Summer training project on

Ludhiana stock exchange &

Its subsidiary company

Under taken at Ludhiana stock exchangeSubmitted to:-Pooja M. Kohli.(EXECUTIVE DIRECTOR)

Submittedby:-Meenu Sood(A-136)MBA(DBIMCS)

Preface

This report is the result of my weeks of “summer training” at Ludhiana stock exchange. Summer training is an integral part of MBA course and efficient utilization of material , time and resources which are very much important for successful completion of any taste. In order to be competent all the students are required to take a real time project work. This exposure to project work will help them to knew that how academic knowledge is applied in actual business situations.

Keeping all this in view, this project report of “Ludhiana stock exchange securities Ltd” is prepared the all rounded encouraging support by many persons towards this report, this report has created confidence in me regarding the approval of subject matter.

Actually this report is a result of an assignment, to improve myself and again confidence. In this I have done my best to make it a genuine body. But as well all knows a maximum “TO ERROR IS HUMAN”. Therefore, there is a chance for some mistake. Also a critical appraisal by anyone will be heartly welcomed.

For the accomplishment of any objective mgt of material, time financial resources is very important. Above to this coordination determines degree of success. Keeping this in view, repot of ”FUNCTIONING OF LUDHIANA STOCK EXCHANGE”is prepared by all the rounded encouraging support by many persons towards this report has created in me the confidence regarding the approval of the subject matter.

The present report is well arranged in a coherent manner. In my project I have made the study of all the depts and consulting heads staff members of various respective depts.

Actually this report is an result of an assignment, to improve myself and gain confidence, in this i have done my best to make it a genuine

study but there is a chance of mistake.

Acknowledgement“You cannot discover new oceans unless you have the courage to lose sight of the share”

The world of capital market was far from us,but we got an opportunity to emission the capital

mkt at Ludhiana stock exchange. We are indebted to our Teachers and Gurus who molded at this junction of our career from where we can take off better in the competitive scenario of today’s world.

We would like to thanks Miss Pooja M Kohli (Executive Director), Ludhiana stock exchange securities limited for giving us an opportunity to do our SUMMER TRAINING in this esteemed organization.

It’s my privilege to express the everlasting feeling of indebtness to Mr.kuber kansal and Mr. Atul chikersal(coordinator)for their valuable suggestions constructive outcome and untiring help during the summer training.

A feeling of elathim insists me on expressing my heartiest thanks, deep sense of gratitude to all my major advisors for their judicious impeccable.

Meenu Sood

STUDENT DECLARATION

I hereby declare that theAnalytical study

OnOVERALL STUDY ON

LSE and its SUBSIDIARY COMPANYIN

LUDHIANA STOCK EXCHANGE

Submitted in partial fulfillment of theRequirement for the degree of

MASTER OF BUSINESS ADMINISTRATION

To Punjabi University, patiala is my original work and not submitted for the award of any other diploma, degree.

Place: Ludhiana Meenu sood Date Signature

CERTIFICATE

This is to certify that the project report entitled “LSE and its SUBSIDIARY COMPANY” submitted by

Ms. Meenu Sood 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.

Pooja M. Kohli

Signature

CONTENTS:-

1. Introduction of Stock Exchange History Features Functions List of regional stock exchanges

2. Introduction of Ludhiana stock exchange Profile Achievements Objectives Operations

3. Introduction to LSE Securities Ltd. Features Board of Directors

4. Introduction to Departments of stock exchange Operation Dept. Margin section Clearing section Mkt surveillance section Computer section. =Service Deptt. Legal section Investor grievance section Listing section Accounts deptt. Technical deptt. Membership deptt. Personnel deptt. Depository deptt.

5. Regulatory frame work of stock exchange 6. Conclusion. 7. Bibliography

INTRODUCTION

TO

STOCK

EXCHANGE

INTRODUCTION TO STOCK EXCHANGE

A stock exchange is an institution of capital mkt which generates capital and provides the same to industrial houses. A stock exchange is nervous system of capital mkt. the changes in the capital mkt are brought about by a complex set of factore, all operating on the mkt simultaneously.

A stock exchange is the key institution facilitating the issues and sale of various types of securities it is a pivot around which every activity of the capital mkt revolves. In the absence of stock exchanges, the people with saving would hardly invest in cooperate securities for which there would no liquidity (buying and selling facility). Corperate investments from the general public would have been thus lower.

Stock exchanges thus represent the mkt place for buying and selling of securities and ensuring liquidity to them in interest of the investors. The stock exchanges are virtually the nerve centre of the capital mkt and reflect the health of the country’s economy as a whole.

The stock exchange is a place or a mkt were securities, shares, debentures, bonds. Mutual funds of join stock companies, central and state govt. organization, local bodies and foreign govt. are brought and sold. A stock exchange is a plateform for the trade of already issued securities through primary mkt. It is the essential pillar of the private sector and corporate economy. It is the open auction mkt were buyer and seller meet and evolve a competitive price for the security. It reflect hope aspiration and fears of people regarding the performance of the economy.

It is a mkt as well as the sources for the capital. Corporate and government raise sources from the mkt. The house hold invest there savings in the securities.

The stock exchange defined.

The supreme court of India has defined the role of stock exchanges in these words:

“A stock exchange fulfills the vital function in the economic development of a nation. Its main function is to liquefy capital by enabling a person who has invested money in, say a factory or a railway to convert it in by disposing off his share in the enterprises to someone else.”

HISTORY OF STOCK EXCHANGE IN INDIA

The stock started in the pre independence era. It is discussed as below:-S.No YEAR Development of stock exchanges

1. 18th century Trading of shares of east India company in kolkata and Mumbai was started.

2. 1850 Joint stock companies came into existence

3. 1860 Speculations in securities was done for first.

4. 1875 Formation of stock exchange in Mumbai.

5. 1894 Formation of Ahmadabad stock exchange.

6. 1908 Formation of Calcutta stock exchange

7. 1939 Formation of Lahore and madras stock exchange.

8. 1940 Formation of U.P and Delhi stock exchange

9. 1956 Securities contract(regulation)Act was enacted

10. 1988 SEBI was setup.

11. 1992 SEBI was given statutory powers under SEBI Act.

12. 1993 NSE was formed for first.

13. 2000 Depositories was introduced.

14. 2002 Start of rolling settlement and banning of BADLA trading.

15. 2003 Introduction of T+2 settelment.

FEATURES OF STOCK EXCHANGE1. Stock exchanges have been an association of individual

members called member broker.2. Stock exchanges are formed for the express purpose of

regulating and facilitating the buying and selling by an institution at large.

3. Stock exchange operate with due recognition with govt. under securities and contract regulation act 1956.

4. The member brokers are middleman who transact on behalf of public for commission.

5. BOD limit is given by SEBI.6. Total 13 directors are in every stock exchange.7. Board is headed by president.8. SEBI has been set to oversee the orderly development of stock

exchange.9. Stock exchange list the companies who wishes to raise the

funds of cap.from public.10. Stock exchange facilitates trading in securities of the public

sector companies as well as govt.securities.11. The recognition accorded to a stock exchange is valid for

period of 5 years subject to satisfactory performance of stock exchange during this period.

