Broking House

7/28/2019 Broking House

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INSTITUTE OF MANAGEMENT SCIENCE(LUCKNOW UNIVERSITY)


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A broker is an individual or party that arranges

transactions between buyers and sellers, and get

commission when the deal is executed.

A broker is an independent agent used extensively

in some industries or companies.



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TYPES OF BROKERS :-

Agri broker

Commodity brokers

Stock brokers Aircraft broker

Auto broker

Real estate broker

Insurance brokers ect.



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1. ICICI DIRECT.COM 2. INDIA INFOLINE

3. KOTAK SECURITIES LTD. 4. SHARE KHAN

5. INDIABULLS 6. MOTILAL OSWAL

7. BAJAJ CAPITAL 8. SMC

9. ANGEL BROKING 10. RELIANCE MONEY

http://www.icicidirect.com/http://www.indiainfoline.com/http://www.kotaksecurities.com/aboutus/index.htmlhttp://www.sharekhan.com/http://www.indiabulls.com/http://www.motilaloswal.com/history.htmhttp://www.bajajcapital.com/http://www.smcindiaonline.com/http://www.angelbroking.com/http://www.reliancemoney.com/index.aspxhttp://www.indiansharemarket.org/indias-top-10-stock-broking-house/http://www.indiansharemarket.org/indias-top-10-stock-broking-house/http://www.reliancemoney.com/index.aspxhttp://www.angelbroking.com/http://www.smcindiaonline.com/http://www.bajajcapital.com/http://www.motilaloswal.com/history.htmhttp://www.motilaloswal.com/history.htmhttp://www.motilaloswal.com/history.htmhttp://www.indiabulls.com/http://www.sharekhan.com/http://www.kotaksecurities.com/aboutus/index.htmlhttp://www.kotaksecurities.com/aboutus/index.htmlhttp://www.kotaksecurities.com/aboutus/index.htmlhttp://www.indiainfoline.com/http://www.indiainfoline.com/http://www.icicidirect.com/


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1. CASH MARKET

2. FUTURES MARKET OR FUTURE

EXCHANGE

INSTITUTE OF MANAGEMENTSCIENCE (LUCKNOW UNIVERSITY)


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Investors use these futures contracts to

hedge against foreign exchange risk


Hedging


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Currency futures can also be

used to speculate and, byincurring a risk, attempt to profit

from rising or falling exchange

rates.


Speculation


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A commodity broker is a firm or individual

who executes orders to buy or sell

commodity contracts on behalf of clients

and charges them a commission.

Commodity contracts include futures, options,

and similarfinancial derivatives.


Commodity broker
http://en.wikipedia.org/wiki/Commodity_markethttp://en.wikipedia.org/wiki/Commission_(remuneration)http://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Financial_derivativeshttp://en.wikipedia.org/wiki/Financial_derivativeshttp://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/Commission_(remuneration)http://en.wikipedia.org/wiki/Commodity_market


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Types of commodity brokerFirms and individuals who are often collectively

called commodity brokers include:Floor Broker/Trader: an individual who trades commoditycontracts on the floor of a commodities exchange. Whenexecuting trades on behalf of a client in exchange for acommission he is acting in the role of a broker. When

trading on behalf of his own account, or for the account ofhis employer, he is acting in the role of a trader. Floortrading is conducted in the pits of a commodity exchange.

1. Futures Commission Merchant (FCM) :a firm orindividual that solicits or accepts orders for commoditycontracts traded on an exchange and holds client funds tomargin, similar to a securities broker-dealer.



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2. Introducing Broker (IB): a firm or individual that solicits or accepts orders

for commodity contracts traded on an exchange. IBs do not actually hold

customer funds to margin. Client funds to margin are held by a FCM

associated with the IB.

3. Commodity Trading Advisor (CTA): a firm or individual that, for

compensation or profit, advises others, on the trading of commodity

contracts. They advise commodity pools and offer managed futures accounts.

Like an IB, a CTA does not hold customer funds to margin; they are held at a

FCM. CTAs exercise discretion over their clients' accounts, meaning that they

have power of attorney to trade the clients account on his behalf according tothe client's trading objectives.

4. Commodity Pool Operator (CPO):a firm or individual that operates

commodity pools advised by a CTA. A commodity pool is essentially the

commodity equivalent to a mutual fund.

5. Registered Commodity Representative (RCR)/Associated Person (AP): anemployee, partner or officer of a FCM, IB, CTA, or CPO, duly registered and

licensed to conduct the activities of a FCM, IB, CTA, or CPO. This is the

commodity equivalent to a registered representative.


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DERIVATIVES

1. A derivative is a product whose value is derived from

the value of one or more underlying variables or assets

is a contractual manner. The underlying assets can be

equity, forex commodity or any other asset the price of

this derivative is deriven by the spot price of the

underlying. The derivative price is at premium/discount.

2. derivates are securities under the securities contract

regulations act 1956 defines derivative to include:-

A security derived from a debt, instruments, share orany other form of security.

A contract which derives its value form the prices or

index of prices of underlying securities.



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FUNCTIONS OF DERIVATIVES MARKET

1. Derivatives market, helps to transfer the risk.2. Derivatives due to their inherent nature are linked

to the underline cash market with the introductionof derivatives the underlining market withness

hier trading volume.3. Derivatives market help in increasing saving and

investment in the long run transfer of risk enablesmarket participants to expand their volume ofactivity.



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SPOT TRADING


Spot trading is any transaction where delivery either takes placeimmediately, or with a minimum lag between the trade and delivery

due to technical constraints. Spot trading normally involves visual

inspection of the commodity or a sample of the commodity, and is

carried out in markets such as wholesale market.

FORWARD CONTRACTS

A forward contract is an agreement between two parties to exchange

at some fixed future date a given quantity of a commodity for a price

defined today. The fixed price today is known as the forward price.Early on these forward contracts were used as a way of getting

products from producer to the consumer. These typically were only

for food and agricultural products.


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FUTURE CONTRACTS

A futures contract has the same general features as a forward

contract but is standardized and transacted through a futuresexchange. In essence, a futures contract is a standardized forward

contract in which the buyer and the seller accept the terms in

regards to product, grade, quantity and location and are only free

to negotiate the price.


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DIFFERENCE BETWEEN COMMODITY AND

FINANCE DERIVATIVE

In case of finance derivatives most of these contracts are cash settled

since financial assets are not bulky they do not need special facility for

storage even in case of physical settlement on the other hand due to

the bulky nature of the underlying assets. Physical settlement in

commodity derivatives creates the need for warehousing.

ISSUES INVOLVED IN COMMODITY TRADING

1. PHYSICAL SETTLEMENT

2. WAREHOUSING



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