Of the 27 criminal charges brought against him, he was only convicted of four,

before his death at age 47 in 2001. Mehta was convicted by the Bombay High
Court and Supreme Court of India for his part in a financial scandal valued
at ₹ 4999 Crores which took place on the Bombay Stock Exchange (BSE). The
scandal exposed the loopholes in the Indian banking system, Bombay Stock
Exchange (BSE) transaction system and SEBI further introduced new rules to
cover those loopholes. Over a period of ten years, beginning 1980, he served in
positions of increasing responsibility at a series of brokerage firms. By 1990, he
had risen to a position of prominence in the Indian securities industry. In 1984,
Mehta was able to become a member of the Bombay Stock Exchange as a
broker and established his own firm called Grow More Research and Asset
Management, with the financial assistance of associates, when the BSE
auctioned a broker's card. He actively started to trade in 1986. By early 1990, a
number of eminent people began to invest in his firm, and utilize his services. It
was at this time that he began trading heavily in the shares of Associated
Cement Company (ACC). The price of shares in the cement company
eventually rose from Rs. 200 to nearly 9000 due to a massive spate of buying
from a set of brokers including Mehta. Mehta justified this excessive trading in
ACC shares by stating that the stock had been undervalued, and that the market
had simply corrected when it revalued the company at a price equivalent to the
cost of building a similar enterprise. In criminal indictments later brought by the
authorities, it was alleged that Mehta and his associates then undertook a much
broader scheme, which resulted in manipulating the rise in the Bombay Stock
Exchange. The scheme was financed by supposedly collateralised bank receipts,
which were in fact uncollateralised. The bank receipts were used in short-term
bank-to-bank lending, known as "ready forward" transactions, which Mehta's
firm brokered. Up to the early 90s, banks in India were not allowed to invest in
the equity markets. However, they were expected to post profits and to retain a
certain ratio (threshold) of their assets in government fixed interest bonds.
Mehta cleverly squeezed capital out of the banking system to address this
requirement of banks and pumped this money into the share market. He also
promised the banks higher rates of interest, while asking them to transfer the
money into his personal account, under the guise of buying securities for them
from other banks. At that time, a bank had to go through a broker to buy
securities and forward bonds from other banks. Mehta used this money
temporarily in his account to buy shares, thus hiking up demand of certain
shares (of good established companies like ACC, Sterlite
Industries and Videocon) dramatically, selling them off, passing on a part of the
proceeds to the bank and keeping the rest for himself. This resulted in stocks
like ACC (which was trading in 1991 for Rs. 200/share) to nearly Rs. 9000 in
just 3 months. On 23 April 1992, journalist Sucheta Dalal exposed Mehta's
illegal methods in a column in The Times of India. Mehta was dipping illegally
into the banking system to finance his buying. Mehta needed banks which
issued fake BRs (Not backed by any government securities). "Two small and
little known banks – the Bank of Karad (BOK) and the Metropolitan Co-
operative Bank (MCB) – came in handy for this purpose. These banks were
willing to issue BRs as and when required, for a fee," the authors point out.
Once these fake BRs were issued, they were passed on to other banks and the
banks in turn gave money to Mehta, assuming that they were lending against
government securities when this was not really the case. This money was used
to drive up the prices of stocks in the stock market. When time came to return
the money, the shares were sold for a profit and the BR was retired. The money
due to the bank was returned. When the scheme was exposed, banks started
demanding their money back, causing the collapse. He was later charged with
72 criminal offences, and more than 600 civil action suits were filed against
him. He was arrested and banished from the stock market with investors holding
him responsible for causing a loss to various entities. Mehta and his brothers
were arrested by the CBI on 9 November 1992 for allegedly misappropriating
more than 2.8 million shares (2.8 million) of about 90 companies, including
ACC and Hindalco, through forged share transfer forms. The total value of the
shares was placed at ₹2.5 billion (US$35 million)

 Demat ac
 No stamp duty on transfer of securities. Safer than paper-shares (earlier
risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc. are mostly eliminated) Reduced paperwork
for transfer of securities. Reduced transaction cost.

Forward Marketcommission. The financial system in India is regulated by

independent regulatorsin the field of banking, insurance, capital market,
commodities market, and pension funds.

 Neccesities
 Bank Account- receiving money and paying
 Demat account- electronic form
 Broking account- with the broker
 F4 – name of the co.
  Shift+F7 – selecting co
 CTRL+F8 & F8
 F1 – BUY
 F2 – SELL
 CTRL+N – NET POSITION REPORT

Punching – Placing your order

Before trading the person must know the following things:

➢ Where should I put my money? By analysing companies past records, business
environment, fundamental analysis.
➢ How to buy? Online trading or via Broker.
➢ When to buy? Technical analysis and Quantitative analysis.
❖ Trading simulation program consists of Trading/Clearing/Settlement process.
Prerequisites for an individual is to do trading in capital market are:
➔ A person must have Trading account with Broker where he/she can buy and sell
his shares.
➔ Dematerialized account with Bank (Demat Account) where shares will be
credited or debited in virtual form through electronic settlements.
➔ Bank account should have enough funds for trading in market.
❏ Steps for buying or selling the shares::
I. Trading process: It take T+1 day.
● Here, validate for price, client code etc.( price band of the share is 10% of the current
share price).
● Order is accepted by giving unique order number and time stamp.
Finally, Trade confirmation is done. It is order matching where buyer and seller agree
on a particular price.
II. Clearing process: It is the second day of the process i.e T+2. Also known as Trading
and Clearing cycle. here, it determines obligation of both the parties for clearing. If all
obligation like securities and fund etc are cleared then it can proceed for settlement
process.
III. Settlement process: It take place on third day i.e T+3. it process and movement of
securities and fund is done. Shares are credited to buyers Demat Account by debiting
bank account and shares are debited from sellers Demat Account by crediting Bank
account.
IV. Institutional Investors: Buying and Selling of shares for chief investment officers.
V. Retail investors: Buying and Selling of shares for individual person and also, helps them
to make money.
❖ Traders Work Space :
It is a Black space where data of shares is given for making decision for trading.
 ● BSP (Best Selling Price): To Buy the share we should see the BSP of the shares
and Quantity available for buying where a Seller is ready to sell at that price.
● BBP (Best Buying Price):To Sell the shares we should see the BBP and a buyer
who is willing to buy shares at that Price.
● LTP (Last Trade Price): it shows the last price of the shares.
Product Type:
★ Margin : Investor who is trading do not take the Delivery of the share. They buy and
sell the shares on same day before the market closes i.e 3.30pm and make little profit.
It is also said to be “INTRA DAY TRADING”. Net position report of the client is
shown at the end of the day.
○ Advantages of Intra day trading:
➔ Commision payable to Broker are low
➔ Don’t need full money for investing, only 10% of the money is needed
for doing on day trading.
★ Delivery: Buying the shares and taking shares credited to Demat Account with the
purpose to keep it for a long time.

First session ended by exposing students to real world of equities trading through hands
on session in the SMART LAB.