INTRODUCTION OF THE STUDY

Online trading is a service offered on the internet for purchase and sale of shares. In the
real world you place orders on your stockbroker either verbally (personally or telephonically)
or in a written form (fax). In online trading, you will access a stockbrokers website through
your internet enabled PC and place orders through the brokers internet based trading engine.
These orders are routed to the stock exchange without manual intervention and executed
thereon in a matter of a few seconds.
The net is used as a mode of trading in internet trading. Orders are communicated to the
stock exchange through website. This new access by the trading public to low-cost
transactions and cutting-edge, real-time market information that formerly belonged only to
brokers has opened up extraordinary new investment opportunities as well as a crucial need
for state-of- the-art information. It is exactly these new-market investment services
that Tradetrek.com specializes in satisfying.
In, the past, investors had to call up their brokers and place an order on the telephone. The
broker would then enter the order in their system which was linked to trading floors and
exchanges. With the advent of the internet, investors can now enter orders directly online, or
even trade with other investors via Electronic Communication Networks (ECN). Some orders
entered online are still routed through the broker allowing agents to approve or monitor the
trades. This step assists in the protection of both the client and brokerage firm from unlawful
or incorrect trades which could affect the clients portfolio or the brokers license
.
1

OBJECTIVES OF THE STUDY

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

NEED OF THE STUDY

The present study to review the online trading procedure a case study of ONLINE
TRADING at SHAREKHAN., as the exchange has changed its trading from the outcry
mode to online trading on 15th February 2012, there is need to assess the performance of the
capital market.

SCOPE OF THE STUDY

3

Online Trading is an internet based investment activity which eliminates the association of a
broker. Anyone who has a computer, enough money to open an account and reasonable financial
history has the ability to invest in the market. Nowadays there are many online trading
companies working as portals for the biggest stock houses like the National stock exchange and
the Bombay Stock Exchange.
The person has to get registered with the online trading portal and get into into an agreement
with the company to trade in different kinds of securities by accepting the terms and conditions.
The online trading portals are connected to the stock exchanges and the assigned banks.

IMPORTANCE OF THE STUDY

4

The importance of online trading is that it allows more individuals enter and
influence the market. Whereas in the past, only those who could afford a broker,
who knew of one and how to access one, would be able to trade in the markets,
online trading allows everyone with access to a computer to do the same.
Online trading lowers the barriers to entry for individuals who want to invest and
trade. The costs, fees, and initial capital required can be lower than what would cost
trading offline

Trading at different exchanges has never been without glitches. It has made a lot of
billionaires, as well as bringing many rich people onto roads. It used to be much
more difficult in past, one of the most challenging problems was inability of the
stock traders to make up something useful of the information generated on per
second basis from the ongoing trade. This not only slowed down the trading activity,
but also resulted into huge losses. Not all the traders were in a position to make the
right decisions at the right time.

Online trading tools have revolutionized the industry; it has made a real difference
in the investors earning ability. At the beginning when these tools came into
existence, many critics were concerned about their ability to make any impact on
the way online trade was carried out. The most important challenge to tackle was
that these trading tools were fed into and they didnt do any real time processing. It
compromised the ability to make contributions in active trades by the traders. Now,
the new tools have changed the trend for good. These tools are connected with the
stock exchange.

RESEARCH METHODOLOGY

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

Primary data:

This method includes the data collected from the personal

interaction with authorized members of Sharekhan Securities limited.

Secondary data: The secondary data collection method includes:

The lectures delivered by the superintendents of respective departments.

The brochures and material provided by Sharekhan Securities limited.
The data collected from the magazines of the NSE, economic times, etc.
Various books relating to the investments, capital market and other
related topics.

LIMITATIONS OF THE STUDY

The study is confined to online trading procedure only. Problems of listing

are not covered due to limited time and to keep the study in manageable
limits.

The data is collected from the primary and secondary sources and thus is subject to
slight variation than what the study includes in reality.

Hence accuracy and correctness can be measured only to the extend of what the sample
group has furnished.

The project is limited to only 45 days.

The project is limited to share khan stock broking, Himayathnagar branch only.

REVIEW OF LITERATURE
OUTCRY SYSTEM

The broker has to buy or sell securities for which he has received the orders. For
this, the broker or his authorized representatives goes to the stock exchange.
This method is called the open outcry system. Basically the brokers shout while
buying or selling the securities. The floor of the stock exchange is divided into a
number of markets also known as post pit or wing based on particular securities
dealt there.
In the post pit or wing, the broker using open outcry method makes an offer or
bid price. For making the necessary bargain, he quotes his purchase or sale
price, also known as offer or bid price. The dealer, to whom the price is quoted,
quotes his own price when the quotation of the dealer suits the broker, he may
loose the bargain. If he is not satisfied with the quote price, he may turn to some
other dealer. On the close of the bargain, the dealer as well as the broker makes
a brief note of the particulars of the deal. Such notes are made on some pad and
on it the number of shares, the price agreed upon, the name of the party, what
membership number etc., are noted.

DISADVANTAGES OF OUTCRY SYSTEM:

It lacks transparency.

The scope of manipulation, speculation and mal practice is more.

Signal were more important in the outcry system any member who could not
interpret the buy/sell signal correctly often landed himself in disaster
situation.

In audibility was another disadvantage of the outcry system.

Due to the above disadvantages of the outcry system the SHAREKHAN has
shifted from outcry system to online trading from February 29 th 1997.

MANUAL TRADING

Trading procedure before introduction of online trading

Trading on stock exchanges is officially done in the trading ring. In the trading
ring the space is provided for specified and non-specified sections, the members
and their authorized assistants have to wear a badge or carry with them an
identity card given by the exchange to enter the trading ring. They carry a sauda
book or confirmation memos, duly authorized by the exchange and carry a pen
with them. The stock exchanges operations are floor level are technical in nature
.Non-members are not permitted to enter in to stock market. Hence various
stages have to be completed in executing a transaction at a stock exchange .The
steps involved in this method of trading have given below:

Choice of broker:
sell shares and transact business, have to act through member brokers only.
They can also appoint their bankers for this purpose as per the present
regulations.

Placement of order:
The next step is the The prospective investor who wants to buy shares or the
investors, who wants to placing order for the purchase or sale of securities with a
broker.
The order is usually placed by telegram, telephone, letter, fax etc or in person.
To avoid delay, it is placed generally over the phone. The orders may take any

one of the forms such as At Best Orders, Limit Order, Immediate or Cancel Order,
Limited Discretionary Order, and Open Order, Stop Loss Order.

Execution of order or contract:

Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30
P.M on all working days Monday to Friday, and a special one-hour session on
Saturday.
The members or the authorized assistants have to wear a badge given by the
exchange to enter into the trading ring. They carry a sauda Block Book or
conformation memos, which are duly authorized by the exchange when the deal
is struck; both broker and jobber make a note in their sauda block books. From
the sauda book, the contract notes are drawn up and posted to the client. A
contract note is written agreement between the broker and his clients for the
transaction executed.

Drawing Up and Bills:

Both sale and purchase bills are prepared along with the contract note and it is
posted on the same day or the next day. This in a purchase transaction, once the
shares are delivered to the client effects payment for the purchases and pays
the stamp fees for transfer, a bill is made out giving the total cost of purchase,
including other expenses incurred by the broker in the price itself. With this, the
process ends.

DEMATERLIZATION:

10

Dematerialization is the process by which physical certificates of an investor are

converted to an equipment number of securities in electronic from and credited
in the investor account with his DP. In order to dematerialize the certificates, an
investor has to first open an account with a DP and then request for the
Dematerialization Request Form, which is DP and submit the same along with
the share certificates. The investor has to ensure that he marks Submitted for
Dematerialization on the certificates before the shares are handed over to the
DP for demat.
Dematerialization can only be done to those certificates, which are already
registered in your name and belong to the list of securities admitted for
Dematerialization at NSDL.

