meet the requirements of the
larger investor population. It is a single stock exchange and all
other centers are electronically linked to this exchange.

NSEIL was promote by leading FIs at the behest of


Government of India and was incorporated in 1992 as a tax
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paying company unlike other stock exchanges in the country. On
its recognition as stock exchange under the Securities Contract
(regulation) Act, 1956 in April 1993, NSEIL commenced operations
in the wholesale debt market segment in June 1994, operations in
the capital market segment in November 1994, and operations in
derivatives segment in June 2000.

TRADING AND SETTLEMENT AT NSE

NSE introduced for the first time in India, fully automated


screen based trading. It uses a modern, fully computerized
trading system designed to offer investors across the length and
breadth of the country a safe and easy way to invest. The NSE
trading system called National Exchange for Automated
Trading(NEAT) is a fully automated screen based trading system,
which adopts the principle of an order driven market.

CLEARING AND SETTLEMENT

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NSCCL carries out clearing and settlement functions as per
the settlement cycles of different sub-segments in the equities
segment.
The clearing function of the clearing corporation is designed
to work out,
a) What counter parties owe and
b) What counter parties are due to receive on the settlement
date.
NSCCL also provides for a mechanism to handle various
exceptional situations
like security shortages, bad delivery, company objections, auction
settlement etc.

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CHAPTER 3
COMPANY PROFILE

HISTORY

Capstocks is a professionally managed stock broking


company having an unblemished and unparalleled service history
of more than 23 years and a vibrant tradition of trust, loyalty and
reliability. Capstocks was started by Rajendran.V, the present
Managing Director of the company, in the year 1989. Capstocks is
having both online and offline trading facilities. It is the first ISO
9001:2008 certified stock broking firm in India for all services in
stock broking and allied activities.

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Capstocks has about 180 outlets in various states of India.
Capstocks is a member of the National Stock Exchange of India
(NSE), Bombay Stock Exchange (BSE), MCX Stock Exchange (MCXSX), Depository Participant with the Central Depository Services
(CDSL) and a SEBI-registered Portfolio Manager.

Capstocks also offers commodity services through its


subsidiaries Capstocks Finanacial Services Ltd which is a member
of the Multi-Commodity Exchange of India (MCX) and Capstocks
Commodities Pvt Ltd which is a member of National Commodity
Derivative
Exchange (NCDEX),
National Multi-Commodity
Exchange of India Ltd (NMCE) and National Spot Exchange of India
Ltd (NSEL).

MANAGEMENT

The Company's Management rests on:


Rajendran. V. (Chairman & Managing Director) Engineer by
profession, with in-depth knowledge and experience in market
analysis.
Leela Jeyakumar (Director) Post Graduate with over 18 years
experience in stock broking and the in charge of company's Tamil
Nadu operation since 1992.
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Meera Sahib. B (Director) Post Graduate with LLB & CAIIB and
28 years of experience in officer / executive cadre in a major
Public Sector Bank
Amjad Hydari (Vice President) Post Graduate with more than
14 years experience in various functions of the equity market
brokerage.
Other Directors
Srinivasan S.IAS. (Director)Former Labor Commissioner and
District Collector.
Prema Rajendran (Director) Graduate in Commerce with more
than 12 years experience.
Rajeev Pillai (Executive Director) Engineer By Profession with
wide exposure to International business organisations and
consulting firms. Currently heading the North & West India
Operations of Capstocks with head quarter at Mumbai.
Besides we have an excellent pool of trained & dedicated
professional staff, three fourth of them are certified by NCFM,
NISM, BCSM, BCDM Examinations.

STRATEGIC INTENT

ISO CERTIFICATION

Capstocks has become the first ISO 9001:2008 brokerage in


India to get certification for all stock broking and related financial
service activities including Cash Markets, Derivatives, Internet
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Trading, Depository Services, Portfolio Management Services,
Equity Research and Analysis, NRI Client Cell and Mutual Funds.
The certification was obtained from the renowned United Kingdom
Accreditation Services (UKAS), based on the Assessment by
Moody International Certification Group through ICL Certifications
Ltd.

The certificate was handed over at a function held in


Trivandrum. Mr. Ashok Kumar Rout, Chief Operating Officer of the
Bombay Stock Exchange Ltd., was the Guest of Honour on the
occasion. Mr. Rajendran V, our Managing Director, received the
certificate from Mr. Uwe Saelzle, Director of Moody International
Certification Group, Germany, in the presence of Mr. Sanjeev
Chadha, CEO, ICL Certifications Ltd., handling the Indian
operations of the Moody International Certification Group.

Mr. Dilip Jacob Mathew, our Vice President, handled ISO


9001:2008 implementation as the Management Representative
with assistance from Ms. Sangeetha, Sr. Executuve (QMS), and Mr.
M. Pradeep Kumar, Management Systems Consultant and Trainer.
A dedicated team of Managers and Executives, trained as Internal
Quality Auditors in Capstocks, was involved in the Internal
Assessments and improvement processes.

Commenting on the certification, Rajendran V, our Managing


Director said We spent nearly 15 months to complete the ISO
9001:2008 certification process. There is a sea change in the
organizational efficiency and day-to-day operations in our
Company. The process flow and our organizational structure from
top to bottom have been totally streamlined and the benefits will
definitely be reflected in offering better services with the utmost
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satisfaction to our clients. As a result of ISO 9001:2008
implementation programme, Capstocks - having 75 branches
covering India and elsewhere - has been able to improve
continually its systems, processes and procedures at the Head
Office and its Branches with better review mechanisms.

With the ISO 9001:2008 recognition under our belt, Quality


of Documentation and Communication has improved. Capstocks
will maintain the Quality Management System and also
continually improve the quality of service through regular
Management Reviews and Internal Quality Audits. As part of this
project, emphasis is being given to imparting effective training
and retraining for Capstocks Team Members and systematic
analysis of activities.

QUALITY POLICY

CAPSTOCKS is committed to render the best knowledgebased personalized services in stock broking and related financial
services, complying with all relevant requirements, by continually
improving the competence of manpower and effectiveness of
quality management systems, optimizing technology and
infrastructure, thereby enhancing customer satisfaction.

SERVICE PROFILE

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1.

Online trading

Capstocks has a network of branches with online terminals of


NSE and BSE in the Capital market and Derivative segments. Our
clients are assured of prompt order execution through dedicated
phones and expert dealers at our offices.

2. Internet trading

Capstocks offers Internet trading through this site. You can


trade through the Internet from the comforts of your office or
home, anywhere in the world. Our dedicated IT systems ensure
service up time and speed, making Internet broking through
Capstocks hassle-free.

Using the 'easiest' facility provided by CDSL, our clients can


transfer the shares sold by them online without delivery
instruction slips. Additionally, digitally signed contract notes can
be sent to clients through E-mail.

3. Depository Services

Capstocks is a member of the Central Depository Services


Limited (CDSL), offer depository services with minimum Annual
Maintenance Charges and transaction charges. Account holders
can view their holding position through the Internet. We also offer
the "easiest" facility provided by CDSL (electronic access to
securities information and execution of secured transaction )
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through which clients can give delivery instructions via the
Internet.
4. Derivative Trading

We offer trading in the futures and options segment of the


National Stock Exchange (NSE). Through the present derivative
trading an investor can take a short-term view on the market for
up to a three months perspective by paying a small margin on
the futures segment and a small premium in the options segment.
In the case of options, if the trade goes in the opposite direction
the maximum loss will be limited to the premium paid.

