BSE Investors Awareness Programme

Welcome to the workshop

“Empowering
Investors Through
Education”
BSE Ltd Introduction
Some Key Statistics
No. of Member No. of No. of
Registered
Brokers Terminals
Sub-brokers

1017 40,000+ 40,000+

No. of Cities Average Market

present Daily Turnover Capitalization

400+ Rs.4,700 Cr. Rs.62,800 Bn

TGF Corpus Listed Companies Daily Average

No. of trades
Rs.4,000 Cr. 4977 22.5 Lakh
 BSE - THE FUTURE AHEAD

• Mobile Trading*

• SME Exchange*

• Securities Lending and Borrowing

• Delivery-based derivatives markets*

* Subject to Regulatory Approval
Regulator of the Capital Market
Securities and Exchange Board of India is
established “to protect the interests of investors
in securities and to promote the development of
and to regulate the securities market and for
matters connected therewith or incidental
thereto”

SEBI Web Site : www.sebi.gov.in

 Investment Choices in the
Securities Market
Securities are considered
as
Challenging
as well as
Rewarding
BUT

Investing in securities requires skill and

expertise
AND

Carries the risk of loss

Investment Choices in the Securities Market contd.
You should evaluate securities broadly on
following criteria
• Liquidity
• Safety
• Returns
• Tax savings
• Whether your active involvement is required to
manage your investment
• Minimum amount that you can invest
Why should you invest?
So as to:
• earn return on your idle resources
• generate a specified sum of money for a
specific goal in life
• make a provision for an uncertain future.

For this you need to:

• Invest with knowledge
• Do financial planning so as to meet your
financial needs with your saving potential.
Investment Choices in the
Securities Market

I. Equity Shares

II. Bonds and debentures

III. Mutual Funds & Exchange

Traded Funds (ETF).

IV.Derivatives
I. Equity Shares
Why Invest In Shares?
US $
Year 1802 1997
Gold 1.00 0.84
Bills 1.00 275
Bonds 1.00 803
Equities 1.00 5,58,945

Study by Prof Jeremy Siegel of Wharton

Business School in U.S.A.
Why Invest In Shares? Cont..

• Rs.100 invested in PPF on April 1, 1979,

would have become Rs.863 in April 2007-
compounded @ 8% per annum.
• Whereas investment in Sensex at 13,178
as on April 9, 2007 would have given a
compounded annual return of 19.04%.
This is excluding the dividend of generally
@ of 2% p.a.
Primary Market
• Enables Issuers to Mobilize savings from
investors for their projects / expansion
resulting in development of economy,
employment, tax collection, creation of
wealth.
• Subsequently these securities get listed
and traded on the stock exchanges.
Listing of Securities

•Listing provides:-
•Liquidity to the Securities.
•Protection to Investors by ensuring full
disclosures.
•Companies to enter into a listing
Agreement.
•The Exchange has power to suspend a
company if clauses of Listing Agreement are
Violated.
Requirements for the IPO’s
• Minimum 35 % of post-issue capital to be
offered to the Public.
• Offer Documents to be made available to the
Public.
• Issue to be kept open for a min of 3 days.
• Mandatory Collection Centers at 4 metros
and regional centers for collection of the
applications.
• Minimum 90% of the issue to be subscribed.
Book Building

•Price of the Issue is not fixed by the

Company.
•The floor price is, however, fixed by the
issuer Company.
•Book Building is a process of discovering
price for issue of Securities to Investors.
•Bidding is done at or above the floor price.
Safeguards for Investors

• 1% of the issue amount is deposited by

companies making public/ right issues
with the Exchange which can be forfeited
in the event of company failing to resolve
the complaints of the Investors regarding
delay in sending refund orders/ Share
certificates, non-payment of commission
to underwriters, brokers etc.
 SECONDARY MARKET
What is the role of a Stock Exchange?
• The Exchange provides ONLINE
ANONYMOUS SCREEN BASED TRADING
PLATFORM for buyers and sellers to deal in
the LISTED/PERMITTED securities listed on
the Exchange at a FAIR PRICE (MARKET
DRIVEN).
• The Exchange ensures settlement of trades
between buyers and sellers at the
appointed time.
T+2 Settlement Regime

Trading T+1 T+2 T+3 T+4

Day Day Day Day Day
Mon Tue Wed Thu Fri
BSE On Line Trading System
(BOLT)
• Trading in Equity Shares through BOLT.
• It is transparent and faster way of execution of trades.
Response time less than two seconds.
• Makes trading possible – from anywhere during market
hours.
• Instantaneous dissemination of information.
• Brings depth and faster execution of trades.
• Trading through Member Brokers (800) or their SEBI
registered Sub-Brokers.
• 11000 trading terminals in 413 cities across the country.
• Investors can place Limit or Market orders.
Do’s and Don’ts for Investors

• Deal with only SEBI Registered Brokers or Sub-Brokers.

