Online Trading Mechanism

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ONLINE TRADING MECHANISM

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CHAPTER-1

INTRODUCTION

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INTRODUCTION

Online trading symbolizes the perfect synergy between technology and the mind

numbering intricacies of stock markets in bringing about a paradigm shift in the way

financial markets operate in recent times. It facilitates faster and efficient transaction of

stocks and share through the internet, while keeping the basic principles of share

trading intact. In addition to replication the traditional stock trading business on the net,

online trading has led to the mushrooming of a plethora of peripheral business units in

the form of e-broking firms, web-advisors, e-consultants, etc.

Across the globe, bulk of the trading is being done through the net, proving

online trading to be an instant success among the investors and intermediaries. It also

renders a harmonic integration of investors, e-broking firms, banks, stock exchanges

and the depositories with the possibility of a single window system, in the near future.

Such a system will enable the execution of trade att+o, rather then the existing T+2

time cycle. The emergence of high-tech mechanisms like straight. Through processing

(STP), Continuous Linking System (CLS) and Direct Access Trading (DAT) platform

is sure to make the dream of an investor, getting his orders executed with the click of a

mouse in 20-30 seconds, a reality.

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In the last decade, online trading has spread far and wide across the globe, with

varying degrees of adoption in terms of percentage of trade carried out online,

economic giants like the US and Japan where online trading had its origin, are yet to

completely transform the stock business through the net, while, India and china, despise

their inherent infrastructural limitations are fast progressing towards a scenario where a

big chunk of the transactions would be online, though online trading has made cross

border trading much easier, the tendency of the investors to trade in their own

currencies and securities, limits the spread and success of it.

However, European investors are best placed in cross border online trading

given their historical and geographical associations with other nations, and also due to

the single trading currency, the euro.

The emergence and spiraling growth of online trading have thrown up a lot of

challenges and opportunities for all major elements, viz, investors, brokers and internet

portals, of the trading mechanism. In the current scenario, online trading portals are

slowly replacing the physical presence of traditional brokers and sub brokers. The role

of these brokers, henceforth, could be restricted to online counseling and web-advising

to the investors. The online portals or the e-broking firms, as they are know, are

connected to the stock exchanges 24 hours a day to execute the orders placed by the

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investors. They also provide the vital market information technical analysis and various

other innovative services to woo the investors. It is learnt that, at present, the market of

e-broking is little over-crowded and hence over-brokered, making it hugely difficult for

the new entrants to negotiate the entry barriers. However, when the markets move in

upward trends and trade volume increases, it is expected that these firms will get

enough to share.

The presence of a wide array of e-broking firms has drastically cut down the

brokerage cost for the investors. The cost effectiveness and the fascination of online

trading are enticing millions of retail traders to the stock markets. These investors,

armed with the variety of market information and intelligence provided by online

portals and consultancies, directly involve in the trade just by sitting in any corner of

the world. The introduction of futures and options trading in the recent past has made

online trading more attractive. But this situation could be a double edged sword. All

these market information and the easy trading opportunities have created an illusionary

knowledge and over confidence among the investors, leaving them like a bunch of

sitting ducks on the highway of market fluctuations and uncertainties.

Online trading has also given way to a new breed of investors known as Day

Traders who gamble in the market, trying to make money out of the minute-by-minute

fluctuations in share prices. To their dismay most of them end up bankrupt and simply

disappear. These day traders are also responsible for most of the day to day price

variations that are beyond the rational expectations prevailing in the market. Another

important worrying factor of online trading is the safety and regulation issues of stock

business. It is very difficult to have a foolproof system of trading, considering that the

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entire business is done on a seamless and a very fluid platform. It needs the evolution of

a blend of well-tested technology and trading mechanism to make online trading

universal and complete. All said and done, investors and people involved in stock

trading should keep in mind that the stock market is not a Mexican casino to gamble,

but a means of capital mobilization and equitable distribution in achieving the ends of

economic growth.

NEED OF THE STUDY

In outcry the broker has to buy or sell securities for which he has received the

orders .for this, the broker or his authorized representatives goes to the stock exchange.

Basically the broker shouts while buying or selling the securities. The floor of the stock

exchange is divided in to a number of market also post pit or wing based on particular

securities dealt there.

In the post pit or wing, the broker using open outcry method makes an offer

or bid price. For making the necessary bargain, he codes his purchase or sales price,

also known as offer or bid price. The dealer, to whom the price is quoted, quotes his

own price quotation of the dealer suits the broker, he may lose the bargain. If he is not

satisfied with the quote price he may turn to some other dealer .On the close of the

bargain, the dealer sell as well as the broker makes a brief notes of the particulars of the

deal. Such notes are made on some pad and on it the number of shares, the price agreed

upon, the name of the party, what membership number etc., are noted.

The disadvantages of outcry system are it lack transparency, the scope of

manipulation, Inaudibility and also speculation and malpractice is more, in order to

overcome the above problems, online trading came in to existence. Hence the need to

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study the advantages of online trading system and its importance in making the market

operations and smooth while retaining the flexibility of conventional trading practices.

OBJECTIVES

1) To study about online trading procedure followed in Iti Financial Services ltd.

2) To study the advantages of online trading system over manual system.

3) To study how online trading system helps in improving market transparency.

4) To study how online trading system helps in smooth market operation while

retaining the flexibility of conventional trading practices.

5) To compare the transaction changes of similar firms.

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RESEARCH METHODOLOGY

Data source: -The data source utilized to under taker the project is both primary

and secondary data.

Primary data: - The data is collected by personal interaction with autherised

members of Iti Financial Services ltd.

Secondary data: -The secondary data is collected from various sources like the

brochures and material provided by Iti Financial Services ltd.

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Scope of the study

The scope of the project is to study and know about Online Trading and Clearing

& Settlements dealt in Iti Financial Services limited.By studying the Online Trading and

Clearing & Settlements, a clear option of dealing in stock exchange is been understood.

Unlike olden days the concept of trading manually is been replaced for fast interaction of

shares of shareholder. By this we can access anywhere and know the present dealings in

shares.

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LIMITATIONS OF THE STUDY

1) The study is confined to online trading procedure only.

2) Problems of listing are not covered due to limited time and to keep the study in

manageable limits

3) The data is collected from the primary and secondary sources and thus is subject to

slight variation than what the study includes in reality

4) The study was restricted in Hyderabad.

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CHAPTER-2

REVIEW

OF

LITERATURE12


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REVIEW OF LITERATURE

Online trading marks a watershed in the application of technology in conducting

trading business in stock markets. This book is divided into four sections. The first

section deals with fundamentals and framework, the second section focuses on the

implication of online trading the third section describes the implications for online

investors. The fourth section is about the technology advancements in online trading.

