ludhiana online trading
TRANSCRIPT
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LUDHIANA STOCK EXCHANGE
SUMMER TRAINING
REPORT
ON
ON-LINE TRADING
Submitted in partial fulfillment of the
Requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BY:-
RAVI THAPAR
DBIMCS,
MANDI GOBINDGARH.
STUDENT DECLARATION
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I hereby declare that the
Analytical study
On
OVERALL STUDY ON
ONLINE TRADING
IN
LUDHIANA STOCK EXCHANGE
Submitted in partial fulfillment of the
Requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION
To Punjab Technical University, Jalandhar is my original work and notsubmitted for the award of any other diploma, degree.
Place: LudhianaRavi Thapar
DateSignature
CERTIFICATE
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This is to certify that the project report entitled ONLINE TRADING OF LUDHIANA
STOCK EXCHANGE submitted by Mr. Ravi Thapar is a bona fide piece of work
conducted under my direct supervision and guidance. No part of this work has been
submitted for any other degree of any other university.
It may be considered for evaluation in partial fulfillment of the degree of Masters in
Business Administration .
Pooja Sharma
Signature
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ACKNOWLEDGEMENT
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For management career, it is important to develop managerial skills. In order
to achieve positive and concrete results, along with theoretical concepts, the exposure of
real life situation existing in corporate world is very much needed. To fulfill this need,
this practical training is required.
I took training in LUDHIANA STOCK EXCHANGE located in Ludhiana. It
was my fortune to get training in a very healthy atmosphere. I got ample opportunity to
view the overall working of the stock exchange.
This report is the result of my 45 days of summer training in LUDHIANA
STOCK EXCHANGE , as a part of M.B.A . The subject of my report is- Online trading.
Contents
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1. Introduction
(A) Capital Market
9
(B)Stock exchange13
2. Objectives19
3. Online Trading23
4. Research Methodology57
5. Analysis and Interpretation59
6. Finding67
7. Conclusion
69
8. Limitations70
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9. Suggestion71
10. Bibliography73
11. Questionnaire74
Introduction to the capital market
The capital market is 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. Financial regulators
ensure that investors are protected against fraud. 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
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individual abilities, but by the abilities of the companies, which in turn
enhance the savings and investments in the country, liquidity of
capital market is an important factor affecting growth.
Since projects require long term finance, but on the other hand, the
investor may not like to relinquish control over their savings for a long
time. A liquid stock market ensures a quick exit without incurring
heavy losses or costs. Thus development of efficient market system is
necessary for creating conductive climate for investment and
economic growth.
Ca pi tal mar ket Se gment Primar y And Secondar y
Broadly , the comprises of two segments the new issuemarket which is commonly known as primary market and thestock market which is known as secondary market.
Primar y
A primary offering, such as with a corporate bond, meansyou are buying it directly from the issuer, at par value, usually. Asecondary market is where you sell or buy existing issues. I.E. If you bought a bond last year, now need to get your principal, youcan sell it in the secondary market. You may not get par value. If rates are up since you bought the bond, then you will likely haveto sell it at a discount to be able to get rid of it. If rates havefallen since you bought it, you could get a premium for it.
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Secondar y
The market where securities are traded after they are initially offeredin the primary market. Most trading is done in the secondary market.
To explain further, it is trading in previously issued financialinstruments. An organized market for used securities. Bombay StockExchange (BSE), National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmentalguaranteed loans etc
Secondary Market refers to a market where securities are traded afterbeing initially offered to the public in the primary market and/or listedon the Stock Exchange. Majority of the trading is done in the secondarymarket. Secondary market comprises of equity markets and the debtmarkets. For the general investor, the secondary market provides anefficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring andcontrol conduitby facilitating value-enhancing control activities,enabling implementation of incentive-based management contracts,and aggregating information (via price discovery) that guidesmanagement decisions.
INDIAN CAPIT AL MA RKE T A T GLANCE
1.
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2020 th century
1908
Formulation of Calcutta stock exchange
1939
Formulation of Lahore and madras stockexchange
1940
Formulation of U.P and Delhi stock exchange
1956
Securities contract and regulation act enacted
1957
Scam of Haridas Mundhra
1988
Securities and exchange board of India set up
1991
Scam of MS Shoes
1992
SEBI given power Under SEBI act,1992
1993
Formation of National stock exchange
1995
HARSHAD MEHTA Scam
1995
SESA GOA Scam
1997
CRB scam
1998
BPL And Videocon Scam
21 st centur y
2000
Depositories came into existence(electronic form of shares)
1800
Trading of shares of east India company inKolkata And Mumbai
1850
Joint stock company came into existence
1860
Speculation and feverish dealing in securities
1875
Formulation of stock exchange of Mumbai
1894
Formulation of Ahmadabad stock exchange
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2001
Ketan Parekh scam
2002
Start of rolling settlement and banning of Badlatrading
2002
Introduction of T+3 settlement in April
2003
Introduction of T+2 settlement in April
2005
BSE Sensex touches all time high 6954 in January
2006
BSE Sensex touches all time high 12500,thehighest intraday fall of 1100
2007
BSE reaches the level of
2008
BSE touches all time high in January 2008
2008
Sensex saw its highest ever loss of 1,408points at the end of the session.
2008
Sexsex saw its 15 month low,from its all timehigh
2009
Sexsex saw its down trend & highest ever lossbecause of Satyam case.
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BRIEF ABOUT THE STOCK EXCHANGES
Stock Exchange is a market like any othercentralized market where both buyers and sellers come and conducttheir business of purchase and sale of shares & securities. In otherwords, it is a market place for shares and securities where tradingtakes place in a controlled and protected environment .
MEANING OF STOCK EXCHANGE
A stock exchange, share market or bourse is a corporation or mutual
organization which provides "trading" facilities for stock brokers andtraders, to trade stocks and other securities. Stock exchanges alsoprovide facilities for the issue and redemption of securities as well asother financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchangeinclude: shares issued by companies, unit trusts and other pooledinvestment products and bonds. To be able to trade a security on acertain stock exchange, it has to be listed there. Usually there is acentral location at least for recordkeeping, but trade is less and lesslinked to such a physical place, as modern markets are electronicnetworks, which gives them advantages of speed and cost of
transactions. Trade on an exchange is by members only. The initialoffering of stocks and bonds to investors is by definition done in theprimary market and subsequent trading is done in the secondarymarket. A stock exchange is often the most important component of astock market. Supply and demand in stock markets is driven by variousfactors which, as in all free markets, affect the price of stocks (seestock valuation).