5. Knowledge Centre

Knowledge Centre activities are intended to provide


systematic and structured services mainly to new investors and
also to young aspirant aiming for a career in financial markets.
The centre has three functional areas: the publication Division,
the Training centre, and wealth management advisory service
which provides complete investment solutions to investors
through knowledge based personalized service.

6. Equity Research Department

We have a full-fledged Investment Research & Analysis


Department to help our clients to make investment decisions. Our
clients can get information on any share they hold or plan to
purchase. We publish a monthly newsletter' CAPSTOCKS INFOLINE
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', which contains our views on the latest trends in the markets,
scrip recommendation, tutorials, news items etc. We also issue a
daily newsletter, ' CAPS TREND ', which is available in our site.
Besides we give intraday calls by SMS, chat, etc.

7. Portfolio Management services

Capstocks is a SEBI-approved portfolio manager offering


discretionary and non-discretionary schemes to its clients.
Capstocks portfolio management team keeps track of the
markets on a daily basis and is exposed to a lot of information and
analytic tools which an investor would not normally have access
to. Other technicalities pertaining to shares like dividends, rights,
bonus, buy-back, Mergers and Acquisitions are also taken care of
by us.

8. Commodity Trading
You can trade in commodity futures like gold, silver, crude oil ,
rubber etc. and take advantage of the extended trading hours (10
am to 11 pm ) in commodities trading.

9. Mutual Funds, Bonds etc.


We also offer Mutual Funds and Bonds. You can select from a
wide range of Mutual Funds and Bonds available in the markets
today.

10. NRI CELL

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We have a well-organized NRI Cell functioning exclusively to


meet the requirements of our clients residing outside India. We
are committed to provide them timely assistance by placing their
orders, giving them valuable suggestions concerning their
investments etc. Also we help those NRIs who desire to open
accounts on repatriation basis. Facilities are offered to those
clients who are interested in Internet trading by activating it, in
co-ordination with the e-trading department.

11. Currency Trading

Capstocks is a member of currency derivatives segment of


National Stock Exchange (NSE) and MCX Stock Exchange (MCXSX). Currency Derivatives are a new asset class which was earlier
not permitted for trading to all Indian residents. Currently the
trading is based on four underlying currencies viz., US Dollar,
Euro, Pound sterling, Japanese Yen.

12. Pan Service Agent of UTI

Capstocks & Securities


authorized PAN card service
applications can be submitted
addition to Head office.(
Technopark, and Pattom, in
ICM-UIM POOJAPURA

(India) Pvt. Ltd. has become


agent (PSA) of UTI. Now pan
to any of the following offices, in
Sasthamangalam, Sreekaryam,
Trivandrum) Kollam, Alappuzha,

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Thiruvalla, Ernakulam, Thrissur, Irinjalakkuda, Thodupuzha,
Calicut, Chennai RO, Mangalore, Navi Mumbai, and Nagercoil RO.
Capstocks offers this value added service to our privileged
customers, existing as well as new customers at nominal charge.

CHAPTER 4
ORGANISATION STRUCTURE

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MANAGEMENT

The Company's Management rests on:


Rajendran. V. (Chairman & Managing Director) Engineer by
profession, with in-depth knowledge and experience in market
analysis.
Leela Jeyakumar (Director) Post Graduate with over 18 years
experience in stock broking and the in charge of company's Tamil
Nadu operation since 1992.
Meera Sahib. B (Director) Post Graduate with LLB & CAIIB and
28 years of experience in officer / executive cadre in a major
Public Sector Bank.
Amjad Hydari (Vice President) Post Graduate with more than
14 years experience in various functions of the equity market
brokerage.
Other Directors
Srinivasan S.IAS. (Director)Former Labor Commissioner and
District Collector.
Prema Rajendran (Director) Graduate in Commerce with more
than 12 years experience.
Rajeev Pillai (Executive Director) Engineer By Profession with
wide exposure to International business organisations and
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consulting firms. Currently heading the North & West India
Operations of Capstocks with head quarter at Mumbai.

Besides we have an excellent pool of trained & dedicated


professional staff, three fourth of them are certified by NCFM,
NISM, BCSM, BCDM Examinations.

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MNAGING DIRECTOR
BOARD OF DIRECTORS
VICE PRESIDENT

TRADING
DEP

DELIVERY
DEP

DEPOSITORY
DEP

COMMODITI
ES

SURVEILLAN
CE

EQT
RESEARCH

HOD

HOD

HOD

HOD

HOD

HOD

MANAGER

MANAGER

MANAGER

MANAGER

MANAGER

MANAGER

ASST.MNGR

ASST.MNGR

ASST.MANAG

ASST.MNGR

ASST.MAGR

ASST.MNGR

SR.EXECTV

SR.EXECTV

SR,EXECTV

SR.EXECTV

SR.EXECTV

SR.EXECTV

JR.EXECTV

JR.EXECTV

JR.EXECTV

JR.EXECTV

JR.EXECTV

JR EXECTV

OFC.ASST.

OFC.ASST

OFC.ASST

OFC.AAST

OFC.ASST

CLIENT
RELATN

ACCOUNTS

MARKETING
DEPT

HR DEPT

SYSTEMS

HOD

HOD

CONSULTANT

ASST.MNGR

IT MANAGER

MANAGER

MANAGER

HOD

SR.EXECTV

ASST.MANGE
R

ASST.MANAG
ER

SR.EXECTV

SR.EXECTV

JR.EXECTV

JR.EXECTV

OFC.ASST

OFC.ASST

JR.EXECTV
MANAGE
R
ASST.MG
R

FRANCHIS
EE
MANAGER
REG.MNG
R

SR.EXECUTIVE

JR.EXECUTIVE
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ASST.

ASST.

MNGR

MNGR

NETWORK
ADMINNISTR
A-TOR

SYSTEM
ADMINISTR
A-TOR

An organizational study at capstocks 2014

CHAPTER 5
DEPARTMENTAL ANALYSIS

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FUNCTIONAL DEPARTMENTS IN CAPSTOCKS

For the effective functioning of the manufacturing unit there are


about 11 departments in CAPSTOCKS and they are
1. Trading department
2. Delivery department
3. Depository department
4. Commodity trading
5. Equity research department
6. Surveillance department
7. Client relation
8. Systems
9. Human resource department
10.
Marketing department
11.
Accounts department

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TRADING DEPARTMENT

HEAD OF THE
DEPARTMENT

MANAGER

ASSISTANT MANAGER

SENIOR EXECUTIVE

JUNIOR EXECUTIVE

Functions

The main function of this department is buying and selling of


securities.
Order placing
To give on information to the clients about the shares

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STOCK TRADING

NEAT

NSE is the first exchange in the world to use satellite


communication technology for trading. Its trading system, called
National Exchange for Automated Trading (NEAT), state of the art
client server based application.

SCREEN BASED TRADING

The trading on stock exchanges in India used to take place


through open outcry without use of information technology for
immediate matching or recording of trades. This was time
consuming and inefficient. This imposed limits on trading volumes
and efficiency. In order to provide efficiency, liquidity and
transparency, NSE introduced a nationwide, on-line fully
automated screen based trading system(SBTS) where a member
can punch into the computer the quantities of a security and the
price at which he would like to transact, and the transaction is
executed as soon as a matching sale or buy order from a counter
party is found.