The first section on fundamentals and Framework deals with the evolution of online

trading, basic concepts, background and trading mechanisms involved. The opening

article, share trading: Moving to the Net, by Dr. T R Rajarajan traces the evolution of

securities trading from traditional system to trading through the internet. It discusses the

trading mechanism through the major components of online trading, viz, banking,

depositories, technology and other infrastructure.

Information technology has replaced the age-old share trading method with the faster

and more accurate online stock trading. The second article. Online trading: Trading @

the speed of light, By Mayura jaiswal, deeepad vashist and Abhay Kumar, traces the

growth of online trading from the year 2000 using statistics on volume of online trading

from the year 2000 using statistics on volume of online trading, number of e-broking

firms, brokerages and demographic patterns. Online trading has dramatically changed

the way stock business has been conducted over the years. In the next article, online

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trading: Issues and concerns, by Anup Bagchi, the author suggests that online trading

should balance a technology centric approach to transactions with the human factor for

a successful transition from traditional to online trading. In his interview, jade smith

(HSBC treasury and capital markets) discusses various aspects of online trading: the

types of transactions conducted online, different value propositions in the online

marketing and the future trends in e-trading.

The process of payment and settlement is an issue of importance in online stock

trading. The sixth article, payments in India: The journey so far and the road ahead,

by Vinod Madhavan looks at how the multiple payment systems have developed in

India and considers the need for technology and a legal framework to ensure that an

electronically linked payments and clearing system, including cheque truncation, can be

implemented in future. In the next article, clearing & settlement system at NSDL, the

structure of a clearing account is described along with the process of settling trade in

markets.

EVOLUTION OF ONLINE TRADING

Online trading had its origin in the US where the first E-trading of stocks began

in 1983. Primarily used in the form of e-commerce to place and receive orders for

commodities; slowly it entered the financial markets as an alternative to the traditional

system. By the late 1990s, most of the stock exchanges had been automated, and the

open outcry method of trading had been slowly done away with. Most stock

exchanges began to use computers to replace the market makers or the floor traders

who execute the trade on the floor.

With the emergence and growth of the internet, the floor traders started taking

computer orders from brokers and executed the trade. Subsequently, when the stock

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exchanges used software technology to interconnect brokers, depositories and banks,

the internet order place by clients were firs route through the stock brokers computer

systems where the matching of orders took place and the trade was executed.

This gradual up scaling of technology has led to the rise in popularity and

acceptance of online broking as a major way of stock trading.

With the book in software technology, the online trading platform became faster

and faster with a lot of sophistication and increased security. Now the thrust is on

making the entire trading process completely seamless and risk free.

TRADING MECHANISM

The mechanism in online trading Is the replication of trading of physical

securities through the internet in a much faster and convenient way. Basic principles

and logic of stock trading remain the same as before; only, the investors feel more

empowered and are served with plenty of information. The diagram 1 and 2 depict both

selling and buying of securities online.

There are primarily 5 components in any online trading mechanism.

1. Investor

2. broker/ E-broking firm

3. DP Accounts

4. Bank Account

5. The Exchange

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The process of online trading is driven by a front-end software which the stock

exchange employs through satellite (like V-SAT) connections. This software

technology provides the necessary interface between the brokers, depositories and the

banks. The investor is required to trade through any of the approved brokers, and

brokers of trading members can only trade with the exchange.

The investor places the order with the broker and the broker gets the order executed

from the exchange. Each broker, who has to be a trading member, is connected to the

exchange through sophisticated software. In the same way, each investor has to trade

only through the broker and needs to have a demat account and a brokers account.

Each investor will be given a login account and a password in the brokers site.

Investors can log in and lace orders anytime that will be sent to exchange and will be

compared with all the orders and executed as per the prices.

In this linear chain of investor-broker-exchange channel, there are two more

important players, viz, depositories and banks. Depositories (DP) handle the holding

and selling of demat securities. All brokers are embers and account holders of DPs. The

depositories function in liaison with the stock exchange and act as an online store for

shares and stocks. The transaction of cash is taken care of by banks. The investors

money is transferred to the account with the broker and used for transactions, and

similarly, the credits for the investor can be directly to the investors bank account.

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The whole mechanism is interconnected and the speed of transaction depends on how

well all these components operate in harmony with each other. The technology used for

interlinking these components and the security issues play a major role in the speed of

transactions. When these issues are addressed, the transactions can be executed in real-

time (T+0), instead of the present T+2 days time period.

BUY TRANSACTION (TABLE-1)

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Broker buys 100 xyz @ market rate

Yes, hold

Funds

transferred

Share

transferred

Hold

Rs.30,

000

NSE

Bank server

Order accepted and

goes to exchange

DP server

Trade done

CUSTOMER APPROACH THROUGH PHONE/INTERNET

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SELL TRANSACTION (TABLE-2)

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Trades done

Orders accepted and

goes to exchange

Yes, Hold

Bank Server

Funds Transferred

BROKER SELLS 100 XYZ @ Rs.300/-

DP server

Hold100

xyz shares

Share transferredNSE

CUSTOMER APPROACH THROUGH PHONE/INTERNET KIOSK


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SETTLEMENT SYSTEM

The schedule of setting the trade Is governed by the stock exchange rules. The

following details are available in the depository software of the DP.The pay in time

decided by the stock exchanges for each settlement is the NSDL deadline time. The

significance of NSDL time is that securities can be moved from the client account to the

clearing account (client to clearing member), or from clearing account to the stock

exchange (clearing member to stock exchange0 or from one settlement to another

(inter-settlement) only till the NSDL deadline of the relevant settlement. Securities

cannot be transferred to a settlement after the NSDL deadline for that settlement is over.

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No. of

days

Transactions

day

Party with

obligation

Activity

Day 1 T (if, Monday) Customer Trading

Day 2 T+1 (Tuesday) Customer Securities pay in to member

broker

Day 2 T+1 (Tuesday Customer Funds pay in to member

broker

Day 3 T+2(Wednesday) Member

broker

Securities pay in to the stock

exchange

Day 3 T+2(Wednesday) Member

broker

Funds pay in to the stock

exchange

Day 3 T+2(Wednesday) Stock

exchange

Payout of securities to

member broker

Day 3 T+2(Wednesday) Stock

exchange

Payout of monies to member

broker

Day 4 T+3 (Thursday) Member

broker

Securities deposited into

demat account of customer

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Day 4 T+3 (Thursday) Member

broker

Funds transferred into clients

bank account.

MAJOR ADVANTAGES OF ONLINE TRADING

With the February 2003 announcement of Gilts trading available online, capital

market reforms in India have outpaced all other sectors in the post-liberalization era.

