PROCEDURE FOR TRADING IN LISTED SECUTRITIES IN STOCK EXCHANGE AND
COMPETETIVE POSITION OF ALANKIT ASSIGNMENT LTD , DELHI .
DECLARATION I Saurav Sood , a student of University Business School , Panjab University Chandigarh of hereby declare that the project work, presented in this report is my own and has been carried out under supervision of This work has not been previously submitted to any other university For any examination .
Date :-
Place:- Signature: Saurav Sood
ACKNOWLEDGEMENT
I hereby take this opportunity to thank M/s ALANKIT ASSIGNMENT LTD , for providing me a corporate exposure through the course of my summer internship. I would like to express my sincere gratitude towards my company guide for providing me great insights about mechanism of stock exchange, procedure for listing of securities in stock exchange and other ventures , for guiding me all throughout and for being a great support. I would like to extend my gratitude to UBS Chandigarh, for providing me such a platform. Last but not the least all my friends and family for their support and co-operation.
Thanking You, Saurav Sood
EXECUTIVE SUMMARY The market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market, the stock market is one of the most vital components of a free-market economy, as it provides companies with access to capital in exchange for giving investors a slice of ownership in the company. The stock market makes it possible to grow small initial sums of money into large ones, and to become wealthy without taking the risk of starting a business or making the sacrifices that often a company a high-paying career. Thus this project is focused to study and analyze procedure for dealing in securities in stock exchange . Researcher has also study some of the demand drivers and supply factors that provide ALANKIT ASSIGNMENT LTD a competitive edge over other players in the market.
SL NO. CONTENTS PAGE NO. 01 Declaration 02 Acknowledgement 03 Certificate 04 Executive summary 05 Review of Literature a Objective of project 06 Company Overview a Mission, Vision & Corporate Philosophy b Product and Services
c Group Companies d Milestones 07 Comparative analysis of Broking Services of Alankit Assignment Limited With other Broking Firms
10 PESTEL analysis of Firm 11 Procedure for Trading Listed Securities in stock exchange
a Introduction and Requirements For Listing of Securities
b Compliances Under Listing Agreement c Procedure For Trading of Securities in BSE d Procedure For Trading of Securities in NSE 12 Conclusions 13 Bibliography
Review Of Literature
Al Ries and Jack Trout, in his work said differentiate or die, too many less differentiated products creates a kind of information overload, and in this clutter of too much information, products which are not properly differentiated or advertised just end up becoming a me too product. To avoid it every marketer needs to position his/ her products in a way that makes a specific image in the minds of consumers.
Jack Miller, in his work published on June 03, 2010, talked about how investors make investment decisions. He broke the process of decision making in pulling the buy or sell trigger. According to him investors made the investment decisions in the ways like simple screening, then lateral recommendation, followed by piggy bank investing.
According to U.S. Securities and Exchange Commissions, one of the articles: investors first evaluate their current financial roadmap, and then they evaluate their comfort zone in taking on risk. Consider an appropriate mix of investments, create and maintain an emergency fund, consider dollar averaging, consider rebalancing portfolio occasionally, and in the process also try to avoid the circumstances that can lead to fraud.
