ACKNOWLEDGEMENT

The satisfaction and euphoria that accompany the successful completion of any task would be incomplete
without mentioning the name of the people who’s constant guidance and encouragement has crowned all our
efforts with success.

Firstly I would like to thank who suggested me this topic & helped me a lot in completing this project.

Going through this project was one of wonderful experiences as such it has overall enhanced my knowledge
about the relevant area and its diverse aspects. Also throughout this project several outstanding individuals were
integrally involved and had given their substantial contribution, for which I am very thankful to them for giving
their precious time in completing this project.

I would like to thank My Industry guide Mr. B.K. Nadhani, Managing Director of U.P. Stock Exchange & Mr.
Narendra Singh Head, Research & Development Department, who helped me in performing this project i.e.
“ORGANIZATIONAL STUDY OF UPSE” by providing me his useful guidance, books and matters related
with my Research Study.

I would also like to thank all those people for their immense co-operation and without help of these people this
project never be completed successfully.

SUMIT
SHARMA
TABLE OF CONTENT

A- ORGANIZATIONAL STUDY
CHAPTER: 1
INTRODUCTION

1.1 STOCK EXCHANGES IN INDIA – BACKGROUND………………………………………. ………………..

1.2. SEBI GENISIS…………..………………………………………………………………… ……………………

1.3. CORPORATIZATION & DEMUTUALIZATION……………………………………………………………..

1.4. NATIONAL STOCK EXCHANGE ( NSE)……………………………………………………………………

1.5. BSE &OTCEI …………………………………………………………………………………………………..

CHAPTER: 2
WORKING OF UTTAR PRADESH STOCK EXCHANGE ASSOC. LTD

2.1HEAD OF UPSE DEPARTMENTS………….………………………………………………….....................

2.2. HISTORY / BACKGROUND OF UPSE………………………………………………………………….……

2.3.UPSE SECURITIES LTD ( SUBSIDIARY CO.)………………………………………………………….……

2.4 LISTING & MEMBERSHIP DEPARTMENT..………..…………………………………………………….

2.5 SECRETARIAL DEPARTMENT……………………………...………………………………………………..

2.6. FINANCE & ESTABLISHMNET DEPARTMENT……………..…………………………………………….

2.7. MARKET OPERATION ( MARGIN DEPARTMERNT)…………….……………………………………….

2.8.CLEARING DEPARTMENT………………………………………………….………………………………..

2.9 SURVEILLANCE DEPARTMENT……………………………………………………………………………

2.10 RESEARCH & DEVELOPMENT DEPARTMENT…………………………………………………………..

B- RESEARCH WORK ON

PROPOSED RESTRUCTURING OF REGIONAL STOCK EXCHANGES

CHAPTER: 3
INTRODUCTION

3.1 BRIEF INTRODUCTION…………………...………………………………………………………………….

3.2. PROBLEM STATEMENT…………………………………………………………………………………….

3.3. LITERATURE REVIEW………………………………………………………………………………………

3.4. OBJECTIVE & PURPOSE OF STUDY………………………………………………………………………

3.5. DATA & METHODOLOGY………………………………………………………………………………….

CHAPTER: 4
DESCRIPTIVE STATISTICS & RESULTS

4.1SUMMARYSTATISTICS………….………………………………………………………….…………………

4.2ANALYSIS…………….……………………………………………………………………..……..………

4.3.ASSUMPTIONS & ACHIEVEMNETS…………….……………………………………..…...............

4.4 SUGGESTIONS & SOLUTIONS………………………………………………………..………....…

4.5 RAY OF HOPE…...…………………………………………………………………………..…………

 CHAPTER: 5

5.1CONCLUSION ………………….……………………………………………………………………………

5.2 APPENDIX………………………………………………………………………………………………………

5.3REFERENCE……………………………………………………………………………………………………..

1.1 STOCK EXCHANGES OF INDIA- BACKGROUND

The stock exchanges concept is more than a century old for the economy of India. The Bombay stock
exchange was formed in 1875, while Calcutta stock exchange and madras stock exchange was set up in 1908
and Delhi stock exchange was formed in year 1947. The multi-tier securities exchange model was adopted in
our country in October 1990 with the establishment of OTCEI . high profile national stock exchange was set
up in 1993 to encourage stock exchange reform through system modernization and competition.

In common parlance, stock exchange means , a place where stocks are traded. The word stock means bond
,equity shares, preference shares, debentures etc. an exchange means trading, transaction. Stock exchange
provides liquidity for stocks and the securities. it is the market that provides a platform to the owner of the
securities to sell their holding at reasonable prices and also provides an opportunities to the prospective buyers
to purchase the same..

MEANING OF STOCK EXCHANGE

According to securities contract ( regulation) act , 1956,” A body of individuals whether incorporated or not
constituted for the purpose of assisting or controlling the business of buying selling or dealing of securities.

FUNCTIONS OF STOCK EXCHANGE

A stock exchange has been variously described such as the barometer of adversity and prosperity of a nation,
the nerve centre and politics of a nation as in most of the world. All the changing political, economic and
industrial conditions of the nation are reflected on the stock exchange. A stock exchange gives encouragement
the promotion of joint stock enterprises for the large manufacturing industries. It serves as a pivot of money
market and fortress of capital . therefore stock exchange is an important system in the capitalist economy.

A stock market is the market which aims at providing at continuous , free and fair market, where buyers and
sellers can come in contact and deal in shares and debentures. It provides a ready market where share and
securities can be exchanged and transferred with the minimum of time and maximum of profit .

Unhealthy speculation and other undesirable practices are condemned; otherwise stock exchange will be a
disaster.

Some of the economic functions of stock exchanges are as follows:

• PROVIDES READY MARKET-

A stock exchange provides a free and fair market in securities. A holder of securities may at any time get
back his money by selling of his holdings in a stock exchange. It promotes investment by offering a
wide choice in securities both on consideration of yield and safety against depreciation in their values.

• FACILITY FOR TRANSFRE OF SECURITIES –

Stock exchange provides sufficient marketability of the securities dealth therein and ensures their price
connectivity . in stock exchange , every security constitutes a separate market for itself. One cannot buy
and sell securities unless some facility , by which buyers and sellers can meet together and delay in
securities is provided .The stock market provides the facility as it is simply a place of traffic in stocks
and shares.

• MOBILITY OF CAPITAL –
 In addition to provide a market, the stock exchange has largely helped in directing the accumulated
wealth of the country into fruitful channels. The stock exchange is not like investment trust or any other
investment institution. It merely provides an open market for the sale and purchase of securities. It
directs the flow of new earnings into investment leading to the production of wealth into 2 ways:

- By purchase of securities by the buyers (savers) directly.

- Secondly by placing the saving with financial institutions to reinvest the funds and securities.

• STABILITY AND LIQUIDITY OF CAPITAL –

An investor can withdraw his capital at anytime either for other investment or for personal need for
selling the shares in the stock market. It is interesting to note that capital can be withdrawn without
affecting the industry. Thus, the investment is made liquid and easily disposable.

• INCREASES THE NUMBER OF DEALINGS-

The stock exchange provides the facility for secondary distribution of new securities, after the original
sale of securities. the supply of shares of a particular industry cannot be increased with every change in
prices , though the stock available in the market at a particular time may vary a little. The stock
exchange creates an interest and willingness in the mind of investors to invest in securities. It increases
the marketability of security since some securities are bought and sold again and again. Readily salable
securities serve good collateral securities for loans.

• SAFETY OF DEALINGS-

An organized stock exchange functioning under government regulation provides a reasonable measure
of security and safety of dealings in securities in the investors through its rules and regulations. The risk
of the investor is considerably reduced when he purchases securities, which are ordinarily dealth in a
stock exchange. The stock exchange before giving permission to deal , require the observance of a rigid
set of rules by the company and call for certain information with a view to safeguard the interest of
investors. The information supplied is examined impartially and then permission is granted. Thus, it
creates confidence in the minds of investors.
• FINANCING INDUSTRY-

The stock exchange encourages investment in an industry more than any other institution The
investment flows in corporate securities so that the nation can achieve industrial development and
economic progress. Moreover, the condition of the company is visible since the price of securities shows
the real worth , which depends upon the serving capacity and future development of the company. In
short industrial development, savings investment and capital formation are the benefits of the stock
exchange.

• WIDER SHARE OWNERSHIP ESTABLISHMENT –

In addition to the basic function a well organized modern exchange is also expected to educate the
masses in the art of investment in stock exchange and thereby, promote wider ownership amongst
individuals is of particular significance to the developing countries wherein savings are scattered for
further income. Through it new sources of capital can be tapped.

• ECONOMIC BAROMETER-

An ideal stock exchange serves to allocate only just enough funds for any industries and checks the
flow of capital when an industry begins to show diminishing or uneconomical returns. This is achieved
through keeping an eye on price movements of the securities.

• OTHER FUNCTIONS-

Other functions performed by the stock exchange are that the market price established in trading is
useful for tax purpose. The stipulation on disclosure and transparency ensures availability of information
on listed companies, particularly in regard to financial conditions and protect investor interest by
eliminating dishonest and irregular practices in the brokerage made.
 INDIAN CAPITAL AND STOCK MARKETS

INTRODUCTION

Capital market is the market for long term funds, just as money market for short term funds. It refer to all the
facilities and the institutional arrangement for the borrowing and lending term funds(medium term and long
term funds).The demand for long term capital fund comes. Predominantly from private sector manufacturing
,industrial, agriculture and from the government (largely for the purposed economic development).The supply
of funds for the capital market comes largely from individuals servers, corporate saving banks, insurance
companies, specialized financing agencies and the government.

INDIAN CAPITAL MARKET

Indian capital market can be divided in to two market primary market (new issue)and secondary market.

PRIMARY MARKET

The primary market helps the industry to raise funds by issuing different types of securities. Issue of securities
in the primary market may be made through (i) prospectus

(ii) Offer of sale and (iii) private placement. The securities offered to the public through prospectus are directly
subscribed to by the investor. The issuing company widely publics the offer through various media. The
securities exchange board of India (SEBI) has classified various issues in to three group’s i.e. New issue, Right
issue, Preferential issue.

The SEBI has issued various guidelines regarding proper disclosure for investors protection .These guidelines
are required to be duly observed by the companies raising capital. The boom in the primary market, that started
in mid eighties and accelerated there after, started slowing down by 1995.The low return on new issues and
several low quality issues have led to stock market .Has (0) eroded the confidence of investors.

SECONDARY MARKET

The secondary market is represent by stock exchange which provide on organized market place for the investors
to trade in securities.

It permits the prices of securities to be determined by market forces .The lining process how for demand and
supply underlying each securities .Thus the specific price of securities in determined, in the manner of an
auction. The stock exchange provides a market in which the members (share brokers) & investors participate to
ensure liquidity. The secondary market of a boost when over the counter exchange of India (OTCEI) and
national stock exchange(NSE) were established .NSE and OTCEI have been established by All India Financial
Institutions ,while after stock exchanges are in the form of associations.

STOCK MARKET

The stock markets refers to the market of shares and debentures of new companies .The market is further
divided in to the new issue market and the old capital market .The new issue market called primary market and
the second one is secondary market. The new issue of primary market refers to the raising of new capital in the
form of shares and debentures whereas the old market or secondary market deals with the securities already
issued by the companies. Both markets are equally important.

INDIAN STOCK MARKET

India has one of the oldest stock market in Asia. India also has the second largest holders next only to USA. The
Indian figure look impressive but actually it constitutes only 1.5 per cent of total population. The country also
has about 50 lacks market has appeared as a result of increasing industrialization are wing awareness among
people and labialization of capital market .

After the industrial revolution, as a size of business enter price grows, it was no longer possible for proprietors
or even partnership to raise classical amount of money required for undertaking large entrepreneurial ventures.
Such large requirement of capital could only be met by the very large member of individual also; their number
running in to hundred, thousands and even millions depending the size of business ventures.
 These ventures could be expected to invest activity in productive enterprise only of there was some
mechanism by which they could sell a part of their state in the business whenever they wish to generate cash
.This need for making investment “liquid” was necessary to be “broken up” in to a large number of small units,
so that each unit could be independently bought and sold. This was achieved through shares and debentures (or
bonds) representing small units of ownership and leading respectively ,by the public .

Such breaking up of stake in to smaller denominations also help in enhancing small savings in the economy in
to entrepreneurial ventures.

NEW ISSUE MARKET

INTRODUCTION

New issue market helps the Industry to raise funds by issuing different types of securities .The securities
exchange board of India(SEBI) has classified various issues in to three group’s i.e. New issue, Right issue,
Preferential issue. The boom in the issue market, that started in mid eighties and accelerated there after, started
slowing down by 1995.

The low return on new issues and several low quality issues have led to stock market fiasco, and eroded the
confidence of investors.

VARIOUS INSTRUMENTS OF NEW ISSUE MARKET

The following instruments can be made in new issue market:

1. Equity issues through prospectus or rights renounced by existing shareholders.

2. Preference shares with a fixed dividend either convertible in to equity or not.
3. Debentures of various categories-convertible fully convertible, partly convertible and not convertible
debentures.
4. PSU bonds –taxable or tax free with fixed interest rates.
Investors should prefer debentures if they are interested in a fixed income .They may go for convertible
debentures ,if they want to have to fixed income and likely capital appreciation in future .If they are risk taking
and aim only at capital gains, then they may invest in equity shares .Of the new issues those of well established
existing companies are least risky while those of new companies floated by little known new entrepreneurs are
most risky .In choosing the new issues for investment decision ,the investor has to ready a copy of the
prospectus and note the following :

1. Who are the promoters and their past record

2. Products manufactured and demand for those products at home or abroad –the competitors and the share of
each in the market.