• Give clear & unambiguous instructions to the Broker/
Sub-Broker with regard to the Price, Qty, Buy/Sell,
Order Type.
• Keep a record of all instructions issued to your broker /
Sub-Broker.
• Confirm whether the delivery is in Physical form or
Demat form before buying / selling shares.
• Verify your trades on www.bseindia.com .
Do’s and Don’ts for Investors
• Clearly mark your option to receive order
confirmations, Contract Notes in digital or physical
form. If you choose digital form, provide the e-mail
id regularly used by you. If you choose physical
form, provide the complete address and STRIKE
OFF e-mail id column.
• Make sure that you receive contract notes for all
your trades within 24 hours.
• In case you have opted for digital contract notes,
Please verify your email account on daily basis so
that all transactions in your account came to your
knowledge.
Do’s and Don’ts for Investors
• Enter into in proper Client Broker agreement with your
broker and keep a signed copy of the same for your
records.
• Furnish Know your Client form to your broker.
• Don’t fall prey to unrealistic / guaranteed returns.
• If Single order is more than Rs. 1,00,000/- details of
PAN No etc. to be furnished. A Unique Code at the
Brokers Level.
• 10% up-front margin in case position more than Rs.
5,00,000/-
Rights of the Investors
• Receive Contract Notes / Confirmation memo
in the specified format within 24 hours.
– The Contract Notes / Confirmation Memo should
contain SEBI Registration No of the Member /
Sub-Broker and transaction details such as :
• Order No, Trade No & Trade Time
• Qty, Brokerage, Price & Settlement Details
• Details of other levies, if any.
• Money and Securities to be received within one
working day of the Pay-Out from the Member
Broker.
Rights of the Investors
• Brokerage not to Exceed 2.5% of the
Contract Price.
• Insist on a Statement of Account along with
the details of Shares and monies outstanding
from your broker at least once in every six
months and report discrepancy in writing
within 15 days from the receipt thereof.
• Access to Arbitration Mechanism of the
Exchange in case of any dispute with broker.
Depositories - Safeguards for
Investors
• Depository A/c is like Bank A/c.
• Keep Delivery Instruction (DI) Book
safely.
• DI Book should have a preprinted serial
no and your account number should be
stamped on each slip.
• Do not sign on DI book unless all the
details are filled up.
Depositories - Safeguards for
Investors
• Entitled to receive a transaction statement from
DP every 15 days if you have done any
transaction and once a Quarter if no transaction
is done.
• Insist on a transaction statement and not a
holding statement.
• Regularly verify the Debits and Credits in your
account.
Principles of Safe Investments
• Diversification
Diversify your investment into different
sectors and companies to avoid Unsystematic
Risk.
• Systematic Investment
Regular systematic investment is the Best
option. Think long term.
• Know your risk profile
Time Horizon & Bankroll
Principles of Safe Investments- Cont..
• Check the Fundamentals
 Invest in stocks of fundamentally good companies
having strong sales and earnings growth. Shift
your investments from weaker to fundamentally
stronger companies
 Consider important factors like promoter’s track
record, growth in sales and profitability, EPS and
dividend payments etc.
 Valuation in terms of PE multiple
 Look for growth sectors and stocks
 Avoid investments in penny stocks
 Look for stocks with good dividend yield
 Have modest expectations of returns
 Principles of Safe Investments- Cont..
• Impact of Leverage (Margin Trading)
Assume Maintain Margin required is 50%.

