Online Trading
Online trading
Before getting in to the online trading we should know some things about the interrne, e-commerce and etc.
1. Internet
Internet is a worldwide, self-governed network connecting several other smaller networks and millions of computers and persons, to mega sources of information. This technology shrinks vast distances, accelerating the pace of business reforms and revolutionizing the way companies are managed. It allows direct, ubiquitous links to anyone anywhere and anytime to build up interactive relationships.
A combination of time and space, called the Internet promises to bring unprecedented changes in our lives and business. Internet or net is an inter- connection of computer communication networks spanning the entire globe, crossing all geographical boundaries. It has re-defined the methods of communication, work study, education, business, leisure, health, trade, banking, commerce and what not it is virtually changing everything and we are living in dot.com age. Net being an interactive two way medium, through various websites, enables participation by individuals in business to business and business to consumer commerce, visit to shopping arcades, games, etc. in cyber space even the information can be copied, downloaded and retransmitted.
The use of Internet has grown 2000 percent in last decade and is currently growing at 10 percent per month. In India, growth of Internet is of recent times. It is expected to bring changes in every functional area of business activity including management and financial services. It offers stock trading at a lower cost. Internet can change the nature and capacity of stock broking business in India.
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2. E-commerce
Electronic commerce is associated with buying and selling over computer communication net work. It helps conduct traditional commerce through new way of transferring and processing of information. Information is electronically transferred from computer to computer in an automated way. E-commerce refers to the paperless exchange of business information using electronic data inter change, electronic technologies. It not only reduces manual processes and paper transactions but also helps organization move to a fully electronic environment and change the way they operated.
PC’s and networking attempts to introduce banks of the tools and technologies required for electroniccommerce.Thecomputer sareeitheworkstations of individual office works or serves where large databases and information resid. Network connects both categories of computers; the various operating systems are the most basis program within a computer. It manages the resources of the computer system in a fair and efficient manner.
Now we can enter in to the concept known as online trading.
In the past, investors had no option but to contact their broker to get real time access to market data. The net brings data to the investor on-line and net broking enables him to trade on a click of mouse. Now information has become easily accessible to both retail as well as big investor.
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EVOLUTION OF BROKING IN INDI A :
The evolution of a broking in India can be categorized in three phases - Stockbrokers will offer on their sites features such as live portfolio manager, live quotes, market research and news, etc. to attract more investors. Brokers will offer online broking and relationship management by providing and offering analysis and information to investors during broking and non- broking hours based on their profile and needs, i.e. customized services. Brokers (now e-brokers) will offer value management or services like initial public offering online, on-line asset allocation, portfolio management, financial planning, tax planning, insurance services, etc. and enables the investors to take better and well considered decisions.
The definition of “Online Trading” is as explained below:
“Online trading is a service offered on the internet for purchase and sale of shares. In the real world you place orders on your stockbroker either verbally (personally or telephonically) or in a written form (fax).” In online trading, you will access a stockbroker’s website through your internet enabled PC and place orders through the broker’s internet based trading engine. These orders are routed to the stock exchange without manual intervention and executed thereon in a matter of a few seconds .The net is used as a mode of trading in internet trading. Orders are communicated to the stock exchange through website.
In India:
Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. The SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing
System (ORS) through registered stock broker son behalf of their clients for execution of transaction. Under the ORS the client enters his requirements
(security, quantity, price buy/sell) on broker’s site.
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Objectives:
Internet trading is expected to
Increase transparency in the markets.
Enhance market q ua li ty through improved liquidity , by increasing quote continuity and market depth.
Reduce settlement risks due to open trades by elimination of mismatches.
Provide management information system.
Introduce flexibility in system, so as to handle growing volumes easily and to support nationwide expansion of market activity.
Besides, through internet trading three fundamental objectives of securities regulation can be easily achieved, these are:
. Investor protection
. Creation of a fair and efficient market, and
. Reduction of the systematic risks.
Requirements for net trading:
For investors:
1. Installation of a computer with required specification
2. Installation of a modem
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
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The following should be produced to get a demat account and online trading account:
As identity proof & address proof any one of the following:
1) Voter ID card
2) Driving license
3) PAN card ( in case of to trade more than 50000)
4) Ration card
5) Bank pass book
6) Telephone bill
Other requirements, which are necessary
1. First page of the bank pass book and last 6 months statement.
2. Bank manager’s signature along with bank’s seal, manager registration code on photograph.
For stock brokers:
1. Permission from stock exchange for net trading.
2. Net worth of `.50 lakh.
3. Adequate back-up system.
4. Secured and reliable software system.
5. Adequate experienced and trained staff.
6. Communication of order (trade confirmation to investor by e-mail).
7. Use of authentication technologies.
8. Issue of contract notes within 24 hours of the trade execution.
9. Setting up a website.
The net is used as a medium of trading in internet trading. Orders are communicated to the stock exchange through website. Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. The
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SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction.
Under the Order Routing System the client enters his requirements (security, quantity, price, and buy/sell) in broker's site. They are checked electronically against the clients account and routed electronically to the appropriate exchange for execution by the broker. The client receives a confirmation on execution of the order. The customer's portfolio and ledger accounts get updated to reflect the transaction. The user should have the user id and password to enter into the electronic ring. He should also have demat account and bank account. The system permits only a registered client to log in using user id and password. Order can be placed using place order window of the website.
Procedure for net trading
Step 1: Those investors, who are interested in doing the trading over internet system i.e. NEAT-IXS, should approach the brokers and get them self registered with the Stock Broker.
Step 2: After registration, the broker will provide to them a Login name, Password and personal identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by using the place order window as under:
(a) First by entering the symbol and series of stock and other parameters like 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: After the review has been satisfactory, the order has to be sent by clicking on the send option.
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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 10 seconds is there in executing the trade.
Step 8: It is regarding charging payment, for which there are different mode. Some brokers will take some advance payment from the investor and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds to his account.
Internet trading provides total transparency between a broker and an investor in the secondary market. In the open outcry system, only the broker knew the actually transacted price. Screen based trading provides more transparency. With online trading
Investors can see themselves the price at which the deal takes place.
The time gap has narrowed in every stage of operation. Confirmation and execution of trade reaches the investor within the least possible time, mostly within 30 seconds. Instant feedback is available about the execution. Some of the websites also offer:
News and research report
BSE and NSE movements
Stock analysis
IPO and mutual fund centers
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Step by step procedure in online trading:
Following steps explain the step by step approach to on-line trading:
1) Log on to the stock broker's website
2) Register as client/investor
3) Fill the application form and client broker agreement form on the requisite
value stamp papers.
4) Obtain user ID and password
5) Log on to the broker's site using secure user ID and password
6) Market watch page will show real time on-line market data
7) Trade shares directly by entering the symbol or number of the security
8) Brokers server will check your limit in the on-line account and Demat account
for the number of shares and execute the trade.
9) Order is executed instantly (10-30 seconds) and confirmation can be obtained.
10) Confirmation is e-mailed to investor by broker
11) Contract note is printed and mailed in 24 hours
12) Settlement will take place automatically on the settlement day
13) Demat account and the bank account will get debited and credited by electronic mean.
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Online trading h a s led to a dditional features such as :
1) Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this leeway facility since one need to hold a price.
2) Market orders: orders can be filled at unexpected prices, but this type is much more risky, since you have to buy stock at the given price.
3) Cash account: where funds have to be available prior to placing the order.
4) Margin account: where orders can be placed against stocks, to increase
Purchasing power.
A DV A NT A GES OF ONLINE TRADIN G :
1. Online trading has made it possible for anyone to have easy and efficient access to more reports and charts than it was previously possible if one went to any brokers' office. Thus we have access to a lot more information online.
2. Online trading has let room for smaller organizations to compete with multinational organizations since it is no longer a leg it issue. Being online does not identify the size of any particular organization, therefore, this additional power to the underdogs.
3. Online trading has allowed companies to locate themselves where they want as physical location is not an issue anymore. Companies can establish themselves according to their gains and losses, for instance where tax (sales and value added taxes) is best suited to them.
4. Online trading gives control to individuals and they can exercise it over accounts thus comprehend what is going on when they trade. It is like going back to school and re-educating oneself on how to trade online.
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5. Individuals’ benefit by saving comparatively a lot more when trading online as the cost per trade is less.
