INTRODUCTION

Trading is the activity of buying & selling exchanging of goods and services between the people,

firms or countries. A trade is a particular area of business or industry. Trading is a over a period

of time.

Types of trading

1) Offline trading

2) Online trading

Offline trading

It means purchasing of shares from broker houses from dealer. The order can be

done by phone. It allows to trading skills before putting real money at risk.

Online trading

Online trading means to buying and selling of securities via internet or other electronic

means such as wireless, touch less, telephones & other new technology.

Online trading means purchasing and selling of stocks on the internet. It facility is

offered by all the stock exchange. Formally, trades took places in the trading hall. Orders

were placed with the stock broker either verbally (telephonically) or in a written form.

However, in online trading the investor accesses a stock broker’s websites through

his/her internet. Enables personal computer and places. Orders through the broker internet

based order routing and trading engine. NSE (National Stock Exchange) was the first to

offer screen based trading all over India.

Online trading has made it possible to trade in different kinds of securities like stocks,

bonds, futures, options, forex currencies and mutual funds.

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Advantages of Online Trading Process

Fully automated trading process with access to advance trading tools.

Online trading of stocks allows trading in real time market data and multiple

products.

It is easy to open and manage an account and does not have any geographically

limitations.

Online trading favoures active traders, who trade in bulk it but demands lesser

commission.

Disadvantages Of Online Trading

Online trading is risky if trading is done an extensively an margin.

Online trading fall sort of constant support and suggestion.

There are chances of trading loss in case of mechanical plot form failure.

The fee of online trading brokers varies having said everything. Online trading

has been a big boost for the stock market.

Procedure of Online Trading

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The investor has to register with the online trading portals listed on the site.

He has to open a bank account with one of the internet trading portals.

Banking and depository services parties.

He must be a registered connect user.

On planning placing an order for buying or selling of securities through the

listed online trading portal. He has to click on “pay through” bank listed on

the online portal which will direct to a login screen of the investors account.

Once the details of the ID login, ID and password are entered, the investor has

to verify the transactions by entering his transactions ID and password.

Once his order executed, an email conformation regarding the status of the

transaction follows.

Online trading provides total transparency between a broker and an investor in the

secondary market, in the open outcry system, only the broker knew the actually transacted

price, screen based trading provides more transparency with online trading investors can

be themselves the price at which the deal takes place.

NEED OF THE STUDY

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1) To need assess the performance of the online trading in NSE.

2) The present study to review the online trading procedure a case study of online

trading in NSE at share khan securities Ltd. Karimnagar.

3) The need for this study is to know the effectiveness of the online trading and study

it’s online trading in NSE.

SCOPE OF THE STUDY

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1) Online trading is an internal based investment activity which elimination of

association of a broker.

2) Now a day, there are many online trading companies working as portals for the

biggest stock business houses like the NSE (National Stock Exchange) & BSE

(Bombay Stock Exchange).

3) The person has to get registered with the online portal and get into an agreement

with the company to trade in different kinds of securities by accepting the terms

and conditions.

OBJECTIVES OF THE STUDY

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1) The primary market is to analyze the changes in trading after the exchange shifted

from outcry to online trading system.

2) It is the study about the functions of share khan securities Ltd, through various

departments.

3) To know the online screened based trading system adopted by share khan

securities Ltd karimnagar. And it’s communications facilities.

4) The appropriate configuration to set the network, which would like the share khan

securities Ltd, an individual/ members.

5) To know the about the latest and future development in the stock exchange trading

system.

RESEARCH METHODOLOGY

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Primary data

The data collection of methodology is primary data and secondary data.A primary

data is the data, which is collected a fresh and for the first time.The primary data includes

the data is collected from the personal interactions with an authorized members, clerks of

share khan securities ltd, karimnagar.

Secondary data

The secondary data is collected from broachers, and materials data provided by share

khan securities ltd and the data collected from the various magazines of NSE, and various

books relating to the online trading information in FIMS, and other related websites,

topics.

LIMITATIONS OF THE STUDY

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1) The study is confined to the trading procedures in the share khan securities ltd,

Karimnagar.

2) The study is to cover to all the procedures only exhaustive analysis, problems of

listing, management of trade.

3) The product is offering from share khan is not competitive enough with other

market players, major of them as- limit option, company information, earning

centers, research report.

INDUSTRY PROFILE

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STOCK MARKETS IN INDIA:

Stock exchanges are the perfect type of market for securities whether of

government and semi-govt. bodies or other public bodies as also for shares and

debentures issued by the joint-stock companies. In the stock market, purchases and sales

of shares are affected in conditions of free competition. Government securities are traded

outside the trading ring in the form of over the counter sales or purchase. The bargains

that are struck in the trading ring by the members of the stock exchanges are at the fairest

prices determined by the basic laws of supply and demand.

DEFINITION OF A STOCK EXCHANGE:

Indian securities contract(regulation) act of 1956,defines it is as- “an association

organization or body of individuals,wehter incorporated or not established for the purpose

of assisting,regulating and controlling business in surving,selling and dealing in

securities.”

HISTORY OF STOCK EXCHANGES

The only stock exchanges operating in the 19th century were those of Mumbai

setup in 1875 and Ahmadabad set up in 1894. These were organized as voluntary

nonprofit- marking associations of brokers to regulate and protect their interests. Before

the control on securities under the constitution in 1950, it was a state subject and the

Bombay securities contracts (control) act of 1925 used to regulate trading in securities.

