A PROJECT REPORT

ON

RISK MANAGEMENT REGARDING WORKING OF A BROKING FIRM, AND ITS INVESTORS

AT

RELIGARE SECURITIES LTD

SUBMITTED BY

MAHENDRA SINGH
PGDM MARKETING

UNDER THE GUIDANCE OF

SWETA SAURABH

GALGOTIAS BUSINESS SCHOOL

DECLARATION

I, the undersigned, hereby declare that the Project Report entitled RISK MANAGEMENT REGARDING WORKING OF A BROKING FIRM, AND ITS INVESTORS written and submitted by me to the GALGOTIAS BUSINESS SCHOOL, New Delhi in partial fulfillment of the requirement for the award of degree of Master of Business Administration under the guidance of P rof. sweta saurabh is my original work and the conclusions drawn therein are based on the material collected by myself.

Place: greater noida Date: /09/2009

Mahendra singh
Research Student

ACKNOWLDGEMENT

Its a great privilege that I have done my project in such a well-organized and diversified organization. I am great full to all those who helped and supported me in completing the project.

First of all I would sincerely like to thank Mr.amit virmani (Branch Manager, noida), for his valuable guidance and kind co-operation during the project. I am highly grateful to Mr. Chandan sir (Sr. Sales Manager) for the help provided by them in various forms.

I am also thankful to our Mr. Hardeev singh dearo and my project guide Mr.Chandan Sir for helping me in completing the project.

Last but not least, I am also thankful to my parents, all college staff and my friends for helping me directly or indirectly in my project

INDEX

Sr No.

Contents

Page No.

Executive Summary 1 INTRODUCTION

1.1 1.2 1.3 1.4 1.5 1.6 1.7 Basic Concepts of the Topic Literature Review Need for the Study Statement of the Problem Objectives of the Project Research Hypothesis Scope of the Study

I-III 1-15

PROFILE OF THE ORGANISATION

2.1 Name of the Organisation 2.2 Vision and Mission 2.3 History and Background 2.4 Group Structure 2.5 Services 2.6 Organisation Structure 2.7 Competitors of Religare Sec. Ltd. 2.8 About Religare Sec. Ltd. 2.9 The Religare Edge

16-24

RESEARCH DESIGN & METHODOLOGY

3.1 Introduction to Research Methodology 3.2 Sampling Design 3.3 Sources of Data Collection 3.4 Limitations of Study

25-28

DATA PRESENTATION, ANALYSIS INTERPRETATION

4

29-37

FINDINGS & SUGGESTIONS

5.1 Main Findings (Conclusions) 5.2 Policy Suggestions 5.3 Scope of Development

38-41

6 7

BIBLIOGRAPHY ANNEXURE

42-43 44-46

LIST OF TABLE

Table No.

Title of the Table

Page No.

5.1 5.2 5.3 5.4 5.5 5.6 5.7

Preference of Investment Awareness of Online Share Trading Awareness of Religare as a Brand Awareness of Religares Facilities DEMAT Account Market Satisfaction level of Customer Frequency of Trading % of Earning Invested in Trading

30 31 32 33 34 35 36

LIST OF CHART

Chart No.

Title of the Chart

Page No.

5.1 5.2 5.3 5.4 5.5 5.6 5.7

Preference of Investment Awareness of Online Share Trading Awareness of Religare as a Brand Awareness of Religares Facilities DEMAT Account Market Satisfaction level of Customer Frequency of Trading % of Earning Invested in Trading

30 31 32 33 34 35 36

EXECUTIVE SUMMARY
Project Title: - Risk Management Regarding Working of a Broking Firm and
Its Investors Name of the Organisation: - Religare Securities Ltd

Introduction: - All investments are risky, whether in stock, capital market,

banking, financial sector, real estate, bullion, gold etc. The degree of risk however varies on the basis of the features of the assets, investments instrument, the mode of investment, time frame or the issuer of the security etc. Risk can be defined as Possibility of suffering losses The chance of something happening that will have an impact upon objectives. It is measured in terms of consequences and likelihood. Risk management in a Broking Industry is a new concept in India, since it Posses maximum risk in the financial market, managing it was felt most essential by the regulatory bodies and exchanges.

