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“SYNERGIES OF STOCK EXCHANGE AND
DEPOSITORIES”SUMMER TRAINNING PROJECT REPORT
Submitted toUttar Pradesh Technical University,
Lucknow In partial fulfillment of the requirements of the
degree of
MASTER OF BUSINESS ADMINISTRATION
Prepared by Training supervisorSwati Singh FAHAD REHMANMBA 3rd Semester Center Manager Roll No. 0804070037 Reliance Money, Varanasi
(2009-10)
Department of Business Administration
Technical education & Research Institute
Post-graduate college, Ghazipur 233001(U.P.)
Certificate
This is to certify that SWATI SINGH pursuing MBA 3rd Semester
from this institute, has prepared the summer training project report entitled
“SYNERGIES OF STOCK EXCHANGE AND DEPOSITORIES” in partial
fulfillment of the requirements of the degree of Master of Business Administration
from Uttar Pradesh Technical University, Lucknow, for the session 2009-2010.
This report is based on summer training project report undertaken by
SWATI SINGH at Reliance Money under the supervision of FAHAD REHAMAN
during the period of 8th June to 31st August and fulfills your requirement of regulation
relating to the nature and standard of MBA course of U.P. Technical University.
I recommend that this summer training project report may be sent for
evaluation.
RAHUL ANAND SINGH
Head ,
Department Of BusinessAdministration
I, Swati singh, hereby declare that this summer training project report entitled
“SYNERGIES OF STOCK EXCHANGE AND DEPOSITORIES” has been
prepared by me on the basis of summer training done at Reliance money under the
supervision of MR. FEHAD REHMAN.
This summer training project report is my bona fide work and has not been
submitted in any form to any University or Institution for the award of any degree or
diploma prior to the under mentioned date. I bear the entire responsibility of
submission of this project report.
1st September 2009 Swati Singh
MBA 3rd Semester
Department of Business Administration
Technical Education & Research Institute
P.G. College, Ghazipur
Declaration
INDEX OF CONTENTS
I : -Preface……………………………………………..
I I : -Acknowledgement………………………….. . . . . . .CHAPTER-1
Introduct ion……………………………
A. Industry prof i le ……………….
B. Company prof i le………………..
CHAPTER-2 Research problem, Object ive and scope of study………..
CHAPTER-3 Research Methodology………………….
CHAPTER-4Analysis & Interpretat ion……………..
CHAPTER-5Findings & Recommendations………….
CHAPTER-6 Conclusion & Limitat ions…………………..
Bibliography…………………………………
Annexure..………………………………
The importance of an academic course would gain advantage and acceptance of the true form
only through practical experience. Hence, it is quite necessary to put the theories into talk. It
is rigidly accepted that the theory widens one’s thinking horizons viz. Concepts of marketing
philosophies, but practice indicates the modern marketing and used in variety of settings of
products.
The attractive feature of the M.B.A. course is that along with theory we also get to have the
exposure of the practical environment. The topic for my dissertation is:“ SYNERGIES OF
STOCK EXCHANGE AND DEPOSITORIES
PREFACE
Trading and settlement of securities is the basic function of stock exchange since the
advent of computer and information technology in the stock exchange the whole
scenario is changed. Introduction of dematerialisation of shares and depository
service has brought about a drastic change in the nature of stock trading.
Trades done at stock exchange are settled by the clearing house/ clearing corporation
of a stock exchange through their clearing members (brokers and custodian). At
NSDL we recognize the vital role played by the clearing member in the settlement
process. Hence, a clearing member can open a special account in the depository
system for the purpose of clearing trades done on stock exchanges. The clearing
account enables the clearing member to receive securities from its client’s for delivery
to the clearing house/ clearing corporation as pay –in and to distribute the pay- out to
its clients received from the clearing house/ clearing corporation.
The first chapter gives a brief overview of ‘Reliance Money’. In this, information is
provided about the Reliance Money’s Mission, organizational structure , products
and services.
The second chapter is dedicated to the Research Problem, it’s objective, scope and
importance of the Research.
The Third Chapter is a summary of the various research methodologies used for the
development of the project.
Data Analysis and interpretation of the survey conducted over a group of 150
investors is provided in chapter four. In this, various graphs and tables are given as
per the research.
Chapter five deals with the findings and recommendations related to the project.
These findings and recommendations are based on the data analysis and interpretation
done in the previous chapter.
The conclusion of the project is provided in Chapter Six and this chapter also deals
with the limitations of the study and research work.
Before I thank anybody for the compilation of this work I would like to thank
Almighty
for providing guidance and me all the necessary help. It is grace only that I have
completed this work
ACKNOWLEDGEMENT
An understanding of the study like this is never the outcome of the efforts of an
individual; rather it bears the imprint of a number of individuals who directly helped
me in completing the present study. I would been failing in my duty if I do not say a
word of thanks to all those whose sincere advice made my training period a real
educative and pleasurable one.
First & foremost, I would like to express my regard to Mr. Rahul Anand Singh
(H.O.D. of M.B.A.) and Dr. Neetu Singh, the training & placement-in-charge, the
honorable Readers of M.B.A. Department for this constant encouragement and
support. I would also like to express immense gratitude towards all the lectures of my
faculty, for providing the invaluable knowledge, guidance and cooperation extended
during perusal of my course.
I am deeply indebted to Reliance Money ,Varanasi for having the faith on me and
letting me work on the training.
I am also sincerely thankful to, Mr.Ashish Tiware, Mr. Siddharth Singh, Mrs.
Priyanka for giving me opportunity and resource to work on the project work and
giving me support whenever necessary.
PART 1
CHAPTER: 1INTRODUCTION TO THE ORGANIZATION
The Reliance – Anil Dhirubhai Ambani Group (ADAG) is among India’s top three
private sector business houses on all major financial parameters, with a market
capitalization of Rs.325,000 crores (US$ 81 billion), net assets in excess of
Company Profile
Rs.115,000 crores (US$ 29 billion), and net worth to the tune of Rs.55,000 crores
(US$ 14 billion).
Reliance Money is promoted by Reliance Capital; one of India's leading and fastest
growing private sector financial services companies, ranking among the top 3 private
sector financial services and banking companies, in terms of net worth. Reliance
Capital Ltd. has interests in asset management, life and general insurance, private
equity and proprietary investments, stock broking and other financial services. Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group.
Thus, Reliance Money provides a comprehensive platform, offering an investment
avenue for a wide range of asset classes. Its endeavor is to change the way India
transacts in financial market and avails financial services. Reliance Money offers a
single window facility, enabling you to access amongst others, Equities, Equity and
Commodity derivatives, Offshore Investments, IPO’s, Mutual Funds, Life Insurance
and General Insurance products, Money Transfer, Money Changing and Credit Cards.
To build a global enterprise for all our stakeholders, and
A great future for our country,
To give millions of young Indians the power to shape their destiny,
Vision
The means to realize their full potential…
To create and nurture a world-class, high performance environment aimed at
delighting our customers by providing endless financial products in all part of the
country.
Mission
Organisational Structure
National Level : National Head
Zonal Level : Zonal Head
Regional Level : Regional head
Divisional level : Cluster Head
Branch Level : Center Manager
Area Level : Business Development Executives & Freelancers
National Head
ZonalHead
ZonalHead
Zonal Head
ZonalHead
RegionalHead
RegionalHead
RegionalHead
ClusterHead
ClusterHead
Centre Manager
Centre Manager
BDEs BDEs BDEs BDEs BDEs
RegionalHead
Advantages offered by Reliance money over other companies:
Cost Effective
Convenience
Security
Single Window for Multiple Products
3 in 1 Integrated Access
Demat Account with Reliance Capital
Other Services like research, live news from Reuter and Dow
Jones etc.
PRODUCT OFFERING1. Trading Portal (with almost negligible brokerage)
Equity Broking
Commodity Broking
Derivatives ( Futures & Options )
Offshore Investments (Contract For Differences)
D-Mat Account.
2. Financial Products Mutual Funds
Life Insurance
o ULIP plan
o Term Plan
o Money Back Plan
General Insurance
o Vehicle/Motor Insurance
o Health Insurance
o House insurance
IPO’s
NFOs
3. Value-Added Services
Retirement Planning
Financial Planning
Tax Saving
Children Future Planning
4. Credit Cards
5. Gold coins retailing
TRADING PORTAL
Online trading refers to buying and selling of the shares / stocks / contracts / bonds
with the use of internet. In this shares are not issued in physical form rather they are
transferred in the dematerialized form in the Demat account directly.
Reliance Money would offer the brokerage services across 700 cities including Delhi
and Mumbai through more than 3,000 outlets.
Investors would need to pay brokerage at the rate of Rs 15 per assisted trade (from
Reliance's Franchisee or call center) and can trade free using online trading portal
(fixed fee of Rs500 for delivery trades up to Rs 5 lakh and / or non-delivery trades up
to Rs 5 lakh, with validity period of one year), the company said.
DEMAT ACCOUNTIn India, a Demat account, the abbreviation for dematerialize account, is a type of
banking account which dematerializes paper based physical stock shares. The
dematerialized account is used to avoid holding physical shares: the shares are bought
and sold through a broker. This account is popular in India. The Securities and
Exchange Board of India (SEBI) mandates a Demat account for share trading and
for opening a DEMAT account a Permanent Account Number (PAN) is also
mandatory.
What are the benefits of opening a Demat account?
Demat account has become a necessity for all categories of investors for the following
reasons/ benefits:
SEBI has made it compulsory for trades in almost all scrip’s to be settled in
Demat mode. Although, trades up to 500 shares can be settled in physical
form, physical settlement is virtually not taking place for the apprehension of
bad delivery on account of mismatch of signatures, forgery of signatures fake
certificates, etc.
It is a safe and convenient way to hold securities compared to holding
securities in physical form..
No stamp duty is levied on transfer of securities held in Demat form.
Instantaneous transfer of securities enhances liquidity.
It eliminates delays, thefts, interceptions and subsequent misuse of
certificates.
Change of name, address, registration of power of attorney, deletion of
deceased's name, etc. - can be effected across companies by one single
instruction to the DP.
Each share is a market lot for the purpose of transactions – so no odd lot
problem.
Any number of securities can be transferred/delivered with one delivery order.
Therefore, paperwork and signing of multiple transfer forms is done away with. It
facilitates taking advances against securities on low margin/low interest.
Challenges for the companyHow Reliance Money Scored Over Others?
1. Two Way Authentication: Reliance offers its customers with a token (an
electronic gadget) that generates a password, which are a third level of security in
addition to the customer log in and a password provided. The password generated by
the token is valid only for a period of 32 seconds. If the web page expires, for the
fresh login, a new password generated by the token has to be keyed in by the
customer.
2. Lowest Brokerage:
3. User friendly software: The portal offered is very easy to understand and use.
4. Forex and offshore investment: Reliance provides the offshore facility which no
other AMC is providing in the market.
5. Better research and news: Reliance offers news from the DOW JONES and
REUTERS.
Seeking to bring share trading closer to consumers just like ATMs, Reliance Capital's
stock brokerage arm Reliance Money launched Internet trading services through web-
enabled retail kiosks.
DEPOSITORY
The Term Depository refers to the institutional framework for holding securities in
electronic form in the same way as bank holds money. It carries out the transaction of
securities by means of book entry without any physical movement of securities. The
depository based settlement system is also called book entry transfer settlement
Though depositories hold securities on behalf of the real owners, it is not another type
of custodian. This is because a depository can legally transfer beneficial ownership,
which a custodian cannot. The main objective of depository is to minimize the paper
work involved with the ownership trading and transfer of securities .At present there
are two depositories in India :
National Securities Depository Limited
Central Depository Services Limited
Benefits of Depository System
In the depository system, the ownership and transfer of securities takes place by
means of electronic book entries. At the outset, this system rids the capital market of
the dangers related to handling of paper. NSDL provides numerous direct and indirect
benefits like:
Elimination of bad deliveries In the depository environment, once holdings
of an investor are dematerialised, the question of bad delivery does not arise
i.e. they cannot be held "under objection". In the physical environment, buyer
was required to take the risk of transfer and face uncertainty of the quality of
assets purchased. In a depository environment good money certainly begets
good quality of assets.
