Invesors Behavior Towards Share Broking ANGEL STOCK BROKING

8/6/2019 Invesors Behavior Towards Share Broking ANGEL STOCK BROKING

1/47

1


2/47

INDEX

(A) INDIAN FINANCIAL SYSTEM

o Indian Financial Market

o Financial Market

o Capital Market

o Development Of Stock Market In India

o Financial Instrument In India

o BSE

o NSE

(B) ANGEL AS A DEPOSITORY PARTICIPANT

o History

o Branches

o Mission Visions Statement

o Goals And Objective

o Core-Competence

o Business Philosophy

o Problem And Opportunity

o Market Summery

o Birds Eye View Of Different Department

2


3/47

o Product Of The Angel

(C) RESEARCH METHODOLOGY

( D) D AT A A NA LY SI S( E) TESTING THE HYP OTHESIS

( F) F INDING AND SUGGESTIONS

( G) B IB LI OG RA PHY

3


4/47

WHY INVEST ?

I f y ou were t o open a book on economics and l ook up t he

wordinvest ing,chances a re that you would f ind the fol lowing

def ini t ion:Invest ing i s bui lding up to meet future consumpt ion

demands wi th the intent ion of making surpluses or prof i t s , as

they are popular ly known.

W hi le t he l if e e xp ec ta nc y o f t he a ve ra ge h um an b ei ng h as

increased , we are product ive only be tween the ages of 30 to 60

years . Hence the shor t t ime span tha t we are ab le to earn money

needs t o p rov i de f o r ou r f u t u re when we may no t be capab l e o f

earning.

Every t h i ng be i ng t he same , We cou l d keep away a pa r t o f ou r

earn ings every year tha t wi l l come in hand when we wi l l no t be

ab l e t o ea rn . However i n f l a t i on des t roy s t he va l ue o f wha t we

save . A sum o f 10 , 000 saved t h i s y ea r w i l l no t have t he same

p ur ch as in g p ow er 1 0 y rs . d ow n t he l in e. H en ce w e n ee d t o

preserve the pur chasing power of what we s ave.

The only way to hedge inf la t ion i s to invest in shares ,

debentures , bonds, gold or real esta te , to earn re turns f rom these

asse t s tha t compensate for the dec l ine in our purchas ing power .

4


5/47

WHAT IS SHARE?

Share or Equi ty represents part of an ownership of a

bu si ne ss . S o a s a s ha re ho ld er y ou o wn a p ie ce o f t he

act ion that happens in that business. Why would yo u want a

piece of the act ion?

For t he rewards o f cou rse . As a sha reho lde r you have a

r ig ht o ve r t he p ro fi ts g en erat ed b y y ou r b us in es s. Y ou r

company might pay out the prof i ts generated every year as

div idends or i t may retain the prof i ts to fur ther grow them.

Th er es ano the r way y ou as a sh ar eho lder ca n ma ke

money. I f your company does wel l , then i ts shares l i s ted on

the s tock market become more va luable and the s tock pr iceappreciates. On the other hand, the company might perform

badly . Then not on ly do you not get d iv idends but the s tock

p r i ce a l so dec l i nes . Hence i nves t i ng i n sha res i s a r i sky

proposi t ion.

When you invest in shares, you can expect cer ta in re turns

based on t he f undamenta ls o f a bus iness . However you

ha ve n o c on tr ol o ve r i t. W ha t y ou h av e c on tr ol o ve r i s

managing r isks associated wi th i t .

5


6/47

INDUSTRY OVERVIEW

INTRODUCTION

S to ck e xc ha ng es t o s om e e xt en t p la y a n i mp or ta nt r ol e a s

indicators , ref lect ing the performance of the countrys economic

s t a t e o f h e a l t h . S t o c k m a r k e t i s a p l a c e w h e r e s e c u r i t i e s a r e

bough t and so l d . I t i s exposed t o a h i gh degree o f vo l a t i l i t y ;

p ri ce s f lu ct ua te w it hi n m in ut es a nd a re d et er mi ne d b y t he

demand and supply of s tocks a t a g iven t ime. S tock brokers a re

t he ones who buy and se l l s ecu r i t i e s on beha l f o f i nd i v i dua l s

and inst i tut ions for some commission.