PLACE ORDERS WITH THE BROKER


You may go to the brokers office or place an order on the
phone /internet or as defined in the Model Agreement, which
every client needs to enter into with his or her broker.
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CORPORATE HIERARCHY

CORPORATE MANAGER

BRANCH MANAGER

DEALER
The trading member has the facility of defining a hierarchy
amongst its users of the NEAT system. This hierarchy comprises:
Corporate manager:
The corporate manager is a term
assigned to a user placed
at the highest level in a trading firm. Such a user receives the end
of day reports
for all branches of the trading member. The facility to set branch
order value
limits and user order value limits is available to the corporate
manager.

Branch Manager: The branch manager is a term assigned to a


user who is placed under the corporate manager. The branch
manager receives end of the day reports for all the dealers under
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the branch. The branch manager can set user order value limit for
each of his branch.

Dealer: Dealers are users at the lower most level of the


hierarchy. A dealer can view and perform order and trade related
activities only for oneself and does not have access to information
on other dealers under either the same branch or other branches.

CONTRACT NOTE

Contract note is a confirmation of trades done on a particular day


on behalf of the client by a trading member. It imposes a legally
enforceable relationship between the client and the trading
member with respect to purchase/sale and settlement of trades. It
also helps to settle disputes/claims between the investor and the
trading member. A valid contract note should be in the prescribed
form, contain the details of trades, stamped with requisite value
and duly signed by the authorized signatory. Contract notes are
kept in duplicate, the trading member and the client should keep
one copy each. After verifying the details contained therein, the
client keeps one copy and returns the second copy to the trading
member duly acknowledged by him.

Order Management
Order Management consists of entering orders,
modification, order cancellation and order matching.

Entering Orders

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The trading member can enter orders in the normal market, odd
lot, RETDEBT and auction market. A user can place orders in any
of the above mentioned markets by invoking the respective order
entry screens. After doing so, the system automatically picks up
formation from the last invoked screen. When the user invokes
the order entry screen, the fields that are taken as default are
symbol, series and book type.

Active & Passive Order


When any order enters the trading system, it is an active order" It
tries to find a match on the other side of the books. If it finds a
match, a trade is generated. If it does not find a match, the order
becomes a passive order and goes and sits in the order book.

Order Books
As and when valid orders are entered or received by the trading
system, they are first numbered, time stamped and then scanned
for a potential match. This means that each order has a
distinctive order number and a unique time stamp on it. If a
match is not found, then the orders are stored in the books as per
the price/time priority. Price priority means that if two orders are
entered into the system, the order having the best price gets the
higher priority. Time priority means if two orders having the same
price is entered, the order that is entered first gets the higher
priority. Best price for a sell order is the lowest price and for a buy
order, it is the highest price,
The different order books in the NEAT system are as detailed
below:

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(a) Regular Lot Book: An order that has no special condition
associated with it is a Regular Lot order. When a dealer places this
order, the system looks for a corresponding Regular Lot order
existing in that market (Passive orders). If it does not find a match
at the time it enters the system, the order is stacked in the
Regular lot book as a passive order.

(b) Special Terms Book: Orders which have a special term


attribute attached to it are known as special terms orders. When a
special term order enters the system, it scans the orders existing
in the Regular Lot book as well as Special Terms Book. Currently
this facility is not available in the trading system.
(c) Stop loss Book: Stop Loss orders are released into the
market when the last traded price for that security in the normal
market reaches or surpasses the trigger price. Before triggering,
the order does not participate in matching and the order cannot
get traded. Untriggered stop loss orders are stacked in the stop
loss book. The stop loss orders can be either a market order or a
limit price order. For buy SL order, the trigger price has to be less
than or equal to the limit price. Similarly, for sell SL orders, the
trigger price has to be greater than or equal to the limit price.

Order Types and Conditions


The system allows the trading members to enter orders with
various conditions attached to them as per their requirements.
These conditions are broadly divided into Time Conditions,
Quantity Conditions, Price Conditions and Other Conditions.
Several combinations of the above are allowed thereby providing
enormous flexibility to the users. The order types and conditions
are summarized below:

a)Time Conditions.
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DAY: A DAY order, as the name suggests is an order that is valid


for the day which it is entered. If the order is not executed during
the day, the system cancels order automatically at the end of the
day. By default, the system assumes that orders entered are Day
orders.
IOC: An Immediate or Cancel (IOC) order allows the user to buy or
sell a security as soon as the order is released into the system,
failing which the order is cancelled from the system. Partial match
is possible for the order, and the unmatched portion of the order
is cancelled immediately.

b)Quantity Conditions
DQ: An order with a Disclosed Quantity @Q) allows the user to
disclose only a portion of the order quantity to the market. For
e.g. if the order quantity is 10,000 and the disclosed quantity is
2,000, then only 2,000 is released to the market. After this
quantity is fully matched, a subsequent quantity of 2,000 is
disclosed. Thus, totally five disclosures with the same order
number are shown one after the other in the market.

c) Price Conditions
Market: Market orders are orders for which price is specified as
'MKT' at the time the order is entered. For such orders, the system
determines the price.
Stop-Loss: This facility allows the user to release an order into
the system, after the market price of the security reaches or
crosses a threshold price called trigger price.
Example: If for stop loss buy order, the trigger is Rs.93.00, the
limit price is Rs.95.00 and the market (last traded) price is
Rs.90.00, then this order is released into the system once the
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market price reaches or exceeds Rs.93.00. This order is added to
the regular lot book with time of triggering as the time stamp, as
a limit order of Rs.95.00.
All stop loss orders are kept in a separate book (stop loss book) in
the system until they are triggered.
Trigger Price: Price at which an order gets triggered from the
stop loss book.
Limit Price: Price of the orders after triggering from stop loss
book.

Order Modification
All orders can be modified in the system till the time only during
market hours. Once an order is modified, the branch gets
adjusted automatically. Following is the corporate hierarchy for performing
order modification functionality:
A' dealer can modify only the orders entered by him.
A branch manager can modify his own orders or orders of
any dealer under his Branch.
A corporate manager can modify his own orders or orders of
all dealers and branch managers of the trading member firm.
However, the corporate manager/branch manager cannot
modify order details such that it exceeds the branch order
value limit set for the day. Order modification cannot be
performed by/for a trading member who is suspended or deactivated by the Exchange for any reason.
A buyback having 'BUYBACKORD' in the client account field
cannot be modified to any other client account. Any order
modifications resulting. In price or quantity freeze shall not be
allowed. The user will receive a message "CFO Request Rejected'
for such modification requests.
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Order Cancellation
Order cancellation functionality can be performed only for orders
which have not been fully or partially traded (for the untraded
part of partially traded orders only) and only during market hours
.

