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REPORT ON
SUMMER INTERNSHIP PROGRAM
UNDERGONE AT
Vadodara Stock Exchange Ltd.
Submitted in partial fulfillment of the requirements of Annamalai University for the
award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
By
RUTIK DILIPBHAI SHAH
Enrolment No.: 4741100011
Under the guidance of Ms. Palak Shah
NIS ACADEMY 50, Sampatrao Colony, Opp. Circuit House,
Alkapuri, R.C. Dutt Road, Vadodara – 390007
MBA 2011 – 13
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NIS ACADEMY
50, Sampatrao Colony, Opp. Circuit House, Alkapuri, R.C. Dutt Road, Vadodara – 390007
CERTIFICATE FROM THE INSTITUTION
Certified that this summer internship report at VADODARA STOCK EXCHANGE Ltd.
is based on the summer internship program undergone by RUTIK DILIPBHAI SHAH
of MBA – 1st year student under the guidance of Ms. Meenaxi Nair
This summer internship program is based on the training undergone by the student as a
of their curriculum and do not form the basis for the award of any other degree/diploma
awarded by Annamalai University or any other University.
The information and/ or data presented herein are of only academic interest and have no
commercial value.
Ms. Meenaxi Nair Mr. Deepak Vaishnav
Executive – T & D Centre Head
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PREFACE
Master of Business Administration (MBA) consists of summer internship
projects which introduces students to learn the basics of administration and
Management of organization. It offers a unique opportunity to explore the
complex and vast field of corporate world.
The objective of practical training at MBA level is to bring awareness in the
students Regarding corporate and industrial environment, general trade
practices, and management policies and to develop a practical knowledge in
them as supplement to the theoretical study of management.
Training for me was a good tool to explore the various facts about
Company’s policies, administration, work atmosphere, etc. The knowledge I
gained from it is definitely going to help support and guide me in future.
Moreover the knowledge is power- the more I get the more I gain. I have
undergone Training at Vadodara Stock Exchange Ltd. in which I have
covered my training in all Department, My specialization is finance, and I have
prepared a project on Functioning of Stock Exchange
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ACKNOWLEDGMENT
I am glad to present this report and hope that it will be appreciated. It was
indeed a memorial experience for me to undergo training in this firm.
I was assigned the project to get the experience of current scenario of the
corporate world. By this experience I have learnt many important things that
will definitely help me in future. I would like to thank all the people who are
involved in this summer training.
First of all I would like to thank my college NIS ACADEMY affiliated to
Annamalai University, which gave me such a golden chance to get valuable
experience in the corporate world today.
I would also like to thank all the officers, staff and those who helped me in
Some or other way to complete my report successfully
.
I thank Mr Manish Dalal for giving me opportunity to work at, Vadodara
Stock Exchange Ltd. as a FINANCE TRAINEE.
I am thankful to Mr.Dipak Vaishnav (Centre Head of NIS ) and Ms. Meenaxi
Nair for their encouragement and able guidance at every stage of my training
work.
I express my deepest sense of gratitude to Vadodara Stock Exchange Ltd.or
giving me an opportunity to carry out this project and provide me insight
throughout the project.
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Table of Content
Sr No. Subject Pg .No.
1 Company Profile 07 1.1 Brief History & Back Ground of VSE 11 1.2 Objective of Vadodara Stock Exchange 13 1.3 History & Back Ground Of VSSL 14 1.4 Services Provided by VSSL 15 1.5 Concept of Stock Exchange 16 1.6 Evolution of Indian Stock Exchange 22 1.7 Market Access 25 1.8 Functions of Stock Exchange 28 2 Organization Structure
2.1 Structure of Vadodara Stock Exchange 32 3 Functional Areas
3.1 Departments of Vadodara Stock Exchange 35 3.2 Stock Exchange Works Like Human Body 47 4 SWOT Analysis
4.1 SWOT Analysis of VSE 52 4.2 Awards of Vadodara Stock Exchange Ltd. 57 4.3 Milestone of VSSL 58 5 Special Task
5.1 Introduction of the Study 60 5.2 Objective & limitation of the Study 61 5.3 Sampling Method 62 5.4 Analysis & Interpretation 64 6 Suggestion 66 7 Annexure
7.1 Questioner 70 8 Bibliography 75
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Company Profile
7
Company Profile
Vadodara Stock Exchange Limited (VSEL) received recognition as
Stock Exchange from the Government of India on 5th January 1990 and
became Country’s 19th recognized Stock Exchange. In the beginning it
had 150 members and now the strength is 289. In order to revive the
Regional Stock Exchanges, SEBI came out with a Circular whereby
RSEs floated its subsidiary company which acquired membership rights
of BSE/NSE to facilitate trading terminals to the members of RSE.
Accordingly, Vadodara Stock Exchange Limited floated its 100%
subsidiary named as VSE Stock Services Limited (VSSL). As on 31-
Dec-2009 there are about 98 active sub-brokers in VSSL and its current
average daily turnover is Rs.80 crores in the cash segments of BSE and
NSE.
Recognizing and appreciating the necessity of introducing Screen
Based Trading at Vadodara, an accomodacious premises was acquired
in 1995 at Fortune Tower, admeasuring approximately 1,56,238 Sq. ft.
of area. VSEL, as per Vadodara Stock Exchange Limited
(Corporatization and Demutualization) Scheme, 2005 (“the
Demutualization Scheme”), notified by Securities and Exchange Board
of India (“SEBI”) in the Official Gazette on 15th September, 2005, and
in terms of Securities Contract (Regulation) (Manner of increasing and
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maintaining Public Shareholding in Stock Exchanges) Regulations,
2006, is required to reduce the shareholding of its Trading members up
to 49% of its equity share capital i.e. minimum 51% holding is required
to be owned by non-trading members, subject to the prior approval of
SEBI,
Accordingly the Exchange got demutualised and a Notification to this
effect vide No. SEBI/MRD/DSA/105441/2007 was published on 9th
October, 2007 in Part–III - Section-4 of the Gazette of India,
notifying that VSEL has ensured compliance with the requirements of
SCRA on 13.09.2007 and that VSEL has completed corporatization
and demutualization by this date.
For the Depository operations, VSEL has branches in Surat, Bharuch
& Anand and plans to expand its Depository participant business
immediately after demutualization in all towns of Gujarat and later on
all over India. It has plans to tie up with banks to provide DP services
from their branch premises, which shall be beneficial for all the
parties.
Trading Members VSEL currently has 289 Trading Members out of
which 54 are corporate Trading Members. Since, presently there is no turnover
on the Exchange the Trading Members are routing their business through the
subsidiary of the Exchange and presently, 100 members are trading through
subsidiary
9
The services provided by VSSL are as under:
o Trading at BSE & NSE Cash Segment
o Strong Risk Management Features
o Electronic Contract Notes
o Direct Billing of Clients
o Efficient Pay Out of Securities and Funds
o Auto Pay In for VSSL clients having Demat Accounts in VSE
CDSL DP
Vadodara Stock Exchange (VSE) is the third stock exchange of
Gujarat and was established in 1990. It was constructed after
Ahmedabad and Rajkot stock exchanges. The stock exchange of
Vadodara is situated at Fortune Towers in Sayajigunj and occupies
an area of 1,56,238 square feet.
