sudhi (final)

8/13/2019 Sudhi (Final).

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Introduction to the capital market

The capital marketis the market for securities, where companies and the government can

raise long term funds. The capital market includes the stock market and the bond market.

The capital markets consist of the primary market, where new issues are distributed to

investors, and the secondary market, where existing securities are traded.

Capital market thus plays a vital role in channelizing the savings of individuals for

Investment in the economic development of the country. As a result the investors are not

constrained by their individual abilities, but by the abilities of the companies, which in turn

enhance the savings and investments in the country.

ince pro!ects re"uire long term finance, but on the other hand, the investor may not like to

relin"uish control over their savings for a long time. A li"uid stock market ensures a "uick

exit without incurring heavy losses or costs and thus it proves to be more beneficial for the

investors. Thus development of efficient market system is necessary for creating conductive

climate for investment and economic growth.

Capital market Segment Primary And Secondary

Capital market #roadly comprises of two segments. the new issue market which is

commonly known as primary market and the stock market which is known assecondary market.

Primary

A primary offering include corporate bond, where you are buying it directly from

the issuer, at par value. A secondary market is where you sell or buy existing issues

that is suppose a person has brought a bond last year, now he need to get his

principal , he can sell it in the secondary market. he may not get par value, If rates are

up since he bought the bond, then he has to sell it at a discount to get rid of it. If rates

have fallen since he bought it, he could get a premium for it.

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Secondary

The secondary market is a market where securities are traded after they are initially offered in

the primary market. $ost of the trading is done in the secondary market. it also means

trading in previously issued financial instruments. It is an organized market for used

securities. It includes #ombay tock %xchange %', (ational tock %xchange (%, bond

markets, over)the)counter markets, residential mortgage loans, governmental guaranteed

loans etc

econdary market comprises of e"uity markets and the debt markets. *or the general

investor, the secondary market provides an efficient platform for trading of securities. *or

the management of the company, econdary e"uity markets serve as a monitoring and

controlling system by facilitating value)enhancing control activities, enabling

implementation of incentive)based management contracts, and aggregating information that

guides management decisions.

BRIEF ABOUT TE STOC! E"CA#$ES

tock %xchange is a market like any other centralized market where both buyers and

sellers come and conduct their business of purchase and sale of shares + securities. In

other words, it is a market place for shares and securities where trading takes place in

a controlled and protected environment%

&EA#I#$ OF STOC! E"CA#$E

A stock exchange, share market or bourse is a corporation or mutual organization which

provides trading facilities for stock brokers and traders, to trade stocks and other securities.

tock exchanges also provide facilities for the issue and redemption of securities as well as

other financial instruments and capital events including the payment of income and dividends.

The securities traded on a stock exchange include- shares issued by companies, unit trusts and

other pooled investment products and bonds.

To be able to trade a security on a certain stock exchange, it has to be listedthere. sually

there is a central location at least for recordkeeping, but trade is less linked to such a physical

place, as modern markets are electronic networks, which gives them advantages of speed and

cost of transactions. Trade on an exchange is done by members only. The initial offering of

stocks and bonds to investors is done in the primary market and subse"uent trading is done in

the secondary market. A stock exchange is often the most important component of a stock

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market. upply and demand in stock market is driven by various factors which, as in case of

free markets, affect the price of stocks.

There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be

subse"uently traded on the exchange. uch trading is said to be off exchangeor over)the)

counter. This is the usual way thatbondsare traded. Increasingly, stock exchanges are part of

a global market for securities.

CO#CEPT OF SARE TRA'I#$

The concept of share broking emerged after the establishment of the !oint stock companies.

The ownership of the companies was divided into small parts and that every part was called

share. o, the term /hare0 denominates some part in the ownership of the company. The

shares are freely transferable sub!ect to the some certain restrictions. 1hen the need was felt

to sell the shares by the owner of the shares, it was difficult to find out the buyers of the

shares who want to buy the shares at the price the seller want to sell. At that time a need was

felt to bring the buyers and sellers on a common platform. To solve this problem, a group of

persons came into picture, who used to bring the buyers and sellers together for the trade of

the shares. These persons are called the share #rokers who find the persons who wish to buy

or sell their securities. The whole process of finding the buyers and sellers of the securities by

the brokers is called the hare #roking. The origination of the Indian securities market may

be traced back to 2345, when 66 enterprise brokers under a #anyan tree established the

#ombay tock %xchange %'. 7ver the last 289 years, the Indian securities market has

evolved continuously to become one of the most dynamic, modern international standards

both in terms of structure and in terms of operating efficiency

SETT(E&E#T C)C(E SCE'U(E

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http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)


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:. (7. ;A< ;%C=I>TI7( 7* ACTI?IT< T=A;%

2 T Trading ;ay

6 T@6 >A< I( #< 29.89 am.

8 T@6 >A< 7T #< 6 pm.

B T@8 Auction of shortage in deliveries

5 T@5 Auction pay)in by 29.89 &2 am pay out by 6 pm.'

Function* o+ Stock E,change

tock exchange is established into the main purpose of providing a market place for the

members to deal in securities under well laid down regulations and to protect the interest of

the investors. The main functions of stock exchange areD

2. It brings the companies and investors together so that the investors can put risk capital

into companies and thus, companies can use the capital.

6. It provides an orderly regulated market for securities.

8. It provides continuous, ready and open market for selling and buying securities.

B. It promotes savings and investment in the economy by attracting funds from the

investors.

5. It facilitates take overEs by means of ac"uiring ma!ority of shares traded on the stock

market.

F. It acts as a clearing house of business information.

4. It motivates the managers of well reputed companies, to retain their shares in GAE

group, to improve performance.

H. It induces the managers to improve performance for converting non)specified shares

into specified shares in the exchange.

3. It enables the investors to evaluate the net worth of their holdings.

29. It also allows the companies to float their shares in the market.

In*titutional o++ering

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In-e*tment Banking

I:+* Invest smart securities limited &II:' offers extensive range of Investment #anking

ervices for e"uity related products and instruments. Thisteam advises on transactions like

business structuring and capital raising opportunities based oncorporate needs and state of

capital markets. ervices they specialize in include $anagement of-

Initial >ublic 7ffering &I>7s'

*ollow)on 7fferings

ualified Institutional >lacements &I>s'

#uyback of %"uities

7pen 7ffers

$ergers + Ac"uisitions

>rivate %"uity >lacements

%7>s

In*titutional E.uity

CompanyEs efficient execution, "uality research, top "uality human resources and complete

compliance with stock exchange regulations, as well as business standard ethics lend towards

exemplary services to investors, through I>7s, e"uities, derivatives and mutual funds.

Company also focuses on identifying undiscovered value stocks to investors. Through its

array of services, this division is well)suited to corporate investors, banks, financial

institutions, insurance companies and *IIEs .companyEs Institutional %"uity #usiness &I%#' is

well positioned to offer support for a complete range of investment banking service to

corporates.

II:, work closely with institutional investors, private e"uity investors and corporates, have

been hosting round table conferences with leading CI7s *und $anagers etc. Also, conduct

activities like organizing of road shows, enabling the senior management to interact with

*IIs, regular conference calls for institutional Investors etc. This works as a pre)re"uisite to

investing in stocks. CompanyEs expertise in this area also extends to international investors

from ingapore, Jong Kong, A and the K.

