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Page 1: Project on Online Trading

Chankaya Institute of Management

Village Gharuan, Tehsil KhararDist. Mohali, Punjab

Email: [email protected]

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A

PROJECT REPORT

ON

ON-LINE TRADING (With special reference of Ludhiana Stock Exchange)

Submitted in partial fulfillment of the Requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION

(2008-2010)

CHANAKYA INSTITUTE OF MANAGEMENT

GHARUAN MOHALIs

SUBMITTED BY:-

HARI SINGH

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STUDENT DECLARATION I hereby declare that the

Analytical study

On

OVERALL STUDY ON

ONLINE TRADING

IN

LUDHIANA STOCK EXCHANGE

Submitted in partial fulfillment of the

Requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION

To Punjab Technical University, Jalandhar is my original work and not submitted for the award of any other diploma, degree.

Place: Gharuan

Date

SIGNATURE

HARI SINGH

CERTIFICATE

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This is to certify that the project report entitled “ONLINE TRADING OF LUDHIANA

STOCK EXCHANGE” submitted by Mr. Hari Singh is a bona fide piece of work

conducted under my direct supervision and guidance. No part of this work has

been submitted for any other degree of any other university.

It may be considered for evaluation in partial fulfillment of the degree of Masters

in Business Administration.

Hari singh

Signature

ACKNOWLEDGEMENT

If words are considered as a symbol of approval and token of appreciation then let the words play the heralding role expressing my gratitude

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The world of capital market war far from me but I got an opportunity to understand the capital market at LSE. While training I learnt many things about capital market and its structure. So I am very thankful to Ludhiana Stock Exchange association limited for giving me such opportunity.

First of all I thank to that Gracie god who blessed me with all kinds of facilities that had been provided to me for completion of my report.

I am also grateful to Miss Rizvi Garg for permitting me to learn and gave me project on Ludhiana stock exchange Ltd.

I acknowledge my deepest sense of gratitude and sincere feeling of in debt ness divine all my faculty members and Mr. Shami Kohli (senior manager) under whose guidance and through their sustained efforts and encouraging attitude IU was able to complete my project. It would have been difficult to achieve the results in such a short span of time.

PREFACE

For management career, it is important to develop managerial skills. In order to

achieve positive and concrete results, along with theoretical concepts, the

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exposure of real life situation existing in corporate world is very much needed. To

fulfill this need, this practical training is required.

I took training in LUDHIANA STOCK EXCHANGE located in Ludhiana. It was my

fortune to get training in a very healthy atmosphere. I got ample opportunity to

view the overall working of the stock exchange.

This report is the result of my 45 days of summer training in LUDHIANA STOCK

EXCHANGE, as a part of M.B.A. The subject of my report is- Online trading.

Contents

CHAPTER -!

1. Introduction (A) Capital Market

(B) Stock exchange

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CHAPTER -2 2. Stock Exchanges

CHAPTER -3

3. Share Trading

CHAPTER -4

4. Research Methodology

CHAPTER -5 5. On Line Trading

6. Growth of On Line Trading in INDIA

CHAPTER -6

7. Analysis and Interpretation

8. Finding

CHAPTER-7 9. Conclusion

11. Suggestion

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10. Limitations

CHAPTER -8

12. Bibliography

11. Questionnaire

Introduction to the capital market

The capital market is the market for securities, where companies and the

government can raise long term funds. The capital market includes the stock

market and the bond market. Financial regulators ensure that investors are

protected against fraud. The capital markets consist of the primary market,

where new issues are distributed to investors, and the secondary market, where

existing securities are traded.

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Capital market thus plays a vital role in channelizing the savings of individuals for

Investment in the economic development of the country. As a result the

investors are not constrained by their individual abilities, but by the abilities of

the companies, which in turn enhance the savings and investments in the

country, liquidity of capital market is an important factor affecting growth.

Since projects require long term finance, but on the other hand, the investor may

not like to relinquish control over their savings for a long time. A liquid stock

market ensures a quick exit without incurring heavy losses or costs. Thus

development of efficient market system is necessary for creating conductive

climate for investment and economic growth.

Capital market Segment – Primary

And Secondary

Broadly , the comprises of two segments – the new issue market which is commonly known as primary market and the stock market which is known as secondary market.

Primary

A primary offering, such as with a corporate bond, means you are buying it directly from the issuer, at par value, usually. A secondary market is where

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you sell or buy existing issues. I.E. If you bought a bond last year, now need to get your principal, you can sell it in the secondary market. You may not get par value. If rates are up since you bought the bond, then you will likely have to sell it at a discount to be able to get rid of it. If rates have fallen since you bought it, you could get a premium for it.

Secondary

The market where securities are traded after they azre initially offered in the primary market. Most trading is done in the secondary market. To explain further, it is trading in previously issued financial instruments. An organized market for used securities. Bombay Stock Exchange (BSE), National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental guaranteed loans etc

Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets. For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit—by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.

BRIEF ABOUT THE STOCK EXCHANGES

Stock Exchange is a market like any other centralized market where both buyers and sellers come and conduct their business of purchase and sale of shares & securities. In other words, it is a market place for shares and securities where trading takes place in a controlled and protected environment.

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MEANING OF STOCK EXCHANGE

A stock exchange, share market or bourse is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock

markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a global market for securities.

CONCEPT OF SHARE TRADING

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The concept of share broking emerged after the establishment of the joint stock

companies. The ownership of the companies was divided into small parts and that

every part was called share. So, the term “Share” denominates some part in the

ownership of the company. The shares are freely transferable subject to the some

certain restrictions. When the need was felt to sell the shares by the owner of the

shares, it was difficult to find out the buyers of the shares who want to buy the

shares at the price the seller want to sell. At that time a need was felt to bring the

buyers and sellers on a common platform. To solve this problem, a group of

persons came into picture, which used to bring the buyers and sellers together for

the trade of the shares. These persons are called the share Brokers who find the

persons who wish to buy or sell their securities. The whole process of finding the

buyers and sellers of the securities by the brokers is called the Share Broking. The

origination of the Indian securities market may be traced back to 1975, when 22

enterprise brokers under a Banyan tree established the Bombay Stock Exchange

(BSE). Over the last 130 years, the Indian securities market has evolved

continuously to become one of the most dynamic, modern international

standards both in terms of structure and in terms of operating efficiency.

SETTLEMENT CYCLE SCHEDULE

SR. NO. DAY DESCRIPTION OF ACTIVITY TRADE

1 T Trading Day

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2 T+2 PAY IN BY 10.30 am.

3 T+2 PAY – OUT BY 2 pm.

4 T+3 Auction of shortage in deliveries

5 T+5 Auction pay-in by 10.30 (1 am/ pay

Out by 2 pm.)

Functions of Stock Exchange

Stock exchange is established into the main purpose of providing a market place

for the members to deal in securities under well laid down regulations and to

protect the interest of the investors. The main functions of stock exchange are;

1. It brings the companies and investors together so that the investors can put

risk capital into companies and thus, companies can use the capital.

2. It provides an orderly regulated market for securities.

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3. It provides continuous, ready and open market for selling and buying

securities.

4. It promotes savings and investment in the economy by attracting funds

from the investors.

5. It facilitates take overs by means of acquiring majority of shares traded on

the stock market.

6. It acts as a clearing house of business information.

7. It motivates the managers of well reputed companies, to retain their shares

in ‘A’ group, to improve performance.

8. It induces the managers to improve performance for converting non-

specified shares into specified shares in the exchange.

9. It enables the investors to evaluate the net worth of their holdings.

10.It also allows the companies to float their shares in the market.

Institutional offering

Investment Banking

IL&FS Invest smart securities limited (IISL) offers you extensive range of

Investment Banking Services for equity related products and instruments. Our

team advises you on transactions like business structuring and capital raising

opportunities based on your corporate needs and state of capital markets.

Services we specialize in include Management of:

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Initial Public Offering (IPOs)

Follow-on Offerings

Qualified Institutional Placements (QIPs)

Buyback of Equities

Open Offers

Mergers & Acquisitions

Private Equity Placements

ESOPs

Institutional Equity:-

Company’s efficient execution, quality research, top quality human resources

and complete compliance with stock exchange regulations, as well as business

standard ethics lend towards our exemplary services to investors, through IPOs,

equities, derivatives and mutual funds.

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Company also focus on identifying undiscovered value stocks to investors.

Through it’s array of services, this division is well-suited to corporate investors,

banks, financial institutions, insurance companies and FII’s .company’s

Institutional Equity Business (IEB) is well positioned to offer support for a

complete range of investment banking service to corporates.

IISL, work closely with institutional investors, private equity investors and

corporates, have been hosting round table conferences with leading CIOs / Fund

Managers etc. Also, conduct activities like organizing of road shows, enabling the

senior management to interact with FIIs, regular conference calls for institutional

Investors etc. This works as a pre-requisite to investing in stocks. Company’s

expertise in this area also extends to international investors from Singapore, Hong

Kong, USA and the UK.

Institutional Debt:-

Institutional debt broking division includes, secondary market broking, primary

market debt placement & distribution and provident fund advisory services.

Secondary debt broking is the principle service provided by this division. The

clients mainly comprise of institutional debt players, such as banks, primary

dealers, mutual funds, large provident funds and in some cases corporate

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treasuries. The division empanelled with almost all banks, primary dealers and

mutual funds, on whose behalf it acts either on the buying or selling side. All

types of debt papers are covered, including government securities, treasury bills,

public sector bonds, corporate bonds etc. This desk also provides transacting and

advisory services to various provident funds and HNI clients.