The options available for investments today are many. The mutual funds industry is

doing well, IPO market is received and derivatives trading are catching on in India. If

these investments can be made by the click of the mouse then the investment process

will be the easiest. Investors can save time and make money. Online trading, which is

the way the developed world is investing, is now the mantra of investment markets in

India. To combine the speed of the internet and the intricacy of the trade and provide an

interactive and integrated trading environment for all investments is the ultimate goal.

Online trading started in India in February 2000.

Online trading is of 2 categories: Discount online brokers and the other one is the

full service online broker. Discount online brokers allow one to trade via the internet

through the broker at reduced (less than offline brokerage charges) rates. Full service

online brokerage is linked to existing brokerage directly through the internet. These

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brokers allow their clients to place online orders with the option of chatting to brokers if

advice is needed.

FOR THE INVESTORS

Online trading has created a new wave of changes among the investors because

of its convenience and the sense of empowerment attached with executing the trade on

their own If has also thrown in plenty of options to the investors in the form of various

online broking firms which provide a whole lot of advisory and counseling services.

The biggest advantages of online trading is the equitable treatment of investors,

irrespective of small or big, In terms of offering the service, making the information

available and the benefits of the stock trading were highly concentrated with a

particular group of investors who could afford the technical and advisory services. The

stock market used to be a black box, now it is open to all those who are willing and

capable of investing because of the simple and user friendly ways of online trading. In a

nutshell,

The internet made the stock market operations transparent.

Cost of execution of trade for small quantities can be done in proportionate

fractions as that of big transactions.

Data and information are their for everyone and available everywhere.

Investors are empowered.

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FOR THE BROKERS

Brokers can gain on two accounts.

Surge in the volume of transactions will increase the profit even though the cost per

transaction is less in case of online trading.

Marketing the investor accounts and transaction of demat securities has manifold

conveniences compared to the traditional method of transactions in physical

securities.

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ONLINE TRADING BENEFITS

Advent of online trading can shift the trading power from stock brokers to

individual investors. The e-trading concept ensures that the investor, howsoever small,

could be a more active participant in the decision rather than leaving his portfolio at the

sole discretion of his broker. Online trading provides.

BEST PRICE FOR INVESTORS: Online trade offers the best price for the buying

and selling transactions of the investors, by ensuring proper matching of their orders

within the communications network itself. Also due to the high level of transparency

with regard to display of information the investors are able to get the best quote for the

shares.

BROKERAGE IS THE LOWEST: As the process of online trade is thoroughly

automated the transaction costs are low, also with competition among the online service

providers the brokerage charges are at their lowest in India.

LIQUIDITY TO THE INVESTORS: When online trade and online banking are

available, liquidity of the investments are very high as it is only a click away to

disinvest and release the funds. Conversely, if the investor spots some opportunity to

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invest, he could immediately allocate money from his savings account and make his

transactions.

TRANSPARENCY: Online trading gives greater transparency to the investors by

providing them an audit trail. This involves a complete integrated electronic chain

starting from order placement, to clearing and settlement and finally ending with a

credit to the depository account of the investor. All these stages were subject to

inspection, thus bringing in transparency into the system.

HASSLE FREE TRADING: Online trading integrates the bank, the brokerage firm

and the stock accounts (demat account) which lead to easy and paperless trading for the

client.

QUICK TRADING: The investor is able to execute the entire trading transaction, right

from logging on the brokers site, to the execution and settlement of his bank account,

in a very short period of time.

LEVEL PLAYING FIELD: Trading on the net, gives even the smallest retail investor

access to information that earlier was available only to the big traders. This provides a

level playing field for all investors In the securities market.

REDUCES THE SETTLEMENT RISK: This method of trading reduces the

settlement risk for the investor, as in this case no short sale is possible, i.e., the seller

will not be able to sell the securities unless he has their actual possession. This reduces

the settlement risk for the buyer. Who is assured of the delivery of the securities.

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OUTCRY SYSTEM

The broker has to buy or sell securities for which he has received the orders. For

this, the broker or his authorized representatives goes to the stock exchange. This

method is called the open outcry system. Basically the brokers shout while buying or

selling the securities. The floor of the stock exchange is divided into a number of

markets also known as post pit or wing based on particular securities dealt there.

In the post pit or wing, the broker using open outcry method makes an offer or

bid price. For making the necessary bargain, he quotes his purchase or sale price, also

known as offer or bid price. The dealer, to whom the price is quoted, quotes his own

price when the quotation of the dealer suits the broker, he may loose the bargain. If he

is not satisfied with the quote price, he may turn to some other dealer. On the close of

the bargain, the dealer as well as the broker makes a brief note of the particulars of the

deal. Such notes are made on some pad and on it the number of shares, the price agreed

upon, the name of the party, what membership number etc., are noted.

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MANUAL TRADING

Trading procedure before introduction of online trading

Trading on stock exchanges is officially done in the trading ring. In the trading ring

the space is provided for specified and non-specified sections, the members and their

authorized assistants have to wear a badge or carry with them an identity card given by

the exchange to enter the trading ring. They carry a sauda book or confirmation memos,

duly authorized by the exchange and carry a pen with them. The stock exchanges

operations are floor level are technical in nature .Non-members are not permitted to

enter in to stock market. Hence various stages have to be completed in executing a

transaction at a stock exchange .The steps involved in this method of trading have given

below:

Choice of broker

The prospective investor who wants to buy shares or the investors, who wants to

sell shares and transact business, have to act through member brokers only. They can

also appoint their bankers for this purpose as per the present regulations.

Placement of order

The next step is the placing order for the purchase or sale of securities with a

broker. The order is usually placed by telegram, telephone, letter, fax etc or in person.

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To avoid delay, it is placed generally over the phone. The orders may take any one of

the forms such as At Best Orders, Limit Order, Immediate or Cancel Order, Limited

Discretionary Order, and Open Order, Stop Loss Order.

Execution of order or contract

Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30

P.M on all working days Monday to Friday, and a special one-hour session on Saturday.

The members or the authorized assistants have to wear a badge given by the exchange

to enter into the trading ring. They carry a sauda Block Book or conformation memos,

which are duly authorized by the exchange when the deal is struck; both broker and

jobber make a note in their sauda block books. From the sauda book, the contract notes

are drawn up and posted to the client. A contract note is written agreement between the

broker and his clients for the transaction executed.

Drawing Up and Bills

Both sale and purchase bills are prepared along with the contract note and it is

posted on the same day or the next day. This in a purchase transaction, once the shares

are delivered to the client effects payment for the purchases and pays the stamp fees for

transfer, a bill is made out giving the total cost of purchase, including other expenses

incurred by the broker in the price itself. With this, the process ends.

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DEMAT ACCOUNT

What is Demat account and wht is required?

Securities and Exchange Board of India (SEBI) is a board (corporate body)

appointed by the Government of India in 1992 with its head office at Mumbai. Its one of

the function is helping the business in stock exchanges and any other securities markets.