Elimination of all risks associated with physical certificates- Dealing in
physical securities have associated security risks of theft of stocks.
No stamp duty for transfer of any kind of securities in the depository.
Immediate transfer and registration of securities - In the depository
environment, once the securities are credited to the investors account on pay
out, he becomes the legal owner of the securities.
Faster disbursement of non cash corporate benefits like rights, bonus,
etc. - NSDL provides for direct credit of non cash corporate entitlements to an
investors account, thereby ensuring faster disbursement and avoiding risk of
loss of certificates in transit.
Reduction in brokerage by many brokers for trading in dematerialised
securities Brokers provide this benefit to investors as dealing in
dematerialised securities reduces their back office cost of handling paper and
also eliminates the risk of being the introducing broker.
Reduction in handling of huge volumes of paper
Periodic status reports to investors on their holdings and transactions,
leading to better controls.
Elimination of problems related to change of address of investor - In case
of change of address, investors are saved from undergoing the entire change
procedure with each company or registrar
Elimination of problems related to transmission of demat shares - In case
of dematerialised holdings, the process of transmission is more convenient as
the transmission formalities for all securities held in a demat account can be
completed by submitting documents to the DP whereas, in case of physical
securities the surviving joint holder(s)/legal heirs/nominee has to correspond
independently with each company in which shares are held.
Elimination of problems related to selling securities on behalf of a minor -
A natural guardian is not required to take court approval for selling demats
securities on behalf of a minor.
Ease in portfolio monitoring since statement of account gives a consolidated
position of investments in all instruments.
STOCK EXCHANGEA stock exchange or bourse is a corporation or mutual organization which provides
facilities for stock brokers and traders, to trade company stocks and other securities.
Stock exchanges also provide facilities for the issue and redemption of securities, as
well as, other financial instruments and capital events including the payment of
income and dividends.
The securities traded on a stock exchange include: shares issued by companies, unit
trusts and other pooled investment products and bonds. To be able to trade a security
on a certain stock exchange, it has to be listed there.
The Role of the Stock ExchangeRaising Capital for Businesses
The Stock Exchange provides companies with the facility to raise capital for
expansion through selling shares to the investing public.
Mobilizing Savings for Investment
When people draw their savings and invest in shares, it leads to a more rational
allocation of resources because funds, which could have been consumed, or kept in
idle deposits with banks, are mobilized and redirected to promote business activity .
Facilitate Company Growth
Companies view acquisitions as an opportunity to expand product lines, increase
distribution channels, hedge against volatility, increase its market share, or acquire
other necessary business assets.
Redistribution of Wealth
By giving a wide spectrum of people a chance to buy shares and therefore become
part-owners (shareholders) of profitable enterprises, the stock market helps to reduce
large income inequalities.
Corporate Governance
By having a wide and varied scope of owners, companies generally tend to improve
on their management standards and efficiency in order to satisfy the demands of these
shareholders and the more stringent rules for public corporations by public stock
exchanges and the government.
Creates Investment Opportunities for Small Investors
As opposed to other businesses that require huge capital outlay, investing in shares is
open to both the large and small stock investors because a person buys the number of
shares they can afford.
Government Raises Capital for Development Projects
The Government and even local authorities like municipalities may decide to borrow
money in order to finance huge infrastructure projects such as sewerage and water
treatment works or housing estates by selling another category of securities known as
bonds.
Barometer of the Economy
At the Stock Exchange, share prices rise and fall depending, largely, on market. Share
prices tend to rise or remain stable when companies and the economy in general show
signs of stability
PROCEDURE FOR DEALING AT STOCK EXCHANGE
The buying and selling at stock exchange is not allowed to outsiders.They have to
approach brokers wha are the members of the exchange and dealings can only be
through them . The first thing to be done is to select broker through whom the
purchase or sale is to be made. After selecting the broker the client places an order for
purchase or sale of securities. The broker enters the order through his PC, which run
under windows NT and send signal to the satellite via VSAT ( very small aperture
terminal) modem. The signal is directed to mainframe computer at NSE via VSAT at
NSE office. A message relating to the order activity is broadcast to the respective
member. This can be shown with the help of the diagram
Trade Details
Funds Securities
Delivered Delivered
Execute The Order
NSE
NSCCL (National
Securities Clearing
Corporation Ltd)
Seller (Investor) Buyer
(Investor)BROKER
About NSDL
Although India had a vibrant capital market, which is more than a century old, the
paper-based settlement of trades caused substantial problems like bad delivery and
delayed transfer of title till recently. The enactment of Depositories Act in August
1996 paved the way for establishment of NSDL, the first depository in India. This
depository promoted by institutions of national stature responsible for economic
development of the country has since established a national infrastructure of
international standard that handles most of the settlement of securities in
dematerialised form in Indian capital market.
Promoters / Shareholders
NSDL is promoted by Industrial Development Bank of India (IDBI) - the largest
development bank of India, Unit Trust of India (UTI) - the largest mutual fund in
India and National Stock Exchange (NSE) - the largest stock exchange in India. Some
of the prominent banks in the country have taken a stake in NSDL.
Promoters Industrial Development Bank of India
Unit Trust of India
National Stock Exchange
Other Shareholders State Bank of India
Oriental Bank of Commerce
Citibank NA
Standard Chartered Bank
HDFC Bank Limited
The Hong Kong and Shanghai Banking Corporation Limited
Deutsche Bank
Dena Bank
Canara Bank
Depository System - Business Partners
NSDL carries out its activities through various functionaries called "Business
Partners" who include Depository Participants (DPs), Issuing companies and their
Registrars and Share Transfer Agents, Clearing corporations/ Clearing Houses of
Stock Exchanges.
Depository Participant (DP)
The investor obtains Depository Services through a DP of NSDL. A DP can be a
bank, financial institution, a custodian, a broker, or any entity eligible as per SEBI
(Depositories and Participants) Regulations, 1996.
Just as one opens a bank account in order to avail of the services of a bank, an
investor opens a depository account with a DP in order to avail of depository
facilities.
Issuing Companies/ their Registrar & Transfer Agents:
Securities issued by issuers who have entered into an agreement with NSDL can be
dematerialised in the NSDL depository. As per this agreement, issuer agrees to verify
the certificates submitted for dematerialisation before they are dematerialised and to
maintain electronic connectivity with NSDL.
Clearing Corporation / House:
The clearing corporations/houses of stock exchanges also have to be electronically
linked to the depository in order to facilitate the settlement of the trades done on the
stock exchanges for dematerialised shares.
.
The following stock exchanges have linked up with NSDL to facilitate trading and
settlement of dematerialised securities:
Madras Stock Exchange Ltd. (MSE)
National Stock Exchange of India Ltd. (NSE)
Inter-connected Stock Exchange of India Ltd. (ISE)
OTC Exchange of India (OTCEI)
The Calcutta Stock Exchange Association Ltd. (CSE)
The Delhi Stock Exchange Association Ltd. (DSE)
The Stock Exchange, Mumbai (BSE)
Joining NSDL
NSDL carries out its activities through service providers like Depository Participants
(DPs), Issuing companies and their Registrars and Share Transfer Agents, Clearing
corporations/ Clearing Houses of Stock Exchanges. These entities are called business
partners in NSDL terminology.
Joining NSDL as Depository Participant
NSDL depository reaches its services to investors through market intermediaries
called Depository Participants (DP), who as per SEBI regulations could be
organizations involved in the business of providing financial services like banks,
brokers, custodians, financial institutions, etc.
LIST OF DOCUMENTS:
1. Letter of intent cum Master Creation Form (MCF) .
2. Audited Balance Sheet for last two years - Certified to be true copies.
3. Certified true copy of Memorandum & Articles of Association.
4. Confirmation letters from respective stock exchanges regarding listing (If
company is listed). Secretarial Audit Report for latest quarter end - If company
is listed.
5. Book value certificate (If company is unlisted).
6. Undertaking from co. (If company is private limited).
7. If company had been issued equity shares after latest balance sheet in that case
company has to provide us certified to be true copy of form no.2.
8. Joining fees for Unlisted companies is Rs.20000/- (Rupees Twenty thousand
only) plus service tax at 10.2% &
Joining NSDL as Registrar and Transfer Agent
The control on creation and extinguishing securities in demat form in NSDL
depository system is with issuers. Securities in demat can be created in two different
ways. confirming rematerialisation requests received i.e. converting demat form
securities into physical certificate form. The second method is by debit corporate
action. Under this method issuer releases instructions to NSDL to debit eligible
beneficial owners with securities as per their entitlements.
Joining NSDL as a Clearing Corporation / House
Any stock exchange desiring to facilitate settlement in demat shares should have a
clearing corporation/house with a fully operational settlement guarantee mechanism.
The settlement guarantee mechanism should have been approved by SEBI
Admission Criteria:
A clearing corporation or a clearing house of stock exchange shall be admitted as a
User on the Depository only if:
The Depository is satisfied that the clearing corporation or a clearing house of
a stock exchange operates in such a manner that it ensures payment against
delivery or guarantees settlement;
In the opinion of the Depository, the clearing corporation or a clearing house
of a stock exchange has the operational capability to provide the services
relating to clearing and settlement of transactions relating to the securities
admitted to the Depository to the held in dematerialised form;
The clearing corporation or a clearing house of a stock exchange undertakes to
co-operate at all times to redress the grievances of Clients and the Participant
in respect of its operation in relation to the Depository;
The clearing corporation or a clearing house of a stock exchange has adequate
hardware and software systems to interact with the Depository as specified in the
Business Rules.
Procedure for joining NSDL, systems specification and investments and expenses
to be incurred by a clearing corporation/house is same as that of Depository
Participant.
Joining NSDL as an Investor
The Indian capital market has witnessed an unprecedented growth in the past few
years, which was made possible by the modernization in the trading and settlement
systems. Automation of the trading mechanism has given us a trading system
comparable with the best in the world. The establishment of a settlement guarantee
mechanism removed the counter-party risk in stock exchanges.
Though the advent of automated trading brought with it several associated benefits
such as transparency in trading and equal opportunity for market players all over the
country; the problems related to settlement of trades such as high instances of bad
deliveries and long settlement cycles have continued.
The introduction of scrip less holding and transaction of securities provides various
benefits to investors viz.
Elimination of bad deliveries such as signature mismatches, invalid transfer
deeds, etc.
Elimination of all risks associated with physical certificates, such as loss, theft,
mutilation, etc.
Reduction in handling of huge volumes of paper.
Waiver of stamp duty for transfer of equity & debt instruments and units of
mutual funds in depository.
Immediate transfer and registration of securities.
Pay in & pay out of securities & funds is on the same day for scrip less trades.
Faster settlement cycles.
Faster disbursement of corporate benefits like rights, bonus, etc.
Reduction in brokerage for trades done in dematerialised securities.
Periodic status reports to investors on their holdings and transactions, leading
to better controls.
Convenient nomination facility.
Convenience in effecting change in address.
All these lead to substantial reduction in transaction costs in dematerialised securities
as compared to physical securities.
Account Opening
In order to avail of depository facilities, an investor has to open a beneficiary account
with a depository participant of his choice. This is similar to opening a bank account
to use the banking services.
The account holder is called 'beneficial owner' in a depository system and the account
is known as 'beneficiary account'.