The primary market services cover placement of debt paper issued by corporates,

with institutional segments covering banks, mutual funds etc. These services

cover various activities :-

Advising the clients on the issuance including the instrument, quantum,

timing, other instrument specific structuring such as put / call option,

conversion option and rating. Assisting in the rating exercise and suggesting

various means and options to improve rating if so desired, through

“Structured Obligations” or other mechanisms.

Pre marketing the placement / issuance

Selling / placing the issuance

Assisting in any related documentation for the issuance

Assisting in all other steps to complete the issuance for draw down funds

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The debt instrument covered by this division cover both short term as well as

longer term instruments. Commercial paper and MIBOR Linked Bonds are popular

among the short-term instruments. The division uses a proprietary online

platform called “DebtonNet” for online book building of debt issuances.

IL&FS investsmart securities limited is facilitating the three type of trading product to its retail customer are

SmartSTART

SmartStart is a powerful browser based trading system for those who are

relatively new to online investing. A unique integrated account, which integrates

your banking, broking, and demat accounts. A comprehensive trading service,

which allows you to invest in equities and derivatives. SmartStart trading platform

allows you the flexibility of trading on any internet capable system, with access to

both the NSE and BSE.

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FEATURES

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Trade on NSE & BSE

Simple order entry for Equity & Derivatives

Fully Customizable display

User friendly Get Quote screen

Integrated Accounts (Bank. Demat & Trading)

Live order status

Track your orders real-time

Dynamic buying power

Works behind a Proxy

Back office access

SYSTEM REQUIREMENTS

Browser Type Microsoft Internet explorer 6.0 or higher

Internet Connection Dial-up connection (Modem at a minimum of 28.8/33.6 Kbps)

System Pentium 3 and above. RAM 128 MB or above

Operating System Windows 98/2000 or Windows XP

BENEFITS:-

NSE& BSE Access -

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Flexibility of trading on both the NSE & BSE via a single screen.

Fully Customizable display –

The save desktop option allows you to save your created trade screen layout,

so the next time you access the application the created layout is not lost

Integrated Accounts (Bank. Demat & Trading) –

Integrates your banking, broking and demat accounts. This enables you to

trade in shares without going through the hassles of tracking settlement cycles,

writing cheques and Transfer Instructions, chasing your broker for cheques or

Transfer Instructions etc.

Live order status –

Tracking all your orders is made easy through the order status screen.

Further drill down into all details pertaining to an order is available in the order

detail sub report

Track your orders –

Track your stock order and trades

Dynamic buying power –

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Reflects your credits and debits instantly on every trade execution. No need

to refresh each statement to know your latest buying limits

Works behind a Proxy –

This platform can be accessed on any Internet enabled network. You can

access it even from your place of work

Back Office access –

View segment wise ledger bills and contract notes, trades, positions, account

contract notes, trades, positions, account balance, realized/unrealized profit &

loss, and buying power all in real time

SmartINVEST

Smartinvest is a browser-based system designed for customers who transact

occasionally. It is ideal for investors who believe in the Buy and Hold approach

towards investment in equities. SmartInvest's capability as a browser-based

trading platform gives you the benefit of real-time streaming data with the

flexibility of trading on any Internet capable system. With access to both the NSE

& BSE, you are in the driver's seat when routing your order to the best price on

either of

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the exchanges. Smartinvest sophisticated yet easy to use point and click order entry

interface allows you to react more quickly to the markets and make better decisions.

FEATURES

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Instant Loading

Works behind a Proxy

Live Streaming quotes

Multiple Watch lists

NSE& BSE Access

Single order form for Cash and FnO

Point and Click order entry

Hot Key Functions

Market Depth Window

Back Office access

SYSTEM REQUIREMENT

Browser Type Microsoft Internet Explorer 6.0 or higher (Java enabled)

Internet Connection Broadband/Dial-Up connection (Modem at a minimum of

28.8/33.6 Kbps)

System Pentium 3 or 4 GHz or best available at market RAM (Physical) 128 MB

or better

Operating System Windows 98/2000 or Windows XP

BENEFITS:-

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Instant Loading -

The browser-based applet system allows you instant access to your account with

no wait time, unlike other systems that take a few minutes to load.

Works behind a Proxy -

This platform can be accessed on any Internet enabled network. You can access it

even from your place of work

Live Streaming quotes -

Keep an eye on the stocks you care about most with streaming, real-time quotes

and customizable market data. Color-coded price changes help you to spot trends and

react to them quickly

Multiple Watch lists -

The new watch list option allows you to create upto 10 watch lists. Each watch list

can be personalized by inserting securities which you would like view as a group

NSE& BSE Access -

Flexibility of trading on both the NSE & BSE via a single screen

Single order form for Cash and FnO -

Single order form offers you the convenience of transacting in various segments of

the market without having to switch between multiple windows

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Point and Click order entry - Makes order entry quick and simple with a click on the security the same gets

inserted into the order form on your trade screen

Hot Key Functions - Using a single keystroke (Hot Key) function you can achieve important tasks very

similar to a broker's terminal. Accessing important reports is also one keystroke away

Market Depth Window - It gives an immediate "at a glance" info about the stock you are following. The view

provides the best 5 bid and offer quotes and the outstanding order quantities

Back Office access - View segment wise ledger bills and contract notes, trades, positions, account

balance, realized/unrealized profit & loss, and buying power all in real time

SmartTRADE

SmartTrade is an EXE based desktop software designed for active traders who

transact frequently to capture favorable short-term price movements. The platform

offers active traders the tools they need to make critical decisions with confidence.

SmartTrade is designed and built from the ground up to address the needs of active

traders. SmartTrade makes the most of state-of the-art technology to deliver power,

speed and reliability. Through an easy-to-use interface, users are provided with the

same tools and advantages that the professionals enjoy.

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FEATURES

Fully Customizable display

Dynamic Charts with Indicators

EOD Charts

Real-Time market data

Advanced Alert capabilities

Live order status

Track your orders real time

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Real time position updates

Dynamic buying power

Derivative chain

Lock terminal option

Message window docking

SYSTEM REQUIREMENT

Browser Type Microsoft Internet Explorer 6.0 or higher (Java enabled)

Internet Connection Broadband/Dial-Up (Modem at a minimum of 28.8/33.6 Kbps)

System P 3 or 4 GHz or best available at market RAM 128 MB or

better Operating System Windows 98/2000 or Windows XP

BENEFITS:-

Fully Customizable display The save desktop option allows you to save your created trade screen layout,

so the next time you access the application the created layout is not lost.

Dynamic Charts with Indicators Provides you a wealth of charting capabilities and timing indicators, which

allow

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you to go right into the action with real-time daily charts, and intra-day charts.

Watch price movements by minutes, days, or weeks.

EOD Charts SmartTrade puts up to 5 years of in-depth market history at your command

with the power to instantly back-test any trading strategy you design, before

risking one rupee of your trading capital.

Real-Time market data Get real time market data from both the NSE and BSE similar to what your

broker gets.

Advanced Alert capabilities Alert Window allows you to be free from watching every tick. Users can be

notified once a security has reached the set parameters. Multiple securities can

be monitored using the set parameters. These alerts can be triggered both

visually and audibly.

Live order status

Tracking all your orders is made easy through the order status screen. Further

drill down into all details pertaining to an order is available in the order detail sub

report.

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Track your orders real time

Track your stock order and trades in real-time.

Real time position updates All your positions are updated automatically and instantly. No need to use the

refresh button at all.

Dynamic buying power Reflects your credits and debits instantly on every trade execution. No need to

refresh each statement to know your latest buying limits.

Derivative chain This feature provides you with a list of all derivative contracts available for the

selected security. To view derivative prices of a security just right click on the

symbol and click on derivative chain.

Lock terminal option If your system is unattended this function locks the trading platform for you

and can be accessed again only on providing the proper login details.

Message window docking

This feature enables you to receive trading messages, intra-day trading calls, and

messages from both the exchanges flashed real time onto your screen

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These are the various product ranges for its retail customer

SMART POWER SMART ELITE

Advance subscription value(Rs)

Default

2500

12500 25000 50000

delivery brokerage 0.50% 0.35% 0.25% 0.20% 0.15%

intraday brokerage CM (1 leg) 0.05% 0.04% 0.03% 0.03% 0.02%

intraday brokerage CM (2 leg 0.05% 0.04% 0.03% 0.03% 0.02%

intraday brokerage F&O (1 leg) 0.05% 0.04% 0.03% 0.03% 0.02%

intraday brokerage F&O (2 leg) 0.05% 0.04% 0.03% 0.03% 0.02%

option brokerage(which is high)

2.5% or Rs.100

2.5% or Rs 90

1% or Rs.60

.75% or Rs.40

.60% or Rs.30

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ONLINE FUND TRANSFER

IISL have tie up with 5 banks, which are. HSBC, HDFC, IDBI, CITI, AXIS bank , for online

money transfer

4. LITERATURE REVIEW

ONLINE TRADING INFRASTRUCTURE

The emergence of online exchanges has facilitated faster transactions by

providing online trading portals and brokerage houses ease and flexibility. The Internet

has indeed opened up new opportunities for conducting the business. The worldwide

stock exchanges has made a major shift from the traditional method of trading and now

conduct a bulk of its business online through its brokers and partners.

In the developed countries majorly all the exchange transactions are conducted

online. The trend took off slowly in India and the National Stock Exchange (NSE) and the

Bombay Stock Exchange (BSE) two of the largest exchanges in India have been

conducting online trade successfully for some time.

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WHY ONLINE TRADING ENTERED LATE IN INDIA?