12. Daily total turnover of all the stock exchanges is Rs.70000 crores (approx.)

13. In India only recognized stock exchanges can operate.14. Stock exchanges provide finance for production outputs.

15. It is a nerve centre.

FUNCTIONS OF STOCK EXCHANGES1. It channelises the household savings into investments.2. It plays vital role in the development of economy of the

country.3. Provides liq1uidity and transpirancy.4. It encourages the companies to perform the best

possible way.5. Ensure funds and capital to flow into profitable

enterprises.6. Increase the mkt value of shares.7. Protect interest of investots.8. Provide platform for investors to trade.9. To ensure recognized code of conduct.10. Stock exchanges indirectly helps in providing

employment to millions of peoples.

LIST OF VARIOUS REGIONAL STOCK EXCHANGES:

S.NO Name of Stock Exchange

Year of establishment

Type of Organizations

1. Bombay stock exchange 1875 Voluntary non-profit organization

2. Ahmadabad Stock exchange

1897 Voluntary non-profit organization

3. Calcatta stock exchange 1908 Public limited company

4. M.P stock exchange Indore

1930 Voluntary non-profit organization

5. Madras stock exchange

1937 Co. limited by guarantee

6. Delhi stock exchange 1940 Public limited company

7. Hydrabad stock exchange

1943 Co. limited by guarantee

8. Banglore stock exchange

1957 Pvt. Converted into public ltd. Company

9. Cochin stock exchange

1978 Public limited company

10. U.P stock exchange kanpur

1982 Public limited company

11. Pune stock exchange 1982 Co. ltd. By guarantee

12. Ludhiana stock exchange

1983 Public limited company

13. Jaipur stock exchange 1983 Public limited company

14. Gwahati stock exchange

1984 Public limited company

15. Kanaar stock exchange

1985 Public limited company

16. Magadh stock exchange

1986 Co. ltd. By guarantee

17. Bhubaneshwar stock exchange

1989 Co. ltd. By guarantee

18. Saurashtra stock exchange

1990 Co. ltd. By guarantee, unrecognised

19. Vadodara stock exchange

1990 Private limited company.

20. Meerut stock exchange

1991 Private limited company

21. OTCEI stock exchange

1993 Pure demutulised

22. National stock exchange

1995 Pure demutulised

23. Coimbatore stock exchange

1997 Private limited company

24. Sikkim stock exchange

1997 Private limited company

25. Multi commodity exchange(MCX)

2008 Public limited company

26. NCDEX 2009 Private limited organisation

From above Saurashtra, Magadh, Hyderabad,and Mangalore are unrecognized and rest are recognized. BSE is in worlds 5th position in transaction.MCX and NCDEX are the new exchanges which only deals in commodities.

INTRODUCTION TO LUDHIANA

STOCK

EXCHANGE

INTRODUCTION OF LUDHIANA STOCK EXCHANGE PROFILE:-It was established n the year 1981 at near clock tower,Ludhiana with 220 members by Sh.S.P.Oswal and Sh. B.M. Munjal leading industrialists to fulfill a vital need of having a stock exchange in the region.since,its inception LSEA(Ludhiana Stock Exchange Association limited)has grown phenomenally switched from manual trading to screen based trading on 18th November 1996 and no.of listed companies increased from 160 in 90’s to 376 of which 245 are regional and 131 are non regional companies(as on March 31,2005).

LSEA has played an important role in generating for the companies in the states of Punjab,Himachal Pradesh,Haryana,and jammu Kashmir. bt now in LSE there are 212 regional and 114 are non regional out of 326 registered companies.

Out of 295 broker members there are 156 are registered with NSE and 121 are registered with BSE and remaining are registered with both.

In Feb 2002 the trading is closed due to lack of funds and infrastructure as compare to NSE and BSE.

Total listed capital of the aforesaid companies(regional and non regional)is 3072.6 approx.

Now the present addressof the stock xchange is feroze Gandhi Market ,ferozepur road ,Ludhiana and exchange has an ultra mound building which is centrally air conditioned.

LSE has its own index as 1993 base yearand index is based on prices as on 1st April.

LSEA published its own bulletin at the interval of a quarter.Govrening board consists of 12 directors.out of which 6 are

Shareholders directors,3are trading member directors3 are public interest directors and 1 is Executive director.

SHAREHOLDER DIRECTORS OF LSE LTD.

1. CHAIRMAN- Sh.Padam Prakash Kansal2. VICE CHAIRMAN-Sh. Joginder kumar3. TRADING MEMBER DIRECTOR-Sh.Sanjay

Anand4. TRADING MEMBER DIRECTOR-Sh.T.S.

Thapar5. SHAREHOLDER DIRECTOR-Sh,Ravinder

nath Sethi6. SHAREHOLDER DIRECTOR-Sh.Ashok kumar7. PUBLIC INTEREST DIRECTOR-Sh.Ashwani

kumar8. PUBLIC INTEREST DIRECTOR-Dr.Raj Singh9. PUBLIC INTEREST DIRECTOR-Sh.Ved

Prakash Gaur10.DING MEMBER DIRECTOR-Sh.Sunil Gupta11.SHAREHOLDER DIRECTOR-Sh.Varun Chhabra12.SHAREHOLDER DIRECTOR-Sh.Satish Nagpal13.EXECUTIVE DIRECTOR-Pooja.M.Kohli

ACHIEVEMENTS OF LSE First regional stock exchange to give proposal of

making subsidiary as broker of NSE and BSE for survival of stock exchange and second to start operations like broker of NSE and BSE.

First regional stock exchange to starttrading in commodities market by subsidiary.

First regional stock exchange to start courses on capital market,only BSE is performing this sort of activities andNSE uis also performing courses on capitqal market only for members but LSE will star outsiders also.

Derivative trading is done in LSE. Commodity trading is also done here. LSE also introduced a settlement guarantee

fund (SGF). The SGF guarantees settlement of transactions and the carryforward facility provides liquidity to the market.

LSE became the first in India to start LSE Securities Ltd., a 100% owned subsidiary of the exchange. The LSE Securities got the ticket as sub-broker of the NSE. In 1998, the exchange also got permission to start derivative trading.

For the settlement of dematerialised securities, the Ludhiana Stock Exchange has also been linked up with National Securities Depository Ltd. (NSDL).

Beside them some more achievements are:-

1. “LSE” brand is popular among masses. The brand image of LSE can be capitalized. 2.LSE have requisite infrastructure for the Capital Market activities which includes a multi-storeyed, centrally air conditioned building situated in the financial hub of the city i.e. Feroze Gandhi Market.3. LSE have well experienced staff handling operations of Stock Exchange.4. LSE have competent Board and professional management. 5. LSE have much needed networking of sub brokers in the entire region, who are having rich experience in Stock Market operations for the last 25 years. 6. LSE have more than 40,000 clients spread across Punjab, Himachal Pardesh, Jammu & Kashmir and adjoining areas of Haryana and Rajasthan. 7. The turnover of LSE subsidiary is the highest amongst all subsidiaries of Regional Stock Exchanges in India. 

