An organizational study at capstocks
An organizational study at capstocks2014
ORGANIZATION STUDYATCAPSTOCKS
Submitted In Partial Fulfillment Of The Requirements For The
Award Of The Degree OfMASTER OF BUSINESS ADMININSTRATION OF KERALA
UNIVERSITYSubmitted byJugunu S NairUnder the guidance ofDr. R
JayalakshmiCourse co-ordinatorIMK-ICMPoojapura
UNIVERSITY INSTITUTE OF MANAGEMENTEXTENSION CENTREICM
CAMPUSPOOJAPURA2013-2014[Type text]Page 2
DECLARATION
I, JUGUNU S NAIR, declare that the organization study report
entitled ORGANISATION STUDY CONDUCTED AT CAPSTOCKS AND SECURITIES
(INDIA) PVT LTD submitted by me for the award for the award of
degree of Master of Business Administration of Kerala University is
my own work. The report has not been submitted for the award of any
other degree of this university or any other university.
JUGUNU S NAIRPlace: ThiruvananthapuramDate:
ACKNOWLEDGEMENT
I offer my gratitude to GOD almighty with whose grace I could
successfully accomplish the organization study.
It gives me a greater pleasure to place on record my sincere
thanks and gratitude to Dr. Jayalakshmi, course coordinator MBA
program, ICM campus Poojapura, for her valuable and timely
assistance during the course of my study.
I express my sincere thanks to Mr.Rathish, Asst.HR Manager,
Capstocks and Securities (India) Pvt. Ltd, Thakaraparambu, who
guide me throughout the study and offered valuable advice. I also
thank all the staffs at Capstocks and Securities (India)Pvt Ltd,
who has helped me to complete my study successfully.
I thank my parents for their motivation and support.
JUGUNU S NAIR
CONTENTS
CHAPTERCONTENTSPAGE NO.
1INTRODUCTION2
1.1OBJECTIVE OF STUDY3
1.2METHODOLOGY OF THE STUDY3
1.3SCOPE OF THE STUDY4
1.4LIMITATIONS OF THE STUDY4
2INDUSTRY PROFILE5-18
3COMPANY PROFILE19-27
4ORGANISATION STRUCTURE28-30
5DEPARTMENTAL ANALYSIS31-76
6SWOT ANALYSIS77-79
7.1FINDINGS81
7.2CONCLUSION82
8REFERENCES83
ICM-UIM POOJAPURAPage 58
CHAPTER 1INTRODUCTION
INTRODUCTION
A stock broker plays a vital role in the secondary market
helping both the seller and buyer of the securities to enter into
transaction. The buyer and seller may be either a broker or a
client. When executing an order the stock broker may i=on behalf of
his client buy or sell securities from his own account i.e. as
principal or act as agent. For each transaction he has to issue
necessary contract note whether the transaction is entered into by
him as a principal or as an agent for another.
This organizational study is intended to analyse, observe and
learn the functioning of the organization and various departments.
This would enable to learn the real practices in business and how
it differs from the theories we learned in class rooms. This study
was undertaken at Capstocks and Securities (India) Pvt.Ltd.
OBJECTIVES OF THE STUDY
To understand the organization structure of the company. To
learn and understand the functions of each departments in the
organization. To know about the actual working of a stock broking
company. To indentify the strength weakness opportunities of the
stock broking company.
METHODOLOGY
This study is descriptive in nature. The data sources include
primary sources and secondary sources.a) Primary sources
i. Direct personnel interview data was directly gathered from
the personnel of different department in the organization.ii.
Personal observation of the trading hall of Capstocks and
Securities (India) Pvt.Ltd.
b) Secondary sources
i. Data was collected from various publications.ii. References
from website of Capstocks and Securities (India) Pvt.Ltd
SCOPE OF THE STUDY
The study analyses the functioning of Capstocks and Securities
(India) Pvt.Ltd. Analyse how a stock broking firm is working and
how it survive and how it works and maintain their market share in
the competitive environment. The study is also considered
beneficial to the future researchers.
LIMITATIONS OF STUDY
The time was limited for a deep study and analysis of the
organization. The study was conducted on working days were the
concerned officials were busy with trading activities.
Confidentiality makes difficulty in getting the appropriate
data.
CHAPTER 2INDUSTRY PROFILE
STOCK EXCHANGE TRADING MECHANISM
There are 21 stock exchanges at present in India including Over
The Counter Exchange Of India (OTCEI), National Stock Exchange
(NSE) and Inter connected Stock Exchange (ICSE). All of them are
regulated in terms of Securities Contract (Regulation) Act, 1956
and SEBI Act, 1992 and the rules and regulations made thereunder.
Some of the exchanges started as voluntary non-profit associations
such as Bombay Stock Exchange (BSE) and Indore Stock Exchange. The
stock exchanges at Chennai, Jaipur , Hyderabad and Pune were
incorporated as companies limited by guarantee. The other stock
exchanges are companies limited by shares and incorporated under
the Companies Act, 1956 or earlier Acts.
The stock exchanges are managed by Board of Directors or Council
of Management consisting of elected brokers and representatives of
Government and Public appointed by SEBI. The brokers of stock
exchanges are empowered to make and enforce rules, bye laws and
regulations with jurisdiction over all its members.
Membership of stock exchange is generally given to persons
financially sound and with adequate experience/ training in stock
market. Their enrolment as member is regulated and controlled by
SEBI to whom they have to pay an annual charge. A member of the
stock exchange is called BROKER who can transact on behalf of his
clients as well as on his own behalf. A non member can deal in
securities only through members. A member as a Badla financier,
commission broker, dealer in odd lots, Govt. securities, jobber,
market maker, or underwriter. He can also take assistance of sub
broker whom he can appoint under the procedure of organization.
The stock exchange is a key institution facilitating the issue
and sale of various types of securities. It is a pivot around which
every activity of the capital market revolves. In the absence of
stock exchange, the people with people with savings would hardly
invest in corporate securities for which there would be no
liquidity. Corporate investments from the general public would thus
have been lower.
Stock exchanges thus present the market place for buying and
selling of securities and ensuring liquidity of them in the
interest of the investors. The stock exchanges are thus virtually
the nerve centre of the capital market and reflect the health of
the countrys economy as a whole.
Securities are traded in three different ways in stock exchanges
ring, namely settlement basis, spot basis, cash basis.
Shares of companies which are not in the spot list are known as
cash shares or B category shares. They are traded on the cash
basis. The actual delivery of securities and payment has to be made
on or before the settlement date fixed in the case of cash basis
trading.
As far as spot trading is concerned the actual delivery of
securities must be made to the buying broker within 48 hours of the
contract. It is expected that the seller would be paid by the buyer
immediately on the delivery of securities.
All securities whether specified list or cash list can be traded
on cash basis or spot basis.
TYPES OF SECURITIES Securities traded in the stock exchange can
be classified as under:
a. Listed cleared securities: The securities admitted for
dealing in stock exchange after complying with the listing
requirements and played by the board on the list of cleared
securities are called by this name.
b. Permitted securities:
The securities listed in some of the recognized stock exchange
When permitted to be traded by those stock exchanges where they are
not listed are called permitted securities. Such permission is
given if suitable provision exists in the regulations of the
concerned stock exchanges.
TYPES OF DELIVERY
Types of delivery in the stock exchanges are spot delivery, hand
delivery, special delivery.
The delivery is said to be spot delivery, if the delivery of and
payment of securities are to be made on the same day or next
day.
The delivery is said to be hand delivery, if the delivery and
payment are to be made on the delivery date fixed by the stock
exchange authorities.
A Special delivery is one were the delivery is to be made after
the delivery date fixed by the stock exchange authorities.
MARGINS
An advance payment of a portion of the value of a stock
transaction. The amount of credit a broker or lender extends to a
customer for stock purchase.
MARGIN TRADING
Margin trading is introduced by SEBI to curb speculative
dealings in shares leading to volatility in the prices of
securities.
Initial margin in this context means the minimum amount,
calculated as a percentage of the transaction value, to be placed
by the client, with the broker, before the actual purchase. The
broker may advance the balance amount to meet full settlement
obligation.
Maintenance margin means the amount calculated as a percentage
of market value of securities, calculated with respect to last
trading days closing price to be maintained by the client with the
broker.
When the balance deposit in the clients margin account falls
below the required maintenance, the broker shall promptly make
margin calls. However, no further exposure can be granted to the
client on the basis of any increase in the market value of the
securities.
The broker may liquidate the securities if the client fails to
meet the margin calls made by the broker or fails to deposit the
cheque on the day following the day on which the margin calls has
been made or the cheque has been dishonored.
The broker may also liquidate the securities in case the clients
deposit in the margin account fails to 30% or less of the latest
market value of the securities, in the interregnum between making
of the margin cell and receipt of payment from the client.
The broker must disclose to the stock exchange details on gross
exposure including the name of the client, unique identification
number, name of the scrip and if the broker has borrowed funds for
the purpose of providing margin trading facilities, name of the
lender and the amount borrowed, on or above 12 noon on the
following day.
