An organizational study at capstocks

An organizational study at capstocks2014

ORGANIZATION STUDYATCAPSTOCKS

Submitted In Partial Fulfillment Of The Requirements For The Award Of The Degree OfMASTER OF BUSINESS ADMININSTRATION OF KERALA UNIVERSITYSubmitted byJugunu S NairUnder the guidance ofDr. R JayalakshmiCourse co-ordinatorIMK-ICMPoojapura

UNIVERSITY INSTITUTE OF MANAGEMENTEXTENSION CENTREICM CAMPUSPOOJAPURA2013-2014[Type text]Page 2

DECLARATION

I, JUGUNU S NAIR, declare that the organization study report entitled ORGANISATION STUDY CONDUCTED AT CAPSTOCKS AND SECURITIES (INDIA) PVT LTD submitted by me for the award for the award of degree of Master of Business Administration of Kerala University is my own work. The report has not been submitted for the award of any other degree of this university or any other university.

JUGUNU S NAIRPlace: ThiruvananthapuramDate:

ACKNOWLEDGEMENT

I offer my gratitude to GOD almighty with whose grace I could successfully accomplish the organization study.

It gives me a greater pleasure to place on record my sincere thanks and gratitude to Dr. Jayalakshmi, course coordinator MBA program, ICM campus Poojapura, for her valuable and timely assistance during the course of my study.

I express my sincere thanks to Mr.Rathish, Asst.HR Manager, Capstocks and Securities (India) Pvt. Ltd, Thakaraparambu, who guide me throughout the study and offered valuable advice. I also thank all the staffs at Capstocks and Securities (India)Pvt Ltd, who has helped me to complete my study successfully.

I thank my parents for their motivation and support.

JUGUNU S NAIR

CONTENTS

CHAPTERCONTENTSPAGE NO.

1INTRODUCTION2

1.1OBJECTIVE OF STUDY3

1.2METHODOLOGY OF THE STUDY3

1.3SCOPE OF THE STUDY4

1.4LIMITATIONS OF THE STUDY4

2INDUSTRY PROFILE5-18

3COMPANY PROFILE19-27

4ORGANISATION STRUCTURE28-30

5DEPARTMENTAL ANALYSIS31-76

6SWOT ANALYSIS77-79

7.1FINDINGS81

7.2CONCLUSION82

8REFERENCES83

ICM-UIM POOJAPURAPage 58

CHAPTER 1INTRODUCTION

INTRODUCTION

A stock broker plays a vital role in the secondary market helping both the seller and buyer of the securities to enter into transaction. The buyer and seller may be either a broker or a client. When executing an order the stock broker may i=on behalf of his client buy or sell securities from his own account i.e. as principal or act as agent. For each transaction he has to issue necessary contract note whether the transaction is entered into by him as a principal or as an agent for another.

This organizational study is intended to analyse, observe and learn the functioning of the organization and various departments. This would enable to learn the real practices in business and how it differs from the theories we learned in class rooms. This study was undertaken at Capstocks and Securities (India) Pvt.Ltd.

OBJECTIVES OF THE STUDY

To understand the organization structure of the company. To learn and understand the functions of each departments in the organization. To know about the actual working of a stock broking company. To indentify the strength weakness opportunities of the stock broking company.

METHODOLOGY

This study is descriptive in nature. The data sources include primary sources and secondary sources.a) Primary sources

i. Direct personnel interview data was directly gathered from the personnel of different department in the organization.ii. Personal observation of the trading hall of Capstocks and Securities (India) Pvt.Ltd.

b) Secondary sources

i. Data was collected from various publications.ii. References from website of Capstocks and Securities (India) Pvt.Ltd

SCOPE OF THE STUDY

The study analyses the functioning of Capstocks and Securities (India) Pvt.Ltd. Analyse how a stock broking firm is working and how it survive and how it works and maintain their market share in the competitive environment. The study is also considered beneficial to the future researchers.

LIMITATIONS OF STUDY

The time was limited for a deep study and analysis of the organization. The study was conducted on working days were the concerned officials were busy with trading activities. Confidentiality makes difficulty in getting the appropriate data.

CHAPTER 2INDUSTRY PROFILE

STOCK EXCHANGE TRADING MECHANISM

There are 21 stock exchanges at present in India including Over The Counter Exchange Of India (OTCEI), National Stock Exchange (NSE) and Inter connected Stock Exchange (ICSE). All of them are regulated in terms of Securities Contract (Regulation) Act, 1956 and SEBI Act, 1992 and the rules and regulations made thereunder. Some of the exchanges started as voluntary non-profit associations such as Bombay Stock Exchange (BSE) and Indore Stock Exchange. The stock exchanges at Chennai, Jaipur , Hyderabad and Pune were incorporated as companies limited by guarantee. The other stock exchanges are companies limited by shares and incorporated under the Companies Act, 1956 or earlier Acts.

The stock exchanges are managed by Board of Directors or Council of Management consisting of elected brokers and representatives of Government and Public appointed by SEBI. The brokers of stock exchanges are empowered to make and enforce rules, bye laws and regulations with jurisdiction over all its members.

Membership of stock exchange is generally given to persons financially sound and with adequate experience/ training in stock market. Their enrolment as member is regulated and controlled by SEBI to whom they have to pay an annual charge. A member of the stock exchange is called BROKER who can transact on behalf of his clients as well as on his own behalf. A non member can deal in securities only through members. A member as a Badla financier, commission broker, dealer in odd lots, Govt. securities, jobber, market maker, or underwriter. He can also take assistance of sub broker whom he can appoint under the procedure of organization.

The stock exchange is a key institution facilitating the issue and sale of various types of securities. It is a pivot around which every activity of the capital market revolves. In the absence of stock exchange, the people with people with savings would hardly invest in corporate securities for which there would be no liquidity. Corporate investments from the general public would thus have been lower.

Stock exchanges thus present the market place for buying and selling of securities and ensuring liquidity of them in the interest of the investors. The stock exchanges are thus virtually the nerve centre of the capital market and reflect the health of the countrys economy as a whole.

Securities are traded in three different ways in stock exchanges ring, namely settlement basis, spot basis, cash basis.

Shares of companies which are not in the spot list are known as cash shares or B category shares. They are traded on the cash basis. The actual delivery of securities and payment has to be made on or before the settlement date fixed in the case of cash basis trading.

As far as spot trading is concerned the actual delivery of securities must be made to the buying broker within 48 hours of the contract. It is expected that the seller would be paid by the buyer immediately on the delivery of securities.

All securities whether specified list or cash list can be traded on cash basis or spot basis.

TYPES OF SECURITIES Securities traded in the stock exchange can be classified as under:

a. Listed cleared securities: The securities admitted for dealing in stock exchange after complying with the listing requirements and played by the board on the list of cleared securities are called by this name.

b. Permitted securities:

The securities listed in some of the recognized stock exchange When permitted to be traded by those stock exchanges where they are not listed are called permitted securities. Such permission is given if suitable provision exists in the regulations of the concerned stock exchanges.

TYPES OF DELIVERY

Types of delivery in the stock exchanges are spot delivery, hand delivery, special delivery.

The delivery is said to be spot delivery, if the delivery of and payment of securities are to be made on the same day or next day.

The delivery is said to be hand delivery, if the delivery and payment are to be made on the delivery date fixed by the stock exchange authorities.

A Special delivery is one were the delivery is to be made after the delivery date fixed by the stock exchange authorities.

MARGINS

An advance payment of a portion of the value of a stock transaction. The amount of credit a broker or lender extends to a customer for stock purchase.

MARGIN TRADING

Margin trading is introduced by SEBI to curb speculative dealings in shares leading to volatility in the prices of securities.

Initial margin in this context means the minimum amount, calculated as a percentage of the transaction value, to be placed by the client, with the broker, before the actual purchase. The broker may advance the balance amount to meet full settlement obligation.

Maintenance margin means the amount calculated as a percentage of market value of securities, calculated with respect to last trading days closing price to be maintained by the client with the broker.

When the balance deposit in the clients margin account falls below the required maintenance, the broker shall promptly make margin calls. However, no further exposure can be granted to the client on the basis of any increase in the market value of the securities.

The broker may liquidate the securities if the client fails to meet the margin calls made by the broker or fails to deposit the cheque on the day following the day on which the margin calls has been made or the cheque has been dishonored.

The broker may also liquidate the securities in case the clients deposit in the margin account fails to 30% or less of the latest market value of the securities, in the interregnum between making of the margin cell and receipt of payment from the client.