Under this act, the Mumbai stock exchange was recognized in 1927 and Ahmadabad in

1937. During the war boom, a number of stock exchanges were organized. Soon after it

became a central subject, central legislation was proposed and a committee headed by

A.D.Gorwala went into the bill for securities regulation.

On the basis of the committee’s recommendations and public discussion, the securities

contract (regulation) act became law in 1956.

Functions of Stock Exchanges:

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Stock exchanges provide liquidity to the listed companies. By giving quotations to

the listed companies, they help trading and raise funds from the market. Over the hundred

and twenty years during which the stock exchanges have existed in this country and

through their medium, the central and state government have raised crores of rupees by

floating public loans. Municipal corporations, trust and local bodies have obtained from

the public their financial requirements, and industry, trade and commerce- the backbone

of the country’s economy-have secured capital of crores or rupees through the issue of

stocks, shares and debentures for financing their day-to-day activities, organizing new

ventures and completing projects of expansion, diversification and modernization.

By obtaining the listing and trading facilities, public investment is increased and

companies were able to raise more funds. The quoted companies with wide public interest

have enjoyed some benefits and assets valuation has become easier for tax and other

purposes.

Stock exchange is established into the main purpose of providing a market place

for the members to deal in securities under well laid down regulations and to protect the

interest of the investors. The main functions of stock exchange are:

It brings the companies and investors together so that the investors can put risk

capital into companies and thus, companies can use the capital.

It provides an orderly regulated market for securities.

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

It promotes savings and investment in the economy by attracting funds from the

investors.

It facilitates take over by means of acquiring majority of shares traded on the

stock market.

It acts as a clearing house of business information.

It motivates the managers of well reputed companies, to retain their shares in ‘A’

group, to improve performance.

It induces the managers to improve performance for converting non-specified

shares into specified shares in the exchange.

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

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

CHARACTERISTICS OF STOCK EXCHANGE

Traditionally,a stock exchange has been association of individual members called

member brokers,formed for the express pur4pose of regulating and facilitating

buying and selling of securities by the public and institution at large.

A stock exchange in india operates with due recognise from the government under

the securites and contracts (Regulations) Act,1956.

The member brokers are essentially the midllemen who carry out the desired

transactions in securities on behalf the public or on there own behalf.New

membership to a stock exchange is through election by governing board of that

stock exchange.

At presaent,there are 23 stock exchanges in india,the largest among them being the

Bombay Stock Exchange.BSE alone accounts for ever 80% of the total valume of

transactions in shares.

Typically,a stock exchange is governed by a board consisting of directors largely

elected by the memer brokers,and a few nominated by the government.Government

nominee include representatives of the ministry of finance, as well as some public

representattives, who are excepted to safeguard the public interest in the functioning

of the exchanges.

A precident,who is an elected member, usually nominated by the government from

among the elected members,heads the board.

The excutive director, who is appointed by the stock exchange with the government

approval is the operational chief of the stock exchange.His duty is to ensure that the

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day to day operations the stock exchange are carried out in accordance with the

various rules and regulations governing its functioning.

The overall development and regulation of the securities market has been entrusted

to the Securities Exchange Board of Indis(SEBI) by an act of parliament in 1992.

ROLE OF STOCK EXCHANGE

Raising capital for business.

Corporate governance

Creating investment opportunities for small investors

Borometer of the economy

Mobilizing savings for investment

MAJOR STOCK EXCHANGES IN INDIA

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NSE (National Stock Exchange)

The National Stock Exchange of India Limited has genesis in the report of the

High Powered Study Group on Establishment of New Stock Exchanges, which

recommended promotion of a National Stock Exchange by financial institutions (FI’s)to

provide access to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of

the Government of India and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country. On its recognition as a stock

exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE

commenced operations in the Wholesale Debt Market (WDM) segment

in June 1994. The Capital Market (Equities) segment commenced operations in

November 1994 and operations in Derivatives segment commenced in June 2000

NSE's mission is setting the agenda for change in the securities markets in India.

The NSE was set-up with the main objectives of:

Establishing a nation-wide trading facility for equities and debt instruments.

Ensuring equal access to investors all over the country through an appropriate

Communication network.

Providing a fair, efficient and transparent securities market to investors using

Electronic trading systems.

Enabling shorter settlement cycles and book entry settlements systems, and

Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology, have Become

industry benchmarks and are being emulated by other market participants.NSE is more

than a mere market facilitator. It's that force which is guiding the Industry towards new

horizons and greater opportunities.

Strengths:

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Transparency and National reach.

Equal access to all members

Government patronage

Institutional patronage

Provides avenue for investment trading

Hi-tech infrastructure

FIIs more comfortable with screen based trading

Specializing in derivatives – Futures & Options

Weaknesses:

No track record.

Screen based trading is a new concept

Short run concentration in Mumbai

Back up infrastructure like communication not in place.

Prohibitive costs of entry for small brokers.

Untested systems for large volumes of trade.

Uneven track record of computerization in India.