Features of Beneficiary Account
No minimum balance is required to be retained in a beneficiary account.
An investor can close a beneficiary account with one DP and open an account
with another DP.
To dematerialize existing physical holdings, the beneficiary account must be opened
in the same ownership pattern in which the securities are held in the physical form
e.g., if one certificate is in individual name and another certificate is jointly held by X
& Y, two different accounts should be opened. However, in case of joint holders,
securities can be dematerialised in the same account even though share certificates are
in different sequence of names e.g., shares held in joint names of X & Y can also be
dematerialised in an account opened in the names of Y & X as well by submitting an
additional form (Transposition Form) along with Demat Request Form to the
DP.However, shares held jointly by X & Y cannot be dematerialised in an account
opened in the name of only X or only Y or any combination of a joint account with
three names i.e., X, Y and
Procedure
Investor will choose a DP for the purposes of opening beneficiary account.
The choice of the investor may be based on convenience, comfort, services
offered, cost or any other reason.
The investor will obtain the relevant account opening form from the chosen
DP.
For the purpose of verification, investor has to submit the following documents along
with the prescribed account opening form.
Proof of Identity(POI) :
Passport, Voter ID Card
Driving License
PAN Card with photograph
MAPIN Card
Identity card/document with applicant's Photo, issued by:
Central/State Government and its Departments
Statutory/Regulatory Authorities
Public Sector Undertakings
Scheduled Commercial Banks
Public Financial Institutions
Colleges affiliated to Universities (this can be treated as valid only till the time
the applicant is a student)
Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their
members; and
Credit cards/Debit cards issued by Banks.
Proof of Address (POA):
Ration Card
Passport
Voter ID Card
Driving License
Bank Passbook
Verified copies of Electricity bills (not more than two months old)/ Residence
Telephone bills (not more than two months old)/ Leave and License agreement
/ Agreement for sale.
Self-declaration by High Court & Supreme Court judges, giving the new
address in respect of their own accounts.
Identity card/document with address, issued by
Central/State Government and its Departments
Statutory/Regulatory Authorities
Public Sector Undertakings
Scheduled Commercial Banks
Public Financial Institutions
Colleges affiliated to Universities (this can be treated as valid only till the
time the applicant is a student)
Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their
Members;
Passport-size photograph
Copy of PAN card along with original PAN card for verification
In case of joint holdings, POI and POA documents along with PAN card must be
submitted in respect of all account holders. Original documents must be taken to the
DP for verification.
The DP will also provide a copy of the DP-Client agreement.
Account opening form require the applicants to give the following details:
(a) Name(s) of account holder(s) -The investor should ensure that the name is
identical to that which appears on the certificate(s) to be dematerialized
(b) Mailing and communication address) - The veracity of the applicant's address is
determined through the documents submitted for verification like ration card,
passport, voter ID, PAN card, driving license, bank passbook, etc
(c) Details of guardian in case account holder is a minor -Only a guardian can open
a depository account for a minor.
(d) Foreign Address and RBI approval details for NRI, FII or OCB accounts -For
foreign-based applicants like NRIs, Flls, OCBs, etc., the applicant must furnish
original or attested copies of the power of attorney and the approval letter from RBI
permitting them to invest, as the case may be
(e) Details of bank account -Details of bank account of the account holder, including
the nine digit code number of the bank and branch appearing on the MICR cheques
issued by the bank have to be filled in the application form. Companies use this
information for printing them on dividend/interest warrants etc.
(f) Nomination declaration - A beneficial owner can make a nomination of his
account in favor of any person by filing the nomination form with his DP.
(g) Standing Instruction - a facility of standing instruction is provided to the
investors for receiving securities to the credit of their accounts without giving a
separate receipt instruction.
Precautions:
Corporate investors to enclose Memorandum of Association/Trust deed/Board
resolution for the authorized signatories along with the account opening form.
Details with respect to the bank account details of an investor must be
indicated in the space provided for the same in the account opening form.
If an investor is interested in availing the facility of standing instructions for
credits to his account, then such instructions may be given to the DP.
Joining NSDL as a Broker
Members of the stock exchanges are an important link between investors and the
clearinghouse in the depository system
Basic Services
Under the provisions of the Depositories Act, NSDL provides various services to
investors and other participants in the capital market like, clearing members, stock
exchanges, banks and issuers of securities.
Dematerialisation
Dematerialisation is the process by which a client can get physical certificates
converted into electronic balances.
An investor intending to dematerialize its securities needs to have an account with a
DP. The client has to deface and surrender the certificates registered in its name to the
DP. After intimating NSDL electronically, the DP sends the securities to the
sconcerned Issuer/ R&T agent. NSDL in turn informs the Issuer/ R&T agent
electronically, using NSDL Depository system, about the request for
dematerialisation. If the Issuer/ R&T agent finds the certificates in order, it registers
NSDL as the holder of the securities (the investor will be the beneficial owner) and
communicates to NSDL the confirmation of request electronically. On receiving such
confirmation, NSDL credits the securities in the depository account of the Investor
with the DP.
Features:
Holdings in only those securities that are admitted for dematerialisation by
NSDL can be dematerialised.
Only those holdings that are registered in the name of the account holder can
be dematerialised.
Names of the holders of the securities should match with the names given for
the demat account.
either X first and Y second or Y first and X second. Separate accounts need
not be opened to demat each share certificate. If shares are in the name
combinations of X and Y, it cannot be dematerialised into the account of either
X or Y alone.
Check the demat performance of the companies whose shares are to be given
for dematerialisation.
A client may, in the normal course, receive demat confirmation in about 30
days from the date of submission of demat request to the DP.
There are special processes for Securities issued by Government of India and
simultaneous transmission and demat.
Procedure:
The client (registered owner) will submit a request to the DP in the
Dematerialisation Request Form for dematerialisation, along with the
certificates of securities to be dematerialised. Before submission, the client has
to deface the certificates by writing "SURRENDERED FOR
DEMATERIALISATION".
The DP will verify that the form is duly filled in and the number of
certificates, number of securities and the security type (equity, debenture etc.)
are as given in the DRF.
The DP will scrutinize the form and the certificates. This scrutiny involves the
following:
Verification of Client's signature on the dematerialisation request with
the specimen signature (the signature on the account opening form). If
the signature differs, the DP should ensure the identity of the client.
Compare the names on DRF and certificates with the client account.
Paid up status
ISIN (International Securities Identification Number)
Lock - in status
Distinctive numbers
In case the securities are not in order they are returned to the client and
acknowledgment is obtained. The DP will reject the request and return the
DRF and certificates in case:
A single DRF is used to dematerialize securities of more than one
company.
The certificates are mutilated, or they are defaced in such a way that
the material information is not readable. It may advise the client to
send the certificates to the Issuer/ R&T agent and get new securities
issued in lieu thereof.
.
The DRN so generated is entered in the space provided for the purpose in the
dematerialisation request form.
A person other than the person who entered the data is expected to verify
details recorded for the DRN. The request is then released by the DP, which is
forwarded electronically to DM (DM - Depository Module, NSDL's software
system) by DPM.
The DM forwards the request to the Issuer/ R&T agent electronically.
The DP will fill the relevant portion viz., the authorization portion of the
demat request form.
The DP will punch the certificates on the company name so that it does not
destroy any material information on the certificate.
The DP will then dispatch the certificates along with the request form and a
covering letter to the Issuer/ R&T agent.
The Issuer/ R&T agent confirms acceptance of the request for
dematerialisation in his system DPM (SHR) and the same will be forwarded to
the DM, if the request is found in order.
The DM will electronically authorize the creation of appropriate credit
balances in the client's account.
The DPM will credit the client's account automatically.
The DP must inform the client of the changes in the client's account following
the confirmation of the request.
Precautions:
Holdings in those securities that have not yet been admitted for
dematerialisation by NSDL cannot be dematerialised. List of securities
admitted for dematerialisation should be verified before defacing the
securities.
Holdings in street name cannot be dematerialised.
The combination of names of holders as printed on the physical certificate
should be identical with the names initiating the dematerialisation request.
Separate dematerialisation requests will have to be filled for locked-in and free
holdings.
Separate dematerialisation requests will have to be filled for holdings locked-
in for different reasons.
Separate dematerialisation requests will have to be filled for fully paid up and
partly paid-up holdings.
Separate dematerialisation requests will have to be filled for holdings in the
different ISINs of a company.
Rematerialisation
Rematerialisation is the process by which a client can get his electronic holdings
converted into physical certificates. The client has to submit the rematerialisation
request to the DP with whom he has an account
Features:
A client can rematerialize his dematerialised holdings at any point of time.
The rematerialisation process is completed within 30 days.
The securities sent for rematerialisation cannot be traded.
PROCEDURE
The client will submit a request to the DP for rematerialisation of holdings in
its account.
On receipt of the request form, the DP will verify that the form is duly filled in
and issue to the client, an acknowledgement slip, signed and stamped.
The DP will verify the signature of the client as on the form with the specimen
available in its records.
If the signatures are different the DP will ensure the identity of the client.
If the form is in order the DP will enter the request details in its DPM
(software provided by NSDL to the DP).
Precautions:
The client has to mention the lot type in the rematerialisation request form.
Securities sent for rematerialisation cannot be traded.
Before initiating a rematerialisation request in a security the client must ensure that he
has sufficient free balances in that security in his depository account.
ROLE OF NSDL IN SETTLEMENT PROCESS
Settlement is conducted by stock exchanges through their respective clearing house/
clearing corporation. NSDL provides the necessary infrastructure to hold securities in
an electronic form and to transfer them between accounts in a depository. Clearing
banks appointed by the stock exchange facilitates settlement of funds.
OPENING A CLEARING ACCOUNT
Clearing member account: Member brokers of those stock exchanges which have
established electronic connectivity with NSDL need to open a clearing member
account, with a DP of his choice, to clear and settle trades in the demat form.
Features
The clearing member account has three parts:
Pool account: Shares are received from selling clients in the pool
account. Transfer to buying clients is also done from the pool account.
Delivery account: Shares received from selling clients are moved
from the pool account to the clearing corporation/ house through the
delivery account.
Receipt account: Shares are received in the pool account from the
clearing corporation/ house through the receipt account.
Procedure for Opening Clearing Member Account
The clearing member will choose a DP for the purposes of opening clearing
member account. The choice may be based on convenience, comfort, services
offered, cost or any other reason.
The clearing member will approach the DP of his choice and obtain the
relevant account opening form.
The DP will specify the list of documents regarding references that need to be
submitted along with the account opening form. The DP will also provide a
copy of the DP-Client agreement.
The clearing member will submit to his DP the duly filled in account opening
form & DP-client agreement along with documents regarding references
specified by the DP.
The Clearing Member will also submit a letter from the clearing corporation/
house regarding allotment of CM-Id to the clearing member.
The DP will verify whether the account opening form has been duly filled in
or not. He will also verify the submitted documents.
If the application form and documents are in order, then the DP will accept
them and give an acknowledgement slip duly signed and stamped to the
clearing member. The DP will execute the agreement and give a copy of it to
the clearing member.
After completion of all documentation, the DP will inquire in the business
partner (BP) Master in the DPM (software provided by NSDL to the DP)
system, whether the clearing member is already a BP and has opened a
clearing member account with some other DP.
After the DP is satisfied that the clearing member doesn't have CM account
with any other DP, it will send a copy of the account opening form, copy of a
letter from the clearing corporation regarding allotment of CM-Id and a
covering letter (separate for different stock exchanges).
NSDL will communicate an Id for the clearing member called CM-BP-Id to
the DP of the applicant-clearing member.
The DP will give a copy of the report listing the client details captured in the
DPM database to the clearing member. The report will be generated by the
DPM and will contain the following details:
Clearing Member name
CM-BP-Id
Client Id
Date of opening of account in the DPM system.