Date Securities Mrket No of Your Broker

Purchased Price Shares Money Money
26-05-06 IDBI 95 2000 1,00,000 90,000 Margin 110%

01-06-06 67 2000 44,000 90,000 Margin 50%

(approx)
06-06-06 64 1000 38,000 90,000 Margin Call : Either
pay 7,000 or Broker
will Sell stock of Rs.
14,000
Status of your account (If NOT paying margin demanded by broker time to time)-
08-06-06 50 400 10,000 10,000 Actual Loss Rs.
72,000 Notional
Loss Rs.18000
In case of stock bought with own money.
24-08-07 150 1000 Profit of Rs.50,000
Principles of Safe Investments- Cont..
• Expect large volatility in the short term
• Don’t be panicky or greedy
• Have faith and patience
• Expenses and excitement are worst enemies of investors
• Investigate thoroughly i.e. do your home work
before investing
• Monitor your investment regularly
• Invest certain portion of your investment in Mutual
Funds (MFs)
• Good judgment comes from experience and experience
come from bad judgment
What makes a great Investor?
• Constant reading and follow up of the
Companies
• Look for Margin of Safety
• Circle of Competency
• Compounding (Start early, invest wisely)
• Investment is 24X7 job
• Have long term view of the market
Advantages of trading with BSE
A Group
B Group
1. Groups S Group (INDO NEXT)
T Group (Surveillance Action)
TS Group (Surveillance Action)
Z Group (Non Investor
Friendly/Non Compliance with

Listing Agreement)
Debentures/Bonds: F Group
Government Securities: G Group
T, TS, Z – Settlement on Trade to Trade basis
Advantages of trading with BSE
….. contd
2. Investors Grievance Redressal
Mechanism at BSE Ltd against BSE
Listed Companies
Type of Complaints -
• Non-Receipt of Money.
• Non-Receipt of Shares.
• Non-Receipt of Debt Securities.
• Non-Receipt of Corporate Benefits.
• Non-Receipt of interest for delay.
• Others
Advantages of trading with BSE Ltd
…. Contd

3. Investors Grievance Redressal Mechanism

at BSE Ltd against Members
Type of Complaints
• Non-Receipt / delay in payment.
• Non-Receipt / delay in Securities.
• Non-Receipt of documents.
• Unauthorized Trades / Misappropriation.
• Service Related.
• Closing out / Squaring up.
• Non-Implementation of Arbitration Awards.
• Others
Investors’ Grievance Redressal
Committee
• On Receipt of a complaint Explanation /
Clarifications are sought from the Member.
• IGRC is a Conciliatory Committee chaired
by a Retired High Court Judge.
• The Committee tries to bring about an
amicable settlement between the parties
to resolve the disputes.
• In case the disputes could not be resolved
at IGRC then the parties, if so advised,
may go in for Arbitration.
Arbitration at BSE
• Quasi Judicial Mechanism.
• Matter decided by the Arbitrators.
• Arbitration Award passed by the
Arbitrators can be enforced under the Civil
Procedure Code, 1908 as if it were a
decree of Court.
• Exchange provides administrative and
secretarial assistance to the arbitrators.
 Investors to select his own
Arbitrators
• Case decided by Sole Arbitrator or 3 Arbitrators
depending upon claim amount.
- Sole Arbitrator : If claim upto Rs.10,00,000

- 3 Arbitrators : If claim above Rs.10,00,000

• Awards given normally within 3 months. (Max 6 Months).
• Awarded Amount Set aside from the Deposits of the
Member if an award is passed against Member.
• Award is binding on both parties. In case investor not
satisfied with award he can file an appeal before appeal
bench.
Challenge to Arbitration Award
•Appeal Bench
•Within 15 days from the date of receipt of Award.
•Appeal Bench of 5 Arbitrators.
•Awarded amount to be deposited with the
Exchange.
•High Court
•U/s 34 of the Arbitration & Conciliation Act, 1996
•Within 90 days from the date of receipt of Award.
Complaints status on BSE website
 Advantages of trading with
BSE Ltd ….. contd
• Highest number of listed companies.
• Over 14000 terminals from 417 cities offering large pool of
liquidity.
• Transparent and screen based trading.
• Trade verification by investors.
• Transaction cost 0.3 basis points.
• Excellent Risk Management. Lowest Defaults.
• Highest contribution to investors from IPF at Rs.15 lakhs.
• Personalized Attention to the Investors in case of any
clarification / Grievance through DIS.
• Dial 1800 22 6663 to report any unhealthy market practices
Investors Protection Fund
• Fund Setup in 1987 to meet the claims of
Investors against Defaulter Member
Brokers.
• Up to Rs. 15 Lakh per Investors can be
paid.
• SEBI Requirement
• Corpus of the Fund : Around 370 Crores.
Claim from Investors Protection
Fund
• Claim against Defaulter Members.
– The claimant has to file an arbitration within Six
month from the date of declaration of member as
defaultor by BSE and obtain an award in his/her
favour.
– Awards to be submitted to the Defaulters’
Committee, Standing Committee with 60% outside
experts, for payment from IPF.
– Committee recommends to the trustees of IPF for
release of the awarded amount or Rs. 10 Lakhs or
actual loss suffered by investor whichever is lower.
Trade Guarantee Fund

