Sumit (Page)

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LUDHIANA STOCK

EXCHANGE

SUMMER TRAINING

REPORT

ON

ON-LINE TRADING

SUBMITTED BY:-

Sumit Goyal

3rd

Sem.

SAS IIT & MOHALI


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STUDENT DECLARATION

I hereby declare that the

Analytical study

On

OVERALL STUDY ON

ONLINE TRADING

IN

LUDHIANA STOCK EXCHANGE

Submitted in partial fulfillment of the

Requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION

To Punjab Technical University, Jalandhar is my original work and not

submitted for the award of any other diploma, degree.

Place: Ludhiana

Sumit Goyal

Date

Signature


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CERTIFICATE

This is to certify that the project report entitled ONLINE TRADING OF LUDHIANA

STOCKEXCHANGE submitted by Mr. Sumit Goyal is a bona fide piece of

work conducted under my direct supervision and guidance. No part of this work

has been submitted for any other degree of any other university.

It may be considered for evaluation in partial fulfillment of the degree of Masters in

Business Administration.

Harbhajan Singh

Signature


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ACKNOWLEDGEMENT

If words are considered as a symbol of approval and token of

appreciation then let the words play the heralding role expressing mygratitude

The world of capital market war far from me but I got an opportunity to

understand the capital market at LSE. While training I learnt many

things about capital market and its structure. So I am very thankful to

Ludhiana Stock Exchange association limited for giving me such

opportunity.

First of all I thank to that Gracie god who blessed me with all kinds of

facilities that had been provided to me for completion of my report.

I am also grateful to Mr Harbjajan Singh for permitting me to take the

training at Ludhiana stock exchange Ltd.

I acknowledge my deepest sense of gratitude and sincere feeling of

indebtness divine all my faculty members and Mr. Shami Kohli (senior

manager) under whose guidance and through their sustained efforts

and encouraging attitude IU was able to complete my project. It would

have been difficult to achieve the results in such a short span of time.

I want to express my sincere gratitude to all the staff members of LSE

for spending their precious time and sharing the value able informationwith me and in helping my project to be a success.


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PREFACE

For management career, it is important to develop managerial skills. In order

to achieve positive and concrete results, along with theoretical concepts, the exposure of

real life situation existing in corporate world is very much needed. To fulfill this need,

this practical training is required.

I took training in LUDHIANA STOCK EXCHANGE located in Ludhiana. It

was my fortune to get training in a very healthy atmosphere. I got ample opportunity to

view the overall working of the stock exchange.

This report is the result of my six weeks of summer training in LUDHIANA

STOCK EXCHANGE, as a part ofM.B.A. The subject of my report is- Online trading.


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Contents

1. Introduction

(A) Capital Market 7

(B)Stock exchange11

2. Objectives17

3. Online Trading 18

4. Research Methodology 54

5. Analysis and Interpretation 56


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6. Finding64

7. Conclusion 66

8. Limitations 67

9. Suggestion 68

10. Bibliography 69

11. Questionnaire 70

Introduction to the capital market

The capital market is the market for securities, where companies

and the government can raise long term funds. The capital market

includes the stock market and the bond market. Financial regulators

ensure that investors are protected against fraud. The capital markets

consist of the primary market, where new issues are distributed toinvestors, and the secondary market, where existing securities are

traded.


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Capital market thus plays a vital role in channelizing the savings of

individuals for Investment in the economic development of the

country. As a result the investors are not constrained by their

individual abilities, but by the abilities of the companies, which in turn

enhance the savings and investments in the country, liquidity of

capital market is an important factor affecting growth.

Since projects require long term finance, but on the other hand, the

investor may not like to relinquish control over their savings for a long

time. A liquid stock market ensures a quick exit without incurring

heavy losses or costs. Thus development of efficient market system is

necessary for creating conductive climate for investment and

economic growth.

Capital market Segment Primary And Secondary

Broadly , the comprises of twosegments the new issue market which is commonly known asprimary market and the stock market which is known assecondary market.

Primary


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A primary offering, such as with a corporate bond, meansyou are buying it directly from the issuer, at par value, usually. Asecondary market is where you sell or buy existing issues. I.E. Ifyou bought a bond last year, now need to get your principal, youcan sell it in the secondary market. You may not get par value. If

rates are up since you bought the bond, then you will likely haveto sell it at a discount to be able to get rid of it. If rates havefallen since you bought it, you could get a premium for it.

SecondaryThe market where securities are traded after they are initially offeredin the primary market. Most trading is done in the secondary market.To explain further, it is trading in previously issued financialinstruments. An organized market for used securities. Bombay StockExchange (BSE), National Stock Exchange NSE, bond markets, over-

the-counter markets, residential mortgage loans, governmentalguaranteed loans etc

Secondary Market refers to a market where securities are traded afterbeing initially offered to the public in the primary market and/or listedon the Stock Exchange. Majority of the trading is done in the secondarymarket. Secondary market comprises of equity markets and the debtmarkets. For the general investor, the secondary market provides anefficient platform for trading of his securities. For the management ofthe company, Secondary equity markets serve as a monitoring andcontrol conduitby facilitating value-enhancing control activities,

enabling implementation of incentive-based management contracts,and aggregating information (via price discovery) that guidesmanagement decisions.

INDIAN CAPITAL MARKET AT GLANCE


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1.

2020th century

1908

Formulation of Calcutta stock exchange

1939

Formulation of Lahore and madras stockexchange

1940

Formulation of U.P and Delhi stock exchange

1956

Securities contract and regulation act enacted

1957

Scam of Haridas Mundhra

1988

Securities and exchange board of India set up

1991

Scam of MS Shoes

1800

Trading of shares of east India company inKolkata And Mumbai

1850

Joint stock company came into existence

1860

Speculation and feverish dealing in securities

1875

Formulation of stock exchange of Mumbai

1894

Formulation of Ahmadabad stock exchange


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1992

SEBI given power Under SEBI act,1992

1993

Formation of National stock exchange

1995

HARSHAD MEHTA Scam

1995

SESA GOA Scam

1997

CRB scam

1998

BPL And Videocon Scam

21st century2000

Depositories came into existence (electronicform of shares)

2001

Ketan Parekh scam

2002

Start of rolling settlement and banning of Badlatrading

2002

Introduction of T+3 settlement in April

2003

Introduction of T+2 settlement in April

2005

BSE Sensex touches all time high 6954 in January

2006

BSE Sensex touches all time high 12500,thehighest intraday fall of 1100

2007

BSE reaches the level of

200 BSE touches all time high in January 2008


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2008

Sensex saw its highest ever loss of 1,408points at the end of the session.

2008

Sexsex saw its 15 month low,from its all timehigh

BRIEF ABOUT THE STOCK EXCHANGES

Stock Exchange is a market like any othercentralized market where both buyers and sellers come and conducttheir business of purchase and sale of shares & securities. In otherwords, it is a market place for shares and securities where tradingtakes place in a controlled and protected environment.