Objectives of the Project: To get familiar with the working of a broking firm.  To understand various risks involved in the broking firm.  To understand various risk for the investors of the broking firm.  To manage and reduce the identified risks.

Need of the Study: Create awareness among investors about the different risks involved in the broking firms.
8

 Understand the total transparency and automation of broking firm  Give basic knowledge to investors regarding risk in broking firm  Also understand the equity market and different way of trading

Research Hypothesis: - Capital Market is growing very fast, turnover wise as

well as area of operation wise. The activities have reached through lengths and breadth of the country. So there is increase in various broking firms. The working of a broking firm is a very risky job because risk is involved in each and every activity of the business.

Conclusions: The researcher found that the working of a broking firm is a very risky job because risk is involved in each and every activity of the business.  The risk prevailing in the business is recognized therefore an efficient risk management department is essential in every broking firm.  Broking business is a client-based business. The recent trend of voluminous increase in investors has also increased the risk involved in it. There is need of continuous up gradation of internal control measures  Staff in a broking firm is continuous busy and due to which they are always under stress.

Suggestions: An Organization should have a risk management function that is independent of its trading staff i.e. personnel responsible for the risk management function should be separate from trading floor personnel.  A periodical compliance review should be conducted to ensure conformity with the rules and regulations.  The designated compliance officer should perform a review of trading Practices annually.

Limitations of Study: To understand the overall working of share market, the period of 60 days is not enough.
9

 Moreover, very few investor and agents have a detail knowledge of the study.  The study was conducted in Ahmednagar only, which restricted the scope of the study.

10

CHAPTER I

INTRODUCTION
1.1 Basic Concepts of the Topic Introduction to Capital Markets
Financial System
The financial system of every economy consists of various constituents such as 1) Financial Institutions 2) Financial Companies 3) Financial Markets 4) Financial Instruments 5) Financial Services 6) Financial regulations The financial market in India comprised of capital market and money market whereas the financial system of the country comprised of institutions, which operate the financial markets and the financial instruments with which the financial system is put into operation. Tax anomy of financial markets can be understood on functional, sectoral and institutional basis. On a functional basis we can divide financial markets into

1. Capital market (long term) 2. Money market (short term)

What is Capital Market?

A Capital Market deals in financial assets, excluding coins and currency. The financial assets comprise of banking accounts, pension funds, provident fund,
11

mutual fund, insurance policy, shares, debentures, and other securities. If the stock exchanges are well regulated and function smoothly, then it is an indication of healthy capital market. Stock exchange provide a good leverage of the capital market and their relationship is directly proportional. India has multi-stock exchange system with more than 24 stock exchanges functioning across the country. In our country, capital markets are generally also known as security/stock market. The Indian Capital Markets can be broadly classified into three types of markets.

1. Money market

2. Primary market

3. Secondary market

Money market
The money market is part of overall financial system and securities or capital market. It deals in short term financial assets which can be readily converted into cash. Money market is a place for trading in money and short tern financial assets that are as liquid as money. It provides a platform for short term surplus funds of lenders or investors and short term requirements of borrowers, the instruments can be traded at low cost and are highly liquid.

Primary market
The primary market provides the channel for sale of new securities. Primary market provides opportunity to issuers of securities; Government as well as corporates, to raise resources to meet their requirements of investment and/or discharge some obligation. They may issue the securities at face value, or at a discount/premium and these securities may take a variety of forms such as equity, debt etc. They may issue the securities in domestic market and/or international market.
12

Secondary Market
Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

RISK MANAGEMENT
Risk is defined as possibility of suffering losses This risk in itself is not bad, risk is essential to progress, and failure is often key part of learning, but we must learn to balance the possible negative consequences of risk against the potential benefits of its associated opportunities. This is risk management.