BSE (Bombay Stock Exchange)

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The Stock Exchange, Mumbai, popularly known as "BSE" was established in

1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia,

even older than the Tokyo Stock Exchange, which was established in 1878. It is a

voluntary non-profit making Association of Persons (AOP) and is currently engaged in

the process of converting itself into demutualised and corporate entity. It has evolved over

the years into its present status as the premier Stock Exchange in the country. It is the first

Stock Exchange in the Country to have obtained permanent recognition in 1956 from the

Govt. of India under the Securities Contracts

(Regulation) Act 1956.The Exchange, while providing an efficient and transparent market

for trading in securities, debt and derivatives upholds the interests of the investors and

ensures redresses of their grievances whether against the companies or its own member-

brokers. It also strives to educate and enlighten the investors by conducting investor

education programmers and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies

and regulates the affairs of the Exchange. The Governing Board consists of 9 elected

directors, who are from the broking community (one third of them retire ever year by

rotation), three SEBI nominees, six public representatives and an Executive Director &

Chief Executive Officer and a Chief Operating Officer. The Executive Director as the

Chief Executive Officer is responsible for the day-to-day administration of the Exchange

and the Chief Operating Officer and other Heads of Department assist him. The Exchange

has inserted new Rule No.126 A in its Rules, Byelaws pertaining to constitution of the

Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting

of three elected directors, three SEBI nominees or public representatives, Executive

Director & CEO and Chief Operating Officer has been constituted. The Committee

considers judicial & quasi matters in which the Governing Board has powers as an

Appellate Authority, matters regarding annulment of transactions, admission, continuance

and suspension of member brokers, declaration of a member-broker as defaulter, norms,

procedures and other matters relating to arbitration, fees, deposits, margins and other

monies payable by the member-brokers to the Exchange, etc.

BSE Facts:

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BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is the

benchmark equity index that reflects the robustness of the economy and finance. It was

the –

First in India to introduce Equity Derivatives

First in India to launch a Free Float Index

First in India to launch US$ version of BSE SENSEX

First in India to launch Exchange Enabled Internet Trading Platform

First in India to obtain ISO certification for Surveillance, Clearing & Settlement

BSE On-Line Trading System’ (BOLT) has been awarded the globally recognized

the Information Security Management System standard BS7799-2:2002.

First to have an exclusive facility for financial training

Moved from Open Outcry to Electronic Trading within just 50 days

BSE with its long history of capital market development is fully geared to continue its

contributions to further the growth of the securities markets of the country, thus helping

India increases its sphere of influence in international financial markets.

Strengths

Huge investor base

Familiarity of investors with Base’s operation.

Large nationwide network of brokers and sub brokers.

120 years’ experience in equity trading.

Expands its vast network to retain business.

Weaknesses

Monopoly lent clout that is susceptible to competition.

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Lack of transparency

Lengthy settlement period

Close club culture prevails

Government preference for National Stock Exchange.

REGULATORY FRAME WORK OF STOCK EXCHANGE

A comprehensive legal framework was provided by the “Securities Contract

Regulation Act, 1956” and “Securities Exchange Board of India 1952”. Three tier

Regulatory structure comprising

Ministry of finance

The Securities And Exchange Board of India

Governing body

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

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The securities and exchange board of India was constituted in 1988

under a resolution of government of India. It was later made statutory body by the SEBI

act 1992. According to this act, the SEBI shall constitute of a chairman and four other

Members appointed by the central government.

With the coming into effect of the securities and exchange board of India act,

1992 some of the powers and functions exercised by the central government, in respect of

the regulation of stock exchange were transferred to the SEBI.

Trading Mechanism of Stock Exchange

The National system provides single, nationwide Securities. It enables

investors in one part of the country to trade at the best quotes with an investors located in

any other part of the country through the members of the stock exchanges and

subsequently clears and settles the trade in an efficient and cost effective manner. The

primary objective of the stock market is to provide clear opportunity to the investors

throughout the country to trade any securities irrespective of the size of the order or the

broker through whom the order is routed. This provides the facility to execute the buy out

any extra cost to the investors. There will be no trading floor in the exchanges. Instead,

each trading member will have a computer at his own office anywhere in India which will

be connected to the central computer system at the NSE through leased lines or VSAT’s

(Very Small Aperture Terminal), for an interim transition period of six months and

subsequently by satellite link. VSAT’s are relatively smaller dishes similar to dish

antenna for cable T.V and have the benefit of not being very expensive.

A satellite network makes it possible to connect almost all the parts of

the nation quickly as it is easy to install, as against the ground lines. Such as dial up

modems leased lines which are prone to disruptions, satellite links on other hands ensure

high speed, availability and quality of the connection. This code of trading is known as

“On-line Trading”.

COMPONY PROFILE

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Company name Share khan ltd, this company establishment year in 1922, company

headquarter is in Mumbai, nature of business is trading service provider. Company is

provided some services to traders that are Depository services, Online Services and.

Technical Research. In this company number of employees is above 3500. Company

website is www.sharekhan.com. Company slogan is You’re Guide to financial jungle.

Vision &Mission

Vision: To be the best retail brokering brand in the retail business of stock marketing.

Mission: To educated and empower the individual investor to make better investment

better decision through the quality advice and superior services.

Company Description

Share khan Limited offers online security broking and portfolio services to institutions

and large corporate houses as well as individual investors. Share khan Limited was

formerly known as SSKI Investor Services Private Limited. The company is based in

Mumbai, India.

Company Analysis

According to the Individual - Audited financial statement for the Year of 2012, total net

operating revenues increased with 0.32%, from INR 478.56 tens of millions to INR

480.07 tens of millions. Operating result decreased from INR 173.4 tens of millions to

INR 140.67 tens of millions which means -18.88% changes. The results of the period

increased 32.41% reaching INR 247.29 tens of millions at the end of the period against

INR 186.76 tens of millions last year. Return on equity (Net income/Total equity) went

from 49.58% to 54.30%, the Return On Asset (Net income / Total Asset) went from

22.93% to 25.61% and the Net Profit Margin (Net Income/Net Sales) went from 39.03%

to 51.51% when compared to the same period of last year. The Debt to Equity Ratio

(Total Liabilities/Equity) was 212.07% compared to 216.17% of last year. Finally, the

Current Ratio (Current Assets/Current Liabilities) went from 2.15 to 2.27 when compared

to the previous year.