In*titutional 'e/t

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Institutional debt broking division includes, secondary market broking, primary market debt

placement + distribution and provident fund advisory services.

econdary debt broking is the principle service provided by this division. The clients mainly

comprise of institutional debt players, such as banks, primary dealers, mutual funds, large

provident funds and in some cases corporate treasuries. The division empanelled with almost

all banks, primary dealers and mutual funds, on whose behalf it acts either on the buying or

selling side. All types of debt papers are covered, including government securities, treasury

bills, public sector bonds, corporate bonds etc. This desk also provides transacting and

advisory services to various provident funds and J(I clients.

The primary market services cover placement of debt paper issued by corporates, with

institutional segments covering banks, mutual funds etc. These services cover variousactivities )

Advising the clients on the issuance including the instrument, "uantum, timing, and

other instrument specific structuring such as put call option, conversion option and

rating. Assisting in the rating exercise and suggesting various means and options to

improve rating if so desired, through /tructured 7bligations0 or other mechanisms.

>re marketing the placement issuance

elling placing the issuance

Assisting in any related documentation for the issuance

Assisting in all other steps to complete the issuance for draw down funds

The debt instrument covered by this division cover both short term as well as longer term

instruments. Commercial paper and $I#7= :inked #onds are popular among the short)term

instruments. The division uses a proprietary online platform called /;ebton(et0 for online

book building of debt issuances.

O#(I#E FU#' TRA#SFER

II: have tie up with 5 banks, which are. J#C, J;*C, I;#I, CITI, ALI bank , for online money

transfer

CURRE#T SCE#ARIO

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The emergence of online exchanges has facilitated faster transactions by providing online trading

portals and brokerage houses ease and flexibility. The Internet has indeed opened up new

opportunities for conducting the business. The worldwide stock exchanges has made a ma!or shift

from the traditional method of trading and now conduct a bulk of its business online through its

brokers and partners.

In the developed countries ma!orly all the exchange transactions are conducted online. The trend

took off slowly in India and the (ational tock %xchange &(%' and the #ombay tock %xchange

%' two of the largest exchanges in India have been conducting online trade successfully for some

time.

0) O#(I#E TRA'I#$ E#TERE' (ATE I# I#'IA1

The Indian exchanges and brokering houses have been very slow in moving their transactions online

and the ma!or reason has been the lot government regulations. The initial delay was due to laying

down the specifications for creating Closed ser Mroups &CMs'. This issue was resolved between

the ;epartment of Telecommunications &;oT' and the *inance $inistry around 233H and after that

soon came the online trading portals like I:+* investsmart, ICICI;irect.com, motilaloswal.com,

sharekhan.com etc. Connectivity related issue was perhaps the most important technological

factor.=#I made regulation that it is mandatory for company to store at least 4 year financial and

transactional data. In the non)stop, 6B hours a day, seven days a week world of investing, we areable to

7btain investment news around the clock

Check "uotes on exchanges all over the world day or night

%asily compare one investment to another via numerous ratios, charts, graphs, and

tables

creen for the best investments to fit our individual goals and re"uirements

Trade stocks as easily and "uickly as professional traders

Calculate retirement needs based on various scenarios

=egularly monitor portfolios and make necessary changes "uickly and almost

effortlessly

Control the routing of individual trades for the best possible price and execution

%ven many years after the launch of the first online brokerage firm, there remain a

large contingent of individual investors who still pick up the phone and call their stock broker

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to buy and sell investments. Jowever, every year a growing number of investors are placing

their trades using online brokers.

On (ine TradingOn (ine Trading

&eaning o+ Online Trading

2Change i* the la3 o+ nature4% There were times when man was a wanderer or a normal. Je

himself had to go place to place in search of food, water and now everything is available at

his doorstep !ust at the click of the mouse. The growth of information technology has affected

almost all sectors of life. Internet has enabled us to get every information at our doorstep.

1hen Internet has affected all sectors, like all other sectors Internet has set its feet in the

stock markets also. Internet trading commissions are clearly posted on the websites of the

various services, and are typically a fixed rate charge, depending upon the type of security

being traded and the size of trade. Therefore, an Interest investor always knows what

commission he is being charged on each trade. Internet investors can take as much time as

they would like to take prior to placing a trade order. imilarly the online investor likely does

not have to worry that his broker is making unauthorized trades. ince there is no individual

broker making a commission, the only person who is authorized to trace into the account is

the actual investor. *urthermore, the internet investor can never become a victim of excessive

trading since the investor maintains total control over the number of transactions which takeplace in the account.

All of these positive features of internet trading may lead the investor to believe that Internet

trading is a way to take control of their finances and save more money in the process.

nfortunately, this is not always the case. The advantages of Internet stock trading have also

its weaknesses and these weaknesses present significant drawbacks for the average investor.

*irst and foremost, the average investor is not an expert in the financial markets. There is a

danger for allowing the autonomy of online trading. An online investor sitting at home at a

personal computer also foregoes proper investment advice and financial planning, perhaps

among the most valuable services provided by traditional brokers.

There are also additional risks relative to performing transactions over the Internet especially

on a shared computer.

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Those people to whom investors have provided their account number and password can

freely trade that account while the investor will have little resource against the brokerage firm

for the breach of security.

0hen 3a* online trading introduced in I#'IA1

7nline trading started in India in *ebruary 6999 when a couple of brokers started offering an

online trading platform for their customers.

O#(I#E TRA'I#$ B) #SE 5 BSE

The central computer located at the %xchange is connected to the workstations of the #rokers

through satellite using ?ery mall Aperture Terminals &?ATs'. 7rders placed at the

#rokersN workstations reach the central computer and are matched by the computer based on

price and time priority.

#oth the exchanges have switched over from the open outcry trading system to a fully

automated computerized mode of trading known as #7:T % 7n :ine Trading' and

(%AT &(ational %xchange Automated Trading' ystem. It facilitates more efficient

processing, automatic order matching, faster execution of trades and transparency. The scrips

traded on the #% have been classified into NAN, N#2N, N#6N, NCN, N*N and NON groups. The NAN group

shares represent those, which are in the carry forward system adla'. The N*N group

represents the debt market &fixed income securities' segment. The NON group scrips are the

blacklisted companies. The NCN group covers the odd lot securities in NAN, N#2N + N#6N groups

and =ights renunciation.

PROCESS OF O#(I#E TRA'I#$

An investor interesting in trading through Internet should firstly register himself with an

Internet brokerage firm. ome formalities such as filling the account opening form of the e)

broker, copies of identity proof, copy of residence proof are made to register himself with the

e)trader. econdly, the investor would be re"uired to open a bank account with a scheduled

bank and sufficient balance should be kept in the account. Thirdly he would be re"uired to

open account with a depository participant because only dematerialized shares can be traded

on Internet. o, generally following steps are followed while doing the trading through the

Internet

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-

Step6I7Those investors interested in doing the trading over Internet system, that is, (%AT )

IL &(%', should approach the brokers and register with the tock #roker.

Step687 After registration, the broker will provide to them a login name, password and a

personal identification number &>I('.

Step697 Actual placement of an order, using the place order window as under can then place

an order-

&a' *irst by entering the symbol and series of stock and other parameters such as "uantity and

price of the scrip on the place order window.

&b' econd, fill in the symbol, series and the default "uantity.

Step6:7 It is the process of review. Thus, the investor has to review the order placed by

clicking the review option. Je may also re)set to clear the values.

Step6;7 After the review has been satisfactoryD the order has to be sent by clicking

on the send option.