Demat (short form of Dematerialization) is the process by which an investor can get stocks

(also called as physical certificates) converted into electronic form maintained in an

account with the Depository Participant (DP).

DP could be organizations involved in the business of providing financial services

like banks, brokers, financial institutions etc. DPs are like agents of Depository.

Depository is an organization responsible to maintain investor's securities

(securities can be stocks or any other form of investments) in the electronic form. In India

there are two such organizations called NSDL (National Securities Depository Ltd.) and

CDSL (Central Depository Services India Ltd.)

Investors wishing to open Demat account has to go DP and open the account. Opening

the Demat account is as simple as opening the bank account with any bank. As we need

bank account to save our money, make cheque payments etc, likewise we need to open a

Demat account if we want to buy or sell stocks. All stocks what we possess will show in

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our Demat account. So we don't have to possess any physical certificates. They are all held

electronically in our Demat account. As we buy and sell the stocks, accordingly our stocks

will get adjusted in our account.

Is a Demat account must?

The market regulator, the Securities and Exchange Board of India (SEBI), has made it

compulsory to open the Demat account if you want to buy and sell stocks.

So a Demat account is a must for trading and investing

How to start to open a Demat account?

We have to approach a DP to open a Demat account. Most banks are DP

participants so we may approach them.

A broker and a DP are two different people. A broker is a member of the stock

exchange, who buys and sells stocks on his behalf and also on behalf of his customers.

Following are the documents required to open Demat account.

When we approach any DP, we will be guided through the formalities of opening an

account. The DP will ask to provide some documents as proof of our identity and address.

Below is a list but we may not require all of them.PAN card, Voters ID, Passport, Ration

card, Drivers License, Photo credit card, Employee ID, IT Returns, Electricity/ Landline

Phone Bill etc.

Do we need any stocks to open a Demat account?

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No. We need not need any stocks to open a Demat account. A Demat account can

be opened with no balance of stocks. And there is no minimum balance to be maintained

either. You can have a zero balance in your account.

How much it cost to open a Demat account?

The charges for account opening, annual account maintenance fees and transaction

charges may vary between various DPs.

Finally After successfully opening the Demat account, the DP will allot

Beneficial Owner Identification Number, which will be needed to mention for all our

future transactions.

If we want to sell our stocks, we need to place an order with our broker and give a

Delivery Instruction to your DP. The DP will debit our account with the number of stocks

sold. We will receive the payment from our broker.

If we want to buy stocks, inform our broker about our Depository Account Number,

so that the stocks bought are credited into our account.

Points to remember while opening online account

Make multiple enquiries and try getting low brokerage trading and Demat account.

Also discuss about the margin they provide for day trading.

Discuss about fund transfer. The fund transfer should be reliable and easy. Fund

transfer from our bank account to trading account and visa versa. Some online

share trading account has integrated savings account which makes easy for us to

transfer funds from our saving account to trading account.

Very important is about service they provide, the research calls, intraday or daily

trading tips.

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Also enquire about their services charges and any other hidden charges if any.

And also see how reliable and easy is to contact them in case if any emergency.

\

DEMATERLIZATION

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

converted to an equipment number of securities in electronic from and credited in the

investor account with his DP. In order to dematerialize the certificates, an investor has

to first open an account with a DP and then request for the Dematerialization Request

Form, which is DP and submit the same along with the share certificates. The investor

has to ensure that he marks Submitted for Dematerialization on the certificates before

the shares are handed over to the DP for demat. Dematerialization can only be done to

those certificates, which are already registered in your name and belong to the list of

securities admitted for Dematerialization at NSDL.

Most of the active scrips in the market including all the scrips of S&P CNX

NIFTY and BSE SENSEX have already joined NSDL. This list is steadily increasing.

Briefly, the process is as follows: after completion of transfer, the investor gets the

option to dematerialize such shares. Investors willing to exercise this option sends a

Demat request along with the option letter sent by the company to his DP. The

company or its R&T agent would confirm the Demat request on its receipt from the DP

to reduce risk of loss in transit.

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Dematerialized shares do not have any distinctive or certificate numbers. These

shares are fungible-which means that 100 shares of a security are the same as any other

100 shares of the security. Odd lot shares certificates can also be dematerialized.

Dematerialization normally takes about fifteen to thirty days. To get back

dematerialized securities in the physical form, request DP for Rematerialization of the

same is made.

Benefits of Demat

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

associated with follow up for rectification. This has lead to reduction in brokerage

to the extent of 0.5% by quite a few brokerage firms.

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

cost of courier / notarization.

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

eliminating risk of loss in transit.

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

compared to loans against physical shares.

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

circumstances is reduced.

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

securities as against 50% for loans against physical securities.

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PROCEDURE FOR DEMATERIALIZATION

1) To Materialize any physical security, one will have to open a demat account with

a DP of ones Choice.

2) Thereafter, all one has to do is to full in a DRF (Demat Request Form) and

submit the same with the shares/securities Certificates to the DP for Dematerialization.

3) DP defaces and sends these certificates to the Issuer/ Registrar who credits an

equivalent number of securities in the demat account maintained with CDSL for each

script, a separate DRF has to be used.

4) The investor shall fill up the following details in the DRF:

Investors account number with the DP

DP ID

DP Name

ISIN

Name of the Issuer

Type of the Security

Total quantity to be maintained.

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Name (s) of the holders (s)

Certificate Details: Folio No., Distinctive Nos., Certificate Nos., and No.

Of Securities.

Lock in Status

2) The registered holder (s) shall sign the DRF:

As per the specimen Signature (s) recorded with the DP

As per the specimen Signature (s) recorded with the Issuer/RTA.

3) The Investor shall also surrender the physical certificate to be

Dematerialized along with the duly filled DRF to the DP. Immediately on

receipt of DRF along with the scraps the DP should give the counter

acknowledgement to the BO.

4) The DP shall verify the following:

Whether the DRF is complete.

Whether the Certificate details mentioned on the DRF and on the

Certificates enclosed, tally.

Whether the name (s) of the holders (s) and the order of the names

of the holders under the BO Account maintained with CDSL.

Whether all the holders have signed the DRF and the signatures of

the account holders tally with those recorded by the DP.

If there is any discrepancy in any of the details, the DP will get it

rectified from the investor and the Error free DRFs will be taken up

for further processing by the DP.

5) The DP shall capture the details from the DRF & Certificate through the

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Front end system provided by the CDSL and shall generate the DRN on

the same day or latest by the next working day from the date of receipt of

DRF.

6) In case the Securities are in Lock-in status the following details need to

Be specified.

Lock in Reason

Lock in Release date.