ACTIVITIES IN SHAREKHAN

EQUTIES & DERIVATIVES

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PORTFOLIO MANAGEMENT AND STRUCTURED PRODUCTS

COMODITIES

RESEARCH

IPO, MUTUAL FUND

DEPOSITORY SERVICES

DIFFERENT TYPES PRODUCTS & SERVICES OFFERED

EQUITY & DERIVETIVE TRANING

DEPOSITORY SERVICES

ONLINE SERVICES

COMODITIES TRANING

DAIL N TRADE

PORTFOLIO MANAGEMENT

SHARE SHOPS

FUNDAMENTAL RESEARCH

TECHNICAL RESEARCH

BRIEF ABOUT SHAREKHAN

Share khan is one of the top retail brokerage houses in India with strong online trading

plat form. The company provides equity based products (research, equities, derivatives,

depository, margin funding, etc.). It has one of the largest networks in the country with

1288 share shops in 325 cities. It is the retail broking arm of the Mumbai-based SSKI

[SHANTILALSHEWANTILALKANTILALISWARNATHLIMITED] Group. Share

khan bring saucer friendly online trading facility, coupled with a wealth of content that

will help to stalk the right shares.

ACHIEVEMENT OF COMPANY

A rated among the top 20 wired companies along with Reliance, Infosys, etc. . by

‘Business Today’, January2004 edition.

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Awarded ‘Top Domestic Brokerage House’ four times by Euro money and Asia

money.

Pioneers of online raiding in India amongst the top 3 online trading website from

India.

Most preferred financial destination amongst online broking customers.

Winners of “Best Financial Website” award.

India’s most preferred brokers with in 5years. “Awaaz customer’s award”.

SWOTANALYSIS

STRENGTHS

It is a pioneer in online trading with a turn over of Rs.400 crores and more than

3000 peoples working in the organization.

Employees are highly empowered and strong communication network.

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Number1 registrar and transfer agent and dealer of investment products in India

•Good co-operation between employees.

WEAKNESS

Localized presence due to insufficient investments for country wide expansion.

High brokerage charges but now they have over come this by a new prepaid

scheme in which brokerage is reduced to half.

High employee turns over.

Lack of awareness among customers because of non-aggressive promotional

strategies (print media, news papers, etc).

OPPORTUNITIES

With the booming capital market it can successfully launch new services and raise

its client’s base.

Marketing at rural and semi-urban areas.

Increasing usage of online trading may boost a whole new breed of investors for

trading in securities.

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As interest on fixed deposits with post office and banks are all time low, more and

more small investors are entering into stock mark.

THREATS

Lack of sufficient branch-offices for speedy delivery of services.

Increasing number of Competitors.

Constant pressure to be cost competitive to meet customer’s expectations.

Aggressive promotional strategies by close competitors may hamper ShareKhan’s

acceptance by new clients.

Terms used in Report

SENSEX

The Sensex is an "index". An index is basically an indicator. It gives general idea about

whether most of the stocks have gone up or most of the stocks have gone down. The

Sensex is an indicator of all the major companies of the BSE. If the Sensex goes up, It

means that the prices of the stocks of most of the major companies on the BSE have gone

up and vice versa.

NIFTY

“Nifty” means National Index for Fifty Stocks. The Nifty is an indicator of all the major

companies of the NSE. Sensex represent the top stocks of the BSE, the Nifty represents

the top stocks of the NSE .The NSE-50 comprises 50 companies that represent 20 broad

Industry groups with an aggregate market capitalization of around Rs.1,70,000crs. All

companies included in the Index have a market capitalization in excess of Rs500crs.

Besides Sensex and the Nifty there are many other indices. There is an index called the

“BSE Mid-cap Index”. That gives an idea about whether the mid-cap stocks go up or

down. Index for small or large cap. Index for the metal stocks. Index for the FMCG

stocks. Index for the Automobile stocks etc.

BSE

The Bombay Stock Exchange (BSE) located on Dalal Street, Mumbai. The oldest stock

exchange in Asia. The equity market capitalization US$1.63trillion-2010, 4th largest SE in

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Asia and the 8th largest in the world. Largest number of listed companies in the world. As

of June2011, over5, 085.

NSE

The National Stock Exchange located at Mumbai, Maharashtra, India. Incorporated in

November 1992 as a tax- paying company. In April 1993 , recognized as a stock

exchange. It is the 9th largest stock exchange in the world by market capitalization. NSE

has a market capitalization of around US$1.59 trillion and over1,552 listings.

How Sensex is calculated?

•It is calculated using the “free-float market capitalization” method.

First: Find out the “free-float market cap” of all the 30 companies that make up the

Sensex! Second: Add all the “free-float market cap’s” of all the 30 companies!

Third: Make all this relative to the Sensex base .The value youngest is the Sensex value!

“Free-float market cap” of Rs.100,000Cr... the Sensex value is4000…Then, for a “free-

float market cap” of Rs.150,000Cr.. .the Sensex value will be.. the Sensex value will be

6000 if the “free-float market cap” comes to Rs.150,000Cr!

DEMAT Account

The term Demat account, refers to a dematerialized account. The Securities Exchange

Board of India (SEBI) requires the investor to maintain a Demataccount. Shares and

securities are held in electronic form instead of taking actual possession of certificates.

Purchases and sales of securities on the Demat account are automatically made on

cetransactions are executed and completed.

