Study of Stock Broking Business in Sangamner

8/3/2019 Study of Stock Broking Business in Sangamner

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A PROJECT REPORT

ON

A STUDY OF STOCK BROKING BUSINESS

IN SANGAMNER CITY

R K GLOBLE SHARE&

SECURITIES

SUBMITTEDBY

MR. SHELKE POPAT

MBA++ II (FINANCE )

UNDER THE GUIDANCE

OF

Ms. Nitin untawale Mr. Darsion khalkar

Faculty Manager

Sankalp business school R K Globle Shere&securities Ltd.

SUBMITTED TO

University of pune

DEPARTMENT OF MANAGEMENT

SANKALP BUSINESS SCHOOL

AMBEGOAN BKPUNE

Year 2010-2012

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SANKALP BUSINESS SCHOOLAMBEGOAN BK, PUNE

CERTIFICATE

This is to certify that the Summer Project report titled STUDY OF

STOCK BROKING BUSINESS. carried out at R K GLOBLE SHARE

& SECURITIES Ltd. Delhi has been submitted by Mr. SHELKE

POPAT, 2nd year MBA++ Finance with sectoral specialization in share

market in student of sankalp business school The University of Pune,

towards the partial fulfillment of the requirement for the award of the

Masters in Business Administration (MBA++) and the same has been

satisfactorily carried out under the guidance of Lecturer Ms. NITIN

UNTAWAL during the academic year 2010 - 2012.

Ms. NITIN UNTAWAL External

Faculty Examiner

S.B.S PUNE

ACKNOWLEDGEMENT

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CHAPTER 1

INTRUDACTION OF TOPIC

1.1 INTRODUCTION OF BSE

Bombay Stock Exchange is the

oldest stock exchange in Asia with a rich

heritage, now spanning three centuries in its

133 years of existence. What is now popularlyknown as BSE was established as "The Native

Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange

in the country which obtained permanent

recognition (in 1956) from the Government of India under the Securities Contracts

(Regulation) Act 1956. BSE's pivotal and pre-eminent role in the development of

the Indian capital market is widely recognized. It migrated from the open outcry

system to an online screen-based order driven trading system in 1995. Earlier an

Association Of Persons (AOP), BSE is now a corporatised and demutualised entity

incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE

(Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and

Exchange Board of India (SEBI).

Over the past 133 years, BSE has facilitated the growth of the Indian

corporate sector by providing it with an efficient access to resources. There is

perhaps no major corporate in India which has not sourced BSE's services in raising

resources from the capital market

Today, BSE is the world's number 1 exchange in terms of the

number of listed companies and the world's 5th in transaction numbers. The market

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capitalization as on December 31, 2007 stood at USD 1.79 trillion . An investor can

choose from more than 4,700 listed companies, which for easy reference, are

classified into A, B, S, T and Z groups.

The BSE Index, SENSEX, is India's first stock market index that

enjoys an iconic stature , and is tracked worldwide. It is an index of 30 stocks

representing 12 major sectors. The SENSEX is constructed on a 'free-float'

methodology, and is sensitive to market sentiments and market realities. Apart from

the SENSEX, BSE offers 21 indices, including 12 sectoral indices. BSE has entered

into an index cooperation agreement with Deutsche Brse. This agreement has

made SENSEX and other BSE indices available to investors in Europe and

America. Moreover, Barclays Global Investors (BGI), the global leader in ETFs

through its iShares brand, has created the 'iShares BSE SENSEX India Tracker'

which tracks the SENSEX. The ETF enables investors in Hong Kong to take an

exposure to the Indian equity market.

1.2 INTRODUCTION OF NSE

Capital market reforms in

India have outstripped the process ofliberalization in most other sectors of the

economy. However, the creation of an

independent capital market regulator was

the initiation of this reform process. After the formation of the Securities Market

regulator, the Securities and Exchange Board of India (SEBI), attention were drawn

towards the inefficiencies of the bourses and the need was felt for better regulation,

discipline and accountability. A Committee recommended the creation of a 2nd

stock exchange in Mumbai called the "National Stock Exchange". The Committee

suggested the formation of an exchange whichwould provide investors across the

country a single, screen based trading platform, operated through a VSAT network.

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. NSE was incorporated in 1992 and was given recognition as a

stock exchange in April 1993. It started operations in June 1994, with trading on

the Wholesale Debt Market Segment. Subsequently it launched the Capital Market

Segment in November 1994 as a trading platform for equities and the Futures and

Options Segment in June 2000 for various derivative instruments.

NSE was set up with the objectives of

a) Establishing a nationwide trading facility for all types of securities;

b) Ensuring equal access to investors all over the country through an

appropriate communication network;

c) Providing a fair, efficient and transparent securities market using

electronic trading system;

d) Enabling shorter settlement cycles and book entry settlements; and

e) Meeting international benchmarks and standards.

NSE has been able to take the stock market to the doorsteps of the

investors. The technology has been harnessed to deliver the services to the

investors across the country at the cheapest possible cost. It provides a nation-wide,

screen-based, automated trading system, with a high degree of transparency and

equal access to investors irrespective of geographical location.

1.3 THE BOLT SYSTEM (BSE ON-LINE TRADING

SYSTEM)

The BOLT was set up to achieve the following goals t To increase market

transparency,

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To enhance market quality through improved liquidity, by increasing

quote continuity and market depth,

To reduce settlement risks due to open trades, by elimination of

mismatches,

To provide management information systems (MIS),

To introduce flexibility in systems, so as to handle growing volumes easily,

and

To support nationwide expansion of market activity.

Since May 1995, the trading software has undergone many changes.

The Exchange is in forefront to utilize computer and telecommunication technology

to provide the most competitive services to investors. Orders are matched in less

than one-tenth of a second. The system allows for complete transparent mode of

each order execution

The BOLT Network based on Very Small Aperture Technology

(VSAT), provides connectivity between member's Trader Work Stations (TWS's)

with our Trading & Settlement system. The network has grown in four stages.

The BOLT system and the Mainframe hardware are continuously upgraded to meet

the growing demand of users. The On-line trading system had 7,129 scrips

available for trading as on 20th August,1998.

Conventional VSATs acquire data from its attached terminals and

transmit the data in form of radio signal to a geo-stationary communication

satellite.

The satellite amplifies and translates these signals and sends back to a Master Earth

Station (often called Hub). The Hub then sends the data to Host computer for

processing. The processed data traverses the reverse path and reaches the

originating

The VSAT network is live since September 1997. As of 31st July,

1998 there were around 606 TWS's active on this network from 161 cities of the

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country. By year 2000 the Stock Exchange expects to have around 10,000 TWS's

on the network.

The Stock Exchange, Mumbai is using Shared Hub situated at HECL facility in

Gurgaon, Haryan. The Stock Exchange's trading systems are connected via VSAT

to this Hub. The Stock Exchange is planning to set up it's own Hub at BSE

premises. A disaster backup hub at a geographically separate site is under

implementation.

Objectives

Following objectives were kept in mind while doing this study:1 To study sub-broker work in share market .

2 To study in screen based trading system in uses broker.

3 To study of trading process of Exchange work in NSE &BSE,

COMMODITIES.

4 To study ofDocument list for sub broker registration in NSE &BSE

5 To study ofbrokerage rate & services data calected in broker wise qualification

6 To study of average daily turn over, delivary base trading and future &option

based trade

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CHAPTER 2

RESEARCH & METHODOLOGY

Research Methodology provides the researcher to know about the

type of research, type of data, research plan and sampling plan used for the project.

Research is a scientific and systematic search for pertinent information on a

specific topic. Thus when we talk of research methodology we not only talk about

research method but also consider the logic behind the methods we use in the

context of our research study.

1. DATA COLLECTION

Data collection in a sub broker and internet.. Primary data is collected by the face-

to-face interview with the customer on the basis of questionnaire. Secondary data

are interpretations of primary data. Textbooks, handbooks, magazines and

newspapers articles, and most newscasts are considered secondary information

source. Indeed, nearly all reference material fall into this category.

