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DIFFERENCE BETWEEN

ONLINE

AND

OFFLINE

STOCK TRADING

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WHAT IS ONLINE TRADINGInvesting online /self directed investing , has

become the norm for individual investors and

traders over the past decade with many, if notall brokers now offering online services with

unique trading platforms.

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Reliance Securities Limited as a SEBI registered

Trading Member of NSE and BSE offers Internet

trading on the url.www.reliancemoney.com. To trade

online the customer is provided with an user id,

password and also a security token which flashes adynamic password number. This security token

displays a new 6 digit number every 36 seconds.

To facilitate trading the following frontend screenshave been made available.

EXAMPLE:

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WHAT IS OFFLINE TRADING/CALL TRADE

Apart from Internet trading, the customers are also

provided with the option of trading through the

Call & Trade facility. When the customer calls the

Call & Trade number to transact, he needs toauthenticate his identity by providing the user id,

and the dynamic password number from his

security token. Password is not required for Call &Trade transactions.

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DIFFERENCE BETWEEN OFFLINE

AND ONLINE TRADINGThe introduction of the Internet has surprisingly changed our way of life as a society.It has defined the way we do business and the way we correspond. The Internet has

opened many opportunities for online trading. The financial industry revolves around

the Internet. Every thing is just a few clicks away. This makes online trading most

convenient. But there are still investors who prefer the old fashion way of offline

trading and they mainly prefer offline trading for security reasons.

Internet has introduced a way for consumers to manage their money online. Not to

mention, Internet has transformed the way investment companies operate their

business and has made it easy for private investors to gain straight access to a range of

different markets and online tools that were at one point only reserved by the use of

investment professionals. Consumer investing and online trading has dramatically

changed over the last decade. Online trading dynamically continues to be redefined.

Services have expanded to include integrated management of additional financial

accounts. Not to mention, it has subsequently expanded in conjunction with ground-

breaking improvements to the traditional trading interface, such as telephone interface

systems.

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Of course, online trading has many pros. There are several wonderful reasons to invest

online and consider online trading.

1.MONEY SAVING OPPORTUNITIES: The amount of money you save depends

primarily on the online brokerage firm that you choose. No two firms are the same.There may be different regulations, similar to bank regulations. There are minimum

deposits required that must be maintained. As mentioned above, this will depend on the

online brokerage firm.

2. INSTANT ONLINE ACCESS: You can gain instant access to your account, thevalue of your portfolio updates immediately before your eyes.

3. ENTER ONLINE TRADES AT ANYTIME: You can enter online trades at

anytime and from anywhere. This is very convenient if you live in a different time zone

than the country you are trading in. Not to mention, it is especially fit for investors withbusy schedules.

4. WITH ONLINE TRADING YOU ARE IN CHARGE:You are in control of your

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

h l i h ll h i f li di h ill i h

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Nevertheless, with all the convenience of online trading there are still investors who

prefer the old fashion way of offline trading. Offline trading has lost some popularity

but it is still the main form of investing. Offline trading offers many benefits as

well.

1. The one benefit that an investor appreciates the most is that they are not alonewhen making investment decisions.

2. There are experienced and professional brokerage companies that handle their

investments for them.

3. Investors are not faced with the challenge of making these vital investment

decisions; especially, if they do not have the experience necessary to make the

appropriate investments.

4. Also, there is someone there to answer any questions that may cause concerns.

Not to mention, with offline trading mistakes are less likely to take place. No one

wants to throw their money away or stand by and watch someone else throw their

money away. It may be wise to hire a professional to assist you in making the correct

investment decisions if you feel you lack the knowledge necessary.

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LOGICAL COMPARISON

Internet doesn't really change everything but it definitely changes the way we work. We

all learn from the old-style businesses that we have done in the past such as offline

trading. With the advent of internet we have seen a great deal of improvement in the

way trading takes place through online trading. It is one of the most affordable means of

trading now. You necessarily don't have to be present at a Stock Exchange center to

know what is going on in the market. Here you are independent and self-sufficient with

knowledge as well as experience.Your brokerage firm does all that is necessary for you to enter into the market as an

investor. An individual who would be able to conduct accurate research and has good

money management skills will always succeed with the stock trading online. There

have been many benefits rather than limitations in online trading when compared to an

offline trading.

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1.The first being the costs involved in hiring a broker and paying him. In offline

trading the costs of the broker are comparatively higher. You have to pay them on

every trade you do. And you cannot be a day trader when you are trading offline. It

becomes very expensive for you to pay the broker on every transaction as a daytrader. In online trading you do not have to pay the broker anything at all. You would

save a lot on the trading commissions.

2. The major difference between the two is the involvement of middlemen. While in

offline trading you are surrounded by brokers, in online trading brokers enteronly when you need them.

3. The most logical benefits are that you as an online trader are taking control of your

own decisions and your own future. You can call your own shot numerous times or

just one time and then you can call it a day. There have been lots of changes in trade

ever since trading went online. Anyone could practically invest in a company of

their choice. And they are wise enough to invest in a company that can control the

market.

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4. While we know that internet has brought a revolution in every field that exists, it

has done a great deal of help to trading as well. Stock trading online is absolutely

paper less. The entire activity takes place on a common platform which can be

accessed by investors online. Share trading is done by brokers at one corner of the

place and the investor interacts with the broker from the other corner of the world.Online trading or eTrade is also interactive. It is not just one side reacting to the

changes. Whatever is happening on the account is visible to both the broker as well

as the investor - while in offline trading you tend to wait for your broker to do your

errands for you.