Step6


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)*+,-T B./,. T/) ,)-,

Places an order on

the net on the

broer!s %ebsite

thro$gh the

distinctive +""

code

ccepts the

order )hecs

the client!s

+dentity and

places the

order %ith the

stoc e#change

ccepts the order

a&ter checing the

scrip li'it o& the

broer &or the day

,#ec$tes the order

The settle'ent o&

the deal b$ysell

order: gets

re&lected in his

e'at acco$nt"

The client is

inti'ated abo$t

the e#ec$tion o&

the deal by e('ail"

Pays the broer

pending physical

delivery"

Pays the

,#change

thro$gh his

o%ns acco$nt

and receives it

&ro' the clientacco$nt"

.eceives the

'oney and

co'pletes the

settle'ent

Step6 =7 In case the order is re!ected by the #roker or the tock %xchange for certain reasons

such as invalid price limit, an appropriate message will appear at the bottom of the screen. At

present, a time lag of about ten seconds is there in executing the trade.

Step6>7 It is regarding charging payment, for which there are different modes. ome brokers

will take some advance payment from the investors and will fix their trading limits. 1hen the

trade is executed, the broker will ask the investor for transfer of funds by the investor to his

account.

TE &ECA#ICS OF O#(I#E TRA'I#$

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BU)I#$ A#' SE((I#$

The first step is to open a demat account with your selected ;epository >articipants &;>'. All

transactions on both the #% and (% are done in demate securities. 1hen an individual buy

shares, he is re"uired to pay money to his broker or sub)broker immediately upon getting the

contract noteconfirmation memo for the purchase of shares. The broker issue as contract

note, whereas sub)broker issues a confirmation memo. imilarly, when an individual sale

shares he is re"uired to give delivery of his shares by transferring them to the demate

account of his brokersub)broker immediately upon getting the contract note or confirmation

memo.

1hen he buy the shares then the share he has purchased will come first to demate account of

his brokersub)broker. 7nce this happens, he can instruct his brokersub)broker to transfer

those shares to his demate account for receiving shares in his demate account he will have to

give his broker or sub)broker the details regarding his demate account.

1hen he sells shares he is re"uired to give delivery of share from his demate account by

instructing his ;> to transfer the number of shares from his account to the demate account

of his broker. In this regard, he will be re"uired to include the details of the demate account

of his broker in the instruction slip that he gives to his ;>. The broker or sub)broker will help

him to fill in the delivery instructions. These instructions are of a technical nature and thedelivery instruction forms and procedures differ from ;> to ;>

OFF (I#EOFF (I#E T=A;I(MT=A;I(M

(evertheless, with all the convenience of online trading there are still investors who

prefer the old fashion way of offline trading. 7ffline trading has lost some popularity

but it is still the main form of investing. 7ffline trading offers many benefits as well.

2. The one benefit that an investor appreciates the most is that they are not alone when

making investment decisions.

6. There are experienced and professional brokerage companies that handle their

investments for them.

8. Investors are not faced with the challenge of making these vital investment decisionsD

especially, if they do not have the experience necessary to make the appropriate

investments.

B. Also, there is someone there to answer any "uestions that may cause concerns. 1ith

offline trading mistakes are less likely to take place. (o one wants to throw their

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money away or stand by and watch someone else throw their money away. It may be

wise to hire a professional to assist in making the correct investment decision.

Point* o+ di++erence /et3een online trading and o++ line trading are a* +ollo3*7

2. 7nline trading is very expensive as compare to manual trading or offline trading.

6. 7nline trading consumes less time as compare to manual trading.

8. 7nline trading is very helpful in finding the records easily but offline trading takes more

time to find the records.

B. In the online trading, there is no chance of any errors while doing the trading. In offline

trading there are some errors exist like barriers in communication.

5. 1ith the help of online trading, we know the international market rate of share very easily.

'E&ATERIA(ISATIO# OF SARES

;ematerialization is the process wherein shares certificates or other securities held in

physical form are converted into electronic form and credited to demat account of an investor

opened with a depository participant. %#I has made compulsory trading of shares of all thecompanies listed in stock exchanges in demat form with effect from 6ndPanuary 6996.The

procedure of opening a demat account with ;> is similar to opening an account with a banks.

E(ECTRO#IC SETT(E&E#T OF TRA'E

A%Procedure +or purcha*ing demateriali?ed *ecuritie* 7

The procedure for purchasing dematerialized securities is also similar to the procedure for

buying physical securities.

2. Investor instructs ;> to receive credits into his account in the prescribed form.

There may be one time standing instruction or separate instruction each time to

receive credits.

6. Investor purchases securities in any of the stock exchanges linked to depository

through a broker.

8. #roker receives payment from investor and arranges payment to clearing

corporation.

B. #roker receives credit to securities in clearing account on the payout day.

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5. #roker gives instructions to ;> to debit clearing account and credit clientEs

account. Investor receives shares into his account by way of book entry.

B% Procedure o+ *elling demateriali?ed *ecuritie*

The procedure for selling dematerialized securities in stock exchanges is similar as selling

physical securities. The only ma!or difference is that instead of delivering physical securities

to the broker, the investor instructs his ;> to debit his demat account with the number of

securities sold by him and credit the brokers clearing account. The procedure for selling

dematerialized securities is given below-

2. Investor sells securities in any of the stock exchange linked to depository

through a broker.

6. Investor instructs his ;> to debit his demat account with the number of

securities sold and credit the brokerEs clearing account.

8. #efore the pay)in)day, broker of the investor transfers the securities to clearing

corporation.

B. The broker receives payment from the stock exchange.

5. The investor receives payment from the broker for sale of securities in the

same manner as received in case of sale of physical securities.

RE&ATERI(ISATIO# OF SARES=ematerialization is the process of conversion of electronic holdings of securities into

physical certificate form. *or rematerialisation of scripEs, the investor has to fill up a remat

re"uest form &==*' and submit it to the ;>. The ;> forwards the re"uest to depository after

verifying the investorEs balances. ;epository in turn initiates the registrars and transfer agent

or the issuer company. =TA Company prints the certificates and dispatches the same to the

investors

&arket timing*7

#ormal &arket @ E,erci*e &arket Open time - 93-55

hours

#ormal market clo*e

- 25-89 hours

Set up cut o+ time +or Po*ition limit@Collateral -alue

- till 25-89 hrs

Trade modi+ication end time @ E,erci*e &arket

- 2F-25 hours

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Internet Based Trading through Order Routing Systems

Internet based trading on conventional exchanges, uses the Internet as a medium for

communicating client orders to the exchange, through broker web sites. #rokerEs web

sites may serve a variety of functions. These may includeD

Allowing the clients to directly trade through investorsD

Advertise the broker dealersE services to potential investorsD

7ffer market information and investment tools similar to those offered

by information vendor or =7 web sitesD

7ffer real)time or delayed "uote information, continuously update

"uotes while the user visits other sites, or allow investors to create a

personal stock tickerD

>rovide market summaries and commentaries, analyst reports and

trading strategies and market data on currencies, mutual funds, options,

market indices and newsD and

7ffer investors access to portfolio management tools and analytic

programsD

Information on commission and feesD and

Account information and research reports.

In an 7rder =outing system, a broker offering Internet trading facility provides an electronic

template for the customer to enter the name of the security, whatever it is to be bought or

sold, the "uantity and whatever the order in a market or limit order.

U*e o+ Internet a* Alternati-e Trading Sy*tem* Pro-i*ion +or price di*co-ery and

matching out*ide con-entional e,change*

In foreign !urisdiction, Alternative trading systems have been developing outside

conventional securities markets, which provide investors with additional proprietary

electronic trading facilities for securities that are traded principally on securities exchanges,

or other organized markets. They have price discovery functions, matching systems and

crossing systems.