MEANING OF STOCK EXCHANGE

A stock exchange, share market or bourse is a corporation or mutualorganization which provides "trading" facilities for stock brokers and

traders, to trade stocks and other securities. Stock exchanges alsoprovide facilities for the issue and redemption of securities as well asother financial instruments and capital events including the payment ofincome and dividends. The securities traded on a stock exchangeinclude: shares issued by companies, unit trusts and other pooledinvestment products and bonds. To be able to trade a security on acertain stock exchange, it has to be listed there. Usually there is acentral location at least for recordkeeping, but trade is less and less


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linked to such a physical place, as modern markets are electronicnetworks, which gives them advantages of speed and cost oftransactions. Trade on an exchange is by members only. The initialoffering of stocks and bonds to investors is by definition done in theprimary market and subsequent trading is done in the secondary

market. A stock exchange is often the most important component of astock market. Supply and demand in stock markets is driven by variousfactors which, as in all free markets, affect the price of stocks (seestock valuation).

There is usually no compulsion to issue stock via the stock exchangeitself, nor must stock be subsequently traded on the exchange. Suchtrading is said to be off exchange or over-the-counter. This is the usualway that bonds are traded. Increasingly, stock exchanges are part of aglobal market for securities.

CONCEPT OF SHARE TRADING

The concept of share broking emerged after the establishment of the joint

stock companies. The ownership of the companies was divided into small

parts and that every part was called share. So, the term Share

denominates some part in the ownership of the company. The shares are

freely transferable subject to the some certain restrictions. When the need

was felt to sell the shares by the owner of the shares, it was difficult to find

out the buyers of the shares who want to buy the shares at the price the

seller want to sell. At that time a need was felt to bring the buyers and sellers

on a common platform. To solve this problem, a group of persons came into

picture, which used to bring the buyers and sellers together for the trade of

the shares. These persons are called the share Brokers who find the persons
http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)


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who wish to buy or sell their securities. The whole process of finding the

buyers and sellers of the securities by the brokers is called the Share Broking.

The origination of the Indian securities market may be traced back to 1975,

when 22 enterprise brokers under a Banyan tree established the Bombay

Stock Exchange (BSE). Over the last 130 years, the Indian securities market

has evolved continuously to become one of the most dynamic, modern

international standards both in terms of structure and in terms of operating

efficiency.

OPERATIONS OF LUDHIANA STOCK EXCHANGE

TURNOVER

Ludhiana Stock Exchange is one of the leading Stock Exchanges

among the Regional Stock Exchanges of the country, and has been

providing trading platform for the investors situated in Punjab, J&k,

Himachal Pradesh & Chandigarh. At present, it has 357 listed

companies and among them, 231 are listed as regional companies. It

had been generating significant amount of the business in the

secondary market. It recorded a peak turnover of Rs.9154 crores

during the year 2000-2001. The structural changes that took place in

the recent past in the Capital Market of the country had a negative


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impact on the trading volume of the Regional Stock Exchanges. There

has been a significant reduction of turnover during the financial year

2001-2002, but the reduction in the turnover of the Exchange has been

more than adequately compensated by substantial rise in the turnover

of LSE Securities Limited, a subsidiary of Ludhiana Stock Exchange.

LISTING

Listing is one of the major functions of a Stock Exchange wherein thesecurities of the Companies are enlisted for trading purpose. AnyCompany incorporated under Companies Act,1956, coming out withan IPO, has to mandatorily list its shares on a Stock Exchange.The Listing Department of Ludhiana Stock Exchange deals withlisting of securities, further listing of issues like bonus and rightsissues, post listing compliance of the companies which are already

listed with Ludhiana Stock Exchange. The Companies desirous oflisting its securities on the Exchange have to sign a ListingAgreement with the Stock Exchange. After getting the listingapproval, the Company has to ensure and report compliance of thepost listing requirements. The listing section of the LSE monitors thepost-listing compliance of all the listed companies and follows upwith the companies,which are found deficient in compliance.

PRESIDENTS/ CHAIRMEN


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Sh. S.P. Oswal 16.08.1983 to 27.07.1986

Sh. B.M. Lall Munjal 28.07.1986 to 15.10.1989

Sh. V.N. Dhiri 16.10.1989 to 30.10.1992

30.09.1998 to 04.10.2000

Sh. G.S. Dhodi 31.10.1992 to 22.12.1993

Sh. Jaspal Singh 23.12.1993 to 05.10.1995

01.10.1996 to 29.09.1998

06.10.2001 to 01.07.2002

Sh. M.S. Gandhi 06.10.1995 to 30.09.1996

Sh. R.C. Singal 05.10.2000 to 05.10.2001

Dr. B. B. Tandon, Chairman 25.06.2007 to 10.12.2007

Sh. S.P. Sharma, Chairman 15.12.2007 to till date


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SETTLEMENT CYCLE SCHEDULE

SR. NO. DAY DESCRIPTION OF ACTIVITYTRADE

1 T Trading Day

2 T+2 PAY IN BY 10.30 am.

3 T+2 PAY OUT BY 2 pm.

4 T+3 Auction of shortage indeliveries

5 T+5 Auction pay-in by10.30 (1 am/ pay

sssOut

by 2 pm.)


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Functions of Stock Exchange

Stock exchange is established into the main purpose of

providing a market place for the members to deal in securities under well laid

down regulations and to protect the interest of the investors. The main

functions of stock exchange are;

1. It brings the companies and investors together so that the investors

can put risk capital into companies and thus, companies can use the

capital.

2. It provides an orderly regulated market for securities.

3. It provides continuous, ready and open market for selling and buying

securities.

4. It promotes savings and investment in the economy by attracting

funds from the investors.

5. It facilitates take overs by means of acquiring majority of shares traded

on the stock market.

6. It acts as a clearing house of business information.

7. It motivates the managers of well reputed companies, to retain their

shares in A group, to improve performance.


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8. It induces the managers to improve performance for converting non-

specified shares into specified shares in the exchange.

9. It enables the investors to evaluate the net worth of their holdings.

10.It also allows the companies to float their shares in the market.

OBJECTIVES OF THE STUDY

1. To understand the appropriate organizational

structure of the LUDHIANA STOCK EXCHANGE

LTD and LUDHIANA STOCK EXCHANGE securities

LIMITED.

2. To analyse the online trading and its process.


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On Line TradingOn Line Trading


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Meaning of Online Trading

Change is the law of nature. There were times when man was a

wanderer or a normal. He himself had to go place to place in search of food,

water and now everything is available at your doorstep just at the click of the

mouse. The growth of information technology has affected almost all sectors

of life. Internet has enabled us to get every information at our doorstep.

When Internet has affected all sectors he could stock markets the most

important player of the economy, has remained far behind? Like all other

sectors Internet has set its feet in the stock markets also.

Internet trading commissions are clearly posted on the websites of the

various services, and are typically a fixed rate charge, depending upon the

type of security being traded and the size of trade. In theory, therefore, an

Interest investor always knows what commission he is being charged on each

trade. Internet investors can take as much time as they would like to take


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prior to placing a trade order. Similarly the online investor likely does not

have to worry that his broker is making unauthorized trades. Since there is no

individual broker making a commission, the only person who is authorized to

trace in a the account is the actual investor. Furthermore, the internet

investor can never become a victim of excessive trading (where for the

broker) since the investor maintains total control over the number of

transactions which take place in the account.

All of these positive features of internet trading may lead the unwary investor

to believe that Internet trading is a way to take control of their finances and

save more money in the process. Unfortunately, this is not always the case.

The advantages of Internet stock trading have also its weaknesses and these

weaknesses present significant drawbacks for the average investor.