The broker must disclose to the stock exchange details on gross
exposure including the name of the client, unique identification
number, name of the scrip and if the broker has borrowed funds for
the purpose of providing margin trading facilities, name of the
lender and the amount borrowed, on or before 12 noon on the
following day.
Stock exchange discloses scrip wise gross outstanding in margin
accounts with all brokers to the market. Such discloses regarding
margin trading done on any day shall be made available after the
trading hours on the following day through the website.
Thus, margin trading acts as a check on the tendency of clients
to manipulate markets by placing orders on brokers without having
adequate money or securities to backup the transaction.
Margin trading will also act as a curb on short selling and
short buying.The reduction in above tendencies on the part of
clients reduces volatility of prices on the stock exchange and
provides stability to the common investors.
Margin trading mechanism also ensures transparency in dealing in
securities and public exposures of the information regarding the
backing behind all major securities transactions.
In the Indian capital markets particularly excessive short
selling and market positioning have been rampant. Margin trading
has acted as a stabilizing force.
BOOK CLOSURE AND RECORD DATE
Book closure is the periodic closure of the register of members
and transfer books of the company, to take a record of shareholders
to determine their entitlement to dividends or to bonus or right
shares or any other rights pertaining to shares. Record date on
which the records of a company are closed for the purpose of
determining the stock holders to whom dividends, proxies rights
etc. are to be sent.In accordance with section 154 of the Companies
Act 1956 a company may close the register of its members for a
maximum of 45 days in a year and for not more than 30 days at any
one time. Book closure become necessary for the purpose of paying
dividend, making right issue or bonus issue. The listed company is
required to give notice of book closure in a news paper at least 7
days before the commencement of the book closure. The members whose
name appear in the register of members on the last date of book
closure are entitled to receive the benefits of dividend, right
shares or bonus shares as the case may be.
TRADING OF PARTLY PAID SHARES AND DEBENTURES
Companies fix the last date for payment of allotment or call
money in case of partly paid shares or debentures and intimate this
to all the stock exchange wherein such shares or debentures are
listed. Based on the date fixed by the company, the stock exchanges
determine the settlement date upto which transactions in the scrip
will be deemed to be good for delivery. After the said date
transactions in the securities take place only if they are paid up
to the extent money has been called up.
TRADING LINE
When the price of the shares move in a particular direction
which persists for a period of time, a price line is regarded as
established. When the movement is upward, the trend is bullish and
when the movement is downward, the trend is bearish. Bear market is
a week or falling market characterized by the dominance of sellers.
Whereas bull market is a rising market with abundance of buyers and
relatively few sellers.
Secondary movements that reverse the uptrend temporarily are
known as reactions. The movements that reverse the down trend
temporarily are known as rallies. When an upward breaks in the
downward direction, it is called trend reversal.
SETTLEMENT SYSTEM
Settlement is the process of netting of transactions and actual
delivery/ receipt of securities and transfer deeds against receipt
/ payment of agreed amount. It is necessary to make a settlement to
know the net effect of a series of transaction during a given
period.
Settlement date is the date specified for delivery of securities
between securities firms. For administrative convenience, a stock
exchange divides an year into a number of settlement periods so as
to enable the members to settle their trades. All transactions
executed during the settlement period are settled at the end of the
settlement period.
Settlement risk or principal risk is the risk that the seller of
a security or funds delivers its obligation but does not receive
delivery. In this event, the full principal value of the securities
of the funds transferred is at risk.BOMBAY STOCK EXCHANGE
LIMITED
Bombay stock exchange ltd., popularly known as BSE was
established in 1875 as The Native Share and Stock Brokers
Association. It is the oldest one in Asia, even older than the
Tokyo Stock Exchange, which was established in 1878. It is a
voluntary nonprofit making Association of Persons (AOP) and is
currently engaged in the process of converting itself in to
demutualized and corporate entity. It has evolved over the year in
to its present status as the premier stock exchange in the country.
It is the first Stock exchange in the country. It is the first
stock exchange in the country has obtained permanent recognition in
the in 1956 from the Govt. of India under the Securities Contract
(Regulation) Act, 1956.
The exchange provides market for trading in securities, debt and
derivatives uphold the interest of the investors and ensure
redressal of their grievances whether against the companies or its
own member brokers. It also strives to educate and enlighten the
investors by conducting investor education programmes and making
available to them necessary informative inputs.
The BSE Index, SENSEX, is Indias first stock market index that
enjoys an iconic stature, and is tracked worldwide. It is an index
of 30 stocks representing 12 major sectors. The SENSEX is
constructed on a free float methodology, and is sensitive to market
sentiments and market realities. Apart from SENSEX, BSE offers 2
indices, including 12 sectoral indices. BSE provides an efficient
and transparent market for trading in equity, debt instruments and
derivatives.
TRADING AT BSE
The scrips traded on BSE have been classified into various
groups.BSE has, for the guidance and benefit of the investors,
classified the scrips in the equity segment into A, B, T, and Z
group on certain qualitative and Z groups on certain quantitative
and qualitative parameters.The F group represents the fixed income
securities.The T group represrnts scrip which are settled on a
trade to trade basis as a surveillance measure .Trading in govt.
securities by the retail is done under G group .The z group was
introduced by BSE in July 1999 and includes companies which have
failed to comply with its listing requirements or have failed to
resolve investor complaints and/or have not made the required
arrangements with both the Depositories, viz., Central Depository
Services (I) Ltd. (CDSL) and National Securities Depository Ltd.
(NSDL) for dematerialization of their securities.
BSE also provides a facility to the market participants for
on-line trading of odd-lot securities in physical form in A, B,T,
and Z group and in rights renunciations in all groups of scrips in
the equity segment.
With effect from December 31,2001, trading in all securities
listed in equity in the equity segment takes place in one market
segment, viz., Compulsory Rolling Settlement Segment (CSR).
The scrips of companies which are in demat can be traded in
market lot of 1. However, the securities of the companies which are
still in the physical form are traded in the market lot of
generally either 50 or 100. Investors having quantities of
securities less than the market lot are required to sell them as
odd lots. This facility offers an exit route to investors to
dispose of their odd lot of securities, and also provides them an
opportunity to consolidate their securities into market lots.
This facility of selling physical shares in compulsory demat
scrip is called as Exit Route Scheme. This facility can also be
used by small investors for selling up to 500 shares in physical
form in respect of scrips of companies where trades are required to
be compulsorily settled by all investors in demat mode.
COMPUTATION OF CLOSING PRICEE OF SCRIPS IN THE CASH SEGMENT
The closing price of scrips is computed by the exchange on the
basis of weighted average price of all trades executed during the
last 30 minutes of continuous trading session. However, if there is
no trade recorded during the last 30 minutes, then last traded
price of a scrip in the continuous trading session is taken as the
official closing price.
COMPULSORY ROLLING SETTELMENT
All transactions in all group of securities in the equity
segment and fixed income securities listed on BSE are required to
be settled on T+2 basis (w.e.f. April 1, 2003). The settlement
calendar, which indicates the dates of the various settlement
related activities, is drawn by BSE in advance and is circulated
among the market participants.
Under rolling settlements, the trades done on a particular day
are settled after a given number of business days. A T+2 settlement
cycle means that the final settlement of transactions done on T,
i.e., trade day by exchange of monies and securities between the
buyers and sellers respectively take place on second business day
after the trade day.
NATIONAL STOCK EXCHANGE OF INDIA LTD. (NSEIL)
Based on Phervani committee report submitted in June 1991, the
National Stock Exchange of India Limited was established to provide
an efficient system eliminating all the deficiencies of stock
exchanges and is geared to meet the requirements of the larger
investor population. It is a single stock exchange and all other
centers are electronically linked to this exchange.
NSEIL was promote by leading FIs at the behest of Government of
India and was incorporated in 1992 as a tax paying company unlike
other stock exchanges in the country. On its recognition as stock
exchange under the Securities Contract (regulation) Act, 1956 in
April 1993, NSEIL commenced operations in the wholesale debt market
segment in June 1994, operations in the capital market segment in
November 1994, and operations in derivatives segment in June
2000.
TRADING AND SETTLEMENT AT NSE
NSE introduced for the first time in India, fully automated
screen based trading. It uses a modern, fully computerized trading
system designed to offer investors across the length and breadth of
the country a safe and easy way to invest. The NSE trading system
called National Exchange for Automated Trading(NEAT) is a fully
automated screen based trading system, which adopts the principle
of an order driven market.
CLEARING AND SETTLEMENT
NSCCL carries out clearing and settlement functions as per the
settlement cycles of different sub-segments in the equities
segment.The clearing function of the clearing corporation is
designed to work out,a) What counter parties owe andb) What counter
parties are due to receive on the settlement date.
NSCCL also provides for a mechanism to handle various
exceptional situations like security shortages, bad delivery,
company objections, auction settlement etc.
CHAPTER 3COMPANY PROFILE
HISTORY
Capstocks is a professionally managed stock broking company
having an unblemished and unparalleled service history of more than
23 years and a vibrant tradition of trust, loyalty and reliability.