Quick Order Cancellation


Quick Order Cancellation (Cancel All) is an extension of Single
Order Cancellation enabling a user to cancel multiple outstanding
orders in various trading books subject to the corporate hierarchy.
The different filters available for cancelling orders by using quick
order cancellation facility are symbol, series, book type, branch,
user, PRO/CLVWHS, client account number and buy/sell. Quick
order cancellation can be performed by invoking the function key
provided and cannot be done from the outstanding orders screen.
If the criteria are not found to be correct by a trading member
then an error message is displayed and the focus is set on the
incorrect field to enable the user to correct it. If the selection
criteria are correct then a message appears on the quick order
cancellation screen stating the number of buy and sell orders to
be cancelled. Quick order cancellation can be done only during
market hours.
ORDER MATCHING
The buy and sell orders are matched on Book Type, symbol,
series, quantity and Price.

Matching Priority
The best sell order is the order with the lowest price and a best
buy order is the order with the highest price. The unmatched
orders are queued in the system by the following priority:
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(a) By Price: A buy order with a higher price gets a higher
priority and similarly, a sell order with a lower price gets a higher
priority.
b) By Time: If there is more than one order at the same price,
the order entered earlier gets a higher priority

Stop Loss Matching


All stop loss orders entered into the system are stored in the stop
loss book. These orders can contain two prices.
Trigger Price. It is the price at which the order gets triggered
from the stop loss book.
Limit Price. It is the price for orders after the orders get
triggered from the stop loss book.
If the limit price is not specified, the trigger price is taken as
limit price for the order. The stop loss orders are prioritized in
stop loss book with the most likely order to trigger first and
least likely to trigger last. The priority is same as that of
regular lot book.

the
the
the
the

The stop loss condition is met under the following circumstances:


Sell Order - A sell order in the stop loss book gets triggered
when the last traded price is the normal market reaches or falls
below the trigger price of the order.
Buy Order - A buy order in the stop loss book gets triggered
when the last traded price in the normal market reaches or
exceeds the trigger price of the order.
When a stop loss order with IOC condition enters the system, the
order is released in the market after it is triggered. Once

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triggered, the order scans the counter order book for a suitable
match to result in a trade or else is cancelled by the system.

Trade Modification

The user can use trade modification facility to request for


modifying trades done during the day. The user can request the
Exchange to modify only the trade quantity field. Moreover, the
new quantity requested must be lower than the original trade
quantity. If the user is a Corporate Manager of a trading member
firm, he can request for trade modification for the trades of any
dealer of the trading members firm and if he is a branch Manager
of a branch, then he can request for trade modification for any
dealer of the branch of the trading member firm. The user can
request for trade modification either from the previous trades
screen or by using the function key provided in the workstation.
Trade Modification Request is sent to the Exchange for approval
and message to that effect is displayed in the message window.
The counterparty to the trade also receives this message. The
counter party then has to make a similar request for the same
modified quantity on the same trading day. Once both the parties
to trade send their respective trade modification requests, the
Exchange either approves or rejects it. The message to that effect
is displayed in the message window. In case a request for trade
modification is approved by the Exchange, the parties to trade
receive a system message confirming the trade modification and
the trade Modification slip is printed at their respective trader
workstations. If the Exchange rejects the trade modification
request, the trade modification rejection slip will be printed at
their respective trader workstations.

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Trade Cancellation

The user can use trade cancellation screen for cancelling trades
done during the day. If the user is a corporate manager of a
trading member firm, he can request for trade cancellation for the
trades of any dealer of the trading members firm and if he is a
branch manager of a branch, then he can request for trade
cancellation for the trades for any dealer of the branch of the
trading member firm. The user can request for trade cancellation
either from the previous trades screen or by using the function
key provided in the workstation. The trade cancellation request is
sent to the Exchange for approval and message to that effect is
displayed in the message window. The counter party to the trade
also receives the message.

The counterparty then has to make similar request on the same


trading day. Once both the parties to trade send the trade
cancellation request, the Exchange either approves or rejects it.
The message to that effect is displayed in the message window.
When a request for the trade cancellation is approved by the
Exchange, the parties to trade receive a system message
confirming the trade cancellation and the trade cancellation slip is
printed at their respective trader workstations. If the Exchange
rejects the trade cancellation request, the trade cancellation
rejection slip is printed at their respective trader workstations.

Internet Broking

SEBI Committee has approved the use of Internet as an Order


Routing System (ORS) for communicating clients' orders to the
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exchanges through brokers. ORS enables investors to place orders
with his broker and have control over the information and quotes
and to hit the quote on an on-line basis. Once the broker's system
receives the order, it checks the authenticity of the client
electronically and then 'routes the order to the appropriate
exchange for execution. On execution of the order, it is confirmed
on real time basis. Investor receives reports on margin
requirement, pa5rments and delivery obligations through the
system. His ledger and portfolio account get updated online.

NSE launched internet trading in early February 2000. It is the


first stock exchange in the country to provide web-based access
to investors to trade directly on the exchange. The orders
originating from the PCs of the investors are routed through the
Internet to the trading terminals of the designated brokers with
whom they are connected and further to the exchange for trade
execution. Soon after these orders get matched and result into
trades, the investors get confirmation about them on their PCs
through the same internet route.

BSE On-Line Trading System (BOLT):


BSE On-Line Trading System, popularly known as the BOLT System
took its genesis in the year 1994, as part of the four-phase
computerization program to create an automated trading
environment. BOLT system aimed at converting the Open Outcry
System of trading to a Screen-based trading system (SBT). BSE
had the requisite knowledge base and virtue of more than 115
year track record in the capital markets; BSE embarked on the
specified project in 1991 and seamlessly completed the fourth
phase in March 1995.

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DELIVERY DEPARTMENT

Head of department

Manager

Assistant executive

Senior executives

Junior executive

Office assistant
The delivery department deals with the settlement of cash market
transactions. The settlement mechanism in Indian securities
market has witnessed significant changes and several innovations
during the last decade. Till recently, the stock exchanges in India
were following a system of account period settlement for cash
market transactions. T+2 rolling settlement have now been
introduced for all securities. The members receive the
funds/securities in accordance with the pay in/pay- out schedules
notified by the respective exchanges' Given the growing volume
of trades and market volatility, the time gap between trading and
settlement gives rise to settlement risk.
Functions

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To ensure timely settlement of trades.
Elaborate margining and capital adequacy standards to
secure market integrity and protect the interests of
investors.

Settlement Cycle
At the end of each trading day, concluded or locked-in trades are
received from NSE by NSCCL. NSCCL determines the cumulative
obligations of each member and electronically transfers the data
to Clearing Members (CMs). All trades concluded during a
particular trading period are settled together. A multilateral
netting procedure is adopted to determine the net settlement
obligations (delivery/receipt positions) of CMs. NSCCL then
allocates or assigns delivery of securities inter se the members to
arrive at the delivery and receipt obligation of funds and
securities by each member. On the securities pay-in day,
delivering members are required to bring in securities to NSCCL.
On pay out day the securities are delivered to the respective
receiving members. Settlement is deemed to be complete upon
declaration and release of pay-out of funds and securities.
Exceptions may arise because of short delivery of securities by
CMs, bad deliveries or company objections on the pay-out day.
NSCCL identifies short deliveries and conducts a buying-in auction
on the day after the payout day through the NSE trading system.
The delivering CM is debited by an amount equivalent to the
securities not delivered and valued at a valuation price (the
closing price as announced by NSE on the day previous to the day
of the valuation). If the buy-in auction price is more than the
valuation price, the CM is required to make good the difference.
All shortages not bought-in are deemed closed out at the highest
price between the first day of the trading period till the day of
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squaring off or closing price on the auction day plus 20o/o,
whichever is higher. This amount is credited to the receiving
member's account on the auction pay-out day.
Bad Deliveries (in case of physical settlement)
Bad deliveries (deliveries which are prima facie defective) are
required to be reported to the clearing house within two days
from the receipt of documents. The delivering member is required
to rectify these within two days. Un-rectified bad deliveries are
assigned to auction on the next day.

