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I, Mr. Bhavik T. Surani a student of M.B.A-SEM.IV hereby declare that the project work presented in this report is my contribution and has been carried out under the supervision of Mr.ALPESH SHAH of SHREE H.N.SHUKLA COLLEGE OF MGT. STUDIES, RAJKOT.

The objective of training undertaken is to get specialized knowledge in specialized field, which further sharpen the skill and practically in the specialization. Date:

Signature

Place: Rajkot

SURANI BHAVIK TAPULAL

It is a great pleasure for me to get golden opportunity to have summer training in financial sector like Angel Broking Ltd.In completing this project many people are involved directly and indirectly. They guide us and help in preparing project and in indirectly. They guide us and help in preparing project and in receiving practical knowledge. Among all I am very thank-full to branch manager Mr. Vijay Popat,Mr. Sameer Juneja (Business Developer) and also I thankful to all staff members of Angel Broking Ltd. For helping and guiding me in my project.Finally I thank to all my guides and my friends who helps me in my project directly or indirectly.

Date:

Surani Bhavik TapulalPlace:Rajkot

MBA-IVth sem

As a part of 4th SEM. Syllabus of MBA. I was visited Angel Broking Ltd. Company for practical training and also studied on the working of its different services and prepare report on particular topic. I felt that this unit is being run superbly by excellent management team, Research team and employees co-operation.

Itisuniversaltruththateveryworkhastwoaspects.Ineducation, we can apply this approach. In equation are thing is theoretical aspects. Management student must have practical aspects. Management students have a some practical knowledge about business. Our practical knowledge helps us to face a problem not theoreticalIt is my pleasure to present work after I had finished my training at Angel Broking Ltd. Rajkot. This training has expanded my horizon of knowledge in practical as well as theoretical which are vital for any student in management level studies. After completion of this training I come to know that when we study theory but practice it is very difficult to understand. INDEX(A) INDIAN FINANCIAL SYSTEM Indian Financial Market

Financial Market

Capital Market

Development Of Stock Market In India

Financial Instrument In India

BSE

NSE(B) ANGEL AS A DEPOSITORY PARTICIPANT

History

Branches

Mission Visions Statement

Goals And Objective

Core-Competence

Business Philosophy Problem And Opportunity

Market Summery Birds Eye View Of Different Department

Product Of The Angel

(C) RESEARCH METHODOLOGY

(D) DATA ANALYSIS

(E) TESTING THE HYPOTHESIS

(F) FINDING AND SUGGESTIONS

(G) BIBLIOGRAPHY

WHY INVEST ?If you were to open a book on economics and look up the wordinvesting,chancesarethatyouwouldfindthefollowingdefinition:Investingisbuildinguptomeetfutureconsumption demandswiththeintentionofmakingsurplusesorprofits,as theyarepopularlyknown.While the life expectancy of the average human being has increased, we are productive only between the ages of 30 to 60 years. Hence the short time span that we are able to earn money needs to provide for our future when we may not be capable of earning.

Everything being the same, We could keep away a part of our earnings every year that will come in hand when we will not be able to earn. However inflation destroys the value of what we save. A sum of 10,000 saved this year will not have the same purchasing power 10 yrs. down the line. Hence we need to preserve the purchasing power of what we save.The only way to hedge inflation is to invest in shares, debentures, bonds, gold or real estate, to earn returns from these assets that compensate for the declineinourpurchasingpower.

WHAT IS SHARE?Share or Equity represents part of an ownership of a business. So as a shareholder you own a piece of the action that happens in that business. Why would you want a piece of the action? For the rewards of course. As a shareholder you have a right over the profits generated by your business. Your company might pay out the profits generated every year as dividends or it may retain the profits to further grow them.

Theres another way you as a shareholder can make money. If your company does well, then its shares listed on the stock market become more valuable and the stock price appreciates. On the other hand, the company might perform badly. Then not only do you not get dividends but the stock price also declines. Hence investing in shares is a risky proposition.

When you invest in shares, you can expect certain returns based on the fundamentals of a business. However you have no control over it. What you have control over is managing risks associated with it.