The broker must disclose to the stock exchange details on gross exposure including the name of the client, unique identification number, name of the scrip and if the broker has borrowed funds for the purpose of providing margin trading facilities, name of the lender and the amount borrowed, on or above 12 noon on the following day.

The broker must disclose to the stock exchange details on gross exposure including the name of the client, unique identification number, name of the scrip and if the broker has borrowed funds for the purpose of providing margin trading facilities, name of the lender and the amount borrowed, on or before 12 noon on the following day.

Stock exchange discloses scrip wise gross outstanding in margin accounts with all brokers to the market. Such discloses regarding margin trading done on any day shall be made available after the trading hours on the following day through the website.

Thus, margin trading acts as a check on the tendency of clients to manipulate markets by placing orders on brokers without having adequate money or securities to backup the transaction.

Margin trading will also act as a curb on short selling and short buying.The reduction in above tendencies on the part of clients reduces volatility of prices on the stock exchange and provides stability to the common investors.

Margin trading mechanism also ensures transparency in dealing in securities and public exposures of the information regarding the backing behind all major securities transactions.

In the Indian capital markets particularly excessive short selling and market positioning have been rampant. Margin trading has acted as a stabilizing force.

BOOK CLOSURE AND RECORD DATE

Book closure is the periodic closure of the register of members and transfer books of the company, to take a record of shareholders to determine their entitlement to dividends or to bonus or right shares or any other rights pertaining to shares. Record date on which the records of a company are closed for the purpose of determining the stock holders to whom dividends, proxies rights etc. are to be sent.In accordance with section 154 of the Companies Act 1956 a company may close the register of its members for a maximum of 45 days in a year and for not more than 30 days at any one time. Book closure become necessary for the purpose of paying dividend, making right issue or bonus issue. The listed company is required to give notice of book closure in a news paper at least 7 days before the commencement of the book closure. The members whose name appear in the register of members on the last date of book closure are entitled to receive the benefits of dividend, right shares or bonus shares as the case may be.

TRADING OF PARTLY PAID SHARES AND DEBENTURES

Companies fix the last date for payment of allotment or call money in case of partly paid shares or debentures and intimate this to all the stock exchange wherein such shares or debentures are listed. Based on the date fixed by the company, the stock exchanges determine the settlement date upto which transactions in the scrip will be deemed to be good for delivery. After the said date transactions in the securities take place only if they are paid up to the extent money has been called up.

TRADING LINE

When the price of the shares move in a particular direction which persists for a period of time, a price line is regarded as established. When the movement is upward, the trend is bullish and when the movement is downward, the trend is bearish. Bear market is a week or falling market characterized by the dominance of sellers. Whereas bull market is a rising market with abundance of buyers and relatively few sellers.

Secondary movements that reverse the uptrend temporarily are known as reactions. The movements that reverse the down trend temporarily are known as rallies. When an upward breaks in the downward direction, it is called trend reversal.

SETTLEMENT SYSTEM

Settlement is the process of netting of transactions and actual delivery/ receipt of securities and transfer deeds against receipt / payment of agreed amount. It is necessary to make a settlement to know the net effect of a series of transaction during a given period.

Settlement date is the date specified for delivery of securities between securities firms. For administrative convenience, a stock exchange divides an year into a number of settlement periods so as to enable the members to settle their trades. All transactions executed during the settlement period are settled at the end of the settlement period.

Settlement risk or principal risk is the risk that the seller of a security or funds delivers its obligation but does not receive delivery. In this event, the full principal value of the securities of the funds transferred is at risk.BOMBAY STOCK EXCHANGE LIMITED

Bombay stock exchange ltd., popularly known as BSE was established in 1875 as The Native Share and Stock Brokers Association. It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary nonprofit making Association of Persons (AOP) and is currently engaged in the process of converting itself in to demutualized and corporate entity. It has evolved over the year in to its present status as the premier stock exchange in the country. It is the first Stock exchange in the country. It is the first stock exchange in the country has obtained permanent recognition in the in 1956 from the Govt. of India under the Securities Contract (Regulation) Act, 1956.

The exchange provides market for trading in securities, debt and derivatives uphold the interest of the investors and ensure redressal of their grievances whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by conducting investor education programmes and making available to them necessary informative inputs.

The BSE Index, SENSEX, is Indias first stock market index that enjoys an iconic stature, and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is constructed on a free float methodology, and is sensitive to market sentiments and market realities. Apart from SENSEX, BSE offers 2 indices, including 12 sectoral indices. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives.

TRADING AT BSE

The scrips traded on BSE have been classified into various groups.BSE has, for the guidance and benefit of the investors, classified the scrips in the equity segment into A, B, T, and Z group on certain qualitative and Z groups on certain quantitative and qualitative parameters.The F group represents the fixed income securities.The T group represrnts scrip which are settled on a trade to trade basis as a surveillance measure .Trading in govt. securities by the retail is done under G group .The z group was introduced by BSE in July 1999 and includes companies which have failed to comply with its listing requirements or have failed to resolve investor complaints and/or have not made the required arrangements with both the Depositories, viz., Central Depository Services (I) Ltd. (CDSL) and National Securities Depository Ltd. (NSDL) for dematerialization of their securities.

BSE also provides a facility to the market participants for on-line trading of odd-lot securities in physical form in A, B,T, and Z group and in rights renunciations in all groups of scrips in the equity segment.

With effect from December 31,2001, trading in all securities listed in equity in the equity segment takes place in one market segment, viz., Compulsory Rolling Settlement Segment (CSR).

The scrips of companies which are in demat can be traded in market lot of 1. However, the securities of the companies which are still in the physical form are traded in the market lot of generally either 50 or 100. Investors having quantities of securities less than the market lot are required to sell them as odd lots. This facility offers an exit route to investors to dispose of their odd lot of securities, and also provides them an opportunity to consolidate their securities into market lots.

This facility of selling physical shares in compulsory demat scrip is called as Exit Route Scheme. This facility can also be used by small investors for selling up to 500 shares in physical form in respect of scrips of companies where trades are required to be compulsorily settled by all investors in demat mode.

COMPUTATION OF CLOSING PRICEE OF SCRIPS IN THE CASH SEGMENT

The closing price of scrips is computed by the exchange on the basis of weighted average price of all trades executed during the last 30 minutes of continuous trading session. However, if there is no trade recorded during the last 30 minutes, then last traded price of a scrip in the continuous trading session is taken as the official closing price.

COMPULSORY ROLLING SETTELMENT

All transactions in all group of securities in the equity segment and fixed income securities listed on BSE are required to be settled on T+2 basis (w.e.f. April 1, 2003). The settlement calendar, which indicates the dates of the various settlement related activities, is drawn by BSE in advance and is circulated among the market participants.

Under rolling settlements, the trades done on a particular day are settled after a given number of business days. A T+2 settlement cycle means that the final settlement of transactions done on T, i.e., trade day by exchange of monies and securities between the buyers and sellers respectively take place on second business day after the trade day.

NATIONAL STOCK EXCHANGE OF INDIA LTD. (NSEIL)

Based on Phervani committee report submitted in June 1991, the National Stock Exchange of India Limited was established to provide an efficient system eliminating all the deficiencies of stock exchanges and is geared to meet the requirements of the larger investor population. It is a single stock exchange and all other centers are electronically linked to this exchange.

NSEIL was promote by leading FIs at the behest of Government of India and was incorporated in 1992 as a tax paying company unlike other stock exchanges in the country. On its recognition as stock exchange under the Securities Contract (regulation) Act, 1956 in April 1993, NSEIL commenced operations in the wholesale debt market segment in June 1994, operations in the capital market segment in November 1994, and operations in derivatives segment in June 2000.

TRADING AND SETTLEMENT AT NSE

NSE introduced for the first time in India, fully automated screen based trading. It uses a modern, fully computerized trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest. The NSE trading system called National Exchange for Automated Trading(NEAT) is a fully automated screen based trading system, which adopts the principle of an order driven market.

CLEARING AND SETTLEMENT

NSCCL carries out clearing and settlement functions as per the settlement cycles of different sub-segments in the equities segment.The clearing function of the clearing corporation is designed to work out,a) What counter parties owe andb) What counter parties are due to receive on the settlement date.

NSCCL also provides for a mechanism to handle various exceptional situations like security shortages, bad delivery, company objections, auction settlement etc.

CHAPTER 3COMPANY PROFILE

HISTORY

Capstocks is a professionally managed stock broking company having an unblemished and unparalleled service history of more than 23 years and a vibrant tradition of trust, loyalty and reliability. Capstocks was started by Rajendran.V, the present Managing Director of the company, in the year 1989. Capstocks is having both online and offline trading facilities. It is the first ISO 9001:2008 certified stock broking firm in India for all services in stock broking and allied activities.