Most of the active scrips in the market including all the scrips of S&P CNX NIFTY
and BSE SENSEX have already joined NSDL. This list is steadily increasing.
Briefly, the process is as follows: after completion of transfer, the investor gets
the option to dematerialize such shares. Investors willing to exercise this option
sends a Demat request along with the option letter sent by the company to his
DP. The company or its R&T agent would confirm the Demat request on its
receipt from the DP to reduce risk of loss in transit.
Dematerialized shares do not have any distinctive or certificate numbers. These
shares are fungible-which means that 100 shares of a security are the same as
any other 100 shares of the security. Odd lot shares certificates can also be
dematerialized.
Dematerialization normally takes about fifteen to thirty days. To get back
dematerialized securities in the physical form, request DP for Rematerialization
of the same is made.
Rematerialization is the process of converting electronic shares in to physical
shares.

11

Benefits of Demat:

It reduces the risk of bad deliveries, in turn saving the cost and wastage of

time associated with follow up for rectification. This has lead to reduction in
brokerage to the extent of 0.5% by quite a few brokerage firms.

In case of transfer of electronic shares, you save 0.5% in stamp duty. You

avoid the cost of courier / notarization.

You can receive your bonuses and rights issues into your DA as a direct

credit, this eliminating risk of loss in transit.

You can also expect a lower interest charge for loans taken against Demat

shares as compared to loans against physical shares.

There is no lost in transit, thus the overheads of getting a duplicate copy

in such circumstances is reduced.

RBI has also reduced the minimum margin to 25% for loans against

dematerialized securities as against 50% for loans against physical securities.

ONLINE TRADING

Before getting in to the online trading we should know some things about the internet, ecommerce and etc.
1) What is Internet?

Internet is a worldwide, self-governed network connecting several other smaller networks

and millions of computers and persons, to mega sources of information. This technology
shrinks vast distances, accelerating the pace of business reforms and revolutionizing the way
companies are managed. It allows direct, ubiquitous links to anyone anywhere and anytime
to build up interactive relationships.
A combination of time and space, called the Internet promises to bring
unprecedented changes in our lives and business. Internet or net is an interconnection of computer communication networks spanning the entire globe,

12

crossing all geographical boundaries. It has re-defined the methods of

communication, work study, education, business, leisure, health, trade, banking,
commerce and what not it is virtually changing every thing and we are living in
dot.com age. Net being an interactive two way medium, through various
websites, enables participation by individuals in business to business and
business to consumer commerce, visit to shopping arcades, games, etc. in cyber
space even the information can be copied, downloaded and retransmitted.

The use of Internet has grown 2000 percent in last decade and is currently
growing at 10 percent per month. In India, growth of Internet is of recent times.
It is expected to bring changes in every functional area of business activity
including management and financial services.
It offers stock trading at a lower cost. Internet can change the nature and
capacity of stock broking business in India.

2. E-commerce
Electronic commerce is associated with buying and selling over computer
communication networks. It helps conduct traditional commerce through new
way of transferring and processing of information. Information is electronically
transferred from computer to computer in an automated way. E-commerce refers
to the paperless exchange of business information using electronic data inter
change, electronic technologies. It not only reduces manual processes and paper
transactions but also helps organization move to a fully electronic environment
and change the way they operated.

13

PCs and networking attempts to introduce banks of the tools and technologies
required for electronic commerce. The computers are either workstations of
individual office works or serves where large databases and information reside.
Network connects both categories of computers; the various operating systems
are the most basis program within a computer. It manages the resources of the
computer system in a fair and efficient manner.
Now we can enter in to the concept known as online trading.
In the past, investors had no option but to contact their broker to get real time
access to market data. The net brings data to the investor on-line and net
broking enables him to trade on a click of mouse. Now information has become
easily accessible to both retail as well as big investor.

EVOLUTION OF BROKING IN INDIA:

The evolution of a broking in India can be categorized in three phases

Stockbrokers will offer on their sites features such as live portfolio

manager, live quotes, market research and news, etc. to attract more
investors.

Brokers will offer online broking and relationship management by

providing and offering analysis and information to investors during broking

14

and non-broking hours based on their profile and needs, i.e. customized
services.

Brokers (now e-brokers) will offer value management or services like initial
public offering online, on-line asset allocation, portfolio management,
financial planning, tax planning, insurance services, etc. and enables the
investors to take better and well considered decisions.

The actual definition of Online Trading is as explained below:

Online trading is a service offered on the internet for purchase and sale of
shares. In the real world you place orders on your stockbroker either verbally
(personally or telephonically) or in a written form (fax). In online trading, you
will access a stockbrokers website through your internet enabled PC and place
orders through the brokers internet based trading engine. These orders are
routed to the stock exchange without manual intervention and executed thereon
in a matter of a few seconds.
The net is used as a mode of trading in internet trading. Orders are
communicated to the stock exchange through website.

In India:
Internet trading started in India on 1 st April 2000 with 79 members seeking
permission for online trading. The SEBI committees on internet based securities
trading services has allowed the net to be used as an Order Routing System
(ORS) through registered stock brokers on behalf of their clients for execution of
transaction. Under the ORS the client enters his requirements (security, quantity,
price buy/sell) on brokers site.

Objectives:

Internet trading is expected to

Increase transparency in the markets,

Enhance market quality through improved liquidity, by increasing quote

15

continuity and market depth,

Reduce

settlement

risks

due

to

open

trades,

by

elimination

of

mismatches,

Provide management information system,

Introduce flexibility in system, so as to handle growing volumes easily and

to support nationwide expansion of market activity.

Besides, through internet trading three fundamental objectives of securities

regulation can be easily achieved, these are:

Investor protection

Creation of a fair and efficient market, and

Reduction of the systematic risks.

Some of the brokers offering net trading include ICICI direct, kotakstreet, etc.

Requirements for net trading:

For investors:

1. Installation of a computer with required specification

2. Installation of a modem
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
The following should be produced to get a demat account and online
trading account:

16

As identity proof & address proof any one of the following:

1) Voter ID card
2) Driving license
3) PAN card( in case of to trade more than 50000)
4) Ration card
5) Bank pass book
6) Telephone bill

Other requirements, which are necessary

First page of the bank pass book and last 6 months statement.

Bank managers signature along with banks seal, manager registration code
on photograph.

For stock brokers:

1. Permission from stock exchange for net trading

2. Net worth of Rs. 50 lack
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website.

17

The net is used as a medium of trading in internet trading. Orders are

communicated to the stock exchange through website. Internet trading started
in India on 1st April 2000 with 79 members seeking permission for online
trading. The SEBI committees on internet based securities trading services has
allowed the net to be used as an Order Routing System (ORS) through registered
stock brokers on behalf of their clients for execution of transaction.

Under the Order Routing System the client enters his requirements (security,
quantity, price, and buy/sell) in broker's site. They are checked electronically
against the clients account and routed electronically to the appropriate
exchange for execution by the broker. The client receives a confirmation on
execution of the order. The customer's portfolio and ledger accounts get updated
to reflect the transaction.

The user should have the user id and password to enter into the electronic ring.
He should also have demat account and bank account. The system permits only
a registered client to log in using user id and password. Order can be placed
using place order window of the website.