Th e S ec ur it ie s a nd E xc ha ng e B oa rd o f I nd ia ( SE BI ) i s t he

a ut hor iz ed b od y, w hic h r eg ul at es t he o pe ra ti on s o f s to ck

e xc ha ng es , b an ks a nd o th er f in an ci al i ns ti tu ti on s. T he p as t

pe r fo rmances i n t he cap it a l marke t s e spec i a ll y t he secur i t ie s

scam by Hasrshad Mehta has l ed to t igh ten ing of the opera t ions

by SEBI . In add i t i on t he i n t e rna t i ona l t r ad i ng and i nves t men t

exposure has made i t imperat ive to bet ter operat ional ef f ic iency.

With the v iew to impr ove , discip line an d br in g gr eater

t ransparency in th i s sec tor , cons tan t e f for t s a re be ing made and

to a cer ta in extent improvements have been made.

6


7/47

Ind i an S t ock Marke t s a re one o f t he o l des t i n As i a . I t s h i s t o ry

d at es b ac k t o n ea rl y 2 00 y ea rs a go . T he e ar li es t r ec or ds o f

securi ty deal ings in India are meager and obscure.

By 1830 ' s bus i ness on co rpora te s t ocks and sha res i n Bank and

Cot t on p resses t ook p l ace i n Bombay . Though t he t r ad i ng l i s t

w as b ro ad er i n 1 83 9, t he re w er e o nl y h al f a d oz en b ro ke rs

recognized by banks and merchant s dur ing 1840 and 1850. The

1850 ' s wi tnessed a rap id deve lopment of commerc ia l en te rpr i se

and brokerage bus iness a t t rac ted many men in to the f i e ld and by

1860 the number of brokers increase d into 60.

In 1860-61 the Amer ican Civ i l War broke out and co t ton supply

f ro m U ni te d S ta te s o f E ur op e w as s to pp ed ; t hu s, t he ' Sh ar e

Mania ' in India begun. The number of brokers increased to about

200 t o 250 . However , a t t he end o f t he Amer ican C i v i l War , i n

1865, a d i sas t rous s l ump began ( f or exampl e , Bank o f Bombay

Share which had touched Rs 2850 could only be so ld a t Rs . 87) .

At the end of the Amer ican Civ i l War , the brokers who thr ived

out of Civ il War in 187 4, fou nd a plac e in a s t r eet (n ow

app ropr ia te ly c al led a s Dalal St r eet ) whe re th ey wo uld

convenient ly assemble and t ransact business .

7


8/47

In 1887, they formal ly establ i shed in Bombay, the "Nat ive Share

and Stock Brokers ' Assoc ia t ion" (which i s a l t e rna t ive ly known

as "T he Sto ck Exch an ge" ). I n 1 895 , th e S toc k Ex cha nge

acqui red a premise in the same s t ree t and i t was inaugura ted in

1899. Thus, the Stock Exchange at Bombay was consol idated.

Th us i n t he s am e wa y, g ra du al ly w it h t he p as sa ge o f t im e

number of exchanges were increased and a t cur ren t ly i t reached

to the f igure of 24 s tock exchanges.

8


9/47

HISTORY:-

In a sho r t span o f 18 y ea r s s i nce i ncep t i on , The Ange l Group

h as e me r ge d a o n e o f t he t op 5 r e ta il s to c k b r o ki ng h o us e s i n

I n d i a , h a v i n g m e m b e r s h i p s o n B S E , N S E a n d t h e t w o l e a d i n g

c om mo d it y e x ch an g es i n t he c o un tr y i .e . N CD EX a n d M CX .

Angel Broking Ltd i s a l so reg i s t e red as a depos i tory par t i cipant

w i t h C D S L . I t i s t h e o n l y 1 0 0 % r e t a i l s t o c k b r o k i n g h o u s e

of fe ri ng a g am ut o f r et ai l c en tr ic s er vi ce s l ik e Re se ar ch ,

Investment Advisory , and Weal th Management Services-Broking

& Commodi t ies to individual investor .

T he g r ou p i s p r om ot ed b y M r . D in es h T h ak k ar w h o s ta r te d t hi s

b us in es s a s a s ub -b ro ke r i n 1 98 7 w it h a t ea m o f 3 .a nd t od ay

p ro f ess i ona l l y managed by a t eam o f 1871+ d i rec t empl oy ees . I t

h as a n a ti on w id e n e tw or k c om pr i si n g 1 2 R eg io n al C en t er s , 6 0

b ranches, 2408+ reg is t ered sub b roke r s and bus iness a s soc i at e s

and 6227+ act ive t rading terminals which cater to the requi rements

of 205610+ reta i l c l ients .