WEBSITES

www.bseindia.com

www.google.com

www.5paise.com

www.icicidirect.com

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2 DATA ANALYSIS

The Task of collection of data is a very important task for anydissertation to achieve the task in efficient manner the questionnaire are set up the

data was collected from the brokers through the questionnaire. In sangamner there

are 50 to 60 (terminals) sub brokers. Among whom the survey of the 15 sub

brokers were made.

The data present in the form of table and change is given from the survey made

from the 15 sub broker on the average.

They are certain tools& teqnics in a data anylisis .they use in

screen base picture, simple chart, bar diagram, cercle diagram& flow chart.

TYPE OF DATA

The type of data, which is used in this research, is primary data. This

data is collected through the opinion of the Brokers & Investor's about the using

BSE LBOLT, which wouldn't be available through secondary data.

Research plan Research plan contain of research sources, research approach and

research instrument

Research sources As my research is to study the market potential for

online-trading in local area so the research sources used in this survey were the

person's involved in BSE trading.

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Research Approach

Here primary data are collected through face-to-face interview with the

professional to know about the awareness, belief and satisfaction level of the

customer

. 3 CHAPTER SKIM

Research methodology is very important role in project. The

objective of the project data collection methods, tools& teaqnics use in project data

anaylisis in use screen system&broker rate is calculate.

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MISSION

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OUR MISSION IS TO PROVIDE TOP CLASS CUSTOMER SERVICES, CREATING VALUE

FOR STAKE HOLDERS AND ENHANCING THE LIVES OF OUR EMPLOYEES AND

COMMUNITY.

VISION

OUR VISION IS TO BE THE LARGEST, MOST TRUSTED AND RESPECTED FINANCIAL

SERVICES COMPANY IN INDIA AND OVERSEAS, BACKED BY OUR CORE PHILOSOPHY OF

TRUST, TRANSPARENCY AND UTMOST CLIENT SATISFACTION.

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COMPANY PROFILE

K Global was incorporated in year 1995 at New Delhi under the dynamic leadership of Shri Ramesh Kumar Bhagchandka, son of late Shri Lakhi Prasad Bhagchandka, a BhagchandkaR group initiative. In 2007, R K Global shifted its registered office to Mumbai in Maharashtra.

R K Global in the initial years engaged itself in steady services of access to the equity market to Bhagchandka GroupCompanies and associates. In the later years it diversified its business in the areas of Equities, Derivatives,Commodities, Currency, Depository, IPO Distribution, Mutual Fund Distribution and Consultancy. It obtained membershipof NSE, BSE, MCX, NCDEX, MCX-SX, NSEL & NSDL under different group companies to provide complete access to

financial services to its clients.

In 2004, R K Global launched its retail broking business on pan India level with a vision to capitalise the much untappedpotential of strong retail segment. Ever since then, it has multiplied its retail client base manifold, by offering a highlycompetitive brokerage of 0.05% on delivery and 0.02% on intraday transactions. This was highly appreciated and lappedimmediately by retail investors all over India and in a show of knee-jerk reaction, top broking

houses immediately slashed their brokerages across the board to catch up with this innovative concept

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.

In 2 R K Global took a leap forward by bringing in its e-trading solutions India Trades @ 999 ,Capital market Segment for Zero Brokerage and Rs.9 per lot brokerage scheme under its

The state of-the-art online trading platform came with high-end and prompt technical suppor

R K Global also recorded unprecedented growth in its Depository division by recording approx. 200%+ growths ithe year 2006-07. Over a journey of 15 Years, R K Global has created a niche for itself in the broking community. Ibase of 350+ business associates. Since the launch of our Online Services in 2006, more than 50,000 clients are tGlobal has recorded 100%+ growths in its Top and Bottom Line for 5 consecutive years. The total trading turnove$13 Billion in 2008-09 and a staggering $44 Billion in the year 2009-10, a phenomenal growth of 230% since last ye

network of offices, sub brokers and clientele.

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31 MHADA Bungalows, JDPS Rd.,Versova, Mumbai - 400053Ph: +91(22) 2636 1521Fax: +91(22) 2636 1519

Email: [email protected]

Official Websitewww.rkglobal.net/index.asp

About R K Global &Sec...

Contact R K Global &Sec...

Website visited 1328 times

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delivering quality service at the quickest pos

robust technology has given it an edge over

Depository Business in May 2001, by virtue o

Depositories Limited (NSDL) thus providing t

roof. We have pioneered in offering low brok

confidence over the years. Ever since our LO

investors was introduced; RKGLOBAL never l

growth of NSDL, a fact that has been acknow

16 2006, stock broking industry in India witn

scheme, [email protected]. It is espec

BROKERAGE FREE UNLIMITED TRADES in ca

innovative schemes in time to come which w

such investor friendly offers in future and aim

RKGLOBAL is planning to launch our dream o

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WE HAVE FOLLOWING GROUP COMPANIES

R K Global Shares & Securities Ltd (Member: NSE,BSE,NSDL & MCX-SX)

R K Global Equity Broking Ltd (Member: BSE)

R K Global Commodity Broking Ltd (Member: NCDEX, MCX & NSEL)

R K Global Insurance Brokers Ltd (Advisory on Life & General Insurance)

R K Global Finance Pvt. Ltd (A Govt. Of India recognised NBFC)

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R K GLOBLE MILESTONES

1995

Incorporation of R K Global as R K Global Shares & Securities Ltd (member of NSE) aBhagchandka Group initiative.

2000

Started retail broking business in Kolkata, Jaipur and Mumbai.

2001

Started Depository services by obtaining membership of National Securities DepositoryLimited (NSDL).

2004

Launched its trademark 0.05% brokerage in Delivery Transaction and 0.02% brokerage in

Intraday Transaction of NSE cash segment.

2005

Started trading in NSE Future & Options segment.

Launched its first ever television advertisement campaign on CNBC TV18 & CNBC Awaaz.

2006

Launched online trading.

Launched a trading scheme never heard before, called India Trades @ Rs.999, providing

unlimited trading in NSE Capital market Segment for Zero Brokerage which has now becomeits Unique Selling Point.

Launched Rs.9 per lot Brokerage in Future & Options Segment of NSE.

Launched online trading.

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Launched a trading scheme never heard before, called India Trades @ Rs.999, providingunlimited trading in NSE Capital market Segment for Zero Brokerage which has now becomeits Unique Selling Point.

Launched Rs.9 per lot Brokerage in Future & Options Segment of NSE.

2007

Received recognition from NSDL for spectacular growth in client acquisition, where R KGlobal opened 200% above the national average of accounts opened with NSDL.

Launched the scheme of Super 9 with brokerage of Rs. 9 per executed order in the NSEcash segment.

Launched online BSE trading by introducing Super 9 scheme with brokerage of Rs. 9 perexecuted order.

2008

Felicitated Mr. Sushil Kumar and Mr. Vijender Singh, bronze medal winners in

Beijing Olympics 2008, and rewarded each with Rs. 5 lakh for outstanding

performance as a part of R K Globals Sports Promotion Initiative.

Felicitated Mr. Satpal Singh, Padma Shri & Dronacharya Awardee and coach to Mr.

Sushil Kumar for his outstanding service to Indian wrestling as a part of R K Globals

Sports Promotion Initiative.

Launched online trading in the Commodity Segment (MCX) with another innovative schemeof Rs. 9 per Lot.

2009

Launched trading in the Currency segment by becoming a member of MCX-SX & CurrencySegment of NSE.

Launched the much slashed brokerage @ Rs. 0.99 paise per Lot in the Currency Segment ofthe online platform.

Launched online trading in NCDEX with Super 9 scheme with brokerage of Rs. 9 per Lot.

2010

R K Global donated Rs. 25,000 towards Save Our Tiger initiative throughMahendra Singh Dhoni Charitable Foundation, for each six that Chennai Super

Kings Hit in IPL 2010.

Mr. Amit Bhagchandka (CEO of R K Global) handed over a cheque of Rs. 5,00,000 to

Mahendra Singh Dhoni Charitable Foundation.