First and foremost, the average investor is not an expert in the financial

markets. There is a danger for allowing the autonomy of online trading to hull

you into the belief that you are an expert investor. An online investor sitting

at home at a personal computer also foregoes proper investment advice and

financial planning, perhaps among the most valuable services provided by

traditional brokers.

There are, of course, additional risks relative to performing transactions over

the Internet especially on a shared computer. Those people whom investors

have provided their account number and password can freely trade that

account while the investor will have little, if any, resource against the

brokerage firm for the breach of security.

When was online trading introduced in INDIA?


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Online trading started in India in February 2000 when a couple pf brokers

started offering an online trading platform for their customers.

ONLINE TRADING BY NSE & BSE

The central computer located at the Exchange is connected to the workstations of the

Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders placed

at the Brokers' workstations reach the central computer and are matched by the computer

based on price and time priority.

Both the exchanges have switched over from the open outcry trading system to a fully

automated computerized mode of trading known as BOLT (BSE On Line Trading) and

NEAT (National Exchange Automated Trading) System. It facilitates more efficient

processing, automatic order matching, faster execution of trades and transparency. The

scrips traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups.

The 'A' group shares represent those, which are in the carry forward system (Badla). The

'F' group represents the debt market (fixed income securities) segment. The 'Z' group


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scrips are the blacklisted companies. The 'C' group covers the odd lot securities in 'A',

'B1' & 'B2' groups and Rights renunciations. key regulator governing Stock Exchanges,

Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants

in Indian secondary and primary market is the Securities and Exchange Board of India

(SEBI) Ltd.

DIFFERENCE BETWEEN ONLINE AND OFFLINEDIFFERENCE BETWEEN ONLINE AND OFFLINE

TRADINGTRADING

Nevertheless, with all the convenience of online tradingthere are still investors who prefer the old fashion way of offline

trading. Offline trading has lost some popularity but it is still the mainform of investing. Offline trading offers many benefits as well.

1. The one benefit that an investor appreciates the most is that theyare not alone when making investment decisions.

2. There are experienced and professional brokerage companies thathandle their investments for them.

3. Investors are not faced with the challenge of making these vitalinvestment decisions; especially, if they do not have the experience

necessary to make the appropriate investments.

4. Also, there is someone there to answer any questions that maycause concerns. Not to mention, with offline trading mistakes are lesslikely to take place. No one wants to throw their money away or standby and watch someone else throw their money away. It may be wise tohire a professional to assist you in making the correct investmentdecisions if you feel you lack the knowledge necessary.


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Points of difference between online trading and oflinetrading are as follows:

1. Online trading is very expensive as compare to manual trading oroffline trading.

2. Online trading consumes less time as compare to manual trading.

3. Online trading has very helpful to finding the records easily butoffline trading takes more time to finding the records.

4. In the help of online trading, there is no chance of any errors whiledoing the trading. in offline trading there are some errors exist likebarriers of communication .

5. With the help of online trading, we know the international market

rate of share very easily.

DEMATERIALISATION OF SHARES

Dematerialization is the process wherein shares certificates or other securities held in

physical form are converted into electronic form and credited to demat account of an

investor opened with a depository participant. SEBI has made compulsory trading of

shares of all the companies listed in stock exchanges in demat form with effect from 2nd

January 2002.The procedure of opening a demat account with DP is similar to opening an

account with a bank.

ELECTRONIC SETTLEMENT OF TRADE

A. Procedure for purchasing dematerialized securities


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The procedure for purchasing dematerialized securities is also similar to the procedure for

buying physical securities.

1. Investor instructs DP to receive credits into his account in the

prescribed form. There may be one time standing instruction or

separate instruction each time to receive credits.

2. Investor purchases securities in any of the stock exchanges linked to

depository through a broker.

3. Broker receives payment from investor and arranges payment to

clearing corporation.

4. Broker receives credit to securities in clearing account on the payout

day.

5. Broker gives instructions to DP to debit clearing account and credit

clients account. Investor receives shares into his account by way of

book entry.

B. Procedure of selling dematerialized securities

The procedure for selling dematerialized securities in stock exchanges is

similar as selling physical securities. The only major difference is that instead

of delivering physical securities to the broker, the investor instructs his DP to

debit his demat account with the number of securities sold by him and credit

the brokers clearing account. The procedure for selling dematerialized

securities is given below:

1. Investor sells securities in any of the stock exchange linked to

depository through a broker.

2. Investor instructs his DP to debit his demat account with the

number of securities sold and credit the brokers clearing

account.


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3. Before the pay-in-day, broker of the investor transfers the

securities to clearing corporation.

4. The broker receives payment from the stock exchange.

5. The investor receives payment from the broker for sale of

securities in the same manner as received in case of sale of

physical securities.

REMATERILISATION OF SHARES

Rematerialization is the process of conversion of electronic holdings of securities

into physical certificate form. For rematerilisation of scrips, the investor has to fill up a

remat request form (RRF) and submit it to the DP. The DP forwards the request to

depository after verifying the investors balances. Depository in turn initiates the

registrars and transfer agent or the issuer company. RTA/ Company prints the certificates

and dispatches the same to the investor.

Market timings:

Trading on the derivatives segment takes place on all days of the week (except Saturdays

and Sundays and holidays declared by the Exchange in advance). The

market timings of the derivatives segment are:

Normal Market / Exercise Market Open time : 09:55 hours

Normal market close : 15:30

hours

Set up cut of time for Position limit/Collateral value : till

15:30 hrs

Trade modification end time / Exercise Market : 16:15

hours


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Advent of online trading

The history of e-trading goes back to 1983, when a doctor in Michigan placed

the first online trade using E*TRADE technology. what began with a single

click over 16 years ago has now taken the world by storm. The concept was

visualized by one bill porter, a physicist and inventor with more than dozen of

patents to his credit, who provided online quotes and trading services to

fidelity, Charles Schwab, and quick and Reilly. This led bill to wonder why, as

an individual investor, he had to pay a broker hundreds of dollars for stock

transactions. with incredible foresight, he saw the solution at hand, some day

everyone would own computers and invest through them with unprecedented

efficiency and control. And today his dream has become a reality.


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SHARE OF ONLINE TRADING IN TOTAL CASH

TURNOVER OF NATIONAL STOCK EXCHANGE

Table 1.1(Year 2003)

MONTH CASH

TURNOVER(cr.)