Company Objections (in case of physical settlement)


Company objections arise when, on lodgment of the securities
with the company Share Transfer Agent (STA) for transfer, which
are returned due to signature mismatch or for an-v other reason
for which the transfer of security cannot be affected. The original
selling CM is normally responsible for rectifying/replacing
defective documents to the receiving CM as per pre-notified
schedule. The CM on whom company objection is lodged has an
opportunity to withdraw the objection if the objection is not valid
or the documents are incomplete (i.e. not as required under
guideline No.100 or 109 of SEBI Good/Bad delivery guidelines),
within 7 days of lodgment against him. If the CM is unable to
rectify/replace defective documents on or before 2l days, NSCCL
conducts a buying-in auction for the non-rectified part of defective
document on the next auction day through the trading system of
NSE.

Normal Market
In a rolling settlement, trade day is T day, T+1 day andT+2 day
for NSCCL. The trades executed each trading day are considered
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as a trading period and trades executed during the day are
settled based on the net obligations for the day. At NSE, trades in
rolling settlement are settled on a T+2 basis i.e. on the 2nd
working day. Typically trades taking place on Monday are settled
on Wednesday, Tuesdafs trades settled on Thursday and so on

ACTIVITY

DAY

Trading
Rolling settlement

Trading T

Clearing settlement
Custodial services

T+1 working day

Delivery services

T+2
days

working

Settlement services
Security and funds pay in

T+2 working day

Security and funds pay out

T+2
working
days
T+1 closing price

Valuation of shortages based on closing stock


Post settlement
Auction
Bad delivery reporting
Auction settlement
Rectified bad delivery pay-in and pay-out
Re-bad delivery reporting and pickup

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T+3
days
T+4
days
T+5
days
T+6
days
T+8
days

working
working
working
working
working

An organizational study at capstocks 2014


Close out of re-bad delivery and funds pay-in & T+9
pay-out
days

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DEPOSITORY DEPARTMENT

HEAD OF DEPARTMENT

MANGER

ASSISTANT MANAGER

SENIOR MANAGER

JUNIOR EXECUTIVE

OFFICE ASSISTANT
Capstocks is a member of the Central Depository Services (India)
Limited (CDSL), offer depository services with minimum Annual
Maintenance Charges and transaction charges. Account holders
can view their holding position through the Internet. They also
offer the "easiest " facility provided by CDSL (electronic access to
securities information and execution of secured transaction)
through which clients can give delivery instructions via the
Internet.
Functions
To transfers the securities from the pool accounts of
members/custodians to the settlement account of the
clearing agency.

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Depositories
A depository is an entity where the securities of an investor are
held in electronic form. The person who holds a demat account is
a beneficiary owner. In case of a joint account, the account
holders will be beneficiary holders of that joint account.
Depositories help in the settlement of the dematerialized
securities. Each custodian/clearing member is required to
maintain a clearing pool account with the depositories. He is
required to make available the required securities in the
designated account on settlement day. The depository runs an
electronic file to transfer the securities from accounts of the
custodians/clearing member to that of NSCCL. As per the
schedule of allocation of securities determined by the NSCCL, the
depositories transfer the securities on the pay-out day from the
account of the NSCCL to those of members/custodians.

Depository Participant (DP)


The Depository provides its services to investors through its
agents called depository participants (DPs). These agents are
appointed by the depository with the approval of SEBI. According
to SEBI regulations, amongst others, three categories of entities,
i.e. Banks, Financial Institutions and SEBI registered trading
members can become DPs.

Dematerialization is the process by which physical certificates of


an investor are converted to an equivalent number of securities in
electronic form and credited to the investor's account with his
Depository Participant (DP).The trades are settled irrespective of
default by a member and the exchange follows up with the
defaulting member subsequently for recovery of his dues to the
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exchange. Due to setting up of the Clearing Corporation, the
market has full confidence that settlements will take place on
time and will be completed irrespective of possible default by
isolated trading members. Movement of securities has become
almost instantaneous in the dematerialized environment. Two
depositories viz., National Securities Depositories Ltd. (NSDL)' and
Central Depositories Services Ltd. (CDSL) provide electronic
transfer of securities and more than 99% of turnover is settled in
dematerialized form. A11 actively traded scrips are held, traded
and settled in demat form. The obligations of members are
downloaded to members / custodians by the clearing agency. The
members/custodians make available the required securities in
their pool accounts with depository participants (DPs) by the
prescribed pay-in time for securities. The depository transfers the
securities from the pool accounts of members/custodi4ns to the
settlement account of the clearing agency. As per the schedule
determined by the clearing agency, the securities are transferred
on the pay-out day by the depository from the settlement account
of
the
clearing
agency
to
the
pool
accounts
of
members/custodians. The pay-in and pay-out of securities is
affected on the same day for all settlements.

Select banks have been empanelled by clearing agency for


electronic transfer of funds. The members are required to
maintain accounts with any of these banks. The members are
informed electronically of their pay-in obligations of funds. The
members make available required funds in their accounts with
clearing banks by the prescribed pay-in day. The clearing agency
forwards funds obligations file to clearing banks which, in turn,
debit the accounts of members and credit the account of the
clearing agency. In some cases, the clearing agency runs an
electronic file to debit members' accounts with clearing banks and
credit its own account. On pay-out day, the funds are transferred
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by the clearing banks from the account of the clearing agency to
the accounts of members as per the member's obligations. In the
T+2 rolling settlement, the pay-in and pay-out of funds as well as
securities take place Z working days after the trade date.

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Depositories Act, 1996
The Depositories Act, 1996 provides for the establishment of
depositories in securities with the objective of ensuring free
transferability of securities with speed, accuracy and security by
(a) making securities of public limited companies freely
transferable subject to certain exceptions; (b) dematerializing the
securities in the depository mode; and (c) providing for
maintenance of ownership records in a book entry form. In order
to streamline the settlement process, the Act envisages transfer
of ownership of securities electronically by book entry without
making the securities move from person to person. The Act has
made the securities of all public limited companies freely
transferable, restricting the company's right to use discretion in
effecting the transfer of securities, and the transfer deed and
other procedural requirements under the Companies Act have
been dispensed with

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COMMODITY TRADING

Head of the
department
Manager

Assistant manager

Senior manager

Junior manager

Office assistant
Functions
Trading of commodities
Account Opening
Commodity
FCRA Forward Contracts (Regulation) Act, 1952 defines goods"
as "every kind of movable property other than actionable claims,
money and securities". Futures trading is organized in such
goods or commodities as are permitted by the Central
Government. At present, all goods and products of agricultural
(including plantation), mineral and fossil origin are allowed for
futures trading under the auspices of the commodity exchanges
recognized under the FCRA.