6. Individuals can invest in a variety of products, unlike earlier when people bought bonds, mutual funds, and stock for long-term basis and sat on them. Now they can invest in stocks, stock and index options mutual funds, government, and even insurance.
Investors re a sons to trade online :
1.They have control over their accounts, can make their own decisions and don’t have to give reasons for their actions. They are independent.
2.They have a reason to participate in the market and learn about it.
It is interesting, cheap, easy, fast, and convenient.
3.A lot of information is online so they can keep up-to-date with what is happening in the trading world.
4.It will give investors a greater choice and better realization.
5.The immediate impact will be competition and benefits will accrue to the investors.
6.It will lead to brokerage commissions going down and brokers striving to increase business afloat.
7.Investors will now go to place, which have better trading conditions and also members to offer them better facilities.
8.They have access to numerous tools to invest, and can create their own portfolio.
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Here are the possible dis a dv a ntage s :
1. When network crashes, there will be problems and delays due to a large influx of
rapid online trading criteria.
2. Individuals are restricted to first-hand financial guidance. This simply means that the individual is himself / herself alone to.
3. A tax (sales tax and value added tax) evaluation becomes an issue, especially when you are trading internationally.
4. One has no idea with whom he is dealing with on the other end.
5. According to a study conducted by Mary Rowland, careful investor: is online trading bad for your portfolio, the more one trades the less returns one gets, meaning that an addicted trader gets, carried away online and begins to trade for too much which causes losses for him / her.
6. Individuals think that they are trading with the market directly and know what they are doing, but the truth is that even though technology has taken over the basic rules of trading are the same. It seems that the middleman has been removed, but that is not so. When the individuals click on the mouse, his trade goes through a broker. The commissions online pertain to the intermediary.
7. There is a need for more effective communication links over the Internet and the ability of the server to deal with a large volume of visitors.
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REVIEW OF LITERATURE
Online trading marks a watershed in the application of technology in conducting trading business in stock markets. This book is divided into four sections. The first section deals with fundamentals and framework, the second section focuses on the implication of online trading the third section describes the implications for online investors. The fourth section is about the technology advancements in online trading. The first section on fundamentals and Framework deals with the evolution of online trading, basic concepts, background and trading mechanisms involved.
The opening article, “share trading: Moving to the Net”, by Dr. T R Rajarajan traces the evolution of securities trading from traditional system to trading through the internet. It discusses the trading mechanism through the major components of online trading, viz, banking, depositories ,technology and other infrastructure .Information technology has replaced the age-old share trading method with the faster and more accurate online stock trading.
The second article. “Online trading: Trading the speed of light,” By Mayura jaiswal, deeepad vashist and Abhay Kumar ,traces the growth of online trading from the year 2000 using statistics on volume of online trading number of e-broking firms, brokerages and demographic patterns.
Online trading has dramatically changed the way stock business has been conducted over the years. In the next article, “online trading: Issues and concerns”, by Anup Bagchi, the author suggests that online trading should balance a technology centric approach to transactions with the human factor for a successful transition from traditional to online trading. In his interview, jade smith (HSBC treasury and capital markets) discusses various aspects of online trading: the types of transactions conducted online, different value propositions in the online marketing and the future trends in e-trading.
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The process of payment and settlement is an issue of importance in online stock trading. The sixth article, “ payments in India: The journey so far and the road ahead”, by Vinod Madhavan looks at how the multiple payment systems have developed in India and considers the need for technology and a legal framework to ensure that an electronically linked payments and clearing system, including cheque truncation, can be implemented in future. In the next article, ‘clearing & settlement system at NSDL’, the structure of a clearing account is described along with the process of settling trade in market.
“Online stock trading in India: An empirical investigation”
In 2007, Nidhi Walia and Ravinder Kumar’s research report examined the investors’ preference for traditional trading and online trading, investor’s perception on Online trading & comparing current usage of online trading and offline trading. This study reveals that out of every 100 investors only 28 trade online, which points out a question as why investors were not able to realize the importance of technology in stock trading.
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NEED FOR THE STUDY
The present study to review the online trading procedure of ONLINE TRADING at SHAREKHAN as the exchange has changed its trading from the outcry mode to online trading there is need to assess the performance of the capital market.
Capital Markets play a vital role in the development of the economy and stock exchanges are the integral part of the capital market.
With the advance in Information Technology, age-old methods of stock trading are gradually fading out.
They are replaced by the easier and hassle-free method of trading On-line through Internet.
This study is carried out to explore the changes occurring in stock exchange with the advancements in the information technology.
The major need for this study is to know the effectiveness of online system in comparison with the outcry system. More emphasis is given to bring out the process of online trading behind the screen and its advantages.
The study also includes the emergence of the depository system in the country to rule out the drawbacks of the system of physical transfer of the shares.
The need of the study is to know the opinion of the customers and their views about their investment.
Basically the analysis had done to find out the comparative position of share khan with other major players of stock market
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OBJECTIVES OF THE STUDY
To know the on-line screen based trading systems and its communication facilities for the appropriate configuration to set network.
To know about the latest and future development in the stock exchange trading system.
To get feedback from the clients about online trading system of SHAREKHAN Ltd.,
To study how online trading and Demat account process takes place.
To study the perception of investors/clients regarding stock trading in SHARE KHAN Ltd, at KURNOOL.
To know how much potentiality has SHAREKHAN Ltd., of Demat and Trading account opening compare to other competitors in stock market
The company tries to improve the services provided to their customers in order to increase the service by which a strong relationship can be maintained with. It is difficult to collect the right data especially to capture all the occasions of company with other competitors.
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SCOPE OF THE STUDY
Many online stock trading companies came but initially due to lack of online trading some companies vanished and some survived. The companies which survived are getting the handsome returns also attracting the foreign investment companies.
The study then goes to evaluate and analyze the findings so as to present a clear picture of the trends in the online trading sector.
It is an internet based investment activity which eliminates the association of a broker. Anyone who has a computer, enough money to open an account and reasonable financial history has the ability to invest in the market.
The person has to get registered with the online trading portal and get into an agreement with the company to trade in different kinds of securities by accepting the terms and conditions.
The online trading portals are connected to the stock exchanges and the assigned banks. Such online portals offer the trader an opportunity to check live online stock prices which they can check mail or the interface.
Also ample amount of research data is provided which helps the user make their own decisions as to whether to invest in a particular stock or not.
The online trading companies allow the users to invest in a number of financial products and services like equities, mutual funds, life insurance, loans, share trading, commodities trading, institutional trading, general insurance and financial planning.
It will give an opportunity to focus on and tack quantifiable action to improve the Services, profitability and overall satisfaction with SHARE KHAN Ltd.
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And know that which is most recommended brand among different Stock broker service provider & frequency of visits the existing customer in Corporate Office.
LIMITATIONS OF THE STUDY:
The study is limited because of time constraint.
The study is only limited to Kurnool and cannot be appropriated to other areas.
SHAREKHAN is a franchise in SHRIRAM RAGHAVENDRA FINANCE PVT Ltd., so adequate information cannot collected.
As a client one will access the NSE through a server of the online brokerage and this may involve queuing delays
If one likes to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If he wants an advice on a particular stock in his portfolio he may not even be able to get that.
SOURCES OF DATA
Primary Source:
The data is collected from the soft copy that has been given by the executive of the Share Khan Ltd.
Secondary Sources:
The data is collected from company Brouchers and the theoretical data is referred from standard text books.
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INDUSTRY PROFILE
Indian financial system:
INDIAN FINANCIAL SYSTEM
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FINANCIAL MARKET:
Financial markets are helpful to provide liquidity in the system and for smooth functioning of the system. These markets are the centers that provide facilities for buying and selling of financial claims and services. The financial markets match the demands of investment with the supply of capital from various sources.
According to functional basis financial markets are classified into two types. They are:
Money markets (short term)
Capital market (long term)
According to institutional basis again classified into two types.
They are;
Organized financial market
Non- organized financial market.
The organized market comprises of official market represented by recognized institutions. Bank and government (SEBI) registered/controlled activities and intermediaries. The unorganized market is composed of indigenous bankers moneylenders individual professional and non professionals.
MONEY MARKET:
Money market is a place where we can raise short- term capital.
Again the money market is classified in to
Bank call money market.
Bill market.
Bank loan market etc. e.g.: treasury bills, commercial papers, CD’s, etc.
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CAPITAL MARKET:
Capital market is a place where we can raise long-term capital.
Again the capital market is classified in to 2 types and they are
Primary market.