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DEMAT Benefits

A safe and convenient way to hold securities. Immediate transfer of securities. No stamp

duty on transfer of securities (0.5%onphysicalshares). Elimination of risks associated with

physical certificates such as bad delivery, fake securities, delays, theft etc. Reduction in

paperwork. No odd lot problem, even one share can be sold. Reduction in transaction

cost. etc…

Online trading

Buying and selling securities using the Internet or broker-provided proprietary software

that works through the Internet. It reduces paper work. It reduces various costs

involve(like Transaction cost). The online trading brings data to the invest or online and

net broking enables him to trade on a click.

Key Executives for Share khan Limited

Mr. Tarun P. Shah Chief Executive Officer

Mr. Rishi Kohli Vice Precident

Mr.Pathik Gandotra Head of Reaserch

Mr.Shankar Valiya Director

Mr.Jaideep Arora Director

Mr.Vikram Linaye Non-Excutive Director

Mr.Rahul yadav Non-Excutive Director

Mr.Jimmy Mahatvani Non-Excutive Director

Mr.Sumeet Narang Non-Excutive Director

An e-brokerage is a brokerage house that allows you to buy and sell stocks and

obtain investment information from its Web site. Some e-brokerages are provided by

traditional and well-established "offline" brokerage houses and a few are exclusively

online only.

TRADING IN THE STOCK EXCHANGE

THE CONVENTION DAY

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The broker has to buy or sell securities for which he has received the

orders. For this, the broker or his authorized representatives goes to the stock exchange.

This method is called the open outcry system. Basically the brokers shout while buying or

selling the securities. The floor of the stock exchange is divided into a number of markets

also known as ‘post pit’ or wing based on particular securities dealt there.

In the post pit or wing, the broker using ‘open outcry’ method makes an offer or bid price.

For making the necessary bargain, he quotes his purchase or sale price, also known as

offer or bid price. The dealer, to whom the price is quoted, quotes his own price when the

quotation of the dealer suits the broker, he may lose the bargain. If he is not satisfied with

the quote price, he may turn to some other dealer. On the close of the bargain, the dealer

as well as the broker makes a brief not of the particulars of the deal. Such notes are made

on some pad and on it the number of shares, the price agreed upon, the name of the party,

what membership number etc., are noted.

MANUAL TRADING

TRADING PROCEDURE BEFORE INTRODUCTION OF ONLINE TRADING

Trading on stock exchanges is officially done in the trading ring. In the trading ring the

space is provided for specified and non-specified sections, the members and their

authorized assistants have to wear a badge or carry with them on identity card given by

the exchange to enter the trading ring. They carry a sauda book or confirmation memos,

duly authorized by the exchange and carry a pen with them. The stock exchanges

operations are floor level are technical in nature .Non-members are not permitted to enter

in to stock market. Hence various stages have to be completed in executing a transaction

at a stock exchange .The steps involved in this method of trading have given below

CHOICE OF BROKER

The prospective investor who wants to buy shares or the investors, who wants to sell

shares and transact business, have to act through member brokers only. They can also

appoint their bankers for this purpose as per the present regulations.

PLACEMENT OF ORDER

The next step is the placing order for the purchase or sale of securities with a broker. The

order is usually placed by telegram, telephone, letter, fax etc or in person. To avoid delay,

it is placed generally over the phone. The orders may take any one of the forms such as

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At Best Orders, Limit Order, Immediate or Cancel Order, Limited Discretionary Order,

and Open Order, Stop Loss Order.

DEMATERLIZATION

Dematerialization is the process by which physical certificates of an investor are

converted to an equipment number of securities in electronic from and credited in the

investor account with his DP. In order to dematerialization his certifies an investor has to

first open an account with a DP and then request for the Dematerialization Request Form,

which is DP and submit the same along with the share certificates. The investor has to

ensure that he marks “Submitted for Dematerialization” on the certificates before the

shares are handed over to the DP for demat. Dematerialization can only be done to those

certificates, which are already registered in your name and belong to the list of securities

admitted for Dematerialization at NSDL.Most of the active scrip’s in the market

including all the scrip’s of S&P CNXNIFTY and BSE SENSEX have already joined

NSDL. This list is steadily increasing.

Briefly, the process is as follows: after completion of transfer, the investor gets the option

to dematerialize such shares. Investors willing to exercise this option sends a Demat

request along with the option letter sent by the company to his DP. The company or its

R&T agent would confirm the Demat request on its receipt from the DP to reduce risk of

loss in transit.

Dematerialized shares do not have any distinctive or certificate numbers. These shares are

fungible-which means that 100 shares of a security are the same as any other 100 shares

of the security. Odd lot shares certificates can also be dematerialized.

Dematerialization normally takes about fifteen to thirty days. To get back dematerialized

securities in the physical form, request DP for Re-materialization of the same is made.

Re-materialization is the process of converting electronic shares in to physical shares.

ONLINE TRADING

Internet is a worldwide, self-governed network connecting several other smaller

networks and millions of computers and persons, to mega sources of information.

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This technology shrinks vast distances, accelerating the pace of business reforms and

revolutionizing the way companies are managed. It allows direct, ubiquitous links to

anyone anywhere and anytime to build up interactive relationships.

A combination of time and space, called the Internet promises to bring

unprecedented changes in our lives and business. Internet or net is an inter-connection

of computer communication networks spanning the entire globe, crossing all

geographical boundaries. It has re-defined the methods of communication, work

study, education, business, leisure, health, trade, banking, commerce and what not it is

virtually changing every thing and we are living in dot.com age. Net being an

interactive two way medium, through various websites, enables participation by

individuals in business to business and business to consumer commerce, visit to

shopping arcades, games, etc. in cyber space even the information can be copied,

downloaded and retransmitted.