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Mr. Amit Bhagchandka handed over a cheque of Rs. 1,41,000 to Mahendra Singh

Dhoni Charitable Foundation towards Save Our Tiger initiative.

2011

R K Global donated Rs. 22,00,000 to Mahendra Singh Dhoni Charitable Foundation

towards Save Our Tiger Fund on account of each six hit by Chennai Super Kings

during Indian Premier League (IPL) 2010

CHAPTER -3 DATA

ANALYSIS

WHAT DOES " SCREEN BASED

TRADING" MEAN?

A consensus quickly emerged that "screen based trading" should be

utilised, but screen-based trading can mean many different things. For example, the

New York Stock Exchange (NYSE) relies on a human being (called the specialist)

to do all order matching, and computers are only used -- in conjunction with old-

fashioned telephones to communicate orders to the specialist.

A radical idea going around in the design of exchanges worldwide

is the open electronic limit order bookmarket. A limit order is just a buy or a sell

order for a specified quantity at a specified price. In this kind of exchange, there are

no human market makers. Orders are placed on screen, and the computercontinually matches buy orders which have low prices against sell orders which

have high prices.

The distance between the cheapest unmatched buy order and the

costliest unmatched sell order is called the bid-ask spread. This is essentially the

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difference in price observed between buying and selling one market lot. Tight bid-

ask spreads are synonymous with a highly liquid market. An example of this is

Reliance, which has a spread on the NSE of around 5 paisa, versus Tata Chem,

which has a spread on the NSE of around 50 paisa. For a comparison, spreads on

the NYSE, where the average stock price is $40, are typically around 12.5 to 25

cents.

Both the BSE and the NSE avoided the NYSE and NASDAQ

approach in exchange design. The NSE chose to implement a pure limit order book

market. BSE's BOLT is also an automated exchange, in the sense that computers do

order matching, except for a slight priority accorded to "jobbers", who offer two-

way quotes.

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TRADING PROCESS OF EXCHANGE

3.1.1 Trading system

3.1.2 NSE Technology

3.1.3 Trading & Settlement

Trading

Settlement

Introduction Of The Demat Segment

3.1.4 Shortages And Objections

Shortages

Objections

Objection Cycle

3.1.5 Margin Trading

3.1.6 Derivatives

3.1.7 Future and Option

3.1.8 Auction

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3.1.1 TRADING SYSTEM

Transactions for the segment are routed from the Trader Work

Stations (TWS) to the central trading computer installed at Broker office . TheTWSs are connected to the central trading computer through leased / ISDN lines,

VPN connectivity and VSAT network. The technology infrastructure optimises and

shares the system resources for access to NSE and BSE segments.

ISS uses the latest version of the Open Dealer Integrated Network

(ODIN) software supplied by Financial Technologies (I) Ltd., which is an

empanelled vendor for the computer-to-in computer link facility. ISS is connected

to NSE by VSATs and leased line. ISS is connected to its sub-brokers downstream

through a network of VSATs, leased lines and ISDN connections. The trading

system supports trading in the NSE Capital Market, NSE Futures & Options

segment and BSE Equities segment. Orders for all the three Exchanges can be

entered on a single system.

Demo Images of the ODIN Software

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Normal Market

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3.1.2 NSE Technology

Across the globe, developments in information, communication and

network technologies have created paradigm shifts in the securities market

operations. Technology has enabled organisations to build new sources of

competitive advantage, bring about innovations in products and services, and to

provide for new business opportunities. Stock exchanges all over the world have

realised the potential of IT and have moved over to electronic trading systems,

which are cheaper, have wider reach and provide a better mechanism for trade and

post trade execution.

NSE believes that technology will continue to provide the necessary

impetus for the organisation to retain its competitive edge and ensure timeliness

and satisfaction in customer service. In recognition of the fact that technology will

continue to redefine the shape of the securities industry, NSE stresses on innovation

and sustained investment in technology to remain ahead of competition. NSE's IT

set-up is the largest by any company in India. It uses satellite communication

technology to energise participation from around 200 cities spread all over the

country. In the recent past, capacity enhancement measures were taken up in regard

to the trading systems so as to effectively meet the requirements of increased users

and associated trading loads. With upgradation of trading hardware, NSE today can

handle up to 15 million trades per day in Capital Market segment. In order to

capitalise on in-house expertise in technology, NSE set up a separate company,

NSE Technology Services Ltd. which is expected to provide a platform for taking

up all IT related assignments of NSE.

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. The trading

server software runs on a fault tolerant STRATUS main frame computer while the

client software runs under Windows on PCs.

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The telecommunications network which was using X.25 protocol

and is the backbone of the automated trading system is being upgraded to use the

more popular and modern IP Protocol. This is a major project involving use of

X.25 and IP in parallel and ensuring smooth transition to IP. Each trading member

trades on the NSE with other members through a PC located in the trading

member's office, anywhere in India. The trading members on the various market

segments such as CM / F&O, WDM are linked to the central computer at the NSE

through dedicated leased lines and VSAT terminals. The Exchange uses powerful

RISC -based UNIX servers, procured from HP for the back office processing. The

latest software platforms like ORACLE 10g RDBMS, SQL/ORACLE FORMS

Front - Ends, etc. have been used for the Exchange applications. The Exchange

currently manages its data centre operations, system and database administration,

design and development of in-house systems and design and implementation of

telecommunication solutions.

NSE is one of the largest interactive VSAT based stock exchanges

in the world. Today it supports more than 2000 VSATs and 3000 leased lines

across the country. The NSE- network is the largest private wide area network in

the country and the first extended C- Band VSAT network in the world. Currentlymore than 9000 users are trading on the real time-online NSE application. There are

over 15 large computer systems which include non-stop fault-tolerant computers

and high end UNIX servers, operational under one roof to support the NSE

applications. This coupled with the nation wide VSAT network makes NSE the

country's largest Information Technology user.

In an ongoing effort to improve NSE's infrastructure, a corporate

network has been implemented, connecting all the offices at Mumbai, Delhi,Calcutta and Chennai. This corporate network enables speedy inter-office

communications and data and voice connectivity between offices.

In keeping with the current trend, NSE has gone online on the

Internet. Apart from having multiple internet links and our own domain for internal

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browsing and e-mail purposes, we have also set up our own Web site. Currently,

NSE is displaying its live stock quotes on the web site (www.nseindia.com) which

are updated online.

NSE today allows members to provide internet trading facility to

their clients through the use of NOW (NSE on web), a shared web infrastructure.

3.1.3 Trading & Settlement Trading

The Exchange has switched over from the open outcry trading

system to a fully automated computerised mode of trading known as BOLT (BSE

On Line Trading) System. This system, which is both order and quote driven, wascommissioned on March 14, 1995. It facilitates more efficient processing,

automatic order matching and faster execution of trades. Above all, the system is

more transparent. The members now enter orders/quotes on their Trader Work

Stations (TWSs) in their offices instead of assembling in the trading ring.

The scrips traded on the Exchange have been classified into 'A', 'Bl',

'B2', 'C' T' and 'Z' group. The number of scrips listed on the Exchange under 'A',

'Bl' and 'B2' groups which represent the equity segments as on October 1999 was

152, 1109 and 4510 respectively. The T' group represents the debt market (fixed

income securities) segment wherein 670 securities were listed as at the end of

October 1999.

The 'Z' group was introduced in the month of July 1999 and covers

the list of companies that fail to comply with listing requirements and also fail to

resolve investor complaints. The 'Z' group comprises of 539 scrips as of October

1999. The 'C' group covers the odd lot securities in 'A', 'Bl' & 'B2' groups and

Rights renunciations.

The Stock Exchange, Mumbai, is the only Stock Exchange in the

country to provide a facility of on-line trading in odd lot securities and Rights i

renunciations. This facility of trading in odd lots of securities and Rights

renunciations not only offers an exit route to investors to dispose of their odd lot of

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securities but also provides them an opportunity to consolidate their securities into

market lots. Trading in fhis segment covers all the scrips listed in the equity

segment. The trading cycle for all these groups of securities is weekly.