3. Availability of inputs, raw materials and accessories and the dependence on imports.

4. Project location and its advantages.

5. Prospectus through projected earnings, net profits and dividend paying capacity, waiting period involved etc.

If the new issues belong to a company promoted by well known Business groups like Reliance, Infosys etc they
are less risky .The company should belong to an industry which is expanding and has good potential like drugs,
chemicals, steel etc the terms of offer should be attractive like conversion or immediate prospects of dividend
etc.
1.2 SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

GENESIS:-

1.1.1.1. The SEBI was established on April 12,1988 through an administrative order,but it
became a statutory and really powerful organization only since 1992.The CICA was replaced
and the office of the CCI was abolished in 1992,and the SEBI was set up on 21 February 1992
through an ordinance issued on January 30 1992.The ordinance was replaced by the SEBI Act
on April 4,1992.Certain powers under certain sections of SCRA and CA have been delegated
to the SEBI .The regulatory powers of the SEBI were increased through the Securities
Laws(Amendment) ordinance of January 1995 which was subsequently replaced by an Act of
Parliament. The SEBI is under the overall control of the Ministry of Finance ,and has its head
office at Mumbai .It has now become a very important constituent of the financial regulatory
framework in India.

OBJECTIVES:-

The philosophy underlying the creation of the SEBI is that multiple regulatory bodies for securities
industry mean that the regulatory system gets divided ,causing confusion among market participants as to who
is really in command .In a multiple regulatory structure, there is also an overlap of functions of different
regulatory bodies. Through the SEBI ,the regulation model which entrusted to a single highly visible and
independent organization ,which is backed by a statue, and which is accountable to the Parliament and in which
investors can have trust.

CONSTITUTION AND ORGANISATION:-

The SEBI is a body of six members comprising the chairman ,two members from amongst the
officials of the ministries of the central government dealing with finance and law ,two members who are
professionals and have experience or special knowledge relating to securities market, and one member from the
RBI. All members, except the RBI member are appointed by the government, who also lays down their terms of
office, tenure, and conditions of service, and who can also serve any member from office under certain
circumstances .The Central government is empowered to supersede the SEBI in public interest ,of if on account
of gave emergency it is unable to discharge its functions or duties, or if it presently defaults in complying with
any direction issued by the government ,or if its financial position and administration deteriorates.

The work of the SEBI has been organized into five operational departments each of which is
headed by an executive director who reports to the chairman. Besides, there is a legal department and the
investigation department .The department have been divide into divisions. The various departments and the
scope of their activities are as follows:-

The Primary Market Policy, Intermediaries Self Regulatory Organizations(ISRO) and Investors
Grievance and Guidance Department:-

It looks after all policy matters regulatory issues in respect of the primary market registration
merchant bankers, portfolio management service's investment advisors ,debenture trustees ,underwriter, SROs
and investor grievance ,guidance ,education and association.

The Issue Management and Intermediaries Department:-

It is responsible for vetting of all prospectus and letters of offer for public and right issues for
coordinating with the primary market policy ,for registration ,regulation and monitoring of issues related
intermediaries.

The Secondary Market Policy, Operations and Exchange Administration, New Investment
Products and Insider Trading Department:-

It is responsible for all policy and regulatory issues for secondary market and new investment
products, registration and monitoring of members of stock exchanges ,administration of some of the stock
exchanges,

market surveillance and monitoring of price movements and insider trading, and EDP and SEBI's data base.
The Secondary Market Exchange Administration, Inspection and Non-member Intermediaries
Department:-

It looks after the smaller stock exchanges of Guwahati, Indore, Bhubaneswar, ,Ludhiana
and Cochin. It is also responsible for inspection of all stock exchanges

and registration, regulation and monitoring of non-member intermediaries such as sub brokers.

Institutional Investment(Mutual Funds and Foreign Institutional Investment),Mergers and

Acquisitions,

Research and Publications, and International Relations and IOSCO Department:-

It looks after policy, registration, regulation and monitoring of Foreign Institutional

Investors(FIIs),domestic mutual funds ,mergers and substantial acquisitions of shares.
WORKING OF THE UTTAR PRADESH STOCK EXCHANGE ASSOCIATION LTD.

INTRODUCTION:

The Uttar Pradesh Stock Exchange Association Ltd. was incorporated as a

Public Ltd. Company under the Companies Act, 1956 on 15th November, 1979 with
its registered office being situated at Kanpur, Uttar Pradesh, having an authorised
capital of Rs. 15,00,000.00 (Rupees Fifteen Lakhs only) divided into 750 (Seven
Hundred and Fifty) shares of Rs. 2000.00 (Rupees Two Thousand only) each.
However, it commenced its working on 3rd June, 1982.

The number of listed companies on U.P.S.E. as on 30 th September, 2003 are

816 out of which the regional companies i.e., which are situated in the region of
Uttar Pradesh itself, are 337 in number. Further, the number of member tickets
allowed to U.P.S.E. by SEBI is 540 out of which subscribed are 530.

MAIN OBJECTS OF U.P.S.E.

1. To regulate the business of the exchange of stocks and shares, debentures

and debenture stocks, govt. securities, bonds and equities of any description
and with a view thereto to establish functions of stock exchange in Kanpur
and/or elsewhere.

2. To acquire the membership of any other recognized stock exchange in India

and Abroad including membership of OTCEI to broad base the operations of
the stock exchange for the benefit of the general public and investors at
large through its member brokers provided no trading will be made by the
exchange on its own behalf.
3. To promote one or more subsidiary companies whether party or wholly
owned, with the object to promote the trade in share and stocks,
debentures, bonds and other securities of any description issued by
companies, statutory corporations, State Govts., Financial Institutions and
the like and all other kind of securities directly or through its members and
to acquire the membership of one or more recognized stock exchanges in
India or abroad.

ORGANISATION AND MANAGEMENT SYSTEM IN U.P.S.E.

The overall management of the affairs of the U.P.S.E. shall be vested in the (at present)
Administrator (otherwise in the Board of Directors).

Management structure of UPSE

ADMINISTRATOR
|

EXECUTIVE DIRECTOR (OFFICIATING)

GENERAL MANAGER (OFFICIATING)

ASSISTANT GENERAL MANAGERS

MANAGERS (OF RESPECTIVE DEPARTMENTS)

ASSISTANT MANAGERS

OFFICERS

OTHER SUBORDINATES
LIST OF EXISTING DEPARTMENTS AT U.P.S.E.

A. Internal Departments of UPSE:

1. Membership Department

2. Margin Department

3. Trade operations Department

4. EDP(Computer Department)

5. Clearing House

6. Surveillance Department

7. Listing Department

8. Finance Department

9. Legal Department

10. Grievance, Compliance and Arbitration Department

11. Bad Delivery Cell (now inactive)

12. Research and Development

13. Secretariat

B. Interconnected Stock Exchange of India Ltd.

C. U.P.S.E. Securities Ltd. (a wholly owned subsidiary of UPSE)

TRADING AT THE STOCK EXCHANGE:

To purchase or sell securities on a stock exchange the following procedure has to be followed:

# A non-member is not allowed to transact business at the Stock Exchange, it can only be done through
a member of the Stock Exchange.

# After the client selects a broker, he has to give an order to purchase/sell his particular security.

The order may be placed in any of below mentioned forms:

1. Fixed Price Order: The client specifies the price at which the broker is to execute the order
 Ex.: “Buy 100 Reliance at 240.”

2. Limit Order: Client specifies the upper and lower limit of the price.

Ex.: Buy 100 Reliance under 240 or sell 100 Reliance at 240 or more

3. At best or At market price: Order must be executed at the best possible price prevailing in the
market.

Ex.: Buy 100 Reliance at best.

4. Immediate or cancel order: The instructions of the elient are required to be executed are required
to be executed immediately. Such an instruction is given when the prices of securities fluctuate
violently.

5. Open Order: Client does not specify any time limit within which the order must be executed.

6. Stop loss Order: Such an order is placed to safeguard against the heavy fluctuation in the prices of
securities.

7. Discretionary Order: Where the broker is given liberty to buy or sell a particular security at his
discretion.

# After receiving the order the broker will contact other broker/member of the stock exchange.

# Contract note will be prepared after the days’ business is over. The contract note mainly includes
the:-

- Number and price of securities purchased or sold.

- names of the parties

- brokerage charged

- Total amount to be paid by/to the client.

# The Contract note is signed by the broker and is sent to the client.

# The last step of trading procedure is settlement. Its mode depends upon the nature of the contract.

- Ready Delivery Contracts – Such contracts are settled on the same day or within the time
fixed by the stock exchange authorities.

- Forward Delivery Contract – Forward delivery transactions are settled on the day fixed by
the Stock Exchange authorities. Such a contract is made without the intention of taking or
giving delivery of the securities. The object is to make profit by taking advantage of price
movement in future.
 RESEARCH METHODOLOGY

This summer training report is to present functioning of UPSE- Kanpur. The research methodology of
the above study involves the following steps.

1. Research design: - The major emphasis of study is on the studying working of stock exchange.

2. Method of collection of data :-

Primary Data: Primary data are those which have not passed through any printing machine.

In my study collection of primary data was through daily quotations on computer.

Secondary Data : Secondary data are those which are already available, sources of secondary data are-

1. Balance sheets of various companies

2. Daily quotations record

3. Survey of concerning literature

4. Contact to experienced officers

3. Data Analysis and Interpretation : The Data collected are analysed and interpreted with the help
of guide and theory of literatures.
 OBJECTIVE OF STUDY

# To get acquainted with nature of stock market.

# To study working of stock exchange.

# To study criteria of becoming member of stock exchange.

# To study how a new company can be listed in stock exchange.

# To study nature of grievances of investor against companies as well as brokers.

# To study how sell and purchase takes place on line.

# To study factors affecting share prices/ volume of trade.

# To study relation between share prices and volume of trade.

 DEPARTMENTAL ANALYSIS

Working of UPSE Kanpur can be understood in following heads.

1. MEMBERSHIP DEPARTMENT

All the members of the U.P. Stock Exchange shall be bound by the Memorandum and Articles
of Association of the U.P. Stock Exchange Association Ltd., its bye-laws, regulations; Orders and
Notifications of the Securities Exchange Board of India (SEBI) issued from time to time and the
provisions of Securities Contract (Regulation) Act, 1956.

The membership department undertakes the procedural aspects pertaining to the acquisition of
membership of the UPSE by individuals, partnership firms and corporate bodies. At present Mr. Atul
Agarwal heads this department.

Any person viz., any individual, partnership firm or a corporate body can become a member of
the exchange if he/they possess the qualifications mentioned in article 19 of the Articles of Association
of the UPSE.

There are certain conditions to be complied with to become a member of the Exchange. They
are described at length as follows:

~ Individuals:

1. Minimum age qualification: 21 years

2. Education: Matriculation or equivalent

(However as per SEBI guidelines it is Senior Secondary)

The Board subject to prior approval of SEBI can waive these two conditions

3. Citizenship: should be Indian Citizen

4. Compliance: should comply with the conditions

Mentioned in Article 19(1) (2) & (3)

~ Partnership:

A partnership firm can be admitted as a member of the Exchange only if the partnership exists
among the family members or relations. Article 28 of the Articles of Association of UPSE provide for
list of relatives with whom such a partnership can be entered into.
~ Corporate Member:

A corporate can become a member of the Exchange on fulfilling the following conditions:

1. Capital Base: Minimum paid-up capital of Rs. 20 lakhs

However, in case of corporate membership converted from individual membership as per the
prescribed norms of the exchange such member shall have minimum paid-
up capital of Rs. 10 lakhs only.

2. Compliance: a) shall comply with the terms and conditions contained in Article 19 (4)
(5) & (6) of Articles of Association of the UPSE.

b) Shall also comply with Sec. 12 of the Companies Act, 1956.

3. Net Worth: The corporate entities must at all times maintain the requisite net worth.

Once these conditions are fulfilled the applicant i.e., the individual or Corporate body can apply
for membership in this department. No particular form has been specified for making the application.

The Board of UPSE finally approves the application, which is then forwarded to SEBI with
other requisites for its approval and registration.

A broker is required to pay the membership fee at the time of his admission as member as per
the fee structure prescribed by the UPSE for the time being in force.

Multiple Memberships:

Multiple membership is also permitted to those members who have had the membership of the
stock exchange for at least 5 years and also fulfill the financial norms as laid down by SEBI.

Termination of Membership:

Any member may cease to be a member in any of the following ways:

• By resignation

• By death

• By expulsion in accordance with the provisions, byelaws or regulations of UPSE.

• By becoming a defaulter

• By becoming inactive
• By defaulting the membership fees within the specified time

• Insolvency of a Corporate member

Re Admission of Defaulters

The Board may re-admit a defaulter as a member subject to the provisions contained in Article
41-47.
2. TRADE OPERATIONS DEPARTMENT

The basic operation of this department is to generate reports pertaining to all monies pay in and
pay out. It is closely connected or interdependent on the Margin Department, Clearing House and EDP
Department. A daily report related to daily trade operations is generated at the end of each day after
trading is over which shows the volume and daily profits/losses of the individuals brokers and are
given to each broker. If the member has sustained a loss he is required to deposit the loss known as the
mark to market margin by way of cheque in the margin department.