Capstocks has about 180 outlets in various states of India. Capstocks is a member of the National Stock Exchange of India (NSE), Bombay Stock Exchange (BSE), MCX Stock Exchange (MCX-SX), Depository Participant with the Central Depository Services (CDSL) and a SEBI-registered Portfolio Manager.

Capstocks also offers commodity services through its subsidiaries Capstocks Finanacial Services Ltd which is a member of the Multi-Commodity Exchange of India (MCX) and Capstocks Commodities Pvt Ltd which is a member of National Commodity Derivative Exchange (NCDEX), National Multi-Commodity Exchange of India Ltd (NMCE) and National Spot Exchange of India Ltd (NSEL).

MANAGEMENT

The Company's Management rests on:Rajendran. V. (Chairman & Managing Director) Engineer by profession, with in-depth knowledge and experience in market analysis.Leela Jeyakumar (Director) Post Graduate with over 18 years experience in stock broking and the in charge of company's Tamil Nadu operation since 1992.Meera Sahib. B (Director) Post Graduate with LLB & CAIIB and 28 years of experience in officer / executive cadre in a major Public Sector BankAmjad Hydari (Vice President) Post Graduate with more than 14 years experience in various functions of the equity market brokerage.Other DirectorsSrinivasan S.IAS. (Director)Former Labor Commissioner and District Collector. Prema Rajendran (Director) Graduate in Commerce with more than 12 years experience.Rajeev Pillai (Executive Director) Engineer By Profession with wide exposure to International business organisations and consulting firms. Currently heading the North & West India Operations of Capstocks with head quarter at Mumbai.Besides we have an excellent pool of trained & dedicated professional staff, three fourth of them are certified by NCFM, NISM, BCSM, BCDM Examinations.

STRATEGIC INTENT

ISO CERTIFICATION

Capstocks has become the first ISO 9001:2008 brokerage in India to get certification for all stock broking and related financial service activities including Cash Markets, Derivatives, Internet Trading, Depository Services, Portfolio Management Services, Equity Research and Analysis, NRI Client Cell and Mutual Funds. The certification was obtained from the renowned United Kingdom Accreditation Services (UKAS), based on the Assessment by Moody International Certification Group through ICL Certifications Ltd.

The certificate was handed over at a function held in Trivandrum. Mr. Ashok Kumar Rout, Chief Operating Officer of the Bombay Stock Exchange Ltd., was the Guest of Honour on the occasion. Mr. Rajendran V, our Managing Director, received the certificate from Mr. Uwe Saelzle, Director of Moody International Certification Group, Germany, in the presence of Mr. Sanjeev Chadha, CEO, ICL Certifications Ltd., handling the Indian operations of the Moody International Certification Group.

Mr. Dilip Jacob Mathew, our Vice President, handled ISO 9001:2008 implementation as the Management Representative with assistance from Ms. Sangeetha, Sr. Executuve (QMS), and Mr. M. Pradeep Kumar, Management Systems Consultant and Trainer. A dedicated team of Managers and Executives, trained as Internal Quality Auditors in Capstocks, was involved in the Internal Assessments and improvement processes.

Commenting on the certification, Rajendran V, our Managing Director said We spent nearly 15 months to complete the ISO 9001:2008 certification process. There is a sea change in the organizational efficiency and day-to-day operations in our Company. The process flow and our organizational structure from top to bottom have been totally streamlined and the benefits will definitely be reflected in offering better services with the utmost satisfaction to our clients. As a result of ISO 9001:2008 implementation programme, Capstocks - having 75 branches covering India and elsewhere - has been able to improve continually its systems, processes and procedures at the Head Office and its Branches with better review mechanisms.

With the ISO 9001:2008 recognition under our belt, Quality of Documentation and Communication has improved. Capstocks will maintain the Quality Management System and also continually improve the quality of service through regular Management Reviews and Internal Quality Audits. As part of this project, emphasis is being given to imparting effective training and retraining for Capstocks Team Members and systematic analysis of activities.

QUALITY POLICY

CAPSTOCKS is committed to render the best knowledge-based personalized services in stock broking and related financial services, complying with all relevant requirements, by continually improving the competence of manpower and effectiveness of quality management systems, optimizing technology and infrastructure, thereby enhancing customer satisfaction.

SERVICE PROFILE

1.Online trading

Capstocks has a network of branches with online terminals of NSE and BSE in the Capital market and Derivative segments. Our clients are assured of prompt order execution through dedicated phones and expert dealers at our offices.

2. Internet trading

Capstocks offers Internet trading through this site. You can trade through the Internet from the comforts of your office or home, anywhere in the world. Our dedicated IT systems ensure service up time and speed, making Internet broking through Capstocks hassle-free.

Using the 'easiest' facility provided by CDSL, our clients can transfer the shares sold by them online without delivery instruction slips. Additionally, digitally signed contract notes can be sent to clients through E-mail.

3. Depository Services

Capstocks is a member of the Central Depository Services Limited (CDSL), offer depository services with minimum Annual Maintenance Charges and transaction charges. Account holders can view their holding position through the Internet. We also offer the "easiest" facility provided by CDSL (electronic access to securities information and execution of secured transaction ) through which clients can give delivery instructions via the Internet.4. Derivative Trading

We offer trading in the futures and options segment of the National Stock Exchange (NSE). Through the present derivative trading an investor can take a short-term view on the market for up to a three months perspective by paying a small margin on the futures segment and a small premium in the options segment. In the case of options, if the trade goes in the opposite direction the maximum loss will be limited to the premium paid.

5. Knowledge Centre

Knowledge Centre activities are intended to provide systematic and structured services mainly to new investors and also to young aspirant aiming for a career in financial markets. The centre has three functional areas: the publication Division, the Training centre, and wealth management advisory service which provides complete investment solutions to investors through knowledge based personalized service.

6. Equity Research Department

We have a full-fledged Investment Research & Analysis Department to help our clients to make investment decisions. Our clients can get information on any share they hold or plan to purchase. We publish a monthly newsletter' CAPSTOCKS INFOLINE ', which contains our views on the latest trends in the markets, scrip recommendation, tutorials, news items etc. We also issue a daily newsletter, ' CAPS TREND ', which is available in our site. Besides we give intraday calls by SMS, chat, etc.

7. Portfolio Management services

Capstocks is a SEBI-approved portfolio manager offering discretionary and non-discretionary schemes to its clients. Capstocks portfolio management team keeps track of the markets on a daily basis and is exposed to a lot of information and analytic tools which an investor would not normally have access to. Other technicalities pertaining to shares like dividends, rights, bonus, buy-back, Mergers and Acquisitions are also taken care of by us.

8. Commodity Trading You can trade in commodity futures like gold, silver, crude oil , rubber etc. and take advantage of the extended trading hours (10 am to 11 pm ) in commodities trading.

9. Mutual Funds, Bonds etc.We also offer Mutual Funds and Bonds. You can select from a wide range of Mutual Funds and Bonds available in the markets today.

10. NRI CELL

We have a well-organized NRI Cell functioning exclusively to meet the requirements of our clients residing outside India. We are committed to provide them timely assistance by placing their orders, giving them valuable suggestions concerning their investments etc. Also we help those NRIs who desire to open accounts on repatriation basis. Facilities are offered to those clients who are interested in Internet trading by activating it, in co-ordination with the e-trading department.

11. Currency Trading

Capstocks is a member of currency derivatives segment of National Stock Exchange (NSE) and MCX Stock Exchange (MCX-SX). Currency Derivatives are a new asset class which was earlier not permitted for trading to all Indian residents. Currently the trading is based on four underlying currencies viz., US Dollar, Euro, Pound sterling, Japanese Yen.

12. Pan Service Agent of UTI

Capstocks & Securities (India) Pvt. Ltd. has become authorized PAN card service agent (PSA) of UTI. Now pan applications can be submitted to any of the following offices, in addition to Head office.( Sasthamangalam, Sreekaryam, Technopark, and Pattom, in Trivandrum) Kollam, Alappuzha, Thiruvalla, Ernakulam, Thrissur, Irinjalakkuda, Thodupuzha, Calicut, Chennai RO, Mangalore, Navi Mumbai, and Nagercoil RO. Capstocks offers this value added service to our privileged customers, existing as well as new customers at nominal charge.