Vadodara Stock Exchange Limited is the 19th recognized stock
exchange in India. It was recognized by the Government of India as
a Stock Exchange on 5th January, 1990. During its inception, the
stock exchange of Vadodara contained about 150 members.
Presently, it possesses about 290 members and about 90 sub-
brokers. The average turnover of the stock exchange is about Rs. 60
crores. Presently, about 484 companies are listed with the stock
exchange of Vadodara.
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It is noteworthy that VSE floated its subsidiaries as VSE Stock
Services Limited, owing to the circular of Securities and Exchange
Board of India (SEBI). Among the services provided by VSSL are:
Efficient Pay Out of Funds and Securities
Direct Bill ing of Clients
Auto Pay In for VSE Stock Services Limited clients having
Demat Accounts in VSE CDSL DP
Strong Risk Management Features
Electronic Contract Notes
All Demat related Services
Trading at BSE and NSE Cash Segment
Furthermore, Vadodora Stock Exchange has many branches in
Bharuch, Anand and Surat for the depository operations. Besides,
the stock exchange at Vadodara has about 290 trading members. Out
of the 290 members, the exchange has 54 corporate trading
members.
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Brief History & Background of VSEL
VSEL is one of the several Regional Stock Exchanges in India.
Earlier, all the Stock Exchanges functioned under the framework of
Bombay Securities Contracts Act, 1925. The Securities Contracts
(Regulations)Act, 1956 was enacted thereafter and all the stock
exchanges within India were required to get recognition from the
Ministry of Finance. Accordingly, VSEL received the recognition as
Stock Exchange from the Government of India on 5th January1990.
Originally incorporated in 1990 as a company limited by guarantee,
VSEL was later converted into a company limited by shares and a
fresh certificate of incorporation was issued on 2nd September,
2005.VSEL went live on 17th July, 1996, marking a memorable
event in its history and joining the stream of Indian Stock
Exchanges having gone LIVE for electronic trading.CMC Ltd. had
facilitated implementation of fully automated stock trading,
settlement and clearing system.
The Exchange installed VECTOR(Versatile Engine for Centralized
Trading and On-line Reporting),built around the Central Trading
System (CTS). All the brokers interacted with CTS through Brokers
Work Station (BWS). The Market operations and surveillance were
connected to the CTS through their work stations Operations Work
Station (OWS) and Surveillance Work Station (SWS) respectively.
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In November 1999, SEBI issued a circular permitting the regional
stock exchanges to acquire membership of NSE and BSE for
facilitating stock broking activities and incorporation of a
subsidiary company for this purpose. This lead to the birth of VSE
Stock ServicesLtd. (“VSSL”) (formerly VSE Securities Limited) as
a subsidiary of VSEL. In July 2000, VSEL also commenced
providing online, real-time Depository Participant (DP) services, of
Central Depository Services Ltd. (CDSL), under the name VSE
Clearing House.
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OBJECTIVE OF VSE
Following are the main objective of Vadodara Stock Exchange Ltd.
To Facilitate, assist, regulate and control the trade of
Business in Securities .
Effectively Serve the interest of the general public &
Investors.
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VSE STOCK SERVICES Ltd.
(VSSL) Brief History & Background VSSL, a subsidiary of VSEL, was incorporated in May 2000. It has
acquired the Membership rights of Cash Market (CM) segment of
The Bombay Stock Exchange Ltd. and the CM Segment of The
National Stock Exchange Ltd. It provides Trading platforms of
these larger Stock Exchanges to the investors of the region, through
a vast network of sub-brokers servicing such investors. VSSL
commenced its operations on BSE in May 2000 and on the NSE in
February 2005.VSSL was initially incorporated as a wholly owned
subsidiary of VSEL.
However, currently, VSEL is in the process of transferring 49%
stake in VSSL to the Members of VSEL, after the completion of
which, VSEL’s holding in VSSL will be 51%.The Issued,
Subscribed and Paid-Up Share Capital of VSSL as on 31stMarch
2007 amounted to Rs. 400 lacs comprising of 40,000 equity shares
of Rs.1,000/- each. However, currently, VSSL is in the process of
sub-dividing the equity share capital of VSSL into equity shares of
face value of Rs. 10/-each, consequent to which its share capital
will comprise of 40,00,000 equity shares of Rs. 10/- each
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Services Provided by VSSL
Trading at BSE (CM segment ),NSE (Cash & F&O Segment).
Providing Auto pay in & other DP related Services through VSEL’s
CDSL DP
Participation in IPO ‘s by acting as syndicate Member With BRLM’s
Efficiency pay in / pay out of funds & Securities.
Client Pay out Cheque directly by Axis Bank in the name of client.
Client can view ECN in their mail box as well as on website
Client can view their Holding , DP Holding , Ledger etc on website.
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Concept of Stock Exchange
The Securities Contracts (Regulation) Act, 1956, has defined Stock Exchange as
an "association, organization or body of individuals, whether incorporated or
not, established for the purpose of assisting, regulating and controlling business
of buying, selling and dealing in Securities".
Stock exchange as an organized security market provides marketability and
price continuity for shares and helps in a fair evaluation of securities in terms of
their intrinsic worth. Thus it helps orderly flow and distribution of savings
between different types of investments. This institution performs an important
part in the economic life of a country, acting as a free market for securities
where prices are determined by the forces of supply and demand. Apart from
the above basic function it also assists in mobilizing funds for the Government
and the Industry and to supply a channel for the investment of savings in the
performance of its functions.
The Stock Exchanges in India as elsewhere have a vital role to play in the
development of the country in general and industrial growth of companies in the
private sector in particular and helps the Government to raise internal resources
for the implementation of various development programme’s in the public
sector. As a segment of the capital market it performs an important function in
mobilizing and channelizing resources which remain otherwise scattered. Thus
the Stock Exchanges tap the new resources and stimulate a broad based
investment in the capital structure of industries.
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A well developed and healthy stock exchange can be and should be an
important institution in building up a property base along with a socialist in
India with broader distribution of wealth and income. Thus Stock Exchange is a
vital organ in a modern society. Without a stock exchange a modern democratic
economy cannot exist. The system of joint stock companies financed through
the public investment as emerged has put the vast means of finances almost to
entrepreneurs' needs.
Finance from external sources mainly from the investing public can become
possible only when an institute like Stock Exchange provides opportunities for
the conversion of scattered savings into profitable investments with the
promises of a reasonable yield and minimum element of risk. Such a
mechanism as provided by Stock Exchanges is not merely a source of capital
but also a conduit which channelizes the savings into investment along with a
free movement of capital.
With the probable exception of a totalitarian state no Government will be able to
mobilize resources from the public if the money market in the form of stock
exchange does not exist. The Stock Exchange benefits the entire community in
a variety of way. It enables the producers to raise capital which directly and
indirectly gives gainful employment to millions of people on the one hand and
helps consumers to get ;the variety of goods needed by them on the other. It
provides opportunities to savers to store the value either as temporary abode of
purchasing power or as a permanent abode of purchasing power in the form of
financial assets. It also helps the segments of the savers who put their savings in
commercial firms and non-banking financial intermediaries because these
institutions avail themselves of the services of Stock Exchange to invest the
money thus collected.