Thus in a gist the following functions can be noted:

- Collection of Mark to Market Margin (only cash/cheque form) on the daily basis.

- Clearing of pay in and pay out;

A. Collection of pay in from members on daily basis.

B. Pay out to clients on daily basis.

I.D.F. (Infrastructure Development fund). It is a compulsory levy for both the active and
non-active members.

- The system is through transfers in individual members account by means of book entries.

- The minimum settlement period of individual member’s transactions takes three days.

- Preparations of reports on daily basis for the trade transactions entered on the Stock
exchange.

- Computerized system of maintaining the records.

Suspension of trading and penalty:

If a cheque for mark to market margin or volatile margin submitted by member is not cleared by
bank, than trading of that member is suspended till next day until clearance of the cheque. Additional
penalty is also leviable if such amount exceeds Rs. 1 lakhs.
3. MARGIN DEPARTMENT

Margin is the minimum amount of capital, required to be deposited, with the Stock Exchange by
the member or broker to have trading rights on the Exchange.

Shri J.K. Dixit heads this department. The margin to be furnished by each member shall be
provided by a deposit of cash or it may be provided in the form of a deposit receipt of a Bank approved
by the Exchange or it may be in the form of approved securities.

Important Note: Deposits of cash shall not carry any interest and the securities deposited by a
member valued at the ruling market price shall exceed the margin amount for the time being covered
by them by such percentage as the Board of Directors may from time to time prescribe.

The margins which are required to be maintained by a member of the exchange can be broadly
stated as follows:

1- BMC-Base Minimum Capital

2- Mark to Market Margin

3- V.A.R. Margin (Value at the Risk)

Base Minimum Capital

A minimum of Rs. 4, 00,000.00 is to be deposited as BMC by an active as well as a non-active

member.

Mode of depositing these four lakhs can be better understood by the following chart:
Rs. 4 Lakhs
|
| |
75 %( i.e. Rs. 3 lakhs) 25%(i.e., Rs. 1 Lakhs)
- can be kept in the form of cash/approved |
Securities/FD -------------------------
- If this margin is to be kept in the form of | |
Securities it is valued at 85% of Market value. 50% 50%
| |
In the form in the form
Of cash of FDRs (from
Clearing bank
of UPSE)

A member or broker can trade 30 times on BMC (i.e., purchase or sale)

 If the member desires to increase his turnover beyond the limits of 30 times of the BMC he can
send a request to the Margin department for the same and deposit the additional capital. This additional
capital is deposited 30% in cash (i.e. cheque/FDRs) and 70% in the form of approved securities.

The total outstanding of a member at the end of day should not exceed 15 times the
BMC+Additional Capital, if any. Thus, the trade transactions of the members are monitored on daily
basis to keep a check that none of the members exceed their trade limit and if they do so then they pay
the difference before they can trade the next day.

Mark to Market Margin:

At the end of the trading cycle, the profit/loss is calculated for every member whose transactions
are not squared up. Under this each member is required to deposit daily losses suffered by him to the
Stock Exchange. However, profit is not taken into consideration. The loss is calculated as the
difference between his buying and selling price and the closing price of the scrip at the end of that day.
The amount is required to be deposited by way of cheque on daily basis.

The losses on day say Tuesday is taken as a “base loss” which is to be paid off next day. If loss
on Wednesday is less than the loss borne on Tuesday then the loss of Wednesday is exempt but if it
higher than the loss of Wednesday, then the loss on Wednesday becomes the “base loss” and so on.

Accordingly the highest loss in a week is to be paid by a member. However, an exemption of

loss up to Rs. 1 lakh is allowed by UPSE. Out of this 1 lakh first of all Mark to market margin is
settled. Thereafter, V.A.R. margin is settled and if there is still any balance that is to be settled
next day morning by 11O’clock.

The mark to market margin is to be paid only on the losses borne on sale of securities and the
loss borne on purchase of securities is ignored.

4. CLEARING HOUSE

The UPSE has maintains a clearing house which is under the control of the Board of the
Directors. The clearing house acts as a common agents of members for clearing contracts between
members and for delivering securities to and receiving securities from members and the receiving or
paying any amounts payable to or payable by such members in connection with any of the contracts.
The clearing house facilitates the delivery and payment in respect of securities, transfer deeds and any
other documents between members. It works in close connection with the trade operations department.
Just as in case of money pay in and money pay out the clearing house deals in the pay in an pay out of
the securities.

At the end of clearing period, each member/broker submits his statements, either as a delivery
note or as receiving note as the case may be to the clearing house. Clearing Rate is the rate at which all
bills are delivered in the Clearing House. It is at that rate all the securities bills are cleared. The
difference of the clearing rate and the actual trade rate is adjusted through profit and loss account in the
trade operations department. The deliveries are received in two ways:

- Direct

- Through UPSE

Since, each member has a separate demat account with a depository participant (known as
clearing member Account), the transfer of securities are facilitated through the same. On the basis of
the delivery note statement, depository participant transfers the securities from clearing member
account to the UPSE account. When the trade operations department intimates the satisfaction of
money pay in, the clearing house directs the depository participant to release deliveries to the
respective member/broker account. In a nutshell, it works synonymously on lines to the working of
Reserve Bank of India, the only basic difference being that in case of clearing house of stock exchange
deals only with the transfer/exchange of securities instead of transfer of money in case of clearing
house of Reserve Bank of India.

Short Delivery/ Close Out:

There may be a situation that there may exist some shortfalls of securities. In order to cover the
shortfalls, the stock exchange goes for the Auction procedure.

The auction of securities are done on T+4 i.e., if the trading was done on Monday the auction
will be conducted on Friday between 12.00 p.m. to 1.00 p.m. of course only if there is any short
delivery. In the auction, the lowest bid price is accepted by the UPSE.

However, if in the auction, shortfall does not get covered, then the deal is closed out. The close
out rate is:

“Highest price recorded in that scrip on the exchange in the settlement in which the concerned
contract was entered in to and up to the date of auction/close out.”

OR
 “20% above the official closing price on the Exchange on the day on which auction offers are
called for (and in the event of there being no such closing price on that day, then the official closing
price on the immediately preceding day on which there was an official closing price)”

“WHICHEVER IS HIGHER.”

5. LISTING DEPARTMENT

Another important area of work of the stock exchange is the listing of the securities of
companies.

Listing Application – The Company, which is not listed on stock exchange should adopt a
request letter of application for the enlistment of its securities therein. The company must apply for
listing of the shares in the prescribed application form within 10 days of the filling of the prospectus
with the registrar of companies along with certain documents i.e. the Memorandum and Articles of
Association, debentures trust deed, prospectus, underwriting agreements, vendors and promoters
agreement, service and selling agency agreement, collaboration and technical agreements, particulars of
dividend and cash business, if any, paid during the last ten years, arrears of dividend, directors Report,
Balance Sheet for the last ten years, a short history of companies with details of its activities,
specimens of share certificates, debentures certificates, transfer, split and consolidation receipts. The
application forms consist of details information under the various head such as the title of the company,
date and place of incorporation, address or registered office and the principal place of business, present
capitalization and past history of capital structure, terms and conditions of any options, dividend
record, particulars of any recognition, reconstruction, amalgamation, absorption etc, and miscellaneous
information in relation to the Company’s financial year. The Company desirous of listing has to
execute with the stock exchange a detailed agreement, in the prescribed form. The list companies
which needs further issues does applies on other prescribed letter of application and supporting
documents. There are five steps in the listing procedure, namely;

I. Applicant Company communicates to the Stock Exchange.

II. Preparation and printing of a formal application.

III. Investigation by a committee of the Board of Directors.

IV. Approval by the Board of Directors.

V. A new Company should have a post issue capital of Rs. 3 Crores. An existing Company opting
for the additional list should also have a post issue capital of Rs. 3 crores.
 The Companies intending to list at the stock exchange have to pay two types of fees: initial
listing fee and annual listing fee. This is the main source of revenue of the Stock Exchange.

A. Initial List fee Rs. 10,500

B. Annual Listing Fee

1. Companies with paid up share capital of Rs. 1Crores Rs. 6,000

2. Above Rs. 1 crores and upto Rs. 5 crores Rs. 12,000

3. Above Rs. 5 crores and upto Rs. 10 crores Rs. 20,000

4. Above Rs.10 crores and upto Rs. 20 crores Rs. 40,000

5. Above Rs. 20 crores and upto Rs. 50 crores Rs. 60,000

6. Above Rs. 50 crores and upto Rs. 75 crores Rs. 1,00,000

Companies, which have a paid up Capital of more than Rs. 75 crores will pay additional listing fees
of Rs. 2000/- for every increase of Rs. 5 crores or part thereof in the paid up share/debenture capital.

DELISTING OF COMPANIES:

With the repeal of the Controller of Capital Issues Act, listing was badly seeked by many
companies consequent to which every Company whether with or without proper financial standing got
enlisted. The result was that prices of shares of these Companies dropped and were hardly traded. Thus,
as a result many Companies got delisted from the UPSE and they fall into the category of the Defunct
Companies.
6. SURVEILLANCE DEPARTMENT

This department reports directly to the SEBI through Executive Director. Its function includes.

- Collections of information from various departments on daily basis, find out script vise
turnover, high/low prices, closing price. The above information is required to be submitted to
SEBI.

- Submission of daily/weekly/monthly report to SEBI as per the prescribed format, disclosing

the total turnover, total outstanding position, on particulars days/week/month.

- Intimation of any special information to SEBI about the Companies.

- Implementation of all the directors given by SEBI.

The surveillance department also keeps vigil over the price movements of each scrip in the
market to keep a check on the abnormal price movements in the scrip. For this purpose, a daily report is
generated by this department to check over the daily price movements of the shares.

The department also maintains stock watch system wherein the price quotations of the shares are
maintained. The system is useful to study the pattern of movements of shares of the Companies.

Members are required to pay annual membership fees to the Exchange as may be fixed by the
Board of Directors from time to time. Apart from that members are required to pay Rs. 5000/- as
registration fees in favour of SEBI.

The department also maintains a personal file of the member in the prescribed format as per the
SEBI rules.

7. BAD DELIVERY CELL (BDC)

Every stock exchange has Bad Delivery Cell to deal with the cases of Bad Delivery of the
Securities. The Bad delivery of securities:-

- The Broker who purchased the shares on the behalf of the client will prepare a Bad deliver
memo in the prescribed from BDC 1A in triplicate and submit the same to the BDC of stock
exchange along with the companies objection(s)
 - The BDC makes an entry of the same in the register and allots a unique serial number to each
objection reported to it & send it to the First Introducing Member (FIM) with in a stipulated
time.

- If the FIM finds any objection as incorrect, he is required to submit the same within 7 days to
the BDC in the prescribed form, otherwise FIM is required to get the objections rectified and
handover the rectified/replaced shares to the receiving members within 7 days.

- Than BDC hands over the rectified replaced shares to the receiving members within 7 days.

- Where the FIM fails to get the objections rectified within the time when the shares are called
for auction to recover the amount. The auction day is every Monday of the Week.

- The FIM is also required to surrender Corporate benefits, if any, receipts like dividend, etc in
favour of the receiving member.

However, with the introduction of system of dematerialization of securities the working of this
department has come to an end in view of simultaneous introduction of Compulsory Rolling Settlement
system by SEBI.

8. GRIEVANCE, COMPLAINTS, AND ARBITRATION DEPARTMENT

The department mainly looks after the grievances and arbitration proceedings. Compliant
against the Company, such complaints are usually received from the investors, brokers intermediaries,
etc. The complaints can be received against;

- U.P. based Companies

- Non-U.P. based Companies

In case of non-U.P. Based Companies, UPSE acts as a post office and simply forwards the complaints
to the respective regional Stock Exchanges.

Nature of Complaints:

From Investors:-

A. Non-Receipts of allotments of shares/refund orders

B. Non-Receipt of shares after transfers.

 C. Non-Receipt of Dividends/Interest

D. Miscellaneous, this includes the non-receipt of Annual Reports, Notice of AGM etc.

From Brokers:

A. Non-Receipt of Brokerage at the time of Public issue

B. Non-Receipt of underwriting commission

Complaints against members/brokers:

Nature of complaints:

A. Non-Receipt of Securities

B. Delay in the receipt of shares

C. Rate differences

To solve the disputes, this department consists of;

• Grievance Committee

The Grievance Committee first calls the parties to the dispute and tries to Reconcile the
matter amicably and delivers its judgment.

• Arbitration Committee

Any party to the dispute disagreeing with the decision of the grievance committee can
appeal to the Arbitration Committee; however a member/broker can directly file its complaint to
the Arbitration Committee.

• Defaults Committee

Apart from the grievance committee and the Arbitration Committee the stock exchange
has defaults committee. The Defaults committee comes into the picture when a member/broker
is declared as a defaulter. A member/Broker can be declared as a defaulter either by the
President or Executive Director or by the Board of Directors when he fails to pay his dues to the
stock exchange.

The functions of the Default Committee include verification on claims, realization of assets
dispersement of the funds to the claimants.

The claims are settled in the following order of preference:

 - Exchange Dues

- Broker’s Claims

- Investor’s Claims

9. LEGAL DEPARTMENT

The main function of this Department is to handle the court cases where the stock exchange is made
a party to the dispute.