At Angel , I t hab i tua l ly genera te va lue added fea tures wi thout the

cos t bu rden be i ng passed on t o t he c l i en t s a s we s t rong l y be l i eve

t ha t be t t e r unde r s t and i ng o f c l i en t s needs and wan t s i s ou r t op

pr ior i ty . Our e-br oking faci l i ty i s one such ef for t , which gives you

a p la t form to access s t a te of the a r t t rad ing fac i li ty a t the c l i ck of

a but ton.

BRANCHES

9


10/47

Andheri (west) Bandra(west)

Borivali(west) Chembur

Fort Ghatkoper(east)Goregaon(west) Kalbadevi

Malad(west, east) Mulund(west)

Santacruz(west) Vilen parle(west)

Ahemdabad Ankleshwar

Baroda Delhi

Hyderabad Indore

Pune Rajkot

Surat

GOALS & OBJECTIVES

Five-year goals

State specific measurable objectives

State market share objectives

State revenue/profitability objectives

Financial 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

10


11/47

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.

11


12/47

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.

12


13/47


14/47

BIRDS EYE VIEW OF DIFFERENT DEPARTMENTS

TRADING DEPARTMENT 27

PRE-TRADING 28

ACCOUNT OPENING FORM

DEPOSITSCOMPLIENTS

TRADING 32

DEALING ROOM

SAUDA PUNCHING

CONFORMATION

POST TRADING 45

CONTRACTS

BILLS

PAYIN AND PAYOUT PROCESS

BACK OFFICE DEPARTMENT 48

DP DEPARTMENT 49

DEMAT ACCOUNTACCOUNT OPENING

DEMATERIALISATION

REMATERIALISATION

PLEDGE /HYPOTHECATION

14


15/47


16/47

Pre-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

16


17/47


18/47

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 MinimumRs 5000

Intra-day Rs 10000

Delivery Rs 5000 (rare case)

Sub broker:

For one segment 100000 cash or share (flexible)For all five segments 350000 if client wants Vast 150000

18


19/47

which include installation

,transportation charges etc

Complients

Part-A Demat-(photo proof)

Pan card

Driving license

Election card

Bank attestation

Part-B (Residence proof)

Bank passbook

Ration card

Electric Bill

Telephone Bill

LIC policy

Blank Cancelled cheque without signature

Trading 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

19


20/47

TRADING

After pre-trading next comes trading which include:

Dealing room

Sauda punching

Conformation

20


21/47

Dealing room

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

include:

NSE Cash

BSE Cash

NSE Derivatives

TRADING IN NSE, BSE AND DERIVATIVES

21


22/47

TRADING IN NSE

22

TREADING

CASH

MARKET

NSEBSE

DERIVATIVE

MARKET

CASH

MARKET


23/47

15 july, 2006

NSE 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

23


24/47

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?

24


25/47

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

25


26/47

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 ofTeji 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.

26


27/47

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.

27

DERIVATIVE

MARKETS

COMMIDITY

DERIVATIVE

FINANCIAL

DERIVATIVE

OTC

MARKET

ORGANISED

MARKET

OTC

MARKET

ORGANISED

MARKET


28/47

COMPONENTS OF DERIVATIVES

ForwardsA 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.

28


29/47

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.

29


30/47

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 theoreticalprice, 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.

30


31/47

Options

Options 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 abuyer of a call

option on Hindustan Lever. The option gives you the right to buy1,000 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.

31


32/47

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 options

American 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.

32


33/47

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.

33


34/47


35/47

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 thereinto 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:-

35


36/47

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.

36


37/47

DP DEPARTMENT

Depository- 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.

37


38/47


39/47

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 ofmarket 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 yearsof the industry there was only one depository and the competition was between

39


40/47


41/47

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

41


42/47

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

42


43/47

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

43


44/47

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.

44


45/47

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)

45


46/47

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 SECURITY

According 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

46


47/47

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.

Invesors Behavior Towards Share Broking ANGEL STOCK BROKING

Documents

Transcript of Invesors Behavior Towards Share Broking ANGEL STOCK BROKING