Principles of Risk management are as follows 1 Global Perspective

Viewing development within the context of large level developments Recognizing both the potential value of opportunity and the potential impact of adverse effects

2
-

Forward looking view

Thinking towards tomorrow, identifying uncertainties, anticipating potential outcomes Managing project resources and activities while anticipating uncertainties

3
-

Open Communications
Encouraging free-flowing information at and between all project levels

13

Enabling formal, informal, and proper communication Using processes that value the individual voice (bringing unique knowledge and insight to identifying and managing risk)

4 Integrated management
Making risk management an integral and vital part of project management Adapting risk management methods and tools to a projects infrastructure and culture

5 Continuous processes
Sustaining constant vigilance Identifying and managing risks routinely through all phases of the projects lifecycle

6 Shared product vision

Mutual product vision based on common purpose, shared ownership, and collective communication Focusing on results

7 Team work
Working cooperatively to achieve common goal Pooling talents, skills, and knowledge

Functions of Risk Management are as follows

i. ii. Identify - Search for and locate risks before they become problems Analyze - Transform risks data into decision-making information. Evaluate impact, probability, and time frame, classify risks, and prioritize them iii. Plan - Translate risk information into decision and mitigating actions (both present and future) and implement those actions
14

iv. v. vi.

Track - Monitor risk indicators and mitigation actions Control - Correct for deviations from the risk mitigation plan. Communicate - Provide information and feedback internal and external to the project on the risk activities, current risks, and emerging risks.

RISK MANAGEMENT IN A BROKING FIRM

Risk management in a Broking Industry is a new concept in India, since it poses maximum risk in the financial market, managing it was felt most essential by the regulatory bodies and exchanges. Therefore NSE introduced for the first time in India, risk containment measures that were common internationally but were absent from the Indian Securities Market. NSCCL has put in place a comprehensive risk management system, which is constantly upgraded to preempt market failures. These measures were taken to reduce the brokers risks. Whereas SEBI has given some guidelines under Investors Protection to protect investors risks. NSE has given the following risk management measures

Margins
NSE has specified Different margins for different instruments like stocks futures and options etc. Margins depend upon the volatility and market conditions, It vary from stock to stock and instrument to instrument Categorization of stocks for imposition of margins Daily margins payable by members consists of the following:

1. Value at Risk Margins 2. Mark to Market Margins

Daily margin, comprising of the sum of VaR margin and mark to market margin is payable.

15

Value at Risk Margin

VaR margin is applicable for all securities in rolling settlement. All securities are classified into three groups for the purpose of VaR margin.

The VaR based margin would be rounded off to the next higher integer (For E.g.: if the VaR based Margin rate is 10. 0 1, it would be rounded off to 11. 00) and capped at 100%. The VaR margin rate computed as mentioned above will be charged on the net outstanding position (buy value-sell value) of the respective clients on the respective securities across all open settlements. The net positions at a client level for a member are arrived at and thereafter, it is grossed across all the clients for a member to compute gross exposure for margin calculation.

For example, in case of a member, if client A has a buy position of 1000 in a security and client B has a sell position of 1000 in the same security, the net position of the member in the security would be taken as 2000. The buy position of client A and sell position of client B in the same security would not be net ted. It would be summed up to arrive at the member's exposure for the purpose of margin calculation. VaR margin rate & Security category

Mark-to-Market Margin
Mark to market margin is computed on the basis of mark to market loss of a member. Mark to market loss is the notional loss which the member would incur in case the cumulative net outstanding position of the member in all securities, at the end of the relevant day were closed out at the closing price of the securities as announced at the end of the day by the NSE. Mark to market margin is calculated by marking each transaction in scrip to the closing price of the scrip at the end of trading. In case the security has not been traded on a particular day, the latest available closing price at the NSE is considered as the closing price.
16

In the event of the net outstanding position of a member in any security being nil, the difference between the buy and sell values would be considered as notional loss for the purpose of calculating the mark to market margin payable.

Some Risk management are also taken by BSE they are as follows 1. Know your client scheme
Under the procedure the member brokers of the exchange are compulsory required to obtain detailed information of clients prior to commencement of any transactions with new clients. A similar procedure is also to be followed for existing clients. This information is to be made available to the exchange authorities whenever called for. In case the member broker fails to furnish the same it is viewed seriously.