Capstocks was started by Rajendran.V, the present Managing Director
of the company, in the year 1989. Capstocks is having both online
and offline trading facilities. It is the first ISO 9001:2008
certified stock broking firm in India for all services in stock
broking and allied activities.
Capstocks has about 180 outlets in various states of India.
Capstocks is a member of the National Stock Exchange of India
(NSE), Bombay Stock Exchange (BSE), MCX Stock Exchange (MCX-SX),
Depository Participant with the Central Depository Services (CDSL)
and a SEBI-registered Portfolio Manager.
Capstocks also offers commodity services through its
subsidiaries Capstocks Finanacial Services Ltd which is a member of
the Multi-Commodity Exchange of India (MCX) and Capstocks
Commodities Pvt Ltd which is a member of National Commodity
Derivative Exchange (NCDEX), National Multi-Commodity Exchange of
India Ltd (NMCE) and National Spot Exchange of India Ltd
(NSEL).
MANAGEMENT
The Company's Management rests on:Rajendran. V. (Chairman &
Managing Director) Engineer by profession, with in-depth knowledge
and experience in market analysis.Leela Jeyakumar (Director) Post
Graduate with over 18 years experience in stock broking and the in
charge of company's Tamil Nadu operation since 1992.Meera Sahib. B
(Director) Post Graduate with LLB & CAIIB and 28 years of
experience in officer / executive cadre in a major Public Sector
BankAmjad Hydari (Vice President) Post Graduate with more than 14
years experience in various functions of the equity market
brokerage.Other DirectorsSrinivasan S.IAS. (Director)Former Labor
Commissioner and District Collector. Prema Rajendran (Director)
Graduate in Commerce with more than 12 years experience.Rajeev
Pillai (Executive Director) Engineer By Profession with wide
exposure to International business organisations and consulting
firms. Currently heading the North & West India Operations of
Capstocks with head quarter at Mumbai.Besides we have an excellent
pool of trained & dedicated professional staff, three fourth of
them are certified by NCFM, NISM, BCSM, BCDM Examinations.
STRATEGIC INTENT
ISO CERTIFICATION
Capstocks has become the first ISO 9001:2008 brokerage in India
to get certification for all stock broking and related financial
service activities including Cash Markets, Derivatives, Internet
Trading, Depository Services, Portfolio Management Services, Equity
Research and Analysis, NRI Client Cell and Mutual Funds. The
certification was obtained from the renowned United Kingdom
Accreditation Services (UKAS), based on the Assessment by Moody
International Certification Group through ICL Certifications
Ltd.
The certificate was handed over at a function held in
Trivandrum. Mr. Ashok Kumar Rout, Chief Operating Officer of the
Bombay Stock Exchange Ltd., was the Guest of Honour on the
occasion. Mr. Rajendran V, our Managing Director, received the
certificate from Mr. Uwe Saelzle, Director of Moody International
Certification Group, Germany, in the presence of Mr. Sanjeev
Chadha, CEO, ICL Certifications Ltd., handling the Indian
operations of the Moody International Certification Group.
Mr. Dilip Jacob Mathew, our Vice President, handled ISO
9001:2008 implementation as the Management Representative with
assistance from Ms. Sangeetha, Sr. Executuve (QMS), and Mr. M.
Pradeep Kumar, Management Systems Consultant and Trainer. A
dedicated team of Managers and Executives, trained as Internal
Quality Auditors in Capstocks, was involved in the Internal
Assessments and improvement processes.
Commenting on the certification, Rajendran V, our Managing
Director said We spent nearly 15 months to complete the ISO
9001:2008 certification process. There is a sea change in the
organizational efficiency and day-to-day operations in our Company.
The process flow and our organizational structure from top to
bottom have been totally streamlined and the benefits will
definitely be reflected in offering better services with the utmost
satisfaction to our clients. As a result of ISO 9001:2008
implementation programme, Capstocks - having 75 branches covering
India and elsewhere - has been able to improve continually its
systems, processes and procedures at the Head Office and its
Branches with better review mechanisms.
With the ISO 9001:2008 recognition under our belt, Quality of
Documentation and Communication has improved. Capstocks will
maintain the Quality Management System and also continually improve
the quality of service through regular Management Reviews and
Internal Quality Audits. As part of this project, emphasis is being
given to imparting effective training and retraining for Capstocks
Team Members and systematic analysis of activities.
QUALITY POLICY
CAPSTOCKS is committed to render the best knowledge-based
personalized services in stock broking and related financial
services, complying with all relevant requirements, by continually
improving the competence of manpower and effectiveness of quality
management systems, optimizing technology and infrastructure,
thereby enhancing customer satisfaction.
SERVICE PROFILE
1.Online trading
Capstocks has a network of branches with online terminals of NSE
and BSE in the Capital market and Derivative segments. Our clients
are assured of prompt order execution through dedicated phones and
expert dealers at our offices.
2. Internet trading
Capstocks offers Internet trading through this site. You can
trade through the Internet from the comforts of your office or
home, anywhere in the world. Our dedicated IT systems ensure
service up time and speed, making Internet broking through
Capstocks hassle-free.
Using the 'easiest' facility provided by CDSL, our clients can
transfer the shares sold by them online without delivery
instruction slips. Additionally, digitally signed contract notes
can be sent to clients through E-mail.
3. Depository Services
Capstocks is a member of the Central Depository Services Limited
(CDSL), offer depository services with minimum Annual Maintenance
Charges and transaction charges. Account holders can view their
holding position through the Internet. We also offer the "easiest"
facility provided by CDSL (electronic access to securities
information and execution of secured transaction ) through which
clients can give delivery instructions via the Internet.4.
Derivative Trading
We offer trading in the futures and options segment of the
National Stock Exchange (NSE). Through the present derivative
trading an investor can take a short-term view on the market for up
to a three months perspective by paying a small margin on the
futures segment and a small premium in the options segment. In the
case of options, if the trade goes in the opposite direction the
maximum loss will be limited to the premium paid.
5. Knowledge Centre
Knowledge Centre activities are intended to provide systematic
and structured services mainly to new investors and also to young
aspirant aiming for a career in financial markets. The centre has
three functional areas: the publication Division, the Training
centre, and wealth management advisory service which provides
complete investment solutions to investors through knowledge based
personalized service.
6. Equity Research Department
We have a full-fledged Investment Research & Analysis
Department to help our clients to make investment decisions. Our
clients can get information on any share they hold or plan to
purchase. We publish a monthly newsletter' CAPSTOCKS INFOLINE ',
which contains our views on the latest trends in the markets, scrip
recommendation, tutorials, news items etc. We also issue a daily
newsletter, ' CAPS TREND ', which is available in our site. Besides
we give intraday calls by SMS, chat, etc.
7. Portfolio Management services
Capstocks is a SEBI-approved portfolio manager offering
discretionary and non-discretionary schemes to its clients.
Capstocks portfolio management team keeps track of the markets on a
daily basis and is exposed to a lot of information and analytic
tools which an investor would not normally have access to. Other
technicalities pertaining to shares like dividends, rights, bonus,
buy-back, Mergers and Acquisitions are also taken care of by
us.
8. Commodity Trading You can trade in commodity futures like
gold, silver, crude oil , rubber etc. and take advantage of the
extended trading hours (10 am to 11 pm ) in commodities
trading.
9. Mutual Funds, Bonds etc.We also offer Mutual Funds and Bonds.
You can select from a wide range of Mutual Funds and Bonds
available in the markets today.
10. NRI CELL
We have a well-organized NRI Cell functioning exclusively to
meet the requirements of our clients residing outside India. We are
committed to provide them timely assistance by placing their
orders, giving them valuable suggestions concerning their
investments etc. Also we help those NRIs who desire to open
accounts on repatriation basis. Facilities are offered to those
clients who are interested in Internet trading by activating it, in
co-ordination with the e-trading department.
11. Currency Trading
Capstocks is a member of currency derivatives segment of
National Stock Exchange (NSE) and MCX Stock Exchange (MCX-SX).
Currency Derivatives are a new asset class which was earlier not
permitted for trading to all Indian residents. Currently the
trading is based on four underlying currencies viz., US Dollar,
Euro, Pound sterling, Japanese Yen.
12. Pan Service Agent of UTI
Capstocks & Securities (India) Pvt. Ltd. has become
authorized PAN card service agent (PSA) of UTI. Now pan
applications can be submitted to any of the following offices, in
addition to Head office.( Sasthamangalam, Sreekaryam, Technopark,
and Pattom, in Trivandrum) Kollam, Alappuzha, Thiruvalla,
Ernakulam, Thrissur, Irinjalakkuda, Thodupuzha, Calicut, Chennai
RO, Mangalore, Navi Mumbai, and Nagercoil RO. Capstocks offers this
value added service to our privileged customers, existing as well
as new customers at nominal charge.