There is usually no compulsion to issue stock via the stock exchangeitself, nor must stock be subsequently traded on the exchange. Suchtrading is said to be off exchange or over-the-counter. This is the usual
way that bonds are traded. Increasingly, stock exchanges are part of aglobal market for securities.
http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance) -
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CONCEPT OF SHARE TRADING
The concept of share broking emerged after the establishment of the joint
stock companies. The ownership of the companies was divided into small
parts and that every part was called share. So, the term Share denominates
some part in the ownership of the company. The shares are freely
transferable subject to the some certain restrictions. When the need was feltto 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, which used to bring the buyers and sellers together for the trade of
the shares. These persons are called the share Brokers 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 Share Broking.
The origination of the Indian securities market may be traced back to 1975,
when 22 enterprise brokers under a Banyan tree established the Bombay
Stock Exchange (BSE). Over the last 130 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.
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OPERATIONS OF LUDHIANA STOCK EXCHANGE
TURNOVER
Ludhiana Stock Exchange is one of the leading Stock Exchangesamong the Regional Stock Exchanges of the country, and has beenproviding trading platform for the investors situated in Punjab, J&k,Himachal Pradesh & Chandigarh. At present, it has 357 listed
companies and among them, 231 are listed as regional companies. Ithad been generating significant amount of the business in thesecondary market. It recorded a peak turnover of Rs.9154 croresduring the year 2000-2001. The structural changes that took place inthe recent past in the Capital Market of the country had a negativeimpact on the trading volume of the Regional Stock Exchanges. Therehas been a significant reduction of turnover during the financial year2001-2002, but the reduction in the turnover of the Exchange has beenmore than adequately compensated by substantial rise in the turnoverof LSE Securities Limited, a subsidiary of Ludhiana Stock Exchange.
LISTING
Listing is one of the major functions of a Stock Exchange wherein thesecurities of the Companies are enlisted for trading purpose. AnyCompany incorporated under Companies Act,1956, coming out withan IPO, has to mandatorily list its shares on a Stock Exchange.
The Listing Department of Ludhiana Stock Exchange deals withlisting of securities, further listing of issues like bonus and rightsissues, post listing compliance of the companies which are already
listed with Ludhiana Stock Exchange. The Companies desirous of listing its securities on the Exchange have to sign a ListingAgreement with the Stock Exchange. After getting the listingapproval, the Company has to ensure and report compliance of thepost listing requirements. The listing section of the LSE monitors thepost-listing compliance of all the listed companies and follows upwith the companies,which are found deficient in compliance.
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PRESIDENTS/ CHAIRMEN
Sh. S.P. Oswal 16.08.1983 to 27.07.1986
Sh. B.M. Lall Munjal 28.07.1986 to 15.10.1989
Sh. V.N. Dhiri 16.10.1989 to 30.10.199230.09.1998 to 04.10.2000
Sh. G.S. Dhodi 31.10.1992 to 22.12.1993
Sh. Jaspal Singh 23.12.1993 to 05.10.1995
01.10.1996 to 29.09.199806.10.2001 to 01.07.2002
Sh. M.S. Gandhi 06.10.1995 to 30.09.1996
Sh. R.C. Singal 05.10.2000 to 05.10.2001
Dr. B. B. Tandon, Chairman 25.06.2007 to 10.12.2007Sh. S.P. Sharma, Chairman 15.12.2007 to
Sh.Jagmohankrishan,Chairman
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List of directors of LSE
Sh.Jagmohankrishan, Chairman
Sh.Padam parkash kansal,vice chairmanSh.yash paul mahajan,Public intrest director
Sh.Joginder kumar, director
Sh.Ashok kumar, director
Sh.Sarbjit garg, Public intrest director
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Sh.Varun chhabra, director
Sh.T.S.Thapar, director
Sh.Raj Singh,Registrar of conpanies
Sh.Sunil Gupta, directorSh.Sanjeeev Kumar Gupta, director
SETTLEMENT CYCLE SCHEDULE
SR. NO. DAY DESCRIPTION OF ACTIVITY TRADE
1 T Trading Day
2 T+2 PAY IN BY 10.30 am.
3 T+2 PAY OUT BY 2 pm.
4 T+3 Auction of shortage indeliveries
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5 T+5 Auction pay-in by10.30 (1 am/ pay
Out by2 pm.)
Functions of Stock Exchange
Stock 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 are;
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1. It brings the companies and investors together so that the investors
can put risk capital into companies and thus, companies can use the
capital.
2. It provides an orderly regulated market for securities.
3. It provides continuous, ready and open market for selling and buying
securities.
4. It promotes savings and investment in the economy by attracting
funds from the investors.
5. It facilitates take overs by means of acquiring majority of shares traded
on the stock market.
6. It acts as a clearing house of business information.
7. It motivates the managers of well reputed companies, to retain their
shares in A group, to improve performance.
8. It induces the managers to improve performance for converting non-
specified shares into specified shares in the exchange.
9. It enables the investors to evaluate the net worth of their holdings.
10.It also allows the companies to float their shares in the market.
OBJECTIVES OF THE STUDY
1. To understand the appropriate organizationalstructure of the LUDHIANA STOCK EXCHANGELTD and LUDHIANA STOCK EXCHANGE securitiesLIMITED.
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On Line TradingOn Line Trading
Meaning of Online Trading
Change is the law of nature. There were times when man was a
wanderer or a normal. He himself had to go place to place in search of food,
water and now everything is available at your doorstep just at the click of the
mouse. The growth of information technology has affected almost all sectors
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of life. Internet has enabled us to get every information at our doorstep.
When Internet has affected all sectors he could stock markets the most
important player of the economy, has remained far behind? 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. In theory, 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. Similarly the online investor likely does not
have to worry that his broker is making unauthorized trades. Since there is noindividual broker making a commission, the only person who is authorized to
trace in a the account is the actual investor. Furthermore, the internet
investor can never become a victim of excessive trading (where for the
broker) since the investor maintains total control over the number of
transactions which take place in the account.
All of these positive features of internet trading may lead the unwary investor
to believe that Internet trading is a way to take control of their finances and
save more money in the process. Unfortunately, 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.
First and foremost, the average investor is not an expert in the financial
markets. There is a danger for allowing the autonomy of online trading to hull
you into the belief that you are an expert investor. An online investor sittingat home at a personal computer also foregoes proper investment advice and
financial planning, perhaps among the most valuable services provided by
traditional brokers.