Procedure for net trading

Step 1: Those investors, who are interested in doing the trading over internet
system i.e. NEAT-IXS, should approach the brokers and get them self registered
with the Stock Broker.
Step 2: After registration, the broker will provide to them a Login name,
Password and personal identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by using the
place order window as under:

18

(a) First by entering the symbol and series of stock and other parameters like
quantity and price of the scrip on the place order window.
(b) Second, fill in the symbol, series and the default quantity.
Step 4: It is the process of review. Thus, the investor has to review the order
placed by clicking the review option. He may also re-set to clear the values.
Step 5: After the review has been satisfactory, the order has to be sent by
clicking on the send option.

Step 6: The investor will receive an "Order Confirmation" message along with
the order number and the value of the order.
Step 7: In case the order is rejected by the Broker or the Stock Exchange for
certain reasons such as invalid price limit, an appropriate message will appear at
the bottom of the screen. At present, a time lag of about 10 seconds is there in
executing the trade.
Step 8: It is regarding charging payment, for which there are different mode.
Some brokers will take some advance payment from the investor and will fix
their trading limits. When the trade is executed, the broker will ask the investor
for transfer of funds to his account.

19

Internet trading provides total transparency between a broker and an investor in the
secondary market.
In the open outcry system, only the broker knew the actually transacted price.
Screen based trading provides more transparency. With online trading investors can
see themselves the price at which the deal takes place.
The time gap has narrowed in every stage of operation. Confirmation and execution
of trade reaches the investor within the least possible time, mostly within 30
seconds. Instant feedback is available about the execution. Some of the websites
also offer;
News and research report
BSE and NSE movements
Stock analysis
IPO and mutual fund centers

20

Step by step procedure in online trading:

Following steps explain the step by step approach to on-line trading:

1) Log on to the stock broker's website
2) Register as client/investor
3) Fill the application form and client broker agreement form on the requisite
value stamp paper
4) Obtain user ID and pass word
5) Log on to the broker's site using secure user ID and password
6) Market watch page will show real time on-line market data
7) Trade shares directly by entering the symbol or number of the security
8)

Brokers server will check your limit in the on-line account and demat
account for the number of shares and execute the trade

9)

Order is executed instantly (10-30 seconds) and confirmation can be

obtained.

10)

Confirmation is e-mailed to investor by broker

11)

Contract note is printed and mailed in 24 hours

12)

Settlement will take place automatically on the settlement day

13)

Demat account and the bank account will get debited and credited by

electronic means.

ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS:

1)

Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this
leeway facility since one need to hold a price.

2)

Market orders: orders can be filled at unexpected prices, but this type is much more
risky, since you have to buy stock at the given price.

3)

Cash account: where funds have to be available prior to placing the order.

4)

Margin account: where orders can be placed against stocks, to increase Purchasing power.

21

ADVANTAGES OF ONLINE TRADING:

1)

Online trading has made it possible for anyone to have easy and efficient access to more
reports and charts than it was previously possible if one went to any brokers' office. Thus
we have access to a lot more information online.

2)

Online trading has let room for smaller organizations to compete with multinational
organizations since it is no longer a leg it issue. Being online does not identify the size of
any particular organization, therefore, this additional power to the underdogs.

3)

Online trading has allowed companies to locate themselves where they want as physical
location is not an issue anymore. Companies can establish themselves according to their
gains and losses, for instance where tax (sales and value added taxes) is best suited to
them.

4)

Online trading gives control to individuals and they can exercise it over accounts thus
comprehend what is going on when they trade. It is like going back to school and reeducating oneself on how to trade online.

5)

Individuals benefit by saving comparatively a lot more when trading online as the cost
per trade is less.

6)

Individuals can invest in a variety of products, unlike earlier when people bought bonds,
mutual funds, and stock for long-term basis and sat on them. Now they can invest in
stocks, stock and index options mutual funds, government, and even insurance.

INVESTORS REASONS TO TRADE ONLINE:

1)

They have control over their accounts, can make their own decisions and dont have to
give reasons for their actions. They are independent.

2)

They have a reason to participate in the market and learn about it.

3)

It is interesting, cheap, easy, fast, and convenient.

4)

A lot of information is online so they can keep up-to-date with what is happening in the
trading world.
22

5)

It will give investors a greater choice and better realization.

6)

The immediate impact will be competition and benefits will accrue to the investors.

7)

It will lead to brokerage commissions going down and brokers striving to increase
business afloat.

8)

Investors will now go to place, which have better trading conditions and also members to
offer them better facilities.

9)

They have access to numerous tools to invest, and can create their own portfolio.

HERE ARE THE POSSIBLE DISADVANTAGES:

1)

When network crashes, there will be problems and delays due to a large influx of rapid
online trading criteria.

2)

Individuals are restricted to first-hand financial guidance. This simply means that the
individual is himself / herself alone to.

3)

A tax (sales tax and value added tax) evaluation becomes an issue, especially when you
are trading internationally.

4)

One has no idea with whom he is dealing with on the other end.

5)

According to a study conducted by Mary Rowland, careful investor: is online trading bad
for your portfolio, the more one trades the less returns one gets, meaning that an addicted
trader gets, carried away online and begins to trade for too much which causes losses for
him / her.

6)

Individuals think that they are trading with the market directly and know what they are
doing, but the truth is that even though technology has taken over, the basic rules of
trading are the same. It seems that the middleman has been removed, but that is not so.
23

When the individuals click on the mouse, his trade goes through a broker. The
commissions online pertain to the intermediary.
7)

There is a need for more effective communication links over the Internet and the ability
of the server to deal with a large volume of visitors.

INDUSTRY PROFILE
24

STOCK MARKETS IN INDIA:

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

Definition of a stock exchange:

Stock exchange means any body or individuals whether incorporated or not,

constituted for the purpose of assisting, regulating or controlling the business of
buying, selling or dealing in securities. The securities include:

Shares of public company.

Government securities.
Bonds

History of Stock Exchanges:

The only stock exchanges operating in the 19 th century were those of Mumbai
setup in 1875 and Ahmedabad set up in 1894. These were organized as
voluntary non-profit-marking associations of brokers to regulate and protect their
interests. Before the control on securities under the constitution in 1950, it was a
state subject and the Bombay securities contracts (control) act of 1925 used to

25

regulate trading in securities. Under this act, the Mumbai stock exchange was
recognized in 1927 and Ahmedabad in 1937.

During the war boom, a number of stock exchanges were organized. Soon after it
became a central subject, central legislation was proposed and a committee
headed by A.D.Gorwala went into the bill for securities regulation.
On the basis of the committees recommendations and public discussion, the
securities contract (regulation) act became law in 1956.

Functions of Stock Exchanges:

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

of rupees by floating public loans. Municipal corporations, trust

and local bodies have obtained from the public their financial requirements, and
industry, trade and commerce- the backbone of the countrys economy-have
secured capital of crores or rupees through the issue of stocks, shares and
debentures for financing their day-to-day activities, organizing new ventures and
completing

projects

of

expansion,

diversification

and

modernization.

By

obtaining the listing and trading facilities, public investment is increased and
companies were able to raise more funds. The quoted companies with wide
public interest have enjoyed some benefits and assets valuation has become
easier for tax and other purposes.

26

Various Stock Exchanges in India:

27

At present there are 23 stock exchanges recognized under the securities

contracts (regulation), Act, 1956. Those are:

Ahmedabad Stock Exchange Association Ltd.