The use of Internet has grown 2000 percent in last decade and is currently

growing at 10 percent per month. In India, growth of Internet is of recent times. It is

expected to bring changes in every functional area of business activity including

management and financial services. In offers stock trading at a lower cost. Internet

can change the nature and capacity of stock broking business in India.

Electronic commerce is associated with buying and selling over computer communication

networks. It helps conduct traditional commerce through new way of transferring and

processing of information. Information is electronically transferred from computer to

computer in an automated way. E-commerce refers to the paperless exchange of business

information using electronic data inter change, electronic technologies. It not only

automates manual processes and paper transactions but also helps organization move to a

fully electronic environment and change the way they operated.

E-TRADING INTERFACE

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PC’s and networking attempts to introduce banks of the tools and technologies

required for electronic commerce. The computers are either workstations of individual

office works or serves where large databases and information reside. Network

connects both categories of computers; the various operating systems are the most

basis program within a computer. It manages the resources of the computer system in

a fair and efficient manner.

Now we can enter in to the concept known as online trading.

In the past, investors had no option but to contact their broker to get real time access

to market data. The net brings data to the investor on line and net broking enables him

to trade on a click of mouse. Now information has become easily accessible to both

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INVESTOR INVESTORSSTOCK BROKERS

DEPOSITORY REGISTAR/COMPANY

DEPOSITORY PARTICIPANT

STOCK EXCHANGE

BANK

SATELLITE LINK

retail as well as big investor. Once investors learn to research on line, they will

demand more market information.

Definition of Online Trading

“Online trading is a service offered on the internet for purchase and sale of shares. In

the real world you place orders on your stockbroker either verbally (personally or

telephonically) or in a written form (fax).” In online trading, you will access a

stockbroker’s website through your internet enabled PC and place orders through the

broker’s internet based trading engine. These orders are routed to the stock exchange

without manual intervention an executed thereon in a matter of a few seconds.

The net is used as a modem of trading in internet trading. Orders are communicated to the

stock exchange through website.

OBJECTIVES OF ONLINE TRADING

Increase transparency in the markets,

Enhance market quality through improved liquidity, by increasing quote

continuity and market depth,

Reduce settlement risks due to open trades, by elimination of mismatches,

Provide management information system,

Introduce flexibility in system, so as to handle growing volumes easily and to

support nationwide expansion of market activity.

Internet trading provides total transparency between a broker and an investor

in the secondary market. In the open outcry system, only the broker knew the actually

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transacted price. Screen based trading provides more transparency. With online trading

investors can see them sleeves the price at which the deal take place.

The time gap has narrowed in every stage of operation. Confirmation and execution of

trade reaches the investor within the least possible time, mostly within 30 seconds. Instant

feedback is available about the execution. Some of the websites also offer;

New and research report

BSE and NSE movements

Stock analysis

Freebies

IPO and mutual fund centers and

Movements of interaction stock exchanges.

THE MECHANICS OF ONLINE TRADING

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STEP BY STEP PROCEDURE IN ONLINE TRADING

Following steps explain the step by step approach to on-line trading:

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Log on to the stock broker's website

Register as client/investor

Fill the application form and client broker agreement form on the requisite value

stamp paper

Obtain user ID and pass word

Log on to the broker's site using secure user ID and password

Market watch page will show real time on-line market data

Trade shares directly yourself by entering the symbol or number of the security

Brokers server will check your limit in the on-line accountant demat account for

the number of shares and execute the trade

Order is executed instantly (10-30 seconds) and confirmation can be obtained.

Confirmation is e-mailed to investor by broker

Contract note is printed and mailed in 24 hours

Settlement will take place automatically on the settlement day

Demat account and the bank account will get debited and credited by electronic

means.

FEATURES OF ONLINE TRADING

The Online Trading is having many features which make it most suitable for the investors

to go for. Some of these features are as follows:

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Freedom of information

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

investment information available online is truly astounding. It's one of the best aspects of

being a wired investor. For the first time in history, any individual with an Internet

connection can:

• Know the price of any stock at any time

• Review the price history of any stock in chart format

• Follow market events in-depth

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

global

economy

• Conduct extensive financial research on any company

Control of your money

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

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

no longer need to call your broker on the phone; hope that he is in the office to place

your order; possibly argue with the broker about the order; and hope that the transaction is

executed instantly.

Access to market

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

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

platforms and sophisticated tools for accessing the markets.

Ensures best price for investors

Every broker house aims at providing the investor with the best price available. Also due

to the high level of transparency with regard to display of information relating to the

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specific stocks and company profiles, you will be able to get the best quote for your orders.

Offers greater transparency

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

involves a complete integrated electronic chain starting from order placement, to clearing

and settlement and finally ending with a credit into your depository account. All these

stages are subject to

inspection, thus bringing in transparency into the system.

Enables hassle free trading

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

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

Allows instant trade execution

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

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

account, in a very short period of time.

Provides a level playing field

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

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

investors in the securities market.

Provides the settlement risk

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

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

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forward.

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

sell transaction. This reduces the settlement risk for the buyer, who is assured of the

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

Instant order trade conformation

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

following every trade with full details for your records. This avoids costly errors that

would have been discovered when it is too late.

Integrated accounts

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

broking houses provide access to many of the popular banks.