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There are, of course, additional risks relative to performing transactions over
the Internet especially on a shared computer. Those people whom investors
have provided their account number and password can freely trade that
account while the investor will have little, if any, resource against the
brokerage firm for the breach of security.
When was online trading introduced in INDIA?
Online trading started in India in February 2000 when a couple of brokers
started offering an online trading platform for their customers.
ONLINE TRADING BY NSE & BSE
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The central computer located at the Exchange is connected to the workstations of the
Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders placed at
the Brokers' workstations reach the central computer and are matched by the computer
based on price and time priority.
Both the exchanges have switched over from the open outcry trading system to a fully
automated computerized mode of trading known as BOLT (BSE On Line Trading) and
NEAT (National Exchange Automated Trading) System. It facilitates more efficient
processing, automatic order matching, faster execution of trades and transparency. The
scrips traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups.
The 'A' group shares represent those, which are in the carry forward system (Badla). The
'F' group represents the debt market (fixed income securities) segment. The 'Z' groupscrips are the blacklisted companies. The 'C' group covers the odd lot securities in 'A',
'B1' & 'B2' groups and Rights renunciations. key regulator governing Stock Exchanges,
Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants
in Indian secondary and primary market is the Securities and Exchange Board of India
(SEBI) Ltd.
DIFFERENCE BETWEEN ONLINE AND OFFLINEDIFFERENCE BETWEEN ONLINE AND OFFLINE TRADINGTRADING
Nevertheless, with all the convenience of online tradingthere are still investors who prefer the old fashion way of offline
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trading. Offline trading has lost some popularity but it is still the mainform of investing. Offline trading offers many benefits as well.
1. The one benefit that an investor appreciates the most is that theyare not alone when making investment decisions.
2. There are experienced and professional brokerage companies thathandle their investments for them.
3. Investors are not faced with the challenge of making these vitalinvestment decisions; especially, if they do not have the experiencenecessary to make the appropriate investments.
4. Also, there is someone there to answer any questions that maycause concerns. Not to mention, with offline trading mistakes are lesslikely to take place. No one wants to throw their money away or stand
by and watch someone else throw their money away. It may be wise tohire a professional to assist you in making the correct investmentdecisions if you feel you lack the knowledge necessary .
Points of difference between online trading and oflinetrading are as follows:
1. Online trading is very expensive as compare to manual trading oroffline trading.
2. Online trading consumes less time as compare to manual trading.
3. Online trading has very helpful to finding the records easily butoffline trading takes more time to finding the records.
4. In the help of online trading, there is no chance of any errors whiledoing the trading. in offline trading there are some errors exist likebarriers of communication .
5. With the help of online trading, we know the international marketrate of share very easily.
DEMATERIALISATION OF SHARES
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Dematerialization 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. SEBI has made compulsory trading of
shares of all the companies listed in stock exchanges in demat form with effect from 2 nd
January 2002.The procedure of opening a demat account with DP is similar to opening an
account with a bank.
ELECTRONIC SETTLEMENT OF TRADE
A. Procedure for purchasing dematerialized securities
The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities.
1. Investor instructs DP 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.
2. Investor purchases securities in any of the stock exchanges linked to
depository through a broker.
3. Broker receives payment from investor and arranges payment to
clearing corporation.
4. Broker receives credit to securities in clearing account on the payout
day.
5. Broker gives instructions to DP to debit clearing account and credit
clients account. Investor receives shares into his account by way of
book entry.
B. Procedure of selling dematerialized securities
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The procedure for selling dematerialized securities in stock exchanges is
similar as selling physical securities. The only major difference is that instead
of delivering physical securities to the broker, the investor instructs his DP 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:
1. Investor sells securities in any of the stock exchange linked to
depository through a broker.
2. Investor instructs his DP to debit his demat account with the
number of securities sold and credit the brokers clearing
account.
3. Before the pay-in-day, broker of the investor transfers the
securities to clearing corporation.
4. 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.
REMATERILISATION OF SHARES
Rematerialization is the process of conversion of electronic holdings of securities
into physical certificate form. For rematerilisation of scrips, the investor has to fill up a
remat request form (RRF) and submit it to the DP. The DP forwards the request to
depository after verifying the investors balances. Depository in turn initiates the
registrars and transfer agent or the issuer company. RTA/ Company prints the certificates
and dispatches the same to the investor.
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Market timings:
Trading on the derivatives segment takes place on all days of the week (except Saturdays
and Sundays and holidays declared by the Exchange in advance). The market timings of
the derivatives segment are:
Normal Market / Exercise Market Open time : 09:55 hours
Normal market close : 15:30 hours
Set up cut of time for Position limit/Collateral value : till 15:30 hrs
Trade modification end time / Exercise Market : 16:15 hours
Advent of online trading
The history of e-trading goes back to 1983, when a doctor in Michigan placed
the first online trade using E*TRADE technology. what began with a single
click over 16 years ago has now taken the world by storm. The concept was
visualized by one bill porter, a physicist and inventor with more than dozen of
patents to his credit, who provided online quotes and trading services tofidelity, Charles Schwab, and quick and Reilly. This led bill to wonder why, as
an individual investor, he had to pay a broker hundreds of dollars for stock
transactions. with incredible foresight, he saw the solution at hand, some day
everyone would own computers and invest through them with unprecedented
efficiency and control. And today his dream has become a reality.
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SHARE OF ONLINE TRADING IN TOTAL CASHTURNOVER OF NATIONAL STOCK EXCHANGE
Table 1.1(Year 2003)
MONTH CASHTURNOVER(cr.)
ONLINETURNOVER(cr.)