OBJECTIVES OF LSEnt at NSE aInvestor grievances :- The major objective of LSE is the handling of investors complaints and grievances. For this purpose it has established investors grievances cells that receives complaints from investors. LSE floated its subsidry company, LSESL, with objectives of

obtaining trading right on bigger stock exchanges. Improving trading settlement from T+2 to T+1. Providing platform for free mkt. Safeguarding general public interest. Keep an effective surveillance on member brokers. Reduction in huge paper works. The major objective of LSE is introduction of NEAT (National

Exchange for Automated Trading) system. Effective clearing and settlemend BSE

Operation of Ludhiana Stock Exchange:-

The Ludhiana stock exchange is the technology savvy, forward looking and modern regional stock exchange.

DATE OF ESTABLISHMENT

Date of incorporation: October 17,1981.

Date of recognition : April 29,1983.

Governing council, committees and Administation.

The council of mgt of the exchange consist of 13 members of which:

=> shareholder director : 6 members

=> Trading member director : 3 members

=> Executive Director : 1 member

=> Public interest director : 3 members

At every Annual General Meeting, 1/3rd of the Elected directors retaired by rotation, Administartion of the exchange is managed by the exective director who is assisted by the company secretaty and a team of executives, assistants, technicians and sub staffs. The exchange has three statutory committees namely:-

Disciplinary Committee.

Arbitration committee.

Default committee.

In addition it has five advisory and standing committees including the investors grivances committee, to assist the Administration.

THE LUDHIANA STOCK EXCHANGE WORKS AS FOLLOWING:-

It has following departments:-

1.Secretarial department2.Membership department3.Technical department4.Legal department5.IGC department6.Accounts department7.Listing department8.Personnel department9.Internal control department.

1. Secretarial department :-LSE is a public ltd. Company.the min. cap. Required is 5 lac .Minimum member required is 7 members.SEBI nominates the public relation director. What this department does:-

To convene the meetings of the Board this dept. is responsible.

7 days before this meeting ,a notice about the place,date, time ,is sent to board by this department.

To draft/compile the agenda of the meeting and send to board members.

Board proceedings are recorde in the form of minutes which is drafted within 30 days and given to chairman of committee and board.

The 2 committes of this dept are:-

1.STATUTORY COMMITTEE

2.NON STATUTORY COMMITTEE

1.STATUTORY COMMITTEE:-It includes the following :-

Investor service committee

Disciplinary committee Default committee Arbitrary committee

2.NON STATUTORY COMMITTEE:- HRM committee Computer committee Share transfer committee Facility mgt. committee Audit committee Trading membership committee.

2.Membership department:-It is primary and secondary department without which working of entrepreneurs and members of any stock exchange is impossible .All the members are required to comply with rules under SCRA,1956.

ELIGIBILITY OF MEMBER SHIP:-The applicant should be citizen of India and must have completed 21 years of age.

REQUIREMENTS FOR INDIVIDUAL MEMBERS OF EXCHANGE:-1. Age limit:- Minimum=21 years.Maxmimum=60

years.2. Qualification:- a. Matriculation.b. He should at least have 3 yrs capital mkt experience.

c. He should not be bankrupt.d. Person should also be registered from SEBI.

REQUIREMENT FOR CORPORATE MEMBER OF EXCHANGE:-A.The company should be registered under section 322

of the companies Act.B.Company should not be bankrupt.C.Minimum paid up capital required is Rs. 25 lacs.D.The copies of MOA and AOA E. Qualification and proof of age.

In LSE 295 members are there out of which 156 are registered with NSE and 1321 are registered with BSE.and rest with both.

.3.Technical department:-The head of this department is Mr. Navraj singh

This department holds all the technical problems in the techniques. This department of LSE is regulating the activities related to the fields of electrical , mechanical and civil engineering besides having other functions like that of security.

There are some of the important aspect:-1.electrification of building.

2.Air conditioning plants.

3.Maintenance of the generator.

4.fire fighting system

5.Maintenance of the telephone exchange

6.Water supply

SECURITY:- These is an additional charge given to this department. The supervision of the security staff, maintenance of metal detector is also under this previous.

4.legal department:-The head o f this department is Mr. Prashant saluja .it holds all the legal formalities to be done on every department and on the stock exchange.

1. to define stock exchange against any type of case.

2. To see that all the SEBI guidelines are followed.

3. to see all the govt. rules and regulations are followed.

4. to check that all the work which is going one is legal .

5. To suggest selective and correct measures when needed.

6. Monthly report to SEBI regarding case of total pending , total solved etc.

5.IGC:-The head of this deparment is again Mr. Prashant Saluja.It solve all the investor related problems and does the following services:-

INVESTOR RELATED SERVICES

:- INVESTOR GRIEVANCES:-the exchange has enabled special arrangements to handle investors grievance or complaints .It has established an investor grievance cell that receives complaints with companies and member-

Broker to ensure this satisfactorily redressal have been fully computerized. In addition ,to 6this the exchange has an investor grievance committee. It is the committee between members and brokers.

:-INVESTOR PROTECTION FUND:-The exchange has set up an investor protection fund in the monthof January, 1990 for providing compensation to individual investors in case of a member of the exchange. The fund has a corpus of Rs.78.60 lacs as of February 28, 2005. In case nay member – broker default to meet his obligation towards investors in respect of deals that took place through the trading system of the stock exchange, then the concerned investors are compensated from the fund.

:-INVESTORS SERVICES CENTRE:-

The exchange has set up an investor’s service centre in its premises for providing information regarding to the general public. The centre has a well- equipped library, which subscribe to leading economic financial dailies and periodicals. It also stores the annual reports of the company listed at the stock exchange.

6.Accounts department:- The head of this department is Mr. Kuber Kansal.This department makes and holds all the financial reports of the company and present it quarterly.

FUNCTIONS:- To make and receive payment to the outside

agencies(cos. Listed at LSE,brokers working in LSE.)

To keep the record of all incoming and outgoing money and preparation of financial matters at the end of the financial year.

To get the a/cs audited from the 3rd party. To disburse personnel expenses.

7.Listing department:-The head of this department is Mr. Sudesh Kumar. It lists the companies those who want to issue their holdings in the public.

Guidelines for Listing

Listing means admission of securities to dealings on a recognized stock stock exchange. The securities may be of any public limited company, Central,tral or State Government, quasi governmental and other financial

Checklist

institutions/corporations, municipalities, etc.

The objectives of listing department are mainly to :

provide liquidity to securities; mobilize savings for economic development; protect interest of investors by ensuring full disclosure. BSE.

BSE has set various guidelines and forms that need to be adhered to and submitted by the companies. These guidelines will help companies to expedite the fulfillment of the various formalities and disclosure requirements that are required at various stages of

Public Issues o Initial Public Offering o Further Public Offering

Preferential Issues Indian Depository Receipts Amalgamation

Qualified Institutions Placements

8.Personnel department:-The head of this department is Mrs. Geeta Goyal.

It helps in the Recruitment of the personnel, whenever and wherever a vacancy arises.It also helps in the maintenance of attendance register.the personnel department also helps in the appointment of the clerks, representative brokers. This department fulfills all the vacant seats of the LSE.