Provides a level playing filed

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

updated security technology to advanced fraud prevention measures, they have the

people and tools in place to provide a strong defense against electronic scams and fraud.

TRADING AND SETTLEMENT AT SHARE KHAN

The NSE first introduced online trading in India. The Online trading system imparted a

greater level of transparency and investors preferred exchanges that offered Online

trading because of the following factors:

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The ease of operation from the view of the both members and the investors.

Increase in the confidence of the investors because at higher level of transparency.

Facilities better monitoring of the market by the exchange.

The best price achieved in buying and selling.

All these resulted in ever-increasing volumes on the exchanges offering the online

trading.

TRADING PROCEDURE AT SHARE KHAN STOCK EXCHANGE

Share Khan deals in buying and selling equity shares and debentures on the

National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-

Counter Exchange of India (OTCEI).

Share Khan is provided with a computer and required software from their

registered stock exchanges. These centers are called “Broker Work Stations”. These

computers are connected to the server at the stock exchanges through cable.

The member or broker sitting in his office can send the quotations, orders, negotiations,

deals, in-house deals, auction orders etc., through the computer.

The central trading system (CTS) will accept these orders and send it for match.

If there is any mistake in the order, CTS will reject the orders and send respective

error message to the member concern. All these operations are in built. The main

objective of CTS is to monitor the Stock Exchanges operations.

Order placed by the broker will be sent for a match and if the match is found suitable, the

transaction will be executed. Otherwise, the order will be deleted automatically after

completion of trading time the carry forward transactions (Good Till cancellation) are

forward to the next day. Even if the match is not found with in the prescribed period, the

order will not cancel.

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TRADING SESSION

Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading

period. Monday to Friday is the trading period in all the stock exchanges. SEBI has

stipulated that all the stock exchanges in India must have same trading period.

BROKER WORK STATION:

At the broker workstation the best BBO’s the last traded price, the day ‘s opening

price, previous day’s closing price, highest and lowest prices, the weighted average price,

the total trade value and total trade value will be available continuously, as the BBO for

each scrip.

Other information will be available on query from the BWS. These include top gainers

/losers of the day. Trader-wise, scrip wise net position, client wise net position, top scrip

by the volume/value, market summary etc.

The BWS as a powerful profiling future which enables each trader to customize his/her

screens layouts as is convenient, profiles may be set at the BWS by the individual users,

for the scrip’s that he/she is interested in watching columns of information available, etc.

Brokers are also provided with information relating to the companies in the matter of

Book closure, Dividend declarations, resolutions in board meeting, information about

liquidated companies, company report etc.

SETTLEMENT OF TRANSACTIONS

Clearing of transaction in the form of shares and cash is called settlement, which was held

in clearing house of stock exchange (for example, SHAREKHAN is a clearance house is

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member in NSDL (National Securities Depository Limited). Buyers will take the delivery

of shares through the Depository Participants (DP’S) like SHARE KHAN and others.

Finally, the settlement is made by means of delivering the share certificates along with

the transfer deeds. The transferor (or the seller) duly signed transfer deed. It bears a stamp

of the selling broker. The buyer then fills up the certificates fills up the particulars in the

transfer deed. Settlement can be done in the following way.

Spot settlement: under this method, the delivery of securities and payment for them

are affected on the day of the contract itself.

Rolling settlement: Under this rolling settlement the trading is on “T+2”,basis i.e. if

Monday is trading day then Wednesday is the paying day . In case on non-delivery, the

securities will go for auction.

DETAILS OF PROCEDURES

Delivery in : The members who is in PAY-OUT position delivers share certificates in to

clearing house with in the settlement period along with the delivery Chelan filled in with

the details of share certificates which has folio numbers or distinctive numbers etc.

Delivery out: The buyer of shares who made pay in position will take delivery of shares

from the clearinghouse.

Pay-in: The member who is in paying position shall pay for value of shares with in the

trading settlement period (T+2).

Payout: The cheques paid in the clearinghouse will be paid members who are in paying

position.

All disputes arising between members regarding non-deliveries, non-payments, good and

bad deliveries pertaining to the settlement will be here by Share Khan and settled by the

settlement committee of the exchange.

BROKERAGE STRUCTURE AT SHAREKHAN

Trading - 0.1 %( on each side)

Delivery - 0.5%

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Exposure - 4 times of deposit

Share khan provides offline trading too.

The given flow chart clearly explains the process of online trading

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ADVANTAGES OF ONLINE TRADING:

Online trading has made it possible for anyone to have easy and efficient access to

more reports and charts than it was previously possible if one went to any brokers'

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office. Thus, we have access to a lot more information online to self teaches

ourbroker’slves.

Online trading has let room for smaller organizations to compete with

multinational organizations since is no longer a legit issue. Being online does not

identify the size of any particular organization, therefore, this additional power to

the underdogs.

Online trading has allowed companies to locate themselves where they want, as

physical location is not an issue anymore. Companies can establish themselves

according to their gains and losses, for instance where tax (sales and value added

taxes) is best suited to them.

Online trading gives control to individuals and they can exercise it over accounts

thus comprehend what is going on when they trade. It is like going back to school

and re-educating oneself on how to trade online.

Individuals’ benefit by saving comparatively a lot more when trading online as the

cost per trade is less.

Individuals can invest in a variety of products, unlike earlier when people bought

bonds, mutual funds, and stock for long-term basis and sat on them. Now they can

invest in stocks, stock and index options mutual funds, individual, government,

and even insurance.

Online trading has made it possible for one fid investment options that were not

available on a regular basis like offbeat net stocks eccentric unique things and

trading in global market.