The systems that are currently in use in outside !urisdictions are closed systems and are not

accessible to the general public through the Internet. The securities markets regulators in

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abroad maintain flexible and open policies designed to encourage innovation in the secondary

securities markets. As a result, a number of market participants, usually broker)dealers, have

developed computerized /alternative trading systems0 by which the system centralize,

display, match, cross or otherwise execute trading interest.

U*e o+ Internet +or making Initial Pu/lic O++ering*

ecurities are issued using the Internet to communicate directly with their shareholders,

potential investors and analysts by disseminating corporate information. In foreign

!urisdiction, they are also using the Internet to communicate to the public for the following-

>ublic offeringsD

>rivate offeringsD and

;isclosure and communication

Issuers are using the Internet to market themselves to potential investors. The Internet is also

being used for fulfilling necessary disclosure re"uirements, for disseminating the prospects in

electronics form and even for receiving share applications in public issues electronically. In

India, %#I has taken initiative in permitting use of the network of stock exchange for

collection of investorsE application in public offerings by the issuer companies

In-e*tment Ad-i*ory Ser-ice*

#rokers as well as other service providers such as investment firms, research outfits etc. are

using the Internet for marketing and advertising purposes, for presenting information on

portfolio analysis and market information, and for communicating with and receiving orders

from potential investors. The services offered by the service providers to the investors are

generally the following-

Advertising

>roviding investment information and investment adviceD

nderwriting

Communicating with the investorsD

Customer ordersD and

=ecord keeping

0orking $roup* *et up /y the Committee

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Considering the present state of capital markets in India and keeping in view the ongoing

developments in Internet based securities business, it was felt that %#I as a regulator could

strive to identify areas where use of Internet in the capital market is possible within the

existing legal framework. 7ne such area identified by the Committee, which is also the

central theme of this report, is the area of Internet trading on existing electronic exchange. In

this area, through early introduction of Cyber :aws would be highly describe but their

existence is not a necessary precondition. To look into the existing regulatory scenario and to

bring out some ground rules for use of the medium of Internet, the Committee therefore

constituted the following two working groups to look into the area-

i. ecurity protocols and standardization of interfaces for Interest based securities

trading.

ii. urveillance and monitoring related issues arising due to Interest based securities

trading.

This report of the standing committee examines the regulatory and security re"uirements

Internet #ased Trading on Conventional %xchanges. eparate reports &s' will cover the

other areas related to Internet applications in the securities markets.

The report of the first working group on security protocols and standardization of interfaces

has been submitted and incorporated in the report. 1ith nearly million on)line investors,

Internet trading in the nited tates is growing by leaps and bounds. Internet trading is being

facilitated by large brokerage houses, thus changing the total concept of securities trading. A

team comprising of members from stock exchanges and %#I visited the nited tates to

these development and had interactions with brokerages houses, Internet service providers

and other agencies involved in facilitating Internet trading. The team also discussed the

developments in the emerging regulatory and supervisory framework in nited tates with

the ecurities and %xchange Commission officials. They were also tripped of the various

initiatives taken by %C in this regard. These inputs have been utilized while drafting this

report.

Recommendation* o+ the Committee

Application +or Permi**ion /y Broker*

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%#I registered tock #rokers interested in providing Internet based trading services will be

re"uired to apply to the respective stock exchange for a formal permission. The stock

exchange should grant approval or re!ect the application as the case may be, and

communicate its decisions to the number within 89 calendar days of the date of completed

application submitted to the exchange. The stock %xchange, before giving permission to

brokers to start Internet based services shall ensure the fulfillment of the following minimum

conditions.

#et 3orth Re.uirement

The broker must have a minimum net worth of =s. 59 lakhs if the broker is providing the

Internet based facility on his own. Jowever, if some brokers collectively approach a service

provider for providing the interest trading facility, net worth, criteria as stipulated by the

stock exchange will apply. The net worth will be computed as per the %#I circular no

*ITTC;CCI=)23H dated Pune 2F, 233H.

Operational and Sy*tem Re.uirement*7

Operational Integrity: The stock %xchange must ensure that the system used by the broker

has provision for security, reliability and confidentiality of data through use of encryption

technology. This stock exchange must also ensure that records encryption technology. The

stock %xchange must also ensure the records maintained in electronic form by the broker are

not susceptible to manipulation.

System Capacity The stock %xchange must ensure that the brokers maintain ade"uate backup

systems and data storage capacity. The stock %xchange must also ensure that the workers

have ade"uate system capacity for handling data transfer, and arrange for alternative means

of communications in case of Internet link failure.

Qualified Personnel: The stock %xchange must lay down the minimum "ualification for

personnel to ensure that the broker has suitably "ualified and ade"uate personnel to handle

communication including instructions as well as other back office work which is likely to

increase because of higher volumes.

Written Procedures: tock %xchange must develop uniform written procedures to handle

contingency situations and for review of incoming and outgoing electronic correspondence.

Signature Verification !uthentication: It is desirable that participants use authenticationtechnologies. *or this purpose is should be mandatory for participants to use certification

Page 18


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agencies as and when notified by Movernment%#I. They should also clearly specify when

manual signatures would be re"uired.

Client Bro"er Relationship

#no$ %our Client: The stock %xchange must ensure that brokers have sufficient, verifiable

information about clients, which would facilitate risk evaluation of clients.

Bro"er& Client !greement: #rokers must enter into an agreement with clients spelling out all

obligations and rights. This agreement should also inter alia, the minimum service standards

to be maintained by the broker for such service specified by %#I%xchange for the internet

based trading from time to time. %xchange will prepare a model agreement for this purpose.

In'estor Information: The broker web site providing the internet based trading facility

should contain information meant for investor protection such as rules and regulations

affecting client broker relationship arbitration rules, investor protection rules etc. The broker

web site providing the Internet based trading facility should also provide and display

prominently, hyper link to the web sitepage on the web site of the relevant stock exchange

&s' displaying rules regulations circulars. Ticker"uoteorder book displayed on the web)site

of the broker should display the time stamp as well as source of such information against the

given information.

OrderTrade Confirmation: 7rderTrade confirmation should also be sent to the investor

through email at clientEs discretion at the time specified by the client in addition to the other

mode of display of such confirmation of real time basis on the broker web site. The investor

should be allowed to specify the time interval on the web site itself within which he would

like to receive this information through email. *acility for reconfirmation of orders which are

larger than that specified by the memberNs risk management system should be provided on the

internet based system.

(andling Complaints )y In'estors: %xchanges should monitor complaints from investors

regarding service provided by brokers to ensure a minimum level of service. %xchange

should have separate cell specifically to handle Internet trading related complaints. It is

desirable that exchanges should also have facility for on)line registration of complaints on

their web site.

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Ris" *anagement: %xchanges must ensure that brokers have a system)based control on the

trading limits of clients, and exposures taken by clients. #rokers must set predefined limits on

the exposure and turnover of each client. The broker systems should be capable of assessing

the risk of the client as soon as the order comes in. The client should be informed of

acceptancere!ection of the order within a reasonable period.

In case system based control re!ects an order because of client having exceeded limits etc.,

the broker system may have a review and release facility to allow the order to pass through.

Contract +otes: Contract notes must be issued to clients as per existing regulations, within

6B hours of the trade execution.

Cross Trades: As a matter of abundant precaution, the committee seeks to reiterate the

existing system. #rokers using Internet based systems for routing client orders will also not

be allowed to cross trades of their clients. All orders must be offered to the market for

matching. It is emphasized that in addition to the re"uirements mentioned above, all existing

obligations of the broker as per current regulation will continue without changes. %xchanges

may also like to specify more stringent standards as they may fit for allowing Internet based

trading facilities to their brokers.