10) The DP shall then write down the DRN on the DRF and deface the

certificates by affixing a rubber stamp Surrendered for Dematerialization. The DP has to

take proper care that the stamp should be affixed in such a manner that no material

information such as distinctive numbers. Folio Nos., Certificate Nos., etc., on the

Certificate is smudged or becomes illegal.

11) The DP shall then mutilate the Certificates, by punching two holes at the top

of the Certificates.

12) The DP shall then give a System Generated acknowledgement of the Demat

request to the BO. This Acknowledgement will contain details such as BO A/c No. BO

Names ISIN, Name of the Issuer & Type of security, Quantity, Distinctive/Certificate/Folio

No., Date of request, DRN. The DP shall authorize this acknowledgement by putting his

seal/rubber stamp & Signature of the authorized signatory (may be printed on the letterhead

of the DP)

13) CDSL shall electronically send the DRF data to the issuer/RTA after the

DRN is generated. The Process is done automatically by the system.

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14) The DRF shall be authorized by the DP by Putting his seal & Signature. The

Certificates & the Original DRF shall be sent to the Issuer/RTA along with a covering letter

printed on the DPs letterhead. This conversing letter content will be generated by the

CDSL system. A copy of the DRF is to be maintained by the DP for its own reference and

records.

15) The DP then shall capture the dispatch details on the front-end system Such as the

dispatch reference no dispatch date, name of the courier, etc. The DP must dispatch the

physical documents within a maximum of 2days from the date of DRN Generation.

16) For items marked confirmed form the Issuer/RTA, CDSL activates the

Balances in the BO account and they will be treated as fully dematerialized securities.

17) The DP will print the statement of holding for the BO account for which balances

have been activated by CDSL and mail/delivery the same to the BO.

18) The dematerialized process must be completed within 15 days or as

Specified by the CDSL, from time to time.

19) Incase of rejection of certificates unless there is a compelling reason, the

RTA/Issuer will print fresh certificates in lieu of the defaced certificates and return the

same under the objection to the DP concerned, along with an appropriate rejection letter.

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NATIONAL SECURITIES DEPOSITORY LIMITED

NSDL was inaugurated in 1996, as the depository in the country to avoid the myriad

problems in settlement.

In depository system, Securities are held in securities (depository) accounts, which is more

or less similar to holding funds in the bank accounts. Transfer of ownership is done through

simple account transfer. This method does away with all the risks and hassles normally associated

with paper work. Consequently, the cost of transaction in depository environment is considerably

lower as compared to transaction in physical certificates.

Trading in dematerialized Securities is quite similar to trading in physical Securities. The

major difference is that at the time of settlement, instead of delivery/receipt of Securities in the

physical form, the same is affected through account transfer. Currently dematerializes trading is

available at NSE, BSE and CSE.

Exclusive Demat segment follows rolling settlement (T+2) cycle and the unified (erstwhile-

physical) segment follows account period settlement cycle.

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All investors, other than the institutional investors, can deliver Securities either

in the physical or dematerialized form in the market.

From January 4, 1999, all categories of investors can deliver only in

Dematerialized form with respect to a select list of securities. However initially this was

applicable only at those exchanges, which have joined the depository, but SEBI has also specified

that this list is to be expanded in a phased manner. The settlement of trades in the stock exchanges

is undertaken by the clearing corporation (CC)/clearing house (CH) of the corresponding stock

exchanges.

While settlement of Dematerialized Securities is effected through NSDL, the funds

settlement is effected through the clearing banks. The physical Securities are settled by the

clearing members directly with the CC/CH.

BENEFITS OF DEPOSITORY SYSTEM

In the depository system, the ownership and transfer of Securities takes place by

means of electronic book entries. At the outset, this system rids the capital market of the danger

related to handling of paper. NSDL provides numerous direct and indirect benefits, like:

Elimination of bad deliveries-in the depository environment, once holding of an investor are

Dematerialized, the question of bad delivery does not arise i.e. they cannot be hold under

objection.

Elimination of all risks associated with physical certificates-dealing in physical Securities

have associates security risks of stocks, mutilation of certificates, loss of certificates during

movements through and from the registrars, thus exposing the investor to the cost of obtaining

duplicate certificates and advertisement, etc.., This problem does not arise in the depository

environment.

No stamps duty for transfer of any kind of Securities in the depository.

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Immediate transfer and registration of securities- in the depository environment, once the

securities are credited to the investors accounts on pay-out, he becomes the legal owner of the

securities. There is no further need to send it to the companys registrar for registration.

Faster settlement cycle-the exclusive Demat segment follow rolling settlement cycle of T+2

i.e. the settlement of trades will be on the 2nd working day from the trade day. This will enable

faster turnover of stock and more liquidity with the investor.

Reduction in brokerage by many brokers for trading in Dematerialized Securities-brokers

provide this benefit to investors as dealing in Dematerialized Securities reduced their back office

cost of handling paper and eliminates the risk of being the introducing broker.

Faster disbursement of non-cash corporate benefits like rights, bonus, etc..,

Reduction of problems related to change of address of investor, transmission, etc., in case of

change of address or transmission of Demat shares, investors are saved from undergoing the

entire change procedure with each company or registrar. Investors have to only inform their DP

with all relevant documents and the required changes are effected in the database of all the

companies, where the investor is a registered holder of Securities.

Elimination of problems related to selling Securities on behalf of a minor- a natural

guardian is not required to take court approval Demat Securities on behalf of a minor. Ease

in portfolio monitoring since statement of account gives a consolidated position of

investment in all instructions.

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CHAPTER-3

INDUSTRY PROFILE42


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AND

COMPANY PROFILE

INDUSTRY PROFILE

STOCK MARKETS IN INDIA

Stock exchanges are the perfect type of market for securities whether of

government and semi-govt bodies or other public bodies as also for shares and

debentures issued by the joint-stock companies. In the stock market, purchases and

sales of shares are affected in conditions of free competition. Government securities are

traded outside the trading ring in the form of over the counter sales or purchase. The

bargains that are struck in the trading ring by the members of the stock exchanges are at

the fairest prices determined by the basic laws of supply and demand.

Definition of a stock exchange

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

constituted for the purpose of assisting, regulating or controlling the business of buying,

selling or dealing in securities. The securities include:

Shares of public company.

Government securities.

Bonds

History of Stock Exchanges

The only stock exchanges operating in the 19 th century were those of Mumbai

setup in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non-

profit-marking associations of brokers to regulate and protect their interests. Before the

control on securities under the constitution in 1950, it was a state subject and the

Bombay securities contracts (control) act of 1925 used to regulate trading in securities.

Under this act, the Mumbai stock exchange was recognized in 1927 and Ahmedabad in

1937. During the war boom, a number of stock exchanges were organized. Soon after it

became a central subject, central legislation was proposed and a committee headed by

A.D.Gorwala went into the bill for securities regulation. On the basis of the

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committees recommendations and public discussion, the securities contract

(regulation) act became law in 1956.