ONLINE

TURNOVER(cr.)RATIO(%)

January 64,762.24 1,923.34 2.97

Feb 48,289.18 1,559.07 3.23

March 43,159.93 1,302.69 3.02

April 48,971.31 1,425.83 2.91

May 54,690.14 1,981.36 3.62

June 61,585.35 2,142.41 3.48

July 78,877.63 2,720.59 3.45

August 85,346.58 3,301.88 3.87

September 1,03,345.50 3,825.88 3.70October 1,15,595.32 4,344.33 3.76

November 92,885.71 4,024.02 4.33

December 1,10,372.64 5,876.21 5.32

Source: Ludhiana stock exchange

TABLE-1.2 (Year 2004)


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MONTH CASH TURNOVER ONLINE TURNOVER RATIO

January 1,34,268.72 6,015.04 4.48

February 1,08,718.06 5,170.01 4.76

March 1,04,876.53 4,330.23 4.13

April 1,00,951.17 5,244.27 5.20

May 98,919.93 5,187.01 5.24

June 84,898.47 5,358.95 6.31

July 93,836.13 6,819.45 7.27

August 86,855.72 6,192.31 7.13

September 88,508.05 6,976,.41 7.88

October 75,697.32 6,261.90 8.27

November 82,035.27 7,490.16 9.13

December 1,15,593.10 11,000.62 9.52

Source: Ludhiana Stock Exchange

MONTH CASH TURNOVER ONLINE TURNOVER RATIO

Table 1.3(Year


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January 68,718.95 1,251.84 . 1.82

February 49,563.77 917.80 1.85

March 44,262.50 868.85 1.96

April 53,320.02 914.73 1.72May 54,979.06 1,237.28 2.25

June 44,241.07 1,108.66 2.51

July 51,398.43 1,290.57 2.51

August 46,113.05 1,310.78 2.84

September 46,498.62 1,318.01 2.84

October 51,902.22 1,476.51 2.85

November 51,351.48 1,639.28 3.19December 61,973.34 1,915.65 3.09


TABLE-1.4(Year 2006)

MONTH CASH TURNOVER ONLINE TURNOVER RA TIO

April 57,229.44 5.85 0.01

May 79,036.68 29.1 0 0.04

June 1,19,373.43 88.58 0.07

July 1,10,056.22 97.49 0.09

August 1,25,347.04 165.09 0.13

September 1,42,479.78 229.98 0.16

October 1,06,854.21 190.18 0.18

November 1,22,731.11 350.79 0.29

December 1,31,414.65 366.75 0.28



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TABLE-1.5(year 2007)

MONTH CASH TURNOVER ONLINETURNOVER

RATIO

January 1,48,829.84 1,130.49 0.76

Februmy 1,35,932.23 1,573.62 1.16

March 60,226.21 849.81 1.41

April 35,615.63 268.9 0.76

May 48,329.11 343.92 0.71

June 42,783.00 238.47 0.56

July 27,227.76 401.68 1.48

August 29,417.15 388.98 1.32

September 35,322.82 453.58 1.28

October 35,326.454 604.17 1.71

November 42,132.23 805.86 1.91

December 54,467.79 1,048.24 1.92


Internet Based Trading through Order Routing

Systems


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Internet based trading on conventional exchanges, uses the Internet as a

medium for communicating client orders to the exchange, through broker web sites.

Brokers web sites may serve a variety of functions. These may include;

Allowing the clients to directly trade through investors;

Advertise the broker dealers services to potential investors;

Offer market information and investment tools similar to those offered by

information vendor or SRO web sites;

Offer real-time or delayed quote information, continuously update quotes

while the user visits other sites, or allow investors to create a personal

stock ticker;

Provide market summaries and commentaries, analyst reports and trading

strategies and market data on currencies, mutual funds, options, market

indices and news; and

Offer investors access to portfolio management tools and analytic

programs;

Information on commission and fees; and

Account information and research reports.

In an Order Routing system, a broker offering Internet trading facility

provides an electronic template for the customer to enter the name of the security,

whatever it is to be bought or sold, the quantity and whatever the order is a market

or limit order. Once the brokers system receives this information.


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Use of Internet as Alternative Trading Systems (Provision

for price discovery and matching outside conventional

exchanges)

In foreign jurisdiction, Alternative trading systems have been developing

outside conventional securities markets, which provide investors with additional

proprietary electronic trading facilities for securities that are traded principally on

securities exchanges, or other organized markets. They have price discovery

functions, matching systems and crossing systems. The systems that are currently

in use in outside jurisdictions are closed systems and are not accessible to the

general public through the Internet. The securities markets regulators abroad the

maintained flexible and open policies designed to encourage innovation in the

secondary securities markets. As a result, a number of market participants, usually

broker-dealers, have developed computerized alternative trading systems by

which the system centralize, display, match, cross or otherwise execute trading

interest.

Use of Internet for making Initial Public Offerings

Issues of securities of using the Internet to communicate directly with their

shareholders, potential investors and analysts by disseminating corporate

information. In foreign jurisdiction, they are also using the Internet to communicate

to the public for the following:

Public offerings;

Private offerings; and

Disclosure and communication

Issuers are using the Internet to market themselves to potential investors. The

Internet is also being used for fulfilling necessary disclosure requirements, for

disseminating the prospects in electronics form and even for receiving share

applications in public issues electronically. In India, SEBI has taken initiative in


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permitting use of the network of stock exchange for collection of investor

applications in public offerings by the issuer companies.

Investment Advisory Services

Brokers as well as other service provides such as investment firms, research

outfits etc. are using the Internet for marketing and advertising purposes, for

presenting information on portfolio analysis and market information, and for

communicating with and receiving orders from potential investors. The services

offered by the service providers to the investors are generally the following:

Advertising

Providing investment information and investment advice;

Underwriting

Communicating with the investors;

Customer orders; and Record keeping


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Working Groups set up by the Committee

Considering the present state of capital markets in India and keeping in view

the ongoing developments in Internet based securities business, it was felt that

SEBI as a regulator could strive to identify areas where use of Internet in the capital

market is possible within the existing legal framework. One such area identified by

the Committee, which is also the central within the existing legal framework. One

such area identified by the Committee, which is also the central theme of this

report, is the area of Internet trading on existing electronic exchange. In this area,

through early introduction of Cyber Laws would be highly describe but their

existence is not a necessary precondition. To look into the existing regulatory

scenario and to bring out some ground rules for use of the medium of Internet, the

Committee therefore constituted the following two working groups to look into the

area of:

i. Security protocols and standardization of interfaces for Interest based

securities trading, chaired by Prof. Deepak B. Phatak, IIT, Pawai, Mumbai

ii. Surveillance and monitoring related issues arising due to Interest based

securities trading, chaired by Shri. L.K. Singhvi, Sr. ED, SEBI

The committee also requested Ms D N Raval, Executive Director, SEBI to

examine the legality of introduction of Internet trading and issue of Alternative

trading systems. This report of the standing committee examines the regulatory

and security requirements Internet Based Trading on Conventional Exchanges.

Separate reports (s) will cover the other areas related to Internet applications in the

securities markets.


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The report of the first working group on security protocols and standardization of

interfaces has since been submitted and incorporated in the report. The committee

would like to place on record its sincere thanks to Dr. D.B. Phatak, Ms. D.N. Raval

and their team members. The global financial market is undergoing a

transformation due to rapid technological developments. It thus becomes

imperative that for developing in effective regulatory framework developments in

other parts of the world should be studies and analyzed.

With nearly who million on-line investors, Internet trading in the United States is

growing by leaps and bounds. Internet trading is being facilitated by large

brokerage houses, thus changing the total concept of securities trading. A team

comprising of members from stock exchanges and SEBI visited the United states to

these development and had interactions with brokerages houses, Internet serviceproviders and other agencies involved in facilitating Internet trading. The team also

discussed the developments in the emerging regulatory and supervisory framework

in United States with the Securities and Exchange Commission officials. They were

also tripped of the various initiatives taken by SEC in this regard. These inputs have

been utilized while drafting this report.

Recommendations of the Committee

Application for Permission by Brokers

SEBI registered Stock Brokers interested in providing Internet based trading

services will be required to apply to the respective stock exchange for a formal

permission. The stock exchange should grant approval or reject the application as

the case may be, and communicate its decisions to the number within 30 calendar

days of the date of completed application submitted to the exchange. The stockexchange, before giving permission to brokers to start Internet based services shall

ensure the fulfillment of the following minimum conditions.