CHAPTER 4ORGANISATION STRUCTURE
MANAGEMENT
The Company's Management rests on:Rajendran. V. (Chairman &
Managing Director) Engineer by profession, with in-depth knowledge
and experience in market analysis.Leela Jeyakumar (Director) Post
Graduate with over 18 years experience in stock broking and the in
charge of company's Tamil Nadu operation since 1992.Meera Sahib. B
(Director) Post Graduate with LLB & CAIIB and 28 years of
experience in officer / executive cadre in a major Public Sector
Bank.Amjad Hydari (Vice President) Post Graduate with more than 14
years experience in various functions of the equity market
brokerage.Other DirectorsSrinivasan S.IAS. (Director)Former Labor
Commissioner and District Collector. Prema Rajendran (Director)
Graduate in Commerce with more than 12 years experience.Rajeev
Pillai (Executive Director) Engineer By Profession with wide
exposure to International business organisations and consulting
firms. Currently heading the North & West India Operations of
Capstocks with head quarter at Mumbai.
Besides we have an excellent pool of trained & dedicated
professional staff, three fourth of them are certified by NCFM,
NISM, BCSM, BCDM Examinations.
JR
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CHAPTER 5DEPARTMENTAL ANALYSIS
FUNCTIONAL DEPARTMENTS IN CAPSTOCKS
For the effective functioning of the manufacturing unit there
are about 11 departments in CAPSTOCKS and they are1. Trading
department 2. Delivery department3. Depository department4.
Commodity trading5. Equity research department6. Surveillance
department7. Client relation8. Systems9. Human resource
department10. Marketing department11. Accounts department
TRADING DEPARTMENT
JUNIOR EXECUTIVESENIOR EXECUTIVEASSISTANT MANAGERMANAGERHEAD OF
THE DEPARTMENT
Functions
The main function of this department is buying and selling of
securities. Order placing To give on information to the clients
about the shares
STOCK TRADING
NEAT
NSE is the first exchange in the world to use satellite
communication technology for trading. Its trading system, called
National Exchange for Automated Trading (NEAT), state of the art
client server based application.
SCREEN BASED TRADING
The trading on stock exchanges in India used to take place
through open outcry without use of information technology for
immediate matching or recording of trades. This was time consuming
and inefficient. This imposed limits on trading volumes and
efficiency. In order to provide efficiency, liquidity and
transparency, NSE introduced a nationwide, on-line fully automated
screen based trading system(SBTS) where a member can punch into the
computer the quantities of a security and the price at which he
would like to transact, and the transaction is executed as soon as
a matching sale or buy order from a counter party is found.
PLACE ORDERS WITH THE BROKERYou may go to the brokers office or
place an order on the phone /internet or as defined in the Model
Agreement, which every client needs to enter into with his or her
broker. CORPORATE HIERARCHY
DEALERBRANCH MANAGERCORPORATE MANAGER
The trading member has the facility of defining a hierarchy
amongst its users of the NEAT system. This hierarchy
comprises:Corporate manager: The corporate manager is a term
assigned to a user placedat the highest level in a trading firm.
Such a user receives the end of day reports for all branches of the
trading member. The facility to set branch order value limits and
user order value limits is available to the corporate manager.
Branch Manager: The branch manager is a term assigned to a user
who is placed under the corporate manager. The branch manager
receives end of the day reports for all the dealers under the
branch. The branch manager can set user order value limit for each
of his branch.
Dealer: Dealers are users at the lower most level of the
hierarchy. A dealer can view and perform order and trade related
activities only for oneself and does not have access to information
on other dealers under either the same branch or other
branches.
CONTRACT NOTE
Contract note is a confirmation of trades done on a particular
day on behalf of the client by a trading member. It imposes a
legally enforceable relationship between the client and the trading
member with respect to purchase/sale and settlement of trades. It
also helps to settle disputes/claims between the investor and the
trading member. A valid contract note should be in the prescribed
form, contain the details of trades, stamped with requisite value
and duly signed by the authorized signatory. Contract notes are
kept in duplicate, the trading member and the client should keep
one copy each. After verifying the details contained therein, the
client keeps one copy and returns the second copy to the trading
member duly acknowledged by him.Order ManagementOrder Management
consists of entering orders, order modification, order cancellation
and order matching.Entering OrdersThe trading member can enter
orders in the normal market, odd lot, RETDEBT and auction market. A
user can place orders in any of the above mentioned markets by
invoking the respective order entry screens. After doing so, the
system automatically picks up formation from the last invoked
screen. When the user invokes the order entry screen, the fields
that are taken as default are symbol, series and book type.
Active & Passive OrderWhen any order enters the trading
system, it is an active order" It tries to find a match on the
other side of the books. If it finds a match, a trade is generated.
If it does not find a match, the order becomes a passive order and
goes and sits in the order book.
Order BooksAs and when valid orders are entered or received by
the trading system, they are first numbered, time stamped and then
scanned for a potential match. This means that each order has a
distinctive order number and a unique time stamp on it. If a match
is not found, then the orders are stored in the books as per the
price/time priority. Price priority means that if two orders are
entered into the system, the order having the best price gets the
higher priority. Time priority means if two orders having the same
price is entered, the order that is entered first gets the higher
priority. Best price for a sell order is the lowest price and for a
buy order, it is the highest price, The different order books in
the NEAT system are as detailed below:
(a) Regular Lot Book: An order that has no special condition
associated with it is a Regular Lot order. When a dealer places
this order, the system looks for a corresponding Regular Lot order
existing in that market (Passive orders). If it does not find a
match at the time it enters the system, the order is stacked in the
Regular lot book as a passive order.
(b) Special Terms Book: Orders which have a special term
attribute attached to it are known as special terms orders. When a
special term order enters the system, it scans the orders existing
in the Regular Lot book as well as Special Terms Book. Currently
this facility is not available in the trading system.(c) Stop loss
Book: Stop Loss orders are released into the market when the last
traded price for that security in the normal market reaches or
surpasses the trigger price. Before triggering, the order does not
participate in matching and the order cannot get traded.
Untriggered stop loss orders are stacked in the stop loss book. The
stop loss orders can be either a market order or a limit price
order. For buy SL order, the trigger price has to be less than or
equal to the limit price. Similarly, for sell SL orders, the
trigger price has to be greater than or equal to the limit
price.
Order Types and Conditions
The system allows the trading members to enter orders with
various conditions attached to them as per their requirements.
These conditions are broadly divided into Time Conditions, Quantity
Conditions, Price Conditions and Other Conditions.Several
combinations of the above are allowed thereby providing enormous
flexibility to the users. The order types and conditions are
summarized below:
a) Time Conditions.
DAY: A DAY order, as the name suggests is an order that is valid
for the day which it is entered. If the order is not executed
during the day, the system cancels order automatically at the end
of the day. By default, the system assumes that orders entered are
Day orders.
IOC: An Immediate or Cancel (IOC) order allows the user to buy
or sell a security as soon as the order is released into the
system, failing which the order is cancelled from the system.
Partial match is possible for the order, and the unmatched portion
of the order is cancelled immediately.
b) Quantity Conditions
DQ: An order with a Disclosed Quantity @Q) allows the user to
disclose only a portion of the order quantity to the market. For
e.g. if the order quantity is 10,000 and the disclosed quantity is
2,000, then only 2,000 is released to the market. After this
quantity is fully matched, a subsequent quantity of 2,000 is
disclosed. Thus, totally five disclosures with the same order
number are shown one after the other in the market.
c) Price Conditions
Market: Market orders are orders for which price is specified as
'MKT' at the time the order is entered. For such orders, the system
determines the price.
Stop-Loss: This facility allows the user to release an order
into the system, after the market price of the security reaches or
crosses a threshold price called trigger price.
Example: If for stop loss buy order, the trigger is Rs.93.00,
the limit price is Rs.95.00 and the market (last traded) price is
Rs.90.00, then this order is released into the system once the
market price reaches or exceeds Rs.93.00. This order is added to
the regular lot book with time of triggering as the time stamp, as
a limit order of Rs.95.00.
All stop loss orders are kept in a separate book (stop loss
book) in the system until they are triggered.
Trigger Price: Price at which an order gets triggered from the
stop loss book.
Limit Price: Price of the orders after triggering from stop loss
book.
Order Modification
All orders can be modified in the system till the time only
during market hours. Once an order is modified, the branch gets
adjusted automatically. Following is the corporate hierarchy for
performing order modification functionality:
A' dealer can modify only the orders entered by him.
A branch manager can modify his own orders or orders of any
dealer under his Branch.
A corporate manager can modify his own orders or orders of all
dealers and branch managers of the trading member firm. However,
the corporate manager/branch manager cannot modify order details
such that it exceeds the branch order value limit set for the day.
Order modification cannot be performed by/for a trading member who
is suspended or de-activated by the Exchange for any reason.
A buyback having 'BUYBACKORD' in the client account field cannot
be modified to any other client account. Any order modifications
resulting. In price or quantity freeze shall not be allowed. The
user will receive a message "CFO Request Rejected' for such
modification requests.