•To Guarantee Settlement of bonafide transactions

of Members inter-se which forms part of BSE
Settlement System.
•Contribution to the Fund :
•Corpus of the Fund : Rs. 900.76 crores (as on
31.08.2003)
•Funds Accessed only on three occasions. Default
in last two years only 0.00001 % of the pay-in
obligations.
Risk Management at BSE
Risk Management
• Base Minimum Capital (BMC) /Additional Capital
(AC).
• Intraday Trading Limits.
• Gross Exposure Limits.
• Margins.
• Monitoring Businesses of Brokers.
• Trading Restrictions.
• BOLT Deactivations.
• Other Measures such as Insurance Policies etc.
Margins
• VAR Margins.
• Group I (246 Highly traded Scrips)
• Group II (Remaining Scrips based on VAR on Sensex)
• Additional Volatility Margins (AVM).
• Mark to Market (MTM).
• Special Adhoc Margins (SAM).
• Special Margin.
• Adhoc Margin.
Circuit Filters
•Individual Circuit Filters :
•Scrips which form part of Sensex / Nifty or on
which derivative products are offered, no circuit
filters are applicable (Only dummy filters )
•Circuit filters of 20% on the remaining Scrips
on the basis of closing price of the scrip on the
previous day.
Market Wide Circuit Breakers
• Applicable on movement in Sensex/Nifty.
• 10 % movement of either index.
• 1 hr. halt if movement takes place before 1:00 p.m.
• ½ hr. halt if movement between 1:00 p.m. and 2:30 p.m.
• No halt after 2.30 p.m.
• 15 % movement in either index.
• 2 hr. halt if movement takes place before 1:00 p.m.
• 1 hr. halt if movement between 1:00 p.m. and 2:00 p.m.
• Halt for the remainder of the day, if after 2.00 p.m.
• 20 % the market will halt for the remainder of the
day.
Shifting a Company to “Z” Group
• The Exchange considers any three out of the
following seven criterion on non-compliance.
• Non Submission of Notice of Book Closure & RD.
• Non Submission of Yearly Accounts.
• Non Submission of Quarterly Shareholding pattern.
• Non Payment of Listing Fees.
• Quarterly results are not published.
• Non Settlement of Investors Complaints.
• Corporate Governance issues are not complied with.
• Companies who have not signed agreement with
both the Depositories for dematerialisation of
their shares.
II. Bonds & Debentures
• Bonds
A Bond is a loan given by the buyer to the
issuer of the instrument. These are debt
instruments. Over and above the scheduled
interest payments as and when applicable,
the holder of a bond is entitled to receive the
par value/face value of the instrument at the
specified maturity date
• Debentures
Debentures are also debt instruments.
• Debt instruments are required to be rated by
credit rating agencies.
• Investors should track the ratings of the
same.
 III. Mutual Funds
And Exchange Traded Funds (ETF)
Mutual Funds
• Type
Equity (Growth) Funds
Debt (Income) Funds
Money Market (including Gilt) Funds
Balanced (Hybrid) Funds
• Comparison of performance
Net Asset Value (NAV) = Market value of the assets of the
scheme less liabilities divided by Number of units outstanding.
• Do not choose a fund based on its relatively lower
net asset value (NAV).
• Management fee and other expenses