Secondary market. e.g.: Shares Debentures and Loans etc.
PRIMARY MARKET:
Primary market is generally referred to the market of new issues or market for mobilization of resources by the companies and government undertakings for new projects as also for expansion modernization addition diversification and up gradation. Primary market is also referred to as new issue market primary market operations include new issue of shares by new and existing companies further and right issues to existing shareholders public offers and issue of debt instruments such as debentures bonds etc.
The primary market is regulated by the Securities and Exchange Board of India (SEBI a government regulated authority).
FUNCTIONS OF PRIMARY MARKET:
The main services of the primary market are origination underwriting and distribution. Origination deals with the origin of the new issue. Underwriting contract make the shares predictable and remove the element of uncertainty in the subscription. Distribution refers to the sale of securities to the investors.
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The following are the market intermediaries associated with the market:
1. Merchant banker/book building lead manager.
2. Registrar and transfer agent.
3. Underwriter/broker to the issue.
4. Adviser to the issue.
5. Banker to the issue.
6. Depository.
INVESTORS PROTECTION IN PRIMARY MARKETS:
To ensure healthy growth of primary market the investing public should be protected the term investor protection as a wider meaning in the primary market. The principal ingredients of investor’s protection are
Provision of all the relevant information.
Provision of accurate information.
Transparent allotment procedures without any bias.
SECONDARY MARKET:
The primary market deals with the new issues of securities. Outstanding securities are traded in the secondary market which is commonly known as stock market or stock exchange “the secondary market is a market where scrip’s are traded”. It is a market place which provides liquidity to the scrip’s issued in the primary market. Thus the growth of secondary market depends on the primary market. More the number of companies entering the primary market the greater are the
AVR & SVR COLLEGE OF ENGINEERING AND TECHNOLOGY 21 Online Trading volume of trade at the secondary market. Trading activities in the secondary market are done through the recognized stock exchanges which are 23 in number including over the Counter Exchange of India National Stock Exchange of India and Interconnected Stock Exchange of India.
Secondary market operations involve buying and selling of securities on the stock exchange through its members. The companies hitting the primary market are mandatory required to list their shares on one or more stock exchange in India including stock exchanges. Listing of scrip’s provides liquidity and offers on opportunity to the investors to buy or sell the scrip’s.
The following intermediaries in the secondary market:
1. Broker/member of stock exchange-buyers broking and seller broker.
2. Portfolio manager.
3. Investment advisor.
4. Share transfer agent.
5. Depository.
6. Depository participants.
DEFINITION OF STOCK EXCHANGE: “Stock exchange means anybody or individuals whether incorporated or not constituted for the purpose of assisting regulating or controlling the business of buying selling or dealing in securities.”
Stock Exchange
Stocks (shares, equity) are traded in stock exchange. India has two big stock exchanges (Bombay stock exchange - BSE and national stock exchange - NSE) and few small exchanges like Jaipur stock exchange etc.
Investor can trade stocks in any of the stock exchange in India.
The securities include:
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1. Shares scrip stocks bonds Debentures stock or other marketable securities of a like nature in or of any incorporated company or body corporate.
2. Government securities: and Rights or interest in securities.
HISTORY OF STOCK EXCHANGE: The only stock exchange operating in the 19th century were those of Mumbai setup in 1875 and Ahmadabad set up in 1894. These were organized as voluntary non- profit-making associations of brokers to regulate and protect their interests. Before the control on securities under the constitution in 1950 it was a state subject and the Bombay securities contracts (control) act of 1925 used to regulate trading is securities. Under this act the Mumbai stock exchange was recognized in1927 and Ahmadabad in 1937. During the war boom a number of stock exchanges were organized. Soon after it become a central subject central legislation was proposed and a committee headed by A.D. Gorwala went into the bill for securities regulation. On the basis of the committee’s recommendations and public discussion the securities contract (regulation) act become law in 1956.
FUNCTIONS OF STOCK EXCHANGE:
Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed companies they help trading and raise funds from the market savings of investors flow into public loans and to joint-stock enterprises because of this ready marketability and unequalled facility for transfer of owner ship of stocks shares and securities provided by the recognized stock exchange as a result over the hundred and twenty years during which the stock exchanges have existed in this country and through their medium the central and state government have raised crores of rupees by floating public loans municipal corporations improvement trust local
AVR & SVR COLLEGE OF ENGINEERING AND TECHNOLOGY 23 Online Trading bodies and state finance corporation have obtained from the public their financial requirements and industry trade and commerce- the backbone of the country’s economy-have secured capital of crores or rupees through the issue of stocks shares and debentures for financing their day-to-day actives organizing new ventures and completing projects of expansion diversification and modernization. By obtaining the listing and trading facilities public investment is increased and companies were able to raise more funds. The quoted companies with wide public interest have enjoyed some benefits and assets valuation has become easier for tax and other purposes
Stock Broker
Investor requires a Stock Broker to buy and sell shares in stock exchanges (BSE, NSE etc.). Stock Broker is registered member of stock exchange. A stock broker can register to one or more stock exchanges.
Only stock brokers can directly buy and sell shares in Stock Market. An investor must contact a stock broker to trade stocks. Broker charge commissions (brokerages) for their service. Brokerage is usually a percent of total amount of trade and varies from broker to broker.
Stock Trading
Traditionally stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading.
Online Stock Market Trading is an internet based stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker.
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In this case these Online Stock Trading companies are stock broker for the investor. They are registered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades in BSE and NSE.
There are two different type of trading environments available for online equity trading. Installable software based Stock Trading Terminals. These trading environments require software to be installed on investors’ computer. These software are provided by the stock broker. This software’s require high speed internet connection. These kind of trading terminals are used by high volume intraday equity traders.
Below is the detail comparison of major Online Stock Market Trading websites in India. This comparison is to help investor to take calculated decision while searching for new trading portal.
• ICICI Direct
• Share khan
• India bulls
• 5Paisa
• Motilal Oswal Securities
• HDFC Securities
• Reliance Money
• IDBI Paisa Builder
• Kotak Securities
• HSBC Invest Direct
BOMBAY STOCK EXCHANGE (BSE):
This stock exchange, Mumbai, popularly known as “BSE” was established in 1857 as “The Native share and stock brokers association” as a voluntary non-profit making associations. It has an evolved over the years into its present status as the premier stock exchange in the country. It may be not that the stock exchanges the
AVR & SVR COLLEGE OF ENGINEERING AND TECHNOLOGY 25 Online Trading oldest one in Asia, even than the Tokyo Stock Exchange, which was founded in 1878.
The exchange, while providing an efficient and transparent market for trading in securities, upholds the interests of the investors and ensures of their grievances, whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor’s education programmers.
A governing board comprising of 9 elected directors 2 SEBI nominees, 7 public representative and executive directors, 2 SEBI nominees, 7 public representative and executive director is the apex body, which decides the policies and regulates the affairs of the exchange.
The executive director as the chief executive officer is responsible for the day to day administration of the exchange. The average daily turnover of the exchange during the year 2000-01 (April – March) was`. 3.984.16 crores and average number of daily trades`. 5.69 Lakhs.
The Ban on all deferral products like BLESS AND ALBM in the Indian capital Markets by SEBI with effect from 2001, abolition period settlements and introduction of compulsory ruling settlements in all scripts traded on the exchanges with effect from December 31, 2001 etc, have adversely impacted the liquidity and consequently there is a considerable decline in the daily turnover at the exchange. The average daily turnover of the exchange present scenario is 110363 (Lakhs) and number of average daily trade 1057 (Lakhs).
BSE INDICATES:
In order to enable the market participants, etc., to track the various ups and downs in the Indian stock market, the exchange have introduced in 1986 and equity stock index called BSE – SENSEX that subsequent became the barometer if the moments of the share prices in the Indian stock market. It is a “Market capitalization weighted” index of 30 companies. The base year of Sensex is 1978-79 .The Sensex is widely reported in both domestic and international market through print as well as electronic media.
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Sensex is calculated using a market capitalization weighted method. As per this methodology, the level of the index reflects the total market value of all 3 component stocks from different industries related to particular base period. The total market value of the company is determined by multiplying the price of its stock by the number of shares outstanding. Statisticians call an index of a set of combined variables (such as price and number of shares) a composite index. It is much easier to graph a chart based on indexed values than one based on actual values worked over majority of the well-known indices are constructed using “Market capitalization weighted method”.