The Indian exchanges and brokering houses have been very slow in moving their

transactions online and the major reason has been the lot government regulations. The

initial delay was due to laying down the specifications for creating Closed User Groups

(CUGs). This issue was resolved between the Department of Telecommunications (DoT)

and the Finance Ministry around 1998 and after that soon came the online trading

portals like IL&FS investsmart, ICICIDirect.com, motilaloswal.com, sharekhan.com etc.

Connectivity related issue was perhaps the most important technological factor.RBI

made regulation that it is mandatory for company to store at least 7 year financial and

transactional data.

In the non-stop, 24 hours a day, seven days a week world of investing, we are able to

Obtain investment news around the clock

Check quotes on exchanges all over the world – day or night

Easily compare one investment to another via numerous ratios, charts,

graphs, and tables

Screen for the best investments to fit our individual goals and requirements

Trade stocks as easily and quickly as professional traders

Calculate retirement needs based on various scenarios

Regularly monitor portfolios and make necessary changes quickly and

almost effortlessly

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Control the routing of individual trades for the best possible price and

execution

Even many years after the launch of the first online brokerage firm, there

remain a large contingent of individual investors who still pick up the phone and

call their stock broker to buy and sell investments. However, every year a growing

number of investors are placing their trades using online brokers.

s OBJECTIVES OF THE STUDY

1. To understand the appropriate organizational structure of the LUDHIANA STOCK EXCHANGE LTD and LUDHIANA STOCK EXCHANGE securities LIMITED.And Growth of Online Trading in India

2. To analyse the online trading and its process.

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On Line TradingOn Line Trading

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Meaning of Online Trading

“Change is the law of nature”. There were times when man was a wanderer or a

normal. He himself had to go place to place in search of food, water and now

everything is available at your doorstep just at the click of the mouse. The growth

of information technology has affected almost all sectors of life. Internet has

enabled us to get every information at our doorstep. When Internet has affected

all sectors he could “stock markets” the most important player of the economy,

has remained far behind? Like all other sectors Internet has set its feet in the

stock markets also.

Internet trading commissions are clearly posted on the websites of the various

services, and are typically a fixed rate charge, depending upon the type of security

being traded and the size of trade. In theory, therefore, an Interest investor

always knows what commission he is being charged on each trade. Internet

investors can take as much time as they would like to take prior to placing a trade

order. Similarly the online investor likely does not have to worry that his broker is

making unauthorized trades. Since there is no individual broker making a

commission, the only person who is authorized to trace in a the account is the

actual investor. Furthermore, the internet investor can never become a victim of

excessive trading (where for the broker) since the investor maintains total control

over the number of transactions which take place in the account.

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All of these positive features of internet trading may lead the unwary investor to

believe that Internet trading is a way to take control of their finances and save

more money in the process. Unfortunately, this is not always the case. The

advantages of Internet stock trading have also its weaknesses and these

weaknesses present significant drawbacks for the average investor.

First and foremost, the average investor is not an expert in the financial markets.

There is a danger for allowing the autonomy of online trading to hull you into the

belief that you are an expert investor. An online investor sitting at home at a

personal computer also foregoes proper investment advice and financial planning,

perhaps among the most valuable services provided by traditional brokers.

There are, of course, additional risks relative to performing transactions over the

Internet especially on a shared computer. Those people whom investors have

provided their account number and password can freely trade that account while

the investor will have little, if any, resource against the brokerage firm for the

breach of security.

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When was online trading introduced in

INDIA?

Online trading started in India in February 2000 when a couple of brokers started

offering an online trading platform for their customers.

ONLINE TRADING BY NSE & BSE

The central computer located at the Exchange is connected to the workstations of

the Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders

placed at the Brokers' workstations reach the central computer and are matched

by the computer based on price and time priority.

Both the exchanges have switched over from the open outcry trading system to a

fully automated computerized mode of trading known as BOLT (BSE On Line

Trading) and NEAT (National Exchange Automated Trading) System. It facilitates

more efficient processing, automatic order matching, faster execution of trades

and transparency. The scrips traded on the BSE have been classified into 'A', 'B1',

'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent those, which are in the

carry forward system (Badla). The 'F' group represents the debt market (fixed

income securities) segment. The 'Z' group scrips are the blacklisted companies.

The 'C' group covers the odd lot securities in 'A', 'B1' & 'B2' groups and Rights

renunciati

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PROCESS OF ONLINE TRADING

An investor interesting in trading through Internet shall have to, firstly register

himself with an Internet brokerage firm. Some formalities such as filling the

account opening form of the e-broker, copies of identity proof, copy of residence

proof are made to register himself with the e-trader. Secondly, the investor would

be required to open a bank account with a scheduled bank and sufficient balance

should be kept in the account. Thirdly he would be required to open account with

a depository participant because only dematerialized shares can be traded on

Internet.

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The client places order via the net by logging on to his

Broker’s site.

The broker accepts and executes the order and places it with the exchange

The exchange accepts the order after checking the share limit for the day.

The broker makes the payment either directly via the client bank account or pays through its own account and recovers it later from the client.

The exchange receives money and completes the settlement.

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So, generally following steps are followed while doing the trading through the

Internet:

Step-I:

Those investors interested in doing the trading over Internet system, that is,NEAT

- ISX (NSE), should approach the brokers and register with the Stock Broker.

Step-2:

After registration, the broker will provide to them a login name, password and a

personal identification number (PIN).

Step-3:

Actual placement of an order, Using the place order window as under can then

place an order:

(a) First by entering the symbol and series of stock and other parameters such as

quantity and price of the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step-4:

It is the process of review. Thus, the investor has to review the order placed by

clicking the review option. He may also re-set to clear the values.

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The client is intimated about the settlement either through the demat or via e-mail.

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Step-5:

After the review has been satisfactory; the order has to be sent by clicking

on the send option.

Step-6:

The investor will receive an "Order Confirmation" 'message along with the order

number and the value of the order.

Step- 7:

In case the order is rejected by the Broker or the Stock Exchange for certain

reasons such as invalid price limit, an appropriate message will appear at the

bottom of the screen. At present, a time lag of about ten seconds is there in

executing the trade.

Step-8:

It is regarding charging payment, for which there are different modes. Some

brokers will take some advance payment from the, investors and will fix their

trading limits. When the trade is executed, the broker will ask the investor for

transfer of funds by the investor to his account.

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CLIENT BROKER STOCK EXCHANGE

Places an order on the net on the broker’s

website through the distinctive I.D. code

Accepts the order, Checks the client’s Identity and places the order with the

stock exchange

Accepts the order after checking the scrip limit

of the broker for the day

Executes the order

The settlement of the deal (buy/sell order) gets reflected in his Demat account.

The client is intimated about the execution of the deal by e-mail. Pays

the broker pending physical delivery.

Pays the

Exchange

though his owns account and

receives it from the client account.

Receives the money and

completes the settlement

THE MECHANICS OF ONLINE TRADING

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DEFINITIONS AND EXPLANATIONS

1. Shares:-

In everyday language, when we talk of shares we normally refer to equity

shares or ordinary shares of a company. The terms shares and stock essentially

means the same things, the letter being a more common American usage.

An equity share is evidence of ownership in a company. The physical evidence

of this ownership of this document is called the Share Certificate. Now days,

shares are usually kept in electronic, or dematerialized, form with a depository

participant (Banks, brokers, financial institutions) of the National Securities

Depository Limited (NSDL). However, if one wants one can still hold the share

in the physical form which has your name endorsed on it, and is proved that

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you are a part owner of the company. Your ownership rights are proportionate

to the number of share you own.

Companies issue shares of a certain fixed denomination, called face

value or par value of that share, which is clearly indicated on a share

certificate in the physical form.

2. Investment: -

Investment essentially refers to what you do with your

savings in order to preserve them and make them grow or yield an income.

If you keep your savings in the form of cash, they are certainly going to

diminish in value because the purchasing power of money is constantly

going down as a result of inflation. (The value of money is judged by the

quantity of goods and services you can buy with it). Therefore, if you want

to maintain or increase the value of your savings, you have to keep them in

forms other than cash. This is what investment is all about, deployment of

your saving with the intentions of preserving or increasing their value. This

deployment can be done by using your savings to buy land, residential

properties, commercial properties, gold, jewelry, works of art, fixed deposits

in banks and companies, shares, bonds, infact, anything whose value is

likely to either remain constant or appreciate with time. Investment also

refer to using one's savings with the intention of earning an income.

3. Demate A/c:-

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On doing an online business ever customer has to open and demate account in

any bank whichever he likes. Demate account is the account in which the

trading done by the customer is mentioned. If the customer sales or purchases

any share the details of this sale and purchasing are in demate account. This

account contents the name of the shares and also the number of shares held

or sold and also the rate of the share with this demate account. It is also

compulsory for every customer to open a saving account in the bank because

the amount which is to be received when the customers sales the shares are

transferred from the demate account to the saving account.

It is the responsibility of the customers that the share which he purchased or

sales are properly transferred in demate account from the stock exchange

whichever he deals. The amount of dividend whichever to be received on the

shares when held for one or more year are also transferred in this demate

account. It is compulsory for every customer to have a PAN no. For opening an

demate account. If PAN no. Is not there is no chance for the customer to do

any trading on line. There is no limit of amount to deal in this account.

4. Circuit Limit:-

While issuing the shares to the public the company has to fix a particular limit

of the rate of the per share this limit is called as circuit limit. This circuit limit is

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generally fixed on the percentage basis. This circuit limit is applied to both the

ends of the share. That is to the upper limit also and also to the lower limit

actually circuit limit is of two types

1) Upper limit

2) Lower limit

It is compulsory for every company to fix the circuit limit. This limit is

beneficial to both. The customer and also to the company generally every

company fix below 10%of the rate of per share.

