You are on page 1of 78


Stock exchange is an organized market place where securities are traded. These securities are issued by the government, semi-government bodies, public sector undertakings and companies for borrowing funds and raising resources. Securities are defined as any monetary claims (promissory notes or I.O.U) and also include shares, debentures, bonds and etc., if these securities are marketable as in the case of the government stock, they are transferable by endorsement and alike movable property. They are tradable on the stock exchange. So are the case shares of companies. Under the Securities Contract Regulation Act of 1956, securities trading is regulated by the Central Government and such trading can take place only in stock exchanges recognized by the government under this Act. As referred to earlier there are at present 23 such recognized stock exchanges in India. Of these, major stock exchanges, like Bombay Stock Exchange, National Stock Exchange, Inter-Connected Stock Exchange, Calcutta, Delhi, Chennai, Hyderabad and Bangalore etc. are permanently recognized while a few are temporarily recognized. The above act has also laid down that trading in approved contract should be done through registered members of the exchange. As per the rules made under the above act, trading in securities permitted to be traded would be in the normal trading hours on working days in the Trading ring, as specified for trading purpose. Contracts approved to be traded are the following: Spot delivery deals are for deliveries of shares on the same day or the next day as the payment is made. Hand deliveries deals for delivering shares within a period of 7 to 14 days from the date of contract. Delivery through clearing for delivering shares with in a period of two months from the date of the contract, which is now reduce to 15 days.(Reduced to 2 days in demat trading)Special Delivery deals for delivering of shares for specified longer periods as may be approved by the governing board of the stock exchange. Except in those deals meant for delivery on spot basis, all the rest are to be put through by the registered brokers of a stock exchange. The securities contracts (Regulation) rules of 1957 laid down the condition for such trading, the trading hours, rules of trading, settlement of disputes, etc. as between the members and of the members with reference to their clients.


ONLINE TRADING NEED FOR THE STUDY Online trading denotes buying and selling securities on the Internet through provided by financial brokers like SIM s and banks online trading is the easy way to buy and sell shares from the comfort of ones home. Finding a company that provides with an online trading account can be difficult. There are many companies that will offer excellent services for online trading, but one needs to find out one that meets their needs and requirements. The present study to review the online trading procedure a case study of ONLINE TRADING at ZENMONEY, as the exchange has changed its trading from the outcry mode to online trading on 20th February 1997, there is need to assess the performance of the capital market. Trading financial markets is like any other discipline; the more you study it and become an expert in it, the better you get. Too many people want to jump into online trading and blow their money before they even know what they are doing. They perceive forex trading or stock market trading as a quick and easy way to riches and figure they can jump in with minimal preparation. This is why beginner traders are susceptible to the latest forex trading or commodity trading sure-fire system that some guru out there is selling. After all, what could be easier than forking out some cash and buying a trading system guaranteed to make you big profits? It would be nice if the world worked that way. It would be nice if money grew on trees too. As with any other major skill, success in trading takes time, study, a fair degree of frustration, and a lot of hard work to master. Whether it is trading forex, stocks, bonds or commodities, you are going to have to invest some serious time really studying your market and getting to know it as well as you does your wife, your children, or your parents! There are really no shortcuts.


Page 2

ONLINE TRADING OBJECTIVES OF THE STUDY The present project work has been undertaken to study ONLINE TRADING CLEARING AND SETTLEMENT. The main objectives of the study are: To observe the mechanism of ONLINE TRADING. To analyze the changes in trading after the exchange shifted from outcry to online trading system. To study the functions of ZENMONEY through various departments. To know how to trade in Stock market by using online trading. To observe the process of Clearing and Settlement. To know the importance of the Depository participants and Clearing members in online trading. To know the tools and techniques providing by the ZENMONEY securities limited for online trading.


Page 3

ONLINE TRADING SCOPE OF THE STUDY The study is confined to the past 2-3 years and the present system of trading procedure in share khan stock exchange. (Also a comparative study is done for SKSE with HDFC securities, icici direct, share khan, Kotak Street, 5 Paisa.) Online Trading is an internet based investment activity which eliminates the association of a broker. Anyone who has a computer, enough money to open an account and reasonable financial history has the ability to invest in the market. Nowadays there are many online trading companies working as portals for the biggest stock houses like the National stock exchange and the Bombay Stock Exchange. The person has to get registered with the online trading portal and get into an agreement with the company to trade in different kinds of securities by accepting the terms and conditions. The online trading portals are connected to the stock exchanges banks. Such online portals offer the trader an opportunity to check live online stock prices which they can either check through mail or the interface. Also ample amount of research data is provided which helps the user make their own decisions as to whether to invest in a particular stock or not. The online trading companies allow the users to invest in a number of financial products and services like equities, mutual funds, life insurance, loans, share trading, commodities trading institutional trading, general insurance and financial planning. Due to this invent, the market has become more accessible, but that doesnt mean that it should be taken lightly When you trade online, you use the services of an online broker. You use actual and the assigned

money, but instead of talking to the broker about which investments to make, you yourself decide which stock to buy since you have resource to the online stock prices. Thus online stock company not only acts as a portal, but also as a broker and offers you to maximize your returns in the most efficient manner.


Page 4

ONLINE TRADING IMPORTANCE OF THE STUDY Online of the trading is no different than offline trading. It requires the same amount of risk plus the same amount of skill. One needs to be well-disciplined and goal oriented as these are the main skills that separate winners and losers in the trading world. Trading especially online trading-requires any one to put limits on what they spend and their number of transactions. Also research is vital if one wants to uncover important tips to greatly improve the quality of their online trading portfolio and also to avoid getting bogged by purchasing shares from companies in the midst of a lawsuit or poor management. Online trading can be a good way to make a lot of money or to bring a small residual income to supplement regular income. Of course, one needs money to get started and even after getting started, it will still be a dangerous game loaded with risks. If one is determined and goal oriented, then they can succeed at online trading. If one trades emotionally and fail to be patient and analytical, they are almost guaranteed to fail, even if they get lucky a couple of times. Trading at different exchanges has never been without glitches. It has made a lot of billionaires, as well as bringing many rich people onto roads. It used to be much more difficult in past; one of the most challenging problems was inability of the stock traders to make up something useful of the information generated on per second basis from the ongoing trade. This not only slowed down the trading activity, but also resulted into huge losses. Not all the traders were in a position to make the right decisions at the right time. Online trading tools have

revolutionized the industry; it has made a real difference in the investors earning ability. At the beginning when these tools came into existence, many critics were concerned about their ability to make any impact on the way online trade was carried out. The most important challenge to tackle was that these trading tools were fed into and they didnt do any real time processing. It compromised the ability to make contributions in active trades by the traders. Now, the new tools have changed the trend for good. These tools are connected with the stock exchange.


Page 5


Research design:Research design is some statement or specification of procedure for collecting and analyzing the information required for the solution of some specific problem. Exploratory Research has been used in this study. Data source: The data source utilized to undertake the project is both primary and secondary data. The data collection methods include both primary and secondary collection methods. PRIMARY DATA: This method includes the data collected from the personal interaction with authorized members of ZENMONEY Securities limited. SECONDARY DATA: The various sources of secondary data include: The lecturers delivered by the superintendents of respective departments. The brochures and material provided by ZENMONEY Securities limited. The data collected from the magazines of the NSE, economic times, etc. Various books relating to the investments, capital market and other related topics.


Page 6

ONLINE TRADING LIMITATIONS OF THE STUDY The study is confined to online trading procedure only. Problems of listing are not covered due to limited time and to keep the study in manageable limits. The study confined to the past 2-3 years and present system of the trading Procedure in the ZENMONEY STOCK EXCHANGE and the study is confined to the coverage of all the related issues in brief. The data is collected from the primary and secondary sources and thus is subject to slight variation than what the study includes in reality.


Page 7


INVESTMENT is referred to as the concept of deferred consumption, which might comprise of purchasing an asset, rendering a loan, keeping the saved funds in a bank account such that it might generate lucrative returns in the future. The options of investments are huge; all of them having different risk-reward trade off. This concludes that the investment industry is really broad and that is why understanding the core concepts of investments and accordingly analyzing them is essential. After thorough understanding of the investment industry can an investor create and manage his own investment portfolio such that the returns are maximized with the least risk exposure. Types of Investments in the Investment industry As stated earlier, the INVESTMENT INDUSTRY is huge; therefore the types of investments are also varied. Different types of investments are: Cash investments: Cash investments comprise of savings bank accounts, certificates of deposit (CDs) and treasury bills (TBs). All these types of investments render a low interest rate and prove to be quite risky during times of inflation. Debt securities This type of investments gives returns in the form of fixed periodic payments and the fixed capital appreciate at maturity. This is safe bait for the investors in the investment industry and has always proved to be the risk free investment tool. Though, it is generally low in risks, the returns are also lower than the other peer securities. Stocks Investors can also buy stocks (equities) from the secondary markets and be a part of any business corporate that are listed in the bourses. By this way, one can become the part of the profits that the company generates. But one should remember that stocks are generally more volatile and carries more risk than bonds.