9.Internal control department:-This dept.is introduced newly in the LSE.this department is headed under :-

SECRETARIAL:-This department is headed under Mrs.Sarabjeet Kaur .Under this department all the records are maintained and all the minutes of the Board meetings are recorded.It helps in the drafting and compiling of the agenda of all the meetings.

FINANCE:-Finance is the life blood of every organization. The head of this department is Mr.Kuber Kansal.

This deptt. helps in arranging finance from various activities in the stock exchange. It decides that from where the finance will come and where it will be utilized in the best possible manner so that in future benefits can be availed from that finance.it also see that the finance where is used is properly used or not.

The Internal control department controls the internal working of the LSE.It puts effective conyrol on the member brokers and other staff members and see that they are working in a well behaved manner or not and if not than proper control is put on them so that they can work properly in future.It helps the clients in giving proper information so that they can work properly.

TRADING SYSTEM:-

Online screen based trading system commenced at LSE on November 18,1996 .however .w.e.f. 23rd jan.2002 there has been no trading at our exchange.

ONLINE TRADING THROUGH VSATS

With the objective to broad based business oppurtunities to the investors and members,the change has set up 37 trading terminals at remote cities in thestate of Punjab,delhi,and union territory of Chandigarh.Now from October 1999 ,trading through VSATs(Very Small Apurture Terminal) is being smoothly conducted.

SETTLEMENT GUARANTEE FUND(SGF)

Ludhiana stock exchange implemented a settlement guarantee fund (SGF)w.e.f. April 6, 1998.It providesguarantee of all the genuine trades made through the screen based trading system of the stock exchange.The SGF had a corpus of Rs. 13.34 crores and membership of 176 brokers as on data available upto 2007.

DEPOSITORY SYSTEM

It is an instituition which deals in securities as a bank deals in funds.Ludhiana stock exchange commenced trading in Demat shares from November 16,1998 by becoming a participants of NSDL

and CDSL. The exchange has set up in house DP services to facilitate trading and settlement in DEMAT securities.

CLEARING AND SETTLEMENT

There is weekly settlement cycle prevailing at the LSE. Which commences on Monday and ends on Friday .at the end of each settlement, members are given scripwise delievery notes.The members are required to depositthe scrips sold by them to the clearing houses on the second working day following the day of transaction. Payments against delievery are made by purchasing members also on the aforesaid day. The stock exchange management ensures that strict compliance is made with the condition for trading,settlement schedule.

ROLLING SETTLEMENT

The exchange introduced the rolling settlement in 10 srips w.e.f. January 10, 2000 and in another 34 scrips w.e.f. march 21.2000 and in another 119 scrips w.e.f. May 8, 2000.

It is the trading system of the securities in the transaction that is buying and selling of securities.

The transaction can be secured up by a counter transaction on the same day only.initially settlement system was T+5 but was graduallu reduced to T+2 on 1st April ,2003.

TRADING ON BIGGER STOCK EXCHANGES

The exchange acquired the membership of NSE and BSE through its subsidiary. The LES securities limited, with the objective of providing an enabling mechanism to its member brokers to trade on NSE and BSE as sub brokers of LSE Securities limited.

Trading at BSE and NSE commenced through the subsidiary routes from September 2000 and December 2000, respectively, and the trading in F&O segment of NSEcommenced in February 2002.

The average daily trading volumes on BSE, NSE (capital market) and NSE (F&O) during the month of February 2005 has ben Rs.18 crores , Rs. 38 crores and Rs. 144 crores respectively.

CORPORATE MEMBERSHIP OF NSE AND BSE

SEBI , at the initiative of LSE , permitted smaller stock exchanges to trade in bigger stock exchanges through their subsidiary companies .LSE floated its subsidiary

company, the LSE Securities Limited, with the the objectives of obtaining trading rights on bigger stock exchanges. It obtained corporate membership of both NSE and BSE. AT present 100 and 60 members of LSE are operating on NSE AND BSE respectively through the subsidiary route.

REVENUE STREAMS

The streams of corporate membership of NSE and BSE is a self financing project and will generate surplus after meeting operations expenses at a very low break -even point.

DEPOSITORY PARTICIPANT DP SERVICES

The company has a depository participant of NSDL and is the only depository in the region having On- line real time connectivity with NSDL. DP operation

of the company not only benefited the investors of the region , but also proved to be a source of income for the company.

LISTING OF SECURITIES AT LSE

At present, Ludhiana Stock Exchange has 330 listed companies, out of which 214 are regional and 116 are Non-regional. The total listed capital of aforesaid companies is Rs. 3168.91 Crores appx. The market capitalization of the said companies is more than Rs. 3372.34 crores. The Stock Exchange is covering the vast investor base through the listing of abovesaid companies, which are situated in the region comprising of Punjab, Himachal Pardesh, Jammu & Kashmir, Chandigarh. At present, Ludhiana Stock Exchange has 330 listed companies, out of which 214 are regional and 116 are Non-regional. The total listed capital of aforesaid companies is Rs. 3168.91 Crores appx. The market capitalization of the said companies is more than Rs. 3372.34 crores. The Stock Exchange is covering the vast investor base through the listing of abovesaid companies,

which are situated in the region comprising of Punjab, Himachal Pardesh, Jammu & Kashmir, Chandigarh. At present, Ludhiana Stock Exchange has 330 listed companies, out of which 214 are regional and 116 are Non-regional. The total listed capital of aforesaid companies is Rs. 3168.91 Crores appx. The market capitalization of the said companies is more than Rs. 3372.34 crores. The Stock Exchange is covering the vast investor base through the listing of abovesaid companies, which are situated in the region comprising of Punjab, Himachal Pardesh, Jammu & Kashmir, Chandigarh. At present, Ludhiana Stock Exchange has 330 listed companies, out of which 214 are regional and 116 are Non-regional. The total listed capital of aforesaid companies is Rs. 3168.91 Crores appx. The market capitalization of the said companies is more than Rs. 3372.34 crores. The Stock Exchange is covering the vast investor base through the listing of abovesaid companies, which are situated in the region comprising of Punjab, Himachal Pardesh, Jammu & Kashmir, Chandigarh. Despite the fact, the implementation of SEBI (Delisting of Securities) guidelines, 2003 has resulted into the Delisting of good companies listed at Exchange, however still there are leading Companies listed with our Exchange, notable among them are United Breweries Limited, Vardhman Acrlyics Limited, SMC global securities limited, Himachal Futuristic Communications Limited etc. Ludhiana Stock Exchange has facilitated the capital generation for agro based industries as Punjab is a agricultural led economy. It will continue to do so, once it

gets approval for a tie up with bigger Exchanges for commencing trading operations.

INTRODUCTION TO LUDHIANA

STOCK EXCHANGE &

SECURITIES LTD

INTRODUCTION OF LUDHIANA STOCK EXCHANGE AND SECURITIES LTD.