In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 30 companies in the index by a number called the index Devisor. The devisor is the only link to the original base period value of the sensex.
The divisor keeps the index comparable over a period of time and if the reference point for the entire index maintains adjustments. SENSEX is widely used to describe the mood in the Indian Stock Markets.
Base year average is changed as per the formula new base year average =old base year average(new market value/old market value).
NATIONAL STOCK EXCHANGE (NSE):
The NSE was incorporated in November 1992 with an equity capital of `. 25 crores. The International Securities Consultancy (ICS) of Hong Kong has helped in setting up NSE. ISE has prepared detailed business plans and installation of hardware and software systems. The promotions for NSE were financial institutions, insurances companies, banks and SEBI Capital Market Ltd.
It has been set up to strengthen the move towards professionalizing of the capital market was well as provide nationwide securities facilities to investors.
NSE is not an exchange in the traditional sense where brokers own and manage the exchange. A two tier administrative set up involving a company board and a governing board envisaged.
NSE is a national market for shares PSU bonds, debentures and government securities since infrastructure and trading facilities are provided.
NSE – MIDCAP INDEX:
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The NSE – midcap index or the junior Nifty comprises 50 that represents 21 abroad industry groups and will provide proper representation of the midcap segment of the Indian Capital Market. All stocks in the index should have market capitalization of greater than `. 200 crores and should have traded 85% of the trading says at the impact cost less 2.5%
The base period for the index is November 4th, 1996, which signifies two years for completion of operation of the capital market segment of the operations. The base value of the index has been set at 1000. At present there are 24 stock exchanges recognized under the securities contract (regulations) Act, 1956. They are ;
NAME OF THE STOCK EXCHANGE YEAR
Bombay Stock Exchange 1875 Ahmadabad share & stock brokers association 1957 Calcutta Stock Exchange Association Ltd 1957 Delhi Stock Exchange Ltd 1957 Madras Stock Exchange Association Ltd 1957 Indore Stock brokers Association Ltd 1958 Bangalore Stock Exchange 1963 Hyderabad Stock Exchange 1943 Cochin Stock Exchange 1978 Pune Stock Exchange 1982 UP Stock Exchange 1982 Ludhiana Stock Exchange 1983 Jaipur Stock Exchange Ltd 1983-84 Gauhati Stock Exchange Ltd 1984 Mangalore Stock Exchange Ltd 1985 Maghad Stock Exchange Ltd, Patna 1986 Bhubaneswar Stock Exchange Association Ltd 1989 Over the counter Exchange India, Bombay 1989 Saurastra Kuth Stock Exchange Ltd 1990 Vadodard Stock Exchange Ltd 1991
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Coimbatore Stock Exchange Ltd 1991 The Meerut Stock Exchange 1991 National Stock Exchange 1991 Integrated Stock Exchange 1999
REGULATORY FRAME WORK OF STOCK EXCHANGE
A comprehensive legal framework was provided by the “Securities Contract Regulation Act, 1956” and “Securities Exchange Board of India 1952”. Three tier regulatory structure comprising
a. Ministry of finance
b. The Securities And Exchange Board of India
c. Governing body
Members of the stock exchange:
The securities contract regulation act 1956 has provided uniform regulation for the admission of members in the stock exchanges. The qualifications for becoming a member of a recognized stock exchange are given below:
o The minimum age prescribed for the members is 21 years.
o He should be an Indian citizen.
o He should be neither a bankrupt nor compound with the creditors.
o He should not be convicted for fraud or dishonesty.
o He should not be engaged in any other business connected with a company.
o He should not be a defaulter of any other stock exchange.
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o The minimum required education is a pass in twelveth standard examination.
SECURITIES A ND EXCH A NGE BOARD OF INDIA (SEBI)
The securities and exchange board of India was constituted in 1988 under a resolution of government of India. It was later made statutory body by the SEBI act 1992.according to this act, the SEBI shall constitute of a chairman and four other members appointed by the central government.
With the coming into effect of the securities and exchange board of India act, 1992 some of the powers and functions exercised by the central government, in respect of the regulation of stock exchange were transferred to the SEBI.
OBJECTIVES AND FUNCTIONS OF SEBI
a. To protect the interest of investors in securities.
b. Regulating the business in stock exchanges and any other securities market.
c. Registering and regulating the working of intermediaries associated with securities market as well as working of mutual funds.
d. Promoting and regulating self-regulatory organizations.
e. Prohibiting insider trading in securities.
f. Regulating substantial acquisition of shares and takeover of companies.
g. Performing such functions and exercising such powers under the provisions of capital issues (control) act, 1947and the securities to it by the central government.
SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCH A NGES)
1. Board of Directors of Stock Exchange has to be reconstituted so as to include non-members, public representatives and government representatives to the extent of 50% of total number of members.
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2. Capital adequacy norms have been laid down for the members of various stock exchanges depending upon their turnover of trade and other factors.
3. All recognized stock exchanges will have to inform about transactions within 24hrs.
TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the investors. The orders are of different types.
Limit orders : Orders are limited by a fixed price. E.g. ‘buy Reliance Petroleum at Rs.50.’Here, the order has clearly indicated the price at which it has to be bought and the investor is not willing to give more than `.50.
Best rate order : Here, the buyer or seller gives the freedom to the broker to execute the order at the best possible rate quoted on the particular date for buying. It may be lowest rate for buying and highest rate for selling.
Discretionary order: The investor gives the range of price for purchase and sale. The broker can use his discretion to buy within the specified limit. Generally the approximation price is fixed. The order stands as this “buy BRC 100 shares around `.40”.
Stop loss order : The orders are given to limit the loss due to unfavorable price movement in the market. A particular limit is given for waiting. If the price falls below the limit, the broker is authorized to sell the shares to prevent further loss. E.g. Sell BRC limited at `.24, stop loss at `.22.
Buying and selling shares : To buy and sell the shares the investor has to locate register broker or sub broker who render prompt and efficient service to him. The order to buy or sell specifying the number of shares of the company of investors’ choice is placed with the broker. The order may be of any type. After receiving the order the broker tries to execute the order in his computer terminal. Once matching order is found, the order is executed. The
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broker then delivers the contract note to the investor. It gives the details regarding the name of the company, number of shares bought, price, brokerage, and the date of delivery of share. In this physical trading form, once the broker gets the share certificate through the clearing houses he delivers the share certificate along with transfer deed to the investor. The investor has to fill the transfer deed and stamp it. The stamp duty is one of the percentage considerations, the investor should lodge the share certificate and transfer deed to the register or transfer agent of the company. If it is bought in the DEMAT form, the broker has to give a matching instruction to his depository participant to transfer shares bought to the investors account. The investor should be account holder in any of the depository participant. In the case of sale of shares on receiving payment from the purchasing broker, the broker effects the payment to the investor.
Sharegroups:
The scrips traded on the BSE have been classifiedinto ‘A’,’B1’,’B2’,’C’,’F’ and ‘Z’ groups. The ‘A’ group represents those, which are in the carry forward system. The ‘F’ group represents the debt market segment (fixed income securities). The Z group scrips are of the blacklisted companies. The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’&’B2’ groups.
ROLLING SETTLEMENT SYSTEM:
Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or 5days) after the trading day. The shares bought and sold are paid in for n days after the trading day of the particular transaction. Share settlement is likely to be completed much sooner after the transaction than under the fixed settlement system.
The rolling settlement system is noted by T+N i.e. the settlement period is n days after the trading day. A rolling period which offers a large number of days negates the advantages of the system. Generally longer settlement periods are shortened gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis of the criteria that they were in compulsory demat list and had daily turnover of about Rs.1crore or more. Then it was extended to “A” stocks in Modified
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Carry Forward Scheme, Automated Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme (BELSS) with effect from Dec 31, 2001.
SEBI has introduced T+5 rolling settlement in equity market from July 2001 and subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement experience it was further reduced to T+2 to reduce the risk in the market and to protect the interest of the investors from 1st April 2003.
Activities on T+1 : Conformation of the institutional trades by the custodian is sent to the stock exchange by 11.00 am. A provision of an exception window would be available for late confirmation. The time limit and the additional changes for the exception window are dedicated by the exchange.
The exchanges/clearing house/ clearing corporation would process and download the obligation files to the broker’s terminals late by 1.30 p.m on T+1. Depository participants accept the instructions for pay in securities by investors in physical form upto 4 p.m and in electronic form upto 6 p.m. the depositories accept from other DPs till 8p.m for same day processing.