Page 8

ONLINE TRADING Mutual funds They are usually a collection of stocks and bonds that a fund manager selects for an investor such that the returns are maximum. The investor does not have to track the investment, be it a bond, stock- or index-based mutual funds. Derivatives Derivatives are financial contracts, whose value is derived from the value of the underlying assets like equities, commodities and bonds. They can take the form of futures, options and swaps. Investors choose derivatives as they are used to minimize the risk of loss that result from variations in the underlying asset values. Commodities The items that are traded on the commodities market are agricultural and industrial commodities and they need to be standardized. Commodities trading have always been giving high returns and thus they are the riskiest of all investment options. One, who trades in commodities, requires specialized knowledge and analytical Capabilities Real estate: Investing in real estate has to be a long term affair. Funds get hooked into the real estate sector for a considerable time period. India Stock and Investment: The India stock and investment market is mainly divided into 2 parts, namely the capital market and the money market. The stock market is an important part of the capital market in the country through which one can carry out the transaction of capital. It is usually done through the means of direct financing through the use of security and investment. The investment market can further be sub divided into the primary and secondary market.


Page 9



Page 10

ONLINE TRADING Financial Market

Financial markets are helpful to provide liquidity in the system and for smooth functioning of the system. These markets are the centers that provide facilities for buying and selling of financial claims and services. The financial markets match the demands of investment with the supply of capital from various sources.

According to functional basis financial markets are classified into two types. They are

Money markets (short-term) Capital markets (long-term)

According to institutional basis again classified in to two types. They are

Organized financial market Non-organized financial market.

The organized market comprises of official market represented by recognized institutions, bank and government (SEBI) registered/controlled activities and intermediaries. The unorganized market is composed of indigenous bankers, moneylenders, individual professional and non-professionals. Money Market Money market is a place where we can raise short-term capital. Again the money market is classified in to

Interbank call money market Bill market and Bank loan market Etc. E.g.; treasury bills, commercial papers, CD's etc.


Page 11

ONLINE TRADING Capital Market Capital market is a place where we can raise long-term capital. Again the capital market is classified in to two types and they are

Primary market and Secondary market. E.g.: Shares, Debentures, and Loans etc.

Primary Market Primary market is generally referred to the market of new issues or market for mobilization of resources by the companies and government undertakings, for new projects as also for expansion, modernization, addition, and diversification and up gradation. Primary market is also referred to as New Issue Market. Primary market operations include new issues of shares by new and existing companies, further and right issues to existing shareholders, public offers, and issue of debt instruments such as debentures, bonds, etc.The primary market is regulated by the Securities and Exchange Board of India (SEBI a government regulated authority). The following diagram gives the structure of Indian Financial System: Function The main services of the primary market are origination, underwriting, and distribution. Origination deals with the origin of the new issue. Underwriting contract make the shares predictable and remove the element of uncertainty in the subscription. Distribution refers to the sale of securities to the investors.


Page 12


The following are the intermediaries associated with the money market: 1. 2. 3. 4. 5. 6. 7. Merchant banker/book building lead manager Registrar and transfer agent Underwriter/broker to the issue Adviser to the issue Banker to the issue Depository Depository participant

Investors protection in the primary market: To ensure healthy growth of primary market, the investing public should be protected. The term investor protection has a wider meaning in the primary market. The principal ingredients of investors protection are:

Provision of all the relevant information Provision of accurate information and Transparent allotment procedures without any bias.

Secondary Market The primary market deals with the new issues of securities. Outstanding securities are traded in the secondary market, which is commonly known as stock market or stock exchange. The secondary market is a market where scrips are traded. It is a market place which provides liquidity to the scrips issued in the primary market. Thus, the growth of secondary market depends on the primary market. More the number of companies entering the primary market, the greater are the volume of Trade at the secondary market. Trading activities in the secondary market are done through the recognized stock exchanges which are 23 in number including Over the Counter Exchange of India (OTCE), National Stock Exchange of India and Interconnected Stock Exchange of India. DARE COLLEGE, KHAMMAM Page 13


Secondary market operations involve buying and selling of securities on the stock exchange through its members. The companies hitting the primary market are mandatory to list their shares on one or more stock exchanges in India. Listing of scrips provides liquidity and offers an opportunity to the investors to buy or sell the scrips. The following are the intermediaries in the secondary market: 1. 2. 3. 4. 5. 6. Broker/member of stock exchange buyers broker and sellers broker Portfolio Manager Investment advisor Share transfer agent Depository Depository participants.

Function of Capital Market It acts as a link between investors and savers. Encouragement to savings Promotes economic growth Encouragement to investment Stability in security prices Benefits to investors

Stock Markets in India Stock exchanges are the perfect type of market for securities whether of government and semi-govt bodies or other public bodies as also for shares and debentures issued by the jointstock companies. In the stock market, purchases and sales of shares are affected in conditions of free competition. Government securities are traded outside the trading ring in the form of over the counter sales or purchase. The bargains that are struck in the trading ring by the members of the stock exchanges are at the fairest prices determined by the basic laws of supply and demand.


Page 14

ONLINE TRADING Definition of a stock exchange Stock exchange means anybody or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. The securities include:

Shares of public company. Government securities. Bonds

History of Stock Exchanges The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and Ahmadabad set up in 1894. These were organized as voluntary non-profitmaking associations of brokers to regulate and protect their interests. Before the control on securities under the constitution in 1950, it was a state subject and the Bombay securities contracts (control) act of 1925 used to regulate trading in securities. Under this act, the Mumbai stock exchange was recognized in 1927 and Ahmadabad in 1937. During the war boom, a number of stock exchanges were organized. Soon after it became a central subject, central legislation was proposed and a committee headed by A.D.Gorwala went into the bill for securities regulation. On the basis of the committees recommendations and public discussion, the securities contract (regulation) act became law in 1956. Functions of Stock Exchanges Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed companies, they help trading and raise funds from the market. Over the hundred and twenty years during which the stock exchanges have existed in this country and through their medium, the central and state government have raised crores of rupees by floating public loans. Municipal corporations, trust and local bodies have obtained from the public their financial requirements, and industry, trade and commerce- the backbone of the countrys economy-have secured capital of crores or rupees through the issue of stocks, shares and debentures for financing their day-to-day activities, organizing new ventures and completing projects of DARE COLLEGE, KHAMMAM Page 15

ONLINE TRADING expansion, diversification and modernization. By obtaining the listing and trading facilities, public investment is increased and companies were able to raise more funds. The quoted companies with wide public interest have enjoyed some benefits and assets valuation has become easier for tax and other purposes. Various Stock Exchanges in India At present there are 23 stock exchanges recognized under the securities contracts (regulation), Act, 1956. Those are: Ahmadabad Stock Exchange Association Ltd. Bangalore Stock Exchange Bhubaneswar Stock Exchange Association Calcutta Stock Exchange Cochin Stock Exchange Ltd. Coimbatore Stock Exchange Delhi Stock Exchange Association Guwahati Stock Exchange Ltd Hyderabad Stock Exchange Ltd. Jaipur Stock Exchange Ltd Kanara Stock Exchange Ltd Ludhiana Stock Exchange Association Ltd Madras Stock Exchange


Page 16

ONLINE TRADING Madhya Pradesh Stock Exchange Ltd. Magadh Stock Exchange Limited Meerut Stock Exchange Ltd. Mumbai Stock Exchange National Stock Exchange of India OTC Exchange of India Pune Stock Exchange Ltd. Saurashtra Kutch Stock Exchange Ltd. Uttar Pradesh Stock Exchange Association Vadodara Stock Exchange Ltd. Out of these major stock exchanges were


The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000


Page 17

ONLINE TRADING NSE's mission is setting the agenda for change in the securities markets in India. The NSE was set-up with the main objectives of: Establishing a nation-wide trading facility for equities and debt instruments. Ensuring equal access to investors all over the country through an appropriate communication network. Providing a fair, efficient and transparent securities market to investors using electronic trading systems. Enabling shorter settlement cycles and book entry settlements systems, and Meeting the current international standards of securities markets. The standards set by NSE in terms of market practices and technology, have become industry benchmarks and are being emulated by other market participants. NSE is more than a mere market facilitator. It's that force which is guiding the industry towards new horizons and greater opportunities. BOMBAY STOCK EXCHANGE The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act 1956.The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redresses of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education programmers and making available to them necessary informative inputs. DARE COLLEGE, KHAMMAM Page 18


A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer. The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange and the Chief Operating Officer and other Heads of Department assist him. The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to constitution of the Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting of three elected directors, three SEBI nominees or public representatives, Executive Director & CEO and Chief Operating Officer has been constituted. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authority, matters regarding annulment of transactions, admission, continuance and suspension of member-brokers, declaration of a member-broker as defaulter, norms, procedures and other matters relating to arbitration, fees, deposits, margins and other monies payable by the memberbrokers to the Exchange, etc. Regulatory frame work of stock exchange A comprehensive legal framework was provided by the Securities Contract Regulation Act, 1956 and Securities Exchange Board of India 1952. Three tier regulatory structure comprising

Ministry of finance The Securities And Exchange Board of India Governing body


Page 19

ONLINE TRADING Members of the stock exchange The securities contract regulation act 1956 has provided uniform regulation for the admission of members in the stock exchanges. The qualifications for becoming a member of a recognized stock exchange are given below: The minimum age prescribed for the members is 21 years. He should be an Indian citizen. He should be neither a bankrupt nor compound with the creditors. He should not be convicted for fraud or dishonesty. He should not be engaged in any other business connected with a company. He should not be a defaulter of any other stock exchange. The minimum required education is a pass in 12th standard examination.

Securities and exchange board of India (SEBI) The securities and exchange board of India was constituted in 1988 under a resolution of government of India. It was later made statutory body by the SEBI act 1992.according to this act, the SEBI shall constitute of a chairman and four other members appointed by the central government. With the coming into effect of the securities and exchange board of India act, 1992 some of the powers and functions exercised by the central government, in respect of the regulation of stock exchange were transferred to the SEBI. Objectives and Functions of SEBI To protect the interest of investors in securities. Regulating the business in stock exchanges and any other securities market. Registering and regulating the working of intermediaries associated with securities market as well as working of mutual funds. Promoting and regulating self-regulatory organizations. DARE COLLEGE, KHAMMAM Page 20

ONLINE TRADING Prohibiting insider trading in securities. Regulating substantial acquisition of shares and takeover of companies. Performing such functions and exercising such powers under the provisions of capital issues (control) act, 1947and the securities to it by the central government.