INDUSTRY OVERVIEW

INTRODUCTIONStock exchanges to some extent play an important role as indicators, reflecting the performance of the countrys economic state of health. Stock market is a place where securities are bought and sold. It is exposed to a high degree of volatility; prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buy and sell securities on behalf of individuals and institutions for some commission.

The Securities and Exchange Board of India (SEBI) is the authorized body, which regulates the operations of stock exchanges, banks and other financial institutions. The past performances in the capital markets especially the securities scam by Hasrshad Mehta has led to tightening of the operations by SEBI. In addition the international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve, discipline and bring greater transparency in this sector, constant efforts are being made and to a certain extent improvements have been made.

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business.

In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.

HISTORY:-In a short span of 18 years since inception, The Angel Group has emerged a one of the top 5 retail stock broking houses in India, having memberships on BSE, NSE and the two leading commodity exchanges in the country i.e. NCDEX and MCX. Angel Broking Ltd is also registered as a depository participant with CDSL. It is the only 100 % retail stock broking house offering a gamut of retail centric services like Research, InvestmentAdvisory,andWealthManagementServices-Broking & Commodities to individual investor.ThegroupispromotedbyMr.DineshThakkarwho started this business as a sub-broker in 1987 with a team of 3.and today professionally managed by a team of 1871+ direct employees. It has a nation wide network comprising 12 Regional Centers, 60 branches, 2408+ registered sub brokers and business associates and 6227+ active trading terminals which cater to the requirements of 205610+ retail clients.

At Angel, It habitually generate value added features without the cost burden being passed onto the clients as we strongly believe that better understanding of clients needs and wants is our top priority. Our e-broking facility is one such effort, which gives you a platform to access state of the art trading facility at the click of a button.BRANCHESAndheri (west)Bandra(west)

Borivali(west)Chembur

FortGhatkoper(east)

Goregaon(west)Kalbadevi

Malad(west, east)Mulund(west)

Santacruz(west)Vilen parle(west)

AhemdabadAnkleshwar

Baroda Delhi

HyderabadIndore

PuneRajkot

Surat

GOALS & OBJECTIVESFive-year goals

State specific measurable objectives

State market share objectives

State revenue/profitability objectivesFinancial Plan High-level financial plan that defines financial model, pricing assumptions, and reviews yearly expected sales and profits for the next three years.

Use several slides to cover this material appropriately

Resource Requirements Technology requirements

Personnel requirements

Resource requirements

Financial, distribution, promotion, etc

External requirements

Products/services/technology required to be purchased outside company

MISSION STATEMENT

The main mission statement of angel broking ltd is to be on top in and around Rajkot and Saurashtra peninsula with the help of retail, bulk and past business within three years.

For FY 06-07 focus will be on Bulk business from existing sub-brokers of competitors by giving those competitive pricing, better connectivity and Post trading Back-up software in post centralized and direct billing era.

VISION STATEMENT

To provide best value for money to investors through innovative products trading investments strategies state of the art technology and personalized service

BUSINESS PHILOSPHY

This firm is working with philosophy that ethical values and transparency should be followed and customers interest should be given preference and deliver it what angel had promise to provide with effective cost management.

CORE COMPETENCE

Top quality research & portfolio advisory services for equities

Retail focused research products

Robust internet trading facility Commodities research & broking services

Depository services through CDSL Web based 24 x 7 back office software

Good understanding of the sub-broker and retail customer needs

Professional work culture with a personal touch

Cost- effective processes

State-of-the-art technology

Streaming quotes & real time charts for bse /nse [cash / derivatives]

Single connectivity and speedy execution of trades.

Private v-sat network for remote areas.

Online technical support & help desk.UNIQUENESS OF ANGEL

100% retail focus

BSE / NSE cash, F&O & commodities on a single screen

flexible margins/ exposure limits

Personalized services through centralized help desk and 25 branches.

cost effective technologyMARKET SUMMARY

Major players are Angel, SSKI, MOST, Karvi, Anagram, India Bull, Kotak in retail segment.

Marwadi and Ajay Natwarlal in sub-broker networking segment.