Activities on T+2: The depository permits the download of the paying in files of securities and funds till 10.30 a.m on T+2 from the brokers’ pool accounts. The depository processes the pay in requests and transfers the consolidated pay in files to clearing House/clearing Corporation by 11.00am/on T+2. The exchange/clearing house/clearing corporation executes the pay-out of securities and funds latest by 1.30 p.m on T+2 to the depositories and clearing banks. In the demat mode net basis settlement is allowed. The buy and sale positions in the same scrip can be settled and net quantity has to be settled.
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COMPANY PROFILE
ABOUT SHAREKHAN LIMITED
Share khan Ltd. is one of the leading retail stock broking house of SSKI Group which is running successfully since 1922 in the country Share khan Ltd (Formally SSKI Investors Services Ltd.) was promoted by Mr. Shripal. S Morkharia and Mr. Shreyas. S Morkhia. It is currently India’s largest broking house. It is a member of the stock exchange, Mumbai. It is the retail broking arm of the Mumbai-based SSKI Group, which has over eight decades of experience in the stock broking business. Share khan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc.
The firm’s online trading and investment site - www.sharekhan.com - was launched on Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers across the country. Known for its jargon-free, investor friendly language and high quality 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 objective has been to let customers make informed decisions and to simplify the process of investing in stocks.
On April 17, 2002 Share khanlaunchedSpeedTrade,a net-based executable application that emulates the broker terminals along with host of other information relevant to the Day 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 Speed Trade has become a de facto standard for the Day Trading community over the net.
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Share khan has today a pan-India presence with over 1,529 outlets serving 9,50,000 customers across 450 cities. It also has international presence through its branches in the UAE and Oman Share khan’s ground network includes over 1288 centers in 325 cities in India which provide a host of trading related services.
Share khan has set category leadership through pioneering initiatives like Trade Tiger, an Internet-based executable application that emulates a broker terminal besides providing information and tools relevant to day traders. Its second initiative, First Step, is targeted at empowering the first-time investors. Share khan has also set its global footprint through the “India First” initiative, a series of seminars conducted by Share khan to help the non-resident Indians participate and benefit from the huge investment opportunities in India.
Share khan 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 Sun Microsystems,Oracle,Microsoft,CambridgeTechnologie Its strengths lies in its investment research capabilities.
With a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of the market in each of these segments. SSKI’s institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK and US. Foreign Institutional Investors generate about 65% of the organization’s revenue, with a daily turnover of over US$ 2 million. The Corporate Finance section has a list of very prestigious clients and has many ‘firsts’ to its credit, in terms of the size of deal, sector tapped etc. The group has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shopper’s Stop.
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PROFILE OF THE COMPANY
Name of the company : Share khan ltd.
Year of Establishment : 1925
Headquarter : Share khan SSKI
A-206 Phoenix House
Phoenix Mills Compound, Lower Parel
Mumbai - Maharashtra, INDIA- 400013
Branch : Home plaza,second floor,
Opp Mahindra show room,
3-6-384/2,NRSF,Himayat Nagar,
Hyderabad-500 029.
Nature of Business : Service Provider
Services : Depository Services, Online Services and
Technical Research.
Number of Employees : Over 3500
Website : ww w .sharekhan.com
Punch line : Your Guide to The Financial Jungle.
Vision
To be the best retail brokering Brand in the retail business of stock market. Mission
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To educate and empower the individual investor to make better investment decisions through quality advice and superior service.
Share khan is infact-
• Among the top 3 branded retail service providers
• No. 1 player in online business
• Largest network of branded broking outlets in the country serving more than
7, 00,000 clients.
Nature of the Business Carried : Share khan is a broking company. The company offers a complete range of pre trade trade and post trade service on the BSE (Bombay Stock Exchange) and the NSE (National Stock Exchange). Whether the client come in to the company’s conventionally officers and trade in a dedicated ambience or issue instructions over the phone, our highly trained team and sophisticated equipment ensure smooth transactions and prompt service
Investment Advisory Service Facilitation Services to Retail Investors, Corporate. Depository Services
Investment options includes:
i. Online trading (Includes equity, derivatives) ii. Commodities trading iii. Mutual Funds iv. Portfolio management Services
Share khan Branches are conceptualized to be place where investors can come in contact with investment opportunities in an atmosphere of convenience and comfort. Share khan services are available through our network of 510 Share Shops spanning 170 major towns and cities in the country.
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Professional seeks to educate clients and end their confusion by custom an Investment Plan according to the needs of clients and is also today a part of company’s induction program advising employees on how to plan their investments.
Quality objectives • Objectives represent, what needs to be accomplished in order to reach the goals. • To increase the customer base of investors to invest in all kind of securities. • Share khan has one among the largest network of outlets of the either trading firms with180 outlets. • To retain the existing consumers with research backed advice and personalized care the needs of the consumer.
ADVANTAGES OF SHAREKHAN LIMITED :
Experience
SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money broker's poll held recently, SSKI won the 'India's Best Broking House for 2004' award. Ever since it launched Share khan as its retail broking division in February 2000, it has been providing institutional-level research and broking services to individual investors.
Technology
With its online trading account one can buy and sell shares in an instant from any PC with an internet connection. One can get access to its powerful online trading tools that will help him take complete control over his investment in shares.
Accessibility
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Share khan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for investors. These services are accessible through its centers across the country over the internet (through the website ww w .sharekhan.com) as well as over the Voice Tool.
Knowledge
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 Share khan limited’s content-rich portal. One can also get a useful set of knowledge-based tools that will empower him to take informed decisions.
Convenience
One can call its Dial-N-Trade number to get investment advice and execute his transactions. Share khan ltd. have a dedicated call-centre to provide this service via a Toll Free Number 1800 - 22 - 7500 & 1800 - 22 - 7050 from anywhere in India.
Customer Service
Share khan limited’s customer service team will assist one for any help that one may require relating to transactions, billing, demat and other queries. Its customer service can be contacted via a toll-free number, email or live chat on www.sha rekhan.com .
Investment Advice
Share khan has dedicated research teams of more than 30 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 SMS on their mobile phone.
SHAREKH A N LIMITED’S MANAGEMENT TEAM
Dinesh Murikya : Owner of the company
Tarun Shah : CEO of the company
Shankar Vailaya : Director (Operations)
Jaideep Arora : Director (Products & Technology)
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Pathik Gandotra : Head of Research
Rishi Kohli : Vice President of Equity Derivatives
Nikhil Vora : Vice President of Research
PRODUCTS A ND SERVICES OF SH A REKH A N LIMITED:
The different types of products and services offered by Share khan Ltd. are as follows:
1. Equity and derivatives trading
2. Depository services
3. Online services
4. Commodities trading
5. Dial-n-trade
6. Portfolio management
7. Share shops
8. Fundamental research
9. Technical research
TYPES OF A CCOUNT IN SH A REKH A N LIMITED
Share khan offers three types of trading account for its clients
1. Classic Account (which include a feature known as Fast Trade Advanced Classic Account for the online users).
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2. Speed Trade Account.
3. Trade Tiger Account.
CLASSIC ACCOUNT
This is a User Friendly Product which allows the client to trade through website www.sharekhan.com and is suitable for the retail investor who is risk-averse and hence prefers to invest in stocks or who does not trade too frequently. This account allow investors to buy and sell stocks online along with the following features like multiple watch lists, Integrated Banking, Demat and digital contracts, Real-time portfolio tracking with price alerts and Instant credit & transfer.
This account comes with the following features:
1. Online trading account for investing in Equities and Derivatives b. Free trading through Phone (Dial-n-Trade).
2. Two dedicated numbers(1800-22-7500 and 39707500) for placing the orders using cell phones or landline phones.
3. Automatic funds transfer with phone banking facilities (for Citibank and HDFC bank customers).
4. Simple and Secure Interactive Voice Response based system for authentication.
get the trusted, professional advice of Share khan limited’s Tele Brokers
5. After hours order placement facility between 8.00 am and 9.30 am c. Integration of: Online Trading +Saving Bank + Demat Account.
6. Instant cash transfer facility against purchase & sale of shares i e IPO investments.
7. Instant order and trade confirmations by e-mail. g. Single screen interface for cash and derivatives.
SPEED TRADE ACCOUNT
This is an internet-based software application, which enables one to buy and sell in an instant. It is ideal for active traders and jobbers who transact frequently
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during day’s session to capitalize on intra-day price movement. This account comes with the following features:
• Instant order Execution and Confirmation.