CHAPTER 4ORGANISATION STRUCTURE

MANAGEMENT

The Company's Management rests on:Rajendran. V. (Chairman & Managing Director) Engineer by profession, with in-depth knowledge and experience in market analysis.Leela Jeyakumar (Director) Post Graduate with over 18 years experience in stock broking and the in charge of company's Tamil Nadu operation since 1992.Meera Sahib. B (Director) Post Graduate with LLB & CAIIB and 28 years of experience in officer / executive cadre in a major Public Sector Bank.Amjad Hydari (Vice President) Post Graduate with more than 14 years experience in various functions of the equity market brokerage.Other DirectorsSrinivasan S.IAS. (Director)Former Labor Commissioner and District Collector. Prema Rajendran (Director) Graduate in Commerce with more than 12 years experience.Rajeev Pillai (Executive Director) Engineer By Profession with wide exposure to International business organisations and consulting firms. Currently heading the North & West India Operations of Capstocks with head quarter at Mumbai.

Besides we have an excellent pool of trained & dedicated professional staff, three fourth of them are certified by NCFM, NISM, BCSM, BCDM Examinations.

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CHAPTER 5DEPARTMENTAL ANALYSIS

FUNCTIONAL DEPARTMENTS IN CAPSTOCKS

For the effective functioning of the manufacturing unit there are about 11 departments in CAPSTOCKS and they are1. Trading department 2. Delivery department3. Depository department4. Commodity trading5. Equity research department6. Surveillance department7. Client relation8. Systems9. Human resource department10. Marketing department11. Accounts department

TRADING DEPARTMENT

JUNIOR EXECUTIVESENIOR EXECUTIVEASSISTANT MANAGERMANAGERHEAD OF THE DEPARTMENT

Functions

The main function of this department is buying and selling of securities. Order placing To give on information to the clients about the shares

STOCK TRADING

NEAT

NSE is the first exchange in the world to use satellite communication technology for trading. Its trading system, called National Exchange for Automated Trading (NEAT), state of the art client server based application.

SCREEN BASED TRADING

The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a nationwide, on-line fully automated screen based trading system(SBTS) where a member can punch into the computer the quantities of a security and the price at which he would like to transact, and the transaction is executed as soon as a matching sale or buy order from a counter party is found.

PLACE ORDERS WITH THE BROKERYou may go to the brokers office or place an order on the phone /internet or as defined in the Model Agreement, which every client needs to enter into with his or her broker. CORPORATE HIERARCHY

DEALERBRANCH MANAGERCORPORATE MANAGER

The trading member has the facility of defining a hierarchy amongst its users of the NEAT system. This hierarchy comprises:Corporate manager: The corporate manager is a term assigned to a user placedat the highest level in a trading firm. Such a user receives the end of day reports for all branches of the trading member. The facility to set branch order value limits and user order value limits is available to the corporate manager.

Branch Manager: The branch manager is a term assigned to a user who is placed under the corporate manager. The branch manager receives end of the day reports for all the dealers under the branch. The branch manager can set user order value limit for each of his branch.

Dealer: Dealers are users at the lower most level of the hierarchy. A dealer can view and perform order and trade related activities only for oneself and does not have access to information on other dealers under either the same branch or other branches.

CONTRACT NOTE

Contract note is a confirmation of trades done on a particular day on behalf of the client by a trading member. It imposes a legally enforceable relationship between the client and the trading member with respect to purchase/sale and settlement of trades. It also helps to settle disputes/claims between the investor and the trading member. A valid contract note should be in the prescribed form, contain the details of trades, stamped with requisite value and duly signed by the authorized signatory. Contract notes are kept in duplicate, the trading member and the client should keep one copy each. After verifying the details contained therein, the client keeps one copy and returns the second copy to the trading member duly acknowledged by him.Order ManagementOrder Management consists of entering orders, order modification, order cancellation and order matching.Entering OrdersThe trading member can enter orders in the normal market, odd lot, RETDEBT and auction market. A user can place orders in any of the above mentioned markets by invoking the respective order entry screens. After doing so, the system automatically picks up formation from the last invoked screen. When the user invokes the order entry screen, the fields that are taken as default are symbol, series and book type.

Active & Passive OrderWhen any order enters the trading system, it is an active order" It tries to find a match on the other side of the books. If it finds a match, a trade is generated. If it does not find a match, the order becomes a passive order and goes and sits in the order book.

Order BooksAs and when valid orders are entered or received by the trading system, they are first numbered, time stamped and then scanned for a potential match. This means that each order has a distinctive order number and a unique time stamp on it. If a match is not found, then the orders are stored in the books as per the price/time priority. Price priority means that if two orders are entered into the system, the order having the best price gets the higher priority. Time priority means if two orders having the same price is entered, the order that is entered first gets the higher priority. Best price for a sell order is the lowest price and for a buy order, it is the highest price, The different order books in the NEAT system are as detailed below:

(a) Regular Lot Book: An order that has no special condition associated with it is a Regular Lot order. When a dealer places this order, the system looks for a corresponding Regular Lot order existing in that market (Passive orders). If it does not find a match at the time it enters the system, the order is stacked in the Regular lot book as a passive order.

(b) Special Terms Book: Orders which have a special term attribute attached to it are known as special terms orders. When a special term order enters the system, it scans the orders existing in the Regular Lot book as well as Special Terms Book. Currently this facility is not available in the trading system.(c) Stop loss Book: Stop Loss orders are released into the market when the last traded price for that security in the normal market reaches or surpasses the trigger price. Before triggering, the order does not participate in matching and the order cannot get traded. Untriggered stop loss orders are stacked in the stop loss book. The stop loss orders can be either a market order or a limit price order. For buy SL order, the trigger price has to be less than or equal to the limit price. Similarly, for sell SL orders, the trigger price has to be greater than or equal to the limit price.

Order Types and Conditions

The system allows the trading members to enter orders with various conditions attached to them as per their requirements. These conditions are broadly divided into Time Conditions, Quantity Conditions, Price Conditions and Other Conditions.Several combinations of the above are allowed thereby providing enormous flexibility to the users. The order types and conditions are summarized below:

a) Time Conditions.

DAY: A DAY order, as the name suggests is an order that is valid for the day which it is entered. If the order is not executed during the day, the system cancels order automatically at the end of the day. By default, the system assumes that orders entered are Day orders.

IOC: An Immediate or Cancel (IOC) order allows the user to buy or sell a security as soon as the order is released into the system, failing which the order is cancelled from the system. Partial match is possible for the order, and the unmatched portion of the order is cancelled immediately.

b) Quantity Conditions

DQ: An order with a Disclosed Quantity @Q) allows the user to disclose only a portion of the order quantity to the market. For e.g. if the order quantity is 10,000 and the disclosed quantity is 2,000, then only 2,000 is released to the market. After this quantity is fully matched, a subsequent quantity of 2,000 is disclosed. Thus, totally five disclosures with the same order number are shown one after the other in the market.

c) Price Conditions

Market: Market orders are orders for which price is specified as 'MKT' at the time the order is entered. For such orders, the system determines the price.

Stop-Loss: This facility allows the user to release an order into the system, after the market price of the security reaches or crosses a threshold price called trigger price.

Example: If for stop loss buy order, the trigger is Rs.93.00, the limit price is Rs.95.00 and the market (last traded) price is Rs.90.00, then this order is released into the system once the market price reaches or exceeds Rs.93.00. This order is added to the regular lot book with time of triggering as the time stamp, as a limit order of Rs.95.00.

All stop loss orders are kept in a separate book (stop loss book) in the system until they are triggered.

Trigger Price: Price at which an order gets triggered from the stop loss book.

Limit Price: Price of the orders after triggering from stop loss book.

Order Modification

All orders can be modified in the system till the time only during market hours. Once an order is modified, the branch gets adjusted automatically. Following is the corporate hierarchy for performing order modification functionality:

A' dealer can modify only the orders entered by him.

A branch manager can modify his own orders or orders of any dealer under his Branch.

A corporate manager can modify his own orders or orders of all dealers and branch managers of the trading member firm. However, the corporate manager/branch manager cannot modify order details such that it exceeds the branch order value limit set for the day. Order modification cannot be performed by/for a trading member who is suspended or de-activated by the Exchange for any reason.

A buyback having 'BUYBACKORD' in the client account field cannot be modified to any other client account. Any order modifications resulting. In price or quantity freeze shall not be allowed. The user will receive a message "CFO Request Rejected' for such modification requests.