Order CancellationOrder cancellation functionality can be
performed only for orders which have not been fully or partially
traded (for the untraded part of partially traded orders only) and
only during market hours.Quick Order CancellationQuick Order
Cancellation (Cancel All) is an extension of Single Order
Cancellation enabling a user to cancel multiple outstanding orders
in various trading books subject to the corporate hierarchy. The
different filters available for cancelling orders by using quick
order cancellation facility are symbol, series, book type, branch,
user, PRO/CLVWHS, client account number and buy/sell. Quick order
cancellation can be performed by invoking the function key provided
and cannot be done from the outstanding orders screen. If the
criteria are not found to be correct by a trading member then an
error message is displayed and the focus is set on the incorrect
field to enable the user to correct it. If the selection criteria
are correct then a message appears on the quick order cancellation
screen stating the number of buy and sell orders to be cancelled.
Quick order cancellation can be done only during market hours.ORDER
MATCHINGThe buy and sell orders are matched on Book Type, symbol,
series, quantity and Price.Matching PriorityThe best sell order is
the order with the lowest price and a best buy order is the order
with the highest price. The unmatched orders are queued in the
system by the following priority:(a) By Price: A buy order with a
higher price gets a higher priority and similarly, a sell order
with a lower price gets a higher priority.b) By Time: If there is
more than one order at the same price, the order entered earlier
gets a higher priority
Stop Loss MatchingAll stop loss orders entered into the system
are stored in the stop loss book. These orders can contain two
prices.Trigger Price. It is the price at which the order gets
triggered from the stop loss book.Limit Price. It is the price for
orders after the orders get triggered from the stop loss book.If
the limit price is not specified, the trigger price is taken as the
limit price for the order. The stop loss orders are prioritized in
the stop loss book with the most likely order to trigger first and
the least likely to trigger last. The priority is same as that of
the regular lot book.The stop loss condition is met under the
following circumstances:Sell Order - A sell order in the stop loss
book gets triggered when the last traded price is the normal market
reaches or falls below the trigger price of the order.Buy Order - A
buy order in the stop loss book gets triggered when the last traded
price in the normal market reaches or exceeds the trigger price of
the order.When a stop loss order with IOC condition enters the
system, the order is released in the market after it is triggered.
Once triggered, the order scans the counter order book for a
suitable match to result in a trade or else is cancelled by the
system.
Trade Modification
The user can use trade modification facility to request for
modifying trades done during the day. The user can request the
Exchange to modify only the trade quantity field. Moreover, the new
quantity requested must be lower than the original trade quantity.
If the user is a Corporate Manager of a trading member firm, he can
request for trade modification for the trades of any dealer of the
trading members firm and if he is a branch Manager of a branch,
then he can request for trade modification for any dealer of the
branch of the trading member firm. The user can request for trade
modification either from the previous trades screen or by using the
function key provided in the workstation. Trade Modification
Request is sent to the Exchange for approval and message to that
effect is displayed in the message window. The counterparty to the
trade also receives this message. The counter party then has to
make a similar request for the same modified quantity on the same
trading day. Once both the parties to trade send their respective
trade modification requests, the Exchange either approves or
rejects it. The message to that effect is displayed in the message
window. In case a request for trade modification is approved by the
Exchange, the parties to trade receive a system message confirming
the trade modification and the trade Modification slip is printed
at their respective trader workstations. If the Exchange rejects
the trade modification request, the trade modification rejection
slip will be printed at their respective trader workstations.
Trade Cancellation
The user can use trade cancellation screen for cancelling trades
done during the day. If the user is a corporate manager of a
trading member firm, he can request for trade cancellation for the
trades of any dealer of the trading members firm and if he is a
branch manager of a branch, then he can request for trade
cancellation for the trades for any dealer of the branch of the
trading member firm. The user can request for trade cancellation
either from the previous trades screen or by using the function key
provided in the workstation. The trade cancellation request is sent
to the Exchange for approval and message to that effect is
displayed in the message window. The counter party to the trade
also receives the message.
The counterparty then has to make similar request on the same
trading day. Once both the parties to trade send the trade
cancellation request, the Exchange either approves or rejects it.
The message to that effect is displayed in the message window. When
a request for the trade cancellation is approved by the Exchange,
the parties to trade receive a system message confirming the trade
cancellation and the trade cancellation slip is printed at their
respective trader workstations. If the Exchange rejects the trade
cancellation request, the trade cancellation rejection slip is
printed at their respective trader workstations.
Internet Broking
SEBI Committee has approved the use of Internet as an Order
Routing System (ORS) for communicating clients' orders to the
exchanges through brokers. ORS enables investors to place orders
with his broker and have control over the information and quotes
and to hit the quote on an on-line basis. Once the broker's system
receives the order, it checks the authenticity of the client
electronically and then 'routes the order to the appropriate
exchange for execution. On execution of the order, it is confirmed
on real time basis. Investor receives reports on margin
requirement, pa5rments and delivery obligations through the system.
His ledger and portfolio account get updated online.
NSE launched internet trading in early February 2000. It is the
first stock exchange in the country to provide web-based access to
investors to trade directly on the exchange. The orders originating
from the PCs of the investors are routed through the Internet to
the trading terminals of the designated brokers with whom they are
connected and further to the exchange for trade execution. Soon
after these orders get matched and result into trades, the
investors get confirmation about them on their PCs through the same
internet route.
BSE On-Line Trading System (BOLT):BSE On-Line Trading System,
popularly known as the BOLT System took its genesis in the year
1994, as part of the four-phase computerization program to create
an automated trading environment. BOLT system aimed at converting
the Open Outcry System of trading to a Screen-based trading system
(SBT). BSE had the requisite knowledge base and virtue of more than
115 year track record in the capital markets; BSE embarked on the
specified project in 1991 and seamlessly completed the fourth phase
in March 1995.
DELIVERY DEPARTMENT
Head of department
Office assistantJunior executiveSenior executivesAssistant
executiveManager The delivery department deals with the settlement
of cash market transactions. The settlement mechanism in Indian
securities market has witnessed significant changes and several
innovations during the last decade. Till recently, the stock
exchanges in India were following a system of account period
settlement for cash market transactions. T+2 rolling settlement
have now been introduced for all securities. The members receive
the funds/securities in accordance with the pay in/pay- out
schedules notified by the respective exchanges' Given the growing
volume of trades and market volatility, the time gap between
trading and settlement gives rise to settlement risk.Functions To
ensure timely settlement of trades. Elaborate margining and capital
adequacy standards to secure market integrity and protect the
interests of investors.
Settlement CycleAt the end of each trading day, concluded or
locked-in trades are received from NSE by NSCCL. NSCCL determines
the cumulative obligations of each member and electronically
transfers the data to Clearing Members (CMs). All trades concluded
during a particular trading period are settled together. A
multilateral netting procedure is adopted to determine the net
settlement obligations (delivery/receipt positions) of CMs. NSCCL
then allocates or assigns delivery of securities inter se the
members to arrive at the delivery and receipt obligation of funds
and securities by each member. On the securities pay-in day,
delivering members are required to bring in securities to NSCCL. On
pay out day the securities are delivered to the respective
receiving members. Settlement is deemed to be complete upon
declaration and release of pay-out of funds and securities.
Exceptions may arise because of short delivery of securities by
CMs, bad deliveries or company objections on the pay-out day. NSCCL
identifies short deliveries and conducts a buying-in auction on the
day after the payout day through the NSE trading system. The
delivering CM is debited by an amount equivalent to the securities
not delivered and valued at a valuation price (the closing price as
announced by NSE on the day previous to the day of the valuation).
If the buy-in auction price is more than the valuation price, the
CM is required to make good the difference. All shortages not
bought-in are deemed closed out at the highest price between the
first day of the trading period till the day of squaring off or
closing price on the auction day plus 20o/o, whichever is higher.
This amount is credited to the receiving member's account on the
auction pay-out day.Bad Deliveries (in case of physical
settlement)Bad deliveries (deliveries which are prima facie
defective) are required to be reported to the clearing house within
two days from the receipt of documents. The delivering member is
required to rectify these within two days. Un-rectified bad
deliveries are assigned to auction on the next day.
Company Objections (in case of physical settlement)Company
objections arise when, on lodgment of the securities with the
company Share Transfer Agent (STA) for transfer, which are returned
due to signature mismatch or for an-v other reason for which the
transfer of security cannot be affected. The original selling CM is
normally responsible for rectifying/replacing defective documents
to the receiving CM as per pre-notified schedule. The CM on whom
company objection is lodged has an opportunity to withdraw the
objection if the objection is not valid or the documents are
incomplete (i.e. not as required under guideline No.100 or 109 of
SEBI Good/Bad delivery guidelines), within 7 days of lodgment
against him. If the CM is unable to rectify/replace defective
documents on or before 2l days, NSCCL conducts a buying-in auction
for the non-rectified part of defective document on the next
auction day through the trading system of NSE.
