Organizational Structure

of a
Brokerage Firm

Presented by:
Prateek Lal (19)
Suresh Sharma (29)
Gaurav Kumar (8)

8/9/2007 1
8/9/2007 2
ocio-Economic Factors involved in opening a Broking Hous

 More than 50% household savings are invested in Government

Securities, Pension funds & Insurance.

 The contribution to equity market at retail level is less than 5 % .

 Exponential increase in the Indian middle class society, per

capita income &
disposable income.

 Changing mindset of the people making them more risk taking .

 Very good opportunity to tap this equity market at the retail

level.

8/9/2007 3
 India: Astounding Demographics

DEMOGRAPHIC TRANSFORMATION OF INDIA

Growth in the higher
income categories of Annual Household Income
India’s population has (in USD)
created an affluent
2 9 20 Rich (Above 115,000)
section of society, Population (million)
which has significant 9 17 33 High Income (57,000 – 115,000)
level of purchasing
power 48 74 120 Consuming class (23,000 – 57,000)

221 285 404 Working class (10,200 – 23,000)

726 710 613 Needy (Below 10,200)

2001-02 2005-06 2009-10(E)

* In PPP terms

Per Capita Income

700 651
Increasing per capita 583
income and large 600
519 Increasing per capita income
population moving into 500 461 coupled with an emerging middle
middle class has led 393 class has provided the necessary
to high level of 400
impetus to consumerism in India
USD

consumerism in India
300

200

100

0
2002-03 2003-04 2004-05 2005-06 2006-07

8/9/2007 4
Challenges in opening and operating a broking house

 Providing the latest cutting edge solutions which is dynamic as well as stable.

 Well-integrated back-office support system .

 Price competition that has put pressure on commission rates.

 Static client base.

 Limited resources with smaller broking firms.

 Regulatory framework is getting more and more rigid.

 Reduced commissions at lower levels.

8/9/2007 5
 Challenges…contd..

 Increasing technology investments.

 Online trading facilities.

 Sophisticated client demands.

8/9/2007 6
 Some Facts about our Company.
(S. P. G. Investments & Securities)
The Corporate Head Office will be based in Mumbai.

The regional head offices will be based in the following cities.

1.Mumbai
2.Ahemedabad
3.Delhi
4.Indore
5.Bangalore
6.Calcutta

We will have a Franchise based business. The franchise will be given by

charging a fixed licensing fees.

8/9/2007 7
The Basic Hierarchy of the Organization will be as follows

Corporate Head Office

( Mumbai )

Delhi Regional Head Offices

Calcutta

Indore Bangalore
Mumbai Ahmedabad

B R
A C H
N

C E S
F
F I
O

8/9/2007 8
State wise average number of Demat Accounts

Maharashtra 14,42,805
Gujarat 9,56,146
Delhi 5,30,151
Tamil Nadu 4,58,214
Uttar Pradesh 4,51,775
Karnataka 4,35,298
West Bengal 4,31,137
Andhra Pradesh 3,68,471
Kerala 1,62,183
Madhya Pradesh 1,46,401
Rajasthan 1,32,999
Punjab 1,32,269
Haryana 1,20,617
Bihar 1,20,426

Source: www.indiastat.com 8/9/2007 9

 Along with the Branch office the following places
will have the Franchise offices
Agra Surat
Ahmedabad Trichy
Ambala Udaipur
Bangalore Yamuna nagar
Baroda Agartala
Bhatinda
Ahmednagar
Chandigarh Akola
Chennai Amravati
Coimbatore Aurangabad
Delhi Balotra
Hyderabad Barilly
Indore Bhopal
Jaipur
Bilaspur
Jalandar Calicut
Kanpur Cochin
Karnal Dehradun
Kolkatta Gaziabad
Ludhiana Karidwar
Mumbai Jhansi
Nagpur
Kanpur
Nasik Kota
Noida Lucknow
Panipat Mathura
Pune Patiala
Rajkot Vizak
Rotak
Salem

8/9/2007 10
Services that our company will offer

 Technical Research

 Equity & Derivatives Trading

 Depository Services

 Online Trading Services

 Commodities Trading

 Phone Trading

 Portfolio Management

 Fundamental Research

8/9/2007 11
 The Senior Management at the Corporate Head Office will have
The following hierarchy

Board of Directors
Board
Investment
Committee

CEO
Human Resource Administration/Back
Office
Portfolio management
services

Chief
Chief Operating Office of
Chief Officer Chief of
Financial Investment Marketing/
(COO) Research
Officer Officer Strategy &
(CFO) (CIO) Development
I.T
8/9/2007 12
Each Head of the department will further have the following
Departments reporting to him/her

Chief
Investment
Officer
(CIO)

Investmen
Securities
t
Dept. Commoditie Advisors
s Brokers

8/9/2007 13
 Chief
Financial
Officer
(CFO)

Compliance
Accounting & Legal
Dept.

Budgeting &
MIS

8/9/2007 14
 Marketing/Strategy &
Development

Corporate
Relationship
Communicatio Sales
Management
n

HNI Corporate
Branding Advertising Clients
Retail Sales
Internal communication Institutional
Of the company Sales

8/9/2007 15
 Research

Financial
Technical
Analyst
Analyst

Bond Equity Special

Financial
Instruments

The Head of the research team reports to the Chief Investment Officer
along with the board of Investment and is a very critical part of the
organization as they are the ones who keep a constant track on various
modes of investments.

8/9/2007 16
 Portfolio Management
Service

Portfolio Trading Portfolio Administration

Portfolio system
Administration
Risk
Management

8/9/2007 17
 Human Resources

Training Employee
Relations

Performance Management
Recruitment
( Regular reviews & Appraisals)

8/9/2007 18
 Information
Technology
Architecture

Online Trading
Server
Real Time
Operations
Data transfer
& Management

Nationwide Data Backup

Networking & Recovery

8/9/2007 19
Conclusion:

During the course of this project we realized that our decision to open
a nationwide network of brokerage firms was correct & there is a big
opportunity in this business we still can take advantage of.

Bibliography:

www.sharekhan .com
www.indiainfoline.com
www.indiastat.com
www.investopedia.com
www.nseindia.com
Magazine – Capital Markets

8/9/2007 20
Thank You

8/9/2007 21