The DP will also inform NSDL the above details immediately after the
account is opened in the DPM system.
Procedure for Shifting Clearing Member Account
The clearing member may close an existing clearing account with one DP and open a
new clearing account with another DP.
. Procedure:
The clearing member will submit the application for closing the
clearing account to the old DP in duplicate.
The old DP will verify that the application for closing the
clearing account is duly filled and if in order issue an acknowledgement to the
clearing member on the duplicate copy.
The clearing member will submit the following documents to
the new DP
Application for opening a clearing account
Letter from clearing corporation regarding allotment of CM-Id.
Application for shifting of clearing account in the prescribed format
Acknowledgement copy of the application for closure of the account
from the old DP.
The new DP will verify that the application for opening the account supported
by the above-mentioned documents is duly filled.
If the application is in order, the new DP will execute the agreement and give
a copy of it to the clearing member.
The new DP will forward the copy of the account opening form along with the
above-mentioned documents to NSDL.
NSDL will allot the clearing member a new CM-BP Id.
The new DP will open the clearing member account after the new CM-BP-Id
is downloaded to its DPM and intimate NSDL.
The new DP will verify that the application for opening the account supported
by the above-mentioned documents is duly filled.
Precautions
A Clearing Member can open only one clearing member account per
exchange, which provides demat trading.
Along with duly filled in account opening form & DP-client agreement the
clearing member will also submit a letter from the clearing corporation/ house
regarding allotment of CM-Id to the clearing member.
The clearing member should ensure that the following details are mentioned in
the account opening form:
Clearing corporation/ clearing house Id
Stock Exchange clearing code (given by Stock Exchange)
SEBI Registration Number (given by SEBI)
Trade Name (name in which trading firm is registered)
The clearing member has to indicate whether he wishes to avail of the
"standing instruction" facility for receiving credit of securities from the clients'
accounts.
OVERVIEW OF TRADING, CLEARING AND SETTLEMENT SYSTEMS AT
EXCHANGES- A DEPOSITORY PERSPECTIVE
Dematerialized securities can be traded at all stock exchanges connected at NSDL.
Trading can be done in various windows of stock exchanges. A stock exchange may
have separate windows
Physical (Account Period)
Rolling
Auction Physical
Auction Rolling
A separate market type is allotted in the depository for each of the above window to
facilitate the settlement of obligation in each window separately. the following two
market types are sued :
Company Objection
Bad Delivery
For each market type, the stock exchange will have various settlements. Hence, there
is a need to identify each settlement within a market type separately
For e.g.
National stock exchange has 250 rolling settlement in a year. In order to segregate
each settlement, it identifies them by a separate number. Say, the 152nd settlement of
the year 2000is denoted as 2000152v.
STRUCTURE OF CLEARING ACCOUNT
The clearing account is identified in the depository system by its CM-BP-ID. The
internal structure of the clearing account consists of three parts to facilitate easy book
keeping.
Arrangement of clearing account
Pool Account
Delivery Account
Receipt Account
Pool Account:
It has two roles to play in clearing of securities, viz. before pay in, the selling client of
the clearing member transfers securities from his client account to the clearing
account.
Delivery Account:
The Securities pay- in, the securities move from the pool account to the delivery
account. This movement will be automatic if the clearing member has given such an
undertaking to its clearing house/ clearing corporation
Receipt Account:
On payout day, the clearing house/ clearing corporation transfers securities to the pool
account (to the extent of net receipt) through the receipt account
MARKET TYPE AND SETTLEMENT NUMBER
A clearing account can be broken into compartments and sub compartments. Each
compartment can be called as market type and each sub compartment can be called as
settlement number.
Settlement Calendar
Settlement calendar is decided by the stock exchange. It contains details for each
market type and settlement number.
NSDL Deadline
The pay-in time decided by the stock exchanges for each settlement is the NSDL
Deadline time.
Market Transfers
Trading in dematerialised securities is quite similar to trading in physical securities.
Features:
Delivery of securities to or from a clearing member are called "Market Trades" in the
depository system
Procedure in Case of Market Transfer
In the diagram, the selling client and clearing member1 have their respective accounts
with DP1 and the buying client and clearing member2 have their respective accounts
with DP2. DP1, DP2 and the Clearing Corporation/ Clearing House have on line
electronic connectivity with NSDL. The following paragraphs, explain the flow of
securities to effect settlement of a market trade:
Step-1: - Seller gives delivery instruction to DP1 to debit his account and transfer
securities to "Clearing Member1 Pool A/c" with DP1
Step-2: - Securities are transferred from "Selling Client A/c" to "Clearing Member1
Pool A/c" with DP1.
Step-3: - Clearing Member1 gives delivery to CC instruction to DP1 to debit his
"Clearing Member1 Pool A/c" and credit his "Clearing Member1 Delivery A/c".
Step-4: - Securities lie in the "Clearing Member1 Delivery A/c" till settlement day.
Step-5: - At the time of payout securities are transferred from the Clearing
Corporation/ Clearing House to "Clearing Member2 Receipt A/c" with DP2. No credit
instruction is needed because this transfer is automatic.
Step-6: - Securities are transferred from "Clearing Member2 Receipt A/c" to
"Clearing Member 2 Pool A/c". Receipt account of clearing members is purely a
transit account for maintaining audit trail.
Step-7: - Clearing Member2 gives a delivery instruction to DP2 to debit his "Clearing
Member 2 Pool A/c" and credit "Buying Client A/c" with DP2
Step-8: - Securities are transferred to "Buying Client A/c" from "Clearing Member2
Pool A/c" with DP2
Precautions:
For a transfer of securities to be effected from one account to another, details
mentioned in the "delivery" and "receipt" instructions need to match. Investors
need to be especially careful with respect to the "execution date" mentioned in
the two forms
Investors need to be careful with respect to the pay-in deadline.
While the selling client fills the delivery form, he must take care to
Strike off the portion for 'For Off-Market Trades (Receiver Details)'
and fill up all other details completely
Ensure that only delivery instruction form given by the DP having the
pre-printed Serial no. Is used. Do not use the form belonging to another
client..
Ensure that his Client ID and DP's 'DP ID' is available on the form.
This would be printed/stamped by his DP.
Writes the CM-BP-ID, name of the clearing member, market type and
settlement number as given by the clearing member in the portion 'For
Market Trades (Receiver Details)'.
Write the ISIN of the security, which is to be transferred. This ISIN
will be available in the statement of account received from the DP
giving details of the security holding.
Write the security name as it appears in the statement of account.
Write the quantity both in figures and words.
Procedure for Inter Settlement Transfers
In a clearing account, the securities are always kept in a bucket of specific market
type and settlement number.
Procedure:
Step-1: - Clearing Member gives "inter settlement instruction" to his DP. The
instruction should clearly indicate the market type & settlement no. From which the
securities are to be moved and the market type & settlement no.
Step-2: - The DP will ensure that the instruction slip is complete & the signature of
the CM is valid.
Step-3: - The DP will execute the instruction & securities will be moved within the
pool a/c of the CM as per the instruction.
Procedure for CM Pool To CM Pool Transfers:
A Clearing Member can transfer securities from its account to any other Clearing
Member's account of any stock exchange connected to NSDL.
Step-1: - Clearing Member gives "CM Pool to CM Pool Delivery Instruction" to his
DP to debit its Pool account and credit the Pool account of another Clearing Member
Step-2: - The DP will ensure that the instruction slip is complete & the signature of
the CM is valid.
Step-3: - The DP will execute the instructions of the Clearing Member to debit/credit
the Pool account of the Clearing Member.
Off - Market Transfers
Trading in dematerialised securities is quite similar to trading in physical securities.
The major difference is that at the time of settlement, instead of delivery/receipt of
securities in the physical form, the same is affected through account transfers.
Features:
Trades, which are not settled through the Clearing Corporation/ Clearing House of an
exchange, are classified as "Off Market Trades".
Procedure in case of an Off-Market Transfer Involving Two Clients:
The selling client will have to give a delivery instruction to his DP to transfer
securities from his depository account to the buying client's depository
account
The details in the "delivery" and "receipt" instructions must match else the
transfer will not take place.
The payment aspect is handled outside the NSDL environment between the
selling and buying clients.
Inter-Depository Transfers
Transfer of securities from an account in one depository to an account in another
depository is termed as an inter-depository transfer. This facility is quite similar to the
account transfers within NSDL.
It can be done only for securities that are available for dematerialisation on
both the depositories.
The account in NSDL can be either a clearing account or a beneficiary
account.
For debiting the clearing account or the beneficial account with NSDL, the
form for "Inter-depository delivery instruction" is required to be submitted by
the clearing member/beneficial owner to its DP.
As both the depositories are connected to each another, the batches to effect
inter - depository transfers are presently exchanged on each working day.
Both the depositories inform the Issuer/Registrar & Transfer Agent about the
transfer and it amends its records accordingly.
Government securities cannot be transferred from one depository to another
using this facility.
AUTOMATION BY A CLEARING MEMBER
.
Typically, the back-office systems of a clearing member are automated which reduces errors, cost per transaction and
thus providing much needed safety and convenience in settlement processing.
1. The computer printout (enclosure) should contain all the details as specified in
the delivery instruction form.
2. Words "Details as per _______ (total) number of pages attached" should be
written on the delivery instruction form.
3. The pre-printed serial number of the delivery instruction form should be
mentioned on every page of the enclosure.
4. Every page of the enclosure and the delivery instruction form should be signed
and stamped by the authorized signatories
The clearing member may also give the instructions in an electronic form in addition
to the hard copy, if the DP is willing to accept the same
Hints for automation
1. Clearing Member can map the trading client code with the demat account
number (via, DP ID & Client ID) of its client in its back-office
2. Tracking of the record date/book closure of each security can be done to give
an alert to move those securities to the beneficial owner accounts.
Automatic Delivery Out Instructions (Auto DOs)
The respective Clearing Corporations based on the net delivery obligations of its
Clearing Members can generate delivery-out instructions for moving securities from
CM Pool Account to CM Delivery Account automatically.
Non Pari-Passu shares or multiple ISINs - The Auto DOs will be generated
only for the main ISIN.
In case IDO is given after generation of Auto DO, Clearing Members will
have to ensure that the Auto DO is first canceled before execution of the IDO.
Further, a Delivery-out Instruction form for the balance quantity should also
be given to the Participant.
c) Shifting of CM Pool Account from one Participant to another Participant
- Auto DOs will be generated only in respect of one CM Pool Account i.e., the
CM Pool Account that is designated for receiving Payout as of the date of
generation of Auto DOs.
Clearing Members will be required to give Inter-settlement Instructions to the
Participants for securities lying in another settlement as usual.
Participants can generate separate reports from the DPM both for Auto DOs and
manual DOs.
CHARGES
NSDL adopts a two-tier charge structure. NSDL does not directly charge the clearing
members. NSDL charges its DPs and the DPs charges to the clearing members.
CORPORATE BENEFITS
Balances lying in the clearing accounts are not eligible for corporate benefits as these
are only transit balances and not beneficiary positions. Recently, as per SEBI's press
release dated May 23, 2000, it was decided that the corporate actions such as dividend
payment and the bonus shares in respect of balances in the clearing account which
remain outstanding on the record date must be credited to the bank/clearing account
of the clearing member and the clearing member must credit the amount to his clients.
Claiming corporate benefits for securities lying in clearing account
If some securities remain in the clearing account as on the record date/book closure,
the corporate benefits on these securities may either be delayed or lost.
Procedure for claiming corporate benefits
Clearing member must transfer the securities to the beneficial owner account.
Clearing member must write to NSDL giving details including CM-BP-ID,
record date/book closure, ISIN, quantity, and a copy of the transaction
statement reflecting the above transaction.