Introduction;-It is wholly subsidiary company of Ludhiana stock exchange.It has been formed with the objectives of growth and survival of LSE as an instituition through increased volumes and liquidity in trading at the exchange. The main objectives of the co is “ To establishand carry on the business of the stock broking as a member of recognized stock exchange (s) in India or abroad and other allied matters and for this purpose to buy,obtain or acquire stock exchange membership or membership rights in India or abroad.” Trading member of MCX-Stock Exchange Limited. Trading Members of LSE can access NSE and BSE by registering themselves with SEBI as Sub-brokers of LSESL.LSE Securities Ltd., was incorporated in 07TH January, 2000 with a view to revive the capital market in the region and for taking full advantage of the emerging opportunities being provided by expansion of bigger stock exchanges like NSE and BSE. The company since its inception has marched forward rapidly and has maintained consistent growth record. -. -LSE SECURITIES LIMITED (LSESL) is a subsidiary of the Ludhiana Stock Exchange Limited under the policy formulated by the Securities and Exchange Board of India (SEBI) for Revival of Small Stock Exchanges.The policy enunciated by the SEBI permits a stock exchange to float a subsidiary, which can take up membership of larger stock exchanges, such as the National Stock Exchange of India Ltd. (NSE), and Bombay Stock Exchange Ltd. (BSE). LSESL has been registered by SEBI as a Trading-cum-Clearing Member in the Capital Market segment and Futures &

Options segment of NSE and Capital Market segment of BSE and NCE

FEATURES OF LUDHIANA STOCK EXCHANGE AND SECURITIES LIMITED

The company has a paid-up capital of Rs 5.55 crores

The Council of the management of the Company comprises of 10 directors of which 3are broker members and 7non-brokers. Five non broker members are Independent Directors of eminent status from the field of finance, law and management and remaining two are Chief Executive Officer of LSE Securities Limited and Executive Director of the holding company (Ludhiana Stock Exchange), who are on the Board of the company as ex-officio Directors

Operations of the company are run in a professional, transparent and fair manner keeping in view of the interest of investors as well as other stake-holders.

The LSE Securities Ltd. commenced trading operations in Capital Market Segments of BSE and NSE in September, 2000 and December 2000 respectively. The turnover of the Company at NSE and BSE is growing by leaps and bounds

ever since in incorporation. There was encouraging response from the sub-brokers specially at NSE counters.During the financial year 2005-06, the Company recorded a turnover of Rs. 7975 crores and Rs.3834 crores in "Capital Market" segments of NSE and BSE respectively. For the year ended 2005-2006, there were 128 sub-brokers registered for NSE and 68 for BSE.

The LSE Securities Ltd. commenced trading operations in Future and Options Segment of NSE in February 2002. The Company became the first subsidiary of any Regional Stock Exchange which commenced trading in “F&O” Segment of NSE.

The LSE Securities Limited has provided facility to its sub-brokers for trading on NSE and BSE through VSAT counters which are located outside Stock Exchange Building

In order to provide professional services to the investors of LSE Securities Limited through its sub-brokers, the company motivated its sub-brokers and its staff to qualify the certification in financial markets conducted by NSE.

The LSE Securities Ltd. commenced its operations as Depository Participant of NSDL in August 2000.

In order to further strengthen its services to sub-brokers and investors, the Company applied for the DP of CDSL. It started DP operations of CDSL in December 2001

As a result of efficient services and competitive rates, the Company has been able to increase its market share in the DP business at the cost of other DPs in the region. As on date DP of NSDL and CDSL of the Company at Ludhiana is servicing over 35000 beneficiary accounts.

To increase its presence in the region further, the company plans to open its branches of Depository Services in the major cities of the region. To start with, it has already opened its branches at Jalandhar Amritsar and Chandigarh.

It acts as financial consultants and provide advice,services,consultancy in various fields such as general administration, secretarial,commercial,financial,legal,economic,directs and indirect taxation and other levies.

It also helps in obtaining trading rights on bigger stock exchanges.

BOARD OF DIRECTORS OF LSESL

DETAILS OF DIRECTORS OF LSE SECURITIES LIMITED

Sr.No.

Name Designation Date of Appointment

1. Mr. Anurag Arora Chairman 26.09.2009

2. Mr. Vishal Goomber Vice-Chairman

27.09.2008

3. Mr. Jatinder Garg Member-Director

26.09.2009

4. Mr. Manjit Singh Sarna

Member-Director

27.09.2008

5. Mr. Lalit Kishore Member-Director

27.09.2008

6. Mr. Susheel Bhakoo

Public Representative Director- Independent Director

12.03.2008

7. Mr. Vijay K. Bansal

Public Representative Director- Independent Director

12.03.2008

8. Dr. Prem Kumar Public 14.02.2009

Representative Director- Independent Director

9. Dr. Anil Kumar Angrish

Public Representative Director- Independent Director

19.07.2007

10. Mr.Pawan Kumar Garg

Public Representative Director- Independent Director

27.08.2008

11. Mrs. Pooja M. Kohli LSE-Representative Director

14.02.2009

Last. Chief executive officer cum director is Mr.Rajesh K. Sharma.

ADDRESS:-Feroze Gandhi market,Ludhiana 141001Punjab .

INTRODUCTION TO DEPARTMENTS OF LUDHIANA

STOCK EXCHANGE

DEPARTMENTS OF LUDHIANA STOCK EXCHANGE AND THEIR WORKINGIn order to fulfill its objectives of safety and security to the investment of the investor to provide the proper service under the prescribed guidelines of SEBI , there are many different departments under which different departments under which different functions are performed , which are assigned to those departments. These are following departments of LSE:-

Operational Department:-

Margin Section

Clearing House

Market Surveillance

Computer Section

Service Department:-Legal Department

Secretarial Department

Listing Section

Accounting Section

Technical Section

Membership department

Personnel Department

Depository Department

All the department perform specific function and all the section are inter connected with each other. There is an organized network of recording of activities performed there. But before studying the inter dependence of section , here is the detail of all.

OPERATIONAL DEPARTMENT

MARGIN SECTION:-

It is necessary for every stock exchange to establish margin section margin has been created for the safety purpose of the client so that he can”t be defaulted and doesn’t suffer loss that much which he cant bear to pay out.In case of forward trading margin is not there but if it is under stock exchange margin is always kept for safety. The basic function is to collect different types of margin from brokers as per regulation given by SEBI.

The idea behind the section is:-1. To prevent the members from doing excessive

speculation trading.2. To keep track of the members who are expected

to default in future.Thus margin section by

keeping a track of base minimum capital and addition base minimum capital and by setting exposure limit for each broker member ensures that any member

buy or sell scrips in proportion to his net worth. To make these relations practical every broker has to deposit certain %age of the total transactions done by him either by way of cash in the bank or by scrips. The Deposit Act as a security money with the stock management for the particular broker.Margin money is charged both on total turnover and total purchase of the brokers.

FUNCTIONS OF MARGIN SECTION To collect BMC , ABMC To keep track on the member brokers. Collection of the margin. Release of the margins

BASE MINIMUM CAPITAL:-

Each broker is required to deposit with the stock exchange Rs. 50,000 in the form of cash/FDR/Bank guarantee of the scip from the approved list.