2. Verification of shares at members office

The exchange has outlined the process i.e. in case the transaction in a script with one particular client in a settlement exceeds Rs 10 laks then the member are to send the photocopies of the transfer deeds and the share certificates to the company/ registrar for verification of the material particulars. The basic idea behind the introduction of this procedure is to prevent fake/forged/stolen shares from being introduced in the market.

3. Inspection
The department is carrying out inspection of the member brokers records as regards compliance of the risk management procedures

4. Insurance
The exchange presently has in place insurance policies to protect itself in the event of losses on account of fire, damage to computer systems and a

17

comprehensive policy that covers risks faced by the exchange, its member brokers and the clearinghouse. The risks covered under the basic cover of the policy are detailed as below. Loss to members on account of infidelity of employees Loss of member on account of fake/forged/ stolen shares being introduced by his clients Direct financial losses suffered by the member broker on account of physical loss, destruction, theft or damage to securities and cash. Loss on account of securities lost in transit Loss suffered on account of incomplete transaction Loss sustained as final receiving member on exchange on account of default of the introducing member Loss on account of errors and omission Directors and officials liability cover

Measures taken by SEBI for Investors protection are as follows

Government of India and SEBI have been stressing upon the need for regulating the secondary market and bringing transparency in transactions on the floor of stock exchanges

The steps taken by SEBI to regulate and control the business of stock exchanges and reduce the risks of investors are as follows

1. Regulation on insider trading with the object to curb it completely and punish the guilty 2. Uniform Trading hours at all the stock exchanges in the country to check arbitrage. 3. Registration of market players- brokers, non member brokers, sub brokers, registrars to issues, merchant bankers, portfolio managers, underwriters,
18

debenture trustees, custodians etc so as to have access/inspection of their books, records and verification of transactions.. 4. Indirect supervision through stock exchanges in day-to-day business by fixing margins, imposing curbs, penalties and fines. 5. Gradual automation to reduce paper work and ensure transparency in transactions this is now almost complete and all stock exchanges have been computerized. 6. Brokers contact notes to mention brokerage separately. 7. Nationwide paperless trading through over the counter exchange of India, National Stock Exchange, BSE, DSE and other exchanges. 8. Brokers to keep clients money in a separate bank account. 9. Forward trading being banned on stock exchanges 10. Stress upon shorter settlement period. 11. Dematerialization of securities permitted on a selective basis. By March 2001, about 3500 companies will have compulsory t rading in Demat mode. 12. Stern action against erring brokers, stock exchanges, companies, merchant bankers, etc. 13. Regulation for fraudulent trade practices 14. Total transparency and automation of stock exchanges. 15. Effective margin system for smooth settlement. 16. Circuit breaker system to check volatility on the exchanges 17. Introduction of modified carry forward system and automated lending borrowing mechanism (ALBM). 18. Introduction of Internet trading. 19. Derivative trading in index based futures of 30, 60 and 90 days. 20. Practicing prudent governance norms.

Recent Development steps taken by SEBI for Investor protection 1. Appointment of administrators to check bad deliveries
19

To get rid of bad deliveries, SEBI has decided to appoint administrator to implement the signature guarantee and certificate authentication programs. The administrators appointed by SEBI act on behalf regulator in resolving problems arising out of signature mismatch

2. Streamlining Investor protection fund

The committee set up by SEBI to review the sources and utilization of investor protection fund of stock exchanges has made following recommendations Funds should be on trust structure and set upon under Indian Trust Act, 1882 with independent trustees Regular contributions from active member brokers and stock exchanges Fund to be utilized only for investor claims and not broker claims. Trustees to ensure that fund is not deployed in risky instruments or for the benefit of any member but only in prescribed avenues. Time schedule to be specified while setting investor claims.

3. Service centers for investors

SEBI has directed all stock exchanges to constitute service centers for investors to enable the investors to have a form for recording and counseling of their grievances as well as access financial and other information of companies on government policies, rules, regulations, etc.

4. Compliance Officer
Each company is required to appoint compliance officer who would be able to verify rumors and information floating in the market about the

20

company to the stock exchange. This will reduce motivated rumors about companies, which aids in price manipulation.

5. Corporate Governance
SEBI has prescribed prudent corporate governance norms for all listed companies to ensure transparency and better disclosure practices.