5. Upper Limit: -

While issuing the shares to the public the company has to fix the upper

limit this limit is also calculated in percentage the limit is also beyond which the

rate of the shares cannot exceed nor that the customer doing the trading can sell

above the level.

For ex. Customer wants to sell a share which is of

Rs10 and its upper limit is fixed at 10% so in this case the person

will have to sell it at Rs11 or the rate which ever he

wants but the person cannot sell it beyond this Rs 11

because by addition of upper limit to the rate of share the

maximum amount of the shares is Rs 11 only and not above.

6.Lower Limit: -

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At the time of issuing share the company has to fix the lower

limit also. This lower limit is calculated on the basis of the rate of the shares. This

limit bears the same percentage, which is mentioned for the upper limit of the

share. Like upper limit in this limit also the share minimum rate of the share is

fixed the customer who wants to see; the holding shares has to first consider the

upper& lower limit of the share he cannot sell the share below the lower limit and

not above the upper limit like the upper limit Percentage generally in this limit

also the percentage is below 10% of the face value of the shares the percentage is

below 10% of the face value of the shares the percentage of the upper &lower

limit is equal to every type of share

For ex . Suppose the person wants to sell the

shares and the rate of the share is Rs. 10/- and the lower limit

percentage is 10% of the rate. So in this case the person cannot

sell the share at below Rs. 9/-. He will have to sell at above Rs. 9/-

or up to the upper limit of the share.

7. Sensex:-

When the shares are issued to the public the stock exchange gives a particular

group to the company. For ex. The Reliance Group is given the group “A” like

this there are several companies which fall in “A” Group. The weightage mean

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is calculated according to its equity when all the companies of Group “A” has

calculated this weightage mean they are added all together when this addition

is done the result which comes down is known as “Sensex”.

The trading of shares of “A” group is totally depended on this sensex value.

The price of the share rises this sensex value also rises and when the price of

this share comes down the sensex value also comes down. With the sensex

8. Scripts:-

The company, which has more than one working area, it has to issue the share

separately than that company is the company which has the script of its name.

For Ex. The Reliance this company has its several

working area Namely Reliance, Capital Reliance, Infocom Reliance Energy,

Reliance Industry. So reliance company issues separate share for separate

working area but the bold name which is given to the working area is

“Reliance”. So in this case Reliance has its own scripts. Other example

Ambuja, Birla, Etc.

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9. Groups:- When the shares are issued by the company they

are given the particular group by the Stock exchange according to its

demand in the market. There are mainly 7 groups .

BUYING AND SELLING

The first step is to open a demat account with your selected Depository

Participants (DP). All transactions on both the BSE and NSE are done in demate

securities.

When you buy shares, you are required to pay money to your broker or sub-

broker immediately upon getting the contract note/confirmation memo for the

purchase of shares. The broker issue as contract note, whereas sub-broker issues

a confirmation memo. Similarly, when you sale shares you are required to give

delivery of your shares by transferring them to the demate account of your

broker/sub-broker immediately upon getting the contract note or confirmation

memo. When you buy the shares then the share you have purchased will come

first to demate account of your broker/sub-broker. Once this happens, you can

instruct your broker/sub-broker to transfer those shares to your demate account

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for receiving shares in your demate account you will have to give your broker or

sub-broker the details regarding your demate account.

When you sale shares you are required to give delivery of share from your

demate account by instructing your DP to transfer the number of shares that you

have sold from your account to the demate account of your broker. In this regard,

you will be required to include the details of the demate account of your broker in

the instruction slip that you give to your DP. Your broker or sub-broker will help

you to fill in the delivery instructions. These instructions are of a technical nature

and the delivery instruction forms and procedures differ from DP to DP.

DIFFERENCE BETWEEN DIFFERENCE BETWEEN ON LINEON LINE AND AND

OFF LINEOFF LINE TRADING TRADING

Nevertheless, with all the convenience of online trading there are still investors who prefer the old fashion way of offline trading. Offline trading has lost some popularity but it is still the main form of investing. Offline trading offers many benefits as well.

1. The one benefit that an investor appreciates the most is that they are not alone when making investment decisions.

2. There are experienced and professional brokerage companies that handle their investments for them.

3. Investors are not faced with the challenge of making these vital investment decisions; especially, if they do not have the experience necessary to make the appropriate investments.

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4. Also, there is someone there to answer any questions that may cause concerns. sNot to mention, with offline trading mistakes are less likely to take place. No one wants to throw their money away or stand by and watch someone else throw their money away. It may be wise to hire a professional to assist you in making the correct investment decisions if you feel you lack the knowledge necessary.

sPoints of difference between online trading and off line trading are as follows:

1. Online trading is very expensive as compare to manual trading or offline trading.

2. Online trading consumes less time as compare to manual trading.

3. Online trading has very helpful to finding the records easily but offline trading takes more time to finding the records.

4. In the help of online trading, there is no chance of any errors while doing the trading. in offline trading there are some errors exist like barriers of communication .

5. With the help of online trading, we know the international market rate of share very easily.

DEMATERIALISATION OF SHARES

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Dematerialization is the process wherein shares certificates or other securities

held in physical form are converted into electronic form and credited to demat

account of an investor opened with a depository participant. SEBI has made

compulsory trading of shares of all the companies listed in stock exchanges in

demat form with effect from 2nd January 2002.The procedure of opening a demat

account with DP is similar to opening an account with a bank.s

ELECTRONIC SETTLEMENT OF TRADE

A.Procedure for purchasing dematerialized

ssecurities :-

The procedure for purchasing dematerialized securities is also similar to the

procedure for buying physical securities.

1. Investor instructs DP to receive credits into his account in the prescribed

form. There may be one time standing instruction or separate instruction

each time to receive credits.

2. Investor purchases securities in any of the stock exchanges linked to

depository through a broker.

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3. Broker receives payment from investor and arranges payment to clearing

corporation.

4. Broker receives credit to securities in clearing account on the payout day.

5. Broker gives instructions to DP to debit clearing account and credit

client’s account. Investor receives shares into his account by way of book

entry.

B. Procedure of selling dematerialized

securities

The procedure for selling dematerialized securities in stock exchanges is similar as

selling physical securities. The only major difference is that instead of delivering

physical securities to the broker, the investor instructs his DP to debit his demat

account with the number of securities sold by him and credit the brokers clearing

account. The procedure for selling dematerialized securities is given below:

1. Investor sells securities in any of the stock exchange linked to

depository through a broker.

2. Investor instructs his DP to debit his demat account with the number

of securities sold and credit the broker’s clearing account.

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3. Before the pay-in-day, broker of the investor transfers the securities

to clearing corporation.

4. The broker receives payment from the stock exchange.

5. The investor receives payment from the broker for sale of securities

in the same manner as received in case of sale of physical securities.

REMATERILISATION OF SHARES

Rematerialization is the process of conversion of electronic holdings of securities

into physical certificate form. For rematerilisation of scrip’s, the investor has to fill

up a remat request form (RRF) and submit it to the DP. The DP forwards the

request to depository after verifying the investor’s balances. Depository in turn

initiates the registrars and transfer agent or the issuer company. RTA/ Company

prints the certificates and dispatches the same to the investor.

s

Market timings:

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Normal Market / Exercise Market Open time : 09:55 hours

Normal market close : 15:30 hours

Set up cut of time for Position limit/Collateral value : till 15:30 hrs

Trade modification end time / Exercise Market : 16:15 hours

Internet Based Trading through Order Routing

Systems

Internet based trading on conventional exchanges, uses the Internet as a

medium for communicating client orders to the exchange, through broker

web sites. Broker’s web sites may serve a variety of functions. These may

include;

Allowing the clients to directly trade through investors;

Advertise the broker dealers’ services to potential investors;

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Offer market information and investment tools similar to those

offered by information vendor or SRO web sites;

Offer real-time or delayed quote information, continuously update

quotes while the user visits other sites, or allow investors to create a

personal stock ticker;

Provide market summaries and commentaries, analyst reports and

trading strategies and market data on currencies, mutual funds,

options, market indices and news; and

Offer investors access to portfolio management tools and analytic

programs;

Information on commission and fees; and

Account information and research reports.

In an Order Routing system, a broker offering Internet trading facility provides an

electronic template for the customer to enter the name of the security, whatever

it is to be bought or sold, the quantity and whatever the order is a market or limit

order. Once the broker’s system receives this information.

Use of Internet as Alternative Trading Systems

(Provision for price discovery and matching outside

conventional exchanges)

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In foreign jurisdiction, Alternative trading systems have been developing outside

conventional securities markets, which provide investors with additional

proprietary electronic trading facilities for securities that are traded principally on

securities exchanges, or other organized markets. They have price discovery

functions, matching systems and crossing systems. The systems that are currently

in use in outside jurisdictions are closed systems and are not accessible to the

general public through the Internet. The securities markets regulators abroad the

maintained flexible and open policies designed to encourage innovation in the

secondary securities markets. As a result, a number of market participants,

usually broker-dealers, have developed computerized “alternative trading

systems” by which the system centralize, display, match, cross or otherwise

execute trading interest.