Functions of Stock Exchanges

Stock exchanges provide liquidity to the listed companies. By giving quotations

to the listed companies, they help trading and raise funds from the market. Over the

hundred and twenty years during which the stock exchanges have existed in this

country and through their medium, the central and state government have raised crores

of rupees by floating public loans. Municipal corporations, trust and local bodies have

obtained from the public their financial requirements, and industry, trade and

commerce- the backbone of the countrys economy-have secured capital of crores or

rupees through the issue of stocks, shares and debentures for financing their day-to-day

activities, organizing new ventures and completing projects of expansion,

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Guwahati Stock Exchange Ltd

Hyderabad Stock Exchange Ltd.

Jaipur Stock Exchange Ltd

Kanara Stock Exchange Ltd

Ludhiana Stock Exchange Association Ltd

Madras Stock Exchange

Madhya Pradesh Stock Exchange Ltd.

Magadh Stock Exchange Limited

Meerut Stock Exchange Ltd.

Mumbai Stock Exchange

National Stock Exchange of India

OTC Exchange of India

Pune Stock Exchange

Uttar Pradesh Stock Exchange Association

Vadodara Stock Exchange Ltd.

United Stock Exchange.

Out of these major stock exchanges were

NSE

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

Powered Study Group on Establishment of New Stock Exchanges, which recommended

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

access to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of

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the Government of India and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country. On its recognition as a stock

exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE

commenced operations in the Wholesale Debt Market (WDM) segment in June 1994.

The Capital Market (Equities) segment commenced operations in November 1994 and

operations in Derivatives segment commenced in June 2000

NSE's mission is setting the agenda for change in the securities markets in India.

The NSE was set-up with the main objectives of:

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

Ensuring equal access to investors all over the country through an appropriate

communication network.

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

electronic trading systems.

Enabling shorter settlement cycles and book entry settlements systems, and

Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology, have become

industry benchmarks and are being emulated by other market participants. NSE is more

than a mere market facilitator. It's that force which is guiding the industry towards new

horizons and greater opportunities.

BSE

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

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older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-

profit making Association of Persons (AOP) and is currently engaged in the process of

converting itself into demutualised and corporate entity. It has evolved over the years into

its present status as the premier Stock Exchange in the country. It is the first Stock

Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of

India under the Securities Contracts (Regulation) Act 1956.The Exchange, while providing

an efficient and transparent market for trading in securities, debt and derivatives upholds

the interests of the investors and ensures redresses of their grievances whether against the

companies or its own member-brokers. It also strives to educate and enlighten the investors

by conducting investor education programmers and making available to them necessary

informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies

and regulates the affairs of the Exchange. The Governing Board consists of 9 elected

directors, who are from the broking community (one third of them retire ever year by

rotation), three SEBI nominees, six public representatives and an Executive Director &

Chief Executive Officer and a Chief Operating Officer.

The Executive Director as the Chief Executive Officer is responsible for the day-to-day

administration of the Exchange and the Chief Operating Officer and other Heads of

Department assist him.

The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to

constitution of the Executive Committee of the Exchange. Accordingly, an Executive

Committee, consisting of three elected directors, three SEBI nominees or public

representatives, Executive Director & CEO and Chief Operating Officer has been

constituted. The Committee considers judicial & quasi matters in which the Governing

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Board has powers as an Appellate 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 to the Exchange, etc.

Regulatory Frame Work Of Stock Exchange

A comprehensive legal framework was provided by the Securities Contract

Regulation Act, 1956 and Securities Exchange Board of India 1952. Three tier

regulatory structure comprising

Ministry of finance

The Securities And Exchange Board of India

Governing body

Members of the stock exchange

The securities contract regulation act 1956 has provided uniform regulation for the

admission of members in the stock exchanges. The qualifications for becoming a member

of a recognized stock exchange are given below:

The minimum age prescribed for the members is 21 years.

He should be an Indian citizen.

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

He should not be convicted for fraud or dishonesty.

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

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

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

STOCK EXCHANGE BOARD OF INDIA (SEBI)

The securities and exchange board of India was constituted in 1988 under a

resolution of government of India. It was later made statutory body by the SEBI act

1992.according to this act, the SEBI shall constitute of a chairman and four other

members appointed by the central government.

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With the coming into effect of the securities and exchange board of India act, 1992

some of the powers and functions exercised by the central government, in respect of the

regulation of stock exchange were transferred to the SEBI.

OBJECTIVES AND FUNCTIONS OF SEBI

To protect the interest of investors in securities.

Regulating the business in stock exchanges and any other securities market.

Registering and regulating the working of intermediaries associated with

securities market as well as working of mutual funds.

Promoting and regulating self-regulatory organizations.

Prohibiting insider trading in securities.

Regulating substantial acquisition of shares and take over of companies.

Performing such functions and exercising such powers under the provisions of

capital issues (control) act, 1947and the securities to it by the central

government.

SEBI GUIDELINES TO SECONDARY MARKETS

(STOCK EXCHANGES)

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

non-members, public representatives and government representatives to the

extent of 50% of total number of members.

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Capital adequacy norms have been laid down for the members of various stock

exchanges depending upon their turnover of trade and other factors.

All recognized stock exchanges will have to inform about transactions within

24 hrs.

TYPES OF ORDERS

Buy and sell orders placed with members of the stock exchange by the investors. The

orders are of different types.

Limit orders: Orders are limited by a fixed price. E.g. buy Reliance Petroleum at

Rs.50.Here, the order has clearly indicated the price at which it has to be bought and the

investor is not willing to give more than Rs.50.

Best rate order:Here, the buyer or seller gives the freedom to the broker to execute the

order at the best possible rate quoted on the particular date for buying. It may be lowest rate

for buying and highest rate for selling.

Discretionary order:The investor gives the range of price for purchase and sale. The

broker can use his discretion to buy within the specified limit. Generally the approximation

price is fixed. The order stands as this buy BRC 100 shares around Rs.40.

Stop loss order: The orders are given to limit the loss due to unfavorable price

movement in the market. A particular limit is given for waiting. If the price falls below the

limit, the broker is authorized to sell the shares to prevent further loss. E.g. Sell BRC

limited at Rs.24, stop loss at Rs.22.