Normal MarketIn a rolling settlement, trade day is T day, T+1
day andT+2 day for NSCCL. The trades executed each trading day are
considered as a trading period and trades executed during the day
are settled based on the net obligations for the day. At NSE,
trades in rolling settlement are settled on a T+2 basis i.e. on the
2nd working day. Typically trades taking place on Monday are
settled on Wednesday, Tuesdafs trades settled on Thursday and so on
ACTIVITYDAY
Trading
Rolling settlement Trading T
Clearing settlement
Custodial services T+1 working day
Delivery services T+2 working days
Settlement services
Security and funds pay inT+2 working day
Security and funds pay outT+2 working days
Valuation of shortages based on closing stock T+1 closing
price
Post settlement
AuctionT+3 working days
Bad delivery reporting T+4 working days
Auction settlementT+5 working days
Rectified bad delivery pay-in and pay-outT+6 working days
Re-bad delivery reporting and pickupT+8 working days
Close out of re-bad delivery and funds pay-in & pay-outT+9
working days
DEPOSITORY DEPARTMENT
HEAD OF DEPARTMENT
OFFICE ASSISTANTJUNIOR EXECUTIVESENIOR MANAGERASSISTANT
MANAGERMANGER Capstocks is a member of the Central Depository
Services (India) Limited (CDSL), offer depository services with
minimum Annual Maintenance Charges and transaction charges. Account
holders can view their holding position through the Internet. They
also offer the "easiest " facility provided by CDSL (electronic
access to securities information and execution of secured
transaction) through which clients can give delivery instructions
via the Internet.Functions To transfers the securities from the
pool accounts of members/custodians to the settlement account of
the clearing agency.
DepositoriesA depository is an entity where the securities of an
investor are held in electronic form. The person who holds a demat
account is a beneficiary owner. In case of a joint account, the
account holders will be beneficiary holders of that joint account.
Depositories help in the settlement of the dematerialized
securities. Each custodian/clearing member is required to maintain
a clearing pool account with the depositories. He is required to
make available the required securities in the designated account on
settlement day. The depository runs an electronic file to transfer
the securities from accounts of the custodians/clearing member to
that of NSCCL. As per the schedule of allocation of securities
determined by the NSCCL, the depositories transfer the securities
on the pay-out day from the account of the NSCCL to those of
members/custodians.
Depository Participant (DP)The Depository provides its services
to investors through its agents called depository participants
(DPs). These agents are appointed by the depository with the
approval of SEBI. According to SEBI regulations, amongst others,
three categories of entities, i.e. Banks, Financial Institutions
and SEBI registered trading members can become DPs.
Dematerialization is the process by which physical certificates
of an investor are converted to an equivalent number of securities
in electronic form and credited to the investor's account with his
Depository Participant (DP).The trades are settled irrespective of
default by a member and the exchange follows up with the defaulting
member subsequently for recovery of his dues to the exchange. Due
to setting up of the Clearing Corporation, the market has full
confidence that settlements will take place on time and will be
completed irrespective of possible default by isolated trading
members. Movement of securities has become almost instantaneous in
the dematerialized environment. Two depositories viz., National
Securities Depositories Ltd. (NSDL)' and Central Depositories
Services Ltd. (CDSL) provide electronic transfer of securities and
more than 99% of turnover is settled in dematerialized form. A11
actively traded scrips are held, traded and settled in demat form.
The obligations of members are downloaded to members / custodians
by the clearing agency. The members/custodians make available the
required securities in their pool accounts with depository
participants (DPs) by the prescribed pay-in time for securities.
The depository transfers the securities from the pool accounts of
members/custodi4ns to the settlement account of the clearing
agency. As per the schedule determined by the clearing agency, the
securities are transferred on the pay-out day by the depository
from the settlement account of the clearing agency to the pool
accounts of members/custodians. The pay-in and pay-out of
securities is affected on the same day for all settlements.
Select banks have been empanelled by clearing agency for
electronic transfer of funds. The members are required to maintain
accounts with any of these banks. The members are informed
electronically of their pay-in obligations of funds. The members
make available required funds in their accounts with clearing banks
by the prescribed pay-in day. The clearing agency forwards funds
obligations file to clearing banks which, in turn, debit the
accounts of members and credit the account of the clearing agency.
In some cases, the clearing agency runs an electronic file to debit
members' accounts with clearing banks and credit its own account.
On pay-out day, the funds are transferred by the clearing banks
from the account of the clearing agency to the accounts of members
as per the member's obligations. In the T+2 rolling settlement, the
pay-in and pay-out of funds as well as securities take place Z
working days after the trade date.
Depositories Act, 1996The Depositories Act, 1996 provides for
the establishment of depositories in securities with the objective
of ensuring free transferability of securities with speed, accuracy
and security by (a) making securities of public limited companies
freely transferable subject to certain exceptions; (b)
dematerializing the securities in the depository mode; and (c)
providing for maintenance of ownership records in a book entry
form. In order to streamline the settlement process, the Act
envisages transfer of ownership of securities electronically by
book entry without making the securities move from person to
person. The Act has made the securities of all public limited
companies freely transferable, restricting the company's right to
use discretion in effecting the transfer of securities, and the
transfer deed and other procedural requirements under the Companies
Act have been dispensed with
COMMODITY TRADING
Head of the department
Manager
Office assistant Junior managerSenior managerAssistant
manager
Functions Trading of commodities Account OpeningCommodity FCRA
Forward Contracts (Regulation) Act, 1952 defines goods" as "every
kind of movable property other than actionable claims, money and
securities". Futures trading is organized in such goods or
commodities as are permitted by the Central Government. At present,
all goods and products of agricultural (including plantation),
mineral and fossil origin are allowed for futures trading under the
auspices of the commodity exchanges recognized under the FCRA.
Commodity ExchangeA Commodity Exchange is an association, or a
company of any other body corporate organizing futures trading in
commodities. In a wider sense, it is taken to include any organized
market place where trade is routed through one mechanism, allowing
effective competition among buyers and among sellers - this would
include auction-type exchanges, but not wholesale markets, where
trade is localized, but effectively takes place through many
non-related individual transactions between different permutations
of buyers and sellers. Commodities exchanges include Chicago Board
of Trade, London Metal Exchange, New York Mercantile Exchange,
Multi Commodity Exchange .The time period of trading is
9am-3.30pm.
Trade AccountTo trade in the Futures market the client has to
register himself and open an account with the broking organization
known as trading account. Trading Lot: Each commodity should be
sold and bought in the Futures market at a specific quantity. These
quantities are called trading lots fixed by the exchanges. For
rubber and pepper it is 1 ton, while it is I quintal for cardamom.
Volatility: A measurement of the change in price over a given time
period.
Warehouse Receipt: When the commodity sold in the Futures market
is taken to the warehouse, the client receives a legal document
from the warehouse known as warehouse receipt. This document has a
trade value.Futures ContractA derivative instrument, Futures is a
type of forward contract. Futures are contracts to sell / buy
standardized financial instruments or commodities on a specified
future date at an agreed price. Futures contracts are used
generally for protecting against adverse price fluctuation.Benefits
of trading in commodity futuresFutures trading in commodities
results in transparent and fair price discovery on account of large
scale participation and reflects views and expectations of wider
section of people related to that commodities. Producers, kaders
and processors, exporters/importers get an online platform through
different exchanges for price risk management. It providers a
platform for producers to hedge their positions according to their
view of the pricesHow is Future Prices DeterminedFutures prices
evolve from the interaction of bids and offers emanating from all
over the country - which converge in the trading floor or the
trading engine. The bid and offer prices are based on the
expectations of prices on the maturity date.
Regulatory body for commodities tradingThe Forward Markets
Commission (FMC) is the regulatory body for commodity
futures/forward trade in India. The commission was set up under the
Forward Contracts (Regulation) Act of 1952. It is responsible for
regulating and promoting futures/forward trade in commodities. The
FMC is headquartered in Mumbai while its regional office is located
in Kolkata.
There are three national Commodity Futures market exchanges in
India. The Futures Market Commission (FMC), which is under the
Central Government supervises and regulates the working of all
these commodities market. National Multi Commodity Exchange of
India Limited (NMCE), Ahmadabad. Promoted by Central Warehousing
Corporation, National Agricultural Cooperative Marketing Federation
of India Limited, Gujarat Agro Industries Corporation Limited,
Gujarat State Agricultural Marketing Board, National Institute of
Agricultural Marketing, Neptune Overseas Limited and Punjab
National Bank.
Multi Commodity Exchange of India Limited (MCX), Mumbai.
Promoted by Financial Technologies (India) Ltd, State Bank of
India, Union Bank of lndia, Bank of India, Corporation Bank and
Canara Bank.
National Commodity and Derivatives Exchange Limited (NDCEX),
Mumbai. Promoted by ICICI Bank Limited, Life Insurance Corporation
of India, National Bank for Agriculture and Rural Development, and
National Stock Exchange of India Limited, Punjab National Bank,
CRISIL Limited, lndian Farmers Fertiliser Cooperative Limited and
Canara Bank.