Objectives of the study:
Study was conducted to find out the services provided by ALANKIT ASSIGNMENT LTD In relation to : 1. Listing of securities of companies with designated Stock Exchanges in India 2. Trading of securities in Stock exchange having nationwide Terminals viz. National and Bombay Stock exchange on Behalf of its clients 3. Competitive position of Alankit Assignments ltd In financial market
COMPANY PROFILE Alankit Assignments Ltd., the flagship company was incorporated in 1991 by a talented visionary entrepreneur, Mr Alok K Agarwal. Under his able guidance and management, the company has made unhindered steady progress since then. The Company has its headquarter in Delhi with 25 Regional Offices in Mumbai, Kolkata, Chennai, Ahmadabad, Bangalore, Hyderabad, Jaipur, Lucknow, Chandigarh, Indore, Bareilly, Kochi, Amritsar, Ludhiana, Patna, Bhubaneswar, Guwahati, Pune, Ranchi, Visakhapatnam, Raipur, Mysore & Nagpur. Alankit Assignments Ltd. has expanded its footprint in global arena with its overseas offices in London, Singapore and Dubai. With a consistent expansion of Alankits business, the Company has evolved from largely Financial & Share Broking Company into a diversified Business House. . Vision: "To be a unique service provider in the sectors we serve Mission: To become a customer centric organization with focus on building trust by our unmatched standards CORE VALUES Customer Centric With our committed workforce we develop relationship that makes a positive difference in our customers lives Trustworthy We uphold clients trust, commitment & privacy for all our actions Quality
We work together, and provide unsurpassed services to deliver premium value to our customers Stewardship Think future oriented; act & invest to build a stronger firm for tomorrow. Alankit Assignments ltd further commits itself to focus on the following as a part of corporate social responsibility initiatives: . Quality in all its activities Ethical and Moral conduct at all times and in all its relationships
Practicing socially and environmentally responsible behavior Providing productive, healthy and safe work place for all its employees
Growth And Strategy Covering India through Aadhar Geographical expansion of business Expand product portfolio Strengthen research capabilities
Product and Services Financial Services Equities Derivatives Currency derivatives Arbitrage Registrar Transfer Agent (RTA) New pension scheme Initial public offer Depositary participant Mutual funds Insurance Institutional equities Wealth Management Portfolio Management Research services Financial planning
Health Care . Third Party Administration . Rx Pharmacy
Group Companies
Alankit Assignments Limited Alankit Imaginations Limited Alankit Health Care TPA Limited Alankit Insurance Brokers Limited Alankit Technologies Limited Alankit Life Care Limited Alankit Finsec Limited
Milestone 1995 to 2000 Registrar & Share Transfer Agent (RTA) Trading & Clearing Member - NSE, OTCEI, NSE- F&O Depository Participant- NSDL & CDSL 2002 Member commodity Exchange Third Party Administrator (TPA) 2003 Insurance Broker 2004 e-Governance TIN 2005 Member of: Dubai Gold & Commodity Exchange (DGCX) Bombay Stock Exchange (BSE) 2007 Member of Indian Energy Exchange (IEX) 2008 Member of Currency Exchange e-Governance- CRA 2009 Member of: Indian Commodity Exchange (ICEX) Delhi Stock Exchange (DSE)
2010 Appointed as POP-SP for New Pension System Aggregator- NPS LITE Enrollment Agency for UIDAI 2011 Launch of recordxpert.com (Health record portal) 2012 Online issue of General Insurance Policies of National Insurance Co. Ltd. 2013 AP of NIR
Comparative Analysis of Broking Services of Alankit Assignment Limited With other Broking Firms:
1. IIFL The IIFL group, comprising the holding company, IIFL and its wholly- owned subsidiaries, straddle the entire financial services space with offerings ranging from equity research, equities and derivatives trading, commodities trading, portfolio management services, mutual funds, life insurance, fixed deposits and other small savings instruments to loan products and investment banking. IIFL has a network of over 2100 business locations (branches and sub-brokers) spread across more than 450 cities and towns. the group caters to approximately a million customers. At present, IIFL is operating into USA, SINGAPORE and DUBAI.
Product & service:
o Equity trading
o Commodity trading
o Insurance solution
o Asset management
o Online investment portal
o Loans
A/c opening charge 550Rs.
Annual Maintenance charges 300Rs.
Minimum Margin Required 10,000Rs.
Client wise exposure up to 4 times in delivery
up to 10 times in intraday
Upfront Subscription Plan Yes
Brokerage 4 paise in delivery
.04 paise in intraday
DP selling charges Nil
Advisory services Free to clients
80 Rs. p.a. sub-broker
Software installation charges Free
Name of software Vconnect, Rapideal, Rapitrade
Table 2.1: Table showing Services and charges of IIFL
. Kotak Securities Limited Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of the Kotak Mahindra Group. One of the oldest broking houses in India, its operations include stock broking and distribution of various financial products. It is a corporate member of both the Bombay Stock Exchange and the National Stock Exchange of India. Kotak Securities was founded in 1994 and is headquartered in Mumbai, India. Kotak Mahindra is one of India's leading banking and financial services organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporate sector. Products & Services o Equity o Derivatives o Currency Futures o IPO o Mutual Funds o ETF o Fixed Deposits o Loans o Tax Services, o New Pension Systems and Insurance.