Market: Retail _SSKI and MOST are considered successful among rest mainly because of good research, aggressive pricing, Margin Funding and spacious and well ambient office.

BIRDS EYE VIEW OF DIFFERENT DEPARTMENTS

TRADING DEPARTMENT

27

PRE-TRADING

28

ACCOUNT OPENING FORM

DEPOSITS

COMPLIENTS

TRADING

32

DEALING ROOM

SAUDA PUNCHING

CONFORMATION

POST TRADING

45

CONTRACTS

BILLS

PAYIN AND PAYOUT PROCESS

BACK OFFICE DEPARTMENT

48DP DEPARTMENT

49

DEMAT ACCOUNT

ACCOUNT OPENING

DEMATERIALISATION

REMATERIALISATION

PLEDGE /HYPOTHECATION

BIRDS EYE VIEW OF DIFFERENT DEPARTMENT

IntroductionSame as all the firms angel broking ltd has different department. It had mainly three departments which are as follows:

Trading department

Back office department

DP department

TRADING DEPARTMENTIntroduction

Angel is one of the broker who is acting as wholesalers and as a broker it is the duty of it to provide service of collecting funds and securities from the investors and send it to clearing house respectively for this an account is to be opened ie trading account. According to SEBI investor has to open trading account, he can open an account in any depository but investor should not be partnership firm or proprietorship firm.

Trading department is again divided into three parts

Pre-trading

Trading

Post-tradingPre-trading

Any person who wants to open an trading accounts first of all pre-trading activity is done which include:

Account opening

Deposits

Complients

ACCOUNT OPENING PROCEDURE

I. First client will ask for opening trading account

II. The Angel will give proof details and client will have to fill up form and submit to Angel with documents required

III. Collection of form from the client

IV. Cheking of the form

V. Scanning of the form

VI. Then this form will be dispatch to H.O

VII. Angel branch will have Collection of code by email or manually

VIII. Now inform client or sub broker through phone or email about internet Id

IX. Now client will be able to trade

Closing procedure

I. First client will give written request for closing an account

II. Then this request is forwarded to H.O

III. At last H.O will inform branch that account has been closed whole procedure about closing will be done at H.O

IV. Angel will inform client about closing of account

Deposits

Retail client:

Cash market Minimum Rs 5000

Intra-day Rs 10000

Delivery Rs 5000 (rare case)

Sub broker:

For one segment 100000 cash or share (flexible)

For all five segments350000 if client wants Vast 150000

which include installation ,transportation charges etc

ComplientsPart-A Demat-(photo proof)

Pan card Driving license Election card Bank attestationPart-B (Residence proof)

Bank passbook Ration card Electric Bill Telephone Bill LIC policy Blank Cancelled cheque without signatureTrading Account proof

Following are the proof required for opening trading account.

Client master copy (DP proof)

Pan card for photo proof/form-60

Any one from Part-A

Any one from Part-B

TRADINGAfter pre-trading next comes trading which include:

Dealing room

Sauda punching

Conformation

Dealing room

Dealing room is the rooms where dealing of different securities are done which include:

NSE Cash

BSE Cash

NSE DerivativesTRADING IN NSE, BSE AND DERIVATIVES

TRADING IN NSE

15 july, 2006NSE NEAT Market

Its trading system, called National Exchange for Automated Trading (NEAT), is a state of the- art client server based application. At the server end all trading information is stored in an in-memory database to achieve minimum response time and maximum system availability for users. It has uptime record of 99.7%. For all trades entered into NEAT system, there is uniform response time of less than 1.5 seconds. NSE has been continuously undertaking capacity enhancement measures so as to effectively meet the requirements of increased users and associated trading loads. With recent up gradation of trading hardware, NSE can handle up to 6 million trades per day. NSE has also put in place NIBIS (NSE's Internet Based Information System) for on-line real-time dissemination of trading information over the Internet.