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The Stock Exchange comes close enough to a perfectly competitive market
allowing the forces of demand and supply a reasonable degree of freedom to
operate as compared to other markets specially the commodity markets. This
segment of the factor market can be considered as a perfect or a nearly perfect
market. Apart from providing a mechanism for transacting business in stock and
shares it generates genuine potential for a new entrepreneur to take up initiative
in the private sector enterprises and allows the expansion of investing
community by offering gainful development of their otherwise sluggish or shy
capital. The Stock Exchange must assume the responsibility of protecting the
rights of investors specially the small investors in the Joint Stock Companies.
What is Stock Exchange ?
Generally we are taking synonyms of both the terms like Stock Market and
Stock Exchange. But both the terms are different from each other.
Stock Market means
Stock Market is a market where the trading of company stock, both listed
securities and unlisted takes place. It is different from stock exchange because
it includes all the national stock exchanges of the country.
For example, we use the term, "the stock market was up today" or "the stock
market bubble."
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Stock Exchange Means
Stock Exchanges are an organized marketplace, either corporation or mutual
organization, where members of the organization gather to trade company
stocks or other securities. The members may act either as agents for their
customers, or as principals for their own accounts. Stock exchanges also
facilitates for the issue and redemption of securities and other financial
instruments including the payment of income and dividends. The record
keeping is central but trade is linked to such physical place because modern
markets are computerized. The trade on an exchange is only
Stock Exchange Means A market in which securities are bought and sold: "the
company was floated on the Stock Exchange".
A stock exchange is simply a market that is designed for the sale and purchase
of securities of corporations and municipalities. This means that a stock
exchange sells and buys stocks, shares, and other such securities. In addition,
the stock exchange sometimes buys and sells certificates representing
commodities of trade. At first, stock exchanges were completely open. Anyone
who wished to buy or sell could do so at a stock exchange. However, to make
stock exchange more effective, membership became limited to those in clubs
and other associations. Today, professionals who have a seat at the exchange are
the people who trade at the exchange.
Stock markets affect the entire economy and encourage investment.
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Stock Exchange Means
S – Securities Provided for Investor
T - Tax Benefits planning and exemption.
O - Optimum Return on Investment
C - Cautious Approach.
K - Knowledge of Market.
Ex - Exchange of Securities Transacted.
C - Cyclopedia of Listed Companies.
H - High Yield.
A - Authentic Information
N - New Entrepreneur encouraged
G - Guidance of Investor & Company.
E - Equity
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How Does Stock Exchange Works?
The buying and selling of stocks at the exchange is done on an area which is
called the floor. All over the floor are positions which are called posts. Each
post has the names of the stocks traded at that specific post. If a broker wants to
buy shares of a specific company they will go to the section of the post that has
that stock. If the broker sees at the price of the stock is not quite what the broker
is authorized to pay, a professional called the specialist may receive an order.
The specialist will often act as a go-between between the seller and buyer. What
the specialist does is to enter the information from the broker into a book. If the
stock reaches the required price, the specialist will sell or buy the stock
according to the orders given to them by the broker. The transaction is then
reported to the investor.
If a broker approaches a post and sees that the price of the stock is what they are
authorized to pay, the broker can complete the transaction themselves. As soon
as a transaction occurs, the broker makes a memorandum and reports it to the
brokerage office by telephone instantly. At the post, an exchange employee jots
down on a special card the details of the transaction including the stock symbol,
the number of shares, and the price of the stocks. The employee then puts the
card into an optical reader. The reader puts this information into a computer and
transmits the information of the buy or sell of the stock to the market. This
means that information about the transaction is added to the stock market and
the transaction is counted on the many stock market tickers and information
display devices that investors rely on all over the world. Today, markets are
instantly linked by the Internet, allowing for faster exchange.
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Evolution & History of Indian Stock Exchange
Indian stock market marks to be one of the oldest stock market in Asia. It dates
back to the close of 18th century when the East India Company used to transact
loan securities. In the 1830s, trading on corporate stocks and shares in Bank
and Cotton presses took place in Bombay.
Though the trading was broad but the brokers were hardly half dozen during
1840 and 1850.
An informal group of 22 stockbrokers began trading under a banyan tree
opposite the Town Hall of Bombay from the mid-1850s, each investing a (then)
princely amount of Rupee 1. This banyan tree still stands in the Horniman
Circle Park, Mumbai. In 1860, the exchange flourished with 60 brokers. In fact
the 'Share Mania' in India began with the American Civil War broke and the
cotton supply from the US to Europe stopped. Further the brokers increased to
250. The informal group of stockbrokers organized themselves as the The
Native Share and Stockbrokers Association which, in 1875, was formally
organized as the Bombay Stock Exchange (BSE). BSE was shifted to an old
building near the Town Hall. In 1928, the plot of land on which the BSE
building now stands (at the intersection of Dalal Street, Bombay Samachar
Marg and Hammam Street in downtown Mumbai) was acquired, and a building
was constructed and occupied in 1930. Premchand Roychand was a leading
stockbroker of that time, and he assisted in setting out traditions, conventions,
and procedures for the trading of stocks at Bombay Stock Exchange and they
are still being followed. Several stock broking firms in Mumbai were family run
enterprises, and were named after the heads of the family.
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The following is the list of some of the initial members of the exchange, and
who are still running their respective business:
• D.S. Prabhudas & Company (now known as DSP, and a joint venture
partner with Merrill Lynch)
• Jamnadas Morarjee (now known as JM)
• Champaklal Devidas (now called Cifco Finance)
• Brijmohan Laxminarayann 1956, the Government of India recognized
the Bombay Stock Exchange as the first stock exchange in the country
under the Securities Contracts (Regulation) Act.
The most decisive period in the history of the BSE took place after 1992. In the
aftermath of a major scandal with market manipulation involving a BSE
member named Harshad Mehta, BSE responded to calls for reform with
intransigence. The foot-dragging by the BSE helped radicalise the position of
the government, which encouraged the creation of the National Stock Exchange
(NSE), which created an electronic marketplace. NSE started trading on 4
November 1994. Within less than a year, NSE turnover exceeded the BSE. BSE
rapidly automated, but it never caught up with NSE spot market turnover. The
second strategic failure at BSE came in the following two years. NSE embarked
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on the launch of equity derivatives trading. BSE responded by political effort,
with a friendly SEBI chairman (D. R. Mehta) aimed at blocking equity
derivatives trading. The BSE and D. R. Mehta succeeded in delaying the onset
of equity derivatives trading by roughly five years.