In such a case, an inter-settlement transfer from cum-benefit settlement to ex-
benefit settlement should be avoided.
NSDL will track the movement of securities and accordingly determine the
Beneficial ownership of such security.
Claiming corporate benefits for pre pay-in of securities
Sometimes securities may remain in the clearing account at the time of record
date/book closure, if the clearing member does a pre pay-in of securities.
TRADING AND SETTLEMENT
Trading And Settlement At NSE
About Us
The National Stock Exchange (NSE) is India's leading stock exchange covering
various cities and towns across the country. NSE was set up by leading institutions to
provide a modern, fully automated screen-based trading system with national reach.
Our Group
NSCCL
IISL NSE.IT
Trading
NSE introduced for the first time in India, fully automated screen based trading. It
uses a modern, fully computerized trading system designed to offer investors across
the length and breadth of the country a safe and easy way to invest.
Market Timings
Trading on the equities segment takes place on all days of the week (except Saturdays
and Sundays and holidays declared by the Exchange in advance). Market Segments
The Exchange operates the following sub-segments in the Equities segment:
Rolling Settlement
Limited Physical Market
Institutional Segment
Trade for Trade Segment
Rolling Settlement
In a rolling settlement, each trading day is considered as a trading period and trades
executed during the day are settled based on the net obligations for the day.
Limited Physical Market
Pursuant to the directive of SEBI to provide an exit route for small investors holding
physical shares in securities mandated for compulsory dematerialised settlement, the
Exchange has provided a facility for such trading in physical shares not exceeding
500 shares.
Institutional Segment
The Reserve Bank of India had vide a press release on October 21, 1999, clarified that
inter-foreign-institutional-investor (inter-FII) transactions do not require prior
approval or post-facto confirmation of the Reserve Bank of India, since such
transactions do not affect the percentage of overall FII holdings in Indian companies.
Trade for Trade Segment
Trading in this segment is available only for the securities
Which have not established connectivity with both the depositories as per
SEBI directive. The list of these securities is notified by SEBI from time to
time.
On account of surveillance action
Securities Available for Trading
The Capital Market (Equities) segment of NSE facilitates trading in the following
instruments:
A. Shares
Equity Shares
Preference Shares
B. Debentures Partly Convertible Debentures
Fully Convertible Debentures
Non Convertible Debentures
Warrants / Coupons / Secured Premium Notes/ other Hybrids
Bonds
C. Units of Mutual Funds
Trading System
NSE operates on the 'National Exchange for Automated Trading' (NEAT) system, a
fully automated screen based trading system, which adopts the principle of an order
driven market. NSE consciously opted in favor of an order driven system as opposed
to a quote driven system. This has helped reduce jobbing spreads not only on NSE but
in other exchanges as well, thus reducing transaction costs.
Market Types
Order Books
Order Matching Rules
Order Conditions
Trading System - Market Types
The NEAT system has four types of market. They are:
Normal Market
All orders that are of regular lot size or multiples thereof are traded in the Normal
Market. For shares that are traded in the compulsory dematerialised mode the market
lot of these shares is one.
.
Odd Lot Market
All orders whose order size is less than the regular lot size are traded in the odd-lot
market. An order is called an odd lot order if the order size is less than regular lot size.
Auction Market
In the Auction Market, the Exchange on behalf of trading members for settlement
related reasons initiate’s auctions. There are 3 participants in this market.
Initiator - the party who initiates the auction process is called an initiator
Competitor - the party who enters orders on the same side as of the initiator
Solicitor - the party who enters orders on the opposite side as of the initiator
Spot Market
Spot orders are similar to the normal market orders except that spot orders have
different settlement periods vis-à-vis normal market. These orders do not have any
special terms attributes attached to them. Currently the Spot Market is not in use.
Trading System - Order Matching Rules
The best buy order is matched with the best sell order. An order may match partially
with another order resulting in multiple trades. For order matching, the best buy order
is the one with the highest price and the best sell order is the one with the lowest
price.
Trading System - Order Conditions
A Trading Member can enter various types of orders depending upon his/her
requirements. These conditions are broadly classified into three categories: time
related conditions, price-related conditions and quantity related conditions.
Time Conditions
DAY - A Day order, as the name suggests, is an order, which is valid for the day on
which it is entered. If the order is not matched during the day, the order gets cancelled
automatically at the end of the trading day.
GTC - A Good Till Cancelled (GTC) order is an order that remains in the system until
the Trading Member cancels it. It will therefore be able to span trading days if it does
not get matched.
GTD - A Good Till Days/Date (GTD) order allows the Trading Member to specify the
days/date up to which the order should stay in the system.
IOC - An Immediate or Cancel (IOC) order allows a Trading Member to buy or sell a
security as soon as the order is released into the market, failing which the order will
be removed from the market..
Price Conditions
Limit Price/Order – An order that allows the price to be specified while entering the
order into the system.
Market Price/Order – An order to buy or sell securities at the best price obtainable at
the time of entering the order.
Stop Loss (SL) Price/Order – The one that allows the Trading Member to place an
order, which gets activated only when the market price of the relevant security
reaches or crosses a threshold price.
A sell order in the Stop Loss book gets triggered when the last traded price in the
normal market reaches or falls below the trigger price of the order.
Quantity Conditions
Disclosed Quantity (DQ)- An order with a DQ condition allows the Trading Member
to disclose only a part of the order quantity to the market. For example, an order of
1000 with a disclosed quantity condition of 200 will mean that 200 is displayed to the
market at a time.
MF - Minimum Fill (MF) orders allow the Trading Member to specify the minimum
quantity by which an order should be filled. For example, an order of 1000 units with
minimum fill 200 will require that each trade be for at least 200 units. In other words
there will be a maximum of 5 trades of 200 each or a single trade of 1000. The
Exchange may lay down norms of MF from time to time.
AON - All or None orders allow a Trading Member to impose the condition that only
the full order should be matched against.
Note: Currently, AON and MF orders are not available on the system as per SEBI
directives.
Trader Workstation
The trader workstation is the terminal from which the member accesses the trading
system. Each trader has a unique identification by way of Trading Member ID and
User ID through which he is able to log on to the system for trading or inquiry
purposes.
The Trader Workstation screen of the Trading Member is divided into several major
windows:
Title Bar
Tool Bar
Ticker Window
Market Watch Window
On line Index and Index Inquiry
Inquiry Window
Snap Quote
Order/Trade Window
Systems Message Window
Supplementary Menu
Clearing & Settlement (Equities)
NSCCL carries out clearing and settlement functions as per the settlement cycles of
different sub-segments in the Equities segment.
The clearing function of the clearing corporation is designed to work out a) what
counter parties owe and b) what counter parties are due to receive on the settlement
date. Settlement is a two way process, which involves legal transfer of title to, funds
and securities or other assets on the settlement date.
Clearing
Clearing is the process of determination of obligations, after which the obligations are
discharged by settlement.
NSCCL has two categories of clearing members: trading members and custodians.
The trading members can pass on its obligation to the custodians if the custodian
confirms the same to NSCCL.
Cleared and non-cleared deals
NSCCL carries out the clearing and settlement of trades executed in the following
sub-segments of the Equities segment:
1. All trades executed in the Book entry / Rolling segment.
2. All trades executed in the Limited Physical Market segment.
Clearing Mechanism
Trades in rolling segment are cleared and settled on a netted basis. Trading and
settlement periods are specified by the Exchange / Clearing Corporation from time to
time. Deals executed during a particular trading period are netted at the end of that
trading period and settlement obligations for that settlement period are computed. A
multilateral netting procedure is adopted to determine the net settlement obligations.
Settlement Cycle
At the end of each trading day, concluded or locked-in trades are received from NSE
by NSCCL. NSCCL determines the cumulative obligations of each member and
electronically transfers the data to Clearing Members (CMs). All trades concluded
during a particular trading period are settled together.
Auctions
Each CM would communicate to NSCCL on the pay-in day the securities that the CM
would be delivering and those that the CM is unable to deliver. NSCCL identifies
short deliveries and conducts a buying-in auction on the day after the payout day
through the NSE trading system.
The CM is debited by an amount equivalent to the securities not delivered and valued
at a valuation price (the closing price as announced by NSE on the day previous to the
day of the valuation). If the buy-in auction price is more than the valuation price, the
CM is required to make good the difference.
Bad Deliveries (in case of physical settlement)
Bad deliveries (deliveries which are prima facie defective) are required to be reported
to the clearinghouse within two days from the receipt of documents. The delivering
member is required to rectify these within two days. Un-rectified bad deliveries are
assigned to auction on the next day.
Company Objections (in case of physical settlement)
Company objections arise when, on lodgment of the securities with the
company/Share Transfer Agent (STA) for transfer, which are returned due to
signature mismatch or for any other reason for which the transfer of security cannot
be effected.
Settlement cycles for the various sub-segments:
Rolling Settlement
Limited Physical Market Segment
Institutional Segment
Settlement Cycle
Rolling Settlement
In a rolling settlement, each trading day is considered as a trading period and trades
executed during the day are settled based on the net obligations for the day.
At NSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working
day. For arriving at the settlement day all intervening holidays, which include bank
holidays, NSE holidays, Saturdays and Sundays are excluded. Typically trades taking
place on Monday are settled on Wednesday, Tuesday's trades settled on Thursday and
so on.
A tabular representation of the settlement cycle for rolling settlement is given below:
Activity Day
Trading Rolling Settlement Trading T
Clearing Custodial Confirmation T+1 working days
Delivery Generation T+1 working days
Settlement Securities and Funds pay in T+2 working days
Securities and Funds pay out T+2 working days
Valuation Debit T+2 working days
Post Settlement Auction T+3 working days
Bad Delivery Reporting T+4 working days
Auction settlement T+5 working days
Rectified bad delivery pay-in and pay-out T+6 working days
Re-bad delivery reporting and pickup T+8 working days
Close out of re-bad delivery and funds pay-in
& pay-outT+9 working days
Settlement Cycle
Limited Physical Market Segment
Settlement for trades is done on a trade-for-trade basis and delivery obligations arise
out of each trade. The settlement cycle for this segment is same as for the rolling
settlement viz:
Activity Day
Trading Rolling Settlement Trading T
Clearing Custodial Confirmation T+1 working days
Delivery Generation T+1 working days
Settlement Securities and Funds pay in T+2 working days
Securities and Funds pay out T+2 working days
Post Settlement Assigning of shortages for close out T+3 working days
Reporting and pick-up of bad delivery T+4 working days
Close out of shortages T+5 working days
Replacement of bad delivery T+6 working days
Reporting of re-bad and pick-up T+8 working days
Close out of re-bad delivery T+9 working days
Settlement Cycle
Institutional Segment
Deals executed in this segment are cleared on a T+2 rolling basis. Settlement for all
trades is done on a trade-for-trade basis and delivery obligation arises out of each
tradeThe settlement cycle for this segment is shown below:
Activity Day
Trading Rolling Settlement Trading T
Clearing Custodial Confirmation T+1 working days
Delivery Generation T+1 working days
Settlement Securities and Funds pay in T+2 working days
Securities and Funds pay out T+2 working days
Valuation Debit T+1 working days
Post Settlement Close out T+2 working days
Trading in this market segment is available for 'institutional investors' only. In order
to ensure that the overall FII limits are not violated, selling in this segment is
restricted to FII clients. Buying is restricted to FII and FI clients. Members are
required to enter the custodian participant code at the time of order entry and to
ensure that the selling/buying restrictions are strictly adhered to.
Members are not allowed the facility of trade warehousing for this segment and
accordingly members are not required to mark the orders for NCIT and warehousing.
If any orders are marked for the Clearing Corporation shall remove NCIT and / or
warehousing the same. Shortages, if any, are compulsorily closed-out at 20% over the
actual trade price.