6. Investor Education
SEBI has taken steps to educate investors through various awareness programmes and publications

1.2 Literature Review

No one has done work over there yet, on this topic. In literature review I read various documents provided by the manager of Religare Sec. In this I reffer the Demat Visiting various websites. In this I also read the various modules of NCFM. And also read the following books: i) FINANCIAL SERVICES AND MARKETS Author: - Dr. Gurusamy form of the Religare Sec. And

ii)RESEARCH METHODOLOGY METOHDS & TECHNIQUES Author: - C.R.Kothari

iii)PROJECT REPORT WRITING Author: - M.K.Rampal & S.L. Gupta

21

1.3 Need for the Study

 Create awareness among investors about the different risks involved in the broking firms.  Understand the total transparency and automation of broking firm  Give basic knowledge to investors regarding risk in broking firm  Also understand the equity market and different way of trading  Convert our therotical knowledge in to practical knowledge

1.4 Statement of the Problem

There are several financial security companies playing their roles in Indian equity market. But People dont have basic knowledge regarding stock market. So they not understand there is various risk involved in the working of broking firm. Due to none availability of the proper guidance most of the person take stock market as gambling.

1.5 Objectives of the Project

 To get familiar with the working of a broking firm.  To understand various risks involved in the broking firm.  To understand various risk for the investors of the broking firm.  To manage and reduce the identified risks.

22

1.6 Research Hypotheses

Capital Market is growing very fast, turnover wise as well as area of operation wise. The activities have reached through lengths and breadth of the country. So there is increase in various broking firms. The working of a broking firm is a very risky job because risk is involved in each and every activity of the business.

1.7 Scope of the Study

Company can take review from market through this project. Management people can get overall idea about the risk management regarding working of broking firms. They also understand what information provide to investor for avoiding the risk.

23

CHAPTER II

PROFILE OF THE ORGANISATION

2.1 NAMERELIGARE SECURITIES LTD.
Corporate Office: 19 Nehru Place, New Delhi 110019 Website Email SMS : www.religare.in : info@religare.in : RELIGARE to 58888

PUNE:
Ground Floor, Amar Caliber, BMCC Road, Shivajinagar, Pune 411004

AHMEDNAGAR:
5&6, Himalaya Tower, Opp. Deepak Hospital, Savedi Road, Ahmednagar - 414003

2.2 VISION & MISSION-

24

Companys Vision
To build Religare as a globally trusted brand in the financial services domain and present it as the Investment Gateway of India.

Companys Mission
Providing complete financial care driven by the core values of diligence and transparency.

Brand Essence
Core brand essence is Diligence and Religare is driven by ethical and dynamic processes for wealth creation.

2.3 History and background

RELIGARE Securities Ltd. (RSL) is a wholly owned subsidiary of RELIGARE Financial Services Ltd. (RFSL), a Company promoted by the late Dr.Parvinder Singh, Ex-CMD of Ranbaxy Laboratories Ltd. The primary focus of Religare Securities Ltd. is to cater to services in Capital Market Operations to Institutional Investors. The Company is a member of the National Stock Exchange (NSE) and OTCEI. The growing list of financial institutions with whom RSL is empanelled as approved Broker is a reflection of the high levels of services maintained by the Company. REL operates from seven domestic regional offices, 43 sub-regional offices, and has a presence in 498* cities and towns controlling 1,837* business locations all over India. To make a mark in the global arena, REL acquired UK-based Hichens, Harrison & Co. in 2008 which was subsequently re-named as Religare Hichens Harrison PLC ("RHH"). Hichens, Harrison & Co. was incorporated in London in the year
25

1803 and is believed to be one of the oldest firms of stockbrokers in the City of London. Pursuant to expansion of REL's business, the company has grown from largely an equity trading company into a diversified financial services company. With the addition of RHH the REL group now operates out of multiple global locations, other than India, (the UK, the USA, Brazil, South Africa, Dubai and Singapore). RELIGARE was founded with the vision of providing integrated financial care driven by the relationship of trust. The bouquet of services offered by RELIGARE includes Broking (Stocks and Commodities), Depository Participant Service, Advisory on Mutual Fund Investments and Portfolio Management Services. RELIGARE is a pioneer in the concept of partnership to reach multiple locations in order to effectively service its large base of individual clients. Besides the reach of RELIGARE, the clients of the company greatly benefit by its strong research capability, which encompasses fundamentals as well as technical knowledge.