The trading cycle for 'A, Bl, B2' 'C and 'Z' group securities

representing the equity segment is from Monday to Friday and that for T1 group

securities representing the debt market is from Thursday to Wednesday. The

transactions in 'A' group scrips are allowed to be carried forward from one

settlement to another settlement subject to a maximum of 75 days from the date of

original transaction. The Stock Exchange, Mumbai is the first Exchange in the

country to provide the facility of carry-forward of outstanding positions in 'A1

group scrips. The trading session for carry forward of transactions from one

settlement to another is conducted on Saturdays, i.e., at the end of every trading

cycle in the equity segment.

Trading on the BOLT system is conducted from Monday to Friday

between 1000 a.m. and 330 p.m. while the carry-forward session for 'A' group

securities is conducted on Saturdays between 1000 a.m. and 1230 p.m.

The Information Systems Department of the Exchange generates the

following statements which can be downloaded by the members in their back

offices on a daily basis

a. Statements giving details of the daily transactions entered into by the

members.

b. Statements giving details of margins payable by the members in respect of

the trades executed by them.

The members are allowed to enter into transactions on behalf of

their Institutional clients, viz., Scheduled Commercial Banks, Indian Financial

Institutions (IFIs) & Foreign Institutional Investors (FIIs) and Mutual Funds

registered with SEBI. The settlement of the trades (money and securities) done on

behalf of the Institutions may be either through the member himself or through a

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SEBI registered Custodian appointed by an Institution. In case the

delivery/payment is to be given or taken by a Custodian on behalf of an Institution,

the former has to confirm the trade done by a member. For this purpose, the

Custodians have been admitted as members of the Clearing House. In case an

institutional transaction is not confirmed by the Custodian, the liability for pay-in

of funds or securities devolves on the concerned member.

SETTLEMENT

Pay-in and Pay-out for "A, Bl, B2", 'C' & "Z" group of securities v

The trades done by the members during the weekly trading period

from Monday to Friday are settled by payment of money and delivery of securities

in the following week. All deliveries of securities are required to be routed through

the Clearing House, except for certain off-market transactions which, although are

required to be reported to the Exchange, may be settled directly between the

members concerned.

The Information Systems Department of the Exchange nets off all

deliverable trades (purchases and sales in each scrip) done by a member during a

settlement and generates delivery/receive orders and money statements which are

downloaded by the members in their back offices.

The delivery orders provide information like scrip, quantity and the

name of the receiving member to whom the securities are to be delivered through

the Clearing House. The Money Statement provides details of payments/receipts

for the settlement.

Earlier the members were required to submit along with the balance

sheet (Form 31-A) which includes the details of Money Statement, margins

payable/receivable, and other credits/debits arising out of auction for shortages,

objections, bad delivery, etc., a cheque /draft depending on whether the settlement

liability is a payable or receivable position on Thursday, i.e., pay-in day. However,

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with effect from December 22, 1997 (i.e., Sett.No.39/97-98), the bank accounts of

members maintained with Bank of India, Stock Exchange Branch, the only clearing

bank at that time, were directly debited through computerised posting on the pay-in

day for their settlement dues. The list of clearing banks has since been expanded to

include HDFC Bank Ltd., Global Trust Bank Ltd. and Standard Chartered Bank.

Thus, the members are no longer required to submit physical Form 31 -A and

cheque/draft as was the earlier practice.

The securities, as per delivery orders issued by the Exchange, are to

be delivered in the Clearing House on the day designated for pay-in ,i.e., on

Wednesday and Thursday as per prescribed time slots upto 100 p.m. No late

delivery of shares is permitted. Members have to deliver the securities in special

closed pouches issued by the Exchange along with the relevant details (distinctive

numbers, scrip code, quantity, receiving member) on a floppy. The data submitted

by the members on floppies is matched against the master file data on the Clearing

House computer systems. If there are no discrepancies, then a scroll number is

generated and a scroll slip is issued. The members then submit the securities at the

receiving counter. The Clearing House personnel arrange and tally the securities

received against the receiving member wise report generated on the Pay-in day.

Once this reconciliation is complete, the bank accounts of members having pay-in

positions are debited on Thursday. This procedure is called Pay-in. The Receiving

Members collect securities on Friday and the accounts of the members having pay-

out are credited on Saturday. This is referred to as Pay-out.

Auction is conducted for those securities which members fail to

deliver/short deliver during the Pay-in. In case the securities are not received in an

auction, the positions are closed out as per the close-out rate fixed by the Exchange

in accordance with the prescribed rules. The close out rate is calculated as the

highest rate of the scrip recorded in the settlement in which the trade was executed

or in the subsequent settlement upto the day prior to the day of auction or 20%

above the closing price on the day prior to the day of auction, whichever is higher.

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The following table summarizes the steps in the trading and settlement cycle for

"A, B1, B2", "C" and "Z" group securities

DAY ACTIVITY

Monday to Friday Trading on BOLT and daily downloading of statement (Monday

is the 1st day showing details of transactions and margin statement, at the and

Friday is the last end of each trading day.

day of trading)

Saturday : Carry Forward Session (for 'A' Group Securities) and

downloading of money statement.

Monday : Marking the mode of delivery - physical or demat

Wednesday : Pay-in of physical securities in the Clearing House without any

time slot

Thursday : Delivery of securities in the Clearing House as per prescribed

time slots up to 100 p.m. only. Debiting of members' bank

accounts having payable position at 500 p.m.

Reconciliation of securities delivered and amounts claimed.

Friday : Pay-out (Physical securities only)

Saturday : Funds pay-out

If a transaction is entered on the first day of the settlement, i.e. Monday, the

same will be settled on the 8th Working day excluding the day of transaction.

However, if the same is done on the last day of the settlement, i.e., Friday, it will be

settled on the 4th working day excluding the day of transaction.

The trading and settlement cycle for "F" group, i.e., Debt Market is

indicated below

DAY ACTIVITY

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Thursday : First day of Trading

Wednesday : Last day of Trading

Thursday : Issue of Delivery Orders, Money statements

Friday : Debiting of the members' bank accounts at 1030 a.m. Pay-out of

securities from 4.30 p.m. to 5.30 p.m. and crediting the bank

accounts of members' with pay-out.

The settlement schedules for various groups of securities have been strictly

adhered to by the Exchange and there has been no case of clubbing of

settlements or postponement of pay-in and pay-out during the last over three years.

The Exchange is also maintaining a database of fake/forged/stolen

securities with the Clearing House so that distinctive numbers submitted by

members on delivery may be matched against the database to weed out bad paper

from circulation.

Introduction of the Demat Segment

The Exchange has commenced trading in the Dematerialised

(Demat) segment with effect from December 29, 1997 where there is no physical

delivery of securities as in the physical segment. Trading in the Demat segment is

on a Rolling Settlement basis n+5) where T stands for Trade Day. The pay-in and

pay-out for the transactions in this segment are both conducted on a single day. The

Pay-in & Pay-out for transactions executed on Monday is conducted on the

following Monday, i.e., corresponding day in the following week. Auction session

for shortages in demat segment is conducted on BOLT on the day after pay-in/pay-

out. The pay-in / pay-out (money part) takes place through computerised posting of

debits and credits in the members' bank accounts as in the case of physical segment.

With effect from April 6, 1998, deliveries in the demat mode are

permitted in the physical segment. This is so because sellers are allowed to give

delivery in demat or electronic form. As of today, this is applicable to 278 scrips.

As such, a break-up session is scheduled every Monday where members may mark

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the mode of delivery, i.e., physical or demat. They, however, have an option to

change the mode of delivery till the pay-in day, i.e., Thursday, SEBI has directed

the stock exchanges in January 1998 that all the trades done by institutional

investors, viz., domestic financial institutions, banks, mutual funds, FIIs and

overseas corporate bodies in certain select scrips should be compulsorily settled in

dematerialised form. This list has been expanded by SEBI from time to time and as

on date 360 scrips for institutional investors are required to be compulsorily settled

in dematerialised form. SEBI has added 140 scrips to this list 70 scrips from

November 29, 1999 and another 70 scrips from January 17, 2000, making the total

number of scrips to 500 in compulsory demat trading for institutional investors.