But this trading, and the accompanying shift of the spot market to rolling
settlement, did come along in 2000 and 2001 - helped by another major scandal
at BSE involving the then President Mr. Anand Rathi. NSE scored nearly 100%
market share in the runaway success of equity derivatives trading, thus
consigning BSE into clearly second place. Today, NSE has roughly 66% of
equity spot turnover and roughly 100% of equity derivatives turnover. Stock
Exchange provides a trading platform, where buyers and sellers can meet to
transact in securities
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Market Access
Trading Session
The market would have following session
1. Logon session: 8.45a.m. To 9.55 a.m.
Trading members can Log On during this session and can download various
trading related information. Can prepare batch of orders for speedy submission
at the start of the trading session.
During this session the trading members are not allowed to enter orders in the
BOLT system .Trading members can do the batch upload of orders during this
session .However the batch session of these orders can be done only in the
continuous trading session . Trading members/ traders can also download the
BRK of the previous 5 settlements and auction files can be downloaded for the
previous 25 settlements.
2. Continuous Trading Session : 9.55a.m. to 3:30 p.m.
During this session ,all types of orders are allowed to be entered into the system
and the traders can carry on all their trading activities . The traders receives
confirmation of the orders entered as well as trades executed by him and can
also view the net position on both scrip wise and client wise. The ticker facility
in the BOLT system provides market sensitive information as and when receive
the source . The BSE SENSEX is calculated at every 15 second and is
Broadcasted on TWS as well as to the Derivatives system of the exchange. The
Rate of the scrip is determined by the market forces based on the demand and
supply .
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3. Closing Session: 3:30 p.m. to 3.40 p.m.
In this session the trading members will not allowed to enter any orders . the
closing price of scrip’s is computed during this session as per the computation
logic . at he end of the session the computed closing price of all the scrip’s
traded on BOLT system in the continuous trading session is displayed on the
touchline window of TWS and it is also displayed in the market view screen .
The closing price of all the traded scrip’s will be calculated based on
a. The weighted average price of all the trades in last N minutes for that
scrip. The current N value in the BOLT system is 30 minutes or
b. If there are no trades in the last N minutes in that scrip then the last
traded price would be taken as the official closing price.
c. If the scrip is not traded on that day the previous days closing price of
the scrip shall be treated as the closing price.
4. Post closing session :3.40 p.m. to 4.00 p.m.
This session is held after the closing session. The trading members can enter
only Limit orders at closing prices would not be accepted . the traders has to
27
selected Retention flag as EOSSESS for orders . all the unmatched orders are
return at the end of the session .
5. Members Query Session : 4.00 p.m. to 5.25 p.m.
In this session the system generates members wise trader level reports. In this
session trading members are allowed to download the breakup of trade wise
position. members query window is a function provided in the main menu . This
window display the trades of all the traders executed during the day . Members
can download the TRD & BRK files .TRD files containing the trades executed
from that particular TWS(Trader Work session) can be downloaded by trades if
allowed by the admin terminal only trader 1 is authorized to download the BRK
file during members query session . this can be done by clicking on the on the
BRK icon
When all the trades are download a check is initiated to detect any error in
download trades . A warning messages is displayed in case on an error and
query message is displayed indicating the file in which the data has been stored
.
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Functions of stock exchange
Following are main Functions of Stock Exchange. These Functions are same .
it is worldwide same.
1. Continuous and ready market for securities
Stock exchange provides a ready and continuous market for purchase and sale
of securities. It provides ready outlet for buying and selling of securities. Stock
exchange also acts as an outlet/counter for the sale of listed securities.
2. Facilitates evaluation of securities
Stock exchange is useful for the evaluation of industrial securities. This enables
investors to know the true worth of their holdings at any time. Comparison of
companies in the same industry is possible through stock exchange quotations
(i.e price list).
3. Encourages capital formation
Stock exchange accelerates the process of capital formation. It creates the habit
of saving, investing and risk taking among the investing class and converts their
savings into profitable investment. It acts as an instrument of capital formation.
In addition, it also acts as a channel for right (safe and profitable) investment.
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4. Provides safety and security in dealings
Stock exchange provides safety, security and equity (justice) in dealings as
transactions are conducted as per well defined rules and regulations. The
managing body of the exchange keeps control on the members. Fraudulent
practices are also checked effectively. Due to various rules and regulations,
stock exchange functions as the custodian of funds of genuine investors.
5. Regulates company management
Listed companies have to comply with rules and regulations of concerned stock
exchange and work under the vigilance (i.e supervision) of stock exchange
authorities.
6. Facilitates public borrowing
Stock exchange serves as a platform for marketing Government securities. It
enables government to raise public debt easily and quickly.
7. Provides clearing house facility
Stock exchange provides a clearing house facility to members. It settles the
transactions among the members quickly and with ease. The members have to
pay or receive only the net dues (balance amounts) because of the clearing
house facility.
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8. Facilitates healthy speculation
Healthy speculation, keeps the exchange active. Normal speculation is not
dangerous but provides more business to the exchange. However, excessive
speculation is undesirable as it is dangerous to investors & the growth of
corporate sector.
9. Serves as Economic Barometer
Stock exchange indicates the state of health of companies and the national
economy. It acts as a barometer of the economic situation / conditions.
10. Facilitates Bank Lending
Banks easily know the prices of quoted securities. They offer loans to customers
against corporate securities. This gives convenience to the owners of securities.
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Organization Structure
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STRUCTURE OF VSE
BSE / NSE
VSEL Member Broker of
BSE
VSSL Vadodara Stock Exchange Services Limited subsidiary of
BROKERS
CLIENTS
VSEL have 94 sub-
broker is also member
of VSEL
40000 Clients Dealing
Under 94 Sub Broker
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Above is the Structure of Vadodara Stock Exchange Limited. Vadodara Stock Exchange Limited is works under Bombay Stock Exchange and National Stock Exchange. It is the subsidiary of BSE and NSE. Vadodara Stock Exchange Limited has 2% part in BSE. There are number of Brokers works in Vadodara Stock Exchange Limited (VSEL).
Vadodara Stock Exchange Limited is the main body. VSEL has one
sister company called Vadodara Stock Exchange Services Limited.
Vadodara Stock Exchange Services Limited is the subsidiary
company of VSEL. It works under VSEL.
Then comes Brokers .Brokers is one type of customer of VSEL.
They are works under Vadodara Stock Exchange Services Limited.
Vadodara Stock Exchange Services Limited has 300 cards. Means
there are only 300 Brokers are works under Vadodara Stock
Exchange Services Limited. But now a Day there are only 103
brokers are Active Broker.
These Brokers have also Sub- Brokers . They are works under
Broker of Vadodara Stock Exchange Services Limited. They have
to follow the instructions of Brokers.
These Sub-Brokers have clients. Sub-Broker may also have Broker.
It is called as Sub sub – Broker. there are 40000 clients works under
Broker.
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Functional Areas
35
Departments of Vadodara Stock Exchange Ltd.
Vadodara Stock Exchange Limited. Has Various Departments. There
are Nine Departments of Vadodara stock Exchange. Following are
various Departments of VSEL.
� Settlement Department
� Margin Department
� Surveillance Department
� Listing Department
� Account Department
� Automation Department
� Personal Department
� Membership Departed
� Central Depository (VSE Clearing House)
1. Settlement Department ;
Settlement department mainly deals with those transactions, which have taken
place during the course of the day and by member brokers. The transaction of
securities of companies which have made arrangements for dematerialization of
their securities are settled only in Dematerialized mode on T+2 on net basis, i.e.
buy and sell position of a member broker in the same scrip are netted and the
net quantity and value is required to be settled.