SEBI Guidelines to Secondary Markets: (Stock Exchanges) Board of Directors of Stock Exchange has to be reconstituted so as to include nonmembers, public representatives and government representatives to the extent of 50% of total number of members. Capital adequacy norms have been laid down for the members of various stock exchanges depending upon their turnover of trade and other factors. All recognized stock exchanges will have to inform about transactions within 24 hrs. Types of Orders Buy and sell orders placed with members of the stock exchange by the investors. The orders are of different types. Limit orders Orders are limited by a fixed price. E.g. buy Reliance Petroleum at Rs.50.Here, the order has clearly indicated the price at which it has to be bought and the investor is not willing to give more than Rs.50. Best rate order Here, the buyer or seller gives the freedom to the broker to execute the order at the best possible rate quoted on the particular date for buying. It may be lowest rate for buying and highest rate for selling.


Page 21

ONLINE TRADING Discretionary order The investor gives the range of price for purchase and sale. The broker can use his discretion to buy within the specified limit. Generally the approximation price is fixed. The order stands as this buy BRC 100 shares around Rs.40. Stop loss order The orders are given to limit the loss due to unfavorable price movement in the market. A particular limit is given for waiting. If the price falls below the limit, the broker is authorized to sell the shares to prevent further loss. E.g. Sell BRC limited at Rs.24, stop loss at Rs.22. Buying and selling shares To buy and sell the shares the investor has to locate register broker or sub broker who render prompt and efficient service to him. The order to buy or sell specifying the number of shares of the company of investors choice is placed with the broker. The order may be of any type. After receiving the order the broker tries to execute the order in his computer terminal. Once matching order is found, the order is executed. The broker then delivers the contract note to the investor. It gives the details regarding the name of the company, number of shares bought, price, brokerage, and the date of delivery of share. In this physical trading form, once the broker gets the share certificate through the clearing houses he delivers the share certificate along with transfer deed to the investor. The investor has to fill the transfer deed and stamp it. The stamp duty is one of the percentage considerations, the investor should lodge the share certificate and transfer deed to the register or transfer agent of the company. If it is bought in the DEMAT form, the broker has to give a matching instruction to his depository participant to transfer shares bought to the investors account. The investor should be account holder in any of the depository participant. In the case of sale of shares on receiving payment from the purchasing broker, the broker effects the payment to the investor.


Page 22

ONLINE TRADING Share groups The scripts traded on the BSE have been classified into A,B1,B2,C,F and Z groups. The A group represents those, which are in the carry forward system. The F group represents the debt market segment (fixed income securities). The Z group scrips are of the blacklisted companies. The C group covers the odd lot securities in A, B1&B2 groups. Rolling Settlement System Limit and the additional changes for the exception window are dedicated by the exchange. The exchanges/clearing house/ clearing corporation would process and download the obligation files to the brokers terminals Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or 5days) after the trading day. The shares bought and sold are paid in for n days after the trading day of the particular transaction. Share settlement is likely to be completed much sooner after the transaction than under the fixed settlement system. The

rolling settlement system is noted by T+N i.e. the settlement period is n days after the trading day. A rolling period which offers a large number of days negates the advantages of the system. Generally longer settlement periods are shortened gradually. SEBI made RS compulsory for

trading in 10 securities selected on the basis of the criteria that they were in compulsory demat list and had daily turnover of about Rs.1 crore or more. Then it was extended to A stocks in Modified Carry Forward Scheme, Automated Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme (BELSS) with effect from Dec 31, 2001. SEBI has introduced T+5 rolling settlement in equity market from July 2001 and subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement experience it was further reduced to T+2 to reduce the risk in the market and to protect the interest of the investors from 1st April 2003. Activities on T+1: conformation of the institutional trades by the custodian is sent to the stock exchange by 11.00 am. A provision of an exception window would be available for late confirmation. The time late by 1.30 p.m on T+1. Depository participants accept the instructions for pay in securities by investors in physical form upto 4 p.m and in electronic form upto 6 p.m. the depositories accept from other DPs till 8p.m for same day processing.Activities on T+2: DARE COLLEGE, KHAMMAM Page 23

ONLINE TRADING The depository permits the download of the paying in files of securities and funds till 10.30 a.m on T+2 from the brokers pool accounts. The depository processes the pay in requests and transfers the consolidated pay in files to clearing House/clearing Corporation by 11.00am/on T+2. The exchange/clearing house/clearing corporation executes the pay-out of securities and funds latest by 1.30 p.m on T+2 to the depositories and clearing banks. In the demat mode net basis settlement is allowed. The buy and sale positions in the same scrip can be settled and net quantity has to be settled.


Page 24



Zen Securities Limited (ZSL) is one of the leading financial services company -providing Financial and Investment related Services and Products. The Company commenced as a proprietary concern of M/s K. Ravindra Babu in 1986 was converted to a Limited company in February 1995 as Zen Securities Ltd. Zen has the distinction of being the First Corporate Member from Hyderabad and also the first A.P. based broking firm to start trading on the National Stock Exchange (NSE). ZEN is a registered Member on the Capital Market Segment and Futures & Options segment of both NSE and BSE. ZEN is also a Depository Participant (DP) with National Securities Depository Ltd. (NSDL) and also with Central Depositories Services Ltd. (CDSL). ZEN is also a SEBI Registered Portfolio Manager offering Portfolio Management Services to clients. Zen Comtrade Pvt. Limited a 100% subsidiary of ZSL and is a member of National Commodities & Derivatives Exchange Limited (NCDEX) and Multi Commodity Exchange (MCX). ZEN operates from Hyderabad as it head office and has branches and associates in Andhra Pradesh, Tamil Nadu, Maharashtra, Karnataka, West Bengal and Orissa. The Company operates from over 140 locations with ove 500 trading terminals. Services Offered by Zen Securities Limited:

Investment advisory services Trading in cash market of NSE and BSE Trading in Futures and Options on NSE and BSE Internet Trading in Stocks, futures and Options both NSE and BSE Mutual Funds advisory service Depository Services in Both NSDL and CDSL Trading in Commodities on MCX and NCDEX Portfolio Management Services NRI Investor Services PAN Application Service Mutual Fund KYC Registration Service Page 25


ONLINE TRADING Our Founder Shri Ravindra Babu Kantheti founded Zen Securities Ltd as a stock broking company and led its evolution into a highly respectable financial services company known for its ethics and values. He passionately believed that one can be successful in business without compromising on ethics. Thru Zen he demonstrated this philosophy and inspired every one of us by setting an example. His ethical, transparent and trustworthy approach to business has inspired all of us to build a very vibrant, successful and strong organisation. We at Zen totally rededicate ourselves to continue to build the organisation on sound foundations of trust, values and relationship with clients, servicing their investment needs as set out by our founder Sri K.Ravindra Babu. Directors of Zen Securities Ltd. have considerable experience and expertise ranging over many industries such as financial services, pharmaceuticals, manufacturing, banking and Information Technology among others. They are some of the most highly respected people in their professional circles.

Mr. Pratap Kantheti, Managing Director Mr. Pratap Kantheti is the Managing Director of the company. He is a Chartered Financial Analyst (CFA) and also has a Masters in Business Administration (MBA) in Finance. He has a deep understanding of and exposure to the financial services sector.

Mr. Satish Kantheti, Jt. Managing Director Mr. Satish Kantheti looks after the Portfolio Management Services and Equity Research divisions of the Company. He is a Chartered Financial Analyst (CFA) and also has a Masters in Business Administration (MBA) in Finance. He overseas the Equity Research division and the Portfolio Management divisions. Mr. K. Gandhi, Director: Mr. K. Gandhi is one of the founder directors of the company. He holds a Masters degree in Electrical and Communication Engineering from IIT Bombay. He has extensive experience in IT and General Management.


Page 26

ONLINE TRADING Mr. Satyanarayana Ch. Ravi (RS), Whole Time Director: Mr. Satyanarayana Ch. Ravi has more than two decades of experience in the fields of Management, Administration, Manufacturing, and Marketing. He holds a Bachelors degree in Chemical Engineering.

Mr. Sambasiva Rao Patibandla, Executive Director: Mr. Sambasiva Rao has worked with several multinational pharmaceuticals companies before incorporating and running a successful pharmacy business venture in U.S. He relocated to India entered the Stock broking industry in 1994. He is the Executive Director of company. He has a Masters degree in Pharmacy.

Mr. Narayanan Director: Mr. Narayanan is a very experienced Investment Analyst and Tax Consultant possessing a deep understanding about investments and stock market dynamics.

Mr. Ajay Kumar Mikkilineni, Director: Mr. Ajay Kumar Mikkilineni has over a decade of experience in senior positions of the Pharmaceutical industry and also has twelve years of experience in the banking sector. He holds a Masters degree in Agriculture.

Mr. K.Venkat Reddy,Director: Mr. K.Venkat Reddy is a chemical engineer. He worked in reputed industrial houses in Paper & Power sectors for 16 years and in Financial markets for 10 years. He has extensive experience in the areas of project management and strategic management.