As part of its business continuity plan, NSE has established a disaster back-up site at Chennai along with its entire infrastructure, including the satellite earth station and the high-speed optical fibre link with its main site at Mumbai. This site at Chennai is a replica of the production environment at Mumbai. The transaction data is backed up on near real time basis from the main site to the disaster back-up site through the 2 mbps high-speed link to keep both the sites all the time synchronized with each other.Trading in BSE

The transaction of BSE is done in bolt software. The BSE On-Line Trading system (BOLT) is designed and developed by CMC Ltd. . . . It is a simple to use, screen-based computer trading system. You can trade on the all scripts using this system. This is a primary guide on how to use the BOLT system.

The BOLT system aims at converting the Open Outcry system of trading to a screen-based system. You, as a trader on the BOLT system can input orders.WHAT IS BOLT?BOLT is CMC's implementation of the screen-based on-line trading system for Bombay Stock Exchange? Trading Rules on the BOLT system are based on the Business Requirements Specification (BRS) provided by the BSE.

NSE DERIVATIVES

Introduction

The derivatives markets has existed for centuries as a result of the need for both users and producers of natural resources to hedge against price fluctuations in the underlying commodities. Although trading in agricultural and other commodities has been the driving force behind the development of derivatives exchanges, the demand for products based on financial instrumentssuch as bond, currencies, stocks and stock indiceshave now far outstripped that for the commodities contracts.

India has been trading derivatives contracts in silver, gold, spices, coffee, cotton and oil etc for decades in the gray market. Trading derivatives contracts in organized market was legal before Morarji Desais government banned forward contracts.

Derivatives on stocks were traded in the form of Teji and Mandi in unorganized markets. Recently futures contract in various commodities were allowed to trade on exchanges. For example, now cotton and oil futures trade in Mumbai, soybean futures trade in Bhopal, pepper futures in Kochi, coffee futures in Bangalore etc.

UNDERSTANDING OF DERIVATIVES

Derivatives are financial contracts whose value/price is dependent on the behavior of the price of one or more basic underlying assets (often simply known as the underlying). These contracts are legally binding agreements, made on the trading screen of stock exchanges, to buy or sell an asset in future. The asset can be a share, index, interest rate, bond, rupee dollar exchange rate, sugar; crude oil, soybean, cotton, coffee and what have you.

SOME EXAMPLE OF DERIVATIVES:- A very simple example of derivatives is curd, which is derivative of milk. The price of curd depends upon the price of milk which in turn depends upon the demand and supply of milk.

Derivatives are not so new to us. Nifty options and futures, Reliance futures and options, Satyam futures and options etc are all examples of derivatives. Futures and options are the most common and popular forms of derivatives.

COMPONENTS OF DERIVATIVES

Forwards

A forward contract is a customized contract between the buyer and the seller where settlement takes place on a specific date in future at a price agreed today. The rupee-dollar exchange rates is a big forward contract market in India with banks, financial institutions, corporate and exporters being the market participants.

The main features of a forward contract

The main features of a forward contract are:

It is a negotiated contract between two parties and hence exposed to counter party risk.

Eg: Trade takes place between A&B@ 100 to buy & sell x commodity .After 1 month it is trading at Rs.120. If A was he buyer he would gain Rs. 20 & B Loose Rs.20. In case B defaults you are exposed to counter party Risk i.e.you will now entitled to your gains. In case of Future, the exchange gives a counter guarantee even if the counter party defaults you will receive Rs.20/- as a gain.

Each contract is custom designed and hence unique in terms of contract size, expiration date, asset type, asset quality etc.

A contract has to be settled in delivery or cash on expiration date.

In case one of the two parties wishes to reverse a contract, he has to compulsorily go to the other party. The counter party being in a monopoly situation can command the price he wants.

Futures

Futures are exchange-traded contracts to buy or sell an asset in future at a price agreed upon today. The asset can be share, index, interest rate, bond, rupee-dollar exchange rate, sugar, crude oil, soybean, cotton, coffee etc.

Standard terms in a futures contract

The standard terms in any futures contract are: Quality of the underlying asset (not required in case of financial futures)

Expiration date

The unit of price quotation (not the price)

Minimum fluctuation in price (tick size)

Settlement style

For example: when you are dealing in March 2002 Satyam futures contract, you know that the market lot, ie the minimum quantity you can buy or sell, is 1,200 shares of Satyam, the contract would expiry on March 28, 2002, the price is quoted per share, the tick size is 5 paise per share or (1200*0.05) = Rs60 per contract/market lot, the contract would be settled in cash and the closing price in the cash market on expiry day would be the settlement price.