Use of Internet for making Initial Public

Offerings

Issues of securities of using the Internet to communicate directly with their

shareholders, potential investors and analysts by disseminating corporate

information. In foreign jurisdiction, they are also using the Internet to

communicate to the public for the following:

Public offerings;

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Private offerings; and

Disclosure and communication

Issuers are using the Internet to market themselves to potential investors. The

Internet is also being used for fulfilling necessary disclosure requirements, for

disseminating the prospects in electronics form and even for receiving share

applications in public issues electronically. In India, SEBI has taken initiative in

permitting use of the network of stock exchange for collection of investor

applications in public offerings by the issuer companies

Investment Advisory Services

Brokers as well as other service provides such as investment firms, research

outfits etc. are using the Internet for marketing and advertising purposes, for

presenting information on portfolio analysis and market information, and for

communicating with and receiving orders from potential investors. The services

offered by the service providers to the investors are generally the following:

Advertising

Providing investment information and investment advice;

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Underwriting

Communicating with the investors;

Customer orders; and

Record keeping

Working Groups set up by the Committee

Considering the present state of capital markets in India and keeping in

view the ongoing developments in Internet based securities business, it was felt

that SEBI as a regulator could strive to identify areas where use of Internet in the

capital market is possible within the existing legal framework. One such area

identified by the Committee, which is also the central within the existing legal

framework. One such area identified by the Committee, which is also the central

theme of this report, is the area of Internet trading on existing electronic

exchange. In this area, through early introduction of Cyber Laws would be highly

describe but their existence is not a necessary precondition. To look into the

existing regulatory scenario and to bring out some ground rules for use of the

medium of Internet, the Committee therefore constituted the following two

working groups to look into the area of:

i. Security protocols and standardization of interfaces for Interest based

securities trading, chaired by Prof. Deepak B. Phatak, IIT, Pawai, Mumbai

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ii. Surveillance and monitoring related issues arising due to Interest based

securities trading, chaired by Shri. L.K. Singhvi, Sr. ED, SEBI

The committee also requested Ms D N Raval, Executive Director, SEBI to

examine the legality of introduction of Internet trading and issue of

Alternative trading systems. This report of the standing committee

examines the regulatory and security requirements Internet Based

Trading on Conventional Exchanges. Separate reports (s) will cover the

other areas related to Internet applications in the securities markets.

The report of the first working group on security protocols and standardization of

interfaces has since been submitted and incorporated in the report. The

committee would like to place on record its sincere thanks to Dr. D.B. Phatak, Ms.

D.N. Raval and their team members. The global financial market is undergoing a

transformation due to rapid technological developments. It thus becomes

imperative that for developing in effective regulatory framework developments in

other parts of the world should be studies and analyzed.

With nearly who million on-line investors, Internet trading in the United States is

growing by leaps and bounds. Internet trading is being facilitated by large

brokerage houses, thus changing the total concept of securities trading. A team

comprising of members from stock exchanges and SEBI visited the United states

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to these development and had interactions with brokerages houses, Internet

service providers and other agencies involved in facilitating Internet trading. The

team also discussed the developments in the emerging regulatory and

supervisory framework in United States with the Securities and Exchange

Commission officials. They were also tripped of the various initiatives taken by

SEC in this regard. These inputs have been utilized while drafting this report.

Recommendations of the Committee

Application for Permission by Brokers

SEBI registered Stock Brokers interested in providing Internet based trading

services will be required to apply to the respective stock exchange for a formal

permission. The stock exchange should grant approval or reject the application as

the case may be, and communicate its decisions to the number within 30 calendar

days of the date of completed application submitted to the exchange. The stock

Exchange, before giving permission to brokers to start Internet based services

shall ensure the fulfillment of the following minimum conditions.

Net worth Requirement

The broker must have a minimum net worth of Rs. 50 lacs if the broker is

providing the Internet based facility on his own. However, if some brokers

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collectively approach a service provider for providing the interest trading facility,

net worth, criteria as stipulated by the stock exchange will apply. The net worth

will be computed as per the SEBI circular no FITTC/DC/CIR-1/98 dated June 16,

1998.s

Operational and System Requirements:

Operational Integrity:

The stock Exchange must ensure that the system used by the broker has provision

for security, reliability and confidentiality of data through use of encryption

technology. This stock exchange must also ensure that records encryption

technology. The stock Exchange must also ensure the records maintained in

electronic from by the broker are not susceptible to manipulation.

System Capacity

The stock Exchange must ensure that the brokers maintain adequate backup

systems and data storage capacity. The stock Exchange must also ensure that the

workers have adequate system capacity for handling data transfer, and arranged

for alternative means of communications in case of Internet link failure.

Qualified Personnel:

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The stock Exchange must lay down the minimum qualification fro personnel to

ensure that the broker has suitably qualified and adequate personnel to handle

communication including instructions as well as other back office work which is

likely to increase because of higher volumes.

Written Procedures:

Stock Exchange must develop uniform written procedures to handle contingency

tuations and for review of incoming and outgoing electronic correspondence.

Signature Verification/ Authentication:

It is desirable that participants use authentication technologies. For this purpose

is should be mandatory for participants to use certification agencies as and when

notified by Government/SEBI. They should also clearly specify when manual

signatures would be required.

Client Broker Relationship

Know Your Client:

The stock Exchange must ensure that brokers have sufficient, verifiable

information about clients, which would facilitate risk evaluation of clients.

Broker- Client Agreement:

Brokers must enter into an agreement with clients spelling out all obligations and

rights. This agreement should also inter alia, the minimum service standards to be

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maintained by the broker for such service specified by SEBI/Exchange for the

internet based trading from time to time. Exchange will prepare a model

agreement for this purpose. The broker agreement with clients should not have

Investor Information:

The broker web site providing the internet based trading facility should contain

information meant for investor protection such as rules and regulations affecting

client broker relationship arbitration rules, investor protection rules etc. The

broker web site providing the Internet based trading facility should also provide

and display prominently, hyper link to the web site/page on the web site of the

relevant stock exchange (s) displaying rules/ regulations/ circulars.

Ticker/quote/order book displayed on the web-site of the broker should display

the time stamp as well as source of such information against the given

information.

Order/Trade Confirmation:

Order/Trade confirmation should also be sent to the investor through email at

client’s discretion at the time specified by the client in addition to the other made

of display of such confirmation of real time basis on the broker web site. The

investor should be allowed to specify the time interval on the web site itself

within which he would like to receive this information through email. Facility for

reconfirmation of orders which are larger than that specified by the member's risk

management system should be provided on the internet based system.

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Handling Complaints by Investors:

Exchanges should monitor complaints from investors regarding service provided

by brokers to ensure a minimum level of service. Exchange should have separate

cell specifically to handle Internet trading related complaints. It is desirable that

exchanges should also have facility for on-line registration of complaints on their

web site.

Risk Management:

Exchanges must ensure that brokers have a system-based control on the trading

limits of clients, and exposures taken by clients. Brokers must set predefined

limits on the exposure and turnover of each client. The broker systems should be

capable of assessing the risk of the client as soon as the order comes in. The client

should be informed of acceptance/rejection of the order within a reasonable

period. In case system based control rejects an order because of client having

exceeded limits etc., the broker system may have a review and release facility to

allow the order to pass through.

Contract Notes:

Contract notes must be issued to clients as per existing regulations, within 24

hours of the trade execution.

Cross Trades:

As a matter of abundant precaution, the committee seeks to reiterate that as III

the case of existing system, brokers using Internet based systems for routing

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client orders will also not be allowed to cross trades of their clients with each

other. All orders must be offered to the market for matching.

It is emphasized that in addition to the requirements mentioned above, all

existing obligations of the broker as per current regulation will continue without

changes. Exchanges may also like to specify more stringent standards as they may

deem fit for allowing Internet based trading facilities to their brokers.

Enforcement:

A separate working group has been set to look into the surveillance

and enforcement related issues arising due to Internet based

securities trading. However, general anti-fraud provisions (SEBI

Fraudulent and Unfair Trade Practices Regulations, 1995) would

apply to all transactions involving securities or financial services,

regardless of the medium.

FEATURES OF ONLINE TRADING:

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The Online Trading is having many features which make it most suitable for the

investors to go for. Some of these features are as follows:

The Internet can provide a new sense of control over your financial future.

The amount of investment information available online is truly astounding.

It's one of the best aspects of being a wired investor. For the first time in

history, any individual with an Internet connection can:

Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock

markets and the global economy

Conduct extensive financial research on any company

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One of the great appeals of using an online trading account is the fact that

the account belongs to you, and is under your direct control. When you

want to buy or sell stock, you no longer need to call your broker on the

phone; hope that he is in the office to place your order; possibly argue with

the broker about the order; and hope that the transaction is executed

instantly.

At the most basic level, an online trading account gives you more agility in

buying and selling stocks. This is through sophisticated information

streams, dedicated trading platforms and sophisticated tools for accessing

the markets.

Every broker house aims at providing the investor with the best price

available. Also due to the high level of transparency with regard to display

of information relating to the specific stocks and company profiles, you will

be able to get the best quote for your orders.

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Online trading offers you greater transparency by providing you with an

audit trail. This involves a complete integrated electronic chain starting

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

credit into your depository account. All these stages are subject to

inspection, thus bringing in transparency into the system.

Online trading integrates your bank account, your trading account and your

demat accounts, which leads to easy and paperless trading for you.

You as an Investment online customer will be able to execute the entire

trading transaction, right from logging on to our site, to the execution and

settlement of your bank account, in a very short period of time.

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.

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This method of trading reduces the settlement risk for the investor, as in

this case all short sell orders are squared off at the specified cut-off time

and not allowed to be carried forward.

In the case of a demat account your demat account is checked by us before

executing your sell transaction. This reduces the settlement risk for the

buyer, who is assured of the delivery of the securities and for you as a seller

of the securities

Every trade is confirmed immediately and you will receive an on-screen

confirmation following every trade with full details for your records. This

avoids costly errors that would have been discovered when it is too late.

Your Bank, Depository and online account are integrated for your

convenience. Various broking houses provide access to many of the popular

banks.