RELIGARE GROUP:
RELIGARE in recent years has expanded its reach in health care and financial services wherein it has multiple specialty hospital and labs which provide health care services and multiple financial services such as secondary market equity services, portfolio management services, depository services etc. RELIGARE financial services group comprises of Religare Securities Limited, RELIGARE Comdex Limited and RELIGARE Finvest Limited which provide services in Equity, Commodity and Financial Services business & Religare Insurance Advisory Ltd.

RELIGARE SECURITIES LIMITED

1. Member of National Stock Exchange of India and Bombay Stock Exchange of India.
26

2. Depository Participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). A SEBI approved Portfolio Manager.

RSL provides platform to all segments of the investor to leverage the immense opportunity offered by equity investing in India either on their own or through managed funds in Portfolio Management. The ARN No. of the Religare Securities Ltd. is 33764. The ARN No. is required by to be available with the broker who deals on behalf of investors or sell the mutual funds of the different companies present in the market.

2.4

Religare Enterprises Limited Religare Securities Limited Equity Broking Online Investment Portal Portfolio Management Services Depository Services Religare Commodities Limited Commodity Broking Religare Finvest Limited Lending and Distribution business Proposed Custodial business

Religare Insurance Broking Limited Life Insurance General Insurance Reinsurance Religare Arts Initiative Limited Business of Art Gallery launched - arts-i Religare Venture Capital Limited Private Equity and Investment Manager
27

Religare Capital Markets Limited Investment Banking Proposed Institutional Broking Religare Realty Limited In house Real Estate Management Company

Religare Hichens Harrison** Corporate Broking Institutional Broking

Religare Asset Management* Derivatives Sales Corporate finance

2.5 SERVICES :-

Equity Arts Initiative Commodit y

Investment Banking

REL

Mutual Fund

Wealth Advisory Services

Insurance Personal Credit

28

2.6 Organization Structure:

29

2.7 Competititors of Religare:There are several financial security companies playing their roles in Indian equity market. But Religare faces competitions from these few companies.

30

 ICICI Direct.com  Share Khan (SSKI)  Kotak Securities.com  India Bulls  HDFC Securities  5paisa.com  Motilal Oswal  IL&FS  Karvy

2.8 About Religare Securities Limited (RSL)

 One of the leading integrated financial services groups of India
31

 Diverse range of offerings  Client base of more than 5000,000 and growing across the retail, wealth and Institutional Spectrum.  Pan India and global footprint.  Width and depth of management leading a formidable employee base.  Best-in-class Research.  Sweetly placed to spot new opportunities and power ahead.

2.9 The Religare Edge

 Diverse offerings  Dynamic Management Team  State-of-the art technology  Vast Distribution and Reach  Robust Brand Recognition  Synergistic partnerships  Innovative Initiatives

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CHAPTER III RESEARCH DESIGN & METHODOLOGY

3.1Introduction to Research MethodologyResearch Methodology comprises defining and redefining the problem, formulating hypothesis or suggesting solution, collecting, organizing and evaluating the data, making deduction and reaching to conclusions and determines whether the formulated hypothesis is right and wrong.

Research Methodology is a way to solve research in study and solving research problems along with logic behind them are defined through research methodology. Thus while talking about research methodologies we are not only talking of research methods but also consider the logic behind the methods. During my project, I collected data through various sources primary & secondary.

3.2Sampling Design
I have taken sample size of 50 respondents. Because the population is too large so it is difficult to survey.

33

Any organization whether big or small, private or public need different types of information are to know its popularity. I have gathered secondary data and primary data and collected information from the combination of these two data.

3.3 Sources of Data Collection-

Primary source includes:1) Discussion with branch manager

2) Discussion with experts

3) Discussion with investors of the firm.

4) Live trading in the market

5) Data collected from questionnaire.