Theoretical way of pricing futures

The theoretical price of a futures contract is spot price of the underlying plus the cost of carry. Please note that futures are not about predicting future prices of the underlying assets. In general, Futures Price = Spot Price + Cost of Carry

The Cost of Carry is the sum of all costs incurred if a similar position is taken in cash market and carried to expiry of the futures contract less any revenue that may arise out of holding the asset. The cost typically includes interest cost in case of financial futures (insurance and storage costs are also considered in case of Commodity futures). Revenue may be in the form of dividend. Though one can calculate the theoretical price, the actual price may vary depending upon the demand and supply of the underlying asset.

Few examples how futures are priced

Suppose Reliance shares are quoting at Rs300 in the cash market. The interest rate is about 12% per annum. The cost of carry for one month would be about Rs3. As such a Reliance future contract with one-month maturity should quote at nearly Rs303. Similarly Nifty level in the cash market is about 1100. One Month Nifty future should quote at about 1111. However it has been observed on several occasions that futures quote at a discount or premium to their theoretical price, meaning below or above the theoretical price. This is due to demand-supply pressures. Every time a Stock Future trades over and above its cost of carry i.e. above Rs. The Arbitragers would step in and reduce the extra premium commanded by the future due to demand. Eg: would buy in the cash market and sell the equal amount in the future. Hence creating a risk free arbitrage, vice-versa for the discount.

OptionsOptions are contracts that give the buyers the right (but not the obligation) to buy or sell a specified quantity of certain underlying asset at a specified price on or before a specified date. On the other hand, the seller is under obligation to perform the contract (buy or sell the underlying). The underlying asset can be share, index, interest rate, bond, rupee-dollar exchange rate, sugar, crude oil, soybean, cotton, coffee etc.

The options that give their buyer the right to buy are called Call Options and those which give their buyer the right to sell are called Put Options.

Call option on a stock with an example

Suppose you have a right to buy 1,000 shares of Hindustan Lever at Rs250 per share on or before March 28, 2002. In other words you are a buyer of a call option on Hindustan Lever. The option gives you the right to buy 1,000 shares. You have the right to buy Hindustan Lever shares at Rs250 per share.

The seller of this call option who has given you the right to buy from him is under obligation to sell 1,000 shares of Hindustan Lever at Rs250 per share on or before March 28, 2002 whenever asked.Put option on a stock with an example

Suppose you have the right to sell 1,600 shares of Bharat Heavy

Electricals at Rs140 per share on or before March 28, 2002. In other words you are a buyer of a put option on Bharat Heavy Electricals. The option gives you the right to sell 1,600 shares. You have the right to sell Bharat Heavy Electricals shares at Rs140 per share. The seller of this put option who has given you the right to sell to him is under obligation to buy 1,600 shares of Bharat Heavy Electricals at Rs140 per share on or before March 28, 2002 whenever asked.Types of optionsAmerican style options

Ideally the buyer should find a seller in the market to square up his

Long position, as he would get a better value for his option. However if a seller is not available, he can exercise his option at the end of the trading session. To exercise an option, call your broker before the exercise timings specified by the exchange .To find the exercise timings; refer to the options contract specifications. I will be glad to provide such information to you.

Option contracts which can be exercised on or before the expiry are called American options. All stock option contracts are American style.

European style options

The options on Nifty and Sensex are European style optionsmeaning that buyer of these options can exercise his options only on the expiry day. He cannot exercise them before expiry of the contract as is the case with options on stocks. As such the buyer of index options needs to square up his position to get out of the market.

Process of Trading

The trading system provides tremendous facilities to the users in terms of orders that can be placed on the system.

It provides complete online market system.

The market screen at any point of time provide complete information on total order depth, five best buyers & sellers available in the market, the quantity traded during the day in that security, the high - low, the last traded price etc Immediately after the trading limit has been placed in order book investor can know the fate of the orders.