Mr. K. Narasimha Rao, Director : Mr. K. Narasimha Rao is a Post Graduate in Literature. He is the Chief Agent of A.P. LIC Mutual Fund since June 2002. He is an LIC agent since 1980 and has extensive knowledge about the securities and insurance markets.

Mr. Namashivaya Renukuntla, Director and Head of Compliance Mr. Namashivaya Renukuntla has vast experience in the field of stock broking and has a deep understanding of the regulatory framework of the Capital Markets. He heads the Commodity Broking business of the Company. He holds a bachelors degree in Civil Engineering and a Masters in Business Administration (MBA).


Page 27


We are committed to honesty, integrity and ethics in all that we do. We create significant value by bringing together innovation, knowledge and experience to help our customers achieve their goals.

We treat customers the way we would want to be treated. We deliver happiness to customers, employees and other stakeholders. We work with passion, commitment and enthusiasm to deliver excellence.

We are a socially responsible and environment-friendly corporate citizen. Stock Broking Zen Securities Limited provides the following equity related trading services to the investors:
o o

Capital Market Segment of NSE and BSE Futures & Options segment of NSE and BSE

ZEN operates from Hyderabad as it head office and has branches and associates in Andhra Pradesh, Tamil Nadu, Maharashtra, Karnataka, West Bengal and Orissa. The Company operates from over 140 locations with over 500 trading terminals


Page 28

ONLINE TRADING Internet Trading Internet trading is easy, convenient and reliable with ZenTr@de Advantages of ZenTr@de - Internet Trading Platform Flexible and advanced trading platform

Simple, reliable and easy to use Futures & Options segment of NSE and BSE Integrated payment gateways facilitates online transfer of funds from your banks (ICICI /Axis/Corp / Yes bank etc.) for instant limits (on funds transferred)

Integrated with Zen DP account seamless settlement Take full control of trading and trade with privacy from any place of your choice. Choice of Trading from Internet or Branch Choice of Browser based or EXE based trading

Market watch

Streaming market quotes Multiple market watch Integrated market watch for viewing NSE / BSE / NSE FAO on one screen Access to trade in NSE / BSE and NSE FAO Segments

INTRADAY and DELIVERY differentiation

Different limits for INTRADAY and DELIVERY Auto square off of all INTRADAY orders 15 minutes before close of trading Convert INTRADAY trades to DELIVERY trades on availability of credit/margin source


Page 29

ONLINE TRADING Access to statements

Stock Statements - View Stocks in your DP account and also Zen Benf account Statements View Cash available in your Zen Broking account Mutual Funds View Transaction/Holding statements with Latest NAVs Networth Statement - Networth statement of assets with Zen, (Stocks+Cash+Mutual funds)

ZenTr@de is an integrated CTCL and internet trading platform offering the choice to trade in a branch or in internet or both as per clients convenience and choice. The platform offers all the conveniences and advantages mentioned above. Mutual Funds ZENS MUTUAL FUND SERVICES - HIGHLIGHTS

One stop shop for a range of Mutual fund products from top Mutual funds such as HDFC, ICICI Prudential, Birla sun life, Franklin Templeton, Reliance , HSBC, Sundaram BNP Paribas, Fidelity and many more

Cost-effective, prompt and trustworthy service Facility to view your account information online 24 X 7, Updates every day.
o o o

You can view your latest Holding statement You can view your latest transaction statement You can view value of all your mutual funds in one consolidated statement

Easy and convenient application process Good Advice keeping your financial goals in mind

Offline presence in various locations convenient to you for better service CONCEPT


Page 30

ONLINE TRADING CONCEPT A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund

Organisation of a Mutal Fund There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund:


Page 31

ONLINE TRADING ADVANTAGES OF INVESTING IN MUTUAL FUNDS Professional Money Management & Research Mutual funds are managed by professional fund managers who regularly monitor market trends and economic trends for taking investment decisions. They also have dedicated research professionals working with them who make an in depth study of the investment option to take an informed decision. Risk Diversification Diversification reduces risk contained in a portfolio by spreading it. It is about not putting all your eggs in one basket. As mutual funds have huge corpuses to invest in, one can be part of a large and well-diversified portfolio with very little investment. Convenience With features like dematerialized account statements, easy subscription and redemption processes, availability of NAVs and performance details through journals, newspapers and updates and lot more; Mutual funds are sure a convenient way of investing. Liquidity One of the greatest advantages of Mutual funds investment is liquidity. Open-ended funds provide option to redeem on demand, which is extremely beneficial especially during rising or falling Markets. Reduction in Costs Mutual funds have a pool of money that they have to invest. So they are often involved in buying and selling of large amounts of securities that will cost much lower than when you invest on your own. Tax Advantages Investment in mutual funds also enjoys several tax advantages. Dividends from Mutual Funds are tax-free in the hands of the investor (This however depends upon changes in Finance Act). Also Capital Gain accrued from Mutual Fund investment for a period of over one year is treated as long term capital appreciation and is tax free.


Page 32

ONLINE TRADING Depository Zen is a depository participant offering flexible, cost effective and transparent depository services to its clients .Zen is a depository participant with the National Securities Depository Limited and Central Depository Services (India) Limited for trading and settlement of dematerialised shares. Zen performs clearing services for all securities transactions through its accounts. Zen offers depository services to create a seamless transaction platform execute trades through ZenSecurities and settle these transactions through the Zen Depository Services.Zen Depository Services is a part of our value added services for our clients that creates multiple interfaces with the client and provides for a solution that takes care of all your needs

Basic Services Provided by Zen DP

Account Opening Account Transfers - Market and Off-Market Dematerialisation Re-materialization Pledge

To know more about Depository Services contacted Commodities Broking ZEN Securities provides trading in Commodities through its subsidiary, Zen Comtrade Pvt. Ltd. Zen Comtrade Pvt. Ltd. is a member of:

National Commodities & Derivatives Exchange Limited (NCDEX) and

Multi Commodities Exchange (MCX)


Page 33


PAN card is compulsory for opening a demat account ( w.e.f. 01.04.2006)

PAN card is compulsory for opening a trading account ( w.e.f.01.01.2007) Zen Securities Limited is a service provider for processing PAN application. Accordingly, investors will have to provide the following documents :

PAN Application Form Proof of Identity (POI) & Proof of address (POA) Can be Attested by notary public/ gazette office (or) Self-attested when presented with original at ZEN Branches.

Photograph - Recent passport size color photograph. Instructions for filling Application. Application must be filled by BLACK INK Only. Do's & Don'ts List

How to get the PAN

The PAN application forms together with the originals along with a photocopy (Selfattested, originals will be given back after verification) or attested true copies of the above mentioned documents have to be presented at the nearest ZEN Branches.

The ZEN Branches will accept the applications, verify the documents & give acknowledgment of the receipt and will send to H. O. for processing. The PAN card will be delivered to thee applicant address mentioned in the application directly by NSDL within 30 days.

PAN Details Change

PAN Details Change Application Form


Page 34


Copy of proof for change details Attested by notary public/ gazette officer (or) Self-attested when presented with original at ZEN Branches.

Additional Information

Frequently Asked Questions ( FAQ) To Know more details about PAN you can visit our nearest branch or email or call us on 040-44232204

What is Portfolio Management Service (PMS)?


Portfolio Management Service (PMS) is a customized investment portfolio of equity, debt, or instruments created to suit the individual investment objectives of a client. ZEN Securities offers a total solution to its NRI clients. We offer services under the

RBI's Portfolio Investment Scheme (PIS) to buy and sell shares through the Indian stock exchanges. We coordinate with the RBI approved Bank to open an NRI account. We will also open the Brokerage account and the Demat Account for the NRI. These three accounts will be opened simultaneously in the NRI's name. We will coordinate the transfer of shares to/from NRI's demat account and money to/from NRI's bank account as per the settlement. We have setup a separate NRI Services team to guide the NRI through the application process and the day to day investment process. An innovative Service that brings the stock market literally at the control of your fingertips. With Zen money, you can always stay connected with Zen Money.


Page 35

ONLINE TRADING Zen Securities Limited is a premier financial services company with a formidable presence in the stock market and has earned the trust of its clients for its efficient and investor friendly services. A professional fund manager who is well equipped to handle the process conducts the portfolio's day-to-day management, research, and idea generation.

Under Is PMS right for me? Portfolio Management Services may be the right option for individuals who:
o o

Want to invest their money in equities but do not have the required expertise. Are equipped with the required awareness and knowledge to invest in equities but do not have time to actively manage their portfolio.

Please Note: Investors are not being offered any guaranteed / assured returns. Investments in securities are subject to market risks. The value of investments may go up or down depending on the various factors and forces affecting the capital markets. Past Performance of Zen PMS does not indicate the future performance of our Portfolio Management services. Investors are urged to read the Disclosure Document before signing the agreement. Our PMS is offered to investors who clearly understand the long-term potential of equities and the associated risks. Fund Profile

Client Login Web Based CLIENT LOGIN (Service) facility on our website In our endeavor to leverage technology to service valuable clients like you, we are pleased to launch an online facility -- CLIENT LOGIN CLIENT LOGIN facility has the following facilities.

Broking Back Office (Hypersoft)

Cash: Financial Ledger / Scrip Ledger / Holding Statement & many more statements F&O :Financial Ledger / Scrip Ledger / Holding Statement & many more statements Page 36


ONLINE TRADING DP Account : Transaction Statement (NSDL / CDSL Account)

Holding Statement (NSDL / CDSL Account), with Value of Holdings

ECN : Digital Contract Note Research :Zen Recommendations list Zen Monthly News Letters all the beginning of the month without any delay This service is available 24x7, is fast and reliable. The data is as of End of Day (EOD). You can see all the statements and reports relating to your account at one place in a single sign on, No need to remember many passwords!