• Single screen trading terminal for NSE Cash, NSE F&O & BSE. • Technical Studies & Multiple Charting & Real-time streaming quotes, tic-by- tic charts. • Market summary (Cost traded scrip, highest value etc.) • Back-up facility to place trades on Direct Phone lines & Live market debts.
CHARGE STRUCTURE:
Fee structure for General Individual:
Charge Classic Account Speed Trade Account
Account Opening ` 750/- `. 1000/-
Brokerage Intra-day – 0.10 % Intra-day - 0.10%
Delivery - 0.50 % Delivery - 0.50%
DEPOSITORY CHARGES:
Account Opening Charges ` . NIL
Annual Maintenance Charges ` NIL first year.`300/= p.a. from second
calendar year onward
Trade Tiger Account:
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This is an internet based software application , which enables one to buy an d sell in an instant. It is ideal for active traders and jobbers who transact
frequently during days’ session to capitalize on intraday price movement.
Advantages of Trade TigerAccount :
1. Multiple Exchange - Internatinational Market Watch
2. 24 Hour Market Access - One Click Filter
3. Unlimited Charts
4. Create your own technical rules for trading - A single Trading Screen for all segments -Live Streaming Quotes - Access all Trading Calls
5. Advanced Charting features
A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX, NCDEX, Mutual Funds, IPOs.
Multiple Market Watch available on Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with various Studies.
Graph Studies include Average, Band- Bollinger, Know SureThing, MACD, RSI, etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template, that is, saving the layout for future use User-defined alert settings on an input Stock Price trigger
Tools available to guage market such as Tick Query, Ticker, Market Summary, Action Watch, Option Premium Calculator, Span Calculator
Shortcut key for FAST access to order placements & reports
Online fund transfer activated with 12 Banks
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TO OPEN AN A CCOUNT WITH SHAREKH A N LIMITED
Following are the ways to open an account with Share khan Ltd. One need to call them at phone number provided below and asks that he want to open an account with them. a. One can call on the Toll Free Number: 1-800-22-7500 to speak to a Customer Service executive b. Or if one stays in Mumbai, he can call on 022-66621111
One can visit any one of Share khan Limited’s nearest branches. Share khan has a huge network all over India (640 centers in 280 cities). One can also log on to “http://sharekhan.com/Locateus.aspx” link to find out the nearest branch.
One can also visit the site www.sharekhan.com and click on the option “Open an Account” to fill a small query form which will ask the individual to give details regarding his name, city he lives in, his email address, phone number, pin code of the city, his nearest Sharekhan Ltd. shop and his preferences regarding the type of account he wants.
These information are compiled in the headquarter of the company that is in Mumbai from where it is distributed through out the country’s branches in the form of leads on the basis of cities and nearest share shops. After that the executives of the respective branches contact the prospective clients over phone or through email and give them information regarding the various types of accounts and the documents they need to open an account and then fix appointment with the prospective clients to give them demonstration and making them undergo the formalities to open the account. After that the forms that has collected from the clients, is scrutinized in the branch and then it is sent to Mumbai for further processing where after a few days the clients’ account are generated and activated. After the accounts are activated, a Welcome Kit is dispatched from Mumbai to the clients’ address mentioned in the documents provided by them. As soon as the clients receive the Welcome Kit, which contains the clients’ Trading ID and Trading Password, they can start trading and investing in shares.
First step:
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The Share khan First Step program is a special , never-been-done-before program created by us for new investors like you to the stock market. Despite being a beginner with a small amount to invest, you will still be able to benefit from our experience, technology-based tools and research. In fact, we have created special versions of all of these for you - clear and simple information tools for your understanding, demonstrations to help you get started and research re-written in easier language. See how our friendly assistance empowers you to become a 'Stock Market ka Sher'.
Generally the process of opening an account follows the following steps
LEAD MANAGEMENT SYSTEM (LMS) / REFERENCE
CONTACT THE PERSON OVER PHONE OR THROUGH EMAI
FIXING AN APPOINTMENT WITH THE PERSON
GIVIN G DEMO NST RATIO N YES NO
DOCUMENTATION
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FILLING UP THE FORM
SUBMISSION OF THE FORM
LOGIN OF THE FORM
SENDING ACCOUNT OPENING KIT TO THE CLIENT
TRADING
Apart from two passport size photographs, one needs to provide with the following documents in order to open an account with Share khan Limited.:
• Photocopy of the clients’ PAN Card which should be duly attached
• Photo copy of any of the following documents duly attached which will serve as correspondence address proof: a. Passport (valid) b. Voter’s ID Card c. Ration Card d. Driving License (valid) e. Electricity Bill (should be latest and should be in the name of the client) f. Telephone Bill (should be latest and should be in the name of the client) g. Flat Maintenance Bill (should be latest and should be in the name of the client) h. Insurance Policy (should be latest and should be in the name of the client) i. Lease or Rent Agreement. j. Saving Bank Statement (should be latest)
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Two cheques drawn in favour of Share khan Limited, one for the Account Opening Fees and the other for the Margin Money (the minimum margin money is Rs. 5000). A cancelled cheque should be given by the client if he provides Saving Bank Statement as a proof for correspondence address.
NOTE: Only Saving Bank Account cheques are accepted for the purpose of Opening an account.
TRADING AND SETTLEMENT AT SHARE KHAN
The NSE first introduced online trading in India. The Online trading system imparted a greater level of transparency and investors preferred exchanges that offered Online trading because of the following factors:
The ease of operation from the view of the both members and the investors.
Increase in the confidence of the investors because of higher level of transparency.
Facilities better monitoring of the market by the exchange.
The best price achieved in buying and selling.
All these resulted in ever-increasing volumes on the exchanges offering the online trading.
TRADING PROCEDURE AT SHARE KHAN STOCK BROKING
Share Khan deals in buying and selling equity shares and debentures on the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The- Counter Exchange of India (OTCEI). Share Khan is provided with a
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The member or broker sitting in his office can send the quotations, orders, negotiations, deals, in-house deals, auction orders etc., through the computer. The Central trading system (CTS) will accept these orders and send it for match. If there is any mistake in the order, CTS will reject the orders and send respective error message to the member concern. All these operations are in built. The main objective of CTS is to monitor the Stock Exchanges operations.
Order placed by the broker will be sent for a match and if the match is found suitable, the transaction will be executed. Otherwise, the order will be deleted automatically after completion of trading time. The carry forward transactions (Good Till cancellation) are forwarded to the next day. Even if the match is not found with in the prescribed period, the order will not cancel.
TRADING SESSION
Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period. Monday to Friday is the trading period in all the stock exchanges. SEBI has stipulated that all the stock exchanges in India must have same trading period.
BROKER WORK STATION
At the broker workstation the BBO’s, the last traded price, the day‘s opening price, previous day’s closing price, highest and lowest prices, the weighted average price and total trade value will be available continuously, as the BBO for each scrip.
Other information will be available on query from the BWS. These include top gainers /losers of the day. Trader-wise, scrip wise net position, client wise net position, top scrip by the volume/value, market summary etc.
Brokers are also provided with information relating to the companies in the matter of Book closure, Dividend declarations, resolutions in board meeting, information about liquidated companies, company report etc
ORDERS
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Orders can be done one at a time or in a batch mode. The submitted order will be accepted at the CTS, after validation if it finds any invalid reason the order is return back to the BWS, with the appropriate error message. If Accepted at the CTS it will be added to the local pending order book.
The order will then be taken up for matching, if it is a buy order the system tries to find a sell order, which fits the requirement of the buy order, when such match is found a trade gets executed. Each trade involves two brokers and respective traders who sent the order. Both these traders are informed of the trade being executed at their respective BWS.
At the BWS the trade is added to the local trade book. Orders sent by the brokers are two types:
1) Good for the day (GFD)
2) Good till cancellation(GTC)
Good for the day
This is also called as “market order”. For an order if the member selects the deal as good for the day, the order is treated as market order. If a “best bid” founds match with “best order” then the transaction gets executed. If the match is not found then after trade time the order gets cancelled that day. Next day he has to place a new order.
For example if a member wants to purchase 1000 shares of satyam info @ 400 each through Good for Day order. If the correct match is not found, order gets cancelled automatically and new quotation has to be placed the next day.