Table 2.2: Table showing Services and charges of Kotak Securities
A/c opening charge 550Rs.
Annual Maintenance charges 300Rs.
Minimum Margin Required 10,000Rs.
Client wise exposure up to 4 times in delivery
up to 10 times in intraday
Prepaid scheme available Yes
Brokerage 4 paise in delivery
.04 paise in intraday
DP selling charges Nil
Advisory services Free to clients
80 Rs. p.a. sub-broker
Software installation charges Free
Name of software Vconnect, Rapideal, Rapitrade
3. Share Khan Incorporated in February 2000, Sharekhan is India's 2 nd largest stock broker providing brokerage services through its online trading website Sharekhan.com and 1950 Share shops which includes branches & Franchises in more than 575 cities across India. Sharekhan has seen incredible growth over last 10+ years though it's very successful online trading platform and the chain of franchises located in almost every part of India. Sharekhan has over 10 lakh retail and institutional customers. Sharekhan.com is the finest investment portal for India stock market. The well designed website provides wide range on investment options, latest stock market updates and many tools for investors. Sharekhan also offers 'Sharekhan Trade Tiger', one of the most popular trading terminals, for retail investors. Product & service: o Equity trading o Commodity trading o Insurance solution o Asset management o Online investment portal o Loans o Wealth management spectrum
Table 2.3: Table showing Services and charges of Sharekhan
A/c opening charge 550Rs.
Annual Maintenance charges 300Rs.
Minimum Margin Required 10,000Rs.
Client wise exposure up to 4 times in delivery
up to 10 times in intraday
Prepaid scheme available Yes
Brokerage 4 paise in delivery
.04 paise in intraday
DP selling charges Nil
Advisory services Free to clients
80 Rs. p.a. sub-broker
Software installation charges Free
Name of software Vconnect, Rapideal, Rapitrade
SWOT analysis of Alankit Assignment Limited Strengths Diversified Services
Experienced Management
PAN India Presence
18 Years of Services
24 Services
8 Group Companies
25 Regional Offices Online trading platform. Diverse branches and networks provide a great opportunity to cater tapped and untapped market as well. Provides competitive brokerage and DP charges. Equity analysis reports to support its clients. Both online and offline trading facility. Weakness Position to answer the questions of the clients in their fields. It does not provide indices on major world markets, ADR prices of Indian scripts.
Lacks banking arm Lack of awareness among customers because of non-aggressive promotional strategies (Print media, newspapers etc.) OPPORTUNITIES: Can easily tap the retail investor s with small saving through promotional channels like print media, electronic media, etc. More & more small investors are entering into share market Focuses more on HNIs than retail investors which results in meager market- share as compared to close competitors. ATM facility should be provided for easy withdrawals. Tie-ups with third party companies for selling products. High client base will help for cross sales of its products
Threats Companies like Sharekhan, ICICI Direct, Kotak Securities, and private brokers are major threats. Banks with demat facilities are jockeying for position. Local brokers capable of charging lower brokerage. Changes in SEBI guidelines and other tax implications. Government regulations
Competitive Advantage Of Alankit Assignments Limited Brokerage Services One of the lowest brokerage charge in the industry (currently). Best software in the industry. Listed company and aggressive in brand promotion. Mobile trading tie ups with Blackberry and other phones, where one can trade with ease. Both online and offline facilities are provided. Competitive commissions and service support at fair price (value for money). Relationship manager facility to assist customers as and when they need assistance and guidance. Easy access to customers of the snap shots of their account statement and portfolio statements and to digital contract notes.