Secondary source includes:1) Various books related to stock market

2) Books related to Financial Management

3) Web sites were used as the vital information source

4) References given by Relationship Manager

34

3.4 LIMITATIONS OF STUDY

 To understand the overall working of share market, the period of 60 days is not enough.

 Moreover, very few investor and agents have a detail knowledge of the study.  The study was conducted in Ahmednagar only, which restricted the scope of the study  The data provided by the investor and the agents cant be held true as 100% correct.  The study was conducted to understand with respect to Risk involved in broking firm and investors, which is a part of the equity share market.

35

CHAPTER IV DATA PRESENTATION, ANALYSIS & INTERPRETATION

1) Preference of Investment:
Financial Instruments Shares Mutual Funds Bonds Derivatives
Source: Primary Data

No. Of Investors (50) 37 8 4 1

(Table No. 5.1)

Chart 5.1

36

Interpretation: This shows that although the mutual funds market is on the rise yet, the most favored investment continues to be in the Share Market. So, with a more transparent system, investment in the Stock Market can definitely be increased.

2) Awareness of online Share trading :

YES 45

NO 5

Source: Primary Data (Table No. 5.2)

Chart 5.2

Interpretation: With the increase in cyber education, the awareness towards online share trading has increased by leaps and bounds. This awareness is expected to increase further with the increase in Internet education.

37

3) Awareness of Religare as a Brand.

YES 29 NO 21

Source: Primary Data (Table No. 5.3)

AWARENESS OF RELIGARE AS A BRAND

43% YES NO 57%

Chart 5.3

Interpretation: This pie chart shows that Religare has a reasonable amount of Brand awareness in terms of a premier Retail stock broking company. The company to increase its market share over its competitors should further leverage this brand image.

38

4) Awareness of the facilities provided by Religare :

YES 42 NO 8

Source: Primary Data (Table No. 5.4)

Chart 5.4

Interpretation: Although there is sufficiently low brand equity among the target audience yet, it is to be noted that the customers are not aware of the facilities provided by the company meaning thereby, that, the company should concentrate more towards promotional tools and increase its focus on product awareness rather than brand awareness.

39

5)

DEMAT Account Market :

INVESTORS 6 15 4 12 13
(Table No. 5.5)

BROKING FIRMS Religare Securities ICICI Direct Kotak Securities India Bulls Others
Source: Primary Data

Chart 5.5

Interpretation: This shows that even with sufficiently high Brand Equity, Religare ranks only 3rd amongst the Demat account providers. This is probably because of two main reasons:

1. Lack of promotion and unfocussed approach towards Product awareness 2. Non transparent marketing policies of the company Hence, the company should crystallize its products and should indulge in aggressive marketing and promotion.

40

6) Satisfaction level among Customers with current Broker :

YES 46 NO 4

Source: Primary Data (Table No.5.6)

Satisfaction level among Customers with current broker

Yes - 92%

No - 8%

Chart 5.6

Interpretation: This pie chart accentuates the fact that Strategic marketing, today, has gone beyond only meeting Sales targets and generating profit volumes. It shows that all the competitors are striving hard not only to woo the customers but also to make them Brand loyal by generating customer satisfaction.

41

7) How often do you trade:

FREQUENCY OF TRADING Daily Weekly Monthly Yearly

Source: Primary Data

NO. OF INVESTORS

5 13 26 6
(Table No. 5.7)

Freq e cy f Tradi
Daily- 9 Weekly- 27 Monthly-53% Y early-11%

Chart 5.7

Interpretation: In spite of the huge returns that the share market promises, we see that there is still a dearth of active traders and investors. This is because of the non transparent structure of the Indian share market and the skepticism of the target audience that is generated by the volatility of the stock market. It requires efficient bureaucratic intervention on the part of the Government.

42

8)

Percentage of earnings invested in Share Trading :

% of Earning Invested Up to 10 % Up to 25 % Up to 50 % Above 50 %

Source: Primary Data

No. of Investors

35 9 4 2
(Table No. 5.8)

Chart 5.8

Interpretation: This shows that people invest only upto 10% of their earnings in the stock market, again reiterating the volatile and non-transparent structure of the Indian stock market. Hence, effective and efficient steps should be undertaken to woo the customers to invest more in the lucrative stock market.
43

CHAPTER V

FINDINGS & SUGGESTIONS

5.1 MAIN FINDINGS (CONCLUSION)

Working with a broking firm especially was really a great experience.