Bangalore Stock Exchange
Bhubaneshwar Stock Exchange Association
Calcutta Stock Exchange
Cochin Stock Exchange Ltd.
Coimbatore Stock Exchange
Delhi Stock Exchange Association
Guwahati Stock Exchange Ltd
Hyderabad Stock Exchange Ltd.
Jaipur Stock Exchange Ltd
Kanara Stock Exchange Ltd
Ludhiana Stock Exchange Association Ltd

Madras Stock Exchange

Madhya Pradesh Stock Exchange Ltd.
Magadh Stock Exchange Limited
Meerut Stock Exchange Ltd.
Mumbai Stock Exchange

National Stock Exchange of India

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

Out of these major stock exchanges were:

28

NSE (National Stock Exchange):

NSE is a stock exchange located at Mumbai, india it is the 9 th largest stock
exchange in the world by market capitalization and largest in India by daily turnover
and number of trades, for both equities and derivative trading. NSE has a market
capitalization of around US$1.59 trillion and over 1,552 listings as of December
2011. Though a number of other exchanges exist, NSE and the Bombay Stock
Exchange are the two most significant stock exchanges in India, and between them
are responsible for the vast 9th majority of share transactions. The NSE's key index
is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an
index of fifty major stocks weighted by market capitalisation.

As of 2007, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities
across India.
NSE is the third largest Stock Exchange in the world in terms of the number of
trades in equities. It is the second fastest growing Stock Exchange in the world with
a recorded growth of 16.6%. The National Stock Exchange of India was promoted by
leading Financial

Institutions at the behest of the Government of India, and was

incorporated in November 1992 as a tax- paying company. In April 1993, it was

29

recognized as a Stock Exchange under the Securities Contracts (Regulation)

Act,1956.

The National Stock Exchange of India Limited has genesis in the report of the High
Powered

Study

Group

on

Establishment

of

New

Stock

Exchanges,

which

recommended promotion of a National Stock Exchange by financial institutions (FIs)

to provide access to investors from all across the country on an equal footing. Based
on the recommendations, NSE was promoted by leading Financial Institutions at the
behest of the Government of India and was incorporated in November 1992 as a
tax-paying company unlike other stock exchanges in the country. On its recognition
as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April
1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in
June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000

NSE's mission is setting the agenda for change in the securities markets in India. The NSE was
set-up with the main objectives of:

Establishing a nation-wide trading facility for equities and debt instruments.

Ensuring equal access to investors all over the country through an

appropriate communication network.

Providing a fair, efficient and transparent securities market to investors using

electronic trading systems.

Enabling shorter settlement cycles and book entry settlements systems, and

Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology, have become industry
benchmarks and are being emulated by other market participants. NSE is more than a mere
market facilitator. It's that force which is guiding the industry towards new horizons and
greater opportunities.

30

BSE (Bombay Stock Exchange)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The
Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the
Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making
Association of Persons (AOP) and is currently engaged in the process of converting itself
into demutualised and corporate entity. It has evolved over the years into its present status as
the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to
have obtained permanent recognition in 1956 from the Govt. of India under the Securities
Contracts (Regulation) Act 1956.
The equity Market Capitalization of the companies listed on the BSE
was US$1.63 trillion as of December 2011, making it the 4th largest stock
exchange in Asia and the 8th largest in the world. The BSE has the largest
number of listed companies in the world. It has also been cited as one of the
world's best performing stock market.
As of December 2011, there are over 5,034 listed Indian companies and over
7700 scrips on the stock exchange, the Bombay Stock Exchange has a
significant trading volume. The BSE SENSEX (SENSitive indEX), also called the

31

"BSE 30", is a widely used market index in India and Asia. Though many other
exchanges exist, BSE and the National Stock Exchange of India account for the
majority of the equity trading in India. A Governing Board having 20 directors is
the apex body, which decides the policies and regulates the affairs of the
Exchange.

The Governing Board consists of 9 elected directors, who are from the broking community
(one third of them retire ever year by rotation), three SEBI nominees, six public
representatives and an Executive Director & Chief Executive Officer and a Chief Operating
Officer.
The Executive Director as the Chief Executive Officer is responsible for the day-to-day
administration of the Exchange and the Chief Operating Officer and other Heads of
Department assist him.

REGULATORY FRAME WORK OF STOCK EXCHANGE

A comprehensive legal framework was provided by the Securities Contract
Regulation Act, 1956 and Securities Exchange Board of India 1952. Three tier
regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body

Members of the stock exchange:

The securities contract regulation act 1956 has provided uniform regulation for
the admission of members in the stock exchanges. The qualifications for
becoming a member of a recognized stock exchange are given below:

The minimum age prescribed for the members is 21 years.

32

He should be an Indian citizen.

He should be neither a bankrupt nor compound with the creditors.

He should not be convicted for fraud or dishonesty.

He should not be engaged in any other business connected with a

company.

He should not be a defaulter of any other stock exchange.

The minimum required education is a pass in 12 th standard examination.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

The securities and exchange board of India was constituted in 1988 under a
resolution of government of India. It was later made statutory body by the SEBI
act 1992.according to this act, the SEBI shall constitute of a chairman and four
other members appointed by the central government.
With the coming into effect of the securities and exchange board of India act,
1992 some of the powers and functions exercised by the central government, in
respect of the regulation of stock exchange were transferred to the SEBI.

OBJECTIVES AND FUNCTIONS OF SEBI

To protect the interest of investors in securities.

Regulating the business in stock exchanges and any other securities

market.

Registering and regulating the working of intermediaries associated with

securities market as well as working of mutual funds.

Promoting and regulating self-regulatory organizations.

Prohibiting insider trading in securities.

Regulating substantial acquisition of shares and take over of companies.

33

Performing such functions and exercising such powers under the

provisions of capital issues (control) act, 1947and the securities to it by
the central government.

SEBI GUIDELINES TO SECONDARY MARKETS:

(STOCK EXCHANGES):

Board of Directors of Stock Exchange has to be reconstituted so as to include

non-members, public representatives and government representatives to the
extent of 50% of total number of members.

Capital adequacy norms have been laid down for the members of various
stock exchanges depending upon their turnover of trade and other factors.

All recognized stock exchanges will have to inform about transactions within
24 hrs.

TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the investors.
The orders are of different types.
Limit orders: An order placed with a brokerage to buy or sell a set number of
shares at a specified price or better. Limit orders also allow an investor to limit
the length of time an order can be outstanding before being canceled.
Depending on the direction of the position, limit orders are sometimes referred
to more specifically as a buy limit order, or a sell limit order . Orders are limited
by a fixed price. E.g. buy Reliance Petroleum at Rs.50.Here, the order has
clearly indicated the price at which it has to be bought and the investor is not
willing to give more than Rs.50.

34

Best rate order: Here, the buyer or seller gives the freedom to the broker to
execute the order at the best possible rate quoted on the particular date for
buying. It may be lowest rate for buying and highest rate for selling.

Discretionary order: The investor gives the range of price for purchase and
sale. The broker can use his discretion to buy within the specified limit. Generally
the approximation price is fixed. The order stands as this buy BRC 100 shares
around Rs.40.

Stop loss order: The orders are given to limit the loss due to unfavorable price
movement in the market. A particular limit is given for waiting. If the price falls
below the limit, the broker is authorized to sell the shares to prevent further loss.
E.g. Sell BRC limited at Rs.24, stop loss at Rs.22.

Buying and selling shares: To buy and sell the shares the investor has to
locate register broker or sub broker who render prompt and efficient service to
him. The order to buy or sell specifying the number of shares of the company of
investors choice is placed with the broker. The order may be of any type. After
receiving the order the broker tries to execute the order in his computer
terminal. Once matching order is found, the order is executed. The broker then
delivers the contract note to the investor. It gives the details regarding the name
of the company, number of shares bought, price, brokerage, and the date of
delivery of share.
In this physical trading form, once the broker gets the share certificate through
the clearing houses he delivers the share certificate along with transfer deed to
the investor. The investor has to fill the transfer deed and stamp it. The stamp
duty is one of the percentage considerations, the investor should lodge the share
certificate and transfer deed to the register or transfer agent of the company. If
it is bought in the DEMAT form, the broker has to give a matching instruction to
his depository participant to transfer shares bought to the investors account.