Products
Oil seedsCastor Seed, Copra, Cotton Seed, Cumin Seed (Jeera),
Groundnut, Linseed, Rape Avlustard seed, Rape Seed-42, Safflower,
Sesame Seed, Soyabean , Sunflower seed , Yellow Soybean
MealOilsCastor Oil ,Coconut Oil ,Cotton Seed Oil ,Groundnut Oil,
Linseed Oil, Rape/Mustard Seed Oil ,sunflower seed Oil ,Sesame seed
Oil ,Soybean Oil, Sunflower seed Oil .Crude Palm Oil ,RBD Palmolein
,Rice bran Oil ,Vanaspati
OiI cakesCastor Oilcake, Coconut Oilcake, Cotton Seed Oilcake
,Groundnut Oilcake,Linseed Oilcake, Rape/Mustard Seed Oilcake
,Safflower seed Oilcake, Sesame Oilcake, Soybean Oilcake, Sunflower
seed Oilcake
MetalsAluminium, Copper, Gold( 1
00Gms),KiloGold,Lead,Nickel,Silve,SteelFlat,Steell,ong,Tin,
ZincEnergyCrude oil, Furnace oil, Natural gasSpicesPepper,
Cardamom, Turmeric, Red ChilliPulsesGram, Tur/Arha, Urad, Moong,
Masoor, Yellow PeasOthersRubber, Sacking, Sugar, Gur, Guar seed,
Bandani, Wheat, Rice, Raw Jute, KapasMedium Staple Cotton, Long
Staple Cotton, Cashew Kernel, Maize
Futures market helps AIIFutures contracts perform two important
functions: Price Discovery Price Risk Management
Farmers Efficient Price Discovery/Forecast made b3r the exchange
will enable farmers decide cropping pattern and investment on
inputs. Price Stability resulting from equilibrium in supply and
demand for a commodity would be possible through exchanges. Get an
extensive market opened for them. Get opportunity to trade, knowing
the national and international trends and standards. Can sell the
commodity to the customer without any agents. Can decide the market
even before harvest. Get an opportunity to gain profit by spending
only a small percentage of the actual commodity price. There is an
opportunity to keep the commodity in the warehouse and use the
warehouse receipt to deal with financial needs, as it is an
endorsable document. Can avoid deliberate decrease in price in the
name of quality. Farmers can trade by asking the help of the
experts in trading organizations even if they are computer
illiterate.
Traders Can trade by spending only the margin amount. Can sell
the commodities that he buys from the ready market and can rescue
himself from the loss happening from price fall. For those who have
kept their commodity in the Central Warehouse, loans are available
on the basis of the stock. The benefit is that you can keep the
commodity somewhere without blocking the working capital in the
stock.
Consumer, Industrialist & Exporters Can be sure that the
commodity is available when they require it. Can calculate the
price since it is predetermined and can arrange everything
according to that. Can buy goods without agents. Can buy them even
while sitting in their office. Can be assured the quality of the
good. Commodities can be purchased with only margin amount instead
of giving the whole price.Market influencing Factors for commodity
Markets
GOLD Above ground supply from sales by central banks, reclaimed
scrap and official gold loans Producer / miner hedging interest
World macro-economic factors - US Dollar, Interest rate Comparative
returns on stock markets Domestic demand based on monsoon and
agricultural outputSILVER Price movements of other metals Income
level of the rural sector of the economy Available supply verses
Fabrication demand Fluctuation in deficits and interest rates
InflationALUMINIUM Domestic demand and supply International prices
Interference of government and various associations Import duties
Other economic activities in the world Price fluctuations of the
input materials like power, freightCOPPER Price fluctuations of
copper in London Metal Exchange Production level of copper in the
world Growth prospects of the major copper consuming countries of
the world Growth prospects of the various consuming
sectorsNICKEL
Discovery of new mines Situation in the various industries that
contribute to the demand of the metal Rise in the world stainless
steel
ZINC Level of stocks with London Metal Exchange Fluctuation in
the world demand for zinc Growth rate of the zinc producing
countries changes in the prices of the other substitute metals
Funds in the zinc sector
CRUDE OIL Production of the major oil producing countries
various climatic or political supply fluctuations World oil demand
Fluctuations in the value of dollar Imports from various world oil
organizations like API, DOE Refinery fire
NATURAT GAS Demand and supply scenario of OPEC nations
Fluctuation in the value of dollar Demand level from the importing
countries Weather conditions in the gas producing countries
Domestic demand from the various sectors of the countryEQUITY
RESEARCH DEPARTMENT
HEAD OF DEPARTMENT
ASSISTANT MANAGEROFFICE ASSISTANTJUNIOR MANAGERSENIOR
MANAGERMANAGER
FunctionsThe Company has a full-fledged Investment Research
& Analysis Department to help their clients to make investment
decisions. Gives information on any share the clients hold or plan
to purchase. Publish a monthly newsletter' CAPSTOCKS INFOLINE'
which contains their views on the latest trends in the markets,
scrip recommendation, tutorials, news items etc. Issue a daily
newsletter, ' CAPS TREND'. The department provides classes for
clients regarding the current shares.
The Equity Research Department is also deals with the services
like Portfolio Management & NRI Cell
Portfolio Management Services
Capstocks is a SEBI approved Portfolio Manager. Clients can rely
on the expertise of the team of expert fundamental and technical
analysts to make investment decisions for them. The company is
strong on equity analysis and it has been one of the strengths of
the company. Capstocks is a SEBl -approved portfolio manager
offering discretionary and non-discretionary schemes to its
clients. Capstocks portfolio management team keeps track of the
markets on a daily basis and is exposed to a lot of information and
analytic tools which an investor would not normally have access to.
Other technicalities pertaining to shares like dividends, rights,
bonus, buy-back, Mergers and Acquisitions are also taken care of by
the company.In today's fast moving world it is not at all possible
or intelligent to do all personal investments on your own. One
cannot keep pace with the fast moving markets and information flow
on a day to day basis" This is where a Portfolio Manager like
Capstocks comes into the picture. Capstocks portfolio management
team keeps track of the markets on a daily basis and has at its
disposal a lot of information and analytic tools which an investor
would not normally have. Minimum Portfolio amount should be Rs.5
lakhs rs as SEBI rules stipulate this minimum amount. You can also
give your existing shares as capital and the same will be valued at
market rate.
Investment ObjectiveThe investment goal is to maximize returns
through intelligent stock picking and analysis. The main approach
is to invest in a mix of securities comprising of front line
stocks, mid cap stocks and identified growth stocks.
Management Fee Structures(1) Option I3 %annual fee is debited
quarterly on average daily NAV of the Portfolio.(2) Option II1%
Annual Fee is debited quarterly on average daily NAV. Additionally
20% of profit is taken as fees on profits above 10%. This charge on
profit is calculated after deducting 1olo annual fees and other
charges payable to Capstocks. This charge on profit will be charged
at the end of the financial year or termination of the agreement
with Capstocks whichever is earlier.
Account opening ProceduresThe client has to submit a completed
account opening form, duly signed agreement form, copy of Pan card,
Photograph, proof of identity and bank details.
Client ReportingThe client can find out the NAV of their
portfolio and how their investments are faring on a daily basis
through email. Where email facility is not available" company will
send a biweekly report by post, or the information can be made
available anytime from office on request.
NRI CELLCapstocks have a well-organized NRI Cell functioning
exclusively to meet the requirements of their clients residing
outside India. They are committed to provide them timely assistance
by placing their orders, giving them valuable suggestions
concerning their investments etc. Also they help those NRI's who
desire to open accounts on repatriation basis. Facilities are
offered to those clients who are interested in Internet trading by
activating it, in co-ordination with the e-trading
department'Account Opening:The Company takes care of all the paper
work and procedures involved in opening NRI client accounts and
bank accounts on portfolio investment scheme. Order execution and
related reporting: NRI clients have the option for registering for
internet trading facility or they can execute their orders through
email, sms or telephonic communication. NRI clients can know their
financial balances, trade confirmations and holdings directly from
the NRI cell.Online options available: Capstocks have exploited
modern technology to offer NRI clients online order execution
through our internet trading facility, online client back office
and online d p holdings whereby clients can see their financial
balances and dp holdings online.
SURVEILLANCE DEPARTMENT
Office assistantJunior executiveSenior managerAssistant
managerManagerHead of the department
A sound risk management system is integral to an efficient
settlement system. NSCCL has put in place a comprehensive risk
management system, which is constantly monitored and upgraded to
pre-empt market failures. It monitors the track record and
performance of members and their net worth; undertakes on-line
monitoring of members' positions and exposure in the market
collects margins from clients and automatically disables members if
the limits are breach.
Functions To keep companys fund flow and equilibrium To protect
the customer fund.In risk management, the online position
monitoring system monitors the clients open position & margins
on a real time basis. The online position monitoring system
generates alerts whenever the margin of a member reaches the pre
determined performance of the capital deposited by the client.