RATIO(%)
January 64,762.24 1,923.34 2.97Feb 48,289.18 1,559.07 3.23
March 43,159.93 1,302.69 3.02
April 48,971.31 1,425.83 2.91
May 54,690.14 1,981.36 3.62June 61,585.35 2,142.41 3.48
July 78,877.63 2,720.59 3.45
August 85,346.58 3,301.88 3.87
September 1,03,345.50 3,825.88 3.70
October 1,15,595.32 4,344.33 3.76
November 92,885.71 4,024.02 4.33
December 1,10,372.64 5,876.21 5.32
Source: Ludhiana stock exchange
TABLE-1.2 ( Year 2004)
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MONTH CASH TURNOVER ONLINE TURNOVER RATIO
January 1,34,268.72 6,015.04 4.48
February 1,08,718.06 5,170.01 4.76March 1,04,876.53 4,330.23 4.13April 1,00,951.17 5,244.27 5.20
May 98,919.93 5,187.01 5.24
June 84,898.47 5,358.95 6.31 July 93,836.13 6,819.45 7.27
August 86,855.72 6,192.31 7.13
September 88,508.05 6,976,.41 7.88October 75,697.32 6,261.90 8.27
November 82,035.27 7,490.16 9.13December 1,15,593.10 11,000.62 9.52
Source: Ludhiana Stock Exchange
MONTH CASH TURNOVER ONLINE TURNOVER RATIO
January 68,718.95 1,251.84 . 1.82
Table 1.3(Year
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February 49,563.77 917.80 1.85
March 44,262.50 868.85 1.96
April 53,320.02 914.73 1.72
May 54,979.06 1,237.28 2.25 June 44,241.07 1,108.66 2.51
July 51,398.43 1,290.57 2.51
August 46,113.05 1,310.78 2.84
September 46,498.62 1,318.01 2.84
October 51,902.22 1,476.51 2.85
November 51,351.48 1,639.28 3.19
December 61,973.34 1,915.65 3.09Source: Ludhiana Stock Exchange
TABLE-1.4(Year 2006)
MONTH CASH TURNOVER ONLINE TURNOVER RA TIO
April 57,229.44 5.85 0.01
May 79,036.68 29.1 0 0.04 June 1,19,373.43 88.58 0.07 July 1,10,056.22 97.49 0.09
August 1,25,347.04 165.09 0.13September 1,42,479.78 229.98 0.16
October 1,06,854.21 190.18 0.18November 1,22,731.11 350.79 0.29
December 1,31,414.65 366.75 0.28Source: Ludhiana Stock Exchange
TABLE-1.5(year 2007)
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MONTH CASH TURNOVERONLINE
TURNOVER RATIO
January 1,48,829.84 1,130.49 0.76
Februmy 1,35,932.23 1,573.62 1.16March 60,226.21 849.81 1.41
April 35,615.63 268.9 0.76May 48,329.11 343.92 0.71
June 42,783.00 238.47 0.56
July 27,227.76 401.68 1.48
August 29,417.15 388.98 1.32
September 35,322.82 453.58 1.28October 35,326.454 604.17 1.71
November 42,132.23 805.86 1.91December 54,467.79 1,048.24 1.92Source: Ludhiana Stock Exchange
Internet Based Trading through Order Routing
Systems
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Internet based trading on conventional exchanges, uses the Internet as a
medium for communicating client orders to the exchange, through broker web sites.
Brokers web sites may serve a variety of functions. These may include;
Allowing the clients to directly trade through investors;
Advertise the broker dealers services to potential investors;
Offer market information and investment tools similar to those offered by
information vendor or SRO web sites;
Offer real-time or delayed quote information, continuously update quotes
while the user visits other sites, or allow investors to create a personal
stock ticker;
Provide market summaries and commentaries, analyst reports and trading
strategies and market data on currencies, mutual funds, options, market
indices and news; and
Offer investors access to portfolio management tools and analytic
programs;
Information on commission and fees; and
Account information and research reports.
In an Order Routing 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 quantity and whatever the order is a market or limit
order. Once the brokers system receives this information.
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Use of Internet as Alternative Trading Systems (Provision
for price discovery and matching outside conventional
exchanges)
In foreign jurisdiction, 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 jurisdictions are closed systems and are not accessible to the
general public through the Internet. The securities markets regulators abroad the
maintained 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 systems by
which the system centralize, display, match, cross or otherwise execute trading
interest.
Use of Internet for making Initial Public Offerings
Issues of securities of using the Internet to communicate directly with their
shareholders, potential investors and analysts by disseminating corporateinformation. In foreign jurisdiction, they are also using the Internet to communicate
to the public for the following:
Public offerings;
Private offerings; and
Disclosure and communication
Issuers are using the Internet to market themselves to potential investors. The
Internet is also being used for fulfilling necessary disclosure requirements, fordisseminating the prospects in electronics form and even for receiving share
applications in public issues electronically. In India, SEBI has taken initiative in
permitting use of the network of stock exchange for collection of investor
applications in public offerings by the issuer companies.
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Investment Advisory Services
Brokers as well as other service provides 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
Providing investment information and investment advice;
Underwriting
Communicating with the investors; Customer orders; and
Record keeping
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Working Groups set up by the Committee
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
SEBI as a regulator could strive to identify areas where use of Internet in the capital
market is possible within the existing legal framework. One such area identified by
the Committee, which is also the central within the existing legal framework. One
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 Laws 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 of:
i. Security protocols and standardization of interfaces for Interest based
securities trading, chaired by Prof. Deepak B. Phatak, IIT, Pawai, Mumbai
ii. Surveillance and monitoring related issues arising due to Interest based
securities trading, chaired by Shri. L.K. Singhvi, Sr. ED, SEBI
The committee also requested Ms D N Raval, Executive Director, SEBI to
examine the legality of introduction of Internet trading and issue of Alternative
trading systems. This report of the standing committee examines the regulatory and
security requirements Internet Based Trading on Conventional Exchanges. Separate
reports (s) will cover the other areas related to Internet applications in the securities
markets.
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The report of the first working group on security protocols and standardization of
interfaces has since been submitted and incorporated in the report. The committee
would like to place on record its sincere thanks to Dr. D.B. Phatak, Ms. D.N. Raval
and their team members. The global financial market is undergoing a
transformation due to rapid technological developments. It thus becomes
imperative that for developing in effective regulatory framework developments in
other parts of the world should be studies and analyzed.
With nearly who million on-line investors, Internet trading in the United States 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 SEBI visited the United states to
these development and had interactions with brokerages houses, Internet serviceproviders and other agencies involved in facilitating Internet trading. The team also
discussed the developments in the emerging regulatory and supervisory framework
in United States with the Securities and Exchange Commission officials. They were
also tripped of the various initiatives taken by SEC in this regard. These inputs have
been utilized while drafting this report.
Recommendations of the Committee
Application for Permission by Brokers
SEBI registered Stock Brokers interested in providing Internet based trading services
will be required to apply to the respective stock exchange for a formal permission.
The stock exchange should grant approval or reject the application as the case may
be, and communicate its decisions to the number within 30 calendar days of the
date of completed application submitted to the exchange. The stock exchange,before giving permission to brokers to start Internet based services shall ensure the
fulfillment of the following minimum conditions.