Such cases may be of the following nature:

- Appeal filed against the award of the Arbitration Committee

- Case filed against the members/brokers for forged shares

- In case any member/Broker is declared as a defaulter

- Association of broker’s filing cases/objections against any directions of Notification of

SEBI/

- Misappropriation of securities lodged with the Margin department of the Stock Exchange as
a security. In such a case by means of applying to the Court, he can obtain the interim
injuction order to prevent those shares from being transferred in favour of any other person.

10. UPSE SECURITIES LIMITED

The UPSE Securities Ltd., a subsidiary of the UPSE was incorporated on 19th April 2000 with its
registered office situated in the state of Uttar Pradesh.

Factors deriving to its constitution:

- SEBI as a regulatory and monitoring body for the stock exchange came out with its
regulatory and control systems owing to which there was an adverse impact on the broker’s
 turnover in trading business. As a result 152 members of UPSE united themselves to create
this organization and at present hold the membership of BSE as well.

- At present 94 members have been registered from SEBI, and 47 out of 94 are active
members of this organization.

- Rolling settlement of transactions.

- Approximately, 5 crores turnover reaped on per day basis.

- However, this Organization barely meeting its basic necessity and is only in the status of no
profit no loss situation. But, in the long run its Management has to restructure all its
promotional, turnover, and trading policies to safeguard the long term interest of the
organisation.
1.3 CORPORATIZATION AND DEMUTUALIZATION 2005

Most of the Stock Exchanges around the world were set up as association of the Trading members. The
objective to set up association was aimed to create a formal institution for mutually regulating the securities
transactions among the members. Thus, most of the Stock Exchanges were promoted as non-profit
organizations. While, the management of the Stock Exchange was generally vested with elected
representative(s) of the trading members, executives carried out the day-to-day functioning of the Stock
Exchange.
However, during last two decades attempts have been made to change the profile of the
Stock Exchange by demutualising them and reconstituting them as commercial corporate entities.1
Demutualization of a Stock Exchange entails that it is no longer remains entity for mutual benefit of Trading
members but beholds the larger objective of becoming the system with adequate checks for proper mobilization
of capital & protecting the interest of investors at large.
Corporatization is a critical enabler that would support the efforts in expanding and
strengthening the Indian capital market. While things are becoming more business oriented,
the corporatized Stock Exchanges will improve its flexibility and efficiency in
terms of its responsiveness to market needs2.
The need for corporatization of Stock Exchanges in India has recently came into lime
light after functioning of Mumbai Stock Exchange is alleged to have been manipulated by the some of the
Trading members on governing Board of the exchange, which followed by stock markets crash inspite of what
was seen as one of the favorable & progressive Union Budget in recent years3.
After the stock scam of March 2001, the Government finally announced that all stock
exchanges would have to mandatorily go in for demutualization within a specified timeframe4. This was aimed
at preventing conflict of interests, which arise when
stockbrokers are involved in the management of the stock exchanges also.
It is in this context it becomes necessary to study the need and impact of Corporatization of Stock Exchanges
and its relevance in Indian context before a clear roadmap could be prepared to take this process forward, for
which SEBI constituted a Group under the Chairmanship of Justice M. H. Kania, former Chief Justice of India
comprising of eminent personalities, in fields of law, accountancy, finance, company law affairs and taxation to
advise SEBI on this matter and to recommend the steps that need to be taken to implement the announcement of
the Government.
So as a result of this the Government has approved the corporatization of stock exchanges in India by which
ownership and trading rights would be segregated from each other .corporatization and demutualization of stock
exchanges are complex subjects and involve number of legal, accounting and company law issues. These
roadmaps could be prepared to take process forward.
Historically, brokers owned , controlled and used to manage stock exchanges. In case of dispute, the self often
got procrdure over regulations leading inevitably to conflict interest. The regulator therefore focus on reducing
the dominance of members in the management of stock exchanges and advised to reconstitute their governing
council to provide atleast 50% non brokers representatives. This did not materially alter the situation. Thus
finally in face of volatility in the securities market, government proposed in marc 2001 to corporatize the stock
exchanges by which the ownership, management and trading members could be segregated from one another.
 NATION

INTRODUCTION:

The national stock exchange is the In

towns across the country. NSE was s
automated screen based trading syste
transparency, speed and efficiency ,
a model for the security industry in t

NSE has played a catalytic role in re

OBJECTIVES

NSE mission is setting the agenda for change in the securities market in India. The NSE was set up with the
main objective of :

• Establishing a nation wide trading facility for equity ,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 system

• Enabling shorter settlement cycles and book entry settlement system

• Meeting the current international standards of securities market

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

TRADING SYSTEM

the fully computerized , online trading system used in WDM segment of the exchange has changed the vary
manner in which trading is perceived in the Indian securities market besides the fact that the system helped in
increasing trading velocities and cut timeframes , it has also managed to incorporate the critical aspect of
security in its function.

The exchange provides the facility for screen based trading with order matching facility. The members are
connected from their respective offices at dispersed locations to the main system at the NSE premises through a
high speed , efficient satellite telecommunication network. The trading system is an order driven , automated
order matching system which does not reveal the identity of the parties to an order or a trade. This help orders
whether large or small to be placed without the members being disadvantaged by disclosure of their identity.
The trading system operates on a price time priority . orders are matched automatically by the computer keeping
the system transparent, objective and fair.
Where an order does not find a match it remains in the system and is displayed to the whole market , till a fresh
order which matches comes in or an earlier order is cancelled or modified.

Trading system provides tremendous facility to the users in terms of the type of orders that can be placed on the
system. Several time related , price related, or volume related conditions can easily be placed on an order, the
trading system also provides complete online market information through various enquiry facilities . detailed
information on the total order debts in a security , the best buys and sells available in the market, the quantity
traded in that security , the high , the low and last traded prices are available through various market screens at
all points of time.

COMMUNICATION NETWORK

Across the globe, developments in information, communication and network technology have created paradigm
shifts in the securities market operations. Technology has enabled organizations to build new sources of
competitive advantage , bring out innovations in products and services, and also provide for new business
opportunities. Stock exchanges all over the world have realized the potential of IT and have moved over to
electronic trading systems which are cheaper, have wider reach and provide a better mechanism for trade and
post trade exhibition.

NSE believes that technology will continue provide the necessary inputs for the organizations to retain its
competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact that
technology will continue to redefine the shape of securities industry.NSE stresses on innovation and sustained
investment in technology to remain ahead of competition. NSE IT set up is the largest by any company in
India. It uses satellite communication technology to energize participation from around 400 cities spread all
over the country . in the recent past , capacity enhancement measures were taken up in regard to the trading
systems so as to effectively meet the requirements of increased users and associated trading loads. with up
gradation of trading hardware ,NSE can handle up to 1 million traders per day. NSE has also put in place
NIBIS ( NSE”s internet based information system) for online real time dissemination of trading information
over the internet. In order to capitalize on in house expertise in technology NSE set ups a separate company –
NSE.IT , in October 1999. This is expected to provide a platform for taking up new IT assignments both within
and outside India and attaining global exposure.

NEAT is a state -of –art client server based application. At the servers end, all trading information is stored in
an in-memory database to achieve minimum response time and maximum system availability for users. The
trading server software runs on a fault tolerant STRATUS main frame computer while the client software runs
under window on PCs.
 The telecommunication network uses X.25 protocol and is the backbone of the automated trading system.
Each trading member trades on the NSE with other members through a PC located in the trading members
office , anywhere in India. The trading members on the wholesale debt market segment are linked to the central
computer at the NSE through the dedicated 64 Kbps leased lines lines and VSAT terminals. These leased lines
are multiplied using dedicated 2 Mbps , optical – fibre links. The WDM participated connect to the trading
system through dial up links.

The exchanges uses powerful RISC – based UNIX servers, procured from digital and HP for the back office
processing. The latest software platforms like ORACLE7 RDBMS, GUPTA-SQL / ORACLE FORMS 4.5

Front –Ends etc have been used for the exchange application . the exchange currently manages its data centre
operations , system and database administration, design and development of the in house systems and design
and implementation of telecommunication solutions.

NSE is one of the largest interactive VSAT based stock exchange in the world. Today it supports 3000 VSATS
& us expected to grow to more than 4000 VSATS in next year. The NSE network is the world largest private
wide area network in the country and the first extended C – band VSAT network in the world. Currently more
than 9000 users are trading on the real time NSE application. There are over 15 large computer system which
include non-stop fault tolerant computers and a high end UNIX servers, operational under one roof to support
NSE application. This coupled with the nation wide VSAT network makes NSE the country largest information
technology users.

In an ongoing effort to improve NSE infrastructure a corporate network, has been implemented connecting all
the offices at Mumbai, Delhi, Calcutta and chennai . this corporate network enables speedy interoffice
communications and data and voice connectivity between offices

In keeping with the current trend , NSE has gone online on the internet . apart from having a 2Mbps to VSNK
and our own domain for internal browsing and email purposes we have also set up our own website.
1.4 BOMBAY STOCK EXCHANGE

INTRODUCTION

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 Tokyo Stock
Exchange , which was established in 1878. It is the voluntary non-profit making Association of persons (AOP)
and is currently engaged in the process of converting itself into demutualized 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 (regulations) Act, 1956.

The exchange while providing an efficient and transparent market for trading in securities, debt & derivatives
uploads the interest of the investors and ensures redressal of their grievances whether against the companies or
own member broker. It also strives to educate and enlighten the investors by conducting investor education
programmes and making available to them necessary informative inputs. A governing board having 20 directors
is an apex body , which decides policies and regulates the affairs of the exchange. The governing body consists
of 9 elected directors, who are from broking community ( one third of them retire every 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 administrations of the
exchange and he is assisted by the chief operating officer and other heads of departments.

The exchange has inserted new rule No. 126 A in its rules , bye laws & regulations pertaining to constitution of
the executive committee of the exchange . Accordingly , an executive committee , consisting of three elected
directors, three SEBI nominees or the public representatives , Executive director & CEO and chief operating
officers has been constituted. The committee considers judicial & quasi matters in which the governing board
has powers as an applete authority , matters regarding annulment of transactions , admission , continuance and
suspension of member brokers , declaration of a member broker as defaulter , norms , procedures and other
matters relating to arbitration, fees , deposits margins and other monies payable by the member brokers of the
exchange. Etc.

OVER THE COUNTER EXCHANGE OF INDIA( OTCEI)

The over the counter exchange of india ( OTCEI) was the first exchange to have started scrips trading and
offered screen based trading in 1990 . It was established mainly to cater to small capitalized companies . the
operations began with trading in debt instruments , in addition , equity debentures instruments of the companies
listed on other stock exchange have been permitted for trading the OTCEI . Ihe turnover levels are extremely
low, and are not viable for a large cross section .

The OTCEI aimed to ensure settlement within three days .Investors trade with counter receipts , not share aimed
to ensure settlement within three days . With settlement done on a spot basis , problems resulting from poor
liquidity and delayed transfers have been reduced.
2.1 DEPARTMENTS OF U.P.S.E

CHAIRMAN Mr. KD GUPTA

EXECUTIVE DIRECTOR Mr. B.K NADHANI

U.P.S.E SECURITIES LTD( SUBSIDIARY CO.) Mr. VED PRAKASH( CEO)

LISTING & MEMBERSHIP DEPT Mr. BP GUPTA

SECRETARIAL DEPARTMENT Mr. CHANDRA BABU PR

FINANCE & ACCOUNT Mr. S.C KAPOOR

MARKET OPERATION / MARGIN Mr. JK DIXIT

LEGAL DEPARTMENT Mr. JN SHUKLA

CLEARING HOUSE Mr. LS PANDEY

SURVEILLANCE DEPARTMENT Mr. ATUL AGGARWAL

R& D / INVESTORS SERVICE CELL Mr. RAJENDRA VERMA

 2.2 UTTAR PRADESH STOCK EXCHANGE ( UPSE) ASSOC LTD.

HISTORY/BACKGROUND

1. Name of Stock Exchange : The Uttar Pradesh Stock Exchange Association Ltd.

2. Registered Address : `Padam Towers’ 14/113, Civil Lines, Kanpur

3. Date of Establishment : 15th November, 1979

4. Nature of organization : Corporate body.

• (Whether a company or Association of persons)

• (If company, please indicate whether limited by guarantee or shares).
• (If company limited by shares, then indicate shareholding pattern)

Public Limited Company registered under the Companies Act, 1956.

Total Shares issued : 1000 (One share of Rs.2000/- each)

 Shareholding pattern in the recognized Stock Exchange as on 30.09.2008

Category of No. of Total Number of Percentage of Shares

Shareholder Shareholders Shares

TRADING MEMBERS

Individuals 177 177 17.7

Corporates (Listed) 03 03 0.3

Corporates (Unlisted) 62 62 6.2

Any other (specify) NIL NIL --

TOTAL (A) 242 242 24.2

PUBLIC

Individuals 257 717 71.7

Corporates (Listed) NIL NIL NIL

Corporates (Unlisted) 32 41 4.1

Any other (specify) NIL NIL NIL

TOTAL (B) 289 758 75.8

Total (A+B) 531 1000 100%

Uttar Pradesh Stock Exchange Association Ltd. was inaugurated on 27th August, 1982 and occupies one of the
prominent place among 24 Stock Exchanges in India. It plays an important role in the development of the
capital market of North India.
Initially, it had only 350 members which has grown up to 540 at present. The membership is open to companies
even beyond the territories of Uttar Pradesh. At present UPSE as 683 companies
listed with the total capitalization of Rs 81,184 crores. The annual turnover of this exchange for past three years
are :

Year Total Turnover Delivery % of turnover

turnover to Delivery
(Single Sided)

(Rs. In Crores)

2006-07 806.50 0.28 0.03

2007-08 476.39 0.98 0.21

2008-09 (upto 170.60 0.05 0.03

31.10.2008)

This stock exchange is wedded to the investors protection and investors education as UPSE has firm conviction
that any investor protection cannot be achieved without proper awareness and education of investors . thus, the
exchange has a very active investor service cell and also a very equipped research and development wing in
functioning. UPSE has also very effective system of readdressing of the investors complaints.