Net worth Requirement


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The broker must have a minimum net worth of Rs. 50 lacs if the broker is providing

the Internet based facility on his own. However, if some brokers collectively

approach a service provider for providing the interest trading facility, net worth,

criteria as stipulated by the stock exchange will apply. The net worth will be

computed as per the SEBI circular no FITTC/DC/CIR-1/98 dated June 16, 1998.

Operational and System Requirements:

Operational Integrity:

The stock Exchange must ensure that the system used by the broker has provision

for security, reliability and confidentiality of data through use of encryption

technology. This stock exchange must also ensure that records encryption

technology. The stock Exchange must also ensure the records maintained in

electronic from by the broker are not susceptible to manipulation.

System Capacity

The stock Exchange must ensure that the brokers maintain adequate backup

systems and data storage capacity. The stock Exchange must also ensure that the

workers have adequate system capacity for handling data transfer, and arranged

for alternative means of communications in case of Internet link failure.

Qualified Personnel:

The stock Exchange must lay down the minimum qualification fro personnel to

ensure that the broker has suitably qualified and adequate personnel to handle

communication including instructions as well as other back office work which islikely to increase because of higher volumes.

Written Procedures:


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Stock Exchange must develop uniform written procedures to handle contingency

situations and for review of incoming and outgoing electronic correspondence.

Signature Verification/ Authentication:

It is desirable that participants use authentication technologies. For this purpose is

should be mandatory for participants to use certification agencies as and when

notified by Government/SEBI. They should also clearly specify when manual

signatures would be required.

Client Broker Relationship

Know Your Client:

The stock Exchange must ensure that brokers have sufficient, verifiable information

about clients, which would facilitate risk evaluation of clients.

Broker- Client Agreement:

Brokers must enter into an agreement with clients spelling out all obligations and

rights. This agreement should also inter alia, the minimum service standards to be

maintained by the broker for such service specified by SEBI/Exchange for the

internet based trading from time to time. Exchange will prepare a model agreement

for this purpose. The broker agreement with clients should not have any clause that

is less stringent/contrary to the conditions stipulated is the model agreement.

Investor Information:

The broker web site providing the internet based trading facility should contain

information meant for investor protection such as rules and regulations affectingclient broker relationship arbitration rules, investor protection rules etc. The broker

web site providing the Internet based trading facility should also provide and display

prominently, hyper link to the web site/page on the web site of the relevant stock

exchange (s) displaying rules/ regulations/ circulars. Ticker/quote/order book


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displayed on the web-site of the broker should display the time stamp as well as

source of such information against the given information.

Order/Trade Confirmation:

Order/Trade confirmation should also be sent to the investor through email at

clients discretion at the time specified by the client in addition to the other made of

display of such confirmation of real time basis on the broker web site. The investor

should be allowed to specify the time interval on the web site itself within which he

would like to receive this information through email. Facility for reconfirmation of

orders which are larger than that specified by the member's risk management

system should be provided on the internet based system.

Handling Complaints by Investors:

Exchanges should monitor complaints from investors regarding service provided by

brokers to ensure a minimum level of service. Exchange should have separate cell

specifically to handle Internet trading related complaints. It is desirable that

exchanges should also have facility for on-line registration of complaints on their

web site.

Risk Management:

Exchanges must ensure that brokers have a system-based control on the trading

limits of clients, and exposures taken by clients. Brokers must set predefined limits

on the exposure and turnover of each client. The broker systems should be capable

of assessing the risk of the client as soon as the order comes in. The client should

be informed of acceptance/rejection of the order within a reasonable period. In case

system based control rejects an order because of client having exceeded limits etc.,the broker system may have a review and release facility to allow the order to pass

through.

Contract Notes:


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Contract notes must be issued to clients as per existing regulations, within 24 hours

of the trade execution.

Cross Trades:

As a matter of abundant precaution, the committee seeks to reiterate that as III the

case of existing system, brokers using Internet based systems for routing client

orders will also not be allowed to cross trades of their clients with each other. All

orders must be offered to the market for matching.

It is emphasized that in addition to the requirements mentioned above, all existing

obligations of the broker as per current regulation will continue without changes.

Exchanges may also like to specify more stringent standards as they may deem fit

for allowing Internet based trading facilities to their brokers.

Enforcement: A separate working group has been set to look into the

surveillance and enforcement related issues arising due to Internet based securities

trading. However, general anti-fraud provisions (SEBI Fraudulent and Unfair Trade

Practices Regulations, 1995) would apply to all transactions involving securities or

financial services, regardless of the medium.

FEATURES OF ONLINE TRADING:The Online Trading is having many

features which make it most suitable for the investors to go for. Some of these

features are as follows:

The Internet can provide a new sense of control over your financial future. The

amount of investment information available online is truly astounding. It's one of

the best aspects of being a wired investor. For the first time in history, any

individual with an Internet connection can:


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Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock

markets and the global economy

Conduct extensive financial research on any company

One of the great appeals of using an online trading account is the fact that the

account belongs to you, and is under your direct control. When you want to buy or

sell stock, you no longer need to call your broker on the phone; hope that he is in

the office to place your order; possibly argue with the broker about the order; and

hope that the transaction is executed instantly.

At the most basic level, an online trading account gives you more agility in buying

and selling stocks. This is through sophisticated information streams, dedicated

trading platforms and sophisticated tools for accessing the markets.

Every broker house aims at providing the investor with the best price available. Alsodue to the high level of transparency with regard to display of information relating

to the specific stocks and company profiles, you will be able to get the best quote

for your orders.

Online trading offers you greater transparency by providing you with an audit trail.


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This involves a complete integrated electronic chain starting from order placement,

to clearing and settlement and finally ending with a credit into your depository

account. All these stages are subject to inspection, thus bringing in transparency

into the system.

Online trading integrates your bank account, your trading account and your demat

accounts, which leads to easy and paperless trading for you.

You as an Investment online customer will be able to execute the entire trading

transaction, right from logging on to our site, to the execution and settlement of

your bank account, in a very short period of time.

Trading on the net, gives even the smallest retail investor access to information

that earlier was available only to the big traders. This provides a level playing field

for all investors in the securities market.

This method of trading reduces the settlement risk for the investor, as in this case

all short sell orders are squared off at the specified cut-off time and not allowed to

be carried forward.

In the case of a demat account your demat account is checked by us before

executing your sell transaction. This reduces the settlement risk for the buyer, who

is assured of the delivery of the securities and for you as a seller of the securities

Every trade is confirmed immediately and you will receive an on-screen

confirmation following every trade with full details for your records. This avoids

costly errors that would have been discovered when it is too late.


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Your Bank, Depository and online account are integrated for your convenience.

Various broking houses provide access to many of the popular banks.

Broking houses work hard to keep our account and personal information secure.

From updated security technology to advanced fraud prevention measures, they

have the people and tools in place to provide a strong defense against electronic

scams and fraud.

BENEFITS OF ONLINE BROKING

1) Less Costly:

The most significant advantage of the Online broking is the cost reduction in the

brokerage. Due to the power of the Internet one has the privilege of becoming the

clients of really large brokerages with the benefits of enjoying the low charges

hithelio before enjoyed only by the big players. As the DP account has got linked to

the trading account most players do not charge a minimum transaction cost thus

truly allowing one to buy a single share and achieve meaningful rupee price

averaging whatever be your buying power.