35

The investor should be account holder in any of the depository participant. In the
case of sale of shares on receiving payment from the purchasing broker, the
broker effects the payment to the investor.

Share groups: The scrips traded on the BSE have been classified into
A,B1,B2,C,F and Z groups. The A group represents those, which are in
the carry forward system. The F group represents the debt market segment
(fixed income securities).
The Z group scrips are of the blacklisted companies. The C group covers the
odd lot securities in A, B1&B2 groups.

ROLLING SETTLEMENT SYSTEM:

Under rolling settlement system, the settlement takes place n days (usually 1, 2,
3 or 5days) after the trading day. The shares bought and sold are paid in for n
days after the trading day of the particular transaction. Share settlement is likely
to be completed much sooner after the transaction than under the fixed
settlement system.
The rolling settlement system is noted by T+N i.e. the settlement period is n
days after the trading day. A rolling period which offers a large number of days
negates the advantages of the system. Generally longer settlement periods are
shortened gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis of
the criteria that they were in compulsory demat list and had daily turnover of
about Rs.1 crore or more.
Then it was extended to A stocks in Modified Carry Forward Scheme,
Automated Lending and Borrowing Mechanism (ALBM) and Borrowing and
lending Securities Scheme (BELSS) with effect from Dec 31, 2001.
SEBI has introduced T+5 rolling settlement in equity market from July 2001 and
subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling

36

settlement experience it was further reduced to T+2 to reduce the risk in the
market and to protect the interest of the investors from 1 st April 2003.
Activities on T+1: conformation of the institutional trades by the custodian is
sent to the stock exchange by 11.00 am. A provision of an exception window
would be available for late confirmation. The time limit and the additional
changes for the exception window are dedicated by the exchange.

The exchanges/clearing house/ clearing corporation would process and download

the obligation files to the brokers terminals late by 1.30 p.m on T+1. Depository
participants accept the instructions for pay in securities by investors in physical
form upto 4 p.m and in electronic form upto 6 p.m. the depositories accept from
other DPs till 8p.m for same day processing.
Activities on T+2: The depository permits the download of the paying in files of
securities and funds till 10.30 a.m on T+2 from the brokers pool accounts. The
depository processes the pay in requests and transfers the consolidated pay in
files

to

clearing

House/clearing

Corporation

by

11.00am/on

T+2.

The

exchange/clearing house/clearing corporation executes the pay-out of securities

and funds latest by 1.30 p.m on T+2 to the depositories and clearing banks. In
the demat mode net basis settlement is allowed. The buy and sale positions in
the same scrip can be settled and net quantity has to be settled.

COMPANY PROFILE
SHAREKHAN
Sharekhan is Indias leading online retail broking house. Launched on

February

8,2000 as on online trading portal, Sharekhan has today a pan- India presence with
over 1,529 outlets serving 950,000 customers across 450 cities.

It also has

international presence through its branches in the UAE and Oman. Sharekhan offers
services like portfolio management, trade execution in equities, futures & options,
commodities, and distribution of mutual funds, insurance and structured products.

37

These services are backed by quality investment advice from an experienced

research team which offers investment and trading ideas based on fundamental and
technical research respectively, market related news, statistical information on
equities, commodities, mutual funds, IPO and much more. Shrekhan is a member of
the Bombay Stock Exchange, the National Stock Exchange and the countrys two
leading commodity exchanges, the NCDEX and MCX.

Sharekhan is also registered as a depository participant with National Securities

Depository and Central Depository Services. Sharekhan has set category leadership
through pioneering initiatives like Trade Tiger, an Internet-based executable
application that emulates broker terminals besides providing information and tools
relevant to day traders.

Its second initiative, First Step, is targeted at empowering the first-time investors.
Sharekhan has also set its global footprint through the India First initiative, a
series of seminars conducted by Sharekhan to help the non-resident Indians
participate and benefit from the huge investment opportunities in India.

ABOUT SHAREKHAN

Sharekhan Limited Company belongs to (SSKI group) S S Kantilal Ishwarlal

Securities Limited.

The Company deals in Shares, Commodities, derivatives etc there is also a

facility of Online as well as Off line Trading.
The SMS alerts are sent to the existing customers for the market fluctuations.

38

 Sharekhan.com is an Online trading facility founded in 1999-2000 with a

focus on equities, derivatives and commodities brokerage execution National
Stock Exchange of India Limited (NSE), Bombay Stock Exchange Limited
(BSE), National Commodity and Derivatives Exchange India (NCDEX and
Multi Commodity Exchange of India Limited (MCX).
Sharekhan has one of the best state of art web portal providing fundamental
and statistical in information across equity, mutual funds and IPOs.

TOP MANAGEMENT
Owner of the company

Dinesh murikya

Head of Research

Mr.Pathik Gandotra

CEO Of the Company

Mr. Tarun Shah

Director, (Operations)

Mr. Shanker Vailaya

Vice president of Equity Derivatives

Rishi Kohli

SSKI
Apart from Sharekhan, the SSKI group also comprises of institutional broking and
corporate finance. The institutional broking division caters to domestic and
foreign institutional investors, while the corporate finance division focuses on

39

niche areas such as infrastructure, telecom and media. SSKI owns 56% in
Sharekhan and the balance ownership is HSBC, First Caryl and Intel Pacific. SSKI
has been voted as the top domestic brokerage house in the research category,
twice by Euro money survey and four times by Asia money survey.

THE MAJOR PLAYERS IN ONLINE TRADING

1) SHAREKHAN.COM
2) 5PAISA.COM
3) KOTAKSTREET.COM
4) INDIABULLS.COM
5) ICICIDIRECT.COM
6) HDFCSEC.COM

TRADING AND SETTLEMENT AT SHARE KHAN

The NSE first introduced online trading in India. The Online trading system
imparted a greater level of transparency and investors preferred exchanges that
offered Online trading because of the following factors:

The ease of operation from the view of the both members and the investors.

Increase in the confidence of the investors because of higher level of

transparency.

Facilities better monitoring of the market by the exchange.

The best price achieved in buying and selling.

TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING

40

Share Khan deals in buying and selling equity shares and debentures on the
National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the OverThe-Counter Exchange of India (OTCEI).

Share Khan is provided with a computer and required software from their
registered stock exchanges. These centers are called Broker Work Stations.
These computers are connected to the server at the stock exchanges through
cable.
The member or broker sitting in his office can send the quotations, orders,
negotiations, deals, in-house deals, auction orders etc., through the computer.
The Central trading system (CTS) will accept these orders and send it for match.
If there is any mistake in the order, CTS will reject the orders and send
respective error message to the member concern.
All these operations are in built. The main objective of CTS is to monitor the
Stock Exchanges operations.
Order placed by the broker will be sent for a match and if the match is found
suitable, the transaction will be executed. Otherwise, the order will be deleted
automatically after completion of trading time. The carry forward transactions
(Good Till cancellation) are forwarded to the next day. Even if the match is not
found with in the prescribed period, the order will not cancel.

TRADING SESSION

Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading
period. Monday to Friday is the trading period in all the stock exchanges. SEBI
has stipulated that all the stock exchanges in India must have same trading
period.

41

BROKER WORK STATION:

At the broker workstation the BBOs, the last traded price, the days opening
price, previous days closing price, highest and lowest prices, the weighted
average price and total trade value will be available continuously, as the BBO for
each scrip.
Other information will be available on query from the BWS. These include top
gainers /losers of the day. Trader-wise, scrip wise net position, client wise net
position, top scrip by the volume/value, market summary etc.
Brokers are also provided with information relating to the companies in the
matter of

Book closure, Dividend declarations, resolutions in board meeting,

information about liquidated companies, company report etc.