Net worth Requirement
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The broker must have a minimum net worth of Rs. 50 lacs if the broker is providing
the Internet based facility on his own. However, 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 SEBI circular no FITTC/DC/CIR-1/98 dated June 16, 1998.
Operational and System Requirements:
Operational Integrity:
The stock Exchange 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 Exchange must also ensure the records maintained in
electronic from by the broker are not susceptible to manipulation.
System Capacity
The stock Exchange must ensure that the brokers maintain adequate backup
systems and data storage capacity. The stock Exchange must also ensure that the
workers have adequate system capacity for handling data transfer, and arranged for
alternative means of communications in case of Internet link failure.
Qualified Personnel:
The stock Exchange must lay down the minimum qualification fro personnel to
ensure that the broker has suitably qualified and adequate personnel to handle
communication including instructions as well as other back office work which is
likely to increase because of higher volumes.
Written Procedures:
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Stock Exchange must develop uniform written procedures to handle contingency s
tuations and for review of incoming and outgoing electronic correspondence.
Signature Verification/ Authentication:
It is desirable that participants use authentication technologies. For this purpose is
should be mandatory for participants to use certification agencies as and when
notified by Government/SEBI. They should also clearly specify when manual
signatures would be required .
Client Broker Relationship
Know Your Client:
The stock Exchange must ensure that brokers have sufficient, verifiable information
about clients, which would facilitate risk evaluation of clients.
Broker- Client Agreement:
Brokers must enter into an agreement with clients spelling out all obligations and
rights. This agreement should also inter alia, the minimum service standards to bemaintained by the broker for such service specified by SEBI/Exchange for the
internet based trading from time to time. Exchange will prepare a model agreement
for this purpose. The broker agreement with clients should not have any clause that
is less stringent/contrary to the conditions stipulated is the model agreement.
Investor 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 site/page on the web site of the relevant stock
exchange (s) displaying rules/ regulations/ circulars. Ticker/quote/order book
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displayed on the web-site of the broker should display the time stamp as well as
source of such information against the given information.
Order/Trade Confirmation:
Order/Trade confirmation should also be sent to the investor through email at
clients discretion at the time specified by the client in addition to the other made 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. Facility for reconfirmation of
orders which are larger than that specified by the member's risk management
system should be provided on the internet based system.
Handling Complaints by Investors:
Exchanges should monitor complaints from investors regarding service provided by
brokers to ensure a minimum level of service. Exchange 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.
Risk Management:
Exchanges must ensure that brokers have a system-based control on the trading
limits of clients, and exposures taken by clients. Brokers 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 acceptance/rejection of the order within a reasonable period. In case
system based control rejects 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 Notes:
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Contract notes must be issued to clients as per existing regulations, within 24 hours
of the trade execution .
Cross Trades:
As a matter of abundant precaution, the committee seeks to reiterate that as III the
case of existing system, brokers using Internet based systems for routing client
orders will also not be allowed to cross trades of their clients with each other. All
orders must be offered to the market for matching.
It is emphasized that in addition to the requirements mentioned above, all existing
obligations of the broker as per current regulation will continue without changes.
Exchanges may also like to specify more stringent standards as they may deem fit
for allowing Internet based trading facilities to their brokers.
Enforcement: A separate working group has been set to look into thesurveillance and enforcement related issues arising due to Internet based securities
trading. However, general anti-fraud provisions (SEBI Fraudulent and Unfair Trade
Practices Regulations, 1995) would apply to all transactions involving securities or
financial services, regardless of the medium.
FEATURES OF ONLINE TRADING: The Online Trading is having manyfeatures which make it most suitable for the investors to go for. Some of these
features are as follows:
The Internet can provide a new sense of control over your financial future. Theamount of investment information available online is truly astounding. It's one of
the best aspects of being a wired investor. For the first time in history, any
individual with an Internet connection can:
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Know the price of any stock at any time
Review the price history of any stock in chart format
Follow market events in-depth
Receive a wealth of free commentary and analysis about stock
markets and the global economy
Conduct extensive financial research on any company
One of the great appeals of using an online trading account is the fact that the
account belongs to you, and is under your direct control. When you want to buy or
sell stock, you no longer need to call your broker on the phone; hope that he is inthe office to place your order; possibly argue with the broker about the order; and
hope that the transaction is executed instantly.
At the most basic level, an online trading account gives you more agility in buying
and selling stocks. This is through sophisticated information streams, dedicated
trading platforms and sophisticated tools for accessing the markets.
Every 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, you will be able to get the best quote
for your orders.
Online trading offers you greater transparency by providing you with an audit trail.
This involves a complete integrated electronic chain starting from order placement,
to clearing and settlement and finally ending with a credit into your depository
account. All these stages are subject to inspection, thus bringing in transparency
into the system.
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Online trading integrates your bank account, your trading account and your demat
accounts, which leads to easy and paperless trading for you.
You as an Investment online customer will be able to execute the entire tradingtransaction, right from logging on to our site, to the execution and settlement of
your bank account, in a very short period of time.
Trading on the net, gives even the smallest retail investor access to information that
earlier was available only to the big traders. This provides a level playing field for all
investors in the securities market.
This method of trading reduces the settlement risk for the investor, as in this case
all short sell orders are squared off at the specified cut-off time and not allowed to
be carried forward.
In the case of a demat account your demat account is checked by us before
executing your sell transaction. This reduces the settlement risk for the buyer, who
is assured of the delivery of the securities and for you as a seller of the securities
Every trade is confirmed immediately and you will receive an on-screen
confirmation following every trade with full details for your records. This avoids
costly errors that would have been discovered when it is too late.
Your Bank, Depository and online account are integrated for your convenience.
Various broking houses provide access to many of the popular banks.
Broking houses work hard to keep our account and personal information secure.
From updated security technology to advanced fraud prevention measures, they
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have the people and tools in place to provide a strong defense against electronic
scams and fraud.
BENEFITS OF ONLINE BROKING
1) Less Costly:
The most significant advantage of the Online broking is the cost reduction in the
brokerage. Due to the power of the Internet one has the privilege of becoming the
clients of really large brokerages with the benefits of enjoying the low charges
hithelio before enjoyed only by the big players. As the DP 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 be your buying power.
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2) Peace of Mind:
One 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 consequent costs.
3) Keeping Records:
The site one trades on keeps a record of all transactions down to unexecuted orders
and cancelled orders thus keeping one abreast of all your transactions 24 hours a
day. No paperwork means more time at ones disposal for research and analysis.
4) Access to Information and investment Tools:
Most 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.