Securities Settlement
The securities obligations of members are downloaded to members / custodians by
NSCCL after the trading period is over. The members / custodians deliver the
securities to the Clearing House on the pay-in day in case of physical settlement and
make available the required securities in the pool accounts with the depository
participants in case of dematerialised securities. Members are required to open
accounts with depository participants of both the depositories, NSDL and CDSL.
In case of dematerialised settlement, the delivering member should have clear
balances of securities in his delivery account within his CM clearing account with the
depository on or before 10:00 a.m. on the pay-in day. The depository would debit the
delivering members account on or after 10:00 a.m. The depository would credit the
receiving members' receipt account within his CM clearing account with the
depository on or after 2:30 p.m. on the payout day.
Pursuant to SEBI directive (vide its circular SMDRP/Policy/Cir-05/2001 dated
February 1, 2001) NSCCL has introduced a settlement system for direct delivery of
securities to the investor’s accounts with effect from April 2, 2001.
Funds Settlement
NSCCL has empanelled 12 clearing banks namely Canara Bank, HDFC Bank,
IndusInd Bank, ICICI Bank, UTI Bank, Bank of India, IDBI Bank, Hong Kong &
Shanghai Banking Corporation Ltd., Standard Chartered Bank, Kotak Mahindra
Bank, Union Bank of India and State Bank of India.
Funds Settlement
Clearing Account Every Clearing Member is required to maintain and operate a
clearing account with any one of the empanelled clearing banks at the designated
clearing bank branches.
Clearing Members are required to authorize the Clearing Bank to access their clearing
account for debiting and crediting their accounts, reporting of balances and other
information as may be required by NSCCL from time to time as per the specified
format.
A Clearing member can deposit funds into this account in any form, but can withdraw
funds from this account only in self-name.
Funds Settlement
Members are informed of their funds obligation for various settlements through the
daily clearing data download. The daily funds statement gives date-wise details of
each debit/ credit transaction in the member’s clearing account whereas the summary
statement summarizes the same information for a quick reference.
The members with a funds pay-in obligation are required to have clear funds in their
account on or before 10.30 a.m. on the settlement day. The payout of funds is credited
to the clearing account of the members on or after 1.30 p.m. on the settlement day.
Funds Shortages
Members are required to ensure that adequate funds are available in the clearing
account towards all obligations, on the scheduled date and time. Trading and/or
clearing facility of members failing to fulfill their funds obligations in all markets
including the valuation debit raised on account of securities shortages to Clearing
Corporation shall be withdrawn. Further, securities payout, due to such clearing
member shall also be withheld. The above provisions shall apply if net cumulative
fund shortage for a member is:
1. Equal to or greater than Rs. Five (5) lakhs at the end of pay-in.
2. Equal to or greater than Rs. Two (2) lakhs for six (6) or more occasions in the last
three (3) months on any given day
Apart from the above, the member will be required to pay a penal charge on the
amount outstanding at the end of the day, till the amount is recovered. Further, for
every case of non-fulfillment of funds pay-in obligations, penalty points are levied on
members.
Shortages Handling
On the securities pay-in day, NSCCL identifies short deliveries and the respective
clearing member is debited by an amount equivalent to the securities not delivered by
him and valued at a valuation price. This is called a valuation debit. A valuation debit
is also conducted for bad delivery by clearing members.
TRADING AND SETTLEMENT AT BSE
INTRODUCTION
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich
heritage. Popularly known as "BSE", it was established as "The Native Share & Stock
Brokers Association" in 1875. It is the first stock exchange in the country to obtain
permanent recognition in 1956 from the Government of India under the Securities
Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the
development of the Indian capital market is widely recognized and its index, SENSEX,
is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now
a demutualised and corporatised entity incorporated under the provisions of the
Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation)
Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).
The Exchange has a nation-wide reach with a presence in 417 cities and towns of
India. The systems and processes of the Exchange are designed to safeguard market
integrity and enhance transparency in operations. During the year 2004-2005, the
trading volumes on the Exchange showed robust growth.
TRADING AND SETTLEMENT
TRADING
Listed Securities
Permitted Securities
Tick Size
Computation of closing price of scrips in the Cash Segment
Compulsory Rolling Segment (CRS)
SETTLEMENT
Pay-in and Pay-out for 'A', 'B1', 'B2', ‘T’, ‘S’, ‘TS’, 'C', "F", "G" & 'Z' group
of securities
Demat pay-in
Auto delivery facility
Pay-in of securities in physical form
Funds Pay-in
Securities Pay-out
Funds Payout
Penalty Norms
Brokers Contingency Fund
SHORTAGES
AUCTIONS
Self-Auction
Close-out
BASKET TRADING SYSTEM
TRADING
Trading on the BOLT System is conducted from Monday to Friday between 9:55 a.m.
and 3:30 p.m. The scrip traded on the Exchange have been classified into 'A', 'B1',
'B2','T', ‘S', ‘TS' ‘F’,'G' and 'Z' groups.
The “S” Group represents scrip’s forming part of the “ BSE-Indonext” segment. The
“TS” Group consists of scrip in the “ BSE-Indonext” segment which are settled on a
trade to trade basis as a surveillance measure.
Trading in Govt. Securities for retail investors is done under "G" group.
The Exchange also provides a facility to the market participants for on-line trading of
odd-lot securities in physical form in 'A', 'B1', 'B2' ‘T','S', ‘TS' and 'Z' groups and
Rights renunciations in all the groups of scrip in the Equity Segment.
With effect from December 31, 2001, trading in all securities listed in equity segment
of the Exchange takes place in one market segment, viz., Compulsory Rolling
Settlement Segment (CRS).
This facility of selling physical shares in compulsory demat scrip is called an Exit
Route Scheme. This facility can also be used by small investors for selling up to 500
shares in physical form in respect of scrip of companies where trades are required to
be compulsorily settled by all investors in demat mode.
Listed Securities:
The securities of companies, which have signed Listing Agreement with the
Exchange, are traded at the Exchange as "Listed Securities". Baring a few scrip’s, all
scrip’s traded in the Equity Segment at the Exchange fall in this category.
Permitted Securities:
To facilitate the market participants to trade in securities of the companies, which are
actively traded at other Regional Stock Exchanges but are not listed on the Exchange,
the Exchange has in April 2002 decided to permit trading in such securities as "
Permitted Securities" provided they meet the relevant norms specified by the
Exchange.
Tick Size:
Tick size is the minimum difference in rates between two orders on the same side i.e.,
buys or sells, entered on the system for particular scrip. Trading in scrip’s listed on
the Exchange is done with the tick size of 5 paise.
Computation of closing price of scrip in the Cash Segment:
The closing price of scrip’s is computed by the Exchange on the basis of weighted
average price of all trades executed during the last 30 minutes of the continuous
trading session.
Compulsory Rolling Settlement (CRS) Segment:
As per the directive by SEBI, all transactions in all groups of securities in the Equity
Segment and Fixed Income securities listed on the Exchange are required to be settled
on T+2 basis w.e.f. From April 1, 2003.
Under rolling settlements, the trades done on a particular day are settled after a given
number of business days. A T+2 settlement cycle means that the final settlement of
transactions done on T, i.e., trade day by exchange of monies and securities between
the buyers and sellers respectively takes place on second business day (excluding
Saturdays, Sundays, bank and Exchange trading holidays) after the trade day.
The transactions in securities of companies which have made arrangements for
dematerialization of their securities are settled only in demat mode on T+2 on net
basis, i.e., buy and sell positions of a member-broker in the same scrip are netted and
the net quantity and value is required to be settled.
The Exchange has introduced a new segment named “BSE Indonext” w.e.f. January 7,
2005. “S” group consists of scrip’s from “B1” & “B2” group on BSE and companies
exclusively listed on regional stock exchanges having capital of 3 crores to 30 crores.
All trades in this segment are done through BOLT system under S group.
The transactions in 'F' group securities representing "Fixed Income Securities" and "
G" group representing Govt. Securities for retail investors are also settled at the
Exchange on T+2 basis
The following table summarizes the steps in the trading and settlement cycle for
scrip’s under CRS:
DAY ACTIVITY
T Trading on BOLT and daily downloading of statements
showing details of transactions and margins at the end of
each trading day.
Downloading of provisional securities and funds
obligation statements by member-brokers.
6A/7A* entry by the member-brokers/ confirmation by the
custodians.
T+1 Confirmation of 6A/7A data by the Custodians up to 11:00
a.m. Downloading of final securities and funds obligation
statements by members.
T+2 Pay-in of funds and securities by 11:00 a.m. and payout of
funds and securities by 1:30 p.m. The member-brokers are
required to submit the pay-in instructions for funds and
securities to banks and depositories respectively by 10: 30
a.m.
T+3 Auction on BOLT at 11.00 a.m.
T+4 Auction pay-in and payout of funds and securities by
12:00 noon and 1:30 p.m. respectively.
Thus, the pay-in and payout of funds and securities takes places on the second
business day (i.e., excluding Saturday, Sundays and bank & Exchange trading
holidays) of the day of the execution of the trade.
a. Statements giving details of the daily transactions entered into by the
members.
b. Statements giving details of margins payable by the member-brokers in
respect of the trades executed by them.
c. Statements of securities and fund obligation.
d. Delivery/Receive orders for delivery /receipt of securities.
The Delivery Order/Receive Order provides information like the scrip and quantity of
securities to be delivered/received by the members through the Clearing House. The
Money Statement provides scrip wise/item wise details of payments/receipts of
monies by the members in the settlement. The members in their back office, as stated
earlier, can download the Delivery/Receive Orders and Money Statement
Settlement
Pay-in and Pay-out for 'A', 'B1', 'B2', ‘T’, ‘S’, ‘TS’, 'C', "F", "G" & 'Z' group of
securities
The trades done on BOLT/Exchange by the members in all the securities in CRS are
now settled on the Exchange by payment of monies and delivery of securities on T+2
basis. All deliveries of securities are required to be routed through the Clearing
House.
The Pay-in /Pay-out of funds based on the money statement and that of securities
based on Delivery Order/ Receive Order issued by the Exchange are settled on T+2
day.
Demat pay-in:
The members can effect pay-in of demat securities to the Clearing House through
either of the Depositories i.e. the National Securities Depository Ltd. (NSDL) or
Central Depository Services (I) Ltd. (CDSL). The members are required to give
instructions to their respective Depository Participants (DPs) specifying details such
as settlement no., effective pay-in date, quantity, etc.
Auto delivery facility:
Instead of issuing Delivery instructions for their securities delivery obligations in
demat mode in various scrip’s in a settlement /auction, a facility has been made
available to the members of automatically generating Delivery instructions on their
behalf from their CM Pool accounts maintained with NSDL and CM Principal
Accounts maintained with CDSL. available for Clearing Member (CM) Pool accounts
and Principal accounts maintained by the members with the respective depositories
Pay-in of securities in physical form:
In case of delivery of securities in physical form, the members have to deliver the
securities to the Clearing Hose in special closed pouches along with the relevant
details like distinctive numbers, scrip code, quantity, etc., on a floppy.
Funds Pay-in:
The bank accounts of members maintained with the clearing banks, viz., Bank of
India, HDFC Bank Ltd., Oriental Bank of Commerce., Standard Chartered Bank,
Centurion Bank Ltd., UTI Bank Ltd., ICICI Bank, IndusInd Bank Ltd., Union Bank of
India and Hong Kong Shanghai Banking Corporation Ltd. are directly debited through
computerized posting for their funds settlement obligations.
Securities Payout:
In case of demat securities; the Clearing House in the Pool/Principal Accounts of the
member-brokers credits the same. The Exchange has also provided a facility to the
member-brokers for transfer of payout securities directly to the clients' beneficiary
owner accounts without routing the same through their Pool/Principal accounts in
NSDL/ CDSL.