2) Peace of Mind:


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One can never have complete peace of mind but online investing does away with

the hassles of filling up instruction slips, visits to the broker for handing over these

slips and consequent costs.

3) Keeping Records:

The site one trades on keeps a record of all transactions down to unexecuted orders

and cancelled orders thus keeping one abreast of all your transactions 24 hours a

day. No paperwork means more time at ones disposal for research and analysis.

4) Access to Information and investment Tools:

Most online investing sites have a wealth of information for their registered

members. This includes research reports, results, analysis and even gossip and thebuzz in the market.

5.) Unparalleled Liquidity:

The. bank account linked with the trading account invariably has an A TM free. Most

partner banks offer Internet banking as well. This results in ones money becoming

available to him whenever he like from his trading account. Conversely in case he

spot an opportunity in the market he can immediately allocate money from his

savings account to his trading account and make profits.

6.) Unparalleled Safety:

Most sites are secure using 128-bit algorithms -highest available commercially

anywhere in the world. Moreover even if somebody broke in and tampered with

ones account the money from the stocks he sold or the stock bought from the

money in his account is in his account only.

7.) Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in this case

no Short sale is possible i.e. the seller will not be able to sell the securities unless he

has their actual possession. In the case of a demat account (required for an online

transaction), when a seller wants to sell the securities, his demat account is


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checked by the Depository Participant before executing the sale transaction. This

reduces the settlement risk for the buyer, who is assured of the delivery of the

securities.

8.) Offers greater transparency:

Online trading gives greater transparency to the investors by providing them an

audit trail. This involves a complete integrated electronic chain starting from order

placement, to clearing and settlement and finally ending with a credit to the

depository account of the investor. All these stages are subject to inspection, thus

bringing in transparency into the system.

9.) Ease of trade:

It is the ease of doing the trade through net, with a click of mouse, one can buy or

sell any share that is dematerialized.

Other than the above-mentioned advantages, Internet trading provides some

additional advantages to the investors, brokers and also helps the nation to

channelize the resources. Net trading would increase competition in the market

hence increase in the bargaining power of the investors. The entire communication

between the investor, broker and exchange would take place within milliseconds.

PROBLEMS OF ONLINE BROKING

There is a flip side to everything and online trading is no exception.


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Chart

21%

23%

27%

11%

14%

4%

More Costly

Lack Of Know ledge

Loyalty to Traditional Broker

Lack of Trust

Slow Speed

Other

Source:- www.lse.co.in

27% Loyality is of traditional broker

23% people says that online trading is more costly than manual trading.

21% people not prefer online trading because of lack of knowledge.

So, the main problems of online trading are as follows:

1.) "Server not found":


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This may appear on ones screens when he is desperately trying to get out of an

unprofitable position. Some of the online sites are providing a telephone number for

use in case their sites are overloaded or their server down.

2.) Connectivity of the Broker with NSE:

Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours

during trading hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of ones broker he is protected

only if the company is taking proper precautions against such attacks and if proper

backup is regularly been taken. He may like to choose a brokerage that has a stated

security policy and contingency plan in place.

4.) Non-availability of a seamless interface:

As a client one will access the NSE through a server of the online brokerage and this

may involve queuing delays. If a number of client access the server the server takes

its own time sending the orders to the NSE server. He must check out the

seamlessness of this interface before selecting an online brokerage. The faster the

orders are processed the more seamless is the interface.

5.) Non- availability of personalized advice:

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do

so. If he want advice on a particular stock in his portfolio he may not even be able

to get that.

6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading on

margin. That is where the brokerage firm lends you money by leveraging his

account, allowing him to buy a large amount of securities by putting up only a small

amount of money. He may have forgotten what he read in the small print of his

agreement, but the brokerage firm has the right to change the maintenance margin

requirements without any warning or notice to him. In fact, the firm has the right to


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liquidate his securities holdings (and it can pick and choose which ones) without any

notice to one if he fail to meet the margin call. And there he was leveraged to the

hilt, hoping to hit a home run when he discovered that he is required to make a

large deposit that he cannot make. The next thing one know, the firm is selling off

his securities at a point in time that is not the best for him. These are the perils of

trading on margin.

7.) Little use of advisory services:

The advisory services being promised by the brokers would be of little use to

investors looking for an insight into the market. Many would not like to rely on

research reports, which are there for all. So, net investors will have to do their ownresearch and take their own decision, whether wild or wise.

8.) Increased charges:

Some of the brokers are of the view that they would have to provide advisory

services to the customers. But with increased volumes, they will have to follow the

international practice of charging a little more than the normal charges from a

customer looking for personal advice.


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WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING

Several broking houses now offer online trading facilities. You can trade online withe-brokerages such as ICICI Direct, Kotakstreet, India bulls, India info lines

5paisa.com and HDFC securities.

If you are already comfortable trading with your regular broker, here are few

reasons why you may consider switching to trading online, or at least another

avenue of trading. an obvious advantage of online trading is that your transaction

would be virtually paperless. Your trading account would be linked to your demat

and bank account, ensuring a smooth transaction process. This is especially helpful

in the extent T+2 settlement system, where you have just two days to settle your

transaction.

The normal process of issuing of delivery note, in case of a sale, or arranging for a

payment in case of purchaser of shares, is all taken care of the minute your order is

executed online. The absence of manual intervention ensures that you are

completely in control of all transaction.

There is also little room for error, as your order is always confirmed before it is

executed. You can also make better decision as you have a clear record of all your

previous transaction. When you trade offline, a demat statement is normally sent to

you only on a quarterly basis .keeping track of your portfolio can be a hassle in such

a case. The inter net can provide a new sense of control over your financial future.

The amount of investment information available online is truly astounding. Its one

of the best aspect of being a wired investor for the first time in history, any

individual with an internet connection can:

Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock markets and

globe economy.


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Conduct extensive financial research on any company

Talk with other investors around the world

At investsmart you can get real-time stock quotes, daily roundups of the stock

market, experts commentary, and a deep community of fellow investors.

Convenience is probably the greatest advantage online trading offers investors. if

dont have time to trade during market hours ,perhaps you are at work, you can log

on the web-trading site and place your order offline, during off market hours. Your

order would join the queue and be expected the next day. You would need to enjoy

a good relationship with your broker, for you to be able to reach him in the late

hours. For non-resident Indians (NRI), trading online is perhaps their easiest option

to invest in the Indian stock markets.

What is more, the time difference, in some cases, can work to their advantage

.Antony, an NRI-based in New York, places his order in the evening after work, when

it is day time India and the markets are open. We also have access to considerable

information online. By just logging on to ICICI direct online, for instance, we can get

the latest news, market information and company research.

Moreover, if our connection is maddeningly slow and we want to get your order

executed immediately, most e-brokerages also provide a facility to trade offline by

placing our order via the phone.


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PROCESS OF ONLINE TRADING

An investor interesting in trading through Internet shall have to, firstly register

himself with an Internet brokerage firm. Some formalities such as filling the account

opening form of the e-broker, copies of identity proof, copy of residence proof are

made to register himself with the e-trader. Secondly, the investor would be required

to open a bank account with a scheduled bank and sufficient balance should be kept

in the account. Thirdly he would be required to open account with a depository

participant because only dematerialized shares can be traded on Internet.