,nforcement: A separate working group has been set to look into the surveillance and

enforcement related issues arising due to Internet based securities trading. Jowever, general

anti)fraud provisions &%#I *raudulent and nfair Trade >ractices =egulations, 2335' would

apply to all transactions involving securities or financial services, regardless of the medium.

FEATURES OF O#(I#E TRA'I#$7

The 7nline Trading is having many features which make it most suitable for the investors to

go for. ome of these features are as follows-

*=%%;7$ 7* I(*7=$ATI7(

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The Internet can provide a new sense of control over individualsE financial future. The

amount of investment information available online is truly astounding. ItNs one of the best

aspects of being a wired investor. *or the first time in history, any individual with an Internet

connection can-

Know the price of any stock at any time

=eview the price history of any stock in chart format

*ollow market events in)depth

=eceive a wealth of free commentary and analysis about stock markets and

the global economy

Conduct extensive financial research on any company

C7(T=7: 7* $7(%=IC% *7= I(?%T7=

%very broker house aims at providing the investor with the best price available. Also due to

the high level of transparency with regard to display of information relating to the specific

stocks and company profiles, investors will be able to get the best "uote for their orders.

7**%= M=%AT%= T=A(>A=%(C=7?I;% A :%?%: >:A


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The most significant advantage of the online broking is the cost reduction in the brokerage.

;ue to the power of the Internet one has the privilege of becoming the clients of really large

brokerages with the benefits of en!oying the low charges hithelio before en!oyed only by the

big players. As the ;> account has got linked to the trading account most players do not

charge a minimum transaction cost thus truly allowing one to buy a single share and achieve

meaningful rupee price averaging whatever is the buying power.

8 Peace o+ &ind7

7ne can never have complete peace of mind but online investing does away with the hassles

of filling up instruction slips, visits to the broker for handing over these slips and conse"uent

costs.

9 !eeping Record*7

The site one trades on keeps a record of all transactions down to unexecuted orders and

cancelled orders thus keeping one abreast of all transactions 6B hours a day. (o paperwork

means more time at oneEs disposal for research and analysis.

: Acce** to In+ormation and in-e*tment Tool*7

$ost online investing sites have a wealth of information for their registered members. This

includes research reports, results, analysis and even gossip and the buzz in the market.

;% Unparalleled (i.uidity7

The bank account linked with the trading account invariably has an AT$ free. $ost partner

banks offer Internet banking as well. This results in oneEs money becoming available to him

whenever he like from his trading account. Conversely in case he spots an opportunity in the

market he can immediately allocate money from his savings account to his trading account

and make profits.


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=% Reduce* the *ettlement ri*k7

This method of trading reduces the settlement risk for the investor, as in this case no hort

sale is possible i.e. the seller will not be able to sell the securities unless he has their actual

possession. In the case of a demat account &re"uired for an online transaction', when a seller

wants to sell the securities, his demat account is checked by the ;epository >articipant before

executing the sale transaction. This reduces the settlement risk for the buyer, who is assured

of the delivery of the securities.

>% O++er* greater tran*parency7

7nline trading gives greater transparency to the investors by providing them an audit trail.

This involves a complete integrated electronic chain starting from order placement, to

clearing and settlement and finally ending with a credit to the depository account of the

investor. All these stages are sub!ect to inspection, thus bringing in transparency into the

system.

D% Ea*e o+ trade7

It is the ease of doing the trade through net, with a click of mouse, one can buy or sell any

share that is dematerialized. 7ther than the above)mentioned advantages, Internet trading

provides some additional advantages to the investors, brokers and also helps the nation tochannelize the resources. (et trading would increase competition in the market hence

increase in the bargaining power of the investors. The entire communication between the

investor, broker and exchange would take place within milliseconds.

PROB(E&S OF O#(I#E BRO!I#$

There is a flip side to everything and online trading is no exception.

% Ser-er not +ound7

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The advisory services being promised by the brokers would be of little use to investors

looking for an insight into the market. $any would not like to rely on research reports, which

are there for all. o, net investors will have to do their own research and take their own

decision, whether wild or wise.

>% Increa*ed charge*7

ome of the brokers are of the view that they would have to provide advisory services to the

customers. #ut with increased volumes, they will have to follow the international practice of

charging a little more than the normal charges from a customer looking for personal advice.

0) PEOP(E ARE BE#'I#$ TO0AR'S O#(I#E TRA'I#$

everal broking houses now offer online trading facilities. An individual can trade online

with e)brokerages such as ICICI ;irect, Kotakstreet, India bulls, India info lineEs 5paisa.com

and J;*C securities.

If he is already comfortable trading with his regular broker, here are few reasons why he

must consider switching to trading online, or at least another avenue of trading. An obvious

advantage of online trading is that his transaction would be virtually paperless. Jis trading

account would be linked to his demat and bank account, ensuring a smooth transaction

process. This is especially helpful in the extent T@6 settlement system, where he has !ust two

days to settle his transaction.

The normal process of issuing of delivery note, in case of a sale, or arranging for a payment

in case of purchaser of shares, is all taken care of the minute the order is executed online. The

absence of manual intervention ensures complete control of all transaction.

There is also little room for error, as order is always confirmed before it is executed. 7ne can

also make better decision as one has clear record of all his previous transaction. 1hen he

trades offline, a demat statement is normally sent on a "uarterly basis .Keeping track of his

portfolio can be a hassle in such a case. The internet can provide a new sense of control over

financial future. The amount of investment information available online is truly astounding.

1hat is more, the time difference, in some cases, can work to their advantage .Antony, an

(=I)based in (ew


27/63

logging on to ICICI direct online, for instance, we can get the latest news, market information

and company research.

$oreover, if our connection is maddeningly slow and we want to get order executed

immediately, most e)brokerages also provide a facility to trade offline by placing our order

via the phone

Rolling Settlement Cycle-

In a rolling settlement, each trading day is considered as a trading period and trades executed

during the day are settled based on the net obligations for the day. At (% and #%, trades in

rolling settlement are settled on a T@6 basis i.e. on the 6nd working day. *or arriving at the

settlement day all intervening holidays, which include bank holidays, (%#% holidays,

aturdays and undays are excluded. Typically trades taking place on $onday are settled on

1ednesday, TuesdayNs trades settled on Thursday and so on.

Concept O+ Buying (imit

uppose one has sold some shares on (% and are trying to figure out that if he can use the

money to buy shares on (% in a different settlement cycle or say on #%. To simplify

things for ICICI ;irect customers, sharekhan has also introduced the concept of #uying

:imit :'. #uying :imit simply tells the customer what is his limit for a given settlementfor the desired exchange.

Future Agenda-

nder the existing legal and regulatory framework, %#I registered brokers can offer trading

on Internet through order is routing systems. Jowever, with the rapid development of the

technology, we have to evolve fisher steps in this direction it is therefore proposed that as the

next step link between the depositories and banks shall be established after the necessaryregulations have been passed. This would reduce the clearing and settlement time and would

also minimize the risk of all the participants involved in the transactions. 1e have to look

forward towards achieving an ideal scenario where all the services related to securities

markets including marketing of initial public offers on internet, providing investment

advisory services to the clients, broking, clearing .