ORDERS:

Orders can be done one at a time or in a batch mode.

The submitted order will be accepted at the CTS, after validation if it finds any
invalid reason the order is return back to the BWS, with the appropriate error
message. If
Accepted at the CTS it will be added to the local pending order book.
The order will then be taken up for matching, if it is a buy order the system tries
to find a sell order, which fits the requirement of the buy order, when such match
is found a trade gets executed. Each trade involves two brokers and respective
traders who sent the order. Both these traders are informed of the trade being
executed at their respective BWS.
At the BWS the trade is added to the local trade book.
Orders sent by the brokers are two types:

42

1) Good for the day (GFD)

2) Good till cancellation(GTC)

Good for the day:

This is also called as market order. For an order if the member selects the deal
as good for the day, the order is treated as market order. If a best bid founds
match with best order then the transaction gets executed. If the match is not
found then after trade time the order gets cancelled that day. Next day he has to
place a new order.
For example if a member wants to purchase 1000 shares of satyam info @ 400
each through Good for Day order. If the correct match is not found, order gets
cancelled automatically and new quotation has to be placed the next day.

Good till cancellation:

This order is forwarded to the last trading day of that settlement period. This is
also called as carry forward order like GFD; broker has to select the option of GTC
for the order.
If the order finds match with in the trading settlement period, the order is
executed. If no match is found, the order is cancelled on the last day of
settlement period. This order is not carried forward to the next settlement
period.
For example, if a member a place purchase order of 500 shares of SBI @ 690 per
share and selects the order as GTC and place an order. If the match is not found
on that day it will be forwarded to the next day until trading settlement period
day.

SETTLEMENT OF TRANSACTIONS:

43

Clearing of transaction in the form of shares and cash is called settlement.

Buyers will take the delivery of shares through the depository participants like
SHARE KHAN and others.
Finally, the settlement is made by means of delivering the share certificates
along with the transfer deeds. The transferor (or the seller) duly signed transfer
deed.
It bears a stamp of the selling broker. The buyer then fills up the certificates fills
up the particulars in the transfer deed. Settlement can be done in the following
way.

Spot settlement:

under this method, the delivery of securities and

payment for them are affected on the day of the contract itself.

Rolling settlement:

Under this rolling settlement

the trading is on

T+2,basis i.e. if Monday is trading day then Wednesday is the paying day . In
case on non-delivery, the securities will go for auction.

DETAILS OF PROCEDURES:

Delivery in : The members who are in pay-out

position delivers share

certificates in to clearing house within the settlement period along with the
delivery Chelan filled in with the details of share certificates which has folio
numbers or distinctive numbers etc.

Delivery out: The buyer of shares who made pay in position will take delivery of
shares from the clearing house.
Pay-in: The member who is in paying position shall pay for value of shares with
in the trading settlement period (T+2).
Payout: The cheques paid in the clearinghouse will be paid to members who are
in paying position.

44

All disputes arising between members regarding non-deliveries, non-payments,

good and bad deliveries pertaining to the settlement will be settled by the
settlement committee of the exchange.

The given flow chart clearly explains the process of online trading:

45

L o g in

S e ll t r a n s c a t io n

B u y t r a n s c a t io n

T h e s y s te m w ill c h e c k y o u r
d p ac c o u n t q u a n tity

T h e s y s te m w ill c h e c k b u y in g
lim its

O rd e rs a c c e p te d

R e je c t e d o r d e r s w o u ld b e
c o m m u n ic a t e d a lo n g w it h r e a s o n s

o rd e rs ac c e p te d

y o u r o r d e r is t r a n s m it t e d t o e x c h a n g e f o r e x e c u t io n

p e n d in g b u y o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c re e n

y o u m a y e d it y o u r
p e n d in g o r d e r

y o u m a y d e le t e
y o u r p e n d in g o r d e r

f la s h e d o n y o u r
s c r e e n im m e d ia t e ly
o n e x e c u t io n

o n e x e c u t io n
o f y o u r o rd e rs

y o u m a y e d it y o u r
p e n d in g o r d e r

c o n f o r m a t io n c o u l
d b e s e n d to y o u r
e - m a il a n d m o b ile

p e n d in g s e ll o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c re e n

y o u m a y d e le t e y o u r
p e n d in g o r d e r

c o n t r a c t n o t e w o u ld
b e s e n t t o b y m a il
o r h a n d d e liv e r y

(FINANCIAL MARKET:
In economics, a financial market is a mechanism that allows people to buy and sell trade)
financial securities (such as stocks and bonds), commodities (such as precious metals or
46

agricultural goods), and other fungible items of value at low transaction costs and at prices
that reflect the efficient market hypothesis.

According to functional basis financial markets are classified into two types.
They are:
Money markets (short-term)
Capital markets (long-term)

MONEY MARKET:
The money market is a component of the financial markets for assets involved in
short-term borrowing and lending with original maturities of one year or shorter
time frames. Trading in the money markets involves Treasury bills, commercial
paper, bankers acceptances, certificates of deposit, federal funds, and shortlived mortgage and asset-backed securities. The money market consists of financial
institutions and dealers in money or credit who wish to either borrow or lend.

CAPITAL MARKET:
A capital market is a market for

securities (debt or equity ), where business

enterprises (companies) and governments can raise long-term funds. It is defined as

a market in which money is provided for periods longer than a year , as the raising of
short-term funds takes place on other markets (e.g., the money market). The capital
market includes the stock market (equity securities) and the bond market (debt).

Capital market is a place where we can raise long-term capital.

Again the capital market is classified in to two types and they are

47

 Primary market and

Secondary market.
E.g.: Shares, Debentures, and Loans etc.

PRIMARY MARKET:

Primary market is generally referred to the market of new issues or market for
mobilization of resources by the companies and government undertakings, for
new projects as also for expansion, modernization, addition, diversification and
up gradation.. Primary market operations include new issues of shares by new
and existing companies, further and right issues to existing shareholders, public
offers, and issue of debt instruments such as debentures, bonds, etc.

SECONDARY MARKET:
The primary market deals with the new issues of securities. which is commonly
known as stock market or stock exchange. The secondary market is a market
where scrips are traded. It is a market place which provides liquidity to the
scrips issued in the primary market.
Thus, the growth of secondary market depends on the primary market. Trading
activities in the secondary market are done through the recognized stock
exchanges which are 23 in number including Over scrips provides liquidity and
offers an opportunity to the investors to buy or sell the scrips.
The following are the intermediaries in the secondary market:
1. Broker/member of stock exchange buyers broker and sellers broker
2. Portfolio Manager
3. Investment advisor
4. Share transfer agent
5. Depository

48

6. Depository participants.

DATA ANALYSIS AND INTERPRETATION

49

Comparative Analysis :
HDFC SECURITIES:

Company Background:
Housing Development Finance Corporation Limited, more popularly known as HDFC Bank
Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking
Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in
principle' approval from RBI, for setting up a bank in the private sector. The bank was
incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The
following year, it started its operations as a Scheduled Commercial Bank. Today, the bank
boasts of as many as 1412 branches and over 3275 ATMs across India.
HDFC Securities Ltd is promoted by the HDFC Bank, HDFC and Chase Capital Partners and
their associates. Pioneers in setting up Dial-a-share service with the largest team of Telebrokers.
Online Account Type:
HDFC Online Trading A/c: Plain Vanilla Account with focus on 3 in 1 advantage.
Pricing of HDFC Account
Account Opening: Rs 799
Demat: NIL, 1st year charges included in Account Opening
Initial Margin : Rs 2500/- for non HDFC Bank Customers (AQB)
Brokerage:
Trading 0.15%* each side + ST
Delivery 0.50%** each side + ST
*Rs 25 Min Brokerage per transaction
**Rs 8 Min Brokerage per transaction

ICICI Direct:
50

 Account Opening: Rs 750

Schemes: For short periods Rs 750 is refundable against brokerage generated in a qtr.
These schemes are introduced 3-4 times a year.
Demat: NIL, 1st year charges included in Account Opening Plus a facility to open
additional 4 DPs without 1st yr AMC. Only Rs 100 as linking charges per DP
Initial Margin : NIL
Brokerage : ICICIs brokerage rates are inclusive of Stamp duty (0.002%) for trading
and 0.010% for delivery while service tax (10.2%) on BROKERAGE land turnover tax is
EXTRA.