36
Day Activity
T= trading on BOLT and daily downloading of statements showing details of
transaction and margins at the end of each day. Downloading of provisional
securities and fund obligation statements by member-broker 6A/7A entry by the
member broker/confirmation by the custodians.
T+1= confirmation of 6A/7A data by the custodian up to 11:00 am.
Downloading of final securities and funds obligations statement by member
brokers.
T+2= pay-in of funds and securities by 11:00 am and pay-out of funds
and securities by 1:30 pm
The member –brokers are required to submit the pay-in instructions for
funds and securities to banks and depositories respectively at 11:00am
T+3= auction on BOLT at 11:00am
T+4= auction pay-in and pay-out of funds and securities by 12:00 noon
And 1:30 pm Respectively The delivery order/receive order provides
information like the script and quantity of securities to be delivered/received by
the member broker through clearing house. The money statement provides
script wise/item wise details of payment/receipts of monies by the member
brokers in the
settlement. The securities, as per the delivery orders issued by the exchange, are
required to be delivered by the member broker to the Clearing House on the day
designated for securities pay-in i.e. T+2 day.
37
Demat Pay- in
As regard to CDSL, the member broker gives pay-in instruction to
their respective DP’s. the securities are transferred by the DP’s to Clearing
Member (CM) Principal Account. The member brokers are required to give
confirmation to their DP’s, so that securities are processed towards pay-in
obligation.
Funds pay-in
After the reconciliation of securities completed, the bank account of member
broker maintained with 9 clearing banks are directly debited through
computerized posting for their fund settlement obligation. Once the pay-in of
securities and funds is completed, the Clearing Member arranges for the pay-
out of securities and funds.
Securities pay –out
Securities are credited by Clearing house in the pool account of member
Broker. The exchange also provides facility to directly to the clients BO
Account. Inter depository settlement takes place if transfer is there from
One depository to another. In case of physicals securities, the receiving
Members are required to collect the same from clearing house on Pay-out day.
38
Funds pay – Out
The bank account of member brokers having pay out of funds are credited by
the Clearing House with the clearing bank on the same day. This process is
called as funds pay-out. if a member fails to deliver the securities, then the value
of shares delivered short is recovered from him at standing/closing price of
script on trading day.
Auction
An auction tender is issued by the exchange to the member broker informing
them about the names of the script short or not delivered, quantity slated for
auction and date and time of the auction session on the BOLT/the auction for
the undelivered quantity is conducted on T+3 day between 11:00am and 12:00
noon for all the script’s under CRS except those in “Z” group and on “trade to
trade” basis which are directly closed.
In auction, the highest offer price is allowed up to close out rate of scrip and the
lowest offer price be 20% below the closing price of the scrip on a day prior to
day of auction i.e. pay-in day.
2. Margin Department
VSE act as broker of Mumbai Stock Exchange. Margin trading is
trading with borrowed funds/ securities. It is essentially a leveraging
mechanism which enables investors to take exposure in the
market over and above what is possible with their own resources.
Corporate brokers with net worth of at least Rs 3 crores are eligible
for providing margin-trading facility to their clients subject to their
39
entering into an agreement to that effect. Before providing margin-
trading facility to client, the member and
the client have been mandated to sign an agreement for this purpose
in the format specified by SEBI. The facility of margin trading is
available for Group 1 and those securities, which are offered in
the initial public offers and meet the conditions for inclusion in
the derivatives segment of the stock exchanges. For providing
the margin trading facility, a broker may use his own funds or
borrow from scheduled commercial banks
or NBFCs regulated bythe RBI. The “total exposure” of the broker
towards the margin trading facility should not exceed the borrowed
funds and 50% of his “net worth”. While providing the margin
trading facility, the broker has to ensure that the exposure to a single
client does not exceed 10% of the “total exposure” of the broker.
Initial margin has been prescribed as 50 % and the maintenance
margin has been prescribed as 40%. In addition, a broker as to
disclose to the stock exchange details on gross exposure including
name of the client, unique number under the SEBI (central database
of market participants) regulations ,2003, and name of the scrip. If
the broker has borrowed funds for the purpose of
providing margin-trading facility, the name of the lender and
amount. Borrowed should be disclosed latest by the next day. The
stock exchange, in turn, has to disclose the scrip-wise gross
outstanding in margin accounts withal brokers to the market. Such
disclosure regarding margin trading done on any day shall be made
available after the trading hours on the following day.
40
3. Surveillance Department :
One of the objectives of the Exchange is to promote and inculcate
honorable and just practices of trade in securities transactions and
to discourage malpractices. The Securites and Exchange Board of
India (SEBI) had directed the stock exchange in August 1995 to set
up a separate Surveillance Department with staff exclusively
assigned to surveillance functions. The exchange has set up a
separate SB to keep a close watch on price movement of scrip’s,
detect market manipulations like price rigging, etc., monitor the
member-broker’s position to ensure that defaults do not occur.
The SB monitors exposure of the members on a daily basis. It also
scrutinizes the prices and volumes of the scrip’s on a daily basis.
As per the guidelines issued by SEBI, the exchanges are required to
apply a daily Circuit Filter of 20% on all the scripts except on the
script’s on which derivative products are available or are included
in the indices on which derivative products are available. On these
script’s exchange has imposed dummy circuit fi lters to avoid
punching error by members, if any.
The imposition of circuit filters on scripts ensures that the price of
the scrip cannot move upward or downward beyond the limit set for
a day.
41
The large variation in the prices as well as the volumes of the
script’s are scrutinized and appropriate actions are taken. The
script’s, which reach new high or new low and companies, which
have high turnover, are watched. The prices and volumes in the
newly listed scripts are monitored.
In case certain abnormalities are notices, then circuit fi lters are
reduced to make it difficult for the price manipulators to increase or
push down the prices of a script within a short period of time. The
exchange imposes special margin in the scripts where it is suspected
that there is an attempt to ramp up the prices by creating artificial
volumes. The exchange imposes special margin in the scripts where
it is suspected that there is an attempt to ramp up the prices by
creating artificial volumes. The exchange also transfers the scripts
for trading and settlement if a trade-to-trade basis would result into
giving/taking delivery of shares on a gross level and no intra-
day/settlement netting off/squaring off facility would be permitted.
In cases where the abnormal movements continue despite the
aforesaid measures, trading in the scrip is suspended.
The exchange has developed an Online Real Time (OLRT)
Surveillance System, which has been commissioned from July15,
1999.
Under this system, alerts are generated by the system online, in real
time, based on certain preset parameters like the price and volume
variation in script’s, members taking unduly large positions not
commensurate with their financial positions or having concentrated
42
positions in one or a few script’s etc. This system includes
databases.
such as company profile, member’s profile and historical database
of turnover and price movement in scripts, member’s turnover, their
pay-ion obligations, etc. the system generates alerts on the basis of
pre-set parameters during the trading hours and corrective action
based on further investigations is taken in such cases.