PESTEL analysis of firm Political and Legal Heavy regulations and tough regulations by SEBI to avoid major scams like Harshad Mehta and ketan Parekh. Settlement period and Settlement Cycle Know Your Customer Norms Economic Environment Limited FDI and Foreign Institutional Investor Inflows Rigid RBI Guidelines and Foreign Exchange Management Provisions Limited Trade and heavy regulations in currency trade Social Environment Apprehensiveness of investments in stocks and shares Less Expertise and more dependence on speculation Festivals
Technological and Environmental Techonological Advances , The stock exchanges , improved trading, hardware and software and software enabling nearly 15 Millions trades per day. Satellite communication techonologies Online and Mobile Trading facilities
Procedure for Trading Securities in stock exchange(National and Bombay stock exchange) As we know stock exchange provides a platform for sale and purchase of existing securities of companies. Only such securities can be traded on floor of stock exchange which are listed with stock exchange. In order to ensure that securities of a public limited company are listed in a stock exchange a company has to appoint a compliance officer which will ensure that all clauses of listing agreement framed by stock exchange are duly compiled. Listing means permission from stock exchange for trading securities on trading floor of stock exchange. Following are main clauses of listing agreement and compliances BOOK CLOSURE FOR DECLARATION OF DIVIDEND ETC.- Clause 16 Event To close the transfer books for declaration of dividend at the time of the AGM. Books will also be closed for issue of right/bonus shares or issue of shares for conversion of debentures etc. in the same manner by giving notices. The minimum time gap between the two closures and / or record dates would be at least 30 days. Time Limit Advance Notice of at least 7 days. The exchange must be given the dates and purpose of closing the transfer of books. The company on whose stocks, derivatives are available or whose stocks form part of an index on which derivatives are available, shall give a notice
period of 7 days to stock exchanges for corporate actions like merger, de- mergers, splits and bonus shares. Clause 19(a), (b) & (d) Prior intimation to stock exchange for calling Board Meeting for some specified Business If the company is planning for Proposal for buy back Declaration of dividend Right issue Bonus Issue (in this case simultaneous notice to stock exchange has to be given on the date when the proposal is communicated to Board of Directors as a part of agenda papers.) Issue of convertible debentures. Passing over of dividend. Then prior intimation to the Exchange is required before the Board considers the same. Time Limit At least 2 working days in advance of the date of the Board Meeting ISSUE OF SHARES OR SECURITIES Clause 24 The company making a new issue has to agree To obtain in principal approval for listing of the new securities To make true, fair and adequate disclosure in the offer documents
To get the offer documents vetted by SEBI To submit to the exchange: Copy of the acknowledgment card so vetted by SEBI and Compliance certificate from merchant banker reporting positive compliance of guidelines on disclosure and investor protection. Company to submit any scheme/petition under sections 391, 394 and 101 proposed to be submitted to the court or tribunal at least one month in advance for getting it approved from the stock exchange and shall also: Submit an auditors certificate to the effect that the accounting treatment contained in such scheme is in compliance with all the applicable Accounting standards (requirement introduced w.e.f. 5 th April, 2010.) Assure to the stock exchange that the said scheme of arrangement/amalgamation/merger etc does not in any way violate, override or circumscribe the provisions of the securities laws or stock exchange requirements. Disclose the pre and post arrangement capital structure, shareholding pattern and the fairness opinion obtained from independent merchant bankers on valuation of assets / shares in the explanatory statement forwarded to the shareholders u/s 393 or accompanying the resolution to be passed under section 100 Clause 23 (e). Event Time to be given to right issue shareholders to decide Time Limit Not less than 4 weeks, within which they will have to exercise their rights.
Clause 23 (e) Event Time limit to issue letters of allotment or letters of rights Time Limit Within 6 weeks of the Record date / reopening of transfer books / submission of letters of renunciation / applicable of new securities. FORWARDING OF ANNUAL ACCOUNTS TO THE EXCHANGE, FILING OF SHAREHILDING PATTERN clause 31 The company will forward to the Exchange promptly and without application: - 6 copies of the Annual report / periodical report / special report as soon as they are issued to the shareholders to all the recognized stock exchanges: 6 copies of all notices, resolutions and circulars relating to new issue of capital prior to their dispatch to the shareholders: 3 Copies of all the notices, call letters or any other circulars including notices of the meeting convened under section 391 or 394 at the same time as they are sent to the shareholders or debenture holders or advertised in the Press: Copy of the proceedings at all AGM / EGM of the company; 3 copies of all notices, circulars, etc, issued or advertised in the press regarding any proposal to merge or amalgamate, re-construction, reduction of capital, scheme or arrangement etc. and copies of the proceedings at all such meetings. Time limit Should be send when mailed to shareholders. Should be send prior to dispatch to shareholders. Should be send when sent to shareholders.
