Online Share Trading – Benefits And Pitfalls
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Transcript of Online Share Trading – Benefits And Pitfalls
Online Share Trading Benefits and Pitfalls
J.KarthikeyanDirector, Finerva Financial Solutions Pvt Ltd
FINERVA
Agenda
• History – Your Sharing
• Entities Involved
• Benefits for Each Entity
• Pitfalls for Each Entity
• Discussions
FINERVA
History
• Stock Exchanges
• BSE
• NSE
• Volume Online
FINERVA
Entities Involved
• Individual Investors
• Intermediaries
• The Government & The Regulator
• Excluded: Large & Institutional Investors, Mutual funds and Financial Institutions
FINERVA
Benefits & Pitfalls for the Government and the
RegulatorBenefits
– Settlement Period is reduced and monitored easily – Events like Harshad Metha Scam cannot happen
– Better control on the traders – through Demat Accounts – PAN linked
– Better control on Intermediaries – Easy & More Collection of Tax – STT & Volumes– Environment friendly– IPO processing easier faster and more economical –
promotes development
FINERVA
Benefits & Pitfalls for the Government and the
Regulator• Pitfalls
– Effort required for Implementation• Education – Investor Education Fund • Infrastructure – processing, verifying documents
– Errors in Processing – Trade / Settlement Guarantee Fund
– Scams like multiple demat accounts - Roopalben Panchal (14,807) 45,000 in all
FINERVA
Benefits & Pitfalls for the Intermediaries
• Benefits
• Higher income – Higher transactions
• Better Management of Portfolios – Easier and Faster
• Transparent Operation – Clear Communication, Processing, Accounting
• More Products – Futures, Options, Debt
FINERVA
Benefits & Pitfalls for the Intermediaries
• Pitfalls
• More investment required – margin money and client leverage
• More risky if client is highly leveraged – Mark-to-Market
• More research required
• Higher regulator visibility and intervention
• Lesser Investment sin Mutual funds
FINERVA
Benefits and Pitfalls for Individual Investors
• Benefits
• Easier to maintain
• Cost per transaction is reduced
• Easier and Faster to Trade - Buying or Selling
• Transparent Transactions
• Accounting is automatic
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Benefits and Pitfalls for Individual Investors
• Pitfalls
• More Transactions – More cost
• Day-Trading Addiction - Brad Barber and Terrance Odean in the US market shows that 82% of the day traders lose money.
• Higher Visibility to the Taxman
• Lack of Research and Knowledge
• No Verification on Decision
FINERVA
DISCUSSION
THANK YOU
FINERVA