For CLIENT LOGIN you have to click on CLIENT LOGIN on Or

User id : Your Client Code eg 224P123N etc. Default Password : Your PAN NO (in Capital Letters)

You will be prompted to change the password first time. You can view these statements anytime, anywhere you want. Hope you would utilize the facility! Please feel free to send your feedback on this or any other service, so that we can improve your investment experience. You can email the feedback to Documents/Policies for the information of the Client :KYC Format Tariff Sheet Rights & Obligations, Risk Disclosure Document & Guidance Mandatory Policies Policies and procedures Business Policy of ZSL in derivative segment Zen Policy for inactive clients PMLA RMS Internal Controls List of Bank account of Zen Securities Ltd List of Demat account of Zen Securitis Ltd Running account authorisation Client Code Modification Policy POA Addendum To KYC Kit Letter of Undertaking Mutual Fund Trading Facility FEMA Declaration & HUF Declaration DISCLOSURE OF PROPRIETORY trading by ZSL


Page 37

ONLINE TRADING Zen Trade Internet trading is easy, convenient and reliable with ZenTr@deOnline Trading from Zen Securities Ltd. - a trusted stock broking enterprise driven by over 2 decades of experience and a fast expanding national presence. Zen offers a diverse range of stock broking and financial services across all it locations with the emphasis on superior quality. Driven by a burgeoning client base, Zen's rapid ascent in the stock market is a testimony to the unmatched quality, economy and credibility of its services. Advantages of ZenTr@de - Internet Trading Platform.

Flexible and advanced trading platform

o o o

Simple, reliable and easy to use. Faster execution, faster price updates. Integrated payment gateways - facilitates online transfer of funds from your banks ( HDFC / ICICI / Axis / Corp / OBC / Yes bank etc.) for instant limits (on funds transferred).

o o o o

Integrated with Zen DP account - seamless settlement. Take full control of trading and trade with privacy from any place of your choice. Choice of Trading from Internet or Branch. Choice of Browser based or EXE based trading.

Market watch
o o o o

Streaming market quotes. Multiple market watch. Integrated market watch for viewing NSE / BSE / NSE FAO on one screen. Access to trade in NSE / BSE and NSE FAO Segments.


Page 38


o o o

Different limits for INTRADAY and DELIVERY. Auto square off of all INTRADAY orders 15 minutes before close of trading. Convert INTRADAY trades to DELIVERY trades on availability of credit/margin source.

Access to trade in NSE / BSE and NSE FAO Segments.

Access to statements
o o o o

Stock Statements - View Stocks in your DP account and also Zen Benf account. Cash Statements - View Cash available in your Zen Broking account. Mutual Funds - View Transaction/Holding statements with Latest NAV's. Networth Statement - Networth statement of assets with Zen, (Stocks+Cash+Mutual funds). ZenTr@de is an integrated Dealer Terminal and internet trading platform offering the

choice to trade in a branch or in internet or both as per client's convenience and choice. The platform offers all the conveniences and advantages mentioned above.


Page 39


Introduction to Online Trading Gone are the days of trading on the floor. Technology has changed the landscape of the stock markets. The look of the stock exchanges has undergone metamorphic changes in the recent years. Prior to online trading, regional stock exchange was playing a very important role in capital markets, as they were local investors. Regional SE, which was unable to interact with other SEs started developing this own screen based trading and connecting to other scrips which were not available with them. This also helped in accessing the quotes and other market information from other stock exchange which proved vital in the functioning of the system as a whole. The trading network is depicted in given below NSE has main computer which is connected through Very Small Aperture Terminal (VSAT) installed at its office. The main computer runs on a fault tolerant STRATUS mainframe computer at the Exchange. Brokers have terminals (identified as the PCs in the given picture) installed at their premises which are connected through VSATs/ leased lines/modems. An investor informs a broker to place an order on his behalf. The broker enters the order through his PC, which runs under Windows NT and sends signal to the satellite via VSAT/leased line/modem. The signal is directed to mainframe computer at NSE via VSAT at NSEs office. A message relating to the order activity is broadcast to the respective member. The order confirmation message is immediately displayed on the PC of the broker. This order matches with the existing passive order(S) otherwise it waits for the active orders to enter the system. On order matching, a message is broadcast to the respective member. TRADING The operation of buying and selling securities on the market. On-line trading denotes buying and selling on the Internet through sites provided by financial brokers like SIMs and banks


Page 40

ONLINE TRADING OUTCRY SYSTEM The broker has to buy or sell securities for which he has received the orders. For this, the broker or his authorized representatives goes to the stock exchange. This method is called the open outcry system. Basically the brokers shout while buying or selling the securities. The floor of the stock exchange is divided into a number of markets also known as post pit or wing based on particular securities dealt there. In the post pit or wing, the broker using open outcry method makes an offer or bid price. For making the necessary bargain, he quotes his purchase or sale price, also Known as offer or bid price. The dealer, to whom the price is quoted, quotes his own price when the quotation of the dealer suits the broker, he may loose the bargain. If he is not satisfied with the quote price, he may turn to some other dealer. On the close of the bargain, the dealer as well as the broker makes a brief note of the particulars of the deal. Such notes are made on some pad and on it the number of shares, the price agreed upon, the name of the party, what membership number etc., are noted. Disadvantages of outcry system It lacks transparency. The scope of manipulation, speculation and mal practice is more. Signal were more important in the outcry system any member who could not interpret the buy/sell signal correctly often landed himself in disaster situation. In audibility was another disadvantage of the outcry system. Due to the above disadvantages of the outcry system the ZENMONEY has shifted from outcry system to online trading from February 29th 1997.


Page 41

ONLINE TRADING Manual Trading Trading procedure before introduction to online trading Trading on stock exchanges is officially done in the trading ring. In the trading ring the space is provided for specified and non-specified sections, the members and their authorized assistants have to wear a badge or carry with them an identity card given by the exchange to enter the trading ring. They carry a sauda book or confirmation memos, duly authorized by the exchange and carry a pen with them. The stock exchanges operations are floor level are technical in nature .Non-members are not permitted to enter in to stock market. Hence various stages have to be completed in executing a transaction at a stock exchange. The steps involved in this method of trading have given below: Choice of broker Sell shares and transact business, have to act through member brokers only. They can also appoint their bankers for this purpose as per the present regulations.

Placement of order: The next step is the prospective investor who wants to buy shares or the investors, who wants to place order for the purchase or sale of securities with a broker. The order is usually placed by telegram, telephone, letter, fax etc or in person. To avoid delay, it is placed generally over the phone. The orders may take any one of the forms such as At Best Orders, Limit Order, Immediate or Cancel Order, Limited Discretionary Order, and Open Order, Stop Loss Order. Execution of order or contract Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30 P.M on all working days Monday to Friday, and a special one-hour session on Saturday. The members or the authorized assistants have to wear a badge given by the exchange to enter into the trading ring.


Page 42

ONLINE TRADING They carry a sauda Block Book or conformation memos, which are duly authorized by the exchange when the deal is struck; both broker and jobber make a note in their sauda block books. From the sauda book, the contract notes are drawn up and posted to the client. A contract note is written agreement between the broker and his clients for the transaction executed. Drawing Up and Bills Both sale and purchase bills are prepared along with the contract note and it is posted on the same day or the next day. This in a purchase transaction, once the shares are delivered to the client effects payment for the purchases and pays the stamp fees for transfer, a bill is made out giving the total cost of purchase, including other expenses incurred by the broker in the price itself. With this, the process ends. Dematerlization Dematerialization is the process by which physical certificates of an investor are converted to an equipment number of securities in electronic form and credited in the investor account with his DP. In order to dematerialize the certificates, an investor has to first open an account with a DP and then request for the Dematerialization Request Form, which is DP and submit the same along with the Share certificates. The investor has to ensure that he marks Submitted for Dematerialization on the certificates before the shares are handed over to the DP for demat. Dematerialization can only be done to those certificates, which are already registered in your name and belong to the list of securities admitted for Dematerialization at NSDL. Most of the active scrips in the market including all the scrips of S&P CNX NIFTY and BSE SENSEX have already joined NSDL. This list is steadily increasing. Briefly, the process is as follows: after completion of transfer, the investor gets the option to dematerialize such shares. Investors willing to exercise this option sends a Demat request along with the option letter sent by the company to his DP.


Page 43

ONLINE TRADING The company or its R&T agent would confirm the Demat request on its receipt from the DP to reduce risk of loss in transit. Dematerialized shares do not have any distinctive or certificate numbers. These shares are fungible-which means that 100 shares of a security are the same as any other 100 shares of the security. Odd lot shares certificates can also be dematerialized. Dematerialization normally takes about fifteen to thirty days. To get back dematerialized securities in the physical form, request DP for Dematerialization of the same is made Dematerialization is the process of converting electronic shares in to physical shares. Benefits of demat It reduces the risk of bad deliveries, in turn saving the cost and wastage of time associated with follow up for rectification. This has lead to reduction in brokerage to the extent of 0.5% by quite a few brokerage firms. In case of transfer of electronic shares, you save 0.5% in stamp duty. You avoid the cost of courier / notarization. You can receive your bonuses and rights issues into your DA as a direct credit, this eliminating risk of loss in transit. You can also expect a lower interest charge for loans taken against Demat shares as compared to loans against physical shares. There is no lost in transit, thus the overheads of getting a duplicate copy in such circumstances is reduced. RBI has also reduced the minimum margin to 25% for loans against dematerialized securities as against 50% for loans against physical securities.