Should be send after the Chairman of the meetings has signed the minutes. Promptly. ANNUAL REPORT- clause 32 Company to supply a copy of the complete B/S, P/L Account and the Directors Report to each Shareholder. Company may supply a single copy to all the shareholders having same unless requested. However the company will supply abridged Balance sheet to all the shareholders in the same household. Company has to give cash flow statement prepared as per AS-3 along with Consolidated Financial Statement (CFS) duly audited by the Statutory Auditors. Filling of such CFS is mandatory. It shall also disclose: Related party transactions Fact of delisting, together with reasons thereof in its Directors Report In case the securities are suspended from trading, the reasons thereof The name and address of each stock exchange at which the issuers securities are listed and also a confirmation that the Annual Listings Fees has been paid to each of the exchange. If company changes its name suggesting new line of business after 1 st January, 1998 then company will have to disclose the turnover and income, etc. from such new activities separately in the annual results for a period of 3 years from the date of change in the name of the company. SHARHOLDING PATTERN clause 35
Shareholding pattern to be filled on a quarterly basis in the form that has been prescribed in the agreement itself. The reporting format of shareholding pattern as provided in clause 35 of the Listing Agreement shall be indicated in 3 categories, viz., shares held by promoters and promoter group, shares held by public and shares held by custodians and against which Depository Receipts have been issued. Additional details with respect to no. of shareholders no. of shares held in demat form etc. will be given for all the 3 categories. Disclosure of shareholding of persons holding more than 1% of the total number of shares and Depository Receipts will also be required to be furnished. The format of disclosure of shareholding pattern also includes details of shares pledged by promoters and promoter group. Such pattern shall be disclosed for each class of security separately and an additional format for disclosure of voting rights pattern in the company has been prescribed. Time limit Within 21 days of end of the quarter Clause 40 A The company agrees to comply with the requirements specified in Rule 19(2) and Rule 19A of the Securities Contracts (Regulation) Rules, 1957. Where the company is required to achieve the minimum level of public shareholding specified in Rule 19(2)(b) and/or Rule 19A of the Securities Contracts (Regulation) Rules, 1957, it shall adopt any of the following methods to raise the public shareholding to the required level:- (a) issuance of shares to public through prospectus; or (b) offer for sale of shares held by promoters to public through prospectus; or (c) sale of shares held by promoters through the secondary market.
Clause 41 Quarterly financial results approved by the Board/ or by a committee thereof, other than the audit committee Along with Limited review report within 45 days from end of the quarter (other than the last quarter). In respect of the last quarter, the company has an option either to submit unaudited financial results for the quarter within forty-five days of end of the financial year or to submit audited financial results for the entire financial year within sixty days of end of the financial year, subject to the provision. Atleast 7 clear calendar days in advance of the Board meeting fixed for taking Un audited / Audited results on record. (excluding date of intimation and date of meeting) Advertise atleast 7 days in advance in atleast one national newspaper in English and in regional language, the day of Board meeting. Fax the results to the stock exchange with in 15 minutes. Recently amended to include the details of pledge shares of the Promoters and Promoter group. Clause 49 Clause 49 of listing agreement deals with corporate governance The Board must have an optimum combination of executive director and non executive director. In case of executive chairman then board shall comprise of independent directors which will be equal to 2/3 of total strength of board
Where in case board have a non executive chairman, then the board must consist of 50% of independent directors. Definition of independent director independent director shall mean non-executive director of the company who a. apart from receiving directors remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its senior management or its holding company, its subsidiaries and associated companies; b. is not related to promoters or management at the board level or at one level below the board; c. has not been an executive of the company in the immediately preceding three financial years; d. is not a partner or an executive of the statutory audit firm or the internal audit firm that is associated with the company, and has not been a partner or an executive of any such firm for the last three years. This will also apply to legal firm(s) and consulting firm(s) that have a material association with the entity. e. is not a supplier, service provider or customer of the company. This should include lessor-lessee type relationships also; and f. is not a substantial shareholder of the company, i.e. owning two percent or more of the block of voting shares. Remuneration committee All remuneration paid to non-executive directors, including independent directors, shall be fixed by the Board of Directors and shall be agreed to by shareholders in general meeting. Limits shall be set for the maximum number of stock options that can be granted to non-executive directors, including independent directors, in any financial year and in aggregate.