5.) Unparalleled Liquidity:
The. bank account linked with the trading account invariably has an A TM free. Most
partner banks offer Internet banking as well. This results in ones money becoming
available to him whenever he like from his trading account. Conversely in case he
spot an opportunity in the market he can immediately allocate money from his
savings account to his trading account and make profits .
6.) Unparalleled Safety:
Most sites are secure using 128-bit algorithms -highest available commercially
anywhere in the world. Moreover even if somebody broke in and tampered with
ones account the money from the stocks he sold or the stock bought from the
money in his account is in his account only.
7.) Reduces the settlement risk:
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This method of trading reduces the settlement risk for the investor, as in this case
no Short 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 (required for an online
transaction), when a seller wants to sell the securities, his demat account is
checked by the Depository Participant before executing the sale transaction. This
reduces the settlement risk for the buyer, who is assured of the delivery of the
securities.
8.) Offers greater transparency:
Online 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 subject to inspection, thus
bringing in transparency into the system.
9.) Ease of trade:
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.
Other than the above-mentioned advantages, Internet trading provides some
additional advantages to the investors, brokers and also helps the nation to
channelize the resources. Net 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 .
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PROBLEMS OF ONLINE BROKING
There is a flip side to everything and online trading is no exception.
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Chart
21%
23%
27%
11%
14%
4%
More Costly
Lack Of Know ledge
Loyalty to Traditional Broker
Lack of Trust
Slow Speed
Other
Source:- www.lse.co.in
27% Loyality is of traditional broker
23% people says that online trading is more costly than manual trading.
21% people not prefer online trading because of lack of knowledge.
So, the main problems of online trading are as follows:
1.) "Server not found":
This may appear on ones screens when he is desperately trying to get out of an
unprofitable position. Some of the online sites are providing a telephone number for
use in case their sites are overloaded or their server down.
2.) Connectivity of the Broker with NSE:
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Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours
during trading hours. This problem is rare but be alive to its possibility.
3.) Cyber attack:
In the event of a malicious attack on the systems of ones broker he is protected
only if the company is taking proper precautions against such attacks and if proper
backup is regularly been taken. He may like to choose a brokerage that has a stated
security policy and contingency plan in place.
4.) Non-availability of a seamless interface:
As a client one will access the NSE through a server of the online brokerage and this
may involve queuing delays. If a number of client access the server the server takes
its own time sending the orders to the NSE server. He must check out the
seamlessness of this interface before selecting an online brokerage. The faster the
orders are processed the more seamless is the interface.
5.) Non- availability of personalized advice:
If one like to ask his broker " Aaj kya achcha lag raha hai " he may not be able to do
so. If he want advice on a particular stock in his portfolio he may not even be able
to get that.
6.) Margin:
If Internet trading alone is not fast and furious enough; many people are trading on
margin. That is where the brokerage firm lends you money by leveraging his
account, allowing him to buy a large amount of securities by putting up only a small
amount of money. He may have forgotten what he read in the small print of his
agreement, but the brokerage firm has the right to change the maintenance margin
requirements without any warning or notice to him. In fact, the firm has the right to
liquidate his securities holdings (and it can pick and choose which ones) without any
notice to one if he fail to meet the margin call. And there he was leveraged to the
hilt, hoping to hit a home run when he discovered that he is required to make a
large deposit that he cannot make. The next thing one know, the firm is selling off
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his securities at a point in time that is not the best for him. These are the perils of
trading on margin.
7.) Little use of advisory services:
The advisory services being promised by the brokers would be of little use to
investors looking for an insight into the market. Many would not like to rely on
research reports, which are there for all. So, net investors will have to do their own
research and take their own decision, whether wild or wise.
8.) Increased charges:
Some of the brokers are of the view that they would have to provide advisoryservices to the customers. But 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.
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WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING
Several broking houses now offer online trading facilities. You can trade online with
e-brokerages such as ICICI Direct, Kotakstreet, India bulls, India info lines
5paisa.com and HDFC securities.
If you are already comfortable trading with your regular broker, here are few
reasons why you may consider switching to trading online, or at least another
avenue of trading. an obvious advantage of online trading is that your transaction
would be virtually paperless. Your trading account would be linked to your demat
and bank account, ensuring a smooth transaction process. This is especially helpful
in the extent T+2 settlement system, where you have just two days to settle your
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 your order is
executed online. The absence of manual intervention ensures that you are
completely in control of all transaction.
There is also little room for error, as your order is always confirmed before it is
executed. You can also make better decision as you have a clear record of all your
previous transaction. When you trade offline, a demat statement is normally sent to
you only on a quarterly basis .keeping track of your portfolio can be a hassle in such
a case. The inter net can provide a new sense of control over your financial future.
The amount of investment information available online is truly astounding. Its one of
the best aspect of being a wired investor for the first time in history, any individual
with an internet connection can:
Know the price of any stock at any time
Review the price history of any stock in chart format
Follow market events in-depth
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Receive a wealth of free commentary and analysis about stock markets and
globe economy.
Conduct extensive financial research on any company
Talk with other investors around the world
At investsmart you can get real-time stock quotes, daily roundups of the stock
market, experts commentary, and a deep community of fellow investors.
Convenience is probably the greatest advantage online trading offers investors. if
dont have time to trade during market hours ,perhaps you are at work, you can log
on the web-trading site and place your order offline, during off market hours. Yourorder would join the queue and be expected the next day. You would need to enjoy a
good relationship with your broker, for you to be able to reach him in the late hours.
For non-resident Indians (NRI), trading online is perhaps their easiest option to
invest in the Indian stock markets.
What is more, the time difference, in some cases, can work to their advantage
.Antony, an NRI-based in New York, places his order in the evening after work, when
it is day time India and the markets are open. We also have access to considerableinformation online. By just logging on to ICICI direct online, for instance, we can get
the latest news, market information and company research.
Moreover, if our connection is maddeningly slow and we want to get your order
executed immediately, most e-brokerages also provide a facility to trade offline by
placing our order via the phone.
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PROCESS OF ONLINE TRADING
An investor interesting in trading through Internet shall have to, firstly registerhimself with an Internet brokerage firm. Some 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. Secondly, the investor would be required
to open a bank account with a scheduled bank and sufficient balance should be kept
in the account. Thirdly he would be required to open account with a depository
participant because only dematerialized shares can be traded on Internet.