4. Listing Department
Listing department of VSE lists the securities of corporate bodies at
the Exchange by making an agreement with the companies, which
fulfil ls the terms and conditions as required by VSE. This
agreement is prepared in order to secure the rights of investors and
to control/guide the risk of investor to some extent.
According to this agreement it is the duty of each company to
inform
VSE about any major decision which can affect the functioning of
the company so that VSE can inform its member broker and in turn
they can inform their respective clients who are investors in the
company. Thus, the investors can decide upon whether to invest in
the company or not and in this manner VSE controls/guides the
risks of investors by informing them about the decision of the
company in which they are investing.
43
5. Accounts Department :
Accounts department at VSE does not have a wide scope. But in general its main
activity is of handling monetary effects in cash and cheque for all companies i.e.
� Vadodara Stock Services Exchange Limited-Listing fee
� VSE Stock Services Limited-BOLT((Membership card of Mumbai Stock
Exchange Collection of maintenance charges from members.
� Collection of cheque for pay-in and pay-out bills from members and
depositing the same. Pay-in and pay-out summary of rolling/regular and
auction and settlement is inserted in PC and cheques of members are
entered in pay- in slip. Thereafter it is deposited in bank and debit/credit
take place in account of member as per the transaction.
� Depositing cheque of listing fee, which is collected for membership card
of VSE Ltd.
� Billing of any material purchased for these 3 companies
� Calculating of monthly rent of BOLT terminals allotted to members
� Collection of maintenance charges from members.
6. Automation Department :
VSE Stock Exchange Ltd. Has around 90 sub- Broker their connectivity of
Terminals with Mumbai Stock Exchange is Checked by Automation
Department. it has to check the file of transaction sent to them by Mumbai
Stock Exchange Every day .Thus this the work of Automation Department.
44
7. Personnel Department
Personnel Department keep all the information of the employees.
Following are the functions played by personnel Department.
� Man –Power Planning
� Recruitment
� Promotion & Transfer
� Training
� Performance Appraisal
Exchange continues to focus on training needs of the employees. Efforts are
directed toward upgrading the knowledge, skills and attitude of employee by
deputing them to various workshops, seminars. Most of the staff members have
been trained for depository operations and are holding DP System
Certification.
8. Membership Department
As we have seen that the Listing Department lists the securities of corporate
bodies at VSE. Whereas the Membership Department of VSE registers
individual persons as members of VSE and issues them a membership card. The
main activity of this dept. is of record and registration of the members,
Collecting turnover fee, Collecting audit reports and working as a middleman
between SEBI and members of VSE. At present there are 290 members at VSE
45
Minimum 3 years working as a member in a stock exchange is compulsory for
multiple memberships. A person can become member of all recognized stock
exchanges in India but only after providing the NOC of other stock exchange.
If any of these members sell their membership card to other person then this
dept. registers the name of other person at SEBI and transfers their name on the
card after checking that whether he falls in the criteria for a member of VSE and
no interview is conducted for him. In case if that person does not fall in the
criteria to become a member of VSE than his membership card gets
automatically canceled. SEBI has the right to cancel the membership card of
any member due to any reason which SEBI feels satisfying.
VSE has stopped issuing more membership cards and making more members
because at present these 307 members are also not functioning properly as
market has slow down. To fasten the business of the members of VSE, VSE
Securities Ltd. has become a member of The Mumbai Stock Exchange and so
the members of VSE are becoming sub-brokers of The Mumbai Stock
Exchange so that they can have a wide scope for their business. Until now 80
such members of VSE has become the sub-broker of The Mumbai Stock
Exchange to get some business even from Mumbai
46
9. Clearing House
VSE has its own Clearing House known as VSE Clearing House. As the
depositories are important intermediaries in the securities market that is scrip-
less or moving towards such a state. The principle function of depository is to
dematerialize securities and enable their transactions in book-entry form.
Dematerialization of securities occurs when securities issued in physical form is
destroyed and an equivalent number of securities are credited into the
beneficiary owner’s account. All the players have to be conversant with the
rules and regulations as well as with the technology for processing. The
intermediaries in this system have to play strictly by the rules. A depository
established under the Depositories Act can provide any services connected with
recording of allotment of securities in the record of a depository. A depository
cannot directly open accounts and provide services to clients. Any person
willing to avail of the services of the depository can do so by entering into an
agreement with the depository through any of its Depository Participants.
Depository Participant (DP)
A Depository Participant is describing as an agent of the depository. They are
the intermediaries between the depository and the investors. The relationship
between the DPs and the depository is governed by an agreement under the
Depository Act, 1996. In a strictly legal sense, a DP is an entity who is
registered as such with SEBI under the provisions of SEBI Act. As per this Act,
a DP can offer depository related services only after getting certificate of
registration from SEBI.
47
Stock Exchange Works Like Human Body
Brain Function
Automation Department
Left Hand
BSE
Veins & Vessels
Banks
Kidney Function
Margin
Left leg
CDSL
Heart Function
Account Department
Right Hand
NSE
Right Leg
NSDL
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Brain Function Automation Department
The human brain is the sources of the conscious, cognitive mind. The mind is
the set of cognitive process related to perception, interpretation, imagination,
memories, and crucially language of which a person may or may not be aware.
The brain regulates autonomic processes related to essential body functions
such as respiration and heart beat, especially through the autonomic nervous
system.
Likewise automation department regulates the automatic process from brokers
to exchange / exchange to brokers. Without automation stock exchange cannot
exist, because all transaction take place through computerize network system.
Automation work as intermediary of sub brokers to member-brokers(VSE)
member-brokers to the BSE/NSE.
Heart function Account Department
The heart is a specialized muscle that contracts regularly and continuously,
pumping blood to the various parts of the body and the lungs. The pumping
action is caused by a flow of electricity through the heart that repeats itself in a
cycle.
Likewise account department works as a heart and pumps fund from brokers to
BSE/NSE and BSE/NSE to brokers. Money is working like blood in human
body. Account department works as a collection of cheques for pay in and get
issue the cheques for pay-out to the client or sub-brokers
49
Kidney function Margin Department
Two kidneys are vital organs that perform many functions to keep blood clean
and chemically. They are located near the middle of our back. Kidneys are
sophisticated reprocessing machine. Every day our kidney process about 200
quarts of blood to sift out about 2 quarts of west product and extra water.
Likewise margin department’s function is like kidney. The main function of
margin department is to collect a margin for NSE/BSE pay-ins. Without margin
no account physibility is possible. Margin department collects margin from
various brokers for pay-ins to BSE/NSE. Few out of all brokers do fail to pay
margin so their limit is decrease and in long-run of defaultment, there terminals
also kept close for some time up to the settlement of margin.
Veins & Vessels Banks
Veins are flexible and acted its activities in extreme condition. The vein valves
are necessary to keep blood flowing towards the heart, but they are also
necessary to allow blood to flow against the force of gravity. The vein valves
provide footholds for the blood as it climbs its way up. Blood vessels are hollow
tubes that circulate our blood.