Further, under directions from SEBI, trades in 104 scrips are to be

compulsorily settled by all investors in dematerialised form. SEBI has added 96

more scrips to this list making the total number of scrips for compulsory settlement

in demat mode by all investors to 200 by January 17, 2000

Shortage and Objection

The members download delivery/receive orders based on their

netted positions for transactions entered into by them during the settlement of

"A,B1, B2", "C" & "Z" groups of securities and the seller member has to deliver

the shares in the Clearing House of the Exchange as per the delivery orders

downloaded. If the seller member is unable to deliver the shares by the last day of

Pay-in, then he submits a document called "shortage memo" which, inter alia,

indicates the undelivered quantity. The member's bank account is then debited at

the standard rate fixed by the Exchange for the quantity of shares short delivered.

The shortage memo contains details such as name & code of scrip short-

delivered/not delivered, quantity short-delivered/not delivered, the clearing number

of receiving member and the standard rate of scrip not delivered. These details are

also required to be submitted by the members on a floppy.

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The Clearing House tallies the shortage memos against delivering

member wise and generates the final shortage report. The seller members are then

informed about the shares not delivered or short delivered by them. The intimation

is given to the seller members to rectify any possible discrepancy/error to prevent

any wrong auction against them.

Subsequently, an Auction Tender Notice is issued by the Exchange

to the members informing them about the names of the scrips, quantity slated for

auction and the date and time of the auction session on the BOLT. The auction for

the undelivered quantities is conducted on Monday and auction offers received in

batch mode are electronically matched with the auction quantities so as to award

the 'best price'. Members who participate in the auction session can download the

delivery orders on the same day, if their offers are accepted. The members are

required to I deliver the shares in the Clearing House on the auction Pay-In day,

i.e., Tuesday. Pay-Out of auction shares and funds is done on the next day, i.e.,

Wednesday.

The various auction sessions on BOLT are now conducted during

normal trading hours. Thus, it is possible to schedule upto three auction sessions on

a single day.

Objections

When receiving members collect shares on the Pay-Out day these

shares are checked by them for good delivery as per the norms prescribed by

Securities and Exchange Board of India (SEBI) in this regard. If the securities are

not considered good delivery, the buyer member obtains an arbitration award from

the arbitrators and submits the shares in the Clearing House two days after the Pay-

Out (i.e., Monday). The Clearing House returns these shares to the delivering

members on the next day, i.e., Tuesday. The delivering member may rectify/replace

the objections and return the shares to the Clearing House on Wednesday to have

the entry removed from the Auction Tender Notice. The rectified securities are

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collected from the clearing house by the buyer member on Thursday. If a member

fails to rectify/replace the objections then the same are auctioned. This is known as

"Objection Auction" and the entire process takes a week.

The auction for objections not rectified is conducted on the BOLT

system on the Friday of the same week. The auction delivery orders are

downloaded to the offerer members on the same day itself. The Objection Auction

Pay-in is scheduled for Saturday. The shares Pay-Out (auction) is done on Monday

and money part Pay-Out is done on Wednesday.

The following table summarises the activities involved in the

Patawat

Objection Cycle

DAY ACTIVITY

Monday Arbitration Session. Members obtain arbitration awards from

arbitrators. Shares deposited in Clearing House (Objection Pay-in of

securities).

Tuesday Shares received under objection returned to the original delivering

member (Objection Pay-out of securities).

Wednesday Members may obtain review chukadas from the Review Committee

for invalid objections. Delivering members may also submit the

securities duly rectified to the Clearing House.

DAY ACTIVITY

Thursday Rectified securities given to the receiving members

(Rectification payout). Awards obtained for invalid rectification

which is later closed out.

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Friday Auction on BOLT for unrectified patawat objections.

Saturday Objection Auction Pay-in (securities).

Monday Auction pay-out of securities to original receiving member.

Wednesday Funds pay-in and pay-out along with next normal settlement

auction pay-in and pay-out.

DAY ACTIVITY

Thursday Rectified securities given to the receiving members

(Rectification payout). Awards obtained for invalid rectification

which is later closed out.

Friday Auction on BOLT for uncertified patawat objections.

Saturday Objection Auction Pay-in (securities).

Monday Auction pay-out of securities to original receiving member.

Wednesday Funds pay-in and pay-out along with next normal settlement

auction pay-in and pay-out.

Shares returned under objection to the Clearing House are required

to be accompanied by an arbitration award (chukada) except in certain cases where

the members are permitted to submit securities without "Chukada". These cases are

as follows

a) Transfer Deed is out of date.

b) Cheques for the dividend adjustment for new shares where distinctive

numbers are given in the Exchange Notice is not enclosed.

c) Stamp of the Registrar of Companies is missing.

d) Details like Distinctive Numbers, Transferors Names, etc. are not filled, in

the Transfer Deeds.

e) Delivering broker's stamp on the reverse of the Transfer Deed is missing.

f) Witness stamp or signature on Transfer Deed is missing.

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g) Signature of the transferor is missing,

h) Death Certificate (in cases where one or more of the transferors are

deceased is missing.

A penalty at the rate of Rs.100/- per marketable lot is levied on the

delivering member for delivering shares which are not in order. In the event a

receiving member misuses the facility of submitting shares under objection without

chukada, a penalty of Rs.500/- per case is charged and the penalty of Rs.100/- per

marketable lot levied on the delivering member is refunded to him by debiting the

receiving member's

account.

There are cases when no offer for a particular scrip is received in an

auction or when members who offer the scrips in auction, fail to deliver the same.

In the former case, the original seller member's account is debited and the buyer

member's account is credited at the close-out rate. In the latter case, the offerer

member's account is debited and the buyer member's account is credited at the

close-out rate.

As regards the transactions in "F" group, i.e., debt market segment,

the trading in this segment, as stated earlier, is conducted from Thursday to

Wednesday. Pay-In and Pay-Out (money as well as securities) are done on Friday.

The instruments under objection are required to be returned by the buyer member

on Saturday. These are collected by the seller members on Monday. Auction

session for shortages as well as objections is conducted on BOLT on Tuesday.

Auction Pay-In / Pay-Out for securities is done on Wednesday. Money part is

included in the next settlement. If the shares are not delivered in auction, the

transactions are closed out as per close-out rate fixed by the Exchange in

accordance with the prescribed rules.

In the C group, i.e., Odd Lot Segment, no auction session is

conducted. The shortages are directly closed out. The Pay-In and Pay-Out of this

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segment is done along with the Pay-In and Pay-Out of 'A, B1, B2' and 'Z' group of

securities

3.1.4Margin Trading

Securities can be paid for in cash or a mix cash and some borrowed

funds. Buying with borrowed funds permits the investors to buy a securities at a

good I price at a good time. This act of borrowing money from bank or a broker to

execute a securities trasaction is reffered to as using "margin". As of now India,

only brokers are allowed to provide the margins. Traders can put up part of the

payment. Brokers I borrow the remaing funds from a moneylender with whom

they Would lodge the share I as colletral for the loan. The Safety of this

mechanism rests on the risk management capabilities of both the stockbroker and

the lender.

3. 1.5 Derivatives

A Derivatives is an instrument whose value is derived from the

value of one or more underlaying security. Which can be commodities, precious

metals, currency, bonds, stocks, stovk indices, etc. Four most examples of

Derivatives instruments are Forwards, Futures, options and Swaps.

The index future were introduced in June 2000. one year later, index

option and Stock Option were introduced as SEBI banded the age-old badals

system.

3.1.6 FUTURE AND OPTION

Future Contract

A futures contract is an exchange-traded contract to buy or sell a

pre-determined quantity and quality of a physical commodity or financial

instruments (quality is not applicable to futures) on a pre-determined future date at

a pre-determined

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Forward contracts v/s Future contracts Forward contracts

A forward contract is one to one bi-partite contract, to be performed in the

future, at the terms decided today. (E.g. forward currency market in India).