Order CancellationOrder cancellation functionality can be performed only for orders which have not been fully or partially traded (for the untraded part of partially traded orders only) and only during market hours.Quick Order CancellationQuick Order Cancellation (Cancel All) is an extension of Single Order Cancellation enabling a user to cancel multiple outstanding orders in various trading books subject to the corporate hierarchy. The different filters available for cancelling orders by using quick order cancellation facility are symbol, series, book type, branch, user, PRO/CLVWHS, client account number and buy/sell. Quick order cancellation can be performed by invoking the function key provided and cannot be done from the outstanding orders screen. If the criteria are not found to be correct by a trading member then an error message is displayed and the focus is set on the incorrect field to enable the user to correct it. If the selection criteria are correct then a message appears on the quick order cancellation screen stating the number of buy and sell orders to be cancelled. Quick order cancellation can be done only during market hours.ORDER MATCHINGThe buy and sell orders are matched on Book Type, symbol, series, quantity and Price.Matching PriorityThe best sell order is the order with the lowest price and a best buy order is the order with the highest price. The unmatched orders are queued in the system by the following priority:(a) By Price: A buy order with a higher price gets a higher priority and similarly, a sell order with a lower price gets a higher priority.b) By Time: If there is more than one order at the same price, the order entered earlier gets a higher priority

Stop Loss MatchingAll stop loss orders entered into the system are stored in the stop loss book. These orders can contain two prices.Trigger Price. It is the price at which the order gets triggered from the stop loss book.Limit Price. It is the price for orders after the orders get triggered from the stop loss book.If the limit price is not specified, the trigger price is taken as the limit price for the order. The stop loss orders are prioritized in the stop loss book with the most likely order to trigger first and the least likely to trigger last. The priority is same as that of the regular lot book.The stop loss condition is met under the following circumstances:Sell Order - A sell order in the stop loss book gets triggered when the last traded price is the normal market reaches or falls below the trigger price of the order.Buy Order - A buy order in the stop loss book gets triggered when the last traded price in the normal market reaches or exceeds the trigger price of the order.When a stop loss order with IOC condition enters the system, the order is released in the market after it is triggered. Once triggered, the order scans the counter order book for a suitable match to result in a trade or else is cancelled by the system.

Trade Modification

The user can use trade modification facility to request for modifying trades done during the day. The user can request the Exchange to modify only the trade quantity field. Moreover, the new quantity requested must be lower than the original trade quantity. If the user is a Corporate Manager of a trading member firm, he can request for trade modification for the trades of any dealer of the trading members firm and if he is a branch Manager of a branch, then he can request for trade modification for any dealer of the branch of the trading member firm. The user can request for trade modification either from the previous trades screen or by using the function key provided in the workstation. Trade Modification Request is sent to the Exchange for approval and message to that effect is displayed in the message window. The counterparty to the trade also receives this message. The counter party then has to make a similar request for the same modified quantity on the same trading day. Once both the parties to trade send their respective trade modification requests, the Exchange either approves or rejects it. The message to that effect is displayed in the message window. In case a request for trade modification is approved by the Exchange, the parties to trade receive a system message confirming the trade modification and the trade Modification slip is printed at their respective trader workstations. If the Exchange rejects the trade modification request, the trade modification rejection slip will be printed at their respective trader workstations.

Trade Cancellation

The user can use trade cancellation screen for cancelling trades done during the day. If the user is a corporate manager of a trading member firm, he can request for trade cancellation for the trades of any dealer of the trading members firm and if he is a branch manager of a branch, then he can request for trade cancellation for the trades for any dealer of the branch of the trading member firm. The user can request for trade cancellation either from the previous trades screen or by using the function key provided in the workstation. The trade cancellation request is sent to the Exchange for approval and message to that effect is displayed in the message window. The counter party to the trade also receives the message.

The counterparty then has to make similar request on the same trading day. Once both the parties to trade send the trade cancellation request, the Exchange either approves or rejects it. The message to that effect is displayed in the message window. When a request for the trade cancellation is approved by the Exchange, the parties to trade receive a system message confirming the trade cancellation and the trade cancellation slip is printed at their respective trader workstations. If the Exchange rejects the trade cancellation request, the trade cancellation rejection slip is printed at their respective trader workstations.

Internet Broking

SEBI Committee has approved the use of Internet as an Order Routing System (ORS) for communicating clients' orders to the exchanges through brokers. ORS enables investors to place orders with his broker and have control over the information and quotes and to hit the quote on an on-line basis. Once the broker's system receives the order, it checks the authenticity of the client electronically and then 'routes the order to the appropriate exchange for execution. On execution of the order, it is confirmed on real time basis. Investor receives reports on margin requirement, pa5rments and delivery obligations through the system. His ledger and portfolio account get updated online.

NSE launched internet trading in early February 2000. It is the first stock exchange in the country to provide web-based access to investors to trade directly on the exchange. The orders originating from the PCs of the investors are routed through the Internet to the trading terminals of the designated brokers with whom they are connected and further to the exchange for trade execution. Soon after these orders get matched and result into trades, the investors get confirmation about them on their PCs through the same internet route.

BSE On-Line Trading System (BOLT):BSE On-Line Trading System, popularly known as the BOLT System took its genesis in the year 1994, as part of the four-phase computerization program to create an automated trading environment. BOLT system aimed at converting the Open Outcry System of trading to a Screen-based trading system (SBT). BSE had the requisite knowledge base and virtue of more than 115 year track record in the capital markets; BSE embarked on the specified project in 1991 and seamlessly completed the fourth phase in March 1995.

DELIVERY DEPARTMENT

Head of department

Office assistantJunior executiveSenior executivesAssistant executiveManager The delivery department deals with the settlement of cash market transactions. The settlement mechanism in Indian securities market has witnessed significant changes and several innovations during the last decade. Till recently, the stock exchanges in India were following a system of account period settlement for cash market transactions. T+2 rolling settlement have now been introduced for all securities. The members receive the funds/securities in accordance with the pay in/pay- out schedules notified by the respective exchanges' Given the growing volume of trades and market volatility, the time gap between trading and settlement gives rise to settlement risk.Functions To ensure timely settlement of trades. Elaborate margining and capital adequacy standards to secure market integrity and protect the interests of investors.

Settlement CycleAt the end of each trading day, concluded or locked-in trades are received from NSE by NSCCL. NSCCL determines the cumulative obligations of each member and electronically transfers the data to Clearing Members (CMs). All trades concluded during a particular trading period are settled together. A multilateral netting procedure is adopted to determine the net settlement obligations (delivery/receipt positions) of CMs. NSCCL then allocates or assigns delivery of securities inter se the members to arrive at the delivery and receipt obligation of funds and securities by each member. On the securities pay-in day, delivering members are required to bring in securities to NSCCL. On pay out day the securities are delivered to the respective receiving members. Settlement is deemed to be complete upon declaration and release of pay-out of funds and securities. Exceptions may arise because of short delivery of securities by CMs, bad deliveries or company objections on the pay-out day. NSCCL identifies short deliveries and conducts a buying-in auction on the day after the payout day through the NSE trading system. The delivering CM is debited by an amount equivalent to the securities not delivered and valued at a valuation price (the closing price as announced by NSE on the day previous to the day of the valuation). If the buy-in auction price is more than the valuation price, the CM is required to make good the difference. All shortages not bought-in are deemed closed out at the highest price between the first day of the trading period till the day of squaring off or closing price on the auction day plus 20o/o, whichever is higher. This amount is credited to the receiving member's account on the auction pay-out day.Bad Deliveries (in case of physical settlement)Bad deliveries (deliveries which are prima facie defective) are required to be reported to the clearing house within two days from the receipt of documents. The delivering member is required to rectify these within two days. Un-rectified bad deliveries are assigned to auction on the next day.

Company Objections (in case of physical settlement)Company objections arise when, on lodgment of the securities with the company Share Transfer Agent (STA) for transfer, which are returned due to signature mismatch or for an-v other reason for which the transfer of security cannot be affected. The original selling CM is normally responsible for rectifying/replacing defective documents to the receiving CM as per pre-notified schedule. The CM on whom company objection is lodged has an opportunity to withdraw the objection if the objection is not valid or the documents are incomplete (i.e. not as required under guideline No.100 or 109 of SEBI Good/Bad delivery guidelines), within 7 days of lodgment against him. If the CM is unable to rectify/replace defective documents on or before 2l days, NSCCL conducts a buying-in auction for the non-rectified part of defective document on the next auction day through the trading system of NSE.