For getting membership in NSE and BSE 2,50,000 is deposit for registration. Out of this 100,000 shares are issued and balance 1.5 lac are given for trading. (1.5 lac is BMC)1.5 *8 times is 12 lac. Upto this he can do trading.

If any person is not satisfied with 12 lac than he can give margin and that is again multiplied with 8. that is called ADDITIONAL BASE MARGIN CAPITAL(ABMC).

INTRA DAY GROSS EXPOSURE LIMIT Each broker would have an intra day gross exposure limit is sum total value of purchase and sale of each scrip would be equal to 25 times(in case of NSE and BSE) of the sum total of permanent security deposited by him. It indicates the aggregates of sale and purchase and calculated on daily bases.

NET EXPOSURE LIMIT Each member would have a net position limit i.e. net volume of purchase and sale of each scrip would be equal to 8.5 times in case of NSE and 6 times in case of BSE of the subtotal of BMC and ABMC. So it indicates the difference between sale and purchase are calculated on daily bases. Net position of each member at the end of the day would be carried out on the next day.

PAYMENT OF MARGIN:- Member brokers are required to make payment of margin by 10:30 am on the T +1 basis.

TYPES OF MARGIN 1. Value at Risk margin(VAR):-This margin is

developed by CHICAGO STOCK EXCHANGE. This system comes of 100% of the market risk through the use of different statistical formulae.VAR margin is calculated on daily basis.

2. Market To Market Loss(MTML):- It is calculated after the close of trading cycle.in each settlement mkt to mkt loss is in a scrip would be netted against mark to market profit in the other scrip. But such netted would be allowed only on the scrip prescribed by SEBI. Thus , stock exchanges collects on daily basis 100% notional loss from each broker for every scrip. It is calculated as the difference between buying and selling price and current value(closing price) of that scrip at the end of the day.

3. Exposure Margin:-Exposure margin is charged 5% -10% of the sale and purchase of shares.

CLEARING DEPARTMENT:-This department takes care of pay in and pay out of securities. In LSE now adays, the system i.e. prevalent for trading is T+2 that means settlement of transaction should take place within 2days.SEBI decided the following activities schedule for exchange for T+2 rolling settlement.

Sr.No. Day Description of activity

1. T Trade date2. T+1 Custodian

confirmation day/deposit of margin

3. T+2 Pay in/ Pay out of securities/ funds

4. T+3 Auction day5. T+4 Pay in/ Pay out of

Auction/ closeout of shortages as soon as possible.

PROCEDURE:-1. when shares are being sold by the sub –broker, he

on the basis of settlement schedule i.e.T+2 has to download all the information of shares being sold to the broker, then the broker will further download this to the delievery officeNSE and BSE.This process is called PAY IN SECURITIES.

2. After pay in sec. pay out takes place.In this step all the information about the scrip would first be downloaded to the broker by NSE, then it would be downloaded to sub- broker.

AUCTION:-Auction of securities can be done at local level of NSE and BSE.It can be done if the sub –broker doesnot give all the information to the broker i.e. in case if broker fails to deliver the scrips on T+2 delivery day.

The n it is the responsibility of clearing house to sttel the undelivered scrips by conducting auction of pending securities and T+5 cycle will start.But in case if the funds are not settled by the sub- broker then his terminal would be de- activated and it would be activated only on the repayment of funds.

PENALTY:-In case sub broker does not give all the information to the broker then he has to, pay penalty of 1% according to BSE ano 0.25%according to NSE

IN CASE OF AUCTION AT NSE,BSE:-Auction in case of NSE,BSE would be done at the closing price +20% of the value or settlement trade date to auction date , high price which ever is higher.

CLOSE OUT:-In case the shares of particular scrips are not available on the date of auction then it is the

obligation of the solicitor (exchange) to give monitory benefits to initiatori.e. buyer against the default of defaulter of securities in this manner settlement cycle is completed.

MARKET SURVEILLANCE DEPARTMENT:-

The main task of this section is to see the market sanctity is maintained and the investors are not cheated. So market surveillance entails scientifically in identifying points ina stock price movement or trading volumes, which don,t match with the co.,s fundamentals. So the price and volume trends in a stock exchange are checked for abnormalities, scientifically.this department keeps a check on trading and coordinates with the margin department and keeps a close watch on the increase and release of limits. It helps in checking:-1. Unusual price rigging.2. Insider trading3. False markets4. fraudsA crucial aspect of any surveillance system is trecking brokers whose trading activities are consent rated in few stocks and confirm the doubt with them. Now SEBI fixed certain online inspect in parameters of stock watch system and asked all the stock exchanges for modern imposition of the

online surveillance by stock exchanges to mitigate the risk of default.

COMPUTER SECTION OR EDP:-The computer section is the nerve centre of the entire tock exchange.This section remains active all the time and is directly involve in all the activities, of LSE. This section is also known as EDP i.e.ELECTRONIC DATE PROCESSING.It prepares several reports namely:-1. Sub-brokers wise delievery bill received

order(after payment).2. Downloading of delievery orders3. downloading of receiving orders4. sub- broker wise final settlement5. HDFC bank enteries.TIMING FOR TRADING SECTION

Market opens 9:oo amTrading session 9:30 am to 15:30 pmClosing session(trading) 3:30 pm to 3:40 pmPost closing 3:40 pm to 4:00 pm

Back up session 4:00 pm to 5:00 pm

The computer section play a pivot role in generating reports supplying daily quotations processing data for settlement of transactions.

FUNCTIONS:-

1. There are four servers of NSE , 1 back up survey NSDL server and CDSL server, so computer department has to maintain all these servers properly.

2. All types of report, which is asked by SEBI, are sent by the computer department.

3. The work of system maintenance is also being done by the computer department(hardware problems, software problem or any problem or any problem or problem related to the system).

4. Computer department also has to maintain a back up reports.

5. They had also to deliever the reports to different epartments i.e. clearing, margin, account.

REPORTS MAINTAINED BY COMPUTER DEPARTMENT:-1.Scrip wise summary statement:-

In this type of report all the detail about the scrips with the sub brokers has to deal with the qty. wise

statement of the scrips purchase position, net position and average rate of the scrips are included.

2.Scrip wise detail statement:- In this particular statement all the

details about the scrips is included. It included information like how much shares are being purchased or sold by client and also its rates, it also includes information about the price at which he purchased or sold his scrip.

3.Receive order statement:- As the name indicates the particular

statement includes the no. of shares the broker will receives and also qty,symbol of the scrip.

4.Delievery order statement:- This particular statement includes the

information of how much shares are to be delievered by the broker.

5.Final obligation:- In this particular report the obligation

of a broker i.e. whether he has to pay or receive is being included after including all the charges(i.e miscellaneous , service tax, stamp duty, NSE charges,BSE charges) and all this amount is being deposited in bank.

6.Margin sheet:-

It goes to each member and is also kept by the computer department as a record. In this, how much margin the broker has to pay and which type of margin he has to pay is included. Out of these mentioned reports receive order statement and delivery order statement are not delivered to FAO. Rest of all the reports are to be submitted to NSE, BSE and FAO.