Forward contracts offer tremendous flexibility to the parties to design the

contract in terms of the price, quantity, quality (in case of commodities),

delivery time and place.

Forward contracts suffer from poor liquidity and default risk.

Not traded on exchanges but are traded over the counter

Contract Specifications differ from trade to trade as they are individually

agreed between two counter parties.

Counter party Risk exists

Liquidation Profile Poor Liquidity as contracts are tailor maid contracts.

Price Discovery Poor; as markets are fragmented

Future contracts

Future contracts are organized / standardized contracts, which are traded on

the exchanges.

These contracts, are standardized by the exchanges are very liquid in nature.

In futures market, clearing corporation/ house provides the settlementguarantee.

Counter party risk exists, but is assumed by the Clearing Corporation/ house

reducing the risk to almost nil.

Liquidation Profile Very high Liquidity as contracts are standardized

contracts.

Price Discovery Better; as fragmented markets are brought to the common

platform whereby the price is much more transparent due to the

standardization and market reporting of volumes and prices.Where a

forward contract can only be reversed with the same counter party with

whom it was entered into, a futures contract can be reversed with any

member of the exchange.

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BENEFITS OF LISTING

Listing provides an opportunity to the corporates / entrepreneurs to raise capital

to fund new projects/undertake expansions/diversifications and for acquisitions.

Listing also provides an exit route to private equity investors as well as liquidity

to the ESOP-holding employees.

Listing also helps generate an independent valuation of the company by the

market.

Listing raises a company's public profile with customers, suppliers, investors,

financial institutions and the media. A listed company is typically covered in

analyst reports and may also be included in one or more of indices of the stock

exchanges.

An initial listing increases a company's ability to raise further capital through

various routes like preferential issue, rights issue, Qualified Institutional

Placements and ADRs/GDRs/FCCBs, and in the process attract a wide and

varied body of institutional and professional investors.

Listing leads to better and timely disclosures and thus also protects the interestof the investors.

Listing on BSE provides a continuing liquidity to the shareholders of the listed

entity. This in turn helps broaden the shareholder base.

Companies listed on BSE generally find that the market perception of their

financial and business strength is enhanced.

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3.2 Document Checklist for Sub broker Registration in BSE

Segment (Individual Sub broker)

(All Xerox document should be CA Attested)

1) One passport size photograph.2) One copy PAN Card of the applicant (with CA Attested)

3) One copy office address proof of the applicant (with CA Attested)(Nationalize Bank passbook, latest Electricity bill, Latest Telephone bill)

4) One copy residential address proof of the applicant (with CA Attested)(Ration card, Electricity bill, Telephone bill, driving license, voter id card,passport)

5) One Copy Bankproof of the applicant Bank Passbook, Bank Statement(with CA Attested) (bank name should be mention on the bank Statement) Account opening date should mention in the bank proof

6) One Copy of Education Qualification Proof of the applicant (with CA

Attested) - Mark sheet and Degree Certificate of the highest qualification(Minimum HSC Passed).

7) Original One set of Bank Reference Letter (As per the given belowformat)

8) Original One set of C.A. Reference Letter (As per the given belowformat)

9) Demand Draft or Chequeofamount required for registration for BSE.

10) If the applicant is a married woman and the proofs like PAN Card,Education Proofs etc. are in her maiden name, a duly notarized Affidaviton a Stamp Paper of Rs. 100/- should be given (As per the given belowformat) (with CA Attested)

11) If the applicant is already registered as sub-broker with any other broker and/or has made an application for cancellation of his sub-brokership the following documents shall be required

- NOC from the Broker with whom he/she is affiliated.- Copy of the SEBI Registration Certificate for Sub Brokership.- Acknowledgment copy of the application/letter filed by the Broker with the

Exchange(s) for cancellation of sub-brokership.- Copy of the news paper advertisement made by the broker, mentioning dis-

association of sub-broker with broker.

12) BCSM Certificate will be Mandatory from 31st January 2011

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Document Checklist for Sub broker Registration in NSE Segment

(Individual Sub broker)

(All Xerox document should be CA Attested)

1) One passport size photograph.2) One copy PAN Card of the applicant (with CA Attested)

3) One copy office address proof of the applicant (with CA Attested)(Nationalize Bank passbook, latest Electricity bill, Latest Telephonebill)

4) One copy residential address proof of the applicant (with CAAttested) (Ration card, Electricity bill, Telephone bill, driving license,voter id card, passport)

5) One Copy Bank proof of the applicant Bank Passbook, BankStatement (with CA Attested) (bank name should be mention on thebank Statement) Account opening date should mention in the bank

proof6) One Copy of Education Qualification Proof of the applicant - (with

CA Attested) (Mark sheet and Degree Certificate of the highestqualification) (Minimum HSC Passed).

7) Original One set of Bank Reference Letter (As perthe given belowformat)

8) Original One set of C.A. Reference Letter (As per the given belowformat)

9) Demand Draft or Cheque of amount required for registration forNSE.

10) If the applicant is a married woman and the proofs like PAN Card,

Education Proofs etc. are in her maiden name, a duly notarized Affidaviton a Stamp Paper of Rs. 100/- should be given (As per the given belowformat) (If Xerox, with CA Attested)

11) If the applicant is already registered as sub-broker with any otherbroker and/or has made an application for cancellation of his sub-brokership the following documents shall be requiredNOC from the Broker with whom he/she is affiliated.Copy of the SEBI Registration Certificate for Sub Brokership.Acknowledgment copy of the application/letter filed by the Broker with

the Exchange(s) for cancellation of sub-brokership.Copy of the news paper advertisement made by the broker, mentioning

dis-association of sub-broker with broker.12) NCFM Certificate Capital Market (Dealer module)

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3.2.1 Process of Getting registered as Sub-broker

1. The person those are interested to getting the sub-brokership, first he has

to choose the broker company and forward the applications.

2. Have the conversation with the particular co. the representative come for

survey

3. The Co. if Satisfied with you after the complete survey, then the

agreement signed between them.

4. The agreement will be sign with the mutual understanding between them.

5. Documents Required1

a. Address Proof- Electric bill, Telephone bill, etc,.

b. Identity Proof- pan card, Deriving License, Voter card, etc,

6. The above document attached with the agreement

7. Submitted the deposit amount to the company before starting the terminal

otherwise | the company not open your trade limit.

3.2.2 Eligibility for Membership

Age

Minimum age 21 years and Maximum age 60 years (Applicable to

all Partner & [Director) .

Status

Indian Citizen , Partnership Firm registered under Indian Partnership

Act, 1932 and porate registered under Indian Companies Act, 1956

Educational & Qualification

Graduate or equivalent qualification and Two designated partners or

Director should be at least graduate or equivalent qualification for Partnership or

Firm and Corporate respectively.

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Experience

Should have a minimum of 2 years experience in an activity related

to dealing in securities or as portfolio manager or as investment consultant or as a

merchant banker or in financial services or treasury broker, sub-broker, authorized

agent or authorized clerk or authorized representative or remisier or apprentice to a

member of a recognized stock exchange, jobber, market maker, or in any other

manner in dealing in securities or clearing and settlement thereof. Same experience

for minimum two partner and director for firm and corporate respectively.

Net worth

Rs.4 lakh In case the applicant is a member of any other Stock

Exchange(s), it should | satisfy the combined minimum net worth requirements of

all these Stock Exchange, Rs.8 lakh In case the applicant partnership firm is a

member of any other Stock Exchange(s), it should satisfy the combined minimum

net worth requirements of all these Stock Exchange and Rs.10 lakh In case the

applicant corporate is a member of any other Stock Exchange(s), it should satisfy

the combined minimum net worth requirements of all these Stock Exchange.

3.2.3 Process of opening account as client with partcular brokers

1. A applicant form has to be filled in which the complete information of the

applicant to be given

2. The following documents has to be attached with the form

a. Address Proof - Electric bill, Telephone bill, etc,.

b. Identity Proof - pan card, ri1ving License, Voter card, etc,.

c. Demat A/c Proof 4 Bank a/c Proof.