Good till cancellation
This order is forwarded to the last trading day of that settlement period. This is also called as carry forward order like GFD; broker has to select the option of GTC for the order. If the order finds match with in the trading settlement period, the order is executed. If no match is found, the order is cancelled on the last day of settlement period. This order is not carried forward to the next settlement period.
For example, if a member a place purchase order of 500 shares of SBI @ 690 per share and selects the order as GTC and place an order. If the match is not
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SETTLEMENT OF TR A NS A CTIONS
Clearing of transaction in the form of shares and cash is called settlement. Buyers will take the delivery of shares through the depository participants like SHARE KHAN and others.
Finally, the settlement is made by means of delivering the share certificates along with the transfer deeds. The transferor (or the seller) duly signed transfer deed. It bears a stamp of the selling broker. The buyer then fills up the certificates fills up the particulars in the transfer deed. Settlement can be done in the following way.
Spot settlement: under this method, the delivery of securities and payment for them are affected on the day of the contract itself.
Rolling settlement: Under this rolling settlement the trading is on “T+2”,basis i.e. if Monday is trading day then Wednesday is the paying day . In case on non-delivery, the securities will go for auction
DETAILS OF PROCEDURES
Delivery in : The members who are in pay-out position delivers share certificates in to clearing house within the settlement period along with the delivery Chelan filled in with the details of share certificates which has folio numbers or distinctive numbers etc.
Delivery out: The buyer of shares who made pay in position will take delivery of shares from the clearing house.
Pay-in: The member who is in paying position shall pay for value of shares with in the trading settlement period (T+2).
Payout: The cheques paid in the clearinghouse will be paid to members who are in paying position.
All disputes arising between members regarding non-deliveries, non- payments, good and bad deliveries pertaining to the settlement will be settled by the settlement committee of the exchange.
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RESE A RCH SECTION IN SHAREKH A N LIMITED
Share khan Limited has its own in-house Research Organization which is known as Value line. It comprises a team of experts who constantly keep an eye on the share market and do research on the various aspects of the share market. Generally the research is based on the Fundamentals and Technical analysis of different companies and also taking into account various factors relating to the economy.
Share khan Limited’s research on the volatile market has been found accurate most of the time. Share khan's trading calls in the month of November 2007 has given 89% strike rate.
Out of 37 trading calls given by Share khan in the month of November 2007, 33 hit the profit target. These exclusive trading picks come only to Share khan Online Trading Customer and are based on in-depth technical analysis.
As a customer of Share khan Limited, one receives daily 5-6 Research Reports on their emails which they can use as tips for investing in the market. These reports are named as Pre-Market Report, Eagle Eye, High Noon, Investors Eye, Daring Derivatives and Post-Market Report. Apart from these, Share khan Limited issues a monthly subscription by the name of Value line which is easily available in the market
Future Plans and prospectus:
2, 00,000 plus retail customers being serviced through centralized call centers /web solutions Branches / Semi branches servicing affluent / aggressive traders through high skill financial advisor. 250 independent investment managers/ franchisee servicing 50,000 highly valued clients New initiatives Portfolio management Services and commodities trading
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AWARDS AND ACHIEVEMENTS
SSKI has been voted as the Top Domestic Brokerage House in the research category, twice by Euro money Survey .
Share khan Limited won the CNBC AWARD for the year 2004 as the most preferred stock broker in India.
Rated among the top 20 wired companies along with Reliance, Infosys, etc by ‘Business Today’, January 2004 edition.
Awarded ‘Top Domestic Brokerage House’ four times by Euro money and Asia money.
Pioneers of online trading in India amongst the top 3 online trading websites from India. Most preferred financial destination amongst online broking customers.
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Winners of “Best Financial Website” award for the year 2005
SWOT ANALYSIS
Strengths
Strong credibility among investors because of its heritage.
Excellent reputation among the business society.
Capability of providing superior customer service.
Quality research team.
Easier access to the customer due to largest ground network of 280 branded share shops in 120 cities.
Abundant information about economy and companies.
Ability to attract and retain superior and quality personnel.
Highly sophisticated infrastructure.
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Efficient research and analysis team, which by interpreting the economy and company’s performance accurately is enhancing the profitability of the clientele.
Weaknesses
Limited customer appeal as the company product line does not include mutual funds which is increasingly becoming a preferred customer investment option.
Inadequate product awareness among the retail investors.
Limited customer appeal as the company does not have access to the BSE online space.
Brand awareness is low in the financial market.
Promotional activities conducted by the company are not at par with the other firms.
Opportunities
Hyderabad covers only 2% of investors which gives huge potential for the market penetration.
Bullish phase of the market attracts investing public.
Access to the BSE online space for the retail investors creates opportunity to increase clientele base.
Awareness campaigns about online trading create new market.
Threats
Availability of Unit Linked Insurance Policies (ULIP’s) and mutual funds in the market.
Threat of entry is high in this industry as the manpower required is less and capital requirement is medium.
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DATA ANALYSIS HAS BEEN DONE ON THE MAJOR PLAYERS IN ONLINE TRADING
The major players in online trading
1) SHAREKHAN.COM
2) 5PAISA.COM
3) KOTAKSTREET.COM
4) INDIABULLS.COM
5) ICICIDIRECT.COM
6) HDFCSEC.COM
POLL RESULTS: BROKER PREFERENCE
Company Points Preference
5paise 119 16.30%
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Sharekhan 194 26.58%
ICICI Direct 192 26.30%
HDFC 46 6.30%
India Bulls 120 16.44%
Kotak 59 8.08%
Interpretation:
1. Here the poll results indicate that the 5 major online trading companies have occupied some percent of the stock market.
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2. 5paise has got 119 points where as India bulls got 121 points, here there is tough competion between these companies.
3. ICICI direct has got 192 points where as Share khan has got 194, so the leading player is Share khan.
4. HDFC, Kotak,and others had got 46,38,59,116 so on
5. Finally the top no:1 retail leading player is Share khan with highest points ie.,194
Company Background:
HDFC Securities Ltd is promoted by the HDFC Bank, HDFC and Chase Capital Partners and their associates. Pioneers in setting up Dial-a-share service with the largest team of Tele-brokers.
Online Account Type:
HDFC Online Trading A/c: Plain Vanilla Account with focus on 3 in 1 advantage.
Pricing of HDFC Account
Account Opening: ` 750
Demat: NIL, 1st year charges included in Account Opening
Initial Margin: ` 5000/- for non HDFC Bank Customers (AQB)
Brokerage:
Trading 0.15% each side + ST
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Delivery 0.50% each side + ST
` 25 Min Brokerage per transaction
` 8 Min Brokerage per transaction
ICICI is a renowned organization in banking sector .ICICI Direct is started in March, 1995.It is a sister concern company of ICICI Brokege Ltd. It is basically deals with online trading .Its performance is very well in the field of online trading.
Account Opening: ` 750
Schemes: For short periods ` 750 is refundable against brokerage generated in a qtr. These schemes are introduced 3-4 times a year.
Demat: NIL, 1st year charges included in Account Opening Plus a facility to open
additional 4 DP’s without 1st yr AMC. Only ` 100 as linking charges per DP
Initial Margin: Nil
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Brokerage: ICICI’s brokerage rates are inclusive of Stamp duty (0.002%) for trading and 0.010% for delivery while service tax (10.2%) on BROKERAGE land turnover tax is EXTRA.
\
Company Background:
India Bulls is a retail financial services company present in 70 locations covering 62 cities. It offers a full range of financial services and products ranging from Equities to Insurance. 450 + Relationship Managers who act as personal financial advisors.
Online Account Type:
Signature Account: Plain Vanilla Account with focus on Equity Analysis. The equity analysis is a paid service even for A/c holders.
Power India bulls: Account with sophisticated trading tools, low commissions and priority access to R.M.
Pricing of IB Accounts:
Signature Account Power India Bulls
Account Opening: ` 250 Account Opening: `750
Demat: ` 200 if POA is signed Demat: `.200 if POA is signed,
No AMC for this DP No AMC for this DP
Initial Margin: NIL Initial Margins: NIL
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Brokerage: Negotiable Brokerage: Negotiable
Company Background:
Kotakstreet is the retail arm of Kotak Securities. Kotak Securities limited is a joint venture between Kotak Mahindra Bank and Goldman Sachs.