Page 44

ONLINE TRADING We should know some things about the internet, e-commerce and etc. What is Internet? Internet is a worldwide, self-governed network connecting several other smaller networks and millions of computers and persons, to mega sources of information. This technology shrinks vast distances, accelerating the pace of business reforms and revolutionizing the way companies are managed. It allows direct, ubiquitous links to anyone anywhere and anytime to build up interactive relationships. A combination of time and space, called the Internet promises to bring unprecedented changes in our lives and business. Internet or net is an inter-connection of computer communication networks spanning the entire globe, crossing all geographical boundaries. It has re-defined the methods of communication, work study, education, business, leisure, health, trade, banking, commerce and what not it is virtually changing every thing and we are living in age. Net being an interactive two way medium, through various websites, enables participation by individuals in business to business and business to consumer commerce, visit to shopping arcades, games, etc. in cyber space even the information can be copied, downloaded and retransmitted. The use of Internet has grown 2000 percent in last decade and is currently growing at 10 percent per month. In India, growth of Internet is of recent times. It is expected to bring changes in every functional area of business activity including management and financial services. It offers stock trading at a lower cost. Internet can change the nature and capacity of stock broking business in India. E-commerce Electronic commerce is associated with buying and selling over computer communication networks. It helps conduct traditional commerce through new way of transferring and processing of information. Information is electronically transferred from computer to computer in an automated way. E-commerce refers to the paperless exchange of business information using electronic data inter change, electronic technologies. DARE COLLEGE, KHAMMAM Page 45

ONLINE TRADING It not only reduces manual processes and paper transactions but also helps organization move to a fully electronic environment and change the way they operated. PCs and networking attempts to introduce banks of the tools and technologies required for electronic commerce. The computers are either workstations of individual office works or serves where large databases and information reside. Network connects both categories of computers; the various operating systems are the most basis program within a computer. It manages the resources of the computer system in a fair and efficient manner. Evolution of broking in India The evolution of a broking in India can be categorized in three phases

Stockbrokers will offer on their sites features such as live portfolio manager, live quotes, market research and news, etc. to attract more investors.

Brokers will offer online broking and relationship management by providing and offering analysis and information to investors during broking and non-broking hours based on their profile and needs, i.e. customized services.

Brokers (now e-brokers) will offer value management or services like initial public offering online, on-line asset allocation, portfolio management, financial planning, tax planning, insurance services, etc. and enables the investors to take better and well considered decisions.

The actual definition of Online Trading is as explained below: Online trading is a service offered on the internet for purchase and sale of shares. In the real world you place orders on your stockbroker either verbally (personally or telephonically) or in a written form (fax). In online trading, you will access a stockbrokers website through your internet enabled PC and place orders through the brokers internet based trading engine. These orders are routed to the stock exchange without manual intervention and executed thereon in a matter of a few seconds.


Page 46

ONLINE TRADING The net is used as a mode of trading in internet trading. Orders are communicated to the stock exchange through website. In India Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. The SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Under the ORS the client enters his requirements (security, quantity, price buy/sell) on brokers site. Objectives Internet trading is expected to Increase transparency in the markets, Enhance market quality through improved liquidity, by increasing quote continuity and market depth, Reduce settlement risks due to open trades, by elimination of mismatches, Provide management information system, Introduce flexibility in system, so as to handle growing volumes easily and to support nationwide expansion of market activity. Besides, through internet trading three fundamental objectives of securities can be easily achieved, these are: Investor protection Creation of a fair and efficient market, and Reduction of the systematic risks. Some of the brokers offering net trading include ICICI direct, kotakstreet, etc. regulation


Page 47

ONLINE TRADING Requirements for net trading for investors 1. Installation of a computer with required specification 2. Installation of a modem 3. Telephone connection 4. Registration for on-line trading with broker 5. A bank account 6. Depository account 7. Compliance with SEBI guidelines for net trading The following should be produced to get a demat account and online trading account: As identity proof & address proof any one of the following: Voter ID card Driving license PAN card( in case of to trade more than 50000) Ration card Bank pass book Telephone bill Cather requirements, which are necessary First page of the bank pass book and last 6 months statement. Bank managers signature along with banks seal, manager registration code on photograph.


Page 48

ONLINE TRADING For stock brokers 1. Permission from stock exchange for net trading 2. Net worth of Rs. 50 lac 3. Adequate back-up system 4. Secured and reliable software system 5. Adequate, experienced and trained staff 6. Communication of order (trade confirmation to investor by e-mail) 7. Use of authentication technologies 8. Issue of contract notes within 24 hours of the trade execution 9. Setting up a website. The net is used as a medium of trading in internet trading. Orders are communicated to the stock exchange through website. Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. The SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Under the Order Routing System the client enters his requirements (security, quantity, price, and buy/sell) in broker's site. They are checked electronically against the clients account and routed electronically to the appropriate exchange for execution by the broker. The client receives a confirmation on execution of the order. The customer's portfolio and ledger accounts get updated to reflect the transaction. The user should have the user id and password to enter into the electronic ring. He should also have demat account and bank account. The system permits only a registered client to log in using user id and password. Order can be placed using place order window of the website.


Page 49

ONLINE TRADING Procedure for net trading Step 1: Those investors, who are interested in doing the trading over internet system i.e. NEATIXS, should approach the brokers and get them self registered with the Stock Broker. Step 2: After registration, the broker will provide to them a Login name, Password and personal identification number (PIN). Step 3: Actual placement of an order. An order can then be placed by using the place order window as under: (a) First by entering the symbol and series of stock and other parameters like 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. 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 10 seconds is there in executing the trade. Step 8: It is regarding charging payment, for which there are different mode. Some brokers will take some advance payment from the investor and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds to his account.


Page 50

ONLINE TRADING Internet trading provides total transparency between a broker and an investor in the secondary market. In the open outcry system, only the broker knew the actually transacted price. Screen based trading provides more transparency. With online trading investors can see themselves the price at which the deal takes place. The time gap has narrowed in every stage of operation. Confirmation and execution of trade reaches the investor within the least possible time, mostly within 30 seconds. Instant feedback is available about the execution. Some of the websites also offer;

News and research report BSE and NSE movements Stock analysis IPO and mutual fund centers

Step by step procedure in online trading Following steps explain the step by step approach to on-line trading: Log on to the stock broker's website Register as client/investor Fill the application form and client broker agreement form on the requisite value stamp paper Obtain user ID and pass word Log on to the broker's site using secure user ID and password Market watch page will show real time on-line market data Trade shares directly by entering the symbol or number of the security Brokers server will check your limit in the on-line account and demat account for the number of shares and execute the trade Order is executed instantly (10-30 seconds) and confirmation can be obtained. Confirmation is e-mailed to investor by broker Contract note is printed and mailed in 24 hours Settlement will take place automatically on the settlement day Demat account and the bank account will get debited and credited by electronic means. DARE COLLEGE, KHAMMAM Page 51

ONLINE TRADING Online trading has led to additional features such as: Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this leeway facility since one need to hold a price. Market orders: orders can be filled at unexpected prices, but this type is much more risky, since you have to buy stock at the given price. Cash account: where funds have to be available prior to placing the order. Margin account: where orders can be placed against stocks, to increase Purchasing power. Advantages of online trading Online trading has made it possible for anyone to have easy and efficient access to more reports and charts than it was previously possible if one went to any brokers' office. Thus we have access to a lot more information online. Online trading has let room for smaller organizations to compete with multinational organizations since it is no longer a leg it issue. Being online does not identify the size of any particular organization, therefore, this additional power to the underdogs. Online trading has allowed companies to locate themselves where they want as physical location is not an issue anymore. Companies can establish themselves according to their gains and losses, for instance where tax (sales and value added taxes) is best suited to them. Online trading gives control to individuals and they can exercise it over accounts thus comprehend what is going on when they trade. It is like going back to school and reeducating oneself on how to trade online. Individuals benefit by saving comparatively a lot more when trading online as the cost per trade is less. Individuals can invest in a variety of products, unlike earlier when people bought bonds, mutual funds, and stock for long-term basis and sat on them. Now they can invest in stocks, stock and index options mutual funds, government, and even insurance.


Page 52

ONLINE TRADING Investors reasons to trade online

They have control over their accounts, can make their own decisions and dont have to give reasons for their actions. They are independent.

They have a reason to participate in the market and learn about it. It is interesting, cheap, easy, fast, and convenient. A lot of information is online so they can keep up-to-date with what is happening in the trading world.

It will give investors a greater choice and better realization. The immediate impact will be competition and benefits will accrue to the investors. It will lead to brokerage commissions going down and brokers striving to increase business afloat.

Investors will now go to place, which have better trading conditions and also members to offer them better facilities.

They have access to numerous tools to invest, and can create their own portfolio.

Here are the possible disadvantages

When network crashes, there will be problems and delays due to a large influx of rapid online trading criteria.

Individuals are restricted to first-hand financial guidance. This simply means that the individual is himself / herself alone to.

A tax (sales tax and value added tax) evaluation becomes an issue, especially when you are trading internationally.

One has no idea with whom he is dealing with on the other end. According to a study conducted by Mary Rowland, careful investor: is online trading bad for your portfolio, the more one trades the less returns one gets, meaning that an addicted trader gets, carried away online and begins to trade for too much which causes losses for him / her.