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Commodity Exchange
A Commodity Exchange is an association, or a company of any
other body corporate organizing futures trading in commodities.
In a wider sense, it is taken to include any organized market place
where trade is routed through one mechanism, allowing effective
competition among buyers and among sellers - this would include
auction-type exchanges, but not wholesale markets, where trade
is localized, but effectively takes place through many non-related
individual transactions between different permutations of buyers
and sellers. Commodities exchanges include Chicago Board of
Trade, London Metal Exchange, New York Mercantile Exchange,
Multi Commodity Exchange .The time period of trading is 9am3.30pm.

Trade Account
To trade in the Futures market the client has to register himself
and open an account with the broking organization known as
trading account. Trading Lot: Each commodity should be sold and
bought in the Futures market at a specific quantity. These
quantities are called trading lots fixed by the exchanges. For
rubber and pepper it is 1 ton, while it is I quintal for cardamom.
Volatility: A measurement of the change in price over a given time
period.

Warehouse Receipt: When the commodity sold in the Futures


market is taken to the warehouse, the client receives a legal
document from the warehouse known as warehouse receipt. This
document has a trade value.
Futures Contract

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A derivative instrument, Futures is a type of forward contract.
Futures are contracts to sell / buy standardized financial
instruments or commodities on a specified future date at an
agreed price. Futures contracts are used generally for protecting
against adverse price fluctuation.
Benefits of trading in commodity futures
Futures trading in commodities results in transparent and fair
price discovery on account of large scale participation and reflects
views and expectations of wider section of people related to that
commodities.
Producers,
kaders
and
processors,
exporters/importers get an online platform through different
exchanges for price risk management. It providers a platform for
producers to hedge their positions according to their view of the
prices
How is Future Prices Determined
Futures prices evolve from the interaction of bids and offers
emanating from all over the country - which converge in the
trading floor or the trading engine. The bid and offer prices are
based on the expectations of prices on the maturity date.

Regulatory body for commodities trading


The Forward Markets Commission (FMC) is the regulatory body for
commodity futures/forward trade in India. The commission was
set up under the Forward Contracts (Regulation) Act of 1952. It is
responsible for regulating and promoting futures/forward trade in
commodities. The FMC is headquartered in Mumbai while its
regional office is located in Kolkata.

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There are three national Commodity Futures market exchanges in
India. The Futures Market Commission (FMC), which is under the
Central Government supervises and regulates the working of all
these commodities market. National Multi Commodity Exchange
of India Limited (NMCE), Ahmadabad. Promoted by Central
Warehousing Corporation, National Agricultural Cooperative
Marketing Federation of India Limited, Gujarat Agro Industries
Corporation Limited, Gujarat State Agricultural Marketing Board,
National Institute of Agricultural Marketing, Neptune Overseas
Limited and Punjab National Bank.

Multi Commodity Exchange of India Limited (MCX), Mumbai.


Promoted by Financial Technologies (India) Ltd, State Bank of
India, Union Bank of lndia, Bank of India, Corporation Bank and
Canara Bank.

National Commodity and Derivatives Exchange Limited (NDCEX),


Mumbai. Promoted by ICICI Bank Limited, Life Insurance
Corporation of India, National Bank for Agriculture and Rural
Development, and National Stock Exchange of India Limited,
Punjab National Bank, CRISIL Limited, lndian Farmers Fertiliser
Cooperative Limited and Canara Bank.

Products

Oil seeds
Castor Seed, Copra, Cotton Seed, Cumin Seed (Jeera), Groundnut,
Linseed, Rape Avlustard seed, Rape Seed-42, Safflower, Sesame
Seed, Soyabean , Sunflower seed , Yellow Soybean Meal
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Oils
Castor Oil ,Coconut Oil ,Cotton Seed Oil ,Groundnut Oil, Linseed
Oil, Rape/Mustard Seed Oil ,sunflower seed Oil ,Sesame seed
Oil ,Soybean Oil, Sunflower seed Oil .Crude Palm Oil ,RBD
Palmolein ,Rice bran Oil ,Vanaspati

OiI cakes
Castor Oilcake, Coconut Oilcake, Cotton Seed Oilcake ,Groundnut
Oilcake,Linseed Oilcake, Rape/Mustard Seed Oilcake ,Safflower
seed Oilcake, Sesame Oilcake, Soybean Oilcake, Sunflower seed
Oilcake

Metals
Aluminium, Copper, Gold
(
1
Zinc

00Gms),KiloGold,Lead,Nickel,Silve,SteelFlat,Steell,ong,Tin,

Energy
Crude oil, Furnace oil, Natural gas
Spices
Pepper, Cardamom, Turmeric, Red Chilli
Pulses
Gram, Tur/Arha, Urad, Moong, Masoor, Yellow Peas
Others
Rubber, Sacking, Sugar, Gur, Guar seed, Bandani, Wheat, Rice,
Raw Jute, Kapas
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Medium Staple Cotton, Long Staple Cotton, Cashew Kernel, Maize

Futures market helps AII


Futures contracts perform two important functions:
Price Discovery
Price Risk Management
Farmers
Efficient Price Discovery/Forecast made b3r the exchange
will enable farmers decide cropping pattern and investment
on inputs.
Price Stability resulting from equilibrium in supply and
demand for a commodity would be possible through
exchanges.
Get an extensive market opened for them.
Get opportunity to trade, knowing the national and
international trends and standards.
Can sell the commodity to the customer without any agents.
Can decide the market even before harvest.
Get an opportunity to gain profit by spending only a small
percentage of the actual commodity price.
There is an opportunity to keep the commodity in the
warehouse and use the warehouse receipt to deal with
financial needs, as it is an endorsable document. Can avoid
deliberate decrease in price in the name of quality.
Farmers can trade by asking the help of the experts in
trading organizations even if they are computer illiterate.

Traders
Can trade by spending only the margin amount.
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Can sell the commodities that he buys from the ready
market and can rescue himself from the loss happening from
price fall.
For those who have kept their commodity in the Central
Warehouse, loans are available on the basis of the stock. The
benefit is that you can keep the commodity somewhere
without blocking the working capital in the stock.

Consumer, Industrialist & Exporters


Can be sure that the commodity is available when they
require it.
Can calculate the price since it is predetermined and can
arrange everything according to that.
Can buy goods without agents.
Can buy them even while sitting in their office.
Can be assured the quality of the good.
Commodities can be purchased with only margin amount
instead of giving the whole price.
Market influencing Factors for commodity Markets

GOLD
Above ground supply from sales by central banks, reclaimed
scrap and official gold loans
Producer / miner hedging interest
World macro-economic factors - US Dollar, Interest rate
Comparative returns on stock markets
Domestic demand based on monsoon and agricultural output
SILVER

Price movements of other metals


Income level of the rural sector of the economy

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Available supply verses Fabrication demand
Fluctuation in deficits and interest rates
Inflation
ALUMINIUM

Domestic demand and supply


International prices
Interference of government and various associations
Import duties
Other economic activities in the world
Price fluctuations of the input materials like power, freight

COPPER
Price fluctuations of copper in London Metal Exchange
Production level of copper in the world
Growth prospects of the major copper consuming countries
of the world
Growth prospects of the various consuming sectors
NICKEL

Discovery of new mines


Situation in the various industries that contribute to the
demand of the metal
Rise in the world stainless steel