Buying and selling shares

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To buy and sell the shares the investor has to locate register broker or sub broker

who render prompt and efficient service to him. The order to buy or sell specifying the

number of shares of the company of investors choice is placed with the broker. The order

may be of any type. After receiving the order the broker tries to execute the order in his

computer terminal. Once matching order is found, the order is executed. The broker then

delivers the contract note to the investor. It gives the details regarding the name of the

company, number of shares bought, price, brokerage, and the date of delivery of share. In

this physical trading form, once the broker gets the share certificate through the clearing

houses he delivers the share certificate along with transfer deed to the investor. The

investor has to fill the transfer deed and stamp it. The stamp duty is one of the percentage

considerations, the investor should lodge the share certificate and transfer deed to the

register or transfer agent of the company. If it is bought in the DEMAT form, the broker

has to give a matching instruction to his depository participant to transfer shares bought to

the investors account. The investor should be account holder in any of the depository

participant. In the case of sale of shares on receiving payment from the purchasing broker,

the broker effects the payment to the investor.

Share groups

The scrips traded on the BSE have been classified into A,B1,B2,C,F and

Z groups. The A group represents those, which are in the carry forward system. The F

group represents the debt market segment (fixed income securities). The Z group scrips are

of the blacklisted companies. The C group covers the odd lot securities in A, B1&B2

groups.

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ROLLING SETTLEMENT SYSTEM

Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or

5days) after the trading day. The shares bought and sold are paid in for n days after the

trading day of the particular transaction. Share settlement is likely to be completed much

sooner after the transaction than under the fixed settlement system.

The rolling settlement system is noted by T+N i.e. the settlement period is n days after

the trading day. A rolling period which offers a large number of days negates the

advantages of the system. Generally longer settlement periods are shortened gradually.

SEBI made RS compulsory for trading in 10 securities selected on the basis of the criteria

that they were in compulsory demat list and had daily turnover of about Rs.1 crore or more.

Then it was extended to A stocks in Modified Carry Forward Scheme, Automated

Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Securities

Scheme (BELSS) with effect from Dec 31, 2001.

SEBI has introduced T+5 rolling settlement in equity market from July 2001 and

subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement

experience it was further reduced to T+2 to reduce the risk in the market and to protect the

interest of the investors from 1st April 2003.

Activities on T+1

Conformation of the institutional trades by the custodian is sent to the stock exchange

by 11.00 am. A provision of an exception window would be available for late confirmation.

The time limit and the additional changes for the exception window are dedicated by the

exchange.

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

obligation files to the brokers terminals late by 1.30 p.m on T+1. Depository participants

accept the instructions for pay in securities by investors in physical form upto 4 p.m and in

electronic form upto 6 p.m. the depositories accept from other DPs till 8p.m for same day

processing.

Activities on T+2

The depository permits the download of the paying in files of securities and funds till

10.30 am on T+2 from the brokers pool accounts. The depository processes the pay in

requests and transfers the consolidated pay in files to clearing House/clearing Corporation

by 11.00am/on T+2. The exchange/clearing house/clearing corporation executes the pay-

out of securities and funds latest by 1.30 p.m on T+2 to the depositories and clearing banks.

In the demat mode net basis settlement is allowed. The buy and sale positions in the same

scrip can be settled and net quantity has to be settled.

COMPANY PROFILE

ITIFSL is emerging as one of the top most wealth management companies in India

with a daily turnover of over 200 crores and 116 branches spread all over the country.

ITIFSL originally promoted by the Investment Trust of India, is now a part of the Sharyans

and Inga Group. The Sharyans Group has an impressive portfolio of businesses under its

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fold which mainly fall under the real estate and financial services categories. The prominent

subsidiaries of this Group are Prebone Yamane (Countrys largest debt broking company),

Intime Spectrum (Indias largest Registry & Transfer Agents), and Collin Stewarts India

Private Limited (Portfolio Management Services & Research along with institutional

broking operations for Collin Stewarts which is the largest wealth management company in

the UK). Under the guidance of the Sharyans and Inga Group, ITIFSL will soon touch the

pinnacles of success in the financial services industry by being a dominant force in the

broking as well as the distribution arena. With an unblemished and reputed track record,

ITIFSL is all set become an imposing wealth management firm in the country by giving the

best to its clients as well as stakeholders.

ITI FSL has been set up to engage in

Stock Broking

Institutional Broking

Derivatives

Depository Services

Distribution of Investment Products

Distribution of Insurance

Commodities Broking

Headquartered in Chennai, ITI FSL has a growing network of offices across several

states to ensure easy accessibility to our clients wherever they are. ITIFSL has over 116

Branch Offices spread across the country to offer better reach and service to the investor.

The company currently marks its presence in the following regions:

Andhra Pradesh

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Delhi

Karnataka

Maharashtra

Madhya Pradesh

Tamil Nadu

West Bengal

Mission:

ITIFSL's mission is to deliver value with commitment. Emerging as one of the

front-line Brokerage Houses and a dominant force in the Distribution arena, we are

continuously engaged in the assessment of market conditions to balance risk and reward so

as to optimize returns to our investors.

Vision:

"To be the most Preferred Financial Advisor, Creator, Wealth Manager and to deliver

the Highest Standards of Service to customers and be Prominent in the horde of Finance

Companies offering similar services".

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Why ITIFSL?

ITIFSLs services are offered under total confidentiality and integrity with the sole

purpose of maximizing returns for their clients.

Equity Broking - Corporate Member of the Stock Exchange, Mumbai (BSE) and

National Stock Exchange of India Ltd. (NSE).

Pan India reach - 380 terminals spread across 75 different locations, in semi urban,

urban and metropolitan areas.

More than 100,000 retail clients serviced from the above locations

ITIFSL have heavily invested in technology (customized and ready to use software)

involving front and back end operations offering seamless process and flawless

execution and raising our service levels.

ITIFSL operate on an alert and well-defined system in risk management and settlement

mechanism.

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ADVANTAGES TO INVESTERS:

Why you need a financial planner?

The financial planner is someone who can help you invest across investment avenues based

on your risk profile and investment objectives. Post-investment, he monitors your

investments and ensures that you are on course to achieve your investment objectives. If

necessary, he suggests changes to your financial plan so that you are able to achieve your

investment objectives as planned.

Given the critical inputs provided by the financial planner in helping you achieve your

financial goals, it is important that you select the right financial planner. Here are the

reasons why ITI is the right planner for you

Certification/Membership

More than anything else, this is a pre-requisite from the compliance point of view. Your

financial planner should be certified and registered as a broker or mutual fund agent with

NSE, BSE, AMFI etc. ITI FSL has Trading and Clearing Memberships with major Stock

Exchanges in India to offer broking services across market segments at all of the National-

level Exchanges. ITI FSL is a Depository Participant with CDSL. We also have

memberships with commodity exchanges. We have AMFI certified professionals to advice

you on mutual funds.

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Competence

Gone are the days when financial planning simply required delivering application

forms. The traditional "one-size fits all" approach is pass.

With the increasing list of investment avenues on offer, selecting the one that suits you

the best is becoming a challenge. To that end, competence and skill set are the basic criteria

that investors should look for in an investment planner.