In case of physical securities, the Receiving Members are required to collect the same
from the Clearing House on the payout day.
Funds Payout:
The bank accounts of the members having pay-out of funds are credited by the
Clearing House with the Clearing Banks on the pay-in day itself
In case, if a member-broker fails to deliver the securities, then the value of shares
delivered short is recovered from him at the standard/closing rate of the scrip’s on the
trading day.
Shortage
The Clearing House arrives at the shortages in delivery of various scrip’s by members
on the basis of their delivery obligations and actual delivery.
The members can download the statement of shortages in delivery of scrip’s in A, B1,
B2, T, S, TS, Z, F, Odd-lot & G group scrip’s on T+2 day, i.e., Pay-in day. After
downloading the shortage details, the members are expected to verify the same and
report discrepancy, if any, to the Clearing House immediately.
AUCTION
An Auction Tender Notice is issued by the Exchange to the members informing them
about the names of the scrip’s short or not delivered, quantity slated for auction and
the date and time of the auction session on the BOLT. The auction for the undelivered
quantities is conducted on T+3 day between 11:00 a.m. and 12 noon for all the scrip’s
under Compulsory Rolling Settlements except those in "Z" group and scrip’s on
"trade to trade" basis which are directly closed-out. i.e., T+4. Payout of auction shares
and funds is also done on the same day, i.e., T+4.
Self- Auction
As has been discussed in the earlier paragraphs, the Delivery and Receive Orders are
issued by the Exchange to the members after netting off their purchase and sell
transactions in scrip’s where netting of purchase and sell positions is permitted. It is
likely in some cases; a selling client has failed to deliver the shares sold in a
settlement to a member-broker. However, this did not result in failure of the member-
broker to deliver the shares to the Clearing House as there was a purchase transaction
of his some other buying client in the same scrip and the same was netted off for the
purpose of settlement.
CLOSE-OUT
Close –out is effected for cases when no offer for particular scrip is received in an
auction or when members who offer the scrip’s in auction, fail to deliver the same or
shortages pertaining to those groups of securities for which auctions are not
conducted. The closeout rates for different segments are as under
‘A’, ‘B1’ , ‘B2’, ’S’ and ‘F’ group
The closeout rate is higher of the following rates:
a) The highest rate of the scrip from the trading day to the day prior to the day on
which the auction is conducted for the respective settlement.
b) 20% above the closing rate as on the day prior to the day of auction/close out of
the respective settlement.
“Odd Lot” , “T”, “TS” and “Z” group and patawat objections
The close-out rate is higher of the following rates:
a) The highest rate of the scrip from the day of trading to the day prior to the day of
auction of the respective settlements;
b) 10% above the closing rate as on the day prior to the day of auction/ close out of
the respective settlement.
In case of shortages in "G" group, the shortages are closed out at Zero Coupon Yield
Curve (ZCYC) plus a 5% penalty.
BASKET TRADING SYSTEM
The Exchange has commenced trading in the Derivatives Segment with effect from
June 9, 2000 to enable the investors to, inter-alia, hedge their risks. Initially, the
facility of trading in the Derivatives Segment was confined to Index Futures.
With a view to provide investors the facility of creating Sensex linked portfolios and
also to create a linkage of market prices of the underlying securities of Sensex in the
Cash Segment and Futures on Sensex.
The Basket Trading System, thus, meets the need of investors and also improves the
depth in cash and futures markets.
The facility of Basket Trading has been introduced by the Exchange w.e.f. August 14,
2000.
The trades executed under the Basket Trading System on BOLT are subject to intra-
day trading and gross exposure limits available to the members. The VaR, MTM
margins etc, as are applicable to normal trades in the Cash Segment, are also
recovered from the members.
PART 2
CH APTER–2
RESEARCH PROBLEM
OBJECTIVE
SCOPE
AND IMPORTANCE
RESEARCH PROBLEM
To ascertain the investors preference according to the facilities provided by
depositories participants.
OBJECTIVES
To ascertain the profile of the investors
To find the reasons for investing in shares
To Examine the preference of investment in different segments like bank
Deposits, PPF, IPO, Mutual Fund, Insurance and alike.
To seek the reasons of the criteria of investment.
Importance of the study
The purpose of this study is to obtain information about the company which help to
identification of the problem and to determine the issue dimension and magnitude to
enumerate and evaluate the alternative solution to select the right course of action to
follow the purpose of the study also to provide information to facilitate the
identification of an opportunity or problem situation are encountered
SCOPE OF THE STUDY
Researcher has been conducted in the Varanasi region like Rathyatra, Lanka, Kabir
Chaura, Lahura Beer, Godauliya, Durga Kund,. The study will help to know the
market share and will also helps the creating & providing high quality services which
increase the brand loyalty.
The researcher will also help in improving marketing sales promotion and new
strategy of the company. Useful for researcher for future research for gating insight
about the topic.
CHAPTER–3
RESEARCH METHODOLOGY
METHODOLOGY
Research is a common language refers to a search of knowledge. Research is
scientific & systematic search for pertinent information on a specific topic, infect
research is an art of scientific investigation. Research Methodology is a scientific way
to solve research problem. It may be understood as a science of studying how research
is doing scientifically. In it we study various steps that are generally adopted by
researchers in studying their research problem. It is necessary for researchers to know
not only know research method techniques but also technology.
The scope of Research Methodology is wider than that of research methods.
The research problem consists of series of closely related activities. At times, the first
step determines the native of the last step to be undertaken. Why a research has been
defined, what data has been collected and what a particular methods have been
adopted and a host of similar other questions are usually answered when we talk of
research methodology concerning a research problem or study. The project is a study
where focus is on the following points:
RESEARCH DESIGN
A research design is defined, as the specification of methods and
procedures for acquiring the Information needed. It is a plant or organizing
framework for doing the study and collecting the data. Designing a research plan
requires decisions all the data sources, research approaches, Research instruments,
sampling plan and contact methods.
Research design is mainly of following types: -
1. Exploratory research.
2. Descriptive studies
EXPLORATORY RESEARCH
The major purposes of exploratory studies are the identification of
problems, the more precise Formulation of problems and the formulations of new
alternative courses of action. The design of exploratory studies is characterized by a
great amount of flexibility and ad-hoc veracity.
DESCRIPTIVE STUDIES
Descriptive research in contrast to exploratory research is marked by the
prior formulation of specific research Questions. The investigator already knows a
substantial amount about the research problem. Perhaps as a Result of an exploratory
study, before the project is initiated. Descriptive research is also characterized by a
Preplanned and structured design.
B) DATA COLLECTION METHOD
PRIMARY SECONDARY
Direct personal Interview
Indirect personal Interview
Information from correspondents Govt. publication
Mailed questionnaire Report Committees &
Commissions
Question filled by enumerators. Private Publication
Research Institute
PRIMARY DATA
These data are collected first time as original data. The data is recorded
as observed or encountered. Essentially they are raw materials. They may be
combined, totaled but they have not extensively been statistically processed.
For example, data obtained by the peoples.
SECONDARY DATA
Sources of Secondary Data
Following are the main sources of secondary data:
1. Official Publications: Publications of the RELIANCE MONEY .
Published Sources Unpublished
Sources
2. Publications Relating to Trade: Publications of the trade associations, stock
exchange, trade union etc.
3. Journal/ Newspapers etc.: Some newspapers/ Journals collect and publish
their own data, e.g. Indian Journal of economics, economist, Economic Times.
4. Unpublished Data: Data may be obtained from several companies,
organizations, working in the same areas.
Period of Study:
This study has been carried out for a maximum period of 7 weeks.
Area of study:
The study is exclusively done in the area of marketing. It is a process
requiring care, sophistication, experience, business judgment, and imagination
for which there can be no mechanical substitutes.
Sampling Design:
The convenience sampling is done because any probability sampling
procedure would require detailed information about the universe, which is not
easily available further, it being an exploratory research.
Sample Procedure:
In this study “judgmental sampling procedure is used. Judgmental
sampling is preferred because of some limitation and the complexity of the
random sampling. Area sampling is used in combination with convenience
sampling so as to collect the data from different regions of the city and to
increase reliability.
Sampling Size:
The sampling size of the study is 150 respondents.
Method of the Sampling:
Probability Sampling
It is also known as random sampling. Here, every item of the universe
has an equal chance or probability of being chosen for sample.
Simple Random Sampling
A simple random sample gives each member of the population an
equal chance of being chosen. It is not a haphazard sample as some people
think! One way of achieving a simple random sample is to number each
element in the sampling frame (e.g. give everyone on the Electoral register a
number) and then use random numbers to select the required sample.
Random numbers can be obtained using your calculator, a spreadsheet,
printed tables of random numbers, or by the more traditional methods of
drawing slips of paper from a hat, tossing coins or rolling dice.
Systematic Random Sampling
This is random sampling with a system! From the sampling frame, a
starting point is chosen at random, and thereafter at regular intervals.
Stratified Random Sampling
With stratified random sampling, the population is first divided into a
number of parts or 'strata' according to some characteristic, chosen to be
related to the major variables being studied. For this survey, the variable of
interest is the citizen's attitude to the redevelopment scheme, and the
stratification factor will be the values of the respondents' homes. This factor
was chosen because it seems reasonable to suppose that it will be related to
people's attitudes
RESEARCH METHODOLOGY
The approach to the research is considered in this chapter, from
the theoretical underpinning to the collection and analysis of the data.
It begins with the extent of the research to provide the specific
guidelines of studying. The next part is concerned with the method of
the research that refers to the data collection and analyzing which is
used in the research.
METHODS
PRIMARY DATA:
Date collection for this research was done primarily through
fill ing up of questionnaire. The sample for the research including
different individuals of various age groups and having different
professions and qualifications. Data was collected through the
interview of individuals. The questionnaire was containing questions
regarding the personal details of individuals and then some light
questions regarding their primary knowledge related to private broking
companies
SECONDARY DATA:
A large amount of secondary data has been collected from secondary
sources. Some of the sources are:-
Reports on Investment Sector of India.
Articles from Newspapers and magazines.
Various web sites of the broking companies and related sites.
DATA ANALYSIS:
There are some features of analyzing data that need to be borne
in mind when choosing the method for analyzing the research. The
questionnaires were prepared to explore the psychology of individuals
about being associated with Reliance Mutual Fund Consultants and to
help the company grow by increasing its sales. Instead of testing a
hypothesis, a qualitative analyst may demonstrate evidence showing
that a theory, generalizing, or interpretation is plausible.
SAMPLE SIZE :-
Various areas of Varanasi were covered in order to fi ll the
questionnaire. I interacted with 100 individuals in order to know about
their interest of being investor of mutual fund.
SAMPLE COMPOSITION:
Youth
Executives
Serviceman
Business persons
RESEARCH DESIGN :A research design provides the framework to be used as a guide
in collecting and analyzing data.
DATA ANALYSIS:-
After collection of data, the analysis of it was done through various
graphs:-
Pie Diagram
Bar Diagram
According to the data collected through survey with the help of questionnaire, the break up with respect to income of individuals is as follows:
CHAPTER–4
DATA ANALYSIS
&
INTERPRETATION
DATA ANALYSIS AND INTERPRETATION
1. Age Of The Investors
Age No. Of Investors
Between 20-30 84
Between 30-40 39
Between 40-50 15
Between 50-60 9
60 and Above 3
ANALYSIS:-
The sample is of150 investors are included and the age of investors are between 20-
30 are 84 , 30-40 are 39,40-50 are 15,50-60 are9 and 60 to above are 3.
INTERPRETATION:- From the above it is found that the most age group are
between 20-30.