ZINC

Level of stocks with London Metal Exchange


Fluctuation in the world demand for zinc
Growth rate of the zinc producing countries
changes in the prices of the other substitute metals
Funds in the zinc sector

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CRUDE OIL

Production of the major oil producing countries


various climatic or political supply fluctuations
World oil demand
Fluctuations in the value of dollar
Imports from various world oil organizations like API, DOE
Refinery fire

NATURAT GAS

Demand and supply scenario of OPEC nations


Fluctuation in the value of dollar
Demand level from the importing countries
Weather conditions in the gas producing countries
Domestic demand from the various sectors of the
country

EQUITY RESEARCH DEPARTMENT

HEAD OF DEPARTMENT

MANAGER

ASSISTANT MANAGER

SENIOR MANAGER

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Functions
The Company has a full-fledged Investment Research & Analysis
Department to help their clients to make investment decisions.
Gives information on any share the clients hold or plan to
purchase.
Publish a monthly newsletter' CAPSTOCKS INFOLINE' which
contains their views on the latest trends in the markets, scrip
recommendation, tutorials, news items etc.
Issue a daily newsletter, ' CAPS TREND'.
The department provides classes for clients regarding the
current shares.

The Equity Research Department is also deals with the services


like Portfolio Management & NRI Cell

Portfolio Management Services

Capstocks is a SEBI approved Portfolio Manager. Clients can rely


on the expertise of the team of expert fundamental and technical
analysts to make investment decisions for them. The company is
strong on equity analysis and it has been one of the strengths of
the company.
Capstocks is a SEBl -approved portfolio manager offering
discretionary and non-discretionary schemes to its clients.
Capstocks portfolio management team keeps track of the markets
on a daily basis and is exposed to a lot of information and analytic
tools which an investor would not normally have access to. Other
technicalities pertaining to shares like dividends, rights, bonus,
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buy-back, Mergers and Acquisitions are also taken care of by the
company.
In today's fast moving world it is not at all possible or intelligent
to do all personal investments on your own. One cannot keep
pace with the fast moving markets and information flow on a day
to day basis" This is where a Portfolio Manager like Capstocks
comes into the picture. Capstocks portfolio management team
keeps track of the markets on a daily basis and has at its disposal
a lot of information and analytic tools which an investor would not
normally have. Minimum Portfolio amount should be Rs.5 lakhs rs
as SEBI rules stipulate this minimum amount. You can also give
your existing shares as capital and the same will be valued at
market rate.

Investment Objective
The investment goal is to maximize returns through intelligent
stock picking and analysis. The main approach is to invest in a
mix of securities comprising of front line stocks, mid cap stocks
and identified growth stocks.

Management Fee Structures


(1) Option I
3 %annual fee is debited quarterly on average daily NAV of the
Portfolio.
(2) Option II
1% Annual Fee is debited quarterly on average daily NAV.
Additionally 20% of profit is taken as fees on profits above 10%.
This charge on profit is calculated after deducting 1olo annual
fees and other charges payable to Capstocks. This charge on
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profit will be charged at the end of the financial year or
termination of the agreement with Capstocks whichever is earlier.

Account opening Procedures


The client has to submit a completed account opening form, duly
signed agreement form, copy of Pan card, Photograph, proof of
identity and bank details.

Client Reporting
The client can find out the NAV of their portfolio and how their
investments are faring on a daily basis through email. Where
email facility is not available" company will send a biweekly report
by post, or the information can be made available anytime from
office on request.

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NRI CELL
Capstocks have a well-organized NRI Cell functioning exclusively
to meet the requirements of their clients residing outside India.
They are committed to provide them timely assistance by placing
their orders, giving them valuable suggestions concerning their
investments etc. Also they help those NRI's who desire to open
accounts on repatriation basis. Facilities are offered to those
clients who are interested in Internet trading by activating it, in
co-ordination with the e-trading department'
Account Opening:
The Company takes care of all the paper work and procedures
involved in opening NRI client accounts and bank accounts on
portfolio investment scheme.
Order execution and related reporting: NRI clients have the
option for registering for internet trading facility or they can
execute their orders through email, sms or telephonic
communication. NRI clients can know their financial balances,
trade confirmations and holdings directly from the NRI cell.
Online options available: Capstocks have exploited modern
technology to offer NRI clients online order execution through our
internet trading facility, online client back office and online d p
holdings whereby clients can see their financial balances and dp
holdings online.

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SURVEILLANCE DEPARTMENT
Head of the department

Manager

Assistant manager

Senior manager

Junior executive

Office assistant
A sound risk management system is integral to an efficient
settlement system. NSCCL has put in place a comprehensive risk
management system, which is constantly monitored and
upgraded to pre-empt market failures. It monitors the track record
and performance of members and their net worth; undertakes online monitoring of members' positions and exposure in the market
collects margins from clients and automatically disables members
if the limits are breach.

Functions
To keep companys fund flow and equilibrium
To protect the customer fund.

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In risk management, the online position monitoring system
monitors the clients open position & margins on a real time basis.
The online position monitoring system generates alerts whenever
the margin of a member reaches the pre determined performance
of the capital deposited by the client.

CLIENT RELATION
Head of the department

Manager

Assistant manager

Senior manager

Junior executive

Office assistant
Functions
Account opening
Trading account modification (address, ph.no., bank details,
mail id)
To handle customer grievances and direct them to the
specific department
To provide application of IPO
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Keep in touch with the clients
There are two types of accounts,
1. Trading account
2. Demat account

To open a trading account there should be a photo, Bank proof,


PAN card &Address proof (Passport, ration Card, Driving License,
voters ID, Bank Passbook/Statement ). The application form
consist of Member -Client Agreement NSE,
Member-Client
Agreement BSE,Tripartite agreement between stock broker
&client-NSE, Combined risk disclosure document for currency
derivatives segment(NSE/MCX-SX),Member client agreement for
internet trading-NSE, Member client agreement for internet
trading-MCX-SX.
To open a demat account there should be a photo, Bank proof PAN
card,Address proof ,nominees photo& nominees cancelled cheque
leaf. The application form consist of Nomination form, Agreement
between a Participant and a Person seeking to open a Beneficial
Owner's Account, DP Tariff Card, Power of Attorney.
This department is also helpful to take PAN cards.

Pan Service Agent of UTI


Capstocks & Securities (India) Pvt. Lid. has become authorized
PAN card service agent (PSA) of UTL Capstocks offers this value
added service to their privileged customers, existing as well as
new customers at nominal processing charges.

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SYSTEMS DEPARTMENT
IT MANAGER

ASSISTANT
MANAGER

ASSISTANT
MANAGER

NETWORK
ADMINISTRA
TORR

SYSTEM
ADMINISTRAT
OR

FUNCTIONS

Computer services and networking


To connect all branches and head office.
Facilitate internet trading
Maintaining virtual date base

For a Share Broking firm the system department has a very bring
role to play Trading is the main process in this type of company
and for this purpose the software ODIN is using. All the branches
are connected to the head office and whatever doing in the
branches, using for the transmission.
4 Type of connectivity is there
1. A SAT
2, VPN [Virtual Private Network]

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3. MPLS (Physical lines are using)
4. LAN

HUMAN RESOURCE DEPARTMENT

Assistant manager

Senior executives

Junior executives
Functions

Recruitment & Selection


Training & Development
Wages and salary administration
Promotion
Statutory facilities providing

The Recruitment process is done by both internal method and


external method. The employee referrals is considering for the
process of Recruitment. Now the H.R department looks forward to
outsourcing also.
The first step of selection is a written test. An interview is then
conducted by the HR Manager for those who succeed in the
written test. Induction program will be given to candidates. They

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will be provided on the exam training and 6 month probation
period. After that they will be appointed permanently.
The training is done by the internal trainer sometimes they
depends on the external trainer also. There are 3 levels of Training
Managerial training: The training is given for the managers.
Induction: The training given for the fresher's.
Exam training: The terminals are allotted to Capstocks by
the exchange on the basis of the exam certificate. So the
training is very important.The details of exams are given
below.