Page 53

ONLINE TRADING Trading and settlement at ZENMONEY The NSE first introduced online trading in India. The Online trading system imparted a greater level of transparency and investors preferred exchanges that offered Online trading because of the following factors: The ease of operation from the view of the both members and the investors. Increase in the confidence of the investors because of higher level of transparency. Facilities better monitoring of the market by the exchange. The best price achieved in buying and selling. All these resulted in ever-increasing volumes on the exchanges offering the online trading. Trading procedure at ZENMONEY Securities ltd ZENMONEY deals in buying and selling equity shares and debentures on the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-Counter Exchange of India (OTCEI). ZENMONEY is provided with a computer and required software from their registered stock exchanges. These centers are called Broker Work Stations. These computers are connected to the server at the stock exchanges through cable. The member or

broker sitting in his office can send the quotations, orders, negotiations, deals, in-house deals, auction orders etc., through the computer. The Central trading system (CTS) will accept these

orders and send it for match. If there is any mistake in the order, CTS will reject the orders and send respective error message to the member concern. All these operations are in built. The main objective of CTS is to monitor the Stock Exchanges operations. Order placed by the broker will be sent for a match and if the match is found suitable, the transaction will be executed. Otherwise, the order will be deleted automatically after completion of trading time. The carry forward transactions (Good Till cancellation) are forwarded to the next day. Even if the match is not found within the prescribed period, the order will not cancel. DARE COLLEGE, KHAMMAM Page 54

ONLINE TRADING Trading session Trading timings are from 9:15 A.M. to 3:30 P.M. on all 5 days of the trading period. Monday to Friday is the trading period in all the stock exchanges. SEBI has stipulated that all the stock exchanges in India must have same trading period. Broker work station At the broker workstation the BBOs, the last traded price, the days opening price, previous days closing price, highest and lowest prices, the weighted average price and total trade value will be available continuously, as the BBO for each scrip. Other information will be available on query from the BWS. These include top gainers /losers of the day. Trader-wise, scrip wise net position, client wise net position, top scrip by the volume/value, market summary etc. Brokers are also provided with information relating to the companies in the matter of Book closure, Dividend declarations, resolutions in board meeting, information about liquidated companies, company report etc. ORDERS Orders can be done one at a time or in a batch mode. The submitted order will be accepted at the CTS, after validation if it finds any invalid reason the order is return back to the BWS, with the appropriate error message. If Accepted at the CTS it will be added to the local pending order book. The order will then be taken up for matching, if it is a buy order the system tries to find a sell order, which fits the requirement of the buy order, when such match is found a trade gets executed. Each trade involves two brokers and respective traders who sent the order. Both these traders are informed of the trade being executed at their respective BWS.


Page 55

ONLINE TRADING At the BWS the trade is added to the local trade book. Orders sent by the brokers are two types Good for the day (GFD) Good till cancellation(GTC)

Good for the day This is also called as market order. For an order if the member selects the deal as good for the day, the order is treated as market order. If a best bid founds match With best order then the transaction gets executed.

If the match is not found then after trade time the order gets cancelled that day. Next day he has to place a new order.For example if a member wants to purchase 1000 shares of satyam info @ 400 each through Good for Day order. If the correct match is not found, order gets cancelled automatically and new quotation has to be placed the next day. Good till cancellation This order is forwarded to the last trading day of that settlement period. This is also called as carry forward order like GFD; broker has to select the option of GTC for the order. If the order finds match with in the trading settlement period, the order is executed. If no match is found, the order is cancelled on the last day of settlement period. This order is not carried forward to the next settlement period. For example, if a member a place purchase order of 500 shares of SBI @ 690 per share and selects the order as GTC and place an order. If the match is not found on that day it will be forwarded to the next day until trading settlement period day.


Page 56


Settlement of transactions Clearing of transaction in the form of shares and cash is called settlement. Buyers will take the delivery of shares through the depository participants like ZENMONEYand others. Finally, the settlement is made by means of delivering the share certificates along with the transfer deeds. The transferor (or the seller) duly signed transfer deed. It bears a stamp of the selling broker. The buyer then fills up the certificates fills up the particulars in the transfer deed. Settlement can be done in the following way. Spot settlement: under this method, the delivery of securities and payment for them are affected on the day of the contract itself. Rolling settlement: Under this rolling settlement the trading is on T+2,basis i.e. if Monday is trading day then Wednesday is the paying day . In case on non-delivery, the securities will go for auction. Details of procedures: Delivery in : The members who are in pay-out position delivers share certificates in to clearing house within the settlement period along with the delivery Chelan filled in with the details of share certificates which has folio numbers or distinctive numbers etc Delivery out: The buyer of shares who made pay in position will take delivery of shares from the clearing house. Pay-in: The member who is in paying position shall pay for value of shares within the trading settlement period (T+2). Payout: The cheques paid in the clearinghouse will be paid to members who are in paying position.


Page 57

ONLINE TRADING All disputes arising between members regarding non-deliveries, non-payments, good and bad deliveries pertaining to the settlement will be settled by the settlement committee of the exchange. Heritage West offers Online Trading as a powerful, cutting-edge online trading platform. Online Trading provides direct access to all U.S. markets as well as select international exchanges. Your orders are quickly and securely routed to electronic handheld devices or printers or directly into electronic exchange venues for fast and accurate execution. With Online Trading you can place and maintain orders, obtain status on working orders, check balances, view positions, check for filled trades, retrieve snapshot quotes, and much more. Online Trading uses a variety of screens to display and request information. These screens are used to display positions, filled trades, account activity, parked orders, quotes, funds, market information, and user preferences. Trade anytime, from anywhere. Online Trading is a 100% web-based platform, so there's no software to download or install - this also means you can access our website using any PC, anywhere in the world, with a browser and Internet connection to access the most popular futures and options contracts. You'll have instant access to real-time account value and positions as well as quotes and fill information. As a client, you can also expect excellent technical and trade support 24 hours a day. An online trading community provides participants with a structured method for trading, bartering, or selling goods and services. These communities often have forums and chatrooms designed to facilitate communication between the members. An online trading community can be likened electronic equivalent of a bazaar, flea market, or garage sale.


Page 58

ONLINE TRADING Formal trading communities A formal trading community consists of a website or network of websites that facilitate and track trade transactions. Some websites, such as the video game trading site Goozex, charge transactional fees per trade, while other similar sites such as GameTZ do not. Key elements of formal trading communities

Transactional tracking Ratings and feedback system Content listing, referencing, and matching

Trading communities There are several community based websites that have a broader scope and lend themselves to a trading environment. 1UP is a website dedicated to the publishing of news, videos, and other related media dealing with video games. There is a growing section of the site though dedicated the trading of games and DVDs on their message boards. Craigslist is a site for posting personal advertisements but many users have found this a less than conventional means of trading goods online with local residents. GameTZ is regarded as being the oldest remaining website dedicated to buying, selling and trading video games on all modern and legacy platforms. IGN is another website dedicated to videogame news and media that also has message boards dedicated to online trading. The distinguishing factors being that IGN has a much larger integrated database of games and DVDs in existence that users can add to their collection lists for trade purposes as well as mark the ones they are playing to lock from trade.


Page 59

ONLINE TRADING General rules of conduct Some online trading communities have specific rules adopted by the users of that community, and though they can differ most have settled upon a few standard practices: The less experienced trader (usually indicated by their feedback or trade history) sends their half first. It is generally frowned upon by most communities to "thread crap" (A term referring to a user not involved in the pending trade undercutting a trade in progress with either a better deal or reasons for the trade not to take place). While trading any used items online, be sure to include the condition and quality of the product so as the receiver can determine its overall value.

Trading circle A trading circle is a form of online trading designed to facilitate viewing of television series and episodic media. Physical media such as videocassettes, DVDs and CDs are exchanged via mail. Each member agrees to pass an episode on to the next member in a timely fashion, thereby allowing all members of the group to view the series. This communal trading method is also used by special interest clubs. Some of these groups (among many) include anime clubs. Investing online, or self-directed investing, has become the norm for individual investors and traders over the past decade with many, if not all brokers now offering online services with unique trading platforms. Online trading portals Online trading is the investment activity that takes place over the Internet without the physical inclusion of the broker. An end user (investor) has to register with an online trading portal like,,, and


Page 60

ONLINE TRADING The investor thus gets into an agreement with the firm to trade in different securities according to the terms and conditions listed down on the agreement. Since the servers of the online trading portal are connected all the time to the stock exchanges and designated banks, order processing is done in real time. Investors can also get updates on the trading and check the status of their orders either through e-mail or through the interface. Portal design Harish Malhotra, Chief Technology Officer, Motilal Oswal Securities Limited, says "the portal should be simple to navigate, full of useful and relevant information which is available with the lowest number of clicks, and should be personalized." However a very important aspect is that the systems should be able to interface directly with that of the online exchanges without incompatibility issues. Overview In the past, investors had to call up their brokers and place an order on the telephone. The broker would then enter the order in their system which was linked to trading floors and exchanges. With the advent of the internet, investors can now enter orders directly online, or even trade with other investors via electronic communication networks (ECN). Some orders entered online are still routed through the broker allowing agents to approve or monitor the trades. This step assists in the protection of both the client and brokerage firm from unlawful or incorrect trades which could affect the clients portfolio or the brokers license. Online brokers are most often referred to as discount brokers, due to their lower fees as opposed to full service brokers who also give advice to clients. Before choosing to invest or trade online it is important for investors to research the online brokers that they plan to employ, assuring that they are licensed within their state or provincial jurisdiction. This step will help to protect investors from falling victim to unlawful or illegal securities schemes (e.g. Boiler Room scams). DARE COLLEGE, KHAMMAM Page 61