CLIENT RELATION
Office assistant Junior executive Senior manager Assistant
managerManager Head of the department
Functions Account opening Trading account modification (address,
ph.no., bank details, mail id) To handle customer grievances and
direct them to the specific department To provide application of
IPO Keep in touch with the clients
There are two types of accounts,1. Trading account2. Demat
account
To open a trading account there should be a photo, Bank proof,
PAN card &Address proof (Passport, ration Card, Driving
License, voters ID, Bank Passbook/Statement ). The application form
consist of Member -Client Agreement NSE, Member-Client Agreement
BSE,Tripartite agreement between stock broker &client-NSE,
Combined risk disclosure document for currency derivatives
segment(NSE/MCX-SX),Member client agreement for internet
trading-NSE, Member client agreement for internet trading-MCX-SX.To
open a demat account there should be a photo, Bank proof PAN
card,Address proof ,nominees photo& nominees cancelled cheque
leaf. The application form consist of Nomination form, Agreement
between a Participant and a Person seeking to open a Beneficial
Owner's Account, DP Tariff Card, Power of Attorney. This department
is also helpful to take PAN cards.
Pan Service Agent of UTICapstocks & Securities (India) Pvt.
Lid. has become authorized PAN card service agent (PSA) of UTL
Capstocks offers this value added service to their privileged
customers, existing as well as new customers at nominal processing
charges.
SYSTEMS DEPARTMENT
IT MANAGER
SYSTEM ADMINISTRATORNETWORK ADMINISTRATORRASSISTANT
MANAGERASSISTANT MANAGER
FUNCTIONS Computer services and networking To connect all
branches and head office. Facilitate internet trading Maintaining
virtual date base
For a Share Broking firm the system department has a very bring
role to play Trading is the main process in this type of company
and for this purpose the software ODIN is using. All the branches
are connected to the head office and whatever doing in the
branches, using for the transmission.4 Type of connectivity is
there1. A SAT2, VPN [Virtual Private Network]3. MPLS (Physical
lines are using)4. LAN
HUMAN RESOURCE DEPARTMENT
Assistant manager
Junior executivesSenior executives Functions Recruitment &
Selection Training & Development Wages and salary
administration Promotion Statutory facilities providing
The Recruitment process is done by both internal method and
external method. The employee referrals is considering for the
process of Recruitment. Now the H.R department looks forward to
outsourcing also.The first step of selection is a written test. An
interview is then conducted by the HR Manager for those who succeed
in the written test. Induction program will be given to candidates.
They will be provided on the exam training and 6 month probation
period. After that they will be appointed permanently. The training
is done by the internal trainer sometimes they depends on the
external trainer also. There are 3 levels of Training Managerial
training: The training is given for the managers. Induction: The
training given for the fresher's. Exam training: The terminals are
allotted to Capstocks by the exchange on the basis of the exam
certificate. So the training is very important.The details of exams
are given below.
Exam
Validity
CAPITAL MARKETDEALTRS MODULE (capital Market)
NISM VIII EQUITY AND DERIVATIVES
NISM VII SORM
NCDEX (Commodity)
MCX (Commodity)
NISM (Currency Derivative)5
3
3
3
3
3
Promotion is based on the seniority, eligibility for post,
efficiency, skill qualification etc' the management decides whether
to fill a post by outside recruitment or through promotion. The
transfers are very often.LEAVE POLICY Capstocks follows a
systematic method for deciding holidays in a year. National
holidays such as Jan26, May l, Aug 15, oct2 etc are considered as
the Holidays. The remaining holidays are decided by management.
Casual leave12 working days. Maximum 3 casual leave in a month
subject to prior approval .
Medical leave6 working days maximum. Medical certificate plus
leave application is required leave exceeding 2days. Within 2 days
self confirmation only required.
Privilege leaveMinimum 3days leave is available to an employee
after giving 30days prior notice.
Encashment of leaveOn December 31st excess unutilized leave
accumulated over 45 days may be encased.
Maternity leave12 weeks or 84 days paid leave is available for
women employees.
Abortion leave6 weeks or 42days paid leave.
Performance Appraisal:Performance appraisal is done on the basis
of certain factors such as job knowledge, job responsibility,
quality & quantity of work, cost consciousness, organizing
ability, punctuality, problem solving ability etc. performance
appraisal goes through three steps i.e. first appraisal by
employee, then appraisal by the rater and reviewed by the head of
the department. Calculation of appraisal score of employee done
based on five point rating system. The final rating is done by the
rater. Counseling is also given for low level performers.
Issue Performance appraisal form to employees. Self appraisal by
the employee. Appraisal by the Rater. Review by Department Head.
Calculation and appraisal scores of eachemployees in personal
interviews. Counsel employees for improved performance.
MARKETING DEPARTMENT
Assistant managerRegional manager Junior managerSenior
managerFranchisee manager MANAGERHODMARKETING CONSULTANT . A
detailed study in the Marketing Department is done. The efficient
marketing Department is the corner stone for success for every
organization. In Capstocks marketing department is under the
control of HOD (Marketing). The activities of this Department are
directly reported to the MD. This department identifies the
customers, interact with them and find out their needs. Marketing
management is a pre requisite for the successful operation of any
business enterprise. Functions Policy making &implementation
New client addition Prepare workout schemes To increase volume by
marketing Conduct promotional activities
More than 50 employees are working in this department. They
follow personalized mode of operation. In Kerala the working of a
share market firm is a risky game because the mindset of the people
is very conservative comparing with the other state of India. The
people in Kerala are unaware about share market and they are not
ready to take risk. The investment habit is also less. The
marketing department has to work hard to make awareness among
people especially in Kerala.
For this purpose the marketing department is conducting the
promotional activities like Advertisements, Road shows, Awareness
programmes etc. The awareness programmes includes investor
awareness programmes &the students awareness programmes. By
investor awareness programmes the company can retain & increase
investment habit of the client. And also company can give
suggestions about what would be the right choice of the investment.
Students awareness programmes are conducting at colleges to
increase their investment habits. The main competitors of the
company are GEOJIT, JRG Securities HEDGE Equities etc.
ACCOUNTS DEPARTMENT
Office assistantSenior manager Junior managerAssistant executive
Manager HEAD OF THE DEPARTMENT Money is the lifeblood of any
organization as it is required to purchase raw materials and
machines, to pay wages and salaries etc. the financial statement of
the company is prepared under the convention accrual basis as a
going concern.
FunctionsThe main functions of Finance Department come mainly
are categories, they Cash Receipts /PaYments Bank Receipts /
Payments Finalizatian
Cash Receipts/ payments Withdrawl Receivel Payment of cash
Settlement of tax, temporary salary, interest advancesBank
receipts/ Payments Amount transter vouchers Writing of Cheque
Remittance of all reeoveries made from salary Preparation of bank
reconciliation statement Generating bank books
Finalization Analysis of ledger Rectification of error Adjusting
and clearing entries Assisting internal Audit Assisting statutory
audit Preparation of Trial balance, P&L accountant and Balance
sheet
In a share broking firm the accounting process is entirely
different. They accept only cheques. As per the SEBI rule any
credit balance from client's trading account should be transferred
to the client's bank account in quarterly basis.
CHAPTER 6SWOT ANALYSIS
SWOT ANALYSIS is a systematic analysis to understand the
business environment. SWOT means analysis of strength, weakness,
opportunity and threat affecting the business. Strength is the
inherent capacity which a business can use against its competitors.
Weakness is an inherent limitation or constraint which creates
strategic disadvantages. An opportunity is a favorable business
condition. A threat is an unfavorable business condition that
creates risk.
Strength Good relation between employees and top management Good
working conditions An excellent pool of trained staffs, three forth
of them is certified by NISM, MCX, NCDEX, NMCE examinations.
Capstocks is the second largest Kerala based stock broking company.
Efficient quality system awarded with ISO certificate. Good
training and induction program for workers
Weakness Less media advertisements Less focus on northern region
of India Debts are not with appropriate physical proximity Market
fluctuations
Opportunity
Rising income levels of people The wide spread business
operations Awareness of public about share market investment
potentials Use of appropriate technology
Threat
Heavy threat from rival firms Market fluctuations Unawareness of
people about share market
CHAPTER 7FINDINGS AND CONCLUSION
FINDINGS
Some of the major things that came into notice are mentioned
below Well disciplined staff and employees Effective attendance
system Well established Employees welfare policies Good relation
between top management and employees The company has a very good
customer retention policy Company is using past references as their
promotion strategy.
CONCLUSION
As my experience I would like to say that the study was very
beneficial. I could get to know how share market is working, how
the trading activities are actually taking place and how the
brokers act as intermediary between the stock market and investing
public.
The company is providing wide range of quality services to their
customers. They are very successful in customer retention and they
are using it as their success mantra. The labor turnover is very
low as they are maintaining good relation with employees. Reference
by existing clients is the marketing strategy they are using. In
this field trust of the clients is the most important thing.
REFERENCES
Securities Laws and Compliances (Institute of company
Secretaries of India) Umasekaran, Research methods for business
M.Y.Khan, Financial services
WEBPRTALS
www.capstocksindia.com www.bse-india.com www.cdslindia.com
www.sebi.com www.nse-india.com