Meeting of Audit Committee The audit committee should meet at least four times in a year and not more than four months shall elapse between two meetings. The quorum shall be either two members or one third of the members of the audit committee whichever is greater, but there should be a minimum of two independent members present. Role of the audit committee The role of the audit committee shall include the following: Oversight of the companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. Recommending the appointment and removal of external auditor, fixation of audit fee and also approval for payment for any other services. Reviewing with management the annual financial statements before submission to the board, focusing primarily on; Any changes in accounting policies and practices. Major accounting entries based on exercise of judgment by management. Qualifications in draft audit report. Significant adjustments arising out of audit. The going concern assumption. Compliance with stock exchange and legal requirements concerning financial statements Any related party transactions Reviewing with the management, external and internal auditors, the adequacy of internal control systems.
Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. Discussion with internal auditors any significant findings and follow up there on. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board. Discussion with external auditors before the audit commences about nature and scope of audit as well as post-audit discussion to ascertain any area of concern. Reviewing the companys financial and risk management policies. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. Whistle Blower Policy The intention of this clause is that management establishes a mechanism for employees to report concerns about unethical behavior, actual or suspected fraud or violation of the companys code of conduct or ethics policy. The exact details of such a mechanism should be left to each company, through its Board of Directors, to decide but the existence and implementation must be reviewed by the audit committee. The mechanism must have adequate provisions to ensure there is no victimization of employees who avail of this procedure..
TRADING MECHANISM IN BOMBAY STOCK EXCHANGE Established in 1875, BSE Ltd , Earlier it was known as The Native Share and Stock Brokers' Association"). BSE provides an efficient and transparent market for trading in equity, debt instruments, derivatives, and mutual funds. It also has a platform for trading in equities of small-and-medium enterprises (SME). Its main index Is SENSEX. It is the one of the stock exchange who has firstly introduced Bombay Online Trading System (BOLT) in india . The scrips traded in Bse have been classified into various groups. Bse has for guidance and benefit of the investor ,classified the scrips in the equity segment into A , B , T , AND Z groups on Certain qualitative and quantitative parameters . The F group represents Fixed Income Securities. The T represents Government Securities which are settled on trade to trade to basis as a surveillance measure Trading in government securities by the retail investor is done under the G GROUP The Z group was introduced by BSE in july 1991 and includes companies which have failed to comply with listing agreement and failed to redress investor grievances and /or have not made the required arrangements with depository participants both CDSL and NSDL for dematerialization of shares.
BSE also provides a facility to the market participants for online trading of odd lot securities in physical form in A ,B, T , AND Z groups and in rights renunciations in all groups of scrips in equity segment The, Mumbai Exchange has initiated a number of measures aimed at providing quality products and services and expanding its network using cutting edge information technology. The BSE made its transition from an 'outcry' system of trading to a completely electronic trading system.BSE has introduced electronic trading system known as BOLT ( Bombay Online Trading System) Trading system displays on a continuous basis scrip and market-related information required supporting traders. (Information includes best five bids and offers, last traded quantity and price, total buy and sell depth (irrespective of rates), open, high, low and close price, total number of trades, volume and value, and index movement. Other company-related information is also displayed)2. As soon as an order is matched, the confirmation of the trade is generated on- line. The order matching logic is based on best price and time priority. The BSE On line Trading Platform has a capacity of conducting 2 million trades per day The latest state of the art technology infrastructure with Trader Work Stations located in more than 400 cities all over the country. Trading on the BOLT system is conducted from Monday to Friday between 9: 30 a.m. and 3:30p.m. Trading can also be conducted through the BSE Internet Trading System - www.bsewebx.comthe first Exchange enabled Internet Trading System.8.
BSE aims to provide trading any where and at anytime. With this endeavor in mind, the exchange continuously upgrades the hardware, software and networking systems so as to enable it to enhance the quality and standards of service to its members and other market intermediaries
PRICE DISCOVERY MECHANISMS
During the pre-opening period (9.15a.m.-9.30a.m.), brokers input the bids and offers they receive from investors into the system until they match. The mechanism for which the price of equities is determined is as follows: The best price (price priority): The transaction is executed for the best price. Type of order: If an order is conditional, precedence of execution is given to orders that are un-conditional. For example, if there are two orders with the same price, the system will give precedence to the un-conditional order.3. Source of order: The sources of order are given precedence of execution as follows: Priority 1 => clients order, foreign investors order, market controls order Priority 2 => mutual funds order, the issuing companys order, specialists order Priority 3 => insiders order Time of order priority: In case the price and type are the same, precedence is given to the orders entered into the system first.5.