The exchange is one of the best developed exchanges of the country so far its infrastructure is concerned . The
Prime minister Dr. Manmohan singh, Finance minister shri Pranab Mukherjee , other central ministers and
chief ministers of Uttar Pradesh have visited the exchange and had appreciated its efforts in maintaining the
transparency and the integrity of the market. To keep pace of changing technology the exchange has embarked
upon the project of screen based training. The online trading based on VECTOR software supplied by Cmc has
commenced on UPSE from 11th November, 1997.

To increase the further business and to facilitate the online trading facility to about 22 members at luck now an
additional trading floor was established at lucknow. Seeing lack of participation by investors, UPSE has closed
down its landmark Additional Trading Floor (ATF) at Lucknow. The ATF was set up initially to further
increase business and to provide online trading facility to Lucknow based members. It commenced online
trading in March 1999 with 22 members, who were allotted computer terminals at the ATF. The terminals were
connected with UPSE's main server via VSAT.

It is noteworthy to note that at present out of 17 regional stock exchanges recognized in India only 2 regional
stock exchanges are functioning and are still generating some turnover. UPSE is among those two regional
stock exchange , the other one being Calcutta stock exchange.
As per decision of SEBI for the revival of the smaller stock exchanges in the country, they can obtain the
member stock exchanges like NSE, BSE, CSE etc by forming a subsidiary company of the exchange and in turn
the members of the exchange can trade through the said subsidiary as sub- brokers.

Accordingly they had incorporated a wholly owned subsidiary namely UPSEC and obtained the membership of
BSE to enable the members of UPSE on BOLT. They are at present trying to get membership of NSE.

MAJOR OBJECTIVES OF UPSE

• To organize and carry on the stock exchange and regulate the business of the exchange , stocks, shares ,
debentures , debenture stocks , government securities , bonds and equities of any description and with a
view to establish and conduct stock exchange in Kanpur.

• To acquire the membership of any other recognized exchange in India and abroad including membership
of OTCEI , broad base the operation of stock exchange for the benefit of general public & investors.

• To promote one or more subsidiary whether wholly or partly owned with object to promote & trade in
shares & stocks , debenture bonds and other securities of any description issued by companies ,
statutory corporations, government of state or union Government , financial institutions.
2.3 UPSE SECURITIES LIMITED

(Commonly referred in as subsidiary company)

The formation of UPSE securities ltd is the outcome of various underlying reasons. To understand that , time
would have to be set back to late 20th century.. Prior to that ,the regional stock exchanges were receiving a great
source of revenue as listing fees of various companies .Every company was supposed to list themselves in
regional stock exchange where their head office existed .so besides mandatory listing in regional stock
exchange ,it was the fashion among companies to list themselves in more and more stock exchange But slowly
in 2003 ,SEBI totally called the mandate and awarded freedom to get listed in any stock exchange All factors
contributed to companies to get delisted from regional stock exchanges. This move vanished the major source
of revenue of RSE. So, it was decided in a meeting held on September 9,1999 to promote or float a subsidiary
company to acquire membership right of other big stock exchanges i.e. NSE /BSE subject to under noted
conditions:

• The subsidiary company shall be 100% owned by stock exchanges promoting/floating such subsidiary
company. The name of the company shall not contain the word “stock exchange”.

• The members of stock exchange shall register themselves as sub .brokers of subsidiary company to
enable them through subsidiary company.
 • The subsidiary company shall register only the members of stock exchange, which is promoting the
subsidiary company as its brokers, and no other client/sub broker shall be entertained by subsidiary
company.

• The sub broker of the subsidiary company shall maintain separate deposits with the subsidiary
company. The Base Minimum Capital deposited by the sub broker with the promoting stock
exchanges shall not be transferred to the subsidiary company.

• The trading / exposure limit of the sub-brokers shall be based on the deposit received by the subsidiary
company from the sub broker and these limits shall not exceed the limits as prescribed by the stock
exchange of which the subsidiary company is a member.

• The subsidiary company shall collect margins from the sub –brokers for the payment of margins to the
respective stock exchange of which subsidiary company is the member. The margin imposed by the
subsidiary company on its sub broker shall not be less than the margin payable to the stock exchange of
which the subsidiary company is the member.

• The stock exchange shall incorporate the above mentioned condition in the Memorandum of association
and Article of Association of the subsidiary company.

So based on this decision taken on the meeting it was decided by board of directors of UPSE to set up their
wholly owned subsidiary named “UPSE SECURITIES LIMITED”.

UPSE securities ltd., a wholly owned subsidiary of U.P Stock Exchange Assn. Ltd. was incorporated on
19.04.2000 with the object to obtain membership of larger Exchanges such as BSE/CSE and provide trading
facilities on these exchanges to the member of U.P stock exchange as its sub brokers as per the
policy/guidelines issued by SEBI. Accordingly the company acquired the membership of BSE and commenced
on-line trading of BOLT with effect from 26.01.2001. The company is limited by shares and its 100% shares
are held by UPSE .Its issued and subscribed share capital was of RS 1,80,73,700 which was its initial funding
and till date their has been no subsequent funding.

To facilitate pay-in and pay-out of funds ,the company has adopted the branch model of business module for
settlement of transactions at company level and consequently separate bank account and beneficiary demat
account ,designed to each of the active sub-broker ,treating it as a virtual branch of the company facilitating the
accounting etc
 Business Module
Of
UPSE Securities Ltd. (UPSEC)
(part & parcel of the Business Rules)
 Based on SEBI(Stock-Brokers And Sub-Brokers)(Amendment)
Regulations,2003 and format of Model Tripartite Agreement.

• BUSINESS MODULE :

With the implementation of back office software “Shilpi-cApex 3.5” developed by M/s Shilpi Computers Ltd.,
New Delhi, all the sub-brokers will be treated as separate virtual branch of the company under whom there can
be multiple offices/trading terminals.

• CLIENT REGISTRATION:

1. All the sub-brokers will be required to submit tripartite agreement with their clients and required to submit
to UPSEC prior to commencement of trading by the client.
2. All the sub- brokers and their clients will be required to abide by the terms and conditions of the tripartite
agreement executed.
3. Client of the sub-broker will be required to directly credit the securities in the CM pool account of UPSEC
maintained at SHCIL, DP having account CMBP ID IN652365 for the purpose of pay-in.

• RISK MANAGEMENT

1. The deposits of the sub brokers, viz Base Minimum Capital , additional capital and margin advance is being
treated as capital deposits for the purpose of computation and adjustment / collection of the margins.

2. The one –third of the capital deposits of the respective sub-brokers is blocked as upfront margins and the rest
two-third is available for trading.

3. At the end of the day, the total margin obligation for the day of the respective sub –brokers are deducted from
total capital deposits of the sub broker.

4.The remaining capital deposits of the respective sub brokers , after such deduction ,is treated as available in
the same manner, as stated above for the next day trading of the sub broker .
5. The margin obligations for the day , so deducted ,if released after pay in of relevant settlement and the same
is added back to the capital deposits of the sub brokers ,available for the subsequent trading.

6. The minimum capital required to trade as a sub broker in the company is Rs 1,50,000 and the additional
capital may be deposited in the multiples of Rs 50,000 /- for enhancing the trading limits.

Some other basic information about the company are:

• UPSEC will open equivalent number of bank accounts for each sub brokers in the name and style of
UPSEC securities ltd. These banks accounts will be opened either with Standard Chartered Bank ,

M.G road, Kanpur or with UTI bank LTD, Mall road ,Kanpur as per the choice of the sub broker
concerned.

• It will be the responsibility of the sub brokers to clear all the dues / pay –in of their clients within time
as per the schedule of the UPSEC i.e. T+1 basis.

• The shortfall in the pay in of the fund ,if met by the sub broker from their own account ,shall be credited
to the contingency deposit account of the sub brokers. UPSEC will not pay any interest on this deposit.

• Every client of the sub- broker will have to clear his / her debit balance in respect of the transactions
undertaken latest by T +4 days.

• UPSEC will issue the contract notes to all the clients of the sub- brokers on the regular basis.

• Brokerage will be charged from the clients of the sub –brokers as per the instructions filled up in the
client registration forms received through the sub-brokers or any written modification authorized by the
clients and the sub –brokers thereafter.

• The share of brokerage of UPSEC from the total brokerage charged to the clients of the sub-brokers
shall be 0.009% subject to minimum of 1 paisa per share. UPSEC shall refund the excess brokerage to
its sub –brokers weekly.

• All other statutory and legal charges such as stock exchange turnover charges, stamp duty, STT, service
tax etc as applicable will be levied separately in the contract notes issued to the clients of the sub –
brokers.
• Sub- brokers who are interested in second, third trading terminal are allowed to have them by allotting
them separate ID on the following terms and conditions:

- Sub – broker will have to pay a sum of Rs 5000 for each such trading terminal.

- Separate monthly charges such as TWS charges, VSAT support charges etc as applicable from time
to time will have to be paid by the sub –broker for each such terminal.

- Each such terminal shall be subject to fulfillment of margin and other applicable business rules.

- Presently BSE has allowed trading only in cash segment.

• TRADING ON BSE STARTED ON -- 29-11-2001

• NUMBER OF REGISTERED SUB-BROKERS -- 113

• NUMBER OF ACTIVE MEMBERS -- 70

• CURRENT NUMBER OF CLIENTS -- 8000(APPROX)

• TURNOVERS: (IN CRORES)

2000-01( FROM 29-01-2001) -- 67.99

2001-02 -- 981.88
2002-03 -- 1907.64
2003-04 -- 2334.55
2004-05 -- 2493.73
2005-06 -- 1813.24
2006-07 -- 2164.10
2007-08 -- 3124.08

• PROFIT / LOSS OF THE COMPANY

YEARS PROFIT/LOSS AMT IN Rs

2000-01 LOSS 3,99,241.91

2001-02 LOSS 10,67,493.51

 2002-03 PROFIT 7,84,000

2003-04 PROFIT 18,20,000

2004-05 PROFIT
12,93,000
2005-06 PROFIT
7,98,000
2006-07 PROFIT
6,36,000
2007-08 LOSS
21,964

Thus , the scope of UPSEC is indeed very wide and in future periods it will surely further expand the levels of
business leading to the lucrative gains to the corporate ,investors and finally its members.
2.4 LISTING DEPARTMENT
Before talking about listing department I would like to throw light on the basic jargaon words
used in this department.

Listed company means a company which has any of its securities offered through an offer
documents listed on recognized stock exchange and also includes public sector undertaking
whose securities are listed on recognized stock exchange.

Public issue means on an invitation by a company to the public to subscribe to the securities
offered through a prospectus.

Right issue means an issue of capital under sub section (1) of section of companies’ acts 1956 to
be offered to the existing shareholder of company through a letter of offer.

Composted issue means an issue of securities by listed by listed company on a public cum right
basis offered through a single offer document wherein the allotment for pubic & right component
of the issue is proposed to be made simultaneous.

Offer document means prospectus in case of public issue of offer for sale & letter of offer in case
of a right issue.

Unlisted company means a company, which is not, listed company.

Application for listing No company shall make any public issue of securities unless it has made
an application for listing of those securities in stock exchange(s)

Security At the time of public/right Issue Company deposit 1% security of the issue.50% in cash
&50% in bank guarantees for protection of investors.

Depository means a body corporate register under SEBI (Depositories and Participants)
Regulation, 1996.
Listing Agreement At the time of listing it is a requirement of the exchange that there must be
filed with the application an agreement in terms to qualify for admission and continuance of said
securities upon the list of exchange.

As per listing agreement companies agree to submit all the required documents with the exchange
for the information.

Delisting There are two types of delisting: voluntary delisting & compulsory delisting.

Voluntary delisting: Voluntary delisting being by the promoters of the company.

Procedure for voluntary delisting: Any promoter or acquirer desirous of delisting securities of the
company under the provision of these guidelines shall:

a) Obtain the prior approval of the shareholders of the company by a special resolution passed at
its general meeting.

b) Make a public announcement in manner provided in these guidelines.

c) Make an application to the delisting exchange.

d) Comply with such other additional conditions as may be specified by the concerned stock
exchange.

Compulsory delisting of companies by exchange

The stock exchange may delist companies which have been suspended for a minimum period of
six months for non-compliance with the listing agreements.

The stock exchanges may also delist companies as per norms provided in schedule.
The stock exchange shall give adequate & wide public notice through newspapers including (one
English national daily of wide circulation) & through display of notice on the notice
board/website/trading systems of the exchange.

The stock exchange shall give a show -cause notice to the company or adopt procedure provided
under part B of schedule III for delisting under clause15 (1) and (2).

Schedule of listing fees:

Initial listing fees: Rs 10,500 /-

Annual listing fees

Up to 1 crores: Rs 600/-

Above 1 crores and up to 5 crores: Rs9000/-

Above 5 crores and up to 10 crores: Rs 14000/-

Above 10 crores and up to 20 crores: Rs 28000/-

Companies which have a paid-up capital of more than Rs.20 crore will pay additional
listing fees of Rs.600/- for every increase of Rs.1 crore or part thereof in the paid up
share/debenture capital.