1.Matching statements:- NSE sends reports to LSE included all

the information related to scrips in detail and this particular report is being crossed checked by computer department so as to ensure accuracy of the information.

1. Contract note:- It is sent to NSE , BSE and FAO in 24 hrs. it includes the name of registred office, dealing office if any, address of a member, registration no., client address, settlement no..

SERVICE DEPARTMENT:-

Legal section:-Whenever there is a dispute between two brokers, between client and brokers and move to court, the legal dept. come in picture to fight for the cause of investers and against defolting members. It plays an important role in working governance and keeps a “Dog Watch”. On all the matters related to the stock exchange.Functions:- 7. to settle the investors grievances and

compliance(IGC).8. to define stock exchange against any

type of case.9. To see that all the SEBI guidelines are

followed.10. to see all the govt. rules and

regulations are followed.11. to check that all the work which is

going one is legal .12. To suggest selective and correct

measures when needed.13. Monthly report to SEBI regarding

case of total pending , total solved etc.

This dept. also deals with transfer of shares. In order to be a member of a stock exchange a person has to hold at least one share. If the member wishes to sell his ticket, he has to intimate the secretarial dept. in adance. A notice is given there after in newspaper for objection with in ten days of such a notice, the clients can lodge there claims. A ten day notice is also to be displayed in the notice board of stock exchange for objection to be raised by members. This dept. covers- >Personnel dept.

>Membership.

Investor Grievance Section:-LSE has formed a separet investor

grievance cell, which receives complaints from investors against companies. And member broker to ensure there satisfactory redressal.

In 1959, MOF said that for every exchange it is maindatory to set up a committee to handle the investor complaints.

“justice delay, justice deny”,-- Gandhi ji.

Types of investor grievances:-1. Against listed companies.2. Against member brokers.

Procedure:- i. Compliant to be filed in

comsurned exchange.ii. Forward to conserned listed

company.iii. Advice to resolve in 45 days.iv. Reminder to resolve in 30 days.v. Advice to appear companies

officials investors grieveances committee(IGC).

vi. Trading suspend.vii. Matter forward to SEBI.

viii. SEBI imposes penalties of 1 lac per day from delay maximum to 1 crore or which ever is less.

ix. Appeal to SAT(Securities Appellate Tribunal).

Secretarial Department:-An LSE has personnel dept. in its orgainstional chart. Main duties. Responsibilities of this dept is as follows.:

Maintenance of records of minutes like :-

1. Meeting of BOD.

2. meeting of vatious committees.3. Meeting of members.4. minutes of AGM.5. Minutes of extraordinary general

meeting.

.Listing section:-For doing in LSE the co. first have to be listed and the function of the listing of the co. is done by listind dept. for getting listed the concerned co. has to pay a certain fee and that fee would depend upon the authorized capital of the co..

Listing means admission of the securities of a co. to deal on a recognized stock exchange

Listing is governed under the following act:- Companies act, 1956SCRAct,1956SEBI guidelines

Necessity of listing:- In case the co. goes public. If the co. declares in the

prospectus Co. to do so in SCRact,1956

Benefits of the listing:- stock exchange provide platform

for free market. Securities available a the

competitive prices Listed shares preferred for

investments. Listing safeguards general

public interest. Provide liquidity to the

securities of the co. Easier to get loan for listed

cos.

Main documents:- MOA and AOA Copy of prospectus or

statement in lieu of prospectus

Copy of offer of sale and circulars of the advertisements.

Copy of balance sheet Certified copies of the

agreement with the financial instituition, selling agent ,etc.

List of top 50 shareholdings

A brief history of the co. since its in incorporation

Particulars of shares and debentures issues

Statement containing particulars , if any , commission and brokerage etc.

Share holding pattern.

ANNUAL LISTING FEES:-Paid up capital listing fees:-

Upto 1crore 70001 to 5 crore 100005 to 10 crore 1800010 to 20 crore 3600020 to 50 crore 5400050 to 75 crore 90000

After this every increase in the paid up cap. With 5 crore than fee will increase 2500rs.and will be added to this.

ACCOUNTS DEPARTMENT:-

It deals with the maintenance of records regarding income and expenditure of the stock exchange . it also prepares annual accounts of the stock exchange.most of the work in this department of LSE is done manually although help is taken from computer for making trial balance, income and expenditure statement and b/s.this report is generally published in august every year.FUNCTIONS:-

To make and receive payment to the outside agencies(cos. Listed at LSE,brokers working in LSE.)

To keep the record of all incoming and outgoing money and preparation of financial matters at the end of the financial year.

To get the a/cs audited from the 3rd party. To disburse personnel expenses.

SOURCES OF FUNDS OF LSE:- Initial listing fees from the co. Annual listing from companies Membership fees from brokers at the beginning Annual computer fee from broker Annual library charges from brokers Fines and penalties from broker. Service charges from brokers Interest earned on fixed deposits Electricity charges per room.

Maintenance charges.

TECHNICAL DEPARTMENT:-This department of LSE is regulating the activities related to the fields of electrical , mechanical and civil engineering besides having other functions like that of security.

There are some of the important aspect:-1.electrification of building.

2.Air conditioning plants.

3.Maintenance of the generator.

4.fire fighting system

5.Maintenance of the telephone exchange

6.Water supply

SECURITY:- These is an additional charge given to this department. The supervision of the security staff, maintenance of metal detector is also under this previous.

MEMBERSHIP DEPARTMENT:- It is primary and secondary deptt. Without entrepreneurs can effectively do the working of any stock exchange is impossible all the member are required to comply with rules under the SCRact,1956.

This deptt, deals with the membership of individual and corporaye members the trade in market is done through the authoriswed member who are duly registered with concerned stock exchanges and SEBI.

CATEGORIES OF MEMBER BROKER:-

MEMBER:-

Individual corporate

ELIGIBILITY OF MEMBER SHIP:-

The applicant should be citizen of India and must have completed 21 years of age.

REQUIREMENTS FOR INDIVIDUAL MEMBERS OF EXCHANGE:-

3. Age limit:- Minimum=21 years.Maxmimum=60 years.

4. Qualification:- e. Matriculation.f. He should at least have 3 yrs capital mkt experience.g. He should not be bankrupt.h. Person should also be registered from SEBI.

REQUIREMENT FOR CORPORATE MEMBER OF EXCHANGE:-F. The company should be registered under section 322

of the companies Act.G.Company should not be bankrupt.H.Minimum paid up capital required is Rs. 25 lacs.I. The copies of MOA and AOA J. Qualification and proof of age.

Through sale and transfer of membership:-a. Member can sell or transfer there membership rights

with all requirements to obtain prior approval from SEBI.

Personnel department:-. The dept carries out the activities as follows:-

1. Recruitment of the personnel, whenever and wherever a vacany arises.

2. Maintenance of attendance register.3. Appointment or removal of floor clerks or authorized

represcntatives of brokers.4. Maintain records of leaves and overtime of employees.5. Promotion, demotion ,registration,conveyance and

allowance ,etc.