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According to an article by Krishnamurthy # in 6995 after inception of online trading in India

in the year 6999 online trading is gained momentum with trading volumes growing by 259

per cent per annum in the years 6998)6995 and it was more than approx

According to brokers the better broadband connectivity across the country and wider

awareness of e"uity as an asset class will raise the online trade volumes to over 59Q of total

trade.In India the demography is such that 45Q of the population is under the age of 8F and

more than 59Q of the 45Q is under age of 65 and this is another supporting factor

The earlier 1eb)based technology used for Internet trading has been replaced by specialized

software which gives real)time global data streaming rates to trader helping investors to

analyze the market trends and helps in faster execution of trades. %arlier the investors made

trade calls over the phone which sometimes led to the delays.

India boasts of the third highest investor base in the world, unthinkable till a few years ago.

The most online stock broking companies started from 6999 onwards because of

development of global Internet economy and for years 6999 to 6998 the stock market was

under a bear hug. The intense competition among a new wave of online brokerage companies

hammered down brokerage rates from 2Q &in 6999' to 9.65 Q, or even lower to 5 paisa

RESEARC 'ESI$#

7#P%CTI?% 7* TJ% T;=7#:%$

In current scenario online trading is one of the important aspects in stock market. #ut online

trading re"uires ade"uate computer knowledge and technological support. As a result most of

the investors do not prefer online trading and few of them are not aware of online trading.

The need and scope of online trading is increasing day by day. It is therefore very essential

to conduct a research on effectiveness of online trading.

RESEARC &ETO'O(O$)

The basic task of research is to generate accurate information for use in decision making.

=esearch can be defined as the systematic and ob!ective process of gathering, recording and

analyzing data for aid in making business decisions.

There are /a*ically t3o techni.ue* adopted +or o/taining in+ormation7

% Primary 'ata%

8% Secondary 'ata.

Primary 'ata

uestionnaire was given to various respondents in order to know about their opinion

regarding online trading

Secondary Source*7

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ources of this data include circulars, books, website of share khan pvt ltd . It also includes

references from the text books and !ournals to get a brief idea about the theoretical aspects.

And the secondary data is incorporated wherever necessary to supplement the primary data.

Stati*tical Tool7 imple statistical tools such as percentages, and ratios are used to analyse

the data and information collected. Important diagrams are also depicted in the form of tables

and charts.

Source* o+ data collection are7

2' harekhan pvt.ltd

6' www.nseindia.com

8' www.bseindia.com

B' www.on)linetrading.com

Scope o+ *tudy7

The scope of the study includes study of factors responsible online trading in relation

to share khan ltd., suggesting measures to improve customers participation in online

trading and also to study its impact on stock market.

(I&ITATIO#S

;espite of the trying my level best, there were still some limitation which I think

remains there to draw fruitful conclusion. There were some practical problems which

cameacross and could not be properly death with. 7nline trading is a vast area of

studyD hence a detailed study was difficult. This study is confined to online trading in

sharekhan ltd.,to that extent it is a micro study. ;etailed study was also not because

of time constraint.

Company Pro+ile-

harekhan :td. is one of the leading retail stock broking house of KI Mroup which is

running successfully since 2366 in the country. It is the retail broking arm of the $umbai)

based KI Mroup, which has over eight decades of experience in the stock broking business.

harekhan offers its customers a wide range of e"uity related services including trade

Page 30
http://www.on-linetrading.com/http://www.on-linetrading.com/


31/63

execution on #%, (%, ;erivatives, depository services, online trading, investment advice

etc. The firmEs online trading and investment site ) www.sharekhan.com was launched on

*eb H, 6999. The site gives access to superior content and transaction facility to retail

customers across the country. Known for its !argon)free, investor friendly language and high

"uality research, the site has a registered base of over one lakh customers. The content)rich

and research oriented portal has stood out among its contemporaries because of its steadfast

dedication to offering customers best)of)breed technology and superior market information.

The ob!ective has been to let customers make informed decisions and to simplify the process

of investing in stocks.

7n April 24, 6996 harekhan launched peed Trade, a net)based executable application that

emulates the broker terminals along with host of other information relevant to the ;ay

Traders. This was for the first time that a net based trading station of this caliber was offered

to the traders. In the last six months peed Trade has become a de facto standard for the ;ay

Trading community over the net. harekhanEs ground network includes over 882 centers in

284 cities in India which provide a host of trading related services.

harekhan has always believed in investing in technology to build its business. The company

has used some of the best)known names in the IT industry, like un $icrosystems, 7racle,

$icrosoft, Cambridge Technologies, (exgenix, ?ignette, ?erisign *inancial Technologies

India :td, pider oftware >vt :td. to build its trading engine and content. The $orakhiya

family holds a ma!ority stake in the company. J#C, Intel + Carlyle are the other investors.

1ith a legacy of more than H9 years in the stock markets, the KI group ventured into

institutional broking and corporate finance 2H years ago. >resently KI is one of the leading

players in institutional broking and corporate finance activities. KI holds a sizeable portion

of the market in each of these segments. KIEs institutional broking arm accounts for 4Q of

the market for *oreign Institutional portfolio investment and 5Q of all ;omestic Institutional

portfolio investment in the country. It has F9 institutional clients spread over India, *ar %ast,

K and . *oreign Institutional Investors generate about F5Q of the organizationEs

revenue, with a daily turnover of over R 6 million. The Corporate *inance section has a list

of very prestigious clients and has many GfirstsE to its credit, in terms of the size of deal,

sector tapped etc. The group has placed over R 2 billion in private e"uity deals. ome of

the clients include #>: Cellular Jolding, Mu!arat >ipavav, %ssar, Jutchison, >lanetasia, and

hopperEs top.

PROFI(E OF TE CO&PA#) 7

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#ame o+ the company- harekhan ltd.


33/63

659 independent investment managers franchisee servicing 59,999 highly valued

clients.

(ew initiatives >ortfolio management ervices and commodities trading.

i*ion 7

To be the best retail brokering #rand in the retail business of stock market.

&i**ion 7

To educate and empower the individual investor to make better investment decisions through

"uality advice and superior service.

harekhan is infact)

S Among the top 8 branded retail service providers

S (o. 2 player in online business

S :argest network of branded broking outlets in the country serving more than 4,99,999

clients..

A Sharekhan outlet o++er* the +ollo3ing *er-ice*7

7nline #% and (% executions &through #7:T + (%AT terminals'

*ree access to investment advice from harekhanNs =esearch team

harekhan ?alue:ine &a monthly publication with reviews of recommendations,

stocks to watch out for etc'

;aily research reports and market review &Jigh (oon + %agle %ye'

>re)market =eport &$orning Cuppa'

;aily trading calls based on Technical Analysis

Cool trading products &;aring ;erivatives and $arket trategy'

>ersonalised Advice

:ive $arket Information

;epository ervices- ;emat + =emat Transactions

;erivatives Trading &*utures and 7ptions'

Commodities Trading

I>7s + $utual *unds ;istribution

Internet)based 7nline Trading- peedTrade

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REASO# TO COOSE SARE!A# (I&ITE'

E,perience 7

KI has more than eight decades of trust and credibility in the Indian stock market. In the

Asia $oney brokerNs poll held recently, KI won theE IndiaEs #est #roking Jouse for 699B N

award. %ver since it launched harekhan as its retail broking division in *ebruary 6999, it has

been providing institutional level research and broking services to individual investors.

Technology 7

1ith its online trading account one can buy and sell shares in an instant from any >C with an

internet connection. 7ne can get access to its powerful online trading tools that will help him

take complete control over his investment in shares.

Acce**i/ility 7

harekhan provides A;?IC%, %;CATI7(, T77: A(; %L%CTI7( services for

investors. These services are accessible through its centers across the country over the

internet &through the website www.sharekhan.com' as well as over the ?oice Tool.