NOTE: A discount of 50% will be applicable on the Annual Listing Fees for the companies
whose registered office falls out outside the State of U.P. & Uttaranchal. This discount is not
applicable to the companies whose securities are listed on this Exchange only.

Last date of Payment of Listing fees - 30th April every year as per clause 38 of the Listing
Agreement

Collection of fees for the last financial year - Rs.25,55,850

Collection of fees at fifteen days prior to
 the current inspection (as on 31.10.2008) - Rs.21,44,995

At the start of the Financial year bills are issued for payment of listing fee (including arrears)
subsequently reminders (twice) have been issued.

- Following are the details given below for listing fees in last 4 years :

Particulars Year Year 2007 Year2008 Year (Upto

2006 31.10.2008)
Total No. of companies listed 713 691 685 681
Amount of listing fees 32,21,75 33,31,300 25,55,850 21,83,995
collected (Rs.) 0
Listing fee arrears (Rs.) 3,51,13,3 3,79,21,621 3,92,11,221
21
No. of companies who have 238 237 234 211
not paid listing fees(Rs.)
% Defaulting Companies 66.62% 65.70% 65.84% 69.02%

Companies which have paid -up capital of more than 20 crore, pay additional fees of Rs600/- for
every increase of Rs 1 crores or part thereof.

Presently there are 713 companies listed with UPSE. Status of listed companies in past 3 years
are:

Year1 Year2 Year3

2006-07 2007-08 2008-09
upto
31.10.2008
st
Number of companies as on 1 April 713 691 685
Companies listed during the year - 1
 Companies Delisted during the year 12 7 4
Number of companies as on 31st March 691 685 681

The companies which are not listed on the stock exchange should adopt a request letter of
application for the enlistment of its securities therein. The company must apply for listing of the
share in the prescribed application firm within 10 days of the filing of prospectus with the
registrar of company along with certain documents i.e.

• Memorandum & article of association.

• Debenture trust deed.
• Prospectus.
• Underwriting agreement.
• Particulars of dividend , arrears of dividend.
• Directors report , balance sheet for the last 10 years.
• Short history of the company.
The company desiring of listing has to execute with the exchange a detailed agreement in the
prescribed form. The listed company which needs further issue needs to apply in other prescribed
letter of application and supporting documents. There are three steps of listing procedure :

• Applicant company communicates to the stock exchange.

• Preparation and printing of formal application.
• Investigation of committee of board of directors & payment of requisite fees.

List of Companies whose further Securities listed from 01.04.2006 to 31.10.2008

LIST OF COMPANIES WHOSE SECURITIES LISTED

S.NO. NAME OF COMPANY EXCHANGE / DATE OF

REGIONAL STOCK LISTING
EXCHANGE
1 JAIPRAKASH ASSOCIATES LTD. REGIONAL 31.05.2006
2 Mirza International Ltd. REGIONAL 05.04.2006
3 Superhouse Leather Ltd. REGIONAL 11.05.2006
4 LML Limited. REGIONAL 11.05.2006
5 Mohan Steel Limited REGIONAL 07.06.2006
6 U.P.Asbestos Limited. REGIONAL 07.06.2006
7 LML Limited. REGIONAL 21.06.2006
8 Jaiprakash Associates Limited REGIONAL 10.07.2006
9 LML Limited REGIONAL 04.08.2006
10 LML Limited. REGIONAL 18.08.2006
11 Ashim Investment Company Limited. Non-REGIONAL 28.08.2006
12 LML Limited REGIONAL 06.09.2006
13 LML Limited REGIONAL 29.09.2006
14 LML Limited Regional 10.07.2006
15. Skipper Steels Limited Non-Regional 12.03.2007
16. Ridhi Sidhi Commercials Limited Regional 10.04.2007
17. Yash Papers Limited Regional 17.05.2007
18. Mirza International Limited Regional 17.05.2007
19. Bihar Tubes Limited Regional 12.07.2007
20 J.K.Cotton & Spinning & Weaving Mills Co. Regional 30.07.2007
21 Amrit Corp. Limited Regional 23.08.2007
22 Associates Cereals Limited Non-Regional 12.09.2007
23 GPT Infraprojects Limited Non-Regional 30.11.2007
24. Ganesh Polytex Limited Regional 12.12.2007
25. GPT Infraprojects Limited Non-Regional 13.03.2008
26. Jaiprakash Enterprises Limited Regional 04.03.2008
27. Bharat Immunologicals & Biologicals Limited Regional 18.03.2008
28. Duke Commerce Limited Non- Regional 24.03.2008
29. Bihar Tubes Limited Non-Regional 29.04.2008
30. Electricals & Electronics (India) Limited Non-Regional 17.07.2008
31 Yash Papers Limited Regional 17.07.2008
32 Surya Commercials Limited Regional 02.08.2008
33. Skipper Steels Limited Non-Regional 26.09.2008
34. Ankita Pratishthan Limited Non-Regional 26.09.2008
35. Ganesh Polytex Limited Regional 26.09.2008

2.4 MEMBERSHIP DEPARTMENT

The department mainly deals with Membership‘s/Membership
Admission/Transfer/Conversion/Registration/Surrender of Certificate of Registration of SEBI.

Admission to Membership of the Exchange is Governed by the eligibility criteria as specified

in Article 19 of the Articles of the Exchange which states :-

 An individual applying for Membership of Exchange should :-

1) Be not less than 21 years of age.

2) Have a qualification of Matriculation of equivalent examination (SEBI requires

minimum Intermediate)

3) Be a citizen of India.

4) Possession a minimum of two years experience.

 In dealing in securities or

 As portfolio manager or

 As investment constitute

Minimum net worth / capital of Rs.lac as certified by CA

It’s an undertaking to the effect that :-

 He/ She is not associated with any defaulting member of Exchange.

 He/ She has not introduced any fake account /forge/stolen share in the market.
  No investigation /enquiry is pending against him/her in any Exchange.

BODY CORPORATE:-

1) Minimum net worth requirement for corporate seeking admission to membership of

the Exchange, is Rs 20 lacs in case of direct corporate and Rs 10 lacs in case of
conversion cases i.e. in case of individual to corporate .

2) Two Designated directors to remain on the Board of the Company. Eligibility criteria for
designated directors to be the same in case of individuals.

3) Entity must have been incorporated under companies act 1956.

4) It must at all times maintain requisite net worth.

5) It should comply with section 12 of companies act.

6) And it should satisfy all such conditions as may be prescribed in the articles.

For any change in status and constitution of Members in terms of SEBI Cir No.30 dated
09.07.03 member is required to obtain prior Approval of exchange as well as SEBI. At the
same time, of effecting any change member must ensure that all SEBI and Exchange dues
have been paid.

AUDIT AND INSPECTION DEPARTMENT:-

1. Maintaining records of Audited Balance sheets of Members:-

Every year, every active member are required to submit their audited balance sheet and
Net worth certificate in the Exchange.
 The department is responsible for collection of the Audited balancesheets to be submitted
by

All active members and imposing penalties in cases of late submission of B/S beyond
the stipulated time

2. Inspection of books of account of members:-

As per SEBI guidelines, Exchange is required to conduct inspection of 20% active

members in each Financial year.

Accordingly, the department selects the names of the members to be inspected (Finalized
by Executive Director), on the basis of turnover in the manner that the cross section of all
members is covered. Few names are selected against whom complaints have been lodged
in the Grievances & Complain Department by Investors. Few other names are taken from
the members against whom surveillance action has been initiated.

The work of inspection of brokers is assigned to independent Charted Accountants.

The C.A. as per the checklist provided by the Exchange conducts inspection. Inspection
reports are forwarded to members ,there by seeking replies. Inspection files are placed
before the Disciplinary Committee for consideration and further action.

3. SEBI Registration fees paid by the Members:-

As per SEBI Stock Brokers and Sub Brokers Regulations 1992, every broker registered
with SEBI and hold a certificate of Registration of SEBI , is required to pay SEBI fees
based on his turnover through the Exchange.

This work is also handled by the department.

 Members are advised to summit a C.A. certificate showing their turnover under
different heads i.e. jobbing of market trades etc. in the prescribed format in the Exchange
with the prescribed limits.

4. SEBI Registration Fees/ SEBI Turnover fees/ SEBI fees:-

Schedule III of SEBI Stock Brokers and Sub Brokers Regulations 1992 specifies the
fees to be paid by the stock brokers.

Every Member is required to pay registration fees in the manner set out below:-

 Where the annual turnover does not exceed Rs. 1 crore during any financial year, a
sum of Rs 5000 for each financial year

 Where the annual turnover exceeds Rs 1 crore during any financial year, a sum of Rs
5000 plus one hundredth of one percent of the turnover excess of Rs 1 crore for each
financial year.

 After the Expiry of of Five financial years from the date of initial registration as
members , he is required to pay a sum of Rs 5000 for each and every block of five
financial years commencing from the sixth financial year after the date of grant of
initial registration.

Every year , details of various components of the total turnover are to be finished by each and
every Active Member in the Exchange within the prescribed time limit.

Turnover shall be computed as aggregate of sale and purchase done by the Member in his own
account and the account of his clients.

In case of jobbing transactions which have been square off during the same day and such
transactions have not been taken by the broker on the behalf of his clients fees at the rate of
0.005% is payable on the sale transaction i.e. Rs 500 on every Rs. 1crore .No fee is payable on
purchase Transaction. Thus at large, incidence of fees on total jobbing transaction comes to Rs.
250 per Rs.1 crore.

In case of members fails to submit the transactions details then fee at a flat rate of 0.1% on the
total turnover is payable by the member i.e Rs 1000 0n every Rs 1 crore turnover.

2.4 SECRETARIAL DEPARTMENT

Governing board : The governing board of Uttar Pradesh stock exchange association limited
consisted or 13 members ,prior to SEBI step of appointing an administrator instead ,classified as
follows:

• Six elected members under the provisions of the articles of association of exchange .
• 2 government nominees appointed by SEBI
• 4 public nominees(a list of 12 persons was sent by UPSE association limited board with
the approval of SEBI .
• 1 member is Executive director who is appointed by the UPSE association limited board
with the approval of SEBI.
• At every Annual general meeting of the exchange 1/3 of the members elected on the
governing board retire by rotation; provided that where a person has been a member
,elected for 2 consecutive terms on the governing board, he shall not be eligible for
reelection for a further period of 2 years.
As per existing articles ,there is a provision for election of president of the exchange out of
the non elected members on the governing board. He will hold the office of president for a
period of 1 year.

However w.e.f. 12 July, 2002 SEBI has supposed the governing board of the exchange &
appointed an administrator and all the powers and functions of the governing board are with
Administrator, under section 11 of the Securities Contract(Regulation)Act,1956.

Statutory Committee

In addition to the committee of Board of Directors, if any referred to in the above Article, the
Board of Directors, every year and as early as convenient after every Annual General Meeting
,appoint the following committee, namely:

• Arbitration Committee
• Defaults Committee
 • Disciplinary Committee

These committee consists of 60% non -members and 40% members with prior approval of
SEBI. President and Executive Director are members of each of such committees and the
President generally besides over each of the meetings of such committee.

Besides the above committees, the following committees are also constituted by the
governing Board of Exchange every year:

• Computer Breakdown Committee.

• Ethics Committee.
• Screening Committee.(membership transfer, admission related)
• Compulsory delisting committee.
• Investor’s service committee.

Surpassing the Board by a single administrator all the powers have transferred to administrator.

Besides handling the corresponding work with SEBI/Ministry/Income Tax the following works
are also handled in secretarial section.

• Compiling and forwarding the monthly development, report of SEBI .

• Coordinating with other departments of the exchange for the implementation of various
SEBI circulars.
• Compiling and forwarding the pre-inspection report.
• Compiling and forwarding the compliance report on the SEBI inspection report
( conducted every year).
The section also fulfills all statutory requirements under companies act like:

• Preparation of board meeting, notices ,agenda ,minutes.

 • Preparation of notices calling AGM & EGM.
• To handle all the company related affairs under companies act.
Similarly works relating to UPSE Securities Ltd . ( a wholly subsidiary of UPSE Assoc Ltd ) are
also handled by the section.
2.5 FINANCE & ESTABLISHMENT

Finance department keeps watch over the financial matters. Apart from keeping record of daily
financial activities, the department also tackles the HR activities under establishment Department.

The UPSE Assoc. Ltd is registered under section 12A of the income tax act 1961, the accounting
standard 22 (Accounting for taxes on income) is not applicable to the company.

Therefore, a statement of income & expenditure A/c is prepared in place of profit & loss A/c.
And according to the taxation compliance , it has to spend its 85% of income on various valid
heads ,if not ,it has to make declaration about expenditure plans.

• Membership fees –Rs 6000 per annum.

• Listing fees based on paid up share capital.
• Interest on BMC and other securities.
• Maintenance charges of terminals.
• Penalties and fines.
• Transaction fees ( Minimum Rs 10000 and beyond graded system is applicable).
• 1% of listing fees (up to 2004-05 , it was 2%) is for investor service cell fund, 10% of
which is transferred to UPSE investor protection fund.
• UPSE Investor’s protection fund is created to protect from the losses incurred due to
exchanges exchange members. But exchanges ceils compensation limit Rs 10 lakh per
broker.
• UPSE has a heavy infrastructure ( building & premise) that UPSE gives on rent to its
members only for various purpose. Outsiders also may hire it for social or Academic
purpose only.
 • The Exchanges are required to contribute 5% of the listing fees collected by them from
companies to SEBI every year.
• The expenditure head also includes operational ,legal and other nominal expenditures.
• The department also maintains the regular records of its employees ,maintains their
provident fund and also works for their welfare.