ONLINE TRADING The USA Federal Government provides practical tips to avoid investment scams via their OnGuard Online website. One tip is "Don't believe everything you read in online newsletters, investing blogs, or bulletin boards. Fraud artists often float false information and "hot tips" as part of their efforts to rip-off investors or manipulate the market for a particular security." They also advise that one "Turn to unbiased sources when researching investments, such as the U.S. Securities and Exchange Commission (via their EDGAR database), your state securities regulator, and securities industry self-regulatory organizations (including the Financial Industry Regulatory Authority (FINRA), Amex, and Nasdaq)." Investors must also fully understand the potential risks of investing without the help of a trained Stock Broker or Investment Advisor. These professionals are experienced both in trade and education and forgoing their advice could be costly. For this reason, most online brokers offer a number of investment tools. Once the above two steps are complete it is dually important to research the sector, business and financial statements of each company whose stock they plan to purchase. This, along with diversification and basic portfolio theory, will assist to mitigate some of the risks associated with the volatility in both the stocks and the stock markets. Once investors have chosen an online brokerage that best suits their needs, they will be provided a trading platform. This platform acts as the hub, allowing investors to purchase and sell securities (fixed income and equities), options, mutual funds, and foreign exchange. Included with the platform are tools to track and monitor securities, portfolios and indices, as well as research tools, realtime streaming quotes and up-to-date news releases; all of which are necessary to trade profitably. Often, more robust research tools are available such as full, in-depth analyst reports and analysis, and customized backtesting and screeners to see how particular investment strategies would have been realized during different historical periods. Some of the popular online brokers include: E*Trade, Scottrade, TD Ameritrade, and Fidelity. Schwab is an example of a hybrid broker combining a traditional, brick-and-mortar brokerage house with discounted trading online, with the usual benefits of both available to customers. Commissions vary from broker to broker, depending on the services included with the account.


Page 62

ONLINE TRADING The given flow chart clearly explains the process of online trading


Buy transcation
The system will check buying limits

Sell transcation
The system will check your dp account quantity

Orders accepted

Rejected orders would be communicated along with reasons

orders accepted

your order is transmitted to exchange for execution

pending buy orders would be displayed on your screen

on execution of your orders

pending sell orders would be displayed on your screen

you may edit your pending order

you may delete your pending order

you may edit your pending order

you may delete your pending order

flashed on your screen immediately on execution

conformationcoul d be send to your e-mail and mobile

contract note would be sent to by mail or hand delivery


Page 63



INTERPRETATION The above table shows the account opening charges of different trading companies. It shows ICICI DIRECT is charging highest charges where as SBI is charging less i.e. only 500 Rs.


Page 64

ONLINE TRADING 2. Statement showing comparison of sell charges in 2011 DEPOSITORY SBI DEMAT A\C HDFC DEMAT A\C ICICI DEMAT A\C CITI BANK DEMAT A\C ZENMONEYDEMAT A\C CHARGES 0.03% 0.04% 0.04% 0.06% 0.04%

0.07% 0.06% 0.05% 0.04% 0.03% 0.02% 0.01% 0.00%



INTERPRETATION The above table shows the selling charges of different online broking companies. It shows CITI bank is charging highest charges where as SBI is charging less i.e. only 0.03 %.


Page 65

ONLINE TRADING 3. Statement Showing Comparison of Buy Charges in 2011


CHARGES 0.01 0.02 0.02 0.03 0.02

0.035 0.03 0.025 0.02 0.015 0.01 0.005 0



INTERPRETATION The above table shows the buy charges of different trading companies. Compare with other companys SBI Demit A/c is low 0.01.


Page 66

ONLINE TRADING 4. Statement Showing Comparison of Account Maintenance Charges in 2011 {Per Annum}:


CHARGES 400 500 500 250 300

Chart Title
600 500 400 300 200 100 0 CHARGES


INTERPRETATION The above table shows the account maintenance charges per annum of different trading companies. It shows HDFC SECURITIES and ICICI DIRECT are charging highest charges where as CITI BANK is charging less i.e. only 250RS


Page 67

ONLINE TRADING 5. Statement showing comparison of intraday brokerage Charges in 2011


INTRADAY BROKERAGE 0.10% 0.10% 0.15% 0.07% 0.03% 0.15% 0.10% 0.15% 0.15% 0.03% 0.01% 0.03% 0.10%


Page 68


0.16% 0.14% 0.12% 0.10% 0.08% 0.06% 0.04% 0.02% 0.00%



INTERPRETATION The above table shows the INTRADAY brokerage charges of different trading companies. It shows MOTILAL OSWAL;ICICI DIRECT; HDFC SECURITIES and UTI SECURITIES are charging highest charges at same rate i.e.0.15% where as RELIANCE MONEY is charging less i.e. only 0.01%.


Page 69

ONLINE TRADING 6. Statement Showing Comparison of Delivery Brokerage Charges in 2011

Online Broker: SBI Cap Securities Share khan Ltd Motilal Oswald 5 Paisa Zenmoney ICICI Direct India Bulls HDFC Securities UTI Securities Religare Reliance Money Geogit India Infoline

Brokerage For Delivery 0.50% 0.50% 0.50% 0.85% 0.50% 0.75% 0.50% 0.50% 0.80% 0.30% 0.01% 0.30% 0.50%


Page 70


0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%

Brokerage For Delivery

Online Broker

INTERPRETATION The above table shows the delivery brokerage charges of different trading companies. It shows 5 PAISA.COM is charging highest charges where as RELIANCE MONEY is charging less i.e. only 0.01%.


Page 71

ONLINE TRADING 7. Statement Showing Comparison of Dematerialization Charges in 2011 { For Each Request} COMPANY: SBI CAP SEC HDFC SECURITIES ICICI DIRECT CITI BANK SEC ZENMONEYLTD DEMATERIALISATION HAREGS: 35 35 35 50 15


INTERPRETATION The above table shows the DEMATERIALISATION charges of different trading companies. It shows CITI BANK is charging highest charges where as ZENMONEYLTD is charging less i.e. only i.e. 15RS.for each request.


Page 72

ONLINE TRADING 8. Statement showing comparison of dematerialization Charges in 2011 { for each request} COMPANY NAME: SBI CAP SEC HDFC SECURITIES ICICI DIRECT CITI BANK SEC ZENMONEY LTD DEMATERIALISATION CHARGE: 25 10 20 50 25


INTERPRETATION The above table shows the DEMATERIALISATION charges of different trading companies. It shows CITI BANK is charging highest charges where as HDFC SECURITIES is charging less i.e. only i.e. 10RS.for each request.


Page 73

ONLINE TRADING 9. Statement showing comparison of initial margin maintenance of bank savings account COMPANY NAME SHAREKHAN 5 PAISA.COM KOTAK STREET INDIA BULLS ZENMONEY HDFC SEC.COM GRAPH-9

INITIAL MARGIN 0 2500 5000 0 4000 5000

INTERPRETATION The above table shows the INITIAL MARGIN MAINTENANCE OF BANK SAVINGS ACCOUNTS of different trading companies. It shows KOTAK STREET AND HDFC SECURITIES are charging highest charges maintenance of 5000 RS. Whereas rest of trading companies are providing at zero maintenance.


Page 74


Fluctuations are more in secondary market than any other market. There are more speculators than investors. Information plays a vital role in the secondary market. Previously rolling settlement is T+5 days, now it changed to T+2 days and further it will be changing to T+1 day. It was also observed that many broking houses offering internet trading allow clients to use their conventional system as well just ensure that they do not loose them and this instead of offering e-broking services they becomes service providers. The number of players is increasing at a steady rate and today there are over a dozen of brokerage houses who have opend to offer net trading to their customers and prominent among them are INDIA BULLS, SHARE KHAN, KOTAKSTREET, ICICI DIRECT and GEOJIT. The Bombay stock exchange sensex zoomed past the 7700 barrier for the first time in history to achieve new all time high of 7800 intraday trade and ended at a historic close of 7732 points.


Page 75



I recommend the exchange authorities to take steps to educate Investors about their rights and duties. I suggest to the exchange authorities to increase the investors confidences.

I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices. I recommend the speculative pressures are responsible for the wide changes in the price, not attracting the genuine investors to the greater extent towards the market.

I recommend genuine investors are not at all interested in the speculative gain as their investment is based on the future profits, therefore the authorities of the exchange should be more vigilant to curb the speculation.

I recommend the necessary steps should be taken by the exchange to deal with the situations arising due to break down in online trading.


Page 76



I concluded things have changed for the better with the ZENMONEY going on-line coupled with endeavor to stream line the whole trading system, things have changed dramatically over the last 3 to 4 years. New and advanced technologies have breached geographical and cultural barriers, and have brought the countrywide market to doorstep.

I concluded in the present scenario to compete with the Brokers would require sound infrastructure and trading as per international standards.

I concluded the introduction of on-line trading would influence the investors resulting in an increase in the business of the exchange. It has helped the brokers handling a vast amount of transactions and this can be an efficient trading, delivering, settlement system with adequate protection to investors. The trading of o ZENMONEY the first day was Rs. 1.8 crores.

I concluded due to invention of online trading there has been greater benefit to the investors as they could sell / buy shares as and when required and that to with online trading.

I concluded the brokers has a greater scope than compared to the earlier times because of invention of online trading.

I concluded he concept of business has changed today, this is a service oriented industry hence the survival would require them to provide the best possible service to the clients.


Page 77


SNO 1 2 3 4 5 BOOK TITLE Investment management Investment management Security Analysis And Portfolio Management Marketing of Financial Services Indian Financial System AUTHOR -V.K.Bhalla -Preethi Singh -V.A.Avadhani -V.A.Avadhani -M.Y.Khan

WEBSITES www.Share


Page 78