Normal MarketIn a rolling settlement, trade day is T day, T+1 day andT+2 day for NSCCL. The trades executed each trading day are considered as a trading period and trades executed during the day are settled based on the net obligations for the day. At NSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. Typically trades taking place on Monday are settled on Wednesday, Tuesdafs trades settled on Thursday and so on ACTIVITYDAY

Trading

Rolling settlement Trading T

Clearing settlement

Custodial services T+1 working day

Delivery services T+2 working days

Settlement services

Security and funds pay inT+2 working day

Security and funds pay outT+2 working days

Valuation of shortages based on closing stock T+1 closing price

Post settlement

AuctionT+3 working days

Bad delivery reporting T+4 working days

Auction settlementT+5 working days

Rectified bad delivery pay-in and pay-outT+6 working days

Re-bad delivery reporting and pickupT+8 working days

Close out of re-bad delivery and funds pay-in & pay-outT+9 working days

DEPOSITORY DEPARTMENT

HEAD OF DEPARTMENT

OFFICE ASSISTANTJUNIOR EXECUTIVESENIOR MANAGERASSISTANT MANAGERMANGER Capstocks is a member of the Central Depository Services (India) Limited (CDSL), offer depository services with minimum Annual Maintenance Charges and transaction charges. Account holders can view their holding position through the Internet. They also offer the "easiest " facility provided by CDSL (electronic access to securities information and execution of secured transaction) through which clients can give delivery instructions via the Internet.Functions To transfers the securities from the pool accounts of members/custodians to the settlement account of the clearing agency.

DepositoriesA depository is an entity where the securities of an investor are held in electronic form. The person who holds a demat account is a beneficiary owner. In case of a joint account, the account holders will be beneficiary holders of that joint account. Depositories help in the settlement of the dematerialized securities. Each custodian/clearing member is required to maintain a clearing pool account with the depositories. He is required to make available the required securities in the designated account on settlement day. The depository runs an electronic file to transfer the securities from accounts of the custodians/clearing member to that of NSCCL. As per the schedule of allocation of securities determined by the NSCCL, the depositories transfer the securities on the pay-out day from the account of the NSCCL to those of members/custodians.

Depository Participant (DP)The Depository provides its services to investors through its agents called depository participants (DPs). These agents are appointed by the depository with the approval of SEBI. According to SEBI regulations, amongst others, three categories of entities, i.e. Banks, Financial Institutions and SEBI registered trading members can become DPs.

Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited to the investor's account with his Depository Participant (DP).The trades are settled irrespective of default by a member and the exchange follows up with the defaulting member subsequently for recovery of his dues to the exchange. Due to setting up of the Clearing Corporation, the market has full confidence that settlements will take place on time and will be completed irrespective of possible default by isolated trading members. Movement of securities has become almost instantaneous in the dematerialized environment. Two depositories viz., National Securities Depositories Ltd. (NSDL)' and Central Depositories Services Ltd. (CDSL) provide electronic transfer of securities and more than 99% of turnover is settled in dematerialized form. A11 actively traded scrips are held, traded and settled in demat form. The obligations of members are downloaded to members / custodians by the clearing agency. The members/custodians make available the required securities in their pool accounts with depository participants (DPs) by the prescribed pay-in time for securities. The depository transfers the securities from the pool accounts of members/custodi4ns to the settlement account of the clearing agency. As per the schedule determined by the clearing agency, the securities are transferred on the pay-out day by the depository from the settlement account of the clearing agency to the pool accounts of members/custodians. The pay-in and pay-out of securities is affected on the same day for all settlements.

Select banks have been empanelled by clearing agency for electronic transfer of funds. The members are required to maintain accounts with any of these banks. The members are informed electronically of their pay-in obligations of funds. The members make available required funds in their accounts with clearing banks by the prescribed pay-in day. The clearing agency forwards funds obligations file to clearing banks which, in turn, debit the accounts of members and credit the account of the clearing agency. In some cases, the clearing agency runs an electronic file to debit members' accounts with clearing banks and credit its own account. On pay-out day, the funds are transferred by the clearing banks from the account of the clearing agency to the accounts of members as per the member's obligations. In the T+2 rolling settlement, the pay-in and pay-out of funds as well as securities take place Z working days after the trade date.

Depositories Act, 1996The Depositories Act, 1996 provides for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed, accuracy and security by (a) making securities of public limited companies freely transferable subject to certain exceptions; (b) dematerializing the securities in the depository mode; and (c) providing for maintenance of ownership records in a book entry form. In order to streamline the settlement process, the Act envisages transfer of ownership of securities electronically by book entry without making the securities move from person to person. The Act has made the securities of all public limited companies freely transferable, restricting the company's right to use discretion in effecting the transfer of securities, and the transfer deed and other procedural requirements under the Companies Act have been dispensed with

COMMODITY TRADING

Head of the department

Manager

Office assistant Junior managerSenior managerAssistant manager

Functions Trading of commodities Account OpeningCommodity FCRA Forward Contracts (Regulation) Act, 1952 defines goods" as "every kind of movable property other than actionable claims, money and securities". Futures trading is organized in such goods or commodities as are permitted by the Central Government. At present, all goods and products of agricultural (including plantation), mineral and fossil origin are allowed for futures trading under the auspices of the commodity exchanges recognized under the FCRA.

Commodity ExchangeA Commodity Exchange is an association, or a company of any other body corporate organizing futures trading in commodities. In a wider sense, it is taken to include any organized market place where trade is routed through one mechanism, allowing effective competition among buyers and among sellers - this would include auction-type exchanges, but not wholesale markets, where trade is localized, but effectively takes place through many non-related individual transactions between different permutations of buyers and sellers. Commodities exchanges include Chicago Board of Trade, London Metal Exchange, New York Mercantile Exchange, Multi Commodity Exchange .The time period of trading is 9am-3.30pm.

Trade AccountTo trade in the Futures market the client has to register himself and open an account with the broking organization known as trading account. Trading Lot: Each commodity should be sold and bought in the Futures market at a specific quantity. These quantities are called trading lots fixed by the exchanges. For rubber and pepper it is 1 ton, while it is I quintal for cardamom. Volatility: A measurement of the change in price over a given time period.

Warehouse Receipt: When the commodity sold in the Futures market is taken to the warehouse, the client receives a legal document from the warehouse known as warehouse receipt. This document has a trade value.Futures ContractA derivative instrument, Futures is a type of forward contract. Futures are contracts to sell / buy standardized financial instruments or commodities on a specified future date at an agreed price. Futures contracts are used generally for protecting against adverse price fluctuation.Benefits of trading in commodity futuresFutures trading in commodities results in transparent and fair price discovery on account of large scale participation and reflects views and expectations of wider section of people related to that commodities. Producers, kaders and processors, exporters/importers get an online platform through different exchanges for price risk management. It providers a platform for producers to hedge their positions according to their view of the pricesHow is Future Prices DeterminedFutures prices evolve from the interaction of bids and offers emanating from all over the country - which converge in the trading floor or the trading engine. The bid and offer prices are based on the expectations of prices on the maturity date.

Regulatory body for commodities tradingThe Forward Markets Commission (FMC) is the regulatory body for commodity futures/forward trade in India. The commission was set up under the Forward Contracts (Regulation) Act of 1952. It is responsible for regulating and promoting futures/forward trade in commodities. The FMC is headquartered in Mumbai while its regional office is located in Kolkata.

There are three national Commodity Futures market exchanges in India. The Futures Market Commission (FMC), which is under the Central Government supervises and regulates the working of all these commodities market. National Multi Commodity Exchange of India Limited (NMCE), Ahmadabad. Promoted by Central Warehousing Corporation, National Agricultural Cooperative Marketing Federation of India Limited, Gujarat Agro Industries Corporation Limited, Gujarat State Agricultural Marketing Board, National Institute of Agricultural Marketing, Neptune Overseas Limited and Punjab National Bank.

Multi Commodity Exchange of India Limited (MCX), Mumbai. Promoted by Financial Technologies (India) Ltd, State Bank of India, Union Bank of lndia, Bank of India, Corporation Bank and Canara Bank.

National Commodity and Derivatives Exchange Limited (NDCEX), Mumbai. Promoted by ICICI Bank Limited, Life Insurance Corporation of India, National Bank for Agriculture and Rural Development, and National Stock Exchange of India Limited, Punjab National Bank, CRISIL Limited, lndian Farmers Fertiliser Cooperative Limited and Canara Bank.