In terms of Rule 14 of the SC(R) Rules, 1957 every recognized Stock Exchange is required to
maintain and preserve the following books of accounts and documents for a period of five years:

I. Minute books of the meetings of

A. Members
B. Governing body
C. Any standing committee or committees of the governing body or of the general body
of members
II. Register of members showing their full names and addresses. Where any member of the
Stock Exchange is a firm, full names and addresses of all partners shall be mentioned.
III. Register of authorized clerks.
IV. Register of remisiers or authorized assistants.
V. Record of security deposits.
VI. Margin deposit book.
VII. Ledger.
VIII. Journals.
IX. Cash Book.
X. Bank Pass Book.

The Inspection Team may verify whether the Exchange has complied with the requirements of the
above rule and check the said books.
2.7 MARKET OPERATION (MARGIN DEPARTMENT)

SEBI form time to time , put in place various risk containment measures to address the risks
involved in the cash and derivative market. In order to contain risk arising out of the
transactions entered into by the members in various script either on their own account or on
behalf of their clients the exchange has .Therefore adopted a well defined risk management
tool by the way of margin, the Exchange accordingly impose margins on the members. Other
highlights of the department are:

Base Minimum capital is Rs. 400000 is required without this trading is not allowed.

50% is in liquid assets (cash & FDR).

50% in other liquid assets (share and mutual funds)

Members are allowed trading on the amount deposited over and above BMC.

As soon as the margin touches the margin point , the terminal automatically gets prohibited for
trading.

There are three types of Margin in Stock Exchange :

• Value at Risk.

• Mark to Market.

• Extreme Loss Margin.

All are calculated and applied on-line.

Margins are calculated on daily basis. M2M Loss is deducted from the deposits of members .

Formula:-

Liquid assets – M2M =Surplus Liquid

Surplus Liquid-VAR ELM=Surplus.

OVERVIEW:

The core of the risk management system is a Liquid Asset , deposited by the members with the
Exchange/Clearing corporation. These liquid assets shall cover the following four
requirements/risks:

M2M LOSSES:- Mark to Market losses are on outstanding settlement obligation of the matter.

VaR: - VaR margin is to cover potential losses for 99% of the days.

ELM Margin:- Margin to cover the expected losses in situation thet lie outside the coverage
of Var Margin.

M2M LOSSES:- M2M Losses shall be collected in following manner:-

 The stock exchange shall collect M2M Margin from member/broker before the start of
the trading day.

 The M2M Margin shall be collected/adjusted from/against the cash/equivalent

component of the liquid net worth deposited with the Exchange.

 The M2M Margin shall be collected on the gross open position of the members. The
gross open position for this purpose would mean the gross of all next position across
all the clients of the members including his proprietor position.
  The margin so collected shall be also with the pay in including early pay-in of
securities.

VaR Margin:- Computation

The VaR Margin is the margin intended to cover the large loss that can be encountered on
99% of the days (99% value at risk) . For liquid stocks the margin covers one day losses
while for liquid stocks it covers three days losses so as to allow clearing corporation to
liquidate the position over three days . This leads to a scaling factor of square root of three
for liquid stocks.

For liquid stocks , the VaR Margins are also based on the votality of the stock while for
other stock , the voltality of the market index is also used for computation.

Computation of VaR Margin includes following terminologies:-

SCRIP SIGMA:- Scrip sigma means the volatility of the security computed as at the end of
the previous day. The computation usage the exponentially weighted moving average
manner as in the derivative market.

SCRIP VaR:- Scrip VaR means the higher of 7.5% or 3.5% scrip sigma.

INDEX SIGMA:- Index sigma means the daily voltality of the market index (S&P CNX
NIFTY OR BSE SENSEX) computed as on the ending of the previous trading day.The
computation usage the exponentially weighted average moving method applied to daily
returns in the same manner as in derivative method.

INDEX VaR :- The higher of 5% or 3% of the higher of the Sensex VaR of Nifty VaR would be
used for this purpose.The VaR Margins are specified as follows for different group of stock:-
LIQUIDITY ONE DAY VaR SCALING FACTOR VaR Margin
CATERGORISATION FOR LIQUIDITY

Liquid Security Scrip VaR 1.00 Scrip VaR

(Group 1st)

Less Liquid Securities Higher of scrip VaR 1.73(Square root of 3) Higher of 1.73 times
and three times of scrip VaR and 5.20
(group 2nd)
Index VaR times Index VaR

Ill Liquid Securities Five times Index VaR 1.73 8.66 times Index VaR

(group 3rd)

Collection of VaR Margin:-

 • The VaR Margin shall be collected on an upfront basis by adjusting against the total
liquid assests of the member at the time of trade collection of T+1 day is not acceptable.

• The VaR Margin shall be collected on the gross open position of the Member.The
Gross open position for this purpose would means the gross of all net position across all
the clients of a member including his proprietary position.

• For the purpose there would .

• The Var margin so collected shall be released along with the pay in including early
pay-ion of securities.

EXTREME LOSS MARGIN:-

 It covers the expected loss in situation that go beyond those envisaged in the 99% VaR
estimated used in VaR margin.

 The ELM for any stock shall be higher of 5% or 1.5% times the Standard Deviation of
daily logarithms return s of the stock price in the last six months.

 The computation shall be done at the end of month by taking the price data on a rolling
basis of past six months and the resulting value shall be applicable for the next month.

 The ELM shall be collected/ adjusted against the total liquid assest of the member on a
real time basis.

 The ELM shall be collected on the gross open position of the member. The gross open
position would be same as mentioned above.

 The ELM so collected shall be release along with pay-in.

BASE MINIMUM CAPITAL:-

The Stock Exchange shall have the BMC requirement as provided below:-

BSE, NSE & CSE Rs. 10 lakhs.

Ahemdabad stock exchange & DSE Rs. 7 lakhs.

Other Stock exchanges. Rs.4 lakhs

Provided that the Stock Exchange shall Maintain the BMC at Rs.1 lakh of the average daily
turnover is less than Rs 1 crore for any three consecutive months.

BASE MINIMUM CAPITAL CAN BE EXPLAINED IN DETAIL:

Point SEBI Points Exchange’s Reply

no.

8 (1 ) Minimum Base Capital of the Non Adjustable

Exchange( Adjustable & Non
Capital required for all risk other than
Adjustable Capital )
market risk ( for example operation risk
and client claims )

8(2) Composition of BMC Rs. 50,000.00 12.50% Cash

Rs. 1,50,000.00 37.50% Cash/FDR

 Rs. 2,00,000.00 50.00% Cash/FDR

Approved

Securities

8(3) Minimum Period of validity Fixed 2 / 3 years

Deposit.

8(4) Procedure for continual Monthwise reviewing the FDRs and

monitoring expiry of BG and necessary notices issued to the
FD’s concerned members in advance for
renewal and also sending the FDRs to
the Bank for renewal.

At present there is no BG deposited in

the Market Operation Department.

8(5) Institutions whose FD’s/ BG’s are FDR accepted of all scheduled banks
accepted and Standard Chartered Bank, Vysya
Bank

8(6) Securities accepted towards the Yes.

BMC

8(7) Methodology & Frequency for Daily basis

valuation of Securities

8(8) Whether Securities Pledged in Yes.

favour of the Exchange.

8(9) Safe custody of Securities Fire proof Almirah and details of Back-
(Custodian of the Exchange) up of Securities is kept in Bank
Lockers. Demat securities are pledged
 with Stock Holding Corporation of India
Ltd.

8 (10 ) Action taken if BMC falls below The trading terminal of the concerned
minimum prescribed. member is deactivated automatically and
efforts for the recovery of BMC are
being made continuously.

8 (11 ) Process of replenishment of the Requiring the members concerned to

shortfall in BMC complete the BMC through notice or
telephonic mode and till completion of
BMC the trading terminal of the
concerned member will remain
deactivated.

8 ( 12 ) Action taken by the Exchange As stated above

against member for non
replenishment of shortfall.

8 ( 13 ) Process of calculation of Free 50 % of Liquid Assets and 50% of

Capital. other liquid

8 ( 14 ) Process to replace existing Nil

collaterals of the banks from
whom the collaterals were being
discontinued to be accepted by the
Exchange ( if any )

8 ( 15 ) Note on Additional BMC

requirement of the Exchange
which includes the following
among other things :

Composition,
 Procedure of continual monitoring

50 % of Liquid Assets and 50% of

other liquid
Withdrawal of Additional Capital,
As per member’s request releasing the
Manner and timing of collection.
excess Additional Capital.
Period of lock-in.

Procedure of release of Additional

Capital.

8 ( 16 ) Please provide a note on the inter Not Transferable.

segment transfer of BMC.

8 ( 17 ) Please provide note on BMC N.A.

requirements in case of composite
members :

8 (18 ) Please provide the details with As per details given below
respect composition of BMC and
AC in the following format for the
above given sample dated
22.10.2008
2.8 LEGAL DEPARTMENT

Legal Department is one of the key department of any organization as Law has to maintain
certain compliances to maintain law and order.

Stock Exchange has a legal department that deals with the legal matters. Legal department
consists of a panel of legal experts who are legal representative of UPSE and take cares of its
legal requirements.

The main function of the department is to protect investor’s interest and to solve their
grievances. However , grievance is tried to sort out at initials stage by Grievance Department
working under Membership Department. If jugdement is not satisfactory , an Arbitrator is
appointed . If still Member is not satisfied and further appeal is in court against Stock
Exchange , Legal Department comes into action as representative of UPSE and pleased on
behalf of UPSE.
The cases mainly related to:-

• Cases filed against the members for bad delivers.

• Cases filed as an appeal in the District Court and then in High Court.

• Cases filed by the members and non members against any order passed by the
Exchange.

• In cases any broker / member declared as defaulter.

• The legal department gives advice to various departments on legal matters when required.

• Whenever there is a proposed change in byelaws of exchange , the legal department takes
proper steps for incorporation of such changes.

• Co ordination with other departments of the Exchange for implementation of various sebi
circulars.

• Compiling and forwarding the pre inspection reports.

• Compiling and forwarding the compliance report on the SEBI inspection

report( conducted every year).

• The section also fulfills all statutory requirements under Companies Act like:-

• Preparation of board meetings Notice, agenda and minutes.

• Preparation of Notice calling AGM & EGM.

• To handle all the company related affairs under companies A ct.

Similar works relating to UPSE Securities ltd.( a wholly subsidiary of UPSE Assoc.
Ltd.) are also handled by the section.
2.9 CLEARING DEPARTMENT

Clearing House is one of the important department of Uttar Pradesh Stock Exchange as it looks
after the pay in and pay out of funds and shares .It acts as an effective mediator between the
brokers of the exchange and investors who want to purchase or sell the securities .Clearing House
helps the stock exchange in providing the facilities of sales and purchases of shares to the client
through their brokers ,and enabling the trading settlement as per the rules and regulations
prescribed by the SEBI .In stock exchange nobody can sell or purchase securities directly,
therefore clearing house makes an adjustment in transactions taking place and helps in evaluating
the total sales and purchases of the stock exchange.

Presently rolling settlement T+2 is applicable in the exchange .The settlement takes
place as:

Timing

Start End Time Remarks, if Activity Involved in this session

Time any

Beginning 9.35 9.42 All the application servers start in this session,
of day but broker cannot login in this session.

Pre-open 9.42 9.50 Members can login in this session and place
Session limit orders (i.e., orders with price) only. The
orders are not matched during this session

Opening 9.50 9.55 During this session, the members could stay
Session logged on but cannot put orders. During this
session, opening price for each scrip is
computed, based on the price which maximized
trading volume i.e. price at which maximum
trades can be executed based on the orders
placed during pre-open session. In case there
are not trades matched the previous days close
price becomes the current days opening price.
Trading 9.55 3.30 Normal trading session. Members can place
Session orders and do trading.

Closing 3.30 3.40 System is not available for use. Closing price
Session for each scrip is computed based on weighted
average of last half an hour trades in particular
scrip. In case there is no trade during the last
half an hour, the average of last five trades is
taken for arriving at closing price.

Post 3.40 3.55 Only Broker can login and allowed to do client
Closing code rectifications only.
Session

End of day 3.55 Members can download their trades.

Session

Break - - No session
Session

Odd-Lot 9.56 3.28 No Trading

Session

Spot - - No Trading
session

Auction 1.30 2.30 During this session only solicitor members

Session (members other than member who failed to give
delivery) can place orders. The solicitor orders
once placed cannot be cancelled. Modification
of orders is only allowed to the extent of
bettering the price or increasing the qty.
 When an investor sell their securities then it is necessary to deposit their shares and securities in
the exchange's account in case of sale and in case of purchase the amount is paid to the exchange
by the investor through their broker.
If any broker / client fails to deposit their shares in the exchange upto the time of pay in of
securities then those shares would be treated as shortage or short delivery.

In case of short delivery shortage is recovered by on-line auction on T+2 day.If

securities are not available in the on-line auction on T+2 day within the prescribed price limit
then the transaction is closed out as per the rules and norms of the exchange.