!no3ledge7

In a business where the right information at the right time can translate into direct profits, one

can get access to a wide range of information on harekhan limitedEs content)rich portal. 7ne

can also get a useful set of knowledge)based tools that will empower him to take informed

decisions.

Con-enience7

7ne can call its ;ial)()Trade number to get investment advice and execute his transactions.

harekhan ltd. has a dedicated call)centre to provide this service via a Toll *ree (umber

2H99)66)4599 + 2H99)66)4959 from anywhere in India.

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Cu*tomer Ser-ice7

harekhan limitedEs customer service team will assist one for any help that one may re"uire

relating to transactions, billing, demat and other "ueries. Its customer service can be

contacted via a toll)free number, email or live chat

In-e*tment Ad-ice-

harekhan has dedicated research teams of more than 89 people for fundamental and

technical researches. Its analysts constantly track the pulse of the market and provide timely

investment advice to its clients in the form of daily research emails, online chat, printed

reports and $ on their mobile phone.

KI Mroup Companies)

KI Investor ervices :td &hare khan'

.. Kantilal Ishwarlal ecurities

KI Corporate *inance

I dream >roductions>alm spring estates >vt :td.

*in flow Investment >vt :td.

I dream >roduction K >vt :td.

hare khan Commodities >vt :td.

Archfund >roperties >vt :td.

PRO'UCTS A#' SERICES OF SARE!A# (I&ITE' 7

The different types of products and services offered by harekhan :td. are as follows-

S %"uity and derivatives trading

S ;epository servicesS 7nline services

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S Commodities trading

S ;ial ) n) trade

S >ortfolio management

S hare shops

S *undamental research

S Technical research

S0OT Analy*i*

STRE#$T

It is a pioneer in online trading with a turnover of =s.B99crores and more than H99

peoples working in the organization

KI the parent company of hare Khan has more than eight decades of trust and

credibility in the Indian stock market. In the Asian $oney #rokerEs poll KI won the

/IndiaEs best broking house for 699B0 award.

hare Khan provides multi)channel access to all its customers through a strong online

presence with www.sharekhan.com, 659 share shops in 289 cities and a call)center based

;ial)n)Trade facility

hare Khan has dedicated research teams for fundamental and technical research. 1hich

constantly track the pulse of the market and provide timely investment advice free of cost

to its clients which has a strike rate of 49)H9Q.

0eakne**7

:ocalized presence due to insufficient investments for country wide expansion.

:ack of awareness among customers because of non)aggressive promotional

strategies &print media, newspapers, etc'.

:esser emphasis on customer retention.

*ocuses more on J(Is than retail investors which results in meager market)share as

compared to close competitors.

Opportunitie*7

1ith the booming capital market it can successfully launch new services and raise its

clientEs base.

It can easily tap the retail investors with small saving through promotional channels like

print media, electronic media, etc.

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As interest on fixed deposits with post office and banks are all time low, more and more

small investors are entering into stock market.

Abolition of long term capital gain tax on shares and reduction in short term capital gain

is making stock market as hot destination for investment among small investors.

Threat*7

:ack of sufficient branch)offices for speedy delivery of services.

7ther players are providing margin funds to investors on easy terms where as there is

no such facility in share khan.

$ore and more players are venturing into this domain which can further reduce the

earnings of hare Khan.

'ATA A#A()SIS A#' I#TERPRETATIO#

Ta/le :%

=espondentsE opinion about their "ualification.

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7pinion (o. of =espondents >ercentage

Jigher secondary 6 6

enior secondary 22 22

Mraduate B3 B3

>ost graduate 2F 2F

>rofessional degree holder 66 66

Chart #o%:%

To invest in the stock market minimum 299999 or more than this should be the annual income level

of the people. In India the per capita income in also increasing so we can say that there is a good

opportunity for the online trading market.

Table B.6

=espondentsE opinion about years of transaction in on line


2 year BB BB

6 year 6F 6F

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8 year

B year

23

22

23

22

Chart #o% :%8

0

5

10

15

2025

30

35

40

45

YEAR

1 year

2 year

3 year

4 year

According to this survey we find that BBQ people say that we are investing the money

online from one year and 6FQ people say that we are investing the money online from

6 years and 23Q to 22Q people says that we are investing money online from 8 to B

year. so we can say that now online trading is very popular in the modern market.

Ta/le :%9

=espondentsE opinion about operation of online trading


?ery easy to operate F9 F9

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?ery difficult to operate 25 25

(ot secure 29 29

Any other 25 25

Chart #o% :%9

0

1020

30

40

50

60

Experience

I find it very easy to operate

I find it very difficult tooperate

I feel it is not secure

Any other

According to this survey we find that F9Q of people find very easy to operate and

25Q people find difficult to operate and 29Q and 25Q people find no secure and any

other. so we can say that online trading is very simple to operate and easy to

understand.

Ta/le :%:

=espondentsE opinion about their investment


59999 85 85

299999)259999 6H 6H

Page 40


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;aily 29 29

1eekly B9 B9

$onthly 86 86

$ore than 2 month 2H 2H

Chart no%:%;

0

5

10

15

20

25

30

35

40

i!e

daily

"ee#ly

!onthly

!ore than 1 !onth

According to this survey we find that 29Q of people do trade ;aily and B9Q

people do trade weekly and 86Q and 2HQ people do trade monthly and more than

month. o we can say that people generally invest in stock market on weekly

basis.

Ta/le :%ercentage

7n line trading 69 69

7ffline trading 86 86

#oth BH BH

Chart #o% :%ercentage

=espondentsE opinion about short comings of online trading


:ack of awareness 25 25

Page 44


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hortage of expertise B3 B3

hortage of infrastructure 2B 2B

Any other 69 69

Chart #o% :%>

G

G

8G

9G

:G

;G

Shortcoming*

(ack o+ a3arene**

Shortage o+

e,perti*e

Shortage O+ In+ra

*tructure

any other

According to this survey we find that 25Q of people feel that there is lack of

awareness B3Q feel that there is hortage of expertise and 2BQ people feel that there

is hortage 7f Infra structure and 66Q opine that there might be any other reason. o

we can say that the main reason for short coming in Indian market is shortage of

experience about the Indian derivatives market or share market.

Ta/le :%D

=espondentsE opinion about media they would prefer to know about investment


T.? 55 55

(ewspaper 65 65

$agazines 29 29

Pournals 29 29

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Chart #o% :%D

G

CG

8G

9G

:G

;G

refer T.? and 65Q people prefer

newspaper and 29Q people prefer magazines and 29Q people prefer !ournals to know

of stock market. o we can infer that people very easily grab the knowledge through

T.?.

Ta/le :%G

=espondentsE opinion about their income level


#elow 299999 6 6

299999)699999 5H 5H

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699999)899999 62 62

899999)B99999 26 26

Above B99999 4 4

Chart #o% :%G

5HQrespondent are having the income level of 299999)699999 ,62Q is having 699999)899999 , 26Q

is having income between 899999)B99999 , 4Q of the total respondent are having income more than

B99999 per annum and only 6Q are having less than 299999 per annum.To invest in the stock market

minimum 299999 or more than this should be the annual income level of the people.