This form has to be submitted with some deposit amount and registration

charges as per the requirement of broker

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3.3 BROKERAGE RATE AND SERVICE

3.3.1 Table of brokerage rate

List Of Company

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BROKRAGE RATE

In sangamner there are many brokers who trade, hence there is a lot

of competition. Maximum brokers available in Amravati charge minimum brakeage

rate as 50 paise on RS.100 for deliver based trade and 10 Paise on RS.100 for

Intraday trading.

This rate vary with the broker to broker .Some brokers also charge 5

paise on RS.100 for Intraday trading and 80-90 paise on RS.100 for Deliver based

trading. There is the possibility of location with the good faith of the client and the

broker.

The brokerage rate charged to unrecorded client is much more than

the recorded clients. The charge rate of the broker differ as per the client.

3.3.2 SERVICES

1) They give the internet trading facility to the clients.

2) Transfer of transaction slip submitted to the related DP.

3) Demat A/c facilities provided by the sub-broker

4) Trading A/C facility

5) Facility of Internet trading, provide few brokers only.

6) Given a tips of the day to client by the sms and calling

Given the payment side of 2 to 3 days or more to client that depends

on the relation of client with the brokers.

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3.4 PROS & CON'S OF STOCK EXCHANGE

3.4.1 Pros

1. Liquidity

We find that liquidity has improved significantly in the second

period compared to the first. From the viewpoint of the country as a whole, the total

trading volume was higher in the second period by a factor of Rs.100 crore per day.

The NSE trades on all weekdays, and this helps generate liquidity on many days for

which the BSE is closed.

On the BSE, liquidity has been enhanced at the security level,

especially for smaller, thinly traded stocks. Among stocks with trading frequency

below 95%, the change in period 2 has two opposing components trading

frequency is higher by around 17 percentage points owing to BOLT, and when

NSE trades a given stock, it has an effect of -5 percentage points.

2. Market Efficiency

Market efficiency is the simple idea that prices are not forecastable,

because if they were, then thousands of profit-seekers would latch onto, and thus

eliminate the forecastability. The small degree of forecastability that is observed in

prices is caused by the cost of execution a combination of brokerage fees, and

the bid-ask spread. When profits from forecasting are smaller than these

transactions costs, will not exploit them, and hence they will not be eliminated.

Competition between the BSE and the NSE has led to a sharp drop

in brokerage fees, and the afore-mentioned improvements in liquidity have led to

tighter spreads. Hence we would expect enhanced market efficiency, which does

indeed prove to be the case. The degree of forecastability of prices is smaller today

than what it used to be prior to BOLT and the NSE. On a related track, we find that

the reaction time of the market to bad news is now faster than it used to be.

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3. Volatility

At first sight, the variance of BSE daily returns has dropped sharply,

but this primarily reflects the new method used to calculate closing prices. Earlier,

the closing price was the price seen on the last transaction. Under BOLT, the

closing price is the average of the last 20 market lots. On balance, it appears that

BSE volatility has risen slightly in the second period as compared with the first

period. When a stock trades on the NSE, this has a slight negative impact on the

BSE volatility of that stock.

This increase in volatility is not cause for alarm. Small increases in

volatility are known to accompany automation the world over, and are consistent

with enhanced market efficiency. Perhaps prices earlier were more sluggish in

reacting to information; higher market efficiency hence implies higher volatility.

4. Transparency

There are numerous allegations that the high-price and low-price

reported by the BSE used to be artificially exaggerated. Are high and low prices

reported under BOLT more accurate?

Based on economic theory, it is known that the high-low spread is

proportional to volatility. In our examination of volatility, we know that volatility is

slightly higher in period 2 as compared with period 1. If the accuracy of data is

unchanged, then the high-low spread should also be slightly higher in period 2 as

compared with period.

Instead, we find that the high-low spread has dropped sharply in

period las compared with period I. This is consistent with the view that the high

and low prices used to be exaggerated prior to BOLT, and the data released today is

more accurate.

3.4.2 Con's

1. Risk of Higher Volatility

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Volatility refers to the dynamic changes in price that securities undergo

when trading activity continues on the Stock Exchange. Generally, higher the

volatility of a My/contract, greater is its price swings. There may be normally

grater volatility in thinly traded securities/contracts than in active

securities/contracts. As a result of volatility, your order may only be partially

executed or not executed at all, or the price at which your order got executed may

be substantially different from the last traded price or change substantially

thereafter, resulting in notional or real losses.

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2. Risk of Lower Liquidity

Liquidity refers to the ability of market participants to buy and/or

sell securities / contracts expeditiously at a competitive price and with minimal

price difference. Generally, it is assumed that more the numbers of the orders

available in a market, grater is the liquidity. Liquidity is important because with

greater liquidity, It is easier for investors to buy and / or sell securities / contracts

swiftly and with minimal price difference, and as a result, investors are more likely

to pay or receive s competitive price for securities / contracts. As a result, your

order may only be partially executed, or may be executed with relatively greater

price difference or may not be executed at all.

3. Risk of wider Spreads

Spread refers to the difference in best buy price and best sell price. It

represents the differential between the price of buying a security and immediately

selling it or vice versa. Lower liquidity and higher volatility may result in wider

than normal spreads for less liquid or illiquid securities / contracts. This in turn will

hamper better price formation.

4. Risk-reducing orders

Most Exchanges have a facility for investors to place "limit orders", "stop loss

orders" etc". The placing of such orders (e.g., "stop loss" orders, or "limit" orders)

which are intended to limit losses to certain amounts may be effective many a time

because rapid movement in market condition may make it impossible to execute

such orders

5. System/Network Congestion

Trading on NSE/BSE is in electronic mode, based on satellite/leased

line based communication, combination of technologies and computer systems to

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place and route orders. Thus there exists a possibility of communication failure or

system problems or slow or delayed response from systems or trading halt, or any

such other problem/glitch whereby not being able to establish access to

the trading system/network. Which may be beyond the control of and may result

in delay in processing or not processing buy or sell orders either in part or in full.

You are cautioned to note that although these problems may be temporary in

nature, but when you have outstanding open positions or unexpected orders, these

represent a risk because of your obligations to settle all executed transactions.

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3.5 MARKET CAPTURE BY BOLT (SANGAMNER CITY)

At currently more than 45 to 50 terminals of different brokers

companies those are trade available which trade in BSE and NSE. exchange in

SANGAMNER every sub -broker has 100 to 150 client on average legally the

daily turnover every terminal has 75 Lakh to 1 crore on average. The person not a

member of exchange there can trade in the sub-broker account such client are

called as illegal or unrecorded client. The brokerage charge a compare to legal

client are high.

The population of iS SANGAMNERs about 12 to 14 lakhs from

which 0.50% people invest in online trading this much market captures by the

BOTL. This market is open fro all so anybody can trade those who fulfill me

requirement of exchange.

The investor percentage of trade worse.

The people of Amravati more interested to trade are intraday and F

and O based trade. They are interested in delivery-based trade also but less as

compares to intraday andFand O based trade. The trade of intraday and F and O

based having the minimum amount or the margin amount. But the delivery based

trade are not having the minimum or margin amount its required full payment of

the trade and the huge amount will be blocked for long period as compared to

intraday and F and O load.

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CHAPTER 4

NATURE & SCOPE

4.1 NATURE OF STOCK EXCHANGE

Basically the working of Stock exchange was done manually, But

after 1995 it was converted to online trading . The BSE's On Line Trading System

(BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified.

The surveillance and clearing & settlement functions of the Exchange are ISO 9001

2000 certified.

STOCK direct has changed the way you look at trading in securities.From your desktop you can now send instruction for buying/selling shares, a three-

way hand shake between leading brokers, national and international banks and |

SHCIL(Stock Holding Corporation Of India Ltd.) is the crux of STOCK direct.