Products

Oil seedsCastor Seed, Copra, Cotton Seed, Cumin Seed (Jeera), Groundnut, Linseed, Rape Avlustard seed, Rape Seed-42, Safflower, Sesame Seed, Soyabean , Sunflower seed , Yellow Soybean MealOilsCastor Oil ,Coconut Oil ,Cotton Seed Oil ,Groundnut Oil, Linseed Oil, Rape/Mustard Seed Oil ,sunflower seed Oil ,Sesame seed Oil ,Soybean Oil, Sunflower seed Oil .Crude Palm Oil ,RBD Palmolein ,Rice bran Oil ,Vanaspati

OiI cakesCastor Oilcake, Coconut Oilcake, Cotton Seed Oilcake ,Groundnut Oilcake,Linseed Oilcake, Rape/Mustard Seed Oilcake ,Safflower seed Oilcake, Sesame Oilcake, Soybean Oilcake, Sunflower seed Oilcake

MetalsAluminium, Copper, Gold( 1 00Gms),KiloGold,Lead,Nickel,Silve,SteelFlat,Steell,ong,Tin, ZincEnergyCrude oil, Furnace oil, Natural gasSpicesPepper, Cardamom, Turmeric, Red ChilliPulsesGram, Tur/Arha, Urad, Moong, Masoor, Yellow PeasOthersRubber, Sacking, Sugar, Gur, Guar seed, Bandani, Wheat, Rice, Raw Jute, KapasMedium Staple Cotton, Long Staple Cotton, Cashew Kernel, Maize

Futures market helps AIIFutures contracts perform two important functions: Price Discovery Price Risk Management

Farmers Efficient Price Discovery/Forecast made b3r the exchange will enable farmers decide cropping pattern and investment on inputs. Price Stability resulting from equilibrium in supply and demand for a commodity would be possible through exchanges. Get an extensive market opened for them. Get opportunity to trade, knowing the national and international trends and standards. Can sell the commodity to the customer without any agents. Can decide the market even before harvest. Get an opportunity to gain profit by spending only a small percentage of the actual commodity price. There is an opportunity to keep the commodity in the warehouse and use the warehouse receipt to deal with financial needs, as it is an endorsable document. Can avoid deliberate decrease in price in the name of quality. Farmers can trade by asking the help of the experts in trading organizations even if they are computer illiterate.

Traders Can trade by spending only the margin amount. Can sell the commodities that he buys from the ready market and can rescue himself from the loss happening from price fall. For those who have kept their commodity in the Central Warehouse, loans are available on the basis of the stock. The benefit is that you can keep the commodity somewhere without blocking the working capital in the stock.

Consumer, Industrialist & Exporters Can be sure that the commodity is available when they require it. Can calculate the price since it is predetermined and can arrange everything according to that. Can buy goods without agents. Can buy them even while sitting in their office. Can be assured the quality of the good. Commodities can be purchased with only margin amount instead of giving the whole price.Market influencing Factors for commodity Markets

GOLD Above ground supply from sales by central banks, reclaimed scrap and official gold loans Producer / miner hedging interest World macro-economic factors - US Dollar, Interest rate Comparative returns on stock markets Domestic demand based on monsoon and agricultural outputSILVER Price movements of other metals Income level of the rural sector of the economy Available supply verses Fabrication demand Fluctuation in deficits and interest rates InflationALUMINIUM Domestic demand and supply International prices Interference of government and various associations Import duties Other economic activities in the world Price fluctuations of the input materials like power, freightCOPPER Price fluctuations of copper in London Metal Exchange Production level of copper in the world Growth prospects of the major copper consuming countries of the world Growth prospects of the various consuming sectorsNICKEL

Discovery of new mines Situation in the various industries that contribute to the demand of the metal Rise in the world stainless steel

ZINC Level of stocks with London Metal Exchange Fluctuation in the world demand for zinc Growth rate of the zinc producing countries changes in the prices of the other substitute metals Funds in the zinc sector

CRUDE OIL Production of the major oil producing countries various climatic or political supply fluctuations World oil demand Fluctuations in the value of dollar Imports from various world oil organizations like API, DOE Refinery fire

NATURAT GAS Demand and supply scenario of OPEC nations Fluctuation in the value of dollar Demand level from the importing countries Weather conditions in the gas producing countries Domestic demand from the various sectors of the countryEQUITY RESEARCH DEPARTMENT

HEAD OF DEPARTMENT

ASSISTANT MANAGEROFFICE ASSISTANTJUNIOR MANAGERSENIOR MANAGERMANAGER

FunctionsThe Company has a full-fledged Investment Research & Analysis Department to help their clients to make investment decisions. Gives information on any share the clients hold or plan to purchase. Publish a monthly newsletter' CAPSTOCKS INFOLINE' which contains their views on the latest trends in the markets, scrip recommendation, tutorials, news items etc. Issue a daily newsletter, ' CAPS TREND'. The department provides classes for clients regarding the current shares.

The Equity Research Department is also deals with the services like Portfolio Management & NRI Cell

Portfolio Management Services

Capstocks is a SEBI approved Portfolio Manager. Clients can rely on the expertise of the team of expert fundamental and technical analysts to make investment decisions for them. The company is strong on equity analysis and it has been one of the strengths of the company. Capstocks is a SEBl -approved portfolio manager offering discretionary and non-discretionary schemes to its clients. Capstocks portfolio management team keeps track of the markets on a daily basis and is exposed to a lot of information and analytic tools which an investor would not normally have access to. Other technicalities pertaining to shares like dividends, rights, bonus, buy-back, Mergers and Acquisitions are also taken care of by the company.In today's fast moving world it is not at all possible or intelligent to do all personal investments on your own. One cannot keep pace with the fast moving markets and information flow on a day to day basis" This is where a Portfolio Manager like Capstocks comes into the picture. Capstocks portfolio management team keeps track of the markets on a daily basis and has at its disposal a lot of information and analytic tools which an investor would not normally have. Minimum Portfolio amount should be Rs.5 lakhs rs as SEBI rules stipulate this minimum amount. You can also give your existing shares as capital and the same will be valued at market rate.

Investment ObjectiveThe investment goal is to maximize returns through intelligent stock picking and analysis. The main approach is to invest in a mix of securities comprising of front line stocks, mid cap stocks and identified growth stocks.

Management Fee Structures(1) Option I3 %annual fee is debited quarterly on average daily NAV of the Portfolio.(2) Option II1% Annual Fee is debited quarterly on average daily NAV. Additionally 20% of profit is taken as fees on profits above 10%. This charge on profit is calculated after deducting 1olo annual fees and other charges payable to Capstocks. This charge on profit will be charged at the end of the financial year or termination of the agreement with Capstocks whichever is earlier.

Account opening ProceduresThe client has to submit a completed account opening form, duly signed agreement form, copy of Pan card, Photograph, proof of identity and bank details.

Client ReportingThe client can find out the NAV of their portfolio and how their investments are faring on a daily basis through email. Where email facility is not available" company will send a biweekly report by post, or the information can be made available anytime from office on request.

NRI CELLCapstocks have a well-organized NRI Cell functioning exclusively to meet the requirements of their clients residing outside India. They are committed to provide them timely assistance by placing their orders, giving them valuable suggestions concerning their investments etc. Also they help those NRI's who desire to open accounts on repatriation basis. Facilities are offered to those clients who are interested in Internet trading by activating it, in co-ordination with the e-trading department'Account Opening:The Company takes care of all the paper work and procedures involved in opening NRI client accounts and bank accounts on portfolio investment scheme. Order execution and related reporting: NRI clients have the option for registering for internet trading facility or they can execute their orders through email, sms or telephonic communication. NRI clients can know their financial balances, trade confirmations and holdings directly from the NRI cell.Online options available: Capstocks have exploited modern technology to offer NRI clients online order execution through our internet trading facility, online client back office and online d p holdings whereby clients can see their financial balances and dp holdings online.

SURVEILLANCE DEPARTMENT

Office assistantJunior executiveSenior managerAssistant managerManagerHead of the department

A sound risk management system is integral to an efficient settlement system. NSCCL has put in place a comprehensive risk management system, which is constantly monitored and upgraded to pre-empt market failures. It monitors the track record and performance of members and their net worth; undertakes on-line monitoring of members' positions and exposure in the market collects margins from clients and automatically disables members if the limits are breach.

Functions To keep companys fund flow and equilibrium To protect the customer fund.In risk management, the online position monitoring system monitors the clients open position & margins on a real time basis. The online position monitoring system generates alerts whenever the margin of a member reaches the pre determined performance of the capital deposited by the client.