The client places order via the net by logging on to his

The broker accepts and executes the order and

laces it with the exchan e

The exchange accepts the order after checking the share limit

The broker makes the payment either directly via the client bank

account or pays through its own account and recovers it later

The exchange receives money and completes the


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So, generally following steps are followed while doing the trading through the

Internet:

Step-I:

Those investors interested in doing the trading over Internet system, that is,NEAT -

ISX (NSE), should approach the brokers and register with the Stock Broker.

Step-2:

After registration, the broker will provide to them a login name, password and a

personal identification number (PIN).

Step-3:

Actual placement of an order, Using the place order window as under can then

place an order:

(a) First by entering the symbol and series of stock and other parameters such as

quantity and price of the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step-4:

The client is intimated about the settlement either

through the demat or via e-mail.


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It is the process of review. Thus, the investor has to review the order placed by

clicking the review option. He may also re-set to clear the values.

Step-5:

After the review has been satisfactory; the order has to be sent by clicking on the

send option.

Step-6:

The investor will receive an "Order Confirmation" 'message along with the order

number and the value of the order.

Step- 7:

In case the order is rejected by the Broker or the Stock Exchange for certain

reasons such as invalid price limit, an appropriate message will appear at the

bottom of the screen. At present, a time lag of about ten seconds is there in

executing the trade.

Step-8:

It is regarding charging payment, for which there are different modes. Some brokers

will take some advance payment from the, investors and will fix their trading limits.

When the trade is executed, the broker will ask the investor for transfer of funds by

the investor to his account.


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CLIENT BROKER STOCK EXCHANGE

Places an order on

the net on thebrokers website

through the

distinctive I.D.

code

Accepts the

order, Checksthe clients

Identity and

places the

order with the

stock

exchange

Accepts the order

after checking thescrip limit of the

broker for the day

Executes the

order

The settlement of

the deal (buy/sell

order) gets

reflected in hisDemat account.

The client is

intimated about

the execution of

the deal by e-mail.

Pays the broker

pending physical

delivery.

Pays the

Exchange

though his

owns account

and receives it

from the client

account.

Receives the

money and

completes the

settlement

55

THE MECHANICS OF ONLINE TRADING


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Rolling Settlement Cycle :

In a rolling settlement, each trading day is considered as a trading period and trades executed

during the day are settled based on the net obligations for the day. At NSE and BSE, trades in

rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. For arriving at the

settlement day all intervening holidays, which include bank holidays, NSE/BSE holidays,

Saturdays and Sundays are excluded. Typically trades taking place on Monday are settled on

Wednesday, Tuesday's trades settled on Thursday and so on.

Concept Of Buying Limit

Suppose you have sold some shares on NSE and are trying to figure out that if you can use the

money to buy shares on NSE in a different settlement cycle or say on BSE. To simplify things

for ICICI Direct customers, we have introduced the concept of Buying Limit (BL). Buying Limit

simply tells the customer what is his limit for a given settlement for the desired exchange.

Assume that you have enrolled for a ICICI Direct account, which requires 100% of the money

required to fund the purchase, be available. Suppose you have Rs 1,00,000 in your Bank A/C and

you set aside Rs 50,000 for which you would like to make some purchase. Your Buying Limit is

Rs 50,000. Assume that you sell shares worth Rs 1,00,000 on the NSE on Monday. The BL

therefore for the NSE at that point of time goes upto Rs 1,50,000. This means you can buy shares

upto Rs 1,50,000 on NSE or BSE. If you buy shares worth Rs 75,000 on Tuesday on NSE your

BL will naturally reduce to Rs75,000. Hence your BL is simply the amount set aside by you

from your bank account and the amount realized from the sale of any shares you have made less

any purchases you have made. Your BL of Rs 50,000, which is the amount set aside by you


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from your Bank account for purchase is available for BSE and NSE. As you have made the sale

of shares on NSE for Rs.100000, the BL for NSE & BSE rises to 1,50,000. The amount from

sale of shares in NSE will also be available for purchase on BSE. ICICI Direct

Future Agenda:

Under the existing legal and regulatory framework, SEBI registered brokers can

offer trading on Internet through order is routing systems. However, with the rapid

development of the technology, we have to evolve fisher steps in this direction it is

therefore proposed that as the next step link between the depositories and banks

shall be established after the necessary regulations have been passed. This would

reduce the clearing and settlement time and would also minimize the risk of all the

participants involved in the transactions. We have to look forward towards

achieving an ideal scenario where all the services related to securities markets

including marketing of initial public offers on internet, providing investment

advisory services to the clients, broking, clearing and settlement etc., are provided

on the Internet by an intermediary. In a nutshell it can be said that we are moving

towards a one-stop service center.


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RESEARCH METHODOLOGY

The basic task of research is to generate accurate

information for use in decision making. Research can be defined as the

systematic and objective process of gathering, recording and analyzing data

for aid in making business decisions.

There are basically two techniques adopted for obtaining information:

1. Primary Data.

2. Secondary Data.

Primary Data is gathered specifically for the project at hand through

personal interviews with the accounts officers.

Secondary data is previously collected and assembled for some

project other than the one at hand. It is gathered and recorded by someone

else prior to current needs of the researcher. It is less expensive than the

primary data.

SECONDARY DATA


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Secondary data was collected from Ludhiana Stock Exchange

Scope of study:

The study is limited to Ludhiana Stock Exchange , Firoz Gandhi Market Ludhiana

Data Collection:

Data is collected from secondary sources.

Sources of data collection are:

1) Ludhiana Stock Exchange

2) www.nseindia.com

3) www.bseindia.com

4) www.on-linetrading.com

For the successful research the manipulation of certain things, concepts, andsymbols for the purpose of generalization is inevitable. Research is simply the pursuit of

truth with the help of the study.
http://www.on-linetrading.com/http://www.on-linetrading.com/


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ANALYSIS & INTERPRATATION

Dear respondent,

I am student of MBA. I am working on theproject of On-Line trading. You are requestedto fill the questionnaire to enable, to undertakethe study on the said Project.

Name.

Occupation

Address

Phone no.

1. For how long you have been trading with on line-trading?

(a)1 year (b) 2 year

(c) 3 year (d) 4 year

Sample size 50


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0

10

20

30

40

50

YEAR

1 year

2 year

3 year

4 year

According to this survey we find that 44% people says that weare investing the money online from one year and 26% people

says that we are investing the money online from 2 years and19% to 11% people says that we are investing money onlinefrom 3 to 4 year. so we can say that now online trading is verypopular in the modern market.

2. How will you describe your experience with on-line trading tilldate?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

Sample size 50


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0

10

20

30

40

50

60

Experience

I find it very easy to operate

I find it very difficult tooperate

I feel it is not secure

Any other

According to this survey we find that 60% of people find very easy to

operate and 15% people find diffcuilt two operate and 10% and 15%people find no secure and any other. so we can say that online tradingis very simple to operate and easy to understand.

3. what amount of money you invest normally ?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount

Sample size 50

0

5

10

15

20

25

30

35

Money

50000

100000to150000

150000to200000

Any Other


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According to this survey we find that 35% of people investmoney normally 50000 and 28% of people invest money100000to150000 and 23% and 14% of people invest moneybetween 150000to200000 and any other. So we can say that thepeople are not invest more money in the share market because

there is a great risk involved while doing the trading.