2.Gender Of The Investors
Gender No of investors
Male 105
Female 45
ANALYSIS:-
It is cleary visible from the above data that more than 70% investors are male and
30% are female.
INTERPRETATION:-It is found that the maximum investors are male as
compared with female.
3. What Percentage Of income Do The Investors Save?
Saving No Of Investors
5 to10% 48
10 to 15% 48
15 to 20% 30
20 to 30% 24
ANALYSIS:-
The above graph show that near about 48 investors are save their percentage of
income 32% ,48 investors are 32%, 30 investors are 20% and 24 are 16%.
INTERPRETATION:- The maximum percentage of savings investors save are 5
to 10% and 10 to 15% from their income.
4. At the moment, invested my money in
InvestmentNo of investors
Bank Fixed Deposits 48
IPOS 36
Mutual Funds 54
Others 12
ANALYSIS:It is clearly shown by the data that 32% invesstors invested their money in bank fixed
deposit 24% in IPOS, 36% in mutual fund and 8% are invested in other places.
INTERPRETATION:It is found that maximum of investors prefer to invest
their money in mutual fund ,the preferences is found to be more for mutual fund as
compared with other mode of investment.
5. What Is The Criteria While Making Your Investment Decision ?
CriteriaNo Of Investors
Liquidity 30
Safety 48
Return 54
Time Period 18
ANALYSIS:
It shows that 32% investors are invested money for safety ,20% for liquidity, 36% are
for return and12% for time period. So most of all are invested for good return.
INTERPRETATION: It is found that most of investors are investing for a good
return.
6. Awareness Among Investors About Demat Services?
Demat Services No of Investors
Aware 132
Not Aware 18
ANALYSIS:The above graph show that near about 88% are aware and 12% are unaware for d-mat
services.
INTERPRETATION:On survey it is found that maximum of people are aware
about the D-Mat account.
7. DO You Have A Demat Account?
Demat Account No Of Investors
Yes 108
No 42
Total 150
ANALYSIS:
In The Sample Survey 108 were having a Demat account and 42 were not
Having a demat account.
INTERPRETATION:Among the investors who are aware about D-Mat account
amximum of them are having their D-Mat account in any broking firm.
8. In Which DP You Are Having Your Demat Account?
Name Of DP No Of Investors
RELIANCE MONEY 24
KARVY 15
ANAND RATHI 9
ICICI 21
HDFC 9
OTHERS 30
Total 108
No Of Investors RELIANCEMONEY
KARVY
ANAND RATHI
ICICI
HDFC
OTHERS
ANALYSIS In this survey 108 investors are added and in it 24 investors have
demat account in Reliance Money, 15 have in KARVY ,19 in ANAND RATHI, 21 in
ICICI,9 in HDFC and
30 in others.
INTERPRETATION: t found that the investors’ preference to have DP in
Reliance Money is found to be maximum.
9. How do investor rate the services provided by your DP?
Rating No of investors
Excellent 24
Very good 42
Good 21
Satisfactory 21
Total 108
ANALYSIS In it 108 investors are included and they are rated their depositories .In it 40 % rated
very good , 22% excellent and 19% said good and 19% are said satisfactory. These
investors are from different depository participants:
INTERPRETATION:The maximumof investors are satisfy and rate the
services very good for the services provided by their respective DP.
RatingRELIANCE
MONEY KARVY ANAND RATHI ICICI HDFC OTHERS TOTAL
Excellent 2 2 3 10 2 5 24
Very good 8 5 2 5 3 19 42
Good 8 4 2 1 2 4 21
Satisfactory 6 4 2 5 2 2 21
TOTAL 24 15 9 21 9 30 108
ANALYSIS :The sample size is 24 in RELIANCE MONEY and 33% customers of reliance money are
said that service of Reliance money is good 34% said very good,25% said satisfactory and
8% said excellent.
INTERPRETATION:The investors who prefer Reliance Money, also show a
good response for the services of Reliance Money and rated very good by many of
maximum.
10. What Do You Feel Is The Most Important Benefits From The Earlier
Physical Settlement Of Trades To The Newer Electronic Mode?
BenefitsNo Of
InvestorsFaster Settlement Cycle 57
Reduction In Paper Work 30
Minimization Of Risk 51
Easy Address Updation 12
Total 150
Analysis The above graph shows that 38 % of the investors say that newer electronic mode has
resulted in faster settlement cycle for business trading.
20 % investors admit that this newer electronic mode has resulted in reduction in
paper mode.
34% investors are agreed on the fact that this business mode minimizes the various
risks.
8% investors admit for easy address updation.
Interpretation :Maximum of investors feel that most important benefits from the
earlier physical settlement of Trades to the newer electronic mode is that of faster
settlement cycle.
Analysis :The above graph shows that 46 % of the investors of Reliance Money say that newer
electronic mode has resulted in faster settlement cycle for business trading.
29 % investors admit that this newer electronic mode has resulted in reduction in
paper mode.
17% investors are agreed on the fact that this business mode minimizes the various
risks.
8% investors admit for easy address updation.
Interpretation :
From above it is found that maximum of the investors of Reliance Money say that
newer electronic mode has resulted in faster settlement cycle for business trading.
11.Do You Think DP Account Help You To Receive Corporate Actions?
Corporate Actions No Of Investors
Yes 140
No 10
Total 150
ANALYSIS :The above graph shows that 93% investors agree that DP account helps in receiving
corporate actions and 7% disagree to the same.
INTERPRETATION:
From above it is found that maximum of investors agree that DP account help them
to receive corporate actions .
12. You Prefer To Have a Demat Account With a DP, Which Is Providing
Trading Facilities Or Which Is Not Providing Trading Facilities?
Trading Facilities No Of Investors
Providing 120
Not Providing 30
Total 150
ANALYSIS :The above graph shows that 80% investors facilitate that DP which provide trading
facility,20% facilitate not provide trading facilitate.
INTERPRETATIONIt found that maximum of investors prefer to have a demat account with a DP, which
is providing Trading facilities.
13. What Do You Feel About The Customer Services Of RELIANCE MONEY?
RatingNo Of
Investors
Very Good 33
Good 72
Satisfactory 21
Total 126
ANALYSIS :The sample shown here is of 126 investors who are having there demat account in
Other DPs or do not have a demat account and the remaining 24 investors are the
Customers of RELIANCE MONEY and their ratings has been shown in the above
charts
INTERPRETATION:From the survey it is found that the maximum of customers of Reliance Money rate
the services good provided to them by the company.
CHAPTER-5
FINDINGS
RECOMMENDATIONS
FINDINGS
The research technique, which adopted was very rigorous and every intricate details were taken into consideration right from making the questionnaire, to finding the kind of people to be interviewed. The following major aspects were taken into account:
Segregation across the different categories.
Segregation by location so as to enable a better planned effort.
Prior appointment over phone before actual visits in order to reduce
propensity of unsuccessful visits.
Sample sizes of 150 investors were taken which were spread over
various segments.
Data was collected through the questionnaire and interviews.
Data was processed for further analysis.
Collected data was analyzed and tabulated. The tabulated data was for
deriving inferences and obtaining conclusions to fulfill the objective of
project.
The qualitative analysis was done and the conclusions were drawn.
The recommendations in order to increase the buying behavior of the
mutual funds investors are given.
RECOMMENDATIONS
1) - There should be focus on advertisements through T.V. or other
Electronic Media.
2) - Make use of internet banking for increasing sales, and also for
promotion.
3) - To identify regions where promotions are required.
4) - If charges can’t be reduced because of costs involved, make the
services customized, so that services are provided to only those
customers who are willing to pay the price for services they are getting
and let the other customers enjoy costs benefits without getting
services.
5) – Reliance money should try to reach in small cities, towns and
villages so it can cover rural customers as well as urban customers.
CHAPTER:6OBSERVATION AND CONCLUSIONS
LIMITATION OF THE STUDY
OBSERVATION AND CONCLUSIONS
The people who were above the above the age of 50wanted to be on truly safe
position and did not want to invest in the risky ventures
In the sample survey conducted most of the people lie between the age of 20-
30
Most of the investors were able to save the money in the ratio between 5
to15%
Most of the investors have invested in some schemes or the other in which
bank deposits were the most preferred among the several schemes.
The investors were more comfortable with the investment which had good
return followed by safety with liquidity and time period
Most of the people were having a demat account and were aware about the
demat services
In the sample survey 22% of the people were having there demat account in
RELIANCE MONEY followed by ICICI (19%) KARVY (14%) ANAND
RATHI (8 %) HDFC (8%). Other DPs include MOTILAL OSWAL
SECURITIES, IDBI, RELIGARE, RR TRADERS, SPFL SECUITIES e.t.c
People were satisfied with the services provided by their respective DPs
Investors suffered lot of problems in the physical settlement of trades such as
longer settlement cycle, risk e.t.c. The newer electronic mode of settlements
solved their problem to a great extent
In the present situation investors prefer to have a demat account with a DP
which is providing trading facilities
Only 36% of the people in the survey were aware of the fact that RELIANCE
MONEY is going to start broking services very soon. Even 13% of
RELIANCE MONEY customers were not aware of this fact.
LIMITATION OF THE STUDY
1) The major difficulty was of language problem . As questionnaire was in English,
so people were not interested in filling it.
2) Few people did not have the time to fill up or answer all the questions.
3) People were not giving exacy information like their income , age etc.
4) Few were not responding as we expect from them and they were reacting as survey is conducted for false purpose.
BIBLIOGRAPHY
ANNEXURES
BIBLIOGRAPHY
Books
1. NCFM’s Depository module2. NCFM’s Capital Market Dealer Module3. Financial Institutions And Markets- Shashi K Gupta
Web Sites:
1. www. Google.com2. www.nsdl.com3. www.nseindia.coms4. www.bseindia.com5. www.sebionline.com
ANNEXURES
The kind of Questionnaire, which was floated for research purpose, is given as
follows:
SNAPSHOT OF THE QUESTIONNAIRE FLOATED TO THE INVESTORS
1. NAME
AGE - 20-30[ ] 30-40 [ ] 40-50 [ ] 50-60 [ ] ABOVE 60 [ ]
GENDER- MALE [ ] FEMALE [ ]
OCCUPATION- BUSINESS [] SERVICE [] PROFESSION []
2. What Percentage Of Your Income Do You Save?
[ ] 5 to 10% [ ] 10 to 15% [ ] 15 to 20% [ ] 20 to 30%
3. Where Do You Invest Your Savings?
[ ] Bank Deposits [ ] IPO [ ] Mutual Funds [ ] Others ( Please Specify)
4. What Is Your Criteria While Making Your Investment Decision?
[ ] Liquidity [ ] Safety [ ] Return [ ] Time Period [ ]
5. Are You Aware Of Demat Services?
[ ] Yes [ ] No
6. Do You Have a Demat Account?
[ ] Yes [ ] No
7. In Which DP You are Having Your demat Account?
[ ] RELIANCE MONEY [ ] KARVY [ ] ANAND RATHI [ ] ICICI [ ]
HDFC [ ] OTHERS
8. How Do You Rate The Services Provided By Your DP?
[ ] Excellent [ ] V.Good [ ] Good [ ] Satisfactory
9. What Do You Feel Is The Most Important Benefits From The Earlier Physical
Settlement Of Trades To The Newer Electronic Mode?
[ ] Faster Settlement Cycle
[ ] Reduction In Paper Work
[ ] Minimization Of Risk
[ ] Easy Address Updation
10. Do You Think Dp Account Help You To Receive Corporate Actions ?
[ ] Yes [ ] No
11. You Prefer To have a Demat Account With a DP Which Is
[ ] Providing Trading Facilities
[ ] Not Providing Trading Facilities
12. What Do You Feel About The Customer Services Of RELIANCE MONEY?
[ ] V.Good [ ] Good [ ] Satisfactory