Ta/le :%

=espondentsE opinion about portfolio in stock market


:ess than 5Q 68 68

5)29 B2 B2

29)25 62 62

25)69 28 28

$ore than 69Q 6 6

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Chart #o% :%

According to the data 68Q of the total respondent invest less than 5Q of their income,B2Q

respondents are saying that they invest 5Q)29Q of their monthly income 1hereas the 62Q investor

do the investment 29Q)25Q of their total monthly income,28Q invest between 25Q)69Q of the

total income and only 6Q does more than 69Q of their income invest in the market 1e can easily

understand that 45Q of the total population is having a good amount of investment, so the

investment is their in the market, good number of people are ready to invest a good amount in the

market 32Q of respondent is in the income level of 299999 899999 &according to the last "uestion

analysis'.

o we can say that stock brokerage houses will have to do a good business with the help of 7nline

trading system with few value addition services

Ta/le :%8

=espondentsE opinion about kind of investment


%"uity F5 F5

$utual fund 2B 2B

Insurance 26 26

Term deposit 3 3

others 9 9

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Chart #o% :%8

Jighest number of respondent is having their investment in the e"uity that is F5Q whereas the

investment available for the mutual fund, term deposit and insurance is 2BQ ,26Q and 3Q.o the

investor for e"uity is high which is again showing the number of opportunity for online trading

Ta/le :%9

=espondentsE opinion about ob!ective of investment


Capital appreciation 28 28

ources of income 44 44

=etirement planning B B

1ealth prevention 2 2

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%ducation funds others 25 25

Chart #o% :%9

28Q of the respondent invest the money for the reason capital appreciation but most of the investor

is having same motive that is source of income and retirement plan, wealth preservation and

education funding for children or other are only 29Q

*rom the analysis we can have idea that the main ob!ective of the investor to earn the money through

trading in stock market44Q of the respondent achieve their ob!ective with the help of investment in

the e"uity market, because most of the investment take place in the form of e"uity . o we can say

that there is a huge potential in the market for the trading in the stock market

Ta/le :%:

=espondentsE opinion about owning computers



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Chart #o% :%:

4HQ of the total respondent who are dealing with the stock market is having computer in their house

and only 66Q is not having computer in their house. The people who is having computer that is 4HQ

can also go for online trading which can be a large number of people who will go for online trading.

There is no need to do a additional investment for computer to go for online trading

Ta/le :%;

=espondentsE opinion about convenience of operating in computer


trongly agree 6F 6F

Agree 52 52

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CanEt say 8 8

;isagree 28 28

trongly disagree 4 4

Chart #o% :%;

4FQ &6F@52' of the total respondent believe that operate a computer is easy for them whereas

69Q&28@4' of the respondent is having problem to operate a computer out of that 69Q , 45 believe

that they canEt go for computer. o ,if 4HQ of the people who are dealing with the stock market is

having computer at their house and around 4FQ of the same population donEt have any problem to

operate a computer. o around F9 Q is their who is having computer and they donEt have problem to

operate a computer.

:% Ta/le :%ercentage

trongly agree 84 84

Agree 8B 8B

CanEt say 22 22

;isagree 2B 2B

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trongly disagree B B

Chart #o% :%ercentage

trongly agree 24 24

Agree 8B 8B

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CanEt say H H

;isagree 69 69

trongly disagree 62 62

Chart #o% :%=

52Q of the total respondent believe that online trading is a easy task 1hereas B2Q of the respondent

believes that to deal with online Trading is not a easy task and H5 was confused to anything aboutthat the trading via internet is a easy task or not.

There is a difference between the people who believe and who donEt believe is not very big that is

only 29Q , the reason of this problem can be if a person is doing its investment on its own he or she

think of the problem of being mistaken in the transaction. o there is a need of proper training to do

trading online

Ta/le :%>

=espondentsE opinion about as to whether online trading contributed in attracting new

customers.


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trongly agree 8F 8F

Agree B2 B2

CanEt say 4 4

;isagree 26 26

trongly disagree B B

Chart (o. B.2H

*rom the above table B.2H we can infer that 8FQ and B2Q of the respondents are of

the opinion that new customers are easily attracted through on line trading,26Q and

BQ of the respondents feel that new customers are easily attracted through on line

trading, remaining 4 Q are not having any idea as to whether online trading attracts

new customers. Thus we can summarize that online trading attracts new customers.

FI#'I#$S

2. 7nline trading is becoming very popular in the modern market

6. >eople are finding very simple to operate and easy to understand through on line

trading

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8. >eople are not interested to invest more money in the share market because there is

a great risk involved while doing the trading.

B. >eople generally invest in stock market on weekly basis.

5. >eople are aware about the on line trading and because of this reason the mostly

people are optimizing offline trade

F. 7n line trading is not settled in the Indian psyche because some people are not

experience towards online trading.

4. >eople are shortage of experience about the Indian derivatives market or share

market.

H. >eople easily grab the knowledge about stock market through Television

3. >eople would like to invest 5) 29Q of their income in stock market

29. >eople would like to invest more on e"uity when compared to mutual funds,

insurance etc.

22. 7nline trading is able to attract more no. of customers

Sugge*tion*

The introduction of the Internet has surprisingly changed our way of life as a society. It has

defined the way we do business and the way we correspond. The Internet has opened many

opportunities for online trading. The financial industry revolves around the Internet. %very

thing is !ust a few clicks away. This makes online trading most convenient. #ut there are still

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investors who prefer the old fashion way of offline trading and they mainly prefer offline

trading for security reasons.

Internet has introduced a way for consumers to manage their money online. (ot to mention,

Internet has transformed the way investment companies operate their business and has made

it easy for private investors to gain straight access to a range of different markets and online

tools that were at one point only reserved by the use of investment professionals. Consumer

investing and online trading has dramatically changed over the last decade. 7nline trading

dynamically continues to be redefined. ervices have expanded to include integrated

management of additional financial accounts. (ot to mention, it has subse"uently expanded

in con!unction with ground)breaking improvements to the traditional trading interface, such

as telephone interface systems.

7f course, online trading has many pros. There are several wonderful reasons to invest online

and consider online trading.

$oney saving opportunities The amount of money you save depends primarily on the online

brokerage firm that you choose. (o two firms are the same. There may be different

regulations, similar to bank regulations. There are minimum deposits re"uired that must be

maintained. As mentioned above, this will depend on the online brokerage firm.

6. Instant online access


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trader is that the investors are loyal to their traditional brokers, they rely upon the suggestions

given by their brokers. Another ma!or problem is that the people donNt have full knowledge

regarding online trading. They find it difficult to trade themselves, as a wrong entry made by

them, can bring them huge losses.

(evertheless to say that online trading has the bright future as the percentage of the trade

done through online trading is increasing day by day.

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BIB(IO$RAP)

BOO!S

C% R% !othri Re*earch &ethodology i*h3a Prak*han

&A$AJI#ES

Bu*ine** 0orld

(SEK* &aga?ine

I#TER#ET SITES

333%n*eindia%com

333%/*eindia%com

333%on6linetrading%com

333%*e/i%go-%in

333%l*e%co%in

333%*harekhan%com

Page 59
http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/http://www.lse.co.in/http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/http://www.lse.co.in/


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5. In which trading you will preferU

&a' 7nline trading &b' offline trading

&c' #oth

F. According to you online trading settled in Indian investor psyche

&a'


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22. 1here do you often invest your moneyU

&a' %"uity &b' $utual fund

&c' Insurance &d' Term deposits

&e' 7thers

26. 1hat is the primary ob!ective of your investmentU

&a' Capital appreciation &b' ource of income

&c' =etirement planning &d' 1ealth preservation

&e' %ducation funding others

28. ;o you owe a ComputerU

&a'


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2F. Introduction of online trading helped to attract the new Investors thus increasing the

trading volumes at tock $arketU

&a' trongly agree &b' Agree

&c' CanEt say &d' ;isagree

sudhi (final)

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