Likewise banks also a perform the job of transferring funds from one place to
another 24*7 for the easy settlement of the funds on both the ends (viz
BSE/NSE & brokers).
50
Two hands BSE and NSE
Our two hands are same but some task being assigned to them is different, still
they work like competitor. Same as in the stock market BSE and NSE is same
but competitor company work as two hands in mechanism of stock market.
Each and every broker has terminals of NSE & BSE and they works on both
Two legs CDSL and NSDL
A man cannot stand or walk without their legs. Likewise stock market can
Not stand or walk without CDSL / NSDL. Two autonomous bodies inter
dependent for transferring securities, and holding securities of each other. This
depositories are able to provide various services to the investors and clearing
member.
51
SWOT Analysis
52
SWOT Analysis of VSE
Meaning of SWOT Analysis
A SWOT analysis is a method for describing the business in terms of those
factors that have the most impact. Essentially the co. nominate the Strengths
and Weaknesses of the business (its internal resources and capabilities), then it
identify the Opportunities and Threats it faces (factors external to the
organization). Strengths and weaknesses are often internal to your
organization. Opportunities and threats often relate to external factors. For
this reason the SWOT Analysis is sometimes called Internal-External Analysis
and the SWOT Matrix is sometimes called an IE Matrix Analysis Tool
53
Strength Strength Means Positive things of Company. Strength is help to achieve market share. Strengths means what advantages do you have? What do you do better than anyone else? Following are the strength of Vadodara Stock Exchange Ltd.
� Vadodara Stock Exchange Ltd. is directly Worked under Bombay
Stock Exchange.
� Vadodara Stock Exchange is SEBI Registered Company
� Broker of Vadodara Stock Exchange are also SEBI Registered
� Performance of Vadodara Stock Exchange is better then other
stock Exchange of Gujarat.
� It has more turnover then Rajkot Stock Exchange and Ahmedabad
Stock Exchange.
� There is 2 % Turnover in Bombay Stock Exchange.
54
� It is good Sign of Performance.
� Vadodara Stock Exchange Ltd. arrange Investment Awareness
Programmers’ time to time
Thus Above are the strength of the vadodara Stock Exchange Ltd. Which it
make differs from other stock exchanges and other Stock Broking companies.
Weaknesses
Weaknesses mean what could you improve? Weaknesses mean what
Should you avoid?
Following are the weaknesses of Vadodara Stock Exchange ltd.
� Main Weakness of Vadodara Stock Exchange Ltd. is its
turnover. The turnover of Vadodara Stock Exchange Ltd. is
not enough according to the Security Exchange Board of
India’s instruction.
� Vadodara Stock Exchange ltd. is dealt only in Bombay
Stock Exchange and National Stock Exchange.
� Vadodara Stock Exchange Ltd. is not Dealt in Mutual Fund,
Gold, Systematic Investment Planning (SIP) and so on.
55
Thus this weaknesses affect the performance of Vadodara
Stock Exchange Ltd.
Opportunities
Opportunities means perceived opportunities in career that are not within
it control but it can take advantage of such things.
Following are the such opportunities for Vadodara Stock Exchange Ltd.
� Vadodara Stock Exchange ltd. has Great opportunity to
Work at state level.
� Vadodara Stock Exchange merge with other Stock
Exchange Like Ahmedabad Stock Exchange And Rajkot
Stock Exchange.
� Opportunity to work under one name say Gujarat Stock
Exchange ltd.
Thus Above are the opportunity of Vadodara Stock Exchange.
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Threats
Threats Means What obstacles are face the company. what are
competitors of company doing that company should worried
about?
Following are the threats of Vadodara Stock Exchange Ltd.
� The main threat of Vadodara Stock Exchange Ltd. is market.
� People are withdraw there funds from capital market and
kept in safe place say banks , posts, Government Bond and
so on.
� The share market is volatile there fore people have no trust
on market
� Therefore there is reduction in number of people who traded
in share market.
Thus these are the threats of Vadodara Stock Exchange Ltd.
57
AWARD
Milestone of Vadodara Stock Exchange
Year Achievements of VSE
1990 Vadodara Stock Exchange was accorded recognition by the Government of India as a Stock Exchange.
1996 Gone For Live Electronic Trading. 2000 Incorporation of wholly owned subsidiary VSE
stock services Ltd. (VSSL) And Acquired Membership of NSE & BSE .
2000 Commencement of online , Real Time Depository participants Services CDSL.
2005 Commencement of Trading on NSE cash segment in VSSL.
2009 Commencement of Trading in Derivative(F&O)Segment of NSE
2009 Membership of MCX –SX currency Derivative Segment.
58
Milestone of Vadodara Stock Services Ltd.
Year Achievement May 2000 Commenced operation in CM segment of BSE Ltd. February 2005
Commenced operation in CM segment of NSE
May 2009 Commenced operation in Derivatives March 2009
Membership of MCX –SX for Trading in currency Derivatives.
59
Special Task
60
Introduction to the study
My project is based on the title of Functioning of Stock Exchange. It means
how the stock Exchange works.
Stock Exchange is works Like Human Body. There are mainly eight functions
which are played by the Vadodara Stock Exchange Ltd.
Main function of Vadodara Stock Exchange Ltd. is Brain Function .Brain
Function means Automation Department. Automation Department is Works like
Human Brain. Without Brain no one is live same as without automation
Department no stock Exchange is exists.
Other important function of Stock Exchange is Heart Function . No person can
exists without Heart same as without Account Department no one stock
Exchange is exists. Heart Function is compared with Account Department.
Veins and Vessels are compared with Banks .Like wise Right hand od
Vadodara Stock Exchange is National Stock Exchange. Left hand of VSE is
Bombay Stock Exchange.
Kidney Function of stock Exchange is Margin Department. Left leg of
Vadodara Stock Exchange Ltd. is CDSL. And Right leg of VSE is National
Stock Services Limited.
Thus above are the function of stock Exchange
61
Objective of the Study
Main objective of this study is to know about stock Exchange. How Stock
Exchange works. How stock Exchange Functioning. Also know about how
investors invest in share market.
Limitation of the Problem
Main Limitation of the study is Response. No one personnel has enough time to help in this study. Every personnel is busy. So there is less response of person of the organization.
People are reluctant towards the survey and take it as a waste of time. Cold callings were not entertained everywhere and thus we were not able to meet all the classification of customers. Investor has also not time to give my answer of the questions properly. Thus this is the Limitation occur during this Study.
62
Sampling Method
Sampling methods are used to select a sample from within a general population.
Proper sampling methods are important for eliminating bias in the selection
process. They can also allow for the reduction of cost or effort in gathering
samples. Common methods of sampling include simple random sampling
(completely random selection from the population), systematic sampling
(ordering the population and selecting at regular intervals), stratified sampling
(splitting the population into categories and randomly selecting from within
each category), matched random sampling (population is divided into pairs
based on a criterion and then randomly assigned to groups), and panel sampling
(applying the same test over time to randomly selected groups).
There are two types of collection of Data
A. Primary Data
B. Secondary Data
63
A. Primary Data
Primary Data means Data Collected directly from person.
