Merits of Offline trading

Less Margin
Generally, company charges 25% margin while the brokers charge nearly 10%margin from the investors in case of trading in derivatives. Sometimes broker charges negligible amount and he allows trading up to his limit. This shifts the investors from trading online to the trading with the brokers. For example: Local Brokers like MotilalOswal, Ratnakar, PravinRatilal, Khandwala etc. allow trading in shares with less margin and low brokerage.

Flexibility in credit period

Local Brokers allow their customers to trade in shares with longer credit periods which facilitate the payments for the investors. Whereas in Online trading a customer is required to make the payment in less than 2 days(because of T+2 trading cycle) which is not the case in offline trading. The conventional system also allows making delay in settlement of payment if the relation with the broker is good.

Customized Advice
Normally, investors would like to take the advice of the broker before taking an investment decision. Internet trading would lack this personal touch. As far as customization of data using data mining is concerned, that would not attract customers looking for something different. 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 balance their preferences and needs of the customers.

Demerits of Offline Trading System

Problems in getting in touch with the Broker Limited Clientele Problem of Attention from the Broker due to load Reliance on the Broker's information Customer has to believe what the broker says Broker might not give the best price Reconciliation of accounts and cash settlements Paperwork

Geographical Restriction

Online Trading - A New Dimension of Trading

WHAT IS E-TRADING?
E-trading is the mechanism of buying / selling securities via the Internet. E-trading is considered as a logical extension of e-commerce.

To put it simply, e-commerce is buying and selling through electronic medium. There could be not being a better place than the stock market, where tremendous volumes are traded, to exploit the opportunities of e-commerce. But, there are certain inherent characteristics of this market, which make it more vulnerable to risks associated with e-commerce. The market requires knowledge, information, ability to analyze and quick decision-making. This requires utmost care while trading on the net. A single click can make or destroy investor's wealth. E-Trading is a service offered on the Internet for purchase and sale of shares. In the real world, you place orders on your stockbroker verbally (personally or telephonically). In Online Trading, a customer can access a stockbroker's website through his internet-enabled PC and place orders through the broker's internet-based order routing and trading engine. These orders are routed to the Stock Exchange without manual intervention and executed thereon. The order routing to the exchange will happen in a matter of seconds. The order execution once it reaches the exchange system is similar to that of an offline transaction,

History of E-Trading In Global Scenario

The history of e-trading began in 1983, when a doctor in Michigan placed the first online trade using E*TRADE technology. What began with a single click over 16 years ago has now taken the world by storm. The concept was visualized by one Bill Porter, a physicist and inventor with more than a dozen patents to his Credit: who provided online quotes and trading services to Fidelity, Charles Schwab, and Quick & Reilly. This led Bill to wonder why, as an individual investor, he had to pay a broker hundreds of dollars for stock transactions.

Today his dream has become a reality. E-trading has become a way of investing in the developed world and is soon catching on in developing countries too. Since that time, online trading has increased dramatically - according to an unprecedented efficiency and control. Recent estimate, there are 7.8 million individuals trading online, making 807000 trades per day. Currently, there are over 200 broker-dealers providing retail investors with the ability to trade online. Along with the growth in online trading, there has been a surge in investor complaints related to online trading. The downfall of a few international dotcom like Value America Inc, Net Inoperative Ltd, Toysmart.com, boo.com has not diminished the opportunities thrown by internet trading. There are investment banking firms which offer a suit of services such as online trading, research reports, real-time market commentary, Java-based charts, analysis and other professional services. E-Trade has presence in around 119 countries, as one of the renowned players in the international market. E-Trade Securities Inc was floated in 1992 to offer online investing services through America Online and CompuServe and launched www.etrade.com in 1996. Recently, it announced strategic alliances with Wit Sound Vies, the online banking subsidiary of Wit Capital Group Inc, to capitalize on the complementary core strengths of the two groups. TD Waterhouse, the second largest global brokerage, has over 2.9 million customer accounts worldwide and more than $150 billion in customers' assets under administration. In addition to securities trading services, it also provides banking, mutual funds and other financial products/services to its customers.

History of e trading in Indian context

Net trading begins in India.... On Jan 31st 2000, the Securities Exchange Board of India (SEBI) formally notified all the stock exchanges, giving them a green signal for Net/Online trading. The various players of the securities market, which includes NSE, BSE, other regional stock exchanges and the brokers, had been waiting long for the go-ahead sign. Trading via the net is expected to generate greater volumes than ever before and this has attracted a large number of players. One day after SEBI announced its regulations for net trading, Kerala based Geojit Securities took the lead and started online trading in Mumbai. The Kerala State Industrial Development Corporation (KSIDC) decided to join Geojit Securities in 1994. It has a 24% stake in the equity, the balance belonging to Geojit Securities itself. This is the only venture in India

where a state owned development institution is participating in the equity of a stock broking company. The first net transaction was a trade for 100 shares of Reliance executed by DR Mehta, Chairman, and SEBI for the Chairman of Geojit Securities. Today there are many other big brokerage firms like MotilalOswal, Kotak Securities, SSKI and ICICI Direct running successfully.