Exam

Validity

CAPITAL MARKETDEALTRS MODULE (capital


Market)

NISM VIII EQUITY AND DERIVATIVES


NISM VII SORM

3
3
3

NCDEX (Commodity)

MCX (Commodity)

NISM (Currency Derivative)


Promotion is based on the seniority, eligibility for post,
efficiency, skill qualification etc' the management decides
whether to fill a post by outside recruitment or through
promotion. The transfers are very often.
LEAVE POLICY

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Capstocks follows a systematic method for deciding holidays in a
year. National holidays such as Jan26, May l, Aug 15, oct2 etc are
considered as the Holidays. The remaining holidays are decided
by management.
Casual leave
12 working days. Maximum 3 casual leave in a month
subject to prior approval .
Medical leave
6 working days maximum. Medical certificate plus leave
application is required leave exceeding 2days. Within 2 days
self confirmation only required.
Privilege leave
Minimum 3days leave is available to an employee after
giving 30days prior notice.
Encashment of leave
On December 31st excess unutilized leave accumulated over
45 days may be encased.
Maternity leave
12 weeks or 84 days paid leave is available for women
employees.
Abortion leave
6 weeks or 42days paid leave.

Performance Appraisal:
Performance appraisal is done on the basis of certain factors such
as job knowledge, job responsibility, quality & quantity of work,
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cost consciousness, organizing ability,
punctuality, problem
solving ability etc. performance appraisal goes through three
steps i.e. first appraisal by employee, then appraisal by the rater
and reviewed by the head of the department. Calculation of
appraisal score of employee done based on five point rating
system. The final rating is done by the rater. Counseling is also
given for low level performers.

Issue Performance appraisal form to employees.


Self appraisal by the employee.
Appraisal by the Rater.
Review by Department Head. Calculation and appraisal
scores of each
employees in personal interviews.
Counsel employees for improved performance.

MARKETING DEPARTMENT
.
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MARKETING Page
CONSULTANT

MANAGER
Franchisee
AssistantSenior
Regional
HOD
Junior
manager
manager
manager
manager

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A detailed study in the Marketing Department is done. The


efficient marketing Department is the corner stone for success for
every organization. In Capstocks marketing department is under
the control of HOD (Marketing). The activities of this Department
are directly reported to the MD. This department identifies the
customers, interact with them and find out their needs. Marketing
management is a pre requisite for the successful operation of any
business enterprise.

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Functions

Policy making &implementation


New client addition
Prepare workout schemes
To increase volume by marketing
Conduct promotional activities

More than 50 employees are working in this department. They


follow personalized mode of operation. In Kerala the working of a
share market firm is a risky game because the mindset of the
people is very conservative comparing with the other state of
India. The people in Kerala are unaware about share market and
they are not ready to take risk. The investment habit is also less.
The marketing department has to work hard to make awareness
among people especially in Kerala.

For this purpose the marketing department is conducting the


promotional activities like Advertisements, Road shows,
Awareness programmes etc. The awareness programmes includes
investor awareness programmes &the students awareness
programmes. By investor awareness programmes the company
can retain & increase investment habit of the client. And also
company can give suggestions about what would be the right
choice of the investment. Students awareness programmes are
conducting at colleges to increase their investment habits. The
main competitors of the company are GEOJIT, JRG Securities
HEDGE Equities etc.

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ACCOUNTS DEPARTMENT

HEAD OF THE
DEPARTMENT
Manager

Assistant executive

Senior manager

Junior manager
Money is the lifeblood
of any
organization as it is required to
Office
assistant
purchase raw materials and machines, to pay wages and salaries
etc. the financial statement of the company is prepared under the
convention accrual basis as a going concern.

Functions
The main functions of Finance Department come mainly are
categories, they
Cash Receipts /PaYments
Bank Receipts / Payments
Finalizatian

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Cash Receipts/ payments
Withdrawl Receivel Payment of cash
Settlement of tax, temporary salary, interest advances
Bank receipts/ Payments

Amount transter vouchers


Writing of Cheque
Remittance of all reeoveries made from salary
Preparation of bank reconciliation statement
Generating bank books

Finalization

Analysis of ledger
Rectification of error
Adjusting and clearing entries
Assisting internal Audit
Assisting statutory audit
Preparation of Trial balance, P&L accountant and Balance
sheet

In a share broking firm the accounting process is entirely different.


They accept only cheques. As per the SEBI rule any credit balance
from client's trading account
should be transferred to the
client's bank account in quarterly basis.

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CHAPTER 6
SWOT ANALYSIS

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SWOT ANALYSIS is a systematic analysis to understand the


business environment. SWOT means analysis of strength,
weakness, opportunity and threat affecting the business. Strength
is the inherent capacity which a business can use against its
competitors. Weakness is an inherent limitation or constraint
which creates strategic disadvantages. An opportunity is a
favorable business condition. A threat is an unfavorable business
condition that creates risk.

Strength
Good relation between employees and top management
Good working conditions
An excellent pool of trained staffs, three forth of them is
certified by NISM, MCX, NCDEX, NMCE examinations.
Capstocks is the second largest Kerala based stock broking
company.
Efficient quality system awarded with ISO certificate.
Good training and induction program for workers

Weakness

Less media advertisements


Less focus on northern region of India
Debts are not with appropriate physical proximity
Market fluctuations

Opportunity
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Rising income levels of people


The wide spread business operations
Awareness of public about share
potentials
Use of appropriate technology

market

Threat

Heavy threat from rival firms


Market fluctuations
Unawareness of people about share market

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CHAPTER 7
FINDINGS AND CONCLUSION

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FINDINGS

Some of the major things that came into notice are


mentioned below
Well disciplined staff and employees
Effective attendance system
Well established Employees welfare policies
Good relation between top management and
employees
The company has a very good customer retention
policy
Company is using past references as their promotion
strategy.

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CONCLUSION

As my experience I would like to say that the study was


very beneficial. I could get to know how share market is
working, how the trading activities are actually taking
place and how the brokers act as intermediary between
the stock market and investing public.

The company is providing wide range of quality services


to their customers. They are very successful in customer
retention and they are using it as their success mantra.
The labor turnover is very low as they are maintaining
good relation with employees. Reference by existing
clients is the marketing strategy they are using. In this
field trust of the clients is the most important thing.

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An organizational study at capstocks 2014

REFERENCES

Securities Laws and Compliances (Institute


company Secretaries of India)
Umasekaran, Research methods for business
M.Y.Khan, Financial services

WEBPRTALS

www.capstocksindia.com
www.bse-india.com
www.cdslindia.com
www.sebi.com
www.nse-india.com

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