BENEFITS OF ON LINE BROKING

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1) Less Costly:

The most significant advantage of the Online broking is the cost reduction in the

brokerage. Due to the power of the Internet one has the privilege of becoming

the clients of really large brokerages with the benefits of enjoying the low charges

hithelio before enjoyed only by the big players. As the DP account has got linked

to the trading account most players do not charge a minimum transaction cost

thus truly allowing one to buy a single share and achieve meaningful rupee price

averaging whatever be your buying power.

2) Peace of Mind:

One can never have complete peace of mind but online investing does away with

the hassles of filling up instruction slips, visits to the broker for handing over these

slips and consequent costs.

3) Keeping Records:

The site one trades on keeps a record of all transactions down to unexecuted

orders and cancelled orders thus keeping one abreast of all your transactions 24

hours a day. No paperwork means more time at one’s disposal for research and

analysis.

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4) Access to Information and investment

Tools:

Most online investing sites have a wealth of information for their registered

members. This includes research reports, results, analysis and even gossip and the

buzz in the market.

5.) Unparalleled Liquidity:

The. bank account linked with the trading account invariably has an A TM free.

Most partner banks offer Internet banking as well. This results in one’s money

becoming available to him whenever he like from his trading account. Conversely

in case he spot an opportunity in the market he can immediately allocate money

from his savings account to his trading account and make profits.

6.) Unparalleled Safety:

Most sites are secure using 128-bit algorithms -highest available commercially

anywhere in the world. Moreover even if somebody broke in and tampered with

one’s account the money from the stocks he sold or the stock bought from the

money in his account is in his account only.

7.) Reduces the settlement risk:

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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. In the case of a demat

account (required for an online transaction), when a seller wants to sell the

securities, his demat account is checked by the Depository Participant

before executing the sale transaction. This reduces the settlement risk for

the buyer, who is assured of the delivery of the securities.

8.) Offers greater 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 are subject to inspection, thus bringing in transparency into the

system.

9.) Ease of trade:

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It is the ease of doing the trade through net, with a click of mouse, one can buy or

sell any share that is dematerialized.

Other than the above-mentioned advantages, Internet trading provides some

additional advantages to the investors, brokers and also helps the nation to

channelize the resources. Net trading would increase competition in the market

hence increase in the bargaining power of the investors. The entire

communication between the investor, broker and exchange would take place

within milliseconds.

PROBLEMS OF ONLINE BROKING

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There is a flip side to everything and online trading is no exception.

Chart

Source:- www.lse.co.in

27% Loyality is of traditional broker

23% people says that online trading is more costly than manual trading.

21% people not prefer online trading because of lack of knowledge.

So, the main problems of online trading are as follows:

1.) "Server not found":

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This may appear on one’s screens when he is desperately trying to get out of an

unprofitable position. Some of the online sites are providing a telephone number

for use in case their sites are overloaded or their server down.

2.) Connectivity of the Broker with NSE:

Recently ICICI Direct had a connectivity problem with the NSE for two and half-

hours during trading hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of one’s broker he is protected

only if the company is taking proper precautions against such attacks and if

proper backup is regularly been taken. He may like to choose a brokerage that has

a stated security policy and contingency plan in place.

4.) Non-availability of a seamless interface:

As a client one will access the NSE through a server of the online brokerage and

this may involve queuing delays. If a number of client access the server the server

takes its own time sending the orders to the NSE server. He must check out the

seamlessness of this interface before selecting an online brokerage. The faster the

orders are processed the more seamless is the interface.

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5.) Non- availability of personalized advice:

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to

do so. If he want advice on a particular stock in his portfolio he may not even be

able to get that.

6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading

on margin. That is where the brokerage firm lends you money by leveraging his

account, allowing him to buy a large amount of securities by putting up only a

small amount of money. He may have forgotten what he read in the small print of

his agreement, but the brokerage firm has the right to change the maintenance

margin requirements without any warning or notice to him. In fact, the firm has

the right to liquidate his securities holdings (and it can pick and choose which

ones) without any notice to one if he fail to meet the margin call. And there he

was leveraged to the hilt, hoping to hit a home run when he discovered that he is

required to make a large deposit that he cannot make. The next thing one know,

the firm is selling off his securities at a point in time that is not the best for him.

These are the perils of trading on margin.

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7.) Little use of advisory services:

The advisory services being promised by the brokers would be of little use to

investors looking for an insight into the market. Many would not like to rely on

research reports, which are there for all. So, net investors will have to do their

own research and take their own decision, whether wild or wise.

8.) Increased charges:

Some of the brokers are of the view that they would have to provide advisory

services to the customers. But with increased volumes, they will have to follow

the international practice of charging a little more than the normal charges from a

customer looking for personal advice.

WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING

Several broking houses now offer online trading facilities. You can trade online

with e-brokerages such as ICICI Direct, Kotakstreet, India bulls, India info line’s

5paisa.com and HDFC securities.

If you are already comfortable trading with your regular broker, here are few

reasons why you may consider switching to trading online, or at least another

avenue of trading. an obvious advantage of online trading is that your transaction

would be virtually paperless. Your trading account would be linked to your demat

and bank account, ensuring a smooth transaction process. This is especially

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helpful in the extent T+2 settlement system, where you have just two days to

settle your transaction.

The normal process of issuing of delivery note, in case of a sale, or arranging for a

payment in case of purchaser of shares, is all taken care of the minute your order

is executed online. The absence of manual intervention ensures that you are

completely in control of all transaction.

There is also little room for error, as your order is always confirmed before it is

executed. You can also make better decision as you have a clear record of all your

previous transaction. When you trade offline, a demat statement is normally sent

to you only on a quarterly basis .keeping track of your portfolio can be a hassle in

such a case. The inter net can provide a new sense of control over your financial

future. The amount of investment information available online is truly

astounding. Its one of the best aspect of being a wired investor for the first time

in history, any individual with an internet connection can:

Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock markets and

globe economy.

Conduct extensive financial research on any company

Talk with other investors around the world

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At investsmart you can get real-time stock quotes, daily roundups of the stock

market, experts commentary, and a deep community of fellow investors.

Convenience is probably the greatest advantage online trading offers investors. if

don’t have time to trade during market hours ,perhaps you are at work, you can

log on the web-trading site and place your order offline, during off market hours.

Your order would join the queue and be expected the next day. You would need

to enjoy a good relationship with your broker, for you to be able to reach him in

the late hours. For non-resident Indians (NRI), trading online is perhaps their

easiest option to invest in the Indian stock markets.

What is more, the time difference, in some cases, can work to their

advantage .Antony, an NRI-based in New York, places his order in the evening

after work, when it is day time India and the markets are open. We also have

access to considerable information online. By just logging on to ICICI direct online,

for instance, we can get the latest news, market information and company

research.

Moreover, if our connection is maddeningly slow and we want to get your order

executed immediately, most e-brokerages also provide a facility to trade offline

by placing our order via the phone

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Rolling Settlement Cycle :

In a rolling settlement, each trading day is considered as a trading period and trades

executed during the day are settled based on the net obligations for the day. At

NSE and BSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd

working day. For arriving at the settlement day all intervening holidays, which

include bank holidays, NSE/BSE holidays, Saturdays and Sundays are excluded.

Typically trades taking place on Monday are settled on Wednesday, Tuesday's

trades settled on Thursday and so on.

Concept Of Buying Limit

Suppose you have sold some shares on NSE and are trying to figure out that if you

can use the money to buy shares on NSE in a different settlement cycle or say on

BSE. To simplify things for ICICI Direct customers, we have introduced the

concept of Buying Limit (BL). Buying Limit simply tells the customer what is his

limit for a given settlement for the desired exchange. Assume that you have

enrolled for a ICICI Direct account, which requires 100% of the money required to

fund the purchase, be available. Suppose you have Rs 1,00,000 in your Bank A/C

and you set aside Rs 50,000 for which you would like to make some purchase.

Your Buying Limit is Rs 50,000. Assume that you sell shares worth Rs 1,00,000

on the NSE on Monday. The BL therefore for the NSE at that point of time goes

upto Rs 1,50,000. This means you can buy shares upto Rs 1,50,000 on NSE or

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BSE. If you buy shares worth Rs 75,000 on Tuesday on NSE your BL will

naturally reduce to Rs75,000. Hence your BL is simply the amount set aside by

you from your bank account and the amount realized from the sale of any shares

you have made less any purchases you have made. Your BL of Rs 50,000, which

is the amount set aside by you from your Bank account for purchase is available

for BSE and NSE. As you have made the sale of shares on NSE for Rs.100000, the

BL for NSE & BSE rises to 1,50,000. The amount from sale of shares in NSE will

also be available for purchase on BSE. ICICI Direct

Future Agenda:

Under the existing legal and regulatory framework, SEBI registered brokers can

offer trading on Internet through order is routing systems. However, with the

rapid development of the technology, we have to evolve fisher steps in this

direction it is therefore proposed that as the next step link between the

depositories and banks shall be established after the necessary regulations have

been passed. This would reduce the clearing and settlement time and would also

minimize the risk of all the participants involved in the transactions. We have to

look forward towards achieving an ideal scenario where all the services related to

securities markets including marketing of initial public offers on internet,

providing investment advisory services to the clients, broking, clearing .