The client places order via the net by logging on to his
The broker accepts and executes the order andplaces it with the exchange
The exchange accepts the order after checking the share
The broker makes the payment either directly via the clientbank account or pays through its own account and recovers
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So, generally following steps are followed while doing the trading through the
Internet:
Step-I:
Those investors interested in doing the trading over Internet system, that is,NEAT -
ISX (NSE), should approach the brokers and register with the Stock Broker.
Step-2:
After registration, the broker will provide to them a login name, password and a
personal identification number (PIN).
Step-3:
Actual placement of an order, Using the place order window as under can then place
an order:
(a) First by entering the symbol and series of stock and other parameters such as
quantity and price of the scrip on the place order window.
(b) Second, fill in the symbol, series and the default quantity.
Step-4:
It is the process of review. Thus, the investor has to review the order placed by
clicking the review option. He may also re-set to clear the values.
Step-5:
The exchange receives money and completes the
The client is intimated about the settlementeither through the demat or via e-mail.
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After the review has been satisfactory; the order has to be sent by clicking on the
send option.
Step-6:
The investor will receive an "Order Confirmation" 'message along with the order
number and the value of the order.
Step- 7:
In case the order is rejected by the Broker or the Stock Exchange 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.
Step-8:
It is regarding charging payment, for which there are different modes. Some brokers
will take some advance payment from the, investors and will fix their trading limits.
When the trade is executed, the broker will ask the investor for transfer of funds by
the investor to his account.
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CLIENT BROKER STOCK EXCHANGE
Places an order onthe net on the
brokers websitethrough the
distinctive I.D.
Accepts theorder, Checks
the clientsIdentity andplaces the
order with the
Accepts the orderafter checking the
scrip limit of thebroker for the day
The settlement of the deal (buy/sellorder) getsreflected in hisDemat account.
The client isintimated aboutthe execution of
the deal by e-mail.
Pays the
Exchange
though hisowns account
and receives itfrom the client
account.
Receives themoney and
completes thesettlement
57
THE MECHANICS OF ONLINE TRADING
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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 NSE and BSE, trades in
rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. For arriving at the
settlement day all intervening holidays, which include bank holidays, NSE/BSE holidays,
Saturdays and Sundays are excluded. Typically trades taking place on Monday are settled on
Wednesday, Tuesday's trades settled on Thursday and so on.
Concept Of Buying Limit
Suppose you have sold some shares on NSE and are trying to figure out that if you can use the
money to buy shares on NSE in a different settlement cycle or say on BSE. To simplify things for
ICICI Direct customers, we have introduced the concept of Buying Limit (BL). Buying Limit
simply tells the customer what is his limit for a given settlement for the desired exchange.
Assume that you have enrolled for a ICICI Direct account, which requires 100% of the money
required to fund the purchase, be available. Suppose you have Rs 1,00,000 in your Bank A/C and
you set aside Rs 50,000 for which you would like to make some purchase. Your Buying Limit is
Rs 50,000. Assume that you sell shares worth Rs 1,00,000 on the NSE on Monday. The BL
therefore for the NSE at that point of time goes upto Rs 1,50,000. This means you can buy shares
upto Rs 1,50,000 on NSE or BSE. If you buy shares worth Rs 75,000 on Tuesday on NSE your
BL will naturally reduce to Rs75,000. Hence your BL is simply the amount set aside by you from
your bank account and the amount realized from the sale of any shares you have made less any
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purchases you have made. Your BL of Rs 50,000, which is the amount set aside by you from
your Bank account for purchase is available for BSE and NSE. As you have made the sale of
shares on NSE for Rs.100000, the BL for NSE & BSE rises to 1,50,000. The amount from sale of
shares in NSE will also be available for purchase on BSE. ICICI Direct
Future Agenda :
Under the existing legal and regulatory framework, SEBI registered brokers can offer
trading on Internet through order is routing systems. However, 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 necessary regulations 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. We 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 and settlement etc., are provided on the Internet by
an intermediary. In a nutshell it can be said that we are moving towards a one-stop
service center.
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RESEARCH METHODOLOGY
The basic task of research is to generate accurate
information for use in decision making. Research can be defined as the
systematic and objective process of gathering, recording and analyzing data
for aid in making business decisions.
There are basically two techniques adopted for obtaining information:
1. Primary Data.
2. Secondary Data .
Primary Data is gathered specifically for the project at hand through
personal interviews with the accounts officers.
Secondary data is previously collected and assembled for some
project other than the one at hand. It is gathered and recorded by someone
else prior to current needs of the researcher. It is less expensive than the
primary data.
SECONDARY DATA
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Secondary data was collected from Ludhiana Stock Exchange
Scope of study:
The study is limited to Ludhiana Stock Exchange , Firoz Gandhi Market Ludhiana
Data Collection:
Data is collected from secondary sources.
Sources of data collection are:
1) Ludhiana Stock Exchange
2) www.nseindia.com
3) www.bseindia.com
4) www.on-linetrading.com
For the successful research the manipulation of certain things, concepts, andsymbols for the purpose of generalization is inevitable. Research is simply the pursuit of truth with the help of the study.
http://www.on-linetrading.com/http://www.on-linetrading.com/ -
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Analysis and Interpretation
1. For how long you have been trading with on line-trading?
(a)1 year (b) 2 year
(c) 3 year (d) 4 year
Sample size 100
0
10
20
30
40
50
YEAR
1 year2 year3 year4 year
According to this survey we find that 44% people says that weare investing the money online from one year and 26% peoplesays that we are investing the money online from 2 years and19% to 11% people says that we are investing money onlinefrom 3 to 4 year. so we can say that now online trading is verypopular in the modern market.
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2. How will you describe your experience with on-line trading tilldate?
(a) very easy to operate
(b) very difficult to operate
(c) not secure
(d) Any other
Sample size 100
010
20
30
40
50
60
Experience
I find it very easy to operate
I find it very difficult tooperateI feel it is not secure
Any other
According to this survey we find that 60% of people find very easy tooperate and 15% people find diffcuilt two operate and 10% and 15%people find no secure and any other. so we can say that online tradingis very simple to operate and easy to understand.
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3. what amount of money you invest normally ?(a) 50000 (b) 100000 to 150000
(c) 150000 to 2000000 (d) Any other amount
Sample size 100
According to this survey we find that 35% of people investmoney normally 50000 and 28% of people invest money100000to150000 and 23% and 14% of people invest moneybetween 150000to200000 and any other. So we can say that thepeople are not invest more money in the share market becausethere is a great risk involved while doing the trading.