Limit orders are orders to buy & sell shares at a stated quantity & stated price.

If price quantity condition doesnt match; the limit order will not be executed.

POST-TRADING

After trading Angel has to prepare

Contracts

bills and

pay in and pay out process

Introduction

After completion of trading the further process is done through this department. Mainly it handles two processes which are known as pay in and pay out process. Further description is given below.Payout Process

When transaction is done between the two members of same DP then it is called internal payout process, but it can be known only after 4 oclock when trading gets over. It can be known that whether the transaction is done internally or not. Otherwise all the transactions are done thorough exchange only. Now if the situation arises in which one of the member of DP has sold a definite quantity of shares, but against which no one has purchased the same amount of quantity of shares belonging to same company then the whole lot will go to the exchange. On the other hand if one of the parties has bought comparatively less quantity than sold by another party then it is called shortfall of shares. Now let us understand the above concept with the help of a practical example. Suppose, one of the members of Angel in RAJKOT has sold 800 shares of Reliance LTD., but against which member of Angel at Mumbai branch has purchased only 300 shares of the same company then it is called SHORTFALL. Now, after the closing of trading activity (i.e. after 4 oclock). Exchange will prepare a shortfall report & this will be directly sent to H.O. Now, department will prepare a summary from the report. After that if DP has access then dealing will be done internally otherwise auction will be done by exchange in which exchange will purchase or sell shortfall of shares from the market. Payout process mainly indicates access amount to be paid by DP i.e. when purchase of share is comparatively higher then selling.PAY IN PROCESS:-Now if we look from the other side the same concept, then it is called PAY IN PROCESS. In this process if selling is done comparatively higher then purchase, then DP will earn i.e. DP will get relatively more amount against which it has to pay less amount. In both the transaction i.e. in paying & payout the payment will be done thorough checks only.CONTRACT NOTE:-Contract note is a confirmation of trades done on a particular day for and on behalf of a client. Angel shall issue a contract note to his client for trades (purchase/sale of securities) executed with all relevant details as required therein to be filled in (refer to SEBI circular no. SMD/SED/CIR/23321 dated June 8, 2005). A contract note shall be issued to a client within 24 hours of the execution of the contract duly signed by the TM or his authorized signatory or client attorney.

BILLS:-In the same way Angel H.O will prepare bill of clients name and this will be sended to respective branches to different places and now branches would be dispatching to their respective clients.

BACK OFFICE DEPARTMENT (account department)

Here back office department is nothing but maintain ledger and other accounts Each and every expense is mentioned under specific head only. As far as books of account are concerned mainly two statements are prepared i.e. receipt and payment account and bank reconciliation statement. Under receipt and payment statement smallest expense is being mentioned and relevant proof as been attached. Bank recosilation statement is prepared and accordingly shortfalls are fulfill every firm uses some of the software for maintaining all the accounting work and here Angel use Pradnya software where client are also given username and password so they can know their balance and ledger.DP DEPARTMENTDepository- An Organization

A depository is an organization where the securities of investors are held in electronic form. Investors open an account in the depository system through a Depository Participant (DEPOSITORY PARTICIPANTS) and hold securities in that account. There are two depositories in India which are National Securities Depository Ltd (NSDL) and Central Depository Service Ltd (CDSL).

Depository system is quite similar to a banking system. If an investor wants to utilize the service offered by a depository, he/she has to open an account with the depository through a DEPOSITORY PARTICIPANTS. This can be compare to the opening of an account with any of the branches of a bank in order to utilize the services of the bank. Holding securities in Depository is now a normal practice across the world. All depositories operate under countrys specific rules and regulations to assure safety, liquidity and right/ liability.

A depository may be defined as facilities of holding securities in electronic form that means without holding any certificates in physical form and which subsequently enable securities transaction to be process by electronic book entry system, without movement of papers.