STOCK direct is India's' first online trading platform was launched

in ?.Today STOCK direct is the most secure online trading platform which

combine j encryption technology/digital signature as well as Smart Card securities

features.

A few clicks will seamlessly check your funds and security position

l, route the order to broker of your choice and do the necessary fund. For people

who are inclined to trading on the net, we have RTMs(Request Transmitting

Machines) [placed at the specified SHCIL centers. This is an electronic touch

screen kiosk where [you can insert your Smart Card and trade effortlessly.

A single instruction enables you to combine your trading, fund and

share transfer whit SHCIL taking care of the settlement.

Trade from home on the Internet with floppy containing the STOCK

'direct software or use the Smart Card to trade through the Request Transmitting

Machines Placed at specified SHCIL centers and partners banks' designated

branches.

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4.2 SCOPE OF STOCK EXCHANGE

BSE has carved out a unique position among the Stock Exchange in

the world in respect of knowledge, development and management. It set up an

exclusive training 15 years ago, that has now emerged as a leading facility and

securities market training in India.

BSE training institute, which is famously known by its acronomy

BTI, enjoys the patronage of the entire spectrum of financial community in India.

Though BSE is recognized all over the world for its knowledge,

development and management but it has its training institutes in very less cities of

India. It has become a problem for the people in other cities to get trained with

BSE.

If some institutions be set up in the other part it will help the people

of near by area also or these institutes can emerge wit the other technical or

management

colleges.

Everybody wants the easy money; in future only the option is to

invest the money in online trading. Now a days, people avoid investing the money

in other investments such as Insurance, Fixed Deposit, etc. because the less return

is received during the certain period. In online trading more risk more return.

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5.1 Analysis showing broker wise qualifications

Table No. 1

Qualification Broker Percentage

H.S.C. 2 13%

Graduate 8 54%

Post Graduate 5 33%

Total 15 100%

Graph No. 1

0%

25%

50%

75%

100%

Percen

tage

H.S.C. Graduate Post Graduate

Qualification

Broker wise qualification

Interpretation

This table shows that most of the respondent have completed graduation i.e. 54%,

33% respondent are post graduate and 13% respondent completed H.S.S.C. also

the examination NCFM( Cash & Derivatives) is compulsory to registered as a sub-

broker.

5.2 Analysis showing existence as a stock broker

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Table No. 5.2

No. of Years Broker Percentage

1-2 year 7 45%3-4 year 3 20%

5-10 year 5 35%

Total 15 100%

Graph No.2

0%

25%

50%

75%

100%

Percentage

1-2 year 3-4 year 5-10 year

Year

Existance as a stock Broker

Interpretation

The above table shows that 45% of broker work in stock exchange from

last 1-2 years. 25% broker work from last 3-4 years and 35% of the broker work

from last 5-10 years.

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5.3 Analysis showing Average Daily turn over on STOCK EXCHANGE

Table 5.3

Turn Over Brokers Percentage

Below 25 lacs 0 0%25-50 lacs 8 53%

51-75 lacs 4 27%

75-1 crore 2 13%

1 crore above 1 7%

Total 15 100%

Graph No. 3

0%

25%

50%

75%

100%

Percentage

Below- 25 lacs 25-50 lacs 51-75 lacs 75-1 crore

Turn Ove

Average Daily Turnov

Interpretation

In this graph 0% of the stock broker have below 25 lacs average daily turn over,

53% have 25 to 50 lack daily turn over and 27% have 51 to75 lacs , 13% stock

broker have 75 to 1 crore and above 1 crore are 7%.

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5.4 Analysis showing Clients do Intra Day Trading

Table No. 5.4

Clint Below Brokers Percentage

Below 25 5 33%26-35 5 33%

36-45 3 21%

46-55 2 13%

Above 55 0 0%

Total 15 100%

Graph No. 4

Intraday Trading

0%

25%

50%

75%

100%

Below 25 26-35 36-45 46-55

Clients

Percenta

Interpretation

Out of Total number of Brokers say that the 33% have Below 25 clients and

26 to 35 clients do intra day trading ,21 % have 36 to 45 clients who do intra day

trading where as 13 % have 46 to 55 clients for intra day trading and no stock

broker more than 55 clients for intra day trading.

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5.5 Analysis showing client do delivery based Trade

Table 5.5

Client Below Brokers Percentage

Below 20 8 53%

21-30 5 33%

31-40 1 7%

41-50 1 7%

Above 50 0 0%

Total 15 100%

Graph No. 5

0%

25%

50%

75%

100%

Percentage

Below 20 21-30 31-40 41-50 Above 50

Clients

Delivery Based Trading

Interpretation

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Out of Total number of Brokers say that the 53% have Below 20 clients

do delivery based trading, 33% have 21 to 30 clients who do delivery based

trading, where as 7% have 31 to 40 and 41to50 clients for delivery based trading,

no stock broker more than 50 clients for delivery based trading,

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5.6 Analysis showing Future and Option based trade

Client Below Brokers Percentage

Below 10 5 33%11-20 8 53%

21-30 1 7%

31-40 1 7%

Above 40 0 0%

Total 15 100%

Graph No. 6

0%

25%

50%

75%

100%

Percentage

Below 10 20-Nov 21-30 31-40 Above 40

Clients

Future & Option based Trade

Interpretation

Out of Total number of Brokers say that the 33% have Below 10 clients

do Future & option based trading , 53% have 11 to 20 clients who do Future &

option based trading, where as 7% have 21 to 30 and 31 to 40 clients for Future &option based trading, no stock broker more than 40 clients for Future & option

based trading

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5. 7 Analysis showing the intraday and future and Option brokerage rate

Table no. 5.7

Paise Brokers Percentage

0-5 10 67%

6-10 5 33%

11-15 0 0%

Total 15 100%

Graph No. 7

Intraday and Future & Option Brokerage Rate

67%

33%

0%

0-5

10-Jun

15-Nov

Interpretation

Out of Total number of Brokers in that the 67% charge brokerage 0 to 05

paise for intraday , 33% brokers charge for 6 to 10 paise and no stock broker

charge brokerage more than 10 paise. The above brokerage rate charge for the

future and option based trade also if the position will be square of same day.

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5.8 Analysis showing delivery based brokerage rate

Table no. 5.8

Paise Brokers Percentage

21-40 7 47%41-60 6 40%

61-75 2 13%

Total 15 100%

Graph No. 8

0%

25%

50%

75%

100%

Percentage

21-40 41-60 61-75

Paise

Delivary Based Trade

Interpretation

Out of Total number of Brokers in that the 47% charge brokerage

21 to 40 paise for delivery based trading , 40% brokers charge for 41 to 60 paise,

13 % broker charge brokerage for 61-75 paise for delivery based trading.

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CHAPTER 6

CONCLUSION & SUGGESTIONS

6.1 CONCLUSION

In sangamner maximum investors depends on the broke for investment

decision

In sangamner he daily turnover of bolt is over all more than 2 crore

In sangamner e people are more interested in intraday trade and future

and opinion base trade.

There is a competition between the brokers about the brokerage rate

The investor choose the broker on the base of personal relations

The -speed-of-online transaction is not satisfactory

Many clients are doing online trading at home with their own accounts .

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6.2 SUGGESTION

The Trading Process should reduce the technical problem faced by theclient.

The transaction slip should be transferred to related DP through online

process.

The Broker Companies should provide the monthly information booklet

of the market to the investor.

The Broker Companies should provide the Demat Account facilities, free

of charges to the regular client,

The brokers company should provide mapin facilities for safety of the

Investorsaccount,

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APPENDICES

1. Firm name

2. Name of the parent's company

3. Your good name

4. Your qualification

5. Let me know your existence since as stock broker

6. Sir, may I know the documents required by the your parent's co. to get the

registration BSE and NSE.

7. May in know the procedure for the client account

8. May I know the number of client do you have

9. May I know the number of clients those trade as Intraday, delivery

based, F&O based

10. sir, may I get the idea about the brokerage charges Intraday, delivery

based, F&O based

11. Sir, may I have the idea

Study of Stock Broking Business in Sangamner

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