At the time of auction of short delivery the loss is borne by the defaulter broker and if
profit is earned by auction then that profit is deposited in Investor Protection Endowment Fund
account of the exchange .On T+3 day the settlement of auction delivery is done, therefore
clearing house plays a significant role in the trading of shares/securities.

A BRIEF NOTE ON AUCTIONS & CLOSE OUT CARRIED OUT AT

EXCHANGE

If securities are not available in online auction on T + 2 day within the prescribed price limit ( i.e
25% of the current market rate) , then the transaction is closed out as per the standard procedures
specified by SEBI.

“ The close out price will be the highest price recorded in that scrip on the exchange in the
settlement in which the concerned contract was entered into and up to the date of auction / close
out.

OR

20% above the official close price on which auction offers are called for ( and in the event of
there being no such closing price on that day , then the official closing price on the immediately
preceding trading day on which there was an official closing price).
 WHICHEVER IS HIGHER “

Since in the rolling settlement the auction and the close outtakes place during trading hours
hence the reference price in the rolling settlement for the close out procedure would be taken as
the latest available closing price at the exchange.

As per SEBI letter no.SMD / POLICY / CIR- 08 / 2002 dated 16th April 2002 that in cases of
close out to the extent of short delivery if the shares cannot be acquired in auction or cum basis
then the mark – up price would be 10% instead of 20%

DEACTIVATION OF TRADING TERMINAL AND IMPOSITION OF

PENALTY

In case of any default by a members regarding timely pay – in of the fund trading terminals of
the concerned members is being deactivated and penalty is also being imposed upon the
concerned members as prescribed by the exchange from time to time. on the receipt of complete
amount of the pay-in and penalty imposed the trading terminal of the concerned member is being
reactivated.

2.10 SURVEILLANCE DEPARTMENT

One of the objectives of the exchange is to promote and inculcate honorable and just practices of
trade in securities transactions and to discourage malpractice. the surveillance function at the
exchange has assumed greater importance over the years .SEBI has directed the exchange in
August 1995 to set up a surveillance department with staff exclusively assigned to surveillance
department to keep a close watch on price movements of scrip, detect market manipulations like
price rigging etc, monitor abnormal price and volumes which are not consistent with normal
trading pattern and keep a watch on the exposure of members .the surveillance department
performs the following function:

1.RISK MANAGEMENT:- The Risk Management system has improved in the recent past
because of positive steps taken by the exchange in terms of prescribing capital adequacy norms
for members ,margins ,on-line surveillance and inspection of broker's books. The Margin system
has become more sophisticated to consider the factors of volatility volumes and other factors. The
Margins are required to be compulsorily collected from the client by the brokers. A Quarterly
certificate has been prescribed for compliance of margin system with the infrastructure of risk
management enhanced. The Stock Exchange as well as investors would be better protected
towards risk of various scams that had shaken the market.
The various Margins collected by the Exchange are:-
.Mark to market margin
.Value at risk margin
.Extreme loss margin

2.PRICE MANIPULATION:-The functions of price monitoring and investigation have been

entrusted to the surveillance department, where large variation in the prices as wll as scrip is
scrutinized and appropriate actions are taken. The scrip which reaches new high or new low and
companies which have high turnover are watched. Also the prices and volumes in the newly
introduced scrip are monitored. Detailed investigation are conducted in the cases where price
manipulation is suspected and disciplinary actions are taken against the members concerned.

3.INSIDER TRADING:-The most important function of this department is to prohibit insider

trading .Insider Trading denotes dealing in a company's security on the basis of confidential
information related to the company .It generally means trading in shares of a company by a
person who is in the management of the company or are close to them on the basis of undisclosed
price sensitive information regarding the working of the company that they know but is not
available to others.

4.MEDIA ALERT:-This is also an important function, before the company information gets
printed in newspapers, they have to be verified by the department. This is necessary in order to
find out whether company is concealing any material facts.

5.OTHER MANIPULATIONS:-Other manipulations like carry forward trading are also

taken care of.

PURPOSE OF SURVEILLANCE
Purpose of surveillance is to prevent risk which may arise due to :
• Carry forward trade
• Trade away from market price
• Price manipulation
• Insider trading
• Circular trading
• Creating false market
In order to detect abnormal behavior / movement it is necessary to know the normal
market behavior. The necessary actions are initiated like imposition of special margin ,
suspension and deactivation of terminals etc. to control abnormal market behavior the
department carries out investigation , if necessary , based on preliminary examination
Analysis and suitable actions are taken against members involved based on investigation.
The detailed activities are as follows:

ONLINE SURVELLIANCE : one of the most important tool of surveillance is the

online real time surveillance system with main objective of detecting potential market
abuses at a necessary stage to reduce the ability of the market participants. To unduly
 influence the price and volume of the scripts traded at the exchange , improve the risk
management system and strengthen the self regulatory mechanism at the exchange the
system has a facility to generate the alerts online based on certain preset parameters like
prices and volume variations in scripts , members crossing intraday limits or gross
exposure limits.

OFFSHORE SURVEILLANCE : the offshore surveillance system comprises of various

reports based on different parameters and securities thereof:
• High / low difference in price
• % change in prices over a week / fortnight / month.
• Top scripts by turnover
• Scripts hitting new high / low etc
The surveillance actions or investigations are initiated in the scripts identified from the
above stated reports.

2.11 R&D DEPARTMENT

R&D Department performs three works:-

 Assistance to investors by ‘Investors cell service’.

 Maintains library.

 Provides stationary.

 Conduct research and development .

INVESTOR SERVICE CELL:-

This wing has been functioning since 1992 under SEBI directors & providing valuable services
to investors. Investor service Cell has been made to help (potential) investors in many ways.
Whether its about their queries of stock market or solving their investment problem. The assist
them in their queries of stock market and solving their investment problems. The cell assist them
in technical matters that consist of legal provision/procedure that secures their interest
.Besides , cell works to aware investors about their rights and duties. INVESTA is an endeavor
in this direction by SEBI. SEBI has designated different Stock E xchanges to arrange INVESTA
zone wise.

UPSE has been designated 176 places in UP and UTTARANCHAL for cause. The program also
makes investors aware about the precaution to be taken while investing and investment decision
is left on investor’s direction.

The whole account of INVESTA is given by R&D Dept. to Finance dept. and to management of
stock Exchange. All expenses are borne by SEBI for this sake a separate fund ‘Investor
Protection Fund’ is maintained.

RECORDS TO BE MAINTAINED BY INVESTA:-

This is the duty of R&D dept. to maintain the necessary records of INVESTA because the same
has to be submitted to the SEBI.The various record which is to be maintained by R&D dept. for
INVESTA are:-

 Schedule for monthly program to be approved by the administration.

 Attendance registers for INVESTA.

 Monthly statement of Program conducted.

OTHER SERVICES:-

 UPSE has set up UPSE & BSE Terminals for investors to enable them to know the quote
of various scrip listed on that.

 Information regarding change of names of companies, mergers of companies, e-merger of

companies is made available.

 Address of companies is can be known from here.

 IPOs forms of various companies are available.

 A view terminal has been provided on which the investors can watch CNBC, ZEE
BUSINESS, NDTV PROFIT and other business news channels.

 If the investors have queries regarding any member, he can contact the Investor Service
Committee, formed for this purpose.

LIBRARY AND STATIONARY:-

Departments maintains a rich library of various Acts , Laws ,Amendments, Articles

regarding Capita Market like SEBI manual, Income Tax Act, Companies Act, Listing
Agreements and the latest changes done by SEBI. Departments also subscribe various books,
magazines and newspaper regularly, like The Times Of India, Economics Times, Business
Standard, The Financial Express, Business Line and all the other leading newspaper and
Magazines like Dalal Street, Capital Market and various magazines are available for
members/ investors.BSE quotations regarding book closure, dividend etc and financial
reports of companies are also made available for their knowledge sake.

Department also deals with Stationary cell. Share transfer deeds, challans, receipt books Bye
laws etc. are sold on No profit No loss basis. The cell regularly maintains the stationary
records (sale, purchase and stock) that is sent to and approved by the Accounts Department.
 Conclusion

In view of above it is concluded that in any efficient securities market the prices are driven by the
forces of demand and supply within the broader frame work of policies, rule and regulation in the
stock exchanges. The market players are supposed to study the psychology of buying and selling
of stocks on the floor of the stock exchange itself.

In India, the stock exchanges are still for from providing liquidity and continuous market
in securities. Therefore Indian S.E. have to make effort for tailoring out a suitable mechanism to
ensure price continuity and easy liquidity to scrip on the promise of which investor can enter the
market in large numbers.
 PROPOSED RESTRUCTURING OF REGIONAL STOCK EXCHANGES

(You can tick more than one answer and give comments too in each
question, if desired)

A.PERSONAL DETAILS

1.NAME
---------------------------------------------------------------------------------------------------------

2.ADDRESS

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

CITY________ DISTT.___________ STATE____________

PHONE MOBILE_________ EMAIL ___________

3. OCCUPATION

[ ] Business [ ] Retired [ ] Service

[ ] Any other(Specify)

4. Tick to the group you belong.

[ ] Broker [ ] Investor [ ] Employee of stock Exchange

5. What is the Range of your monthly income in Rupees?

[ ] Below 10000 [ ] 10000-40000 [ ] 40000-60000

[ ] 60000-80000 [ ] 80000-100000 [ ] Above 100000

6. EDUCATION

[ ] Graduate [ ] Post Graduation [ ] professional

 [ ] Any other (Specify)

B.PERSONAL FINANCE

7. Do you invest in securities market?

[ ] Yes [ ] No

8. Through which Stock Exchange do you trade?

[ ] NSE [ ] BSE [ ] CSE

[ ]UPSE [ ] Any Other(Specify)

9. Which of the following category of shares are held by you? Rank in

order of values of holding, rank 1 for maximum holdings.

[ ]Sensex/ Nifty [ ] Thinly traded [ ] Z Group/T Group

[ ] Illiquid [ ] De-listed [ ] Anyother (Specify)

C.RESTRUCTURING OF REGIONAL STOCK EXCHANGE

10.Do you think that having 19 Regional Stock Exchanges all over the
Country is Superfluous and against requirement ?

[ ] Strongly Agree [ ] Agree [ ] Can’t Say

[ ] Disagree [ ] Strongly Disagree

11. What do you think has been the reason for non-functioning of RSE?

[ ] SEBI Regulations [ ] Lack of Proper Administration of RSE

[ ] Investors Insecurity and lack of trust [ ] wide coverage by NSE & BSE

[ ] Any other (specify)______

12. Do you agree that the Broking Business will be redundant or extinct in
coming Decade Due to invasion of Banks and like institutions?

[ ] yes [ ] No
 13. Do you think that Commercial consideration of Big Brokers is a big
hurdle in upliftment of RSE?

[ ] Totally Correct [ ] Somewhat Correct [ ] Can’t Say

[ ] Somewhat Incorrect [ ] Incorrect

14. Do you really think that Demutualization has solved its purpose of
segregating Trading and ownership control in its right spirit?

[ ] yes [ ] No

15. As there are Approx. 9000 + companies Listed in India, do you think
that NSE alone is Solving the basic purpose of developing and running a
healthy stock market which is a prerequisite of a developing Economy,
where Top 50 securities are forming 55% of total trade in cash market and
top 300 Securities form around 85% of total trade?

[ ] strongly Agree [ ] Agree [ ] can’t Say

[ ] disagree [ ] strongly Disagree

16. Do you think there is a need for Revival of RSE?

[ ] Strongly Agree [ ] Agree [ ] Can’t say

[ ] Disagree [ ] Strongly Disagree

17. Do you think that Virtual Extinction of Regional Stock Exchange Would
lead to monopolistic Situation of NSE?

[ ] Yes [ ] No

18. What do you think can be the solution of revival of Regional Stock
Exchange?

(Mark your preference on priority Basis –Rating from 1-5,Rate 1 to the option you
find most appropriate)

[ ]Consolidation of all RSE i.e. Setting Common trading Platform .

[ ] Listing of new companies with paid up share Capital less than 2 crore in RSE .
[ ] Providing trading Platform of small cap companies wholly to RSE .

[ ] Developing new financial instruments specifically for these RSE.

[ ] Any other (Specify) _______________________

19. Please give your suggestions regarding this topic to us. (Subjective)

____________________________________________________________________________________

5.3 REFERENCES:

-A knock out punch for regional stock exchanges/ Sarabjeet K Sen, KR Srivastav/ New Delhi /
April,6,2005.

-Revival of Regional stock Exchanges / Dr. Rajeev Kumar FCS / Chandigarh / 2008.

-Article by MR MAYYA/ ICSE/2003.

-SEBI finalizes Exit Policy for RSE / Reena Zachariah-ET bureau/ 15 Dec 2008

-Report by committee on future of RSE- Post Demutualization.

-BSE- Indonext many Mid cap firms feel entry norms stringent/ CR Sukumar /
Hyderabad/January 5 ,2007.
-Book by V.A Avadhani/ Capital market management/ Himalaya Publication house.

-Book by NSE & BSE.

-journal of Dalal street.

-http:// www.sebi.gov.in

-http://www.nseindia.com

-http://www.bseindia.com

• JOURNAL OF DALAL STREET.

• JOURNAL OF FINANCE

• http: //www.upse-india.com.

• http: // www.nse-india.com

• http:// www.sebi.gov.in

• http:// www.toi.com

• JOURNAL OF CAPITAL MARKET BY NSE.