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7. GROWTH OF ONLINE TRADING

According to an article by Krishnamurthy B in 2005 after inception of online

trading in India in the year 2000 online trading is gained momentum with trading

volumes growing by 150 per cent per annum in the years 2003-2005 and it was

more than approx. 200% in the year 2008 The volume of all trades executed

through the Internet on the National Stock Exchange had grown from less than Rs

100 crore (Rs 1 billion) in June 2003 to over Rs 700 crore (Rs 7 billion) in July 2005

which was a handsome growth in the year 2005in the starting of 2008 the growth

of online share was good but at the mid of the year when subprime crisis affected

India including all over the world, market of online trading got shrunk by more

than 50%

Now the growth of online trading is on its right track ,Indian stock market has

been announced the one of the Safe and stable market of the world, so here in

India the online trading is growing like anything in comparison to the whole

world

At the end of July 2008, there were more than 168 registered brokers on the

NSE and the number of Internet trading subscribers to about 2.024 million. In the

year 2007 India has 8 crore (80 million) internet user, the % of internet user is

growing in each year

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At the same time the number of subscribers trading through the portal of Kotak

Securities had gone up significantly by 150 per cent and the number of online

trading customers had grown from 30,000 to 75,000. And the company expected

to have at least 130,000 customers by the end of that fiscal. In the recent past

years of 2005

ICICIDirect and Indiabulls recorded an annual volume growth of 100 per cent and

Indiabulls had about 30 per cent of India's online trading volumes.

Today the total volume of online trade in India is about 29-31% of total

trades.

According to brokers the better broadband connectivity across the country and

wider awareness of equity as an asset class will raise the online trade volumes to

over 50% of total trade.In India the demography is such that 75% of the

population is under the age of 36 and more than 50% of the 75% is under age of

25 and this is another supporting factor

The Chief Executive of Reliance Money Ltd says that online investing is still at

a nascent stage in India and expects that Internet-based trading will eventually

take about half of the total stock market trading as like with developed markets

such as the US. Philippines has the highest online trade with about 55-60%

execution of trade is online. The reason is because they had wider Internet

connectivity years before India. The biggest challenge in India remains better

Internet connectivity. The earlier Web-based technology used for Internet trading

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has been replaced by specialized software which gives real-time global data

streaming rates to trader helping investors to analyze the market trends and

helps in faster execution of trades. Earlier the investors made trade calls over the

phone which sometimes led to the delays.

Online share trading in India was at a boom in the end of 2006 with daily-

traded volumes more than tripling from Rs 1,500 crore to Rs 5,000 crore in the

last one year and terminals was set up in small towns such as Rajkot, Hubli and

Vijayawada .In that

year the share of online trading rose dramatically from 7% last year to 20% as a

percentage of overall traded volumes. Due to this factor the top five US brokerage

firms decided to make a foray into India in the next year driven by strategic

interest. Also at that time non-metros accounted for half of the daily turnover of

online trading.

Graph is showing the declining in the turnover of online trading in Indian

stock exchange during slowdown in economy due to subprime mortgage crisis.

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A crash of the market in the early February 2008 the investors remained

away from online trading the turnover of the NSE from internet-based trading

dipped to a daily average of Rs 1,648 crore between February 1 and February 8 as

compared with Rs 3,450 crore in January 2008 Rs 3,587 crore in December 2007

and Rs 4,417 crore in November 2007 in the exchange’s cash market segment. In

the mid February 2008 it

accounted for just 12% of NSE’s total cash turnover as compared with a high of

24% in November last year.

"Issues that need to be addressed are education on cyber crime and the

security solutions around it," says Vinesh Menon, Deputy CEO & Head for Online

Investment & Branch Channel, Bajaj Capital

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"It's a matter of time when we will see exponential growth in the online

trading segment, not just through the computer but also through our mobile

phones," adds Menon. With over 20 million investors,

India boasts of the third highest investor base in the world, unthinkable till a few

years ago. The most online stock broking companies started from 2000 onwards

because of development of global Internet economy and for years 2000 to 2003

the stock market was under a bear hug. The intense competition among a new

wave of online brokerage companies hammered down brokerage rates from 1%

(in 2000) to 0.25 %, or even lower to 5 paisa

The number of investors opting for online trading has gone up manifold,

according to the recently published 'India’s Leading Equity Broking Houses, 2008'

by Dun & Bradstreet (D&B). The publication says that less than 10% of the 191

broking firms surveyed reported huge growth in opening of e-broking accounts

and some firms saw a surge in value of up to 400% in e-broking during 2007

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According to the report, numbers of e-broking accounts registered in 2007 have

grown exponentionally. Indiabulls Securities Ltd added 4,51,611 accounts while a

relatively new firm in the industry, Reliance Money added 2,15,678 accounts

during the same time period. Motilal Oswal

Securities Ltd managed to add 19,065 accounts while Unicon Financial

Intermediates Pvt Ltd could increase their e-broking accounts by 13,787

According to market watchers, the rise in the value of on line transactions is

also because of sustained bull run witnessed in 2007, when the 30-share Sensex

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of the Bombay Stock Exchange (BSE) gained from 13,842 points to 20,207 points,

a gain of 6,365 points (up 47%).

E-broking is contributing a sizeable portion to the trading volumes and also to

the revenue generated for leading stock broking firms. Some examples of the

percentage contribution to trading volumes contributed by e-broking are 91% in

case of Reliance Money, 62% for India Bulls, 20% each for ASL Capital and Shreyas

Stock, 19% Angel Broking, and 15% Farsight Capital. In respect of revenues

generated from e-broking, India Bulls (63%), Reliance Money (54%), Unicon

Financial (30%) and Shreyas Stock (20%) reported higher shares in 2007. Ashika

reported 98% growth in e-broking business in the first 10 months of 2007.

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Another significant trend is the growth in international business of broking

firms. Firms that reported presence of offices outside India include Reliance

Money, Motilal Oswal, Karvy Stock Broking, JRG securities, Vogue and Bonanza

Portfolio.

HDFC Securities have 500,000 online customers’ deals in daily online trades worth

Rs 250-300 crore is also in the black. The revenues it had in 2007-08 is Rs 100

crore. HDFC Securities had revenues of Rs 67 crore and a net profit of Rs 7.21

crore in 2006-07. ICICIdirect has 1.5 million online broking accounts and parent

ICICI Securities reported revenues of Rs 750 crore for March 2008. The new player

Reliance Money has 2 million online accounts trades worth Rs 2,000 to Rs 3,000

crore per day.

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RESEARCH METHODOLOGY

The basic task of research is to generate accurate information for use in decision

making. Research can be defined as the systematic and objective process of

gathering, recording and analyzing data for aid in making business decisions.

There are basically two techniques

adopted for obtaining information:

1. Primary Data.

2. Secondary Data.

Primary Data is gathered specifically for the project at hand through

personal interviews with the accounts officers.

Secondary data is previously collected and assembled for some project

other than the one at hand. It is gathered and recorded by someone else

prior to current needs of the researcher. It is less expensive than the

primary data.

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SECONDARY DATA

Secondary data was collected from Ludhiana Stock Exchange

Scope of study:

The study is limited to Ludhiana Stock Exchange , Firoz Gandhi Market Ludhiana

Data Collection:

Data is collected from secondary sources.

Sources of data collection are:

1) Ludhiana Stock Exchange

2) www.nseindia.com

3) www.bseindia.com

4) www.on-linetrading.com

For the successful research the manipulation of certain things, concepts, and symbols for the purpose of generalization is inevitable. Research is simply the pursuit of truth.

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Analysis and Interpretation

Ans.1 What is your education qualification?

To invest in the stock market minimum 100000 or more than this should be the annual

income level of the people. In India the per capita income in also increasing so we can

say that there is a good opportunity for the online trading market.

1. For how long you have been trading with on line-trading?

(a)1 year (b) 2 year

(c) 3 year (d) 4 year

Sample size 100

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According to this survey we find that 44% people says that we are investing the money online from one year and 26% people says that we are investing the money online from 2 years and 19% to 11% people says that we are investing money online from 3 to 4 year. so we can say that now online trading is very popular in the modern market.

2. How will you describe your experience with on-line trading till date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

Sample size 100

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According to this survey we find that 60% of people find very easy to operate and 15% people find difficult two operate and 10% and 15% people find no secure and any other. so we can say that online trading is very simple to operate and easy to under

3. what amount of money you invest normally ?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount

Sample size 100

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According to this survey we find that 35% of people invest money normally 50000 and 28% of people invest money 100000to150000 and 23% and 14% of people invest money between 150000to200000 and any other. So we can say that the people are not invest more money in the share market because there is a great risk involved while doing the trading.

4 . How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month

Sample Size 100

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According to this survey we find that 10% of people do trade Daily and 40% people do trade weekly and 32% and 18% people do trade month and more than month. So we can say that people are generally invest in stock market weekly basis.

5. which trading you prefer?

(a) On line trading (b) Manual trading

(c) Both

Sample Size 100

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According to this survey we find that 20% people prefer online trading and 32% people prefer offline trading rest of 48% people prefers both. So we can say that mostly people are awareness about the on line trading and because of this reason the mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

(a) Yes (b) No

Sample Size 100

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According to this survey we find that 30% people says yes and 70% people says no. so we can find that on line trading is not settled in the Indian psyche because some people are not experience towards online trading.

7. What shortcomings do you feel in Indian On-Line trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(c) any other

Sample Size 100

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According to this survey we find that 15% of people says lack of awareness 49% says Shortage of expertise and 14% people says Shortage Of Infra structure and 22% says any other. So we can say that mostly people are shortage of experience about the Indian derivatives market or share market.

8. Which media would you prefer the most for investment?

(a) T.V (b) Newspaper

(c) Magazines (D) Journals

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According to this survey we find that 55% people Prefer T.V and 25% people prefer newspaper and 10% people prefer magazines and 10% people prefer journals. So we can suggest that mostly people are very easily grapped the knowledge through T.V.

9.What is your annual income?

INTERPRETATION

58%respondent are having the income level of 100000-200000 ,21% is having

200000-300000 , 12% in having300000-400000 , 7% of the total respondent are having

income more than 400000 per annum and only 2% are having less than 100000 per

annum.

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To invest in the stock market minimum 100000 or more than this should be the

annual income level of the people. In India the per capita income in also increasing so

we can say that there is a good opportunity for the online trading market.