A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by aDepository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as Beneficial owner (BO) has to open a Demat account through any DP for dematerialization of his holdings and transferring securities. Angel is having DP of cdsl where the balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the investor, at regular intervals, a statement of account which gives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of securities.BRIEF HISTORY OF DEPOSITORY PARTICIPANT IN INDIA

Although India had a vibrant capital market which is more than a century old. The paper based settlement or trades caused substantial problems like bad delivery and delayed transfer of title till recently. The enactment of depositories act in august 1996 paved the way for establishment of NATIONAL SECURITIES DEPOSITORY LIMITED, The first depository in India. This depository promoted by institution of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handle most of the trading and settlement in dematerialized form in India capital market.

NATIONAL SECURITIES DEPOSITORY LIMITED was promoted by UTI, IDBI and NSE. It started providing depository services in November 1996. Afterwards, CENTRAL DEPOSITORY SERVICE LIMITED flagged of its operation in July 1999. The CENTRAL DEPOSITORY SERVICE LIMITED was promoted by BSE jointly with leading banks such as SBI, BOI, BOB, HDFC, Standard Chartered, Union Bank of India & Centurion Bank.

Trading in dematerialization share commenced on NSE in December 1996 on BSE in December 1997. In January 1998 compulsory Demat trading for retail investor started for selected scrips. Thus scrips in compulsory demat trading included the once with highest market capitaliasation and most traded scrips. This step led to phenomenon growth of the depository environment in Indian capital market.Until CENTRAL DEPOSITORY SERVICE LIMITED commenced its operations it was a one man show handled by DEPOSITORY PARTICIPANTS of NATIONAL SECURITIES DEPOSITORY LIMITED. NATIONAL SECURITIES DEPOSITORY LIMITED had there fore cover a large chunk of market before CENTRAL DEPOSITORY SERVICE LIMITED came into picture and it has remained the largest depository till date.

Investors were opening the account in NATIONAL SECURITIES DEPOSITORY LIMITED and dematerializing there shares in the first phase. That was a booming period for the depository industry. Thus, in the initial years of the industry there was only one depository and the competition was between DEPOSITORY PARTICIPANTS only. The service was newly launch and SEBI was increasing the scope and compulsion by way of introducing more and more scrip in the least of compulsory demats trading. ROLE OF DP

A Depository is an organization firm to provide electronic depository facilities for securities traded. Securities are then held in the electronic form through the medium of DP. The NSDL is the first depository in India. The functions of NSDL are regulated by the Securities and Exchange Board of India (SEBI). The Depository is not just another custodian. The Depository can legally transfer beneficial ownership, which a custodian can not. The chief objective of a depository is to reduce settlement risk by minimizing the paperwork involved in trading, settling and transferring securities. To utilize the services offered by a depository, you must open an account with the depository through a DP. The DPs are the link between the shareholders and the company and NSDL. Banks, financial institutions, custodians and stock brokers can become DPs subject to their meeting certain requirements prescribe by NSDL and SEBI. NSDL publishes the list of DPs registered with them from time to time. The DP will provide you with a passbook or statement of account periodically to inform you on your holdings. You can even have a zero balance in your account.

BENEFITS OF OPENING AN ACCOUNT WITH CDSL SYSTEM

The unique centralized database of CDSL enables DPs in Debit/Credit securities instantaneously to the Beneficial Owners account, thereby avoiding any transit position. CDSLs unique client ID number ensures debit/credit of securities only to the intended account as the system does not accept a transaction, where account number is keyed in incorrectly. CDSL offers facilities to the Clearing House. Clearing Corporation under which securities sold/purchased by any BO on BSF can be directly delivered from/ received in the BO account, without routing them through the brokers pool account. CDSL does not collect any custody fees from DPs, thus, BOs can expect a lower charge in respect of securities held in CDSL accounts. The transaction cost for settlement of securities through CDSL as lower in most cases.ACCOUNT OPENING

To avail the various services offered by CDSL an investor or a broker or an approved intermediary has to open a CDSL depository account.

Depository accounts are of three types:

BENEFICIARY ACCOUNT:

An investor or a broker who wants to hold shares on dematerialized form and undertake scrips less trading must have depository account called Beneficiary Owner account (BO) with a DP of his choice.