� Primary Source of my data collection is personnel who worked in the
Vadodara stock Exchange Ltd. Most of the data are collected from the
HR Manager of Vadodara Stock Exchange Ltd. Other Data are collected
from various Department of Vadodara Stock Exchange . like Settlement
Department ,Margin Department ,Surveillance Department Account
Department Automation Department, HR Department Membership
Departed.
B. Secondary Data
Secondary Data means Data Which are collected not from directly .it is
collected indirectly. Generally it is collected from Internet or Reference
Books
Collection of my Secondary Data is from internet. It is collected from
various Sites. like www.vseindia.com , www.bseindia.com and so on. I had
also collect the secondary data from the annual Report of Vadodara Stock
Exchange Ltd.
For practical knowledge primary Data is better than secondary Data.
64
Analysis & interpretation
Stock Exchange means an organized marketplace, either corporation or mutual
organization, where members of the organization gather to trade company
stocks or other securities. The members may act either as agents for their
customers, or as principals for their own accounts. Stock exchanges also
facilitates for the issue and redemption of securities and other financial
instruments including the payment of income and dividends. The record
keeping is central but trade is linked to such physical place because modern
markets are computerized. The trade on an exchange is only.
The performance of Vadodara Stock Exchange Ltd. is better then other Stock
Exchange of Gujarat. There are three stock Exchange in Gujarat Like Rajkot
Stock Exchange, Ahmedabad Stock Exchange and Vadodara Stock Exchange.
But Out of three the performance of Vadodara Stock Exchange ltd. is better then
other. Turnover of Vadodara Stock Exchange is more then other Stock
Exchanges. Vadodara Stock Exchange has 3% share in Bombay Stock
Exchange.
Vadodara Stock Exchange is Worked under Bombay Stock Exchange. Bombay
Stock Exchange is also called as Sensex. Sensex is the barometer of india. It
Shows the condition, position of india.
Stock Exchange of the country shows the Growth of the country. Stock
Exchange is the Mirror of any country.
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The performance of Stock Exchange is not only Depend on Buying and Selling
of Shares. It is Depend on lots of things. India’s stock Exchange is Called
Sensex Which Means Sensitivity Index. It is Globally connected . Sensex
Shows the Economic Condition of the country. it is worldwide connected for
example if the Euro zone crisis it will affect the Sensex. Policy of Indian
Government also affects the Indian Stock Exchange. Credit Rating Agency also
affect the Indian Stock Exchange. If American Credit rating Agency S&P
Downgrade the Indian Economy it will defiantly affect the Sensex.
66
Suggestions
Strong Point of Promotion
Vadodara Stock Exchange should promote their strong points to compete
with other broking firms.
VSE has its own clearing house. They provide services through other brokers
in three places apart from VSE like Anand, Bharuch, Surat. It has huge
63000 plus DP accounts but brokers for all of these is not VSE brokers.
So VSE should target those accounts who have their accounts with other
brokers.
VSE has very low charges of DP services of VSE Clearing house compared
to other DP service providers. So they should undertake marketing
activities to promote such low charges.
Many VSE brokers have DP accounts with other firms. So VSE should
promote its DP services among VSE brokers.
VSE should try to provide DP services to broking firms. Thus this can be a
major source or revenue if efforts are made in this direction. As the charges
are already less the distribution network of broking firms can be used to
increase the account base.
67
Setup a Marketing Team
VSE should set up a marketing team for promotion of their strong points
which we discussed above. Calcutta Stock Exchange already have a
marketing team, so VSE should take cue from it and set up a marketing
team.
68
Steps To Be taken to Continue to Exit as BSE
Demutualised stock exchanges have usually listed on the stock exchange itself
and regulatory conflicts have been addressed through specific provisions in the
listing agreement. This will lead to better corporate governance.
Due to the access to the national trading platform through the subsidiary route
has reduced the incentive of VSE to trade in its own cash segment. So VSE
should make efforts to re-commence trading in the shares which are exclusively
listed on the exchange by joining with some other RSE and forming an
alternative trading platform.
After recommencing trading in its cash segment VSE should also diversify
in the derivatives & commodities. Only being in equity isn’t going to work
in the long run. In order to survive in the competitive market VSE should
provide an electronic equities exchange for the shares listed on the exchange.
It can also create a platform for book building for initial public offerings (IPOs).
The exchange can try to create its own distinct identity once trading starts
in its cash segment. For instance, Nasdaq in US is renowned for technology
companies. Similarly, AIM at London attracts SMEs from all over the world.
Thus they can study the pattern of transactions happening to create their own
niche.
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Annexure
70
Questioner
1. Name :
2. Age :
3. Mo. No.: ___________________________
4. Email id: _____________________________________
5. Profession:
Home- maker
Student
Job
Business
6. Approx. Annual Income:
Up to Rs. 1 Lac
Rs. 1 Lac to Rs. 3 Lac
Rs. 3 Lac to Rs. 5 Lac
Rs. 5 Lac and above
7. From your total income approx. how much do you save annually?
0% to 20% 21% to 40%
41% to 60%
60% and above
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8. How much risk would you bear in your investment returns?
High
Moderate Low
9. How do allocate your savings? Please specify by Percentage:
FD
Savings A/c Gold/ Silver Real Estate PPF Insurance Mutual funds Post Stock Investment –
Shares
Debentures
Bonds
72
10. How frequently do you trade?
Intraday Settlement basis- 5 days a week Weekly Monthly 6 monthly Yearly/ Occasionally Based on share price fluctuations
11. How frequently do you review/ modify your total investment portfolio?
Monthly
Bimonthly
Monthly
Yearly
Rarely
12. When do you invest in stock market?
When market is bearish When market is bullish
Any other please specify, like SIP
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13. How do you go about investing in shares of a company?
Brokers’ advice
Through the Market tips
Advice of surrounding people
TV business channels Self study – fundamental analysis of a company
13. In stock market, in which financial instruments do you invest?
Equity shares
Debt/ bonds
Listed Company’s FDR
Mutual Fund
14. How do you select a broker?
From family/ friend Registered broker with SEBI Experience in stock market Knowledge in stock market Reference group advice Low brokerage Company
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15.From which source do you get inspired to invest in stock market? Reference groups Market tips Electronic media: TV news Business channels Internet Print media:
News papers
Company bulletins
Advertisements of a company
Reports of a company
Expert advice Self- study
16. What efforts do you put for gaining knowledge about stock market?
Analyze market fluctuations own self regularly Attend investor awareness programs conducted by VSE and other organizations Attend training conducted by such organizations Take expert advices Qualify through various exams conducted by BSE/ NSE
75
Bibliography
Reference Sites
www.vseindia.com
www.bseindia.com
http://www.sebi.gov.in/corpo/vadodaraorder.html
http://www.munothfinancial.com/stock_faq.php
http://pareesinvestments.blogspot.in/2011/09/role-of-stock-
exchange-in-development.html
http://www.mapsofindia.com/vadodra/trade-and-industry/stock-
exchange.html
Reference Books
BSE’s Certificate on Securities
Working of Bombay Stock exchange
Annual report of Vadodara Stock Exchange