4. How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month

Sample Size 50

0

510

15

20

25

30

35

40

Time

daily

weekly

monthly

more than 1 month

According to this survey we find that 10% of people do trade Dailyand 40% people do trade weekly and 32% and 18% people do trademonth and more than month. So we can say that people aregenerally invest in stock market weekly basis.


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5. which trading you prefer?

(a) On line trading (b) Manual trading

(c) Both

Sample Size 50

0

10

20

30

40

50

Relationship

On line trading

Offline trading

Both

According to this survey we find that 20% people prefer onlinetrading and 32% people prefer offline trading rest of 48% peopleprefers both. So we can say that mostly people are awarenessabout the on line trading and because of this reason the mostly

people are optimizing offline trading.


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6. Whether online trading settled in Indian investor psyche

(a) Yes (b) No

Sample Size 50

0

10

20

30

40

50

60

70

Settleled

Yes

No

According to this survey we find that 30% people says yes and 70%people says no. so we can find that on line trading is not settled inthe Indian psyche because some people are not experience towardsonline trading.


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7. What shortcomings do you feel in Indian derivatives market?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) any other

Sample Size 50

0

10

20

30

40

50

Shortcomings

Lack of awareness

Shortage ofexpertise

Any other

According to this survey we find that 37% of people says lack ofawareness 49% says Shortage of expertise and 14% people saysany other. So we can say that mostly people are shortage ofexperience about the Indian derivatives market or share market.


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8. Which media would you prefer the most for investment?

(a) T.V (b) Newspaper

(c) Magazines

0

5

1015

20

25

30

35

40

45

Media

T.V

Newspaper

Magazines

According to this survey we find that 41% people Prefer T.V and 39%people prefer newspaper and 20% people prefer magazines. So we cansuggest that mostly people are very easily grapped the knowledgethrough T.V.

FINDINGS


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According to this survey we find that 44% people says that weare investing the money onlinefrom one year. 11% people says that we are investing money

online from 4 year. so we can say that now online trading is verypopular in the modern market.

2. How will you describe your experience with on-line trading till date?

According to this survey we find that 60% of people find very easyto operate. and 15% people find no secure . so we can say that onlinetrading is very simple to operate and easy to understand

3. what amount of money you invest normally ?

According to this survey we find that 35% of people investmoney normally 50000. 14% of people invest money between150000to200000. So we can say that the people are not investmore money in the share market because there is a great riskinvolved while doing the trading.


According to this survey we find that 10% of people do trade Daily.18% people do trade more than month. So we can say that peopleare generally invest in stock market weekly basis.

5. which trading you prefer?

According to this survey we find that 20% people prefer onlinetrading and 32% people prefer offline trading. So we can say thatmostly people are awareness about the on line trading and becauseof this reason the mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

According to this survey we find that 30% people says yes and 70%people says no. so we can find that on line trading is not settled in


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the Indian psyche because some people are not experience towardsonline trading.


According to this survey we find that 37% of people says lack ofawareness 49% says Shortage of expertise and 14% people saysany other. So we can say that mostly people are shortage ofexperience about the Indian derivatives market or share market.

8. Which media would you prefer the most for investment?

According to this survey we find that 41% people Prefer T.Vand 39% people prefer newspaper and 20% people prefer magazines.

So we can suggest that mostly people are very easily grapped theknowledge through T.V.

CONCLUSION


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Online trading is the new concept in the stock market. In India, online trading is still

at its infancy stage. Online trading has made it easy to trade in the stock market as

now people can trade while sitting at their home. Now stock market is easily

accessible by the people. There are some problems while doing the trade through

the internet. Major problem faced by online trader is that the investors are loyal to

their traditional brokers, they rely upon the suggestions given by their brokers.

Another major problem is that the people don't have full knowledge regarding

online trading. They find it difficult to trade themselves, as a wrong entry made by

them, can bring them huge losses.

Nevertheless to say that online trading has the bright future as the percentage of

the trade done through online trading is increasing day by day.

LIMITATIONS


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Despite of the training my level best, there were still some limitationwhich I think remains there to draw fruitful conclusion. There weresome practical problem which come across and could not be properly

death with

The advisory services being promised by the brokers would be oflittle use to investors looking for an insight into the market.

As a client one will access the NSE through a server of the onlinebrokerage and this may involve queuing delays

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not

be able to do so. If he want advice on a particular stock in his portfolio

he may not even be able to get that.

Suggestions


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The introduction of the Internet has surprisingly changed our way of life as asociety. It has defined the way we do business and the way we correspond.The Internet has opened many opportunities for online trading. The financial

industry revolves around the Internet. Every thing is just a few clicks away.This makes online trading most convenient. But there are still investors whoprefer the old fashion way of offline trading and they mainly prefer offlinetrading for security reasons.

Internet has introduced a way for consumers to manage their money online.Not to mention, Internet has transformed the way investment companiesoperate their business and has made it easy for private investors to gainstraight access to a range of different markets and online tools that were atone point only reserved by the use of investment professionals. Consumerinvesting and online trading has dramatically changed over the last decade.

Online trading dynamically continues to be redefined. Services haveexpanded to include integrated management of additional financialaccounts. Not to mention, it has subsequently expanded in conjunction withground-breaking improvements to the traditional trading interface, such astelephone interface systems.

Of course, online trading has many pros. There are several wonderfulreasons to invest online and consider online trading.

1. Money saving opportunities The amount of money you save dependsprimarily on the online brokerage firm that you choose. No two firms are thesame. There may be different regulations, similar to bank regulations. Thereare minimum deposits required that must be maintained. As mentionedabove, this will depend on the online brokerage firm.

2. Instant online access You can gain instant access to your account, thevalue of your portfolio updates immediately before your eyes.

3. Enter online trades at anytime You can enter online trades at anytime andfrom anywhere. This is very convenient if you live in a different time zonethan the country you are trading in. Not to mention, it is especially fit forinvestors with busy schedules.


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4. With online trading you are in charge You are in control of your

investments. No sales pitches and no hassle. You decide where to invest

your money.

BIBLIOGRAPHY

BOOKS

C. R. Kothri, Research Methodology, Vishwa

Prakshan

MAGAZINES

Business World

LSEs Magazine

INTERNET SITES

www.nseindia.com

www.bseindia.com

www.on-linetrading.com

www.sebi.gov.in

www.lse.co.in
http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/


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Questionnaire

Dear respondent,

I am student of MBA. I am working on theproject of On-Line trading. You are requestedto fill the questionnaire to enable, to undertakethe study on the said Project.

Name.

Occupation

Address

Phone no.


(a)1 year (b) 2 year

(c) 3 year (d) 4 year

2.How will you describe your experience with on-line trading tilldate?

(a) very easy to operate


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(b) very difficult to operate

(c) not secure

(d) Any other

3. what amount of money you are invested normally ?

(a) 50000 (b) 100000 to 150000

(c) 150000 to 2000000 (d) Any other amount


(a)Daily (b) Weekly

(c) Monthly (d) More than one month

5. In which trading you will prefer?

(a) Online trading (b) offline trading

(c) Both

6. According to you online trading setteled in Indian investor psyche

(a) Yes (b) No


(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) If any other

8. Which media would you prefer the most for investor?

(a) T.V (b) Newspaper

(c) Magazines


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