CLIENT RELATION

Office assistant Junior executive Senior manager Assistant managerManager Head of the department

Functions Account opening Trading account modification (address, ph.no., bank details, mail id) To handle customer grievances and direct them to the specific department To provide application of IPO Keep in touch with the clients

There are two types of accounts,1. Trading account2. Demat account

To open a trading account there should be a photo, Bank proof, PAN card &Address proof (Passport, ration Card, Driving License, voters ID, Bank Passbook/Statement ). The application form consist of Member -Client Agreement NSE, Member-Client Agreement BSE,Tripartite agreement between stock broker &client-NSE, Combined risk disclosure document for currency derivatives segment(NSE/MCX-SX),Member client agreement for internet trading-NSE, Member client agreement for internet trading-MCX-SX.To open a demat account there should be a photo, Bank proof PAN card,Address proof ,nominees photo& nominees cancelled cheque leaf. The application form consist of Nomination form, Agreement between a Participant and a Person seeking to open a Beneficial Owner's Account, DP Tariff Card, Power of Attorney. This department is also helpful to take PAN cards.

Pan Service Agent of UTICapstocks & Securities (India) Pvt. Lid. has become authorized PAN card service agent (PSA) of UTL Capstocks offers this value added service to their privileged customers, existing as well as new customers at nominal processing charges.

SYSTEMS DEPARTMENT

IT MANAGER

SYSTEM ADMINISTRATORNETWORK ADMINISTRATORRASSISTANT MANAGERASSISTANT MANAGER

FUNCTIONS Computer services and networking To connect all branches and head office. Facilitate internet trading Maintaining virtual date base

For a Share Broking firm the system department has a very bring role to play Trading is the main process in this type of company and for this purpose the software ODIN is using. All the branches are connected to the head office and whatever doing in the branches, using for the transmission.4 Type of connectivity is there1. A SAT2, VPN [Virtual Private Network]3. MPLS (Physical lines are using)4. LAN

HUMAN RESOURCE DEPARTMENT

Assistant manager

Junior executivesSenior executives Functions Recruitment & Selection Training & Development Wages and salary administration Promotion Statutory facilities providing

The Recruitment process is done by both internal method and external method. The employee referrals is considering for the process of Recruitment. Now the H.R department looks forward to outsourcing also.The first step of selection is a written test. An interview is then conducted by the HR Manager for those who succeed in the written test. Induction program will be given to candidates. They will be provided on the exam training and 6 month probation period. After that they will be appointed permanently. The training is done by the internal trainer sometimes they depends on the external trainer also. There are 3 levels of Training Managerial training: The training is given for the managers. Induction: The training given for the fresher's. Exam training: The terminals are allotted to Capstocks by the exchange on the basis of the exam certificate. So the training is very important.The details of exams are given below.

Exam

Validity

CAPITAL MARKETDEALTRS MODULE (capital Market)

NISM VIII EQUITY AND DERIVATIVES

NISM VII SORM

NCDEX (Commodity)

MCX (Commodity)

NISM (Currency Derivative)5

3

3

3

3

3

Promotion is based on the seniority, eligibility for post, efficiency, skill qualification etc' the management decides whether to fill a post by outside recruitment or through promotion. The transfers are very often.LEAVE POLICY Capstocks follows a systematic method for deciding holidays in a year. National holidays such as Jan26, May l, Aug 15, oct2 etc are considered as the Holidays. The remaining holidays are decided by management. Casual leave12 working days. Maximum 3 casual leave in a month subject to prior approval .

Medical leave6 working days maximum. Medical certificate plus leave application is required leave exceeding 2days. Within 2 days self confirmation only required.

Privilege leaveMinimum 3days leave is available to an employee after giving 30days prior notice.

Encashment of leaveOn December 31st excess unutilized leave accumulated over 45 days may be encased.

Maternity leave12 weeks or 84 days paid leave is available for women employees.

Abortion leave6 weeks or 42days paid leave.

Performance Appraisal:Performance appraisal is done on the basis of certain factors such as job knowledge, job responsibility, quality & quantity of work, cost consciousness, organizing ability, punctuality, problem solving ability etc. performance appraisal goes through three steps i.e. first appraisal by employee, then appraisal by the rater and reviewed by the head of the department. Calculation of appraisal score of employee done based on five point rating system. The final rating is done by the rater. Counseling is also given for low level performers.

Issue Performance appraisal form to employees. Self appraisal by the employee. Appraisal by the Rater. Review by Department Head. Calculation and appraisal scores of eachemployees in personal interviews. Counsel employees for improved performance.

MARKETING DEPARTMENT

Assistant managerRegional manager Junior managerSenior managerFranchisee manager MANAGERHODMARKETING CONSULTANT . A detailed study in the Marketing Department is done. The efficient marketing Department is the corner stone for success for every organization. In Capstocks marketing department is under the control of HOD (Marketing). The activities of this Department are directly reported to the MD. This department identifies the customers, interact with them and find out their needs. Marketing management is a pre requisite for the successful operation of any business enterprise. Functions Policy making &implementation New client addition Prepare workout schemes To increase volume by marketing Conduct promotional activities

More than 50 employees are working in this department. They follow personalized mode of operation. In Kerala the working of a share market firm is a risky game because the mindset of the people is very conservative comparing with the other state of India. The people in Kerala are unaware about share market and they are not ready to take risk. The investment habit is also less. The marketing department has to work hard to make awareness among people especially in Kerala.

For this purpose the marketing department is conducting the promotional activities like Advertisements, Road shows, Awareness programmes etc. The awareness programmes includes investor awareness programmes &the students awareness programmes. By investor awareness programmes the company can retain & increase investment habit of the client. And also company can give suggestions about what would be the right choice of the investment. Students awareness programmes are conducting at colleges to increase their investment habits. The main competitors of the company are GEOJIT, JRG Securities HEDGE Equities etc.

ACCOUNTS DEPARTMENT

Office assistantSenior manager Junior managerAssistant executive Manager HEAD OF THE DEPARTMENT Money is the lifeblood of any organization as it is required to purchase raw materials and machines, to pay wages and salaries etc. the financial statement of the company is prepared under the convention accrual basis as a going concern.

FunctionsThe main functions of Finance Department come mainly are categories, they Cash Receipts /PaYments Bank Receipts / Payments Finalizatian

Cash Receipts/ payments Withdrawl Receivel Payment of cash Settlement of tax, temporary salary, interest advancesBank receipts/ Payments Amount transter vouchers Writing of Cheque Remittance of all reeoveries made from salary Preparation of bank reconciliation statement Generating bank books

Finalization Analysis of ledger Rectification of error Adjusting and clearing entries Assisting internal Audit Assisting statutory audit Preparation of Trial balance, P&L accountant and Balance sheet

In a share broking firm the accounting process is entirely different. They accept only cheques. As per the SEBI rule any credit balance from client's trading account should be transferred to the client's bank account in quarterly basis.

CHAPTER 6SWOT ANALYSIS

SWOT ANALYSIS is a systematic analysis to understand the business environment. SWOT means analysis of strength, weakness, opportunity and threat affecting the business. Strength is the inherent capacity which a business can use against its competitors. Weakness is an inherent limitation or constraint which creates strategic disadvantages. An opportunity is a favorable business condition. A threat is an unfavorable business condition that creates risk.

Strength Good relation between employees and top management Good working conditions An excellent pool of trained staffs, three forth of them is certified by NISM, MCX, NCDEX, NMCE examinations. Capstocks is the second largest Kerala based stock broking company. Efficient quality system awarded with ISO certificate. Good training and induction program for workers

Weakness Less media advertisements Less focus on northern region of India Debts are not with appropriate physical proximity Market fluctuations

Opportunity

Rising income levels of people The wide spread business operations Awareness of public about share market investment potentials Use of appropriate technology

Threat

Heavy threat from rival firms Market fluctuations Unawareness of people about share market

CHAPTER 7FINDINGS AND CONCLUSION

FINDINGS

Some of the major things that came into notice are mentioned below Well disciplined staff and employees Effective attendance system Well established Employees welfare policies Good relation between top management and employees The company has a very good customer retention policy Company is using past references as their promotion strategy.

CONCLUSION

As my experience I would like to say that the study was very beneficial. I could get to know how share market is working, how the trading activities are actually taking place and how the brokers act as intermediary between the stock market and investing public.

The company is providing wide range of quality services to their customers. They are very successful in customer retention and they are using it as their success mantra. The labor turnover is very low as they are maintaining good relation with employees. Reference by existing clients is the marketing strategy they are using. In this field trust of the clients is the most important thing.

REFERENCES

Securities Laws and Compliances (Institute of company Secretaries of India) Umasekaran, Research methods for business M.Y.Khan, Financial services

WEBPRTALS

www.capstocksindia.com www.bse-india.com www.cdslindia.com www.sebi.com www.nse-india.com