Online Account Type
. Twin Advantage / Green Channel: 2 DP’s, Limit against shares
. Free Way: Flat Rs 999 Cover Charge p.m, 0.03% per transaction
. High Trader: 6 Times Exposure Cash & Derivatives, Auto sq off 2:55
. Cash Expressway: Spot payment, additional 0.5% charges
For Kotak Fast Lane Keat Lite Keat Desktop are trading interfaces.
Keat Desktop with advanced tools comes at a charge of ` 500 p.m, Non refundable.
PRICING OF KOTAK
· Account Opening: ` 500
· Demat: ` 22.5 p.m
· Initial Margin: ` 5000(Compulsory)
· Min Margin Retainable: ` 1000
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· Brokerage Slab wise: Higher the volume, lower the brokerage.
Even older customers (on 0.25% & 0.40%) have been moved to the slab wise structure.
Company Background
India Info line was founded in 1995 and was positioned as a research firm In 2000 e-broking was started under the brand name of 5paisa.com. Apart from offering online trading in stock market the company offers mutual funds online.
It also acts as a distributor of various financial services i.e. GOI securities, Company Fixed Deposits, Insurance. Limited ground network, present in 20 cities
Online Account Types
· Investor Terminal: Investors / Students
· Trader Terminal: Day Traders / HNI’s
PRICING FOR RETAIL CLIENTS
Investor Terminal
· Account Opening: ` 500
· Demat I year: ` 250
· Initial Margin: ` 2500 (Compulsory)
· Min Margin Retainable: ` 1000
Brokerage:
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Trading 0.10% each side + ST
Delivery 0.50% each side + ST
PRICING FOR HNI CLIENTS
Trader Terminal
Account Opening: ` 500
Demat I year: ` 250
Initial Margin : ` 5000(Compulsory)
Min Margin Retainable: ` 1000
Brokerage:
Trading 0.10% each side + ST
Delivery 0.50% each side + ST
(Negotiable to 0.05% each side & 0.25%)
Account Access Charges
Monthly ` 800, adjustable against Brokerage
Yearly ` 8000, adjustable against brokerage
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Company Background
Share khan is the retail broking arm of SSKI Securities Pvt Ltd. SSKI owns 56% in Share khan, broking since 80 years
Focused on providing equity solutions to every segment
Largest ground network of 210 Branded Share shops in 90 cities
Online Account Types
• Classic Account: Investor in equities
• Speed Trade: Trader in equities & derivatives
PRICING FOR HNI CLIENTS
Speed Trade
Account Opening: Rs 1000 (Refundable against brokerage in Month + 1)
Demat I year inclusive in account opening
Initial Margin: Nil
Min Margin Retainable: NIL
Brokerage:
Trading 0.10% each side + All Taxes
Delivery 0.50% each side + All Taxes
(Negotiable based on volume)
Account Access Charges
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Monthly Rs 500, adjustable qtrly against brokerage of Rs 9000/- for qtr. No access charges for gold customers (Above 1 lac brokerage p.a)
Pricing for Retail Customers
Classic
Account Opening: `. 750
st Yr : NIL Demat 1
Initial Margin: NIL
Min Margin Retainable: NIL
Brokerage:
Trading 0.10% each side + All Taxes
Delivery 0.50% each side + All Taxes
Share khan online Trading Interfaces
The customer can choose the online trading interface that meets his requirement based on his trading habits and preferences
CLASSIC
The classic is meant for customers who Invests in Equities
SPEEDTRADE
The speed trade is meant for customers who trade in Equities
DIAL-N-TRADE – Toll Free
The DNT is a value added services meant for all customers who
Want to transact but are not online.
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DNT – TOLL FREE FERTURES
Dedicated Toll – Free number for Order placements
Automatic fund transfer with phone banking
Simple and secure IVR based system for authentication
No wait time, on entry of Phone Id & TPIN, the call is transferred
Trusted, professional advice of Tel-brokers who offer undiluted Share khan Research Inputs
After-hours order placement facility
Transfer of money using phone banking is available with Citibank only
Between 9 a.m to 9.55 am and 3.30p.m to 6 p.m
CLASSIC ACCOUNT FEATURES
Facility to integrate choice of 4 Banks/DP/Trading Account
Instant credit for shares sold from DP
Automatic pick-up of shares from linked DP for pay – in
Automatic deposit of shares into linked DP after pay-out
4 Times leverage on Margin Trades
Margin Trading available for entire marker session
Slab wise brokerage structure for delivery and margin trades, shortly
Free calls for order placement on Toll-Free
Trusted, Professional advice of Tele-brokers
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Facility to enter After Market Orders online & via Phone
CLASSIC/WEBSITE FEATURES
Daily Research newsletter (Investor Eye) Via e-mail
Access to new IPO without any paperwork
Advanced portfolio monitoring Tools
Integrated DP account with trading account
Option of linking additional 4 DP accounts to trading account
Choice of linking 4 banks to trading a/c for online payments
Cash and Derivatives trading in a single account
E-mail confirmations for all transactions
Choice of electronic/Physical contracts
SPEED TRADE EXE FEATURES
Real – time streaming quotes using 2 Marker Watches
Trade Execution in 2-3 seconds
Instant Order/trade confirmations in the same window
Hot keys similar to a Broker’s Terminal
Multiple Tic-by-Tic Intra-day charts with multiple indicators
Availability of 2 ISP & 6 Servers ensuring maximum uptime
Customized alerts based on multiple parameters
Cancel All/Square Off All Facility
Window for Top Gainers, Top Losers, and Most Active updated Live
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FINDINGS
1. Fluctuations are more in secondary market than any other market.
2. There are more speculators than investors.
3. Information plays a vital role in the secondary market.
4. Previously rolling settlement is T+5 days, now it changed to T+2 days and further it will be changing to T+1 day.
5. It was also observed that many broking houses offering internet trading allow clients to use their conventional system as well just ensure that they do not lose them and this instead of offering e-broking services they becomes service providers.
6. The number of players is increasing at a steady rate and today there are over a dozen of brokerage houses who have opted to offer net trading to their customers and prominent among them are SHARE KHAN, India bulls, kotak street, ICICI direct & HDFC.
7. The Bombay stock exchange sensex zoomed past the 7700 barrier for the first time in history to achieve new all time high of 7800 intraday trade and ended at a historic close of 7732 points.
8. The Share Khan is serving the customer with new and different types of account facility to access easily and fastly, but where as other major
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competitors are providing very limited accounts with more maintenance charges.
SUGGESTIONS
Things have changed for the better with the SHAREKHAN going on-line coupled with endeavor to stream line the whole trading system, over the last 3 to 4 years.
1. In the present scenario to compete with the competition, Broker’s would require sound infrastructure and trading as per international standards.
2. Share Khan should concentrate more on gaining the attention of investors through on line trading.
3. Due to invention of online trading there has been greater benefit to the investors as they could sell buy online, which Share Khan has to manage efficiently.
4. Share Khan has to even have access to broker’s, who have a greater scope than compared to the earlier times because of invention of online trading.
5. The concept of business has changed today, this is a service oriented industry hence the survival would require them to provide the best possible service to the client.
6. I recommend the exchange authorities to take steps to educate Investors about their rights and duties and suggest to the exchange authorities to increase the investors’ confidences.
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7. I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices.
8. The speculative pressures are responsible for the wide changes in the price, not
Attracting the genuine investors to the greater extent towards the market.
9. Necessary steps should be taken by the exchange to deal with the situations
Arising due to break down in online trading.
CONCLUSION
New and advanced technologies have breached geographical and cultural barriers, and have brought the countrywide market to doorstep.
The onset of online trading changed the traditional value proposition of trading, allowing online brokers to supply investors with rich, interactive information in real time including market updates, investment research and robust analytics. The trading of SHAREKHAN of the first day was `. 1.8 crores. The result is an integrated trading experience that combines execution with interactive analysis shown by growth of the online trading in share khan than other competitors in the stock market. On-line trading would influence the investors resulting in an increase in the business of the exchange. It has helped the brokers handling a vast amount of transactions and this can be an efficient trading, delivering, settlement system with adequate protection to investors.
Genuine investors are not at all interested in the speculative gain as their investment is based on the future profits, therefore the authorities of the exchange should be more vigilant to curb the speculation. Online trading has gained momentum of total online trading services from past 10 years in SHAREKHAN. It is the only company which is serving above 7, 00,000 clients all over the country.
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