0
5
10
15
2025
30
35
Money
50000
100000to150000
150000to200000Any Other
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4 . How often do you trade?(a)Daily (b) Weekly
(c) Monthly (d) More than one month
Sample Size 100
0
5
10
15
20
2530
35
40
Time
dailyweeklymonthlymore than 1 month
According to this survey we find that 10% of people do trade Dailyand 40% people do trade weekly and 32% and 18% people do trademonth and more than month. So we can say that people aregenerally invest in stock market weekly basis.
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5. which trading you prefer?
(a) On line trading (b) Manual trading(c) Both
Sample Size 100
0
10
20
30
40
50
Relationship
On line trading
Offline trading
Both
According to this survey we find that 20% people prefer onlinetrading and 32% people prefer offline trading rest of 48% peopleprefers both. So we can say that mostly people are awareness aboutthe on line trading and because of this reason the mostly people areoptimizing offline trading.
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7. What shortcomings do you feel in Indian On-Line trading ?
(a) Lack of awareness the investors about on-line trading(b) Shortage of domestic technical expertise
(c) Shortage Of Infra structure
(c) any other
Sample Size 100
0
10
20
30
40
50
Shortcomings
Lack of awareness
Shortage of expertise
Shortage Of Infrastructure
any other
According to this survey we find that 15% of people says lack of awareness 49% says Shortage of expertise and 14% people saysShortage Of Infra structure and 22% says any other. So we cansay that mostly people are shortage of experience about theIndian derivatives market or share market.
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8. Which media would you prefer the most for investment?
(a) T.V (b) Newspaper
(c) Magazines (D) Journals
0
10
20
30
40
50
60
Media
T.V
Newspaper
Magazines
Journals
According to this survey we find that 55% people Prefer T.V and 25%people prefer newspaper and 10% people prefer magazines and 10%people prefer journals. So we can suggest that mostly people are veryeasily grapped the knowledge through T.V.
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6. Whether online trading settled in Indian investor psyche
According to this survey we find that 30% people says yes and 70%people says no. so we can find that on line trading is not settled inthe Indian psyche because some people are not experience towardsonline trading.
7. What shortcomings do you feel in Indian derivatives market?
According to this survey we find that 37% of people says lack of awareness 49% says Shortage of expertise and 14% people saysany other. So we can say that mostly people are shortage of experience about the Indian derivatives market or share market.
8. Which media would you prefer the most for investment?
According to this survey we find that 41% people Prefer T.Vand 39% people prefer newspaper and 20% people prefer magazines.So we can suggest that mostly people are very easily grapped theknowledge through T.V.
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CONCLUSION
Online trading is the new concept in the stock market. In India, online trading is stillat its infancy stage. Online trading has made it easy to trade in the stock market as
now people can trade while sitting at their home. Now stock market is easily
accessible by the people. There are some problems while doing the trade through
the internet. Major problem faced by online trader is that the investors are loyal to
their traditional brokers, they rely upon the suggestions given by their brokers.
Another major problem is that the people don't 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.
Nevertheless 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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LIMITATIONS
Despite of the training my level best, there were still some limitationwhich I think remains there to draw fruitful conclusion. There weresome practical problem which come across and could not be properlydeath with
The advisory services being promised by the brokers would be of little use to investors looking for an insight into the market.
As a client one will access the NSE through a server of the onlinebrokerage and this may involve queuing delays
If one like to ask his broker " Aaj kya achcha lag raha hai " he may not
be able to do so. If he want advice on a particular stock in his portfolio
he may not even be able to get that.
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Suggestions
The introduction of the Internet has surprisingly changed our way of life as asociety. It has defined the way we do business and the way we correspond. The Internet has opened many opportunities for online trading. The financialindustry revolves around the Internet. Every thing is just a few clicks away.
This makes online trading most convenient. But there are still investors whoprefer the old fashion way of offline trading and they mainly prefer offlinetrading for security reasons.
Internet has introduced a way for consumers to manage their money online.Not to mention, Internet has transformed the way investment companiesoperate 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 atone point only reserved by the use of investment professionals. Consumerinvesting and online trading has dramatically changed over the last decade.Online trading dynamically continues to be redefined. Services haveexpanded to include integrated management of additional financialaccounts. Not to mention, it has subsequently expanded in conjunction withground-breaking improvements to the traditional trading interface, such astelephone interface systems.
Of course, online trading has many pros. There are several wonderfulreasons to invest online and consider online trading.
1. Money saving opportunities The amount of money you save dependsprimarily on the online brokerage firm that you choose. No two firms are thesame. There may be different regulations, similar to bank regulations. Thereare minimum deposits required that must be maintained. As mentionedabove, this will depend on the online brokerage firm.
2. Instant online access You can gain instant access to your account, thevalue of your portfolio updates immediately before your eyes.
3. Enter online trades at anytime You can enter online trades at anytime andfrom anywhere. This is very convenient if you live in a different time zonethan the country you are trading in. Not to mention, it is especially fit forinvestors with busy schedules.
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4. With online trading you are in charge You are in control of your
investments. No sales pitches and no hassle. You decide where to invest your
money .
BIBLIOGRAPHY
BOOKS
C. R. Kothri, Research Methodology,Vishwa Prakshan
MAGAZINES Business World
LSEs Magazine
INTERNET SITES
www.nseindia.com www.bseindia.com www.on-linetrading.com
www.sebi.gov.in
www.lse.co.in
http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/ -
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Questionnaire
Dear respondent,
I am student of MBA. I am working on theproject of On-Line trading. You are requested to
fill the questionnaire to enable, to undertake thestudy on the said Project.
Name.
Occupation
Address
Phone no.
1. For how long you have been trading with on line-trading?
(a)1 year (b) 2 year
(c) 3 year (d) 4 year
2 .How will you describe your experience with on-line trading tilldate?
(a) very easy to operate
(b) very difficult to operate
(c) not secure
(d) Any other
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3. what amount of money you are invested normally ?
(a) 50000 (b) 100000 to 150000(c) 150000 to 2000000 (d) Any other amount
4. How often do you trade?
(a)Daily (b) Weekly
(c) Monthly (d) More than one month
5. In which trading you will prefer?
(a) Online trading (b) offline trading
(c) Both
6. According to you online trading setteled in Indian investor psyche
(a) Yes (b) No
7. What shortcomings do you feel in Indian On-line Trading ?
(a) Lack of awareness the investors about on-line trading
(b) Shortage of domestic technical expertise
(c) Shortage Of Infra structure
(d) If any other