BSE Launches BSE StAR MF – Mutual Fund trading platform

Exchange Traded Funds (ETF)
ETF is a security that tracks an index, commodity
or sector but trades like a stock on an Exchange.
It is similar to close ended mutual fund listed on
stock exchange. ETF experience the price
changes throughout the day as they are bought
and sold.
- Instant exposure to a well diversified portfolio
or an asset class.
- Real time buying and selling like other scrip.
- No sales load for investor. Only normal
brokerage charges apply.
 ETFs traded on BSE
• All ETFS available in the Indian capital market are available for trade
at BSE
• Major Index-tracking ETFs – 1. SENSEX ETF
2. SENSEX Prudential ICICI ETF
3. Kotak SENSEX ETF
4. S&P CNX Nifty
5. Junior Nifty BeES
6. Hang sang BeES
7. Kotak Nifty
8. Nifty BeES – NIFTYBEES
• Gold ETFs
 Reliance Mutual Fund – Gold ETF (RELIANCEGOLD).
 SBI Mutual Fund – SBI Gold ETF Scheme (SBI GOLD ETF)
 Kotak Mutual Fund – Gold ETF ( KOTAKGOLDETF).
 UTI Mutual Fund – UTI Gold Exchange Traded Fund.
IV. Equity Derivatives
Futures Contracts
• Investment required - Initial Margin + Mark to Market
• Reliance(RIL) Future bought at Rs 1200/- (Lot size 300)
Day Closing price MTM
Day 1 1210 +10
Day2 1250 +40
Day3 1200 -50
Day4 1270(position +70
closed)
 OPTION
BUYER SELLER
Insured party: pays premium. Loss Insurer: receives premium. Profit
is limited to the premium paid. is limited to the premium
Profit can be unlimited received. Loss is unlimited.
CALL OPTION
He is bullish He is moderately bearish
Buyer of the option has the right Seller has the obligation to sell
to buy
PUT OPTION
He is bearish (Mandi) He is moderately bullish (Teji)
Buyer of the option has the right Seller has the obligation to buy
to sell
Zero Sum Game
 BSE Equity Derivatives
• Mid Month Expiry – Last Thursday to 3rd Last Thursday
• Tick Size – Increased from 0.05 to 1 Index Point
[Index F&O]

Sensex, Mini Sensex, BSE TECK, BSE Oil & Gas and
Indexes
BSE Bankex
Multiplier 15 (for Sensex)
Expiration cycle 1,2 & 3 months
Tick size Rs. 1.00
Trading Hours 9.00 AM to 3.30 PM
Expiration day 3rd last Thursday of contract month
Final settlement Cash settled to closing price of the index
Other Services and Facilities
offered by BSE Ltd
BSE Training Institute
• Conducts courses on:
• Three months part time- Comprehensive course on capital Market
in coordination with Jamnalal Bajaj Institute of Management,
• Investors Awareness programme
• Retail Debt Market
• Corporate Governance
• Programmes on Derivatives / Futures Options etc.( Basic &
Advanced)
• Interest Rate / Fixed Income Derivatives
• Mergers and Acquisitions / Mutual Funds
• Technical Analysis / Fundamental Analysis.
• Stock Market operations / BOLT Trading Operation.
• Certification Courses.
BSE Publications
• BSE Annual Capital Market Review.
• Review of Markets
• Addresses of Companies
• The Stock Exchange Review
• Technical Analysis
• Fundamental analysis
• Futures & Options
• Capital Market Briefings.
BSE Web-Ex
• Introduced in February, 2001 with a view to provide an
additional facility to the Investors to put their orders for
purchase or sale of securities using Internet.
• Investors can put in their own orders through the
internet.
• Investors can get realtime confirmation of their trades.
• They can view status of their orders, modify or cancel
them, if not executed and also view their order and trade
history for the day.
BSE Web Site : www.bseindia.com
• Most popular web site of Capital Market : 5.7 million
hits on budget day. Average daily of 5 million hits.
New Features on www.bseindia.com
• Advance Stock Reach
Compare with Pre-defined &
Peers Technical
charts

Historical
High/Low

LTP Market Depth Latest

5 Alerts

Key Pointers
New Features on www.bseindia.com
• BSE Mkt Galaxy

Click thru to
Stock Watch

Cloud of the
most
eventful
scrips Events
New Features on www.bseindia.com
• SENSEX View
SENSEX
Share Price
Intra-day
Performance
Graph
Heat Map

SENSEX Scrips
Announcements

Intra-day graph,
price info. of the
scrip
BSE Toll Free No. 1600 22 6663

Thank You
Kindly E-mail your suggestions, if any, with regards
to the Programme to
iscdelhi@bseindia.com
or write to :
Department of Investors Services
Floor -7, Mercantile House
K. G Marg, New Delhi
BSE Ltd,
Ph-41510481 / 41510968