10.What percentage of your monthly household income could be available for investment?

INTERPRETATION

According to the data 23% of the total respondent invest less than 5% of their

income,

41% respondents are saying that they invest 5%-10% of their monthly income (which is

highest)

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Whereas the 21% investor do the investment 10%-15% of their total monthly income,13

invest between 15%-20% of the total income and only 2% does more than 20% of their

income invest in the market

We can easily understand that 75% of the total population is having a good amount of

investment, so the investment is their in the market, good number of people are ready

to invest a good amount in the market

91% of respondent is in the income level of 100000 – 300000 (according to the last

question analysis).

So we can say that stock brokerage houses will have to do a good business with

the help of Online trading system with few value addition services

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10.Where do you often invest your money?

INTERPRETATION

Highest number of respondent is having their investment in the equity that is 65%

whereas the investment available for the mutual fund, term deposit and insurance is

14% ,12% and 9%

So the investor for equity is high which is again showing the n number of opportunity for

online trading

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11.what is the primary objective of your investment?

INTERPRETATION

13% of the respondent invest the money for the reason capital appreciation but

most of the investor is having same motive that is source of income and retirement

plan, wealth preservation and education funding for children or other are only 10%

From the analysis we can have idea that the main objective of the investor to earn the

money through trading in stock market77% of the respondent achieve their objective

with the help of investment in the equity market, because most of the investment take

place in the form of equity (explanation of 4th ans. ) So we can say that there is a huge

potential in the market for the trading in the stock market

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12.Do you owe a Computer?

INTERPRETATION

78% of the total respondent who are dealing with the stock market is having

computer in their house and only 22% is not having computer in their house

The people who is having computer that is 78% can also go for online trading which

can be a large number of people who will go for online trading. they don’t need to do a

additional investment for computer to go for online trading

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13. To operate a computer is easy for me

INTERPRETATION

76% (26+51) of the total respondent believe that operate a computer is easy for me

whereas 20%(13+7) of the respondent is having problem to operate a computer out of

that 20% , 75 believe that they can’t go for computer

So ,if 78% of the people who are dealing with the stock market is having computer at

their house and around 76% of the same population don’t have any problem to operate

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a computerSo around 60 % is their who is having computer and they don’t have

problem to operate a computer.

14. Online trading is a secure way of trading

INTERPRETATION

71% of the respondent is having a positive thinking that online trading is a secure

way of trading whereas 185 of the respondent believes that online trading is not a

secure way of trading

Satisfaction about the process, by which they will be going to do a trading that is

online trading, should be there in the mind of the customer. If they believe that their is

no risk over the money which they are going to invest in the market with the help of

online trading, there will be a perception to go for online trading at least one time

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15,online trading is easy and fast way of trading?

INTERPRETATION

51% of the total respondent believe that online trading is a easy task Whereas 41%

of the respondent believes that to deal with online Trading is not a easy task and 85 was

confused to anything about that the trading via internet is a easy task or not

There is a difference between the people who believe and who don’t believe is not

very big that is only 10% , the reason of this problem can be if a person is doing its

investment on its own he or she think of the problem of being mistaken in the

transaction. So there is a need of proper training to do trading online

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16. Introduction of online trading helped to attract the new Investors thus increasing the trading volumes at Stock Market?

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FINDINGS

1. For how long you have been trading with on line-trading?

According to this survey we find that 44% people says that we are investing the money online from one year. 11% people says that we are investing money online from 4 year. so we can say that now online trading is very popular in the modern market.

2. How will you describe your experience with on-line trading till date?

According to this survey we find that 60% of people find very easy to operate. and15% people find no secure. so we can say that online trading is very simple to operate and easy to understand

3. What amount of money you invest normally?

According to this survey we find that 35% of people invest money normally 50000. 14% of people invest money between 150000to200000. So we can say that the people are not invest more money in the share market because there is a great risk involved while doing the trading.

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4. How often do you trade?

According to this survey we find that 10% of people do trade Daily. 18% people do trade more than month. So we can say that people are generally invest in stock market weekly basis.

5. which trading you prefer?

According to this survey we find that 20% people prefer online trading and 32% people prefer offline trading. So we can say that mostly people are awareness about the on line trading and because of this reason the mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

According to this survey we find that 30% people says yes and 70% people says no. so we can find that on line trading is not settled in the

Indian psyche because some people are not experience towards online trading.

7. What shortcomings do you feel in Indian derivatives market?

According to this survey we find that 37% of people says lack of awareness 49% says Shortage of expertise and 14% people says any other. So we can say that mostly people are shortage of experience about the Indian derivatives market or share market.

8. Which media would you prefer the most for investment?

According to this survey we find that 41% people Prefer T.V and 39% people prefer newspaper and 20% people prefer magazines. So we can

suggest that mostly people are very easily grapped the knowledge through T.V

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CONCLUSION

Online trading is the new concept in the stock market. In India, online trading is

still at its infancy stage. Online trading has made it easy to trade in the stock

market as now people can trade while sitting at their home. Now stock market is

easily accessible by the people. There are some problems while doing the trade

through the internet. Major problem faced by online trader is that the investors

are loyal to their traditional brokers, they rely upon the suggestions given by their

brokers. Another major problem is that the people don't have full knowledge

regarding online trading. They find it difficult to trade themselves, as a wrong

entry made by them, can bring them huge losses.

Nevertheless to say that online trading has the bright future as the percentage of

the trade done through online trading is increasing day by day.

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LIMITATIONS

Despite of the training my level best, there were still some limitation which I think remains there to draw fruitful conclusion. There were some practical problem which come across and could not be properly death with

The advisory services being promised by the brokers would be of little use to investors looking for an insight into the market.

As a client one will access the NSE through a server of the online brokerage and this may involve queuing delays

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be

able to do so. If he want advice on a particular stock in his portfolio he may

not even be able to get that.

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Suggestions

The introduction of the Internet has surprisingly changed our way of life as a society. It has defined the way we do business and the way we correspond. The Internet has opened many opportunities for online trading. The financial industry revolves around the Internet. Every thing is just a few clicks away. This makes online trading most convenient. But there are still investors who prefer the old fashion way of offline trading and they mainly prefer offline trading for security reasons.

Internet has introduced a way for consumers to manage their money online. Not to mention, Internet has transformed the way investment companies operate their business and has made it easy for private investors to gain straight access to a range of different markets and online tools that were at one point only reserved by the use of investment professionals. Consumer investing and online trading has dramatically changed over the last decade. Online trading dynamically continues to be redefined. Services have expanded to include integrated management of additional financial accounts. Not to mention, it has subsequently expanded in conjunction with ground-breaking improvements to the traditional trading interface, such as telephone interface systems.

Of course, online trading has many pros. There are several wonderful reasons to invest online and consider online trading.

Money saving opportunities The amount of money you save depends primarily on the online brokerage firm that you choose. No two firms are the same. There may be different regulations, similar to bank regulations. There are minimum deposits required that must be maintained. As mentioned above, this will depend on the online brokerage firm.

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2. Instant online access You can gain instant access to your account, the value of your portfolio updates immediately before your eyes.

3. Enter online trades at anytime You can enter online trades at anytime and from anywhere. This is very convenient if you live in a different time zone than the country you are trading in. Not to mention, it is especially fit for investors with busy schedules.

4. With online trading you are in charge You are in control of your investments.

No sales pitches and no hassle. You decide where to invest your money.

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Questionnaire

Dear respondent,

I am student of MBA. I am working on the project of “On-Line trading”. You are requested to fill the questionnaire to enable, to undertake the study on the said Project.

Name……………………….

Occupation………………

Address ……………………

Phone no………………….

1. For how long you have been trading with on line-trading?

(a)1 year (b) 2 year

(c) 3 year (d) 4 year

2 .How will you describe your experience with on-line trading till date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

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(d) Any other

3. What amount of money you are invested normally?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount

4. How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month

5. In which trading you will prefer?

(a) Online trading (b) offline trading

(c) Both

6. According to you online trading settled in Indian investor psyche

(a) Yes (b) No

7. What shortcomings do you feel in Indian On-line Trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(d) If any other

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8. Which media would you prefer the most for investor?

(a) T.V (b) Newspaper

(c) Magazines (d) Journals

9. What is your annual income?

(a) Below 100000 (b) 1,00,000 – 2,00,000

(c) 2,00,000 – 3,00,000 (d) 3,00,000 – 4,00,000

10. What percentage of your monthly household income could be available for m investment?

(a) Less than 5% (b) 5% to 10%

(c) 10% to 15% (d) 15% to 20%

11. Where do you often invest your money?

(a) Equity (b) Mutual fund

(c) Insurance (d) Term deposits

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(e) Others

12. What is the primary objective of your investment?

(a) Capital appreciation (b) Source of income

(c) Retirement planning (d) Wealth preservation

(e) Education funding /others

13. Do you owe a Computer?

(a) Yes

(b) No 14. online trading is a secure way of trading

(a) Strongly agree (b) Agree

(c) Can’t say (d) Disagree

15. online trading is easy and fast way of trading?

(a) Strongly agree (b) Agree

(c) Can’t say (d) Disagree

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16. Introduction of online trading helped to attract the new Investors thus increasing the trading volumes at Stock Market?

(a) Strongly agree (b) Agree

(c) Can’t say (d) Disagree

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BIBLIOGRAPHY

BOOKS

C. R. Kothri, Research Methodology, Vishwa Prakshan

MAGAZINES

Business World

LSE’s Magazine

INTERNET SITES

www.nseindia.com

www.bseindia.com

www.on-linetrading.com

www.sebi.gov.in

www.lse.co.in

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