Cross priority: Cross priority is implemented if the one with the priority is on the active side .Trading in cross priority takes precedence over other house, then against the same house order. Random factor priority: In case two orders are received in the same time, precedence is given to the random factor. CLEARING AND SETTLEMENT The settlement of transactions was earlier done in the weekly settlement environment, where the exchange had a carry forward facility. The exchange commenced exchange of trades on rolling basis where the trades are settled on T+ 2 basis. Undelivered quantities of securities in settlement is promptly auctioned or closed out as per the well-laid procedure. Two depositories, namely the Central Depository Services (India) Ltd. and National Securities Depository of India Ltd. operate in the Indian Market place. The Clearing House of the exchange has well- structured linkages with both the depositories. Direct transfer of securities to and from the Beneficial Owner Accounts is facilitated at the Clearinghouse level only, making for the seamless movement of securities in the settlement system .The settlement of transactions in the depositories mode is based on the ISIN codes of the securities. The exchange Rules, Bylaws and regulations have clearly laid down the default handling procedure. National Stock Exchange National Stock Exchange (NSE) was established in the mid 1990s as a demutualised electronic exchange. NSE provides a modern, fully automated screen-based trading system, with over two lakh trading terminals . across the country. The exchange was incorporated in 1992 as a tax-paying company and was recognized as a stock exchange in 1993 under the Securities Contracts (Regulation) Act, 1956.
NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. The Objectives of the NSE are: To establish a nation wide trading facility for equities, debt instruments and Hybrids . To ensure equal access to investors all over the country through an appropriate Communication network. To provide a fair, efficient and transparent securities market to investors using Electronic trading systems. To enable shorter settlement cycles and book entry settlement system. To meet the current international standards of securities markets. The trading system of the NSE, known as NEAT (National Exchange for Automated Trading), is a fully automated screen based trading system that enables members across the Country to trade simultaneously with enormous ease and efficiency. In one stroke it has done away with the need for people to congregate on the floor of an exchange to trade and done away with the need for people to congregate on the floor of an exchange to trade and has instead taken the exchange floor to the investors doorstep. The telecommunications network is the backbone of any automated trading system and the same is true for NSE also . Each Trading Member trades on the NSE with other members through a computer that may be located at the Trading Members office or anywhere in India. The Trading Members of the exchange trade through VSATs (Very Small Aperture Terminals)..
The Exchange provides a facility for screen based trading with automated order matching The trading system operates on a price time priority. Orders are matched automatically by the computers keeping the system transparent, objective and fair. Where an order does not find a match, it remains in the system and is displayed to the whole market till a fresh order comes in or the earlier order is cancelled or modified The trading system also provides complete on-line market information through various inquiry facilities. The various screens on the Trading System provide comprehensive information like the total order depth in a security, the best buys and sells available in the market, the quantity traded in that security, the high price, the low price and the last traded price etc It is thus possible for investors to know the actual position of the market before placing orders. Investors can also know the fate of the orders almost as soon as they are placed by the Trading Members on the NEAT system. EXCHANGE OPERATIONS The Exchange currently operates three market segments, namely Capital Market Segment, Futures and Options Segment and the Wholesale Debt Market Segment. The Exchange currently operates three market segments, namely Capital Market Segment, Futures and Options Segment and the Wholesale Debt Market Segment. CAPITAL MARKET SEGMENT The Capital Market segment provides trading facilities in equities, convertible debentures etc. This segment commenced trading on November 3, 1994.