Delivery Vol per QTR Brokerage Square Vol P.M.

Brokerage

< 10 lakhs

0.75%

< 50 lakhs

.10% Both Sides

10 25 lakhs

0.70%

50 lakhs 2 Cr

.08% Both Sides

25 50 lakhs

0.55%

2Cr-5Cr

.05% Both Sides

5Cr- 10 Cr

.04% Both Sides

50 lakhs - 1 Cr

0.45%

1 Cr 2 Cr

0.35%

10Cr -20 Cr

.035% Both Sides

2 Cr 5 Cr

0.30%

> 20 Cr

.03% Both Sides

> 5 Cr

0.25%

----

51

--------

INDIABULLS:
Company Background:
India Bulls is a retail financial services company present in 70 locations covering 62 cities. It
offers a full range of financial services and products ranging from Equities to Insurance. 450
+ Relationship Managers who act as personal financial advisors.

Online Account Type:

Signature Account: Plain Vanilla Account with focus on Equity Analysis. The equity
analysis is a paid service even for A/c holders.
Power India bulls: Account with sophisticated trading tools, low commissions and
priority access to R.M.

Pricing of IB Accounts:
Signature Account
* Account Opening: Rs 1200

Power India Bulls

* Account Opening: Rs 750
52

* Demat: Rs 200 if POA is signed,

* Demat: Rs.200 if POA is signed,

No AMC for this DP

No AMC for this DP

* Initial Margin: NIL

* Initial Margin: NIL

* Brokerage: Negotiable

* Brokerage: Negotiable

Kotakstreet:
Company Background:
Kotak Mahindra Bank Limited (the Bank) is a commercial bank. The Bank operates in
four business segments: Treasury and Balance Sheet Management Unit (BMU), which
includes dealing in money market, forex market, derivatives, investments and primary
dealership of government securities; Retail Banking, which includes lending, commercial
vehicle finance, personal loans, agriculture finance, other loans and home loans, branch
banking, which includes retail borrowings covering savings, current, term deposit accounts
and branch banking network/services including distribution of financial products, and credit
cards; Corporate Banking, which comprises wholesale borrowings and lendings and other
related services to the corporate sector. As of March 31, 2011, it had a network of 249
branches.
Kotakstreet is the retail arm of Kotak Securities. Kotak Securities limited is a joint venture
between Kotak Mahindra Bank and Goldman Sachs.
Online Account Type
Twin Advantage / Green Channel : 2 DPs, Limit against shares
Free Way: Flat Rs 999 Cover Charge p.m, 0.03% per transaction
High Trader : 6 Times Exposure Cash & Derivatives, Auto sq off 2:55
Cash Expressway : Spot payment, additional 0.5% charges
For Kotak FastLane / Keat Lite / Keat Desktop are trading interfaces.
Keat Desktop with advanced tools comes at a charge of Rs 500 p.m, Non refundable.

PRICING OF KOTAK
53

 Account Opening : Nil

Delivery Brokerage Charges - 0.30%
Intraday Brokerage Charges - 0.03%

Demat Maintenance Fee - Rs 30/- per month (Rs 360 per annum)

Slab structure of Kotak

Delivery Vol p m Brokerage * Square Vol P.M.
< 1 lakhs

0.65%

1 lakhs 5 lakhs

0.60%

10 lakhs 25 lakhs

5 lakhs 10 lakhs

0.50%

25 lakhs - 2 Cr

10 lakhs - 20 lakhs

0.40%

20 lakhs 60 lakhs

0.30%

> 5 Cr

0.06% Both Sides

60 lakhs - 2 Cr

0.23%

---do---

0.06% Both Sides

>2

0.20%

< 10 lakhs

Brokerage **

2 Cr

----

54

5 Cr

0.10% Both Sides

0.08% Both Sides
0.05% Both Sides
0.04% Both Sides

--------

* Brokerage is inclusive of All Taxes

* Brokerage is inclusive of All Taxes

* DP Charges Extra
* Min Brokerage of Rs 0.05 per share * Min Brokerage of Rs 0.01 per share
Derivatives Vol off p m

Brokerage

< 2 Cr

0.07% Both Sides

2 Cr - 5.5 Cr

0.05% Both Sides

5.5 Cr 10 Cr

0.04% Both Sides

> 10 Cr

0.03% Both Sides

* Brokerage is inclusive of All Taxes.

55

5paisa
Company Background
India infoline was founded in 1995 and was positioned as a research firm
In 2000 e-broking was started under the brand name of 5paisa.com.
Apart from offering online trading in stock market the company offers
mutual funds online.
It also acts as a distributor of various financial services i.e. GOI securities,
Company Fixed Deposits, Insurance.
Limited ground network, present in 20 cities

Online Account Types

Investor Terminal : Investors / Students
Trader Terminal : Day Traders / HNIs

PRICING FOR RETAIL CLIENTS

Investor Terminal
Account Opening : Rs 500
Demat 1st Yr : Rs 250
Initial Margin : Rs 2500 (Compulsory)
Min Margin Retainable : Rs 1000
Brokerage :
Trading 0.05% each side + ST
Delivery 0.20% each side + ST

56

PRICING FOR HNI CLIENTS

Trader Terminal
Account Opening : Rs 500
Demat 1st Yr : Rs 250
Initial Margin : Rs 5000(Compulsory)
Min Margin Retainable : Rs 1000

Brokerage :
Trading 0.10% each side + ST
Delivery 0.50% each side + ST
(Negotiable to 0.05% each side & 0.25%)
Account Access Charges
Monthly Rs 800, adjustable against Brokerage
Yearly Rs 8000, adjustable against brokerage

Sharekhan
57

Company Background

Sharekhan is the retail broking arm of SSKI Securities Pvt Ltd. SSKI owns 56%
in Sharekhan, balance ownership is HSBC, First Caryle, and Intel Pacific

Into broking since 80 years

Focused on providing equity solutions to every segment

Largest ground network of 210 Branded Share shops in 90 cities

Online Account Types

Classis Account / Applet : Investor in equities
Speed Trade : Trader in equities & derivatives

PRICING FOR HNI CLIENTS

Speed Trade
Account Opening : Nil ( Refundable against brokerage in Month + 1)
Demat 1st Yr : Including in Account Opening
Initial Margin : NIL
Min. Margin Retainable : NIL
Brokerage :
Trading 0.10% each side + All Taxes
Delivery 0.50% each side + All Taxes
(Negotiable based on volume)
Account Access Charges
Monthly Rs 500, adjustable quarterly against brokerage of Rs 9000/- for qtr.
No access charges for gold customers (Above 1 lack brokerage p.a)

Pricing for Retail Customers

58

Classic / Applet
Account Opening : Rs 750
Demat 1st Yr : NIL
Initial Margin : NIL
Min Margin Retainable : NIL
Brokerage:
Trading 0.10% each side + All Taxes
Delivery 0.50% each side + All Taxes

The average returns per trade (in %) of our trading strategies

59

Low Risk Strategy Sell-Short Strategy

Combined
Strategy
(Basic + SellShort)

Year

Basic Strategy

2015

0.5

0.9

0.5

0.9

2014

0.5

0.7

0.2

0.4

2013

0.5

1.5

0.7

0.6

2012

0.0

0.4

2.9

1.4

2011

0.7

3.0

1.7

1.2

2010

0.6

1.6

0.8

0.7

2009

0.8

2.0

1.0

0.9

2008

0.5

1.2

0.7

0.6

2007

1.2

2.5

1.3

1.25

2005

0.5

0.6

1.6

1.05

2004

1.3

1.6

2.5

1.9

2003

2.6

3.7

6.1

4.3

2002

4.5

5.0

3.1

3.8

2001

1.4

2.7

3.6

2.5

2000

2.7

4.0

2.9

2.8

1999

3.3

4.8

2.2

2.7

Average

1.4

2.4

2.1

1.8

Stand. Dev.