CLEARING MEMBER ACCOUNT:

Member brokers of the stock exchange which have established electronic connectivity with CDSL need to open a clearing member account with a DP of his choice to clear and settle trades in the demat form. This account is meant only to transfer shares and receives shares for the clearing corporation/house and hence, the member broker does not have any ownership rights over the shares running held in such an account. INTERMIDEARY ACCOUNT:

Any person desiring to act as an approved intermediary account with any DP office choice. An intermediary account may be open with the DP only after the intermediary has obtained registration from the securities and Exchange board of India. And with the prior approval of the CDSL. This account is meant only to deposit the securities receive from the lender and lend them to the borrower under stock landing and borrowing scheme. The intermediary does not have any ownership rights over the shares held in such account

PROCEDURE FOR OPENING AN ACCOUNT

An investor who wants to hold securities in the electronic form in a depository system should open an account with a participant with following procedure

The participant will make available the relevant account opening form (depending on whether the client is a retailer investor or corporate client or clearing member) and specify the relevant list of Documents regarding references that should be submitted along with the form. It will also give a copy of the relevant agreement, to be entered with the client, in duplicate. The client will submit the duly filled in account opening form. It should also furnish such documents regarding references, as specified electronic form in by the participant, along with the account opening form. The Angel will verify that the account opening form is duly filled in. it will also verify the enclosed documents, if any. Incomplete forms will be forwarded to the client for rectification. The authorized signatories are enclosed. In case the documents are not proper, the form will rejected and intimate the client of the same, stating the reasons for doing so. The copy of the agreement submitted by the client is destroyed. If the form is in order, the Angel will accept the same and give an acknowledgment slip duly signed and stamped, to the client. The Angel will execute the agreement and give a copy of it to the client. After completion of all documentation, the Angel will send to H.O then enter the client details as mentioned in the account opening form in the DPM screen provided for the purpose. After entering client details in the system, a client account number will be generated by the DPM. H.O will send to Angel The Angel will give a copy of the report listing the client details captured in the DPM database to the client. The report will be generated by the DPM. Finally Angel dispatch, Demat account kit to the client by courier.DEMET REQUISITION FORM (DRF)

Now we know that all the transaction are done through electronic form for this investors has to convert all the physical certificates into electronic form for this process is to be made for dematerialization of the certificates.

DEMATERIALIZATION OF SECURITYAccording to the Depositories Act 1996, an investor has the option to hold shares either in physical or electronic form. Now ever, SEBI has notified that settlement of trade in almost all listed securities should the Demat mode. Although, trades up to 500 shares can settled in physical form, physical settlement is virtually not taking place for apprehension of bad delivery on account of mismatch of signatures, forgery of signature, fake certificate, etc.

Before you start trading of your security using Demat account you dematerialize the certificate. Dematerialize means converting security in electronic form from physical form.

Only those security can be Dematerialized whose owner company has registered itself for CDSL service. Shareholder can request its owned company to register itself with CDSL if it is not registered only after that security can be dematerialized

Procedure for dematerialization

If client is having physical certificate and wants to convert then request is to give to angel for dematerialization

Then this request is send to H.O

H.O will stamp this request and send this request to related R&T agent

R&T Agent will on receiving the physical documents and the electronic request verifies and checks them

The DP issues a statement of transaction to the client

Then angel will inform to client

PLEDGING

Major benefit of the Demat account and holding security in Demat form is that you can put this certificate on pledge and you will get loan on it.

If you have an demat account with RNSB bank then you will get loan either form this bank or you will get it form some other institutes. The person who applied for the loan is called ledger and one need to have Demat account with CDSL. Pledge puts once security under the pledge it can not use for other purpose. This securities pledged are moved from Free Balance to Pledged Balance account.

ORGANIZATION OVERVIEW

HISTORY OF THE BROKING INDUSTRY

OTC

MARKET

FINANCIAL

DERIVATIVE

COMMIDITY

DERIVATIVE

DERIVATIVE

MARKETS

ORGANISED

MARKET

ORGANISED

MARKET

OTC

MARKET

CASH MARKET

DERIVATIVE

MARKET

BSE

NSE

CASH MARKET

TREADING

PAGE 6 SHREE H.N.SHUKLA COLLEGE OF MGT. STUDIES, RAJKOT