The clearing and settlement operations in CM segment of the Exchange are managed by its wholly owned subsidiary, namely the National Securities Clearing Corporation Limited (NSCCL)
The NSCCL operates a settlement fund with a corpus of over Rs.1,200 crores. This settlement fund works like a self insurance mechanism The members contribute to the settlement fund and in the unlikely event of member default or their failure to meet settlement obligations , the fund is used to complete the settlement. This virtually eliminates the counterparty default on NSE. To further reduce the systemic risk, NSE has arranged a comprehensive insurance scheme covering the major Systemic risks of all Trading members in the Capital Market Segment. FUTURES & OPTIONS (F & O) SEGMENT NSE has introduced firstly trading in derivatives in India. This segment facilitates trades in derivative products such as stock index based futures, stock index based options, stock options, stock futures, and interest rate derivative products. Trading facilities in Futures & Options Segment of the Exchange are available at all centers where Capital Market operations have been extended. All clearing and Settlement functions for the F&O market segment are handled by NSCCL. Securities Available in WDM Segment: All Government securities and Treasury bills are automatically deemed to be listed as and when they are issued. Other securities, either publicly issued or privately placed could be listed if eligible as per exchange rules. Procedure and Conditions for listing of securities on WDM segment:
1. All Listing are subject to compliance with Byelaws, Rules and other requirements framed by the Exchange from time to time in addition to the SEBI and other statutory requirements. 2. The Issuer of security proposed for listing has to forward an application in the format prescribed in Annexure I of this booklet
along with application, such supporting documents/information as specified in Annexure I of this booklet and as prescribed by the Exchange from time to time. 4. On getting an in-principle approval t of the exchange the issuer has to enter into a listing agreement in the prescribed format under its common seal. 5. Upon listing, the Issuer has to comply with all requirements of law, any guidelines/directions of Central Government, other Statutory or local authority 6. The Issuer shall also comply with the post listing compliance as laid out in the listing agreement and shall also comply with the rules, bye-laws, regulations and any other guidelines of the Exchange as amended from time to time.
7. Listing on WDM segment does not imply a listing on CM segment also or vice versa. 8. . If the equity shares of an issuer are listed on other stock exchanges but not listed on Capital Market segment of the Exchange, though eligible, then the debt securities of the said issuer will not be permitted to be listed on the WDM segment. Clearing and Settlement Trades on the Wholesale Debt Market are settled gross on a trade for trade basis i.e. each transaction is settled individually and cumulating or netting of transactions is not allowed. Each trade has a unique settlement date specified upfront at the time of order entry and used as a matching parameter. It is mandatory for trades to be settled on the predefined settlement date . The Exchange currently allows settlement periods ranging from same day (T+0) settlement to a maximum of three (T+2) days. Exchange also permits Repurchase (REPO) trades for a repo term upto 14 days for eligible securities and participants. The Clearing Corporation of India Limited (CCIL), promoted by the banks and financial institutions, was incorporated in April 2001 to support and facilitate clearing and institutions, was incorporated in April 2001 to support and facilitate clearing and settlement of trades in government securities (and also trades in forex and money markets). It facilitates settlement of transactions in government securities (both outright and repo) on gross basis and settlement of funds on net basis simultaneousl It acts as a central counterparty for clearing and settlement of government securities transactions done on NDS. It provides guaranteed settlement for transactions in government securities including repos through improved risk management practices viz, daily mark to market margin and Dealer/Mutual Fund or a Statutory Corporation or body corporate which is a member of NDS and which has opened an SGL Account and a Current Account with RBI can apply NDS and which has opened an SGL Account and a Current Account with RBI can apply for CCIL's membership for the Securities segment.In case of securities other than government securities, there is a bilateral settlement between the parties to the trade. Settlements of transactions are closely monitored by the Exchange through obtaining settlement details by trading members and participants. In case of deferment of settlement or cancellation of trade, trading members and participants are required to seek prior or cancellation of trade, trading members and participants are required to seek prior approval from the Exchange .
Conclusions And Findings After working into a Alankit Assignment Ltd , Trainee has got a clear understanding of procedure for trading of securities in stock exchange and major compliance made by above said firm on behalf of its clients under Listing agreement . After analyzing the books of firm ,the trainee has find out the competitive advantage available to firm against its competitors in the Market .
Bibliography WWW.Alankit.com www.BSE.com WWW.NSE.com ISCI JOURNALS ICSI Study Materials- Securities law and Compliances WWW.kotak .com WWW.Share khan.com Alankit Assignment Ltd Prospectus