 The researcher found that the working of a broking firm is a very risky job because risk is involved in each and every activity of the business.

 The risk prevailing in the business is recognized therefore an efficient risk management department is essential in every broking firm.  Capital Market is growing very fast, turnover wise as well as area of operation wise. The activities have reached through lengths and breadth of the country. All these necessitated in the introduction of latest technology in the form of advanced softwares.

 Broking business is a client-based business. The recent trend of voluminous increase in investors has also increased the risk involved in it. There is need of continuous up gradation of internal control measures  Staff in a broking firm is continuous busy and due to which they are always under stress.
44

5.2 POLICY SUGGESTIONS

 An Organization should have a risk management function that is independent of its trading staff i.e. personnel responsible for the risk management function should be separate from trading floor personnel.

 Senior management should regularly evaluate the risk management procedure in place to ensure they are appropriate and sound.

 Senior management should also foster and participate in active discussions with the board of directors, sub brokers, franchisee, staff of risk management function and investors regarding procedures for measuring and managing risk.

 Highly qualified staff not only in front office positions such as trading desk, relationship officer and sales but also all back office functions responsible for risk management and internal control.

 Risk management or control function should be able to produce a risk management report that highlights positions, limits and excess on a basis commensurate with trading activity. This report should be sent to senior management, reviewed, signed and returned to control staff.

 Auditors should perform a comprehensive review of risk management annually, emphasizing segregation of duties and validation of data integrity.

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 The designated compliance officer should perform a review of trading Practices annually.

5.3 SCOPE FOR DEVELOPMENT RELIGARE SECURITIES)

RELIGARE SECURITIES have set themselves very stringent and high standards of Risk Management. However I would like to make a few points, which would help the organization in a big way.

 Recording of trader and dealer telephone calls, which will facilitate to resolve the disputes at different levels.  Fast and frequent interaction between the risk managers, the sub brokers and client will help in reducing the delay in giving limits.  Periodical visits to the sub brokers and franchisee by the RELIGARE SECURITIES personnel for interaction and inspection will help in minimizing the risk to great extent.

 Regarding dealers risks, well-trained and less stressed dealers will help in reducing the mistakes. It has been observed that most of the mistakes are done when they are under stress. HRD must help in this matter.  In settlement department the persons have be appointed with utmost care and their periodic check can be conducted to avoid any employee fraud.

 Along with large client base, quality of clientele will help in balanced growth of business and minimizing the risk.

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CHAPTER VI

BIBLIOGRAPHY & WEBLIOGRAPHY

FINANCIAL SERVICES AND MARKETS Author: - Dr. Gurusamy

 RESEARCH METHODOLOGY METOHDS & TECHNIQUES Author: - C.R.Kothari

 PROJECT REPORT WRITING Author: - M.K.Rampal & S.L. Gupta  www.religare.in  www.bseindia.com  www.nseindia.com  www.google.co.in  Dalal Street  Various books of Equity Management.
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ANNEXURE
QUESTIONNAIRE
Q1. In which of these Financial Instruments do you invest into? Shares Mutual Funds Bonds Derivatives

Q2. Are you aware of online Share trading? Yes No

Q3. Heard about Religare? Yes No

Q4. Do you know about the facilities provided by Religare? Yes No

Q5. With which company do you have your DEMAT account? Religare ICICI Direct Kotak Mahindra India Bulls

Others (please specify)

__________

Q6. Are you currently satisfied with your Share trading company? Yes No

Q7. How often do you trade? Daily Weekly Monthly Yearly

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Q8. What percentage of your earnings do you invest in share trading? Up to 10% Up to 25% Up to 50% Above 50%

Q9. Is broking firms are always risk free? Yes No

Q10.What more facilities do you think you require with your DEMAT account? ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Additional Information (optional) Name: Age: Phone No: Occupation:

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