Depositary Department:-

“An institution which deals in securities as a bank deals in funds”.The depository Act 1996 defines “a compsny formed and register under companies act 1956”.and which has been granted a certificate of registration under sub section 1A of section 12 of the SEBI act 1992.The term depository means a palce where something is deposited for keeping in bank in which other deposit funds or other depository securities.

Names of Depositories:-a. NSDL(National Security Depository LTD.) b. CDSL(Central Depository Service Ltd.) NSDL is about 10 years old.

Depository System:-

It is concerned with conversion of physical security to electronic form, settlement of trades in electronic transfer of ownership of shares and electronic custody of securities. This electronic system is faster then the paper work.

COMMENCMENT OF BUSINESS:-

For commencement of business of depository one has to take certain following steps:-

A.Registration: -As per the rules of SEBI act, a depository can deal in securities only after obtaining the certificate of registration from SEBI . On being satisfied with the eligibility parameters of a company to act as depository SEBI may grant certificate of registration subject to certain conditions.

B.Commencement of business:-

A depository which has obtained a registration, can start operation only after getting a certificate of commencement of business from SEBI.Depository must apply for and obtained a certificate of commencement of business from SEBI with in 1 year from the date of receiving a certificate of registration from SEBI.

C.Rights and obligation of depositories:-The depository has some rights and obligations under the depository act 1996.

Every depository must have adequate methods for reviewing,monitoring and properly evaluating its methods and procedures.

For its smooth functioning it should properly conduct inspection at appropriate times and should forward the repot of inspection to the SEBI.

It should maintain such a system so, as to ensure that all the records are properly maintain and there is no loss or destruction of records.

In event of the loss of any type of record.It should have the adequate back up system for back up of records.

SERVICES OF THE DEPOSITORY:-

Depository was established under depository sevices act,1996. these depository services are provided through DP.

RECORDS TO BE MAINTAINED WITH DP:-

Records like:-1. Records of securities dematerialized and rematerialize.

2.The name of the transfer of transferee.

3.Account no. , bank a/c of v all client.

4.No. of shares the client has in his account.

5.Records of approval , notice entry and cancellation of pledge.

6.Some other records which are said to be maintained by SEBI.

STRUCTURE OF DP:-

For any client it is necessary for him to firstly open an account with the DP. There are mainly 2 types account:-

a. Beneficiary account:- There are the accont of investor where their security are held in electronic form.

b. clearing member account:- any trade done on the exchange in a particular settlement has to be settled tgrough clearing member. For this purpose there is a claring account of clearing member(broker).

He collect in this account all the securities sold by different client any deliver the same to the exchange. In code of purchase he receives the securities from NSDL and distributes same to the client.

Dematerialisation (De-mat):-It is a process were physical form of shares is being converted into electronic mode. Such acc. Is maintained in DP.1. the client opens De-mat acc. With any DP.2. upon De-mat, the certificates are destroyed and

credit entry of exactly equal no. of securities is created in DP in electronic mode.

3. The BO acc. Of holder is credited.4. The securities loss there identity.

Securities that can be Dematerialised:-1. Shares, bonds, debentures.2. Units of mutual funds.3. certificate of deposits.4. Unlisted securities.

DE-MAT CHART:-

1

6

2 53

x

DE-MAT PROCESS:-

1. The register holder of the securities will make the request.2. Securities must be recognized by depository as eligible.3. The company issuer should have established connectivity

with the depository.4. The holder to have a beneficiary account.

Investor DP

NSDLR & T agent

5. The A/C to be in the same name as appear on the securities certificates to be de -materialized.

REMATERIALISATION:-

this process is the reverse of the dematerialization It is the process by which the electronic holding of the shares is converted into physical form.

REMAT CHART:-

REMAT PROCESS:-

Depository participant

Benefial owner(Investor)

R&T agent

Depository

1. The beneficial owner of the securities to make the request to DP in DRF.

2. DP enter the remat request in DRM.3. The DP forwards DRF to the issuer or to its

R&T agent.4. The request to be made with in 7 days of

accepting it from the client.5. The issuer or the R&T agent verifies the RRF &

confirms to DP.6. The DP on receiving confirmation of debits the

client A/C& informs the client.7. The issuer /R&T agent prepares physical security

certificates to be issued to B.O.8. The certificates are dispatched to the B.O.9. No trading is possible on the securities sent for

REMAT.

PLEDGE:-

Any member can take the loan against the securities.For this purpose the depository pledge the securities of the client.The shares of the client would be sealed.no one can take his shares out.The pledge so created can be closed on either repayment of loan or can be invoked on default. The pledge shares can not be leaded.

REGULATORY FRAMEWORK

OF

LUDHIANA STOCK

EXCHANGE

REGULATORY FRAMEWORK OF STOCK EXCHANGE

For the control of the capital market and these stock exchanges the government has made some rules and laws with which exchanges have to comply with, which are as follows:-

Legislations governing securities market:-

1. Securities Contract (Regulations) act,1956

2. Companies Act,1956

3. Securities and Exchange Board Of India ,1992

4. Depositories Act ,1996

1. Securities Contract (Regulations) act,1956:-Its main objectives are:-

To control over stock exchanges through recognition and continued supervision.

To control over stock exchanges through contracts in securities.

To control over stock exchanges through listing of securities.

2. Companies Act,1956:- It was established on the following grounds:-

To control cos. Mgt. To secure allotment and transfer of securities. Provision regarding prospectus and public issue of

cos. Policies regarding payment of interest and

dividend. To keep ensure regular supply of annual reports

and there information to shareholders and stock exchanges.

Premium, discount, rights and bonus issues. Substantial acquisition of share.

3. Securities and Exchange Board Of India ,1992:-

It came into existence on the 30th june 1992. To protect the interest of the investors . To promote the development of the securities

market. To regulate the securities market. To exercise control over the securities market

intermediates. Present Chairman is Mr.C.B. BHAVRE.

4. Depositories Act ,1996:-

An recent development in the securities market was electronic form of the shares or securities and vanishing the certificate system and reduce the time of the settlement of the delieveries and payments and also secure the delievery of the securities for this two main depiository companies came into existence i.e. CDSL and NSDL. The main objective of the depository act are:-

To make the securities freely transferable. Dematerialization of the securities. To provide ownersh in the depository mode. No role of the companies with regard to

transfer of shares..

CONCLUSION:-

LSE is the one of the best regional stock exchange.even it is the first regional exchange which has its subsidiary co. named as LUDHIANA STOCK EXCHANGE AND SECURITIES LTD.it has many sub centres in the different cities Chandigarh, Amritsar ,and Jallandhar .

It ensures that the funds of the investor are used properly.it is governed by a good Legal Framework.Its subsidiary co. helps in obtaining trading rights on the bigger stock exchanges and even it carries on the business of custodian & depository.It has the renowned members in its BOD. They work under the regulations of the SEBI,NSE and BSE.

So after working on this project I concluded that trading through this company is safe for every investor as the trading is fully transferable and there is very less chance of any complaint.

BIBLIOGRAPHY

Newspapers :-The business standard

The economics times

MAGAZINES:-

Business World

LSE’s Magazine

The business standard

INTERNET SITES:- www.nseindia.com

www.bseindia.com

www.sebi.gov.in

www.lse.co.in