1.3

1.5

1.5

1.2

Risk/Return

0.9

0.6

0.7

0.6

Sharekhan online Trading Interfaces

The customer can choose the online trading interface that meets his
requirement based on his trading habits and preferences.

60

CLASSIC / APPLET
The website is meant for customers who Invests in Equities

SPEEDTRADE
The speed trade is meant for customers who trade in Equities

DIAL-N-TRADE Toll Free

The DNT is a value added services meant for all customers who
Want to transact but are not online.

DNT TOLL FREE FERTURES

Dedicated Toll Free number for Order placements

Automatic fund transfer with phone banking*

Simple and secure IVR based system for authentication

No wait time, on entry of Phone Id & TPIN, the call is transferred

Trusted, professional advice of Tel-brokers who offer undiluted Sharekhan

Research Inputs

After-hours order placement facility **

Transfer of money using phone banking is available with Citibank only

** Between 9 a.m to 9.55 am and 3.30p.m to 6 p.m

CLASSIC/WEBSITE FEATURES

Facility to integrate choice of 4 Banks/DP/Trading Account

Instant credit for shares sold from DP

Automatic pick-up of shares from linked DP for pay in

Automatic deposit of shares into linked DP after pay-out

61

4 Times leverage on Margin Trades

Margin Trading available for entire marker session

Slab wise brokerage structure for delivery and margin trades, shortly

Free calls for order placement on Toll-Free

Trusted, Professional advice of Tele-brokers

Facility to enter After Market Orders online & via Phone

CLASSIC/WEBSITE FEATURES

Daily Research newsletter (Investor Eye) Via e-mail

Access to new IPO without any paperwork

Advanced portfolio monitoring Tools

Integrated DP account with trading account

Option of linking additional 4 DP accounts to trading account

Choice of linking 4 banks to trading a/c for online payments

Cash and Derivatives trading in a single account

E-mail confirmations for all transactions

Choice of electronic/Physical contracts

SPEEDTRADE EXE FEATURES

ALL THE FEATURES OF CLASSIC

*Real time streaming quotes using 2 Marker Watches
*Trade Execution in 2-3 seconds
* Instant Order/trade confirmations in the same window
*Hot keys similar to a Brokers Terminal
*MULTIPLE Tic-by-Tic Intra-day charts with multiple indicators
* Availability of 2 ISP & 6 Servers ensuring maximum uptime

62

* Customized alerts based on multiple parameters

* Cancel All/Square Off All Facility
* Window for Top Gainers, Top Losers, and Most Active updated Live

SWOT ANALYSIS

Strengths

1. Strong credibility among investors because of its heritage.

2. Excellent reputation among the business society.
3. Capability of providing superior customer service.
4. Quality research team.
5. Easier access to the customer due to largest ground network of 280 branded

share shops in 120 cities.

6. Abundant information about economy and companies.
7. Ability to attract and retain superior and quality personnel.
8. Highly sophisticated infrastructure.
9. Efficient research and analysis team, which by interpreting the economy and

companys performance accurately is enhancing the profitability of the

clientele.

Weaknesses

1. Limited customer appeal as the company product line does not include

mutual

funds

which

is

increasingly

investment option.

63

becoming

preferred

customer

2. Inadequate product awareness among the retail investors.

3. Limited customer appeal as the company does not have access to the BSE

online space.
4. Brand awareness is low in the financial market.
5. Promotional activities conducted by the company are not at par with the

other firms.

Opportunities

1. Hyderabad covers only 2% of investors which gives huge potential for the

market penetration.
2. Bullish phase of the market attracts investing public.
3. Access to the BSE online space for the retail investors creates opportunity to

increase clientele base.

4. Awareness campaigns about online trading creates new market.

Threats

1. Availability of Unit Linked Insurance Policies (ULIPs) and mutual funds in the

market.
2. Threat of entry is high in this industry as the manpower required is less and

capital requirement is medium.

FINDINGS
64

1. Fluctuations are more in secondary market than any other market.

2. There are more speculators than investors.
3. Information plays a vital role in the secondary market.
4. Previously rolling settlement is T+5 days, now it changed to T+2 days and

further it will be changing to T+1 day.

SUGGENSTIONS
65

1. It was also observed that many broking houses offering internet trading allow
clients to use their conventional system as well just ensure that they do not
loose them and this instead of offering e-broking services they becomes
service providers.
2. The number of players is increasing at a steady rate and today there are over
a dozen of brokerage houses who have opted to offer net trading to their
customers and prominent among them are SHARE KHAN, India bulls,
kotakstreet, ICICI direct and geojit.
3. The Bombay stock exchange sensex zoomed past the 7700 barrier for the
first time in history to achieve new all time high of 7800 intra day trade and
ended at a historic close of 7732 points.

66

CONCLUSION:

1. Things have changed for the better with the SHAREKHAN going on-line coupled with
endeavor to stream line the whole trading system, things have changed dramatically over
the last 3 to 4 years. New and advanced technologies have breached geographical and
cultural barriers, and have brought the countrywide market to doorstep.
2. In the present scenario to compete with the Brokers would require sound infrastructure
and trading as per international standards.
3. The introduction of on-line trading would influence the investors resulting in an increase
in the business of the exchange. It has helped the brokers handling a vast amount of
transactions and this can be an efficient trading, delivering, settlement system with
adequate protection to investors. The trading of SHAREKHAN of the first day was Rs.
1.8 crores.
4. Due to invention of online trading there has been greater benefit to the investors as they
could sell / buy shares as and when required and that to with online trading.
5. The brokers has a greater scope than compared to the earlier times because of invention
of online trading.
6. The concept of business has changed today, this is a service oriented industry hence the
survival would require them to provide the best possible service to the clients.
7. I recommend the exchange authorities to take steps to educate Investors about their rights
and duties. I suggest to the exchange authorities to increase the investors confidences.
8. I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices.
9. The speculative pressures are responsible for the wide changes in the price, not attracting
the genuine investors to the greater extent towards the market.
10. Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits, therefore the authorities of the exchange should be more
vigilant to curb the speculation.
11. Necessary steps should be taken by the exchange to deal with the situations arising due to
break down in online trading.
67

BIBILOGRAPHY:

BOOKS:

1.

Investment management
-V.A. Avadhani

2.

Marketing of Financial Services

-V.A.Avadhani

3.

Indian Financial System

-M.Y.Khan

WEBSITES:

1.

www.Share Khan.com

2.

www.bseindia.com

3.

www.sebi.com

4.

www.moneycontrol.com

5.

www.economictimes.com
www.nseindia.com

68