With ITI fine staff of professionals, you can be sure that you will get the best advice

and service to achieve your financial goals. Furthermore, the recommendations offered by

ITI are backed by solid research.

Value-add services

In addition to financial planning, ITI provides related, value-add services that can assist

you in the investment process. On-line tools and calculators are some of our more popular

value-add services. These tools can help you keep track of your investments. These value-

add services form an integral part of our offering.

One-stop shop

Every individual has different needs and the same undergo a change over a period of

time. The financial planner should be capable enough to understand these needs and offer

suitable products to fulfill them. For this purpose, ITI provides you with the entire range of

investment products from stocks, mutual funds, bonds to fixed deposits. In other words, we

offer a "one-stop" solution for all your investment needs.

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Accessibility

One of the common complaints from investors is that their financial planner is

unavailable/inaccessible and therefore unable to provide adequate/prompt service. This is

particularly common in a one-man setup where the financial planner's services begin and

end with him, with little or no backup.

If the financial planner is preoccupied with some important clients or if he re-locates, it

leaves you in a soup because your financial plan is in limbo. It is best to go with a financial

planning initiative that is run by teams (as opposed to one-man setups) to ensure continuity

of your financial plan. ITI has a team of professionals who are ever ready to serve you at

any point of time. We are spread across the country so that you can have access to us

always.

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Data Analysis and Interpretation

Iti Financial Services Ltd

The company charges Rs.0.03% for Intraday and Rs.0.3 % for delivery

based transactions

For Intraday based transactions

Transaction value Rs.100000.00

Deduct

Brokerage (0.03%) 30.00

Service Tax (10.2% on brokerage) 3.06

STT (security transaction tax)

0.125% on transaction value 125.00

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

Rs.99841.9

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

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For Delivery based transactions


Deduct

Brokerage (0.3%) 300.00




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

Rs.99419.4

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

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Share Khan Ltd

The company charges Rs.0.1% for Intraday and Rs.0.5% for delivery

based transactions



Deduct

Brokerage (0.1%) 100.00




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

Rs.99764.8

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

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Deduct

Brokerage (0.5%) 500.00




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

Rs.99199.00

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

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Motilal Oswal Ltd

The company charges Rs.0.15% for Intraday and Rs.0.4% for delivery

based transactions



Deduct

Brokerage (0.15%) 150.00




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

Rs.99709.7

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

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Deduct

Brokerage (0.4%) 400.00




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

Rs.99309.2

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

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For Intraday

99600

99650

99700

99750

99800

99850

Iti Financial

Services

Share

khan

Mothilal

OswaL

Net Amount For Intra Day

Transactions

69

Particulars Iti Financial Services Share Khan Ltd Motilal Oswal Ltd

Transaction value 100000 100000 100000Brokerage 30 100 150

Service Tax 3.6 10.2 15.3

STT 125 125 125

Net Amount 99841.9 99764.8 99709.7


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Interpretation

Though the transaction value is same for Iti Financial Services, Share

Khan & Motilal Oswal, but the net amount benefited to the customer is

obtained from Iti Financial Services. The reason, the brokerage charges

are less. Also it is to be noted that the service tax is charged on

brokerage amount.

For Delivery

70

Particulars Iti Financial Services Share Khan Ltd Motilal Oswal Ltd

Transaction value 100000 100000 100000Brokerage 300 500 400Service Tax 30.6 51 40.8STT 250 250 250Net Amount 99419.4 99199 99309.2


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F1

Key is used for the buying of shares and to display the order entry table .

For eg:- Bse/Nse

Company code

Symbol

Total quantity

Price

F2

Key is used for selling the shares and to display order entry.

F3

Key is used to display the pending entry

eg:- If we order for shares and it will not be traded by Nse/Bse. Then the shares

are known as in pending.

F4

Key is used for market watch

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F5&F6

Key is used for market picture of a particular company if we enter some particular

company name in the market picture. It will show the best five buyers of that particular

and best five seller of that particular company. Always the five buyers /sellers will not

be same they will change with in seconds.

Buyer Seller

No. of Quantity Price Price Quantity No. of

Orders of shares of shares orders

And we can see .

Opening/yesterday closing price of the shares.

High /low rate of the shares.

% of changes in particular company.

Last traded quantity and rate will be shown.

Shift F7

To know the details of a particular company

Eg:-

Reliance:-symbol, company code, dividend details

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F8 & F9

This keys are used to show all the executed order.

Eg:-which are already traded in the market picture

F10

Key is used for message log

At what time particular company shares were traded, particular trade, particular time.

F11

To add script to the screens

F12

Key is used for market movement for particular script or share.

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CHAPTER-4

SUMMARY

AND

CONCLUSIONS

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SUMMARY AND CONCLUSIONS

The intraday net amount (99841.9) is highest for Iti Financial Services Ltd when

compared to Share Khan Ltd & Motilal Oswal Ltd.

The net amount for delivery based transactions(99419.4) is highest for Iti

Financial Services Ltd, followed by Motilal Oswal Ltd & Share Khan Ltd

It was found that most of the customers are willing to take Demat Account

rather than commodity account.

From the survey it is found that most of the customers satisfaction level is good

with the advice given by their marketing executives and the information given

in the broachers.

Most of the customers prefer to invest in long term investments.

From the survey it is found that most of the customers are aware of trading

process of Iti Financial Services Ltd.

Most of the customers are interested to take part in the demo sessions of online

trading in Iti Financial Services Ltd.

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The competitors of Iti Financial Services Ltd Viz., Share Khan Ltd and Motilal

Oswal should decrease the brokerage charges to attract the customers.

Company should increase awareness about the companys products & service

offered by them in the market.

Company should maintain good relation with the customers and respond

quickly to the queries asked by the customers

The company should give demonstration to customers so that they can get

complete knowledge about online trading.

Company should try to minimize the rejections by taking care while filling the

application form.

The company should increase branch offices in Hyderabad & other areas in all

over India.

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CONCLUSION

New ideas are to be implemented to catch the customers. The strategy of giving

more benefits to the high end customers is very useful. All the positive points are used

to get the business for the firm.

But again if any one wants to take risk & earns a lot he can go for shares. Because stock

market is a volatile market. Anything & everything can happen to this market. But then

again if anyone study the market well he can earn a lot.

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Text Books:

WEBSITES:

www.nse-india.com

www.bseindia.com

www.moneycontrol.com

www.itifsl.co.in
http://www.nse-india.com/http://www.bseindia.com/http://www.moneycontrol.com/http://www.itifsl.co.in/http://www.nse-india.com/http://www.bseindia.com/http://www.moneycontrol.com/http://www.itifsl.co.in/

Online Trading Mechanism

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