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5. One of the most reasonable advantages in online trading is that you can watch the

international stock markets move right from your doorstep. You don't have to call

anyone or wait for the newspaper the next day to check out the international listings.You can even trade at the same time from another part of the world. If you are still

an offline trader, it would still remain a dream for you to explore the international

markets.

6. Online trading is electronic which means that the trade of securities, bonds, shares,stock , debentures, certificates, etc. is through an online broker. This is the modern

day world trading. Bill Gates truly said with his experience that Internet will help

achieve "Friction free Capitalism" by putting buyer and seller in direct contact and

providing more information to both about each other. This is what practically

happens while you do stock trading online.

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ONLINE STOCK TRADING BEATS

OFFLINE TRADING FOR SPEED

As the internet's popularity has continued to rise, many small jobs can be performedmuch more simply and quickly online, when in the past they would have needed to be

carried out in person or over the telephone. A good example is online stock trading,

which previously was done through brokers. However, investing stocks online has

become the method of choice for many investors. Making wise investment decisions

and finding a good online company are essential things to think about when choosing

to trade online.

Online stock trading has spurned a plethora of online trading companies willing to

assist you in investing your money. Checking into these companies is important when

going through an online brokerage. Search the internet for previous user's experiences

to figure out whether a company is reputable. It is also a good idea to inspect theterms of service and customer service policies. A good online stock trading company

will clearly lay out their policies and have customer service available to investors.

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If you are trading offline, you may benefit from discussing with your financial advisor

the benefits of trading online. Opening a discourse with your financial advisor will

allow you to maintain a consistent trading style, roll over any previously invested

funds, and obtain other useful insight into reputable sites. Your finanical advisor may

even maintain his own internet trading company as well.

If you choose to trade without the help of an online advisor, this freedom will also

come with important risks and responsibility. Before choosing to trade on your own,

make sure you fully understand what trading entails. This may involve taking classes

or reading books. This is the most critical part of becoming an online trader. Many

people have lost money trading online because they no longer have the benefit of their

financial advisor's education.

The best way to minimize your risk while still making money is to invest in a variety

of companies. This means to have some high risk stocks and to have some stocks in a

lower risk group. It is always important into keep these kinds of things in mind and tobalance risk and reward. An advisor's knowledge and training can help you do this

because many investors forget to keep the risks in mind when faced with the chance to

make lots of money fast. This is why online stock trading can be too risky without a

personal advisor.

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DEMATERIALIZATION

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Dematerialization is the process by which a client can get physical

certificates converted into electronic form.

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 concerned

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 theholder 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.

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PROCEDURE:

The client (registered owner) will submit a request to the DP in theDematerialisation Request Form for dematerialisation, along with the certificates

of securities to be dematerialized.

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.

If the form and security count is in order, the DP will issue an acknowledgement

slip duly signed and stamped, to the client.

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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.

ISIN (International Securities Identification Number)

Lock - in status

Distinctive numbers

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FEATURES:

Holdings in only those securities that are admitted for dematerialisation by

NSDL can be dematerialized.

Only those holdings that are registered in the name of the account holder can be

dematerialized.

Names of the holders of the securities should match with the names given for the

Demat account.

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.

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If the same set of joint holders held securities in different sequence of names, these

joint holders by using ' Transposition cum Demat facility' can dematerialize the

securities in the same account even though share certificates are in different

sequence of names. e.g., If there are two share certificates one in the name of X first

and Y second and another in the name of Y first and X second, then these shares canbe dematerialized in the depository account which is in any name combination of X

and Y i.e., 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 dematerialized into the account of either X or

Y alone.

Demat requests received from client (registered owner) with name not matching

exactly with the name appearing on the certificates merely on account of initials not

being spelt out fully or put after or prior to the surname, can be processed, provided

the signature of the client on the Dematerialisation Request Form (DRF) tallies with

the specimen signature available with the Issuers or its R & T agent.

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REMATERIALIZATION

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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.

The DP enters the request in its system which blocks the client's holdings to that extent

automatically.

The DP releases the request to NSDL and sends the request form to the Issuer/ R&T

agent.

The Issuer/ R&T agent then prints the certificates, dispatches the same to the client and

simultaneously electronically confirms the acceptance of the request to NSDL.

Thereafter, the client's blocked balances are debited.

PROCEDURE

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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 andissue 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). While entering the details, if it is found that the

client's account does not have enough balance, the DP will not entertain the request.

The DP will intimate the client that the request cannot be entertained since the client

does not have sufficient balance.

If there is sufficient balance in the client's account, the DP will enter the request in

the DPM will generate a Rematerialisation Request Number (RRN).

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The RRN so generated is entered in the space provided for the purpose in the

Rematerialisation request form.

Details recorded for the RRN should be verified by a person other than the person who

entered the data. The request is then released to the DM by the DP.

The DM forwards the request to the Issuer/ R&T agent electronically.

The DP will fill the authorization portion of the request form.

The DP will then dispatch the request form to the Issuer/ R&T agent.

While processing the request, the Issuer/ R&T agent may report some objections.

Depending on the nature of objection, the Issuer/ R&T agent may reject the request or

process it partially, seeking rectification for the remaining, and send an objection memo

to the DP.

The Issuer/ R&T agent accepts the request for Rematerialisation prints and dispatches

the certificates to the client and sends electronic confirmation to the DM.

The DM downloads this information to the DPM and the status of the

R t i li ti t i d t d i th DPM