DISADVANTAGES OF ONLINE TRADING:

When network crashes, there will be problems and delays due to a large influx of

rapid online trading criteria.

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Individuals are restricted to first-hand financial guidance. This simply means that

the individual is himself / herself alone to.

A tax (sales tax and value added tax) evaluation becomes an issue, especially

when you are trading internationally.

Chances are that one has no idea who one is dealing with on the other end, so it is

advisable to gather all the possible information about the party one is dealing with.

In short, do the home work and be prepared.

Online trading has left individuals open to too much information. This is harmful

since it leaves brokerages wide open to sensitive data.

According to a study conducted by Mary Rowland, careful investor: is online

trading bad for your portfolio, the more one trades the less returns one gets,

meaning that an addicted trader gets, carried away online and begins to trade for

too much which causes losses for him / her.

The study also shows that smart investment is better than fast investment. Simply

put speed should be considered to be a major factor would lead any online trader

to think they know the market.

DATA ANALYSIS & INTERPRETATION

Share values of TCS Company

Date Opening price Closing price Change in price

31-May-2013 1,491.00 1,498.45 7.45

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30-May-2013 1,500.00 1,499.40 -0.60

29-May-2013 1,516.00 1,497.35 -18.65

28-May-2013 1,498.00 1,514.10 16.10

27-May-2013 1,469.50 1,498.00 28.50

24-May-2013 1,500.00 1,469.55 -30.45

23-May-2013 1,495.00 1,492.70 -2.30

22-May-2013 1,498.00 1,498.40 0.40

21-May-2013 1,465.00 1,492.85 27.85

20-May-2013 1,471.25 1,472.40 1.15

17-May-2013 1,455.00 1,473.80 18.80

16-May-2013 1,469.00 1,454.05 -14.95

15-May-2013 1,458.10 1,471.55 13.45

14-May-2013 1,455.10 1,457.95 2.85

13-May-2013 1,480.00 1,451.60 -28.40

11-May-2013 1,495.00 1,489.65 -5.35

10-May-2013 1,498.45 1,495.90 -2.55

09-May-2013 1,483.20 1,498.45 15.25

08-May-2013 1,472.00 1,480.10 8.10

07-May-2013 1,467.10 1,471.60 4.50

06-May-2013 1,420.00 1,467.20 47.20

03-May-2013 1,426.00 1,418.50 -7.50

02-May-2013 1,373.50 1,433.90 60.40

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Interpretation

The above graph represents the share values of a TCS company.

From the above graph it is clearly known that the share value of TCS Company is

increased high on the date 02/may/13 when compared to all the days, and the

share value is decreased high on the date 24/may/13.

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Share values of Wipro. Ltd

Date Opening price Closing price Change in price

31-May-2013 337.75 327.65 -10.1

30-May-2013 337.55 336.10 -1.45

29-May-2013 339.00 339.35 0.35

28-May-2013 338.70 340.10 1.4

27-May-2013 337.00 340.25 3.25

24-May-2013 338.55 336.20 -2.35

23-May-2013 341.05 337.10 -3.95

22-May-2013 339.40 342.05 2.65

21-May-2013 338.05 338.90 0.85

20-May-2013 341.25 337.95 -3.3

17-May-2013 346.00 344.00 -2

16-May-2013 346.50 346.45 -0.05

15-May-2013 347.25 346.15 -1.1

14-May-2013 348.00 347.65 -0.35

13-May-2013 355.00 347.95 -7.05

11-May-2013 354.30 355.00 0.7

10-May-2013 356.55 355.00 -1.55

09-May-2013 352.40 354.80 2.4

08-May-2013 352.00 351.05 -0.95

07-May-2013 358.00 350.80 -7.2

06-May-2013 356.90 357.35 0.45

03-May-2013 350.65 355.25 4.6

02-May-2013 348.00 352.25 4.25

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Interpretation

The above graph represents the share values of a Wipro.Ltd company.

From the above graph it is clearly known that the share value of a Wipro.Ltd

Company is increased high on the date 03/may/13 when compared to all the days,

and the share value is decreased high on the date 31/may/13.

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Share values of Reliance industries

Date Opening price Closing price Change in price

31-May-2013 834.10 806.30 -27.8

30-May-2013 845.00 836.80 -8.2

29-May-2013 840.50 847.90 7.4

28-May-2013 830.00 843.40 13.4

27-May-2013 802.75 828.30 25.55

24-May-2013 793.40 786.45 -6.95

23-May-2013 811.65 784.45 -27.2

22-May-2013 830.10 818.75 -11.35

21-May-2013 831.10 828.60 -2.5

20-May-2013 837.40 831.15 -6.25

17-May-2013 840.65 835.50 -5.15

16-May-2013 816.00 840.65 24.65

15-May-2013 802.00 819.00 17

14-May-2013 800.55 798.15 -2.4

13-May-2013 813.35 803.00 -10.35

11-May-2013 813.40 814.10 0.7

10-May-2013 814.70 812.95 -1.75

09-May-2013 828.40 818.10 -10.3

08-May-2013 830.10 829.65 -0.45

07-May-2013 821.50 828.15 6.65

06-May-2013 802.20 821.60 19.4

03-May-2013 803.00 800.50 -2.5

02-May-2013 787.40 802.90 15.5

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Interpretation

The above graph represents the share values of Reliance industries.

From the above graph it is clearly known that the share value of Reliance

industries is increased high on the date 27/may/13 when compared to all the days,

and the share value is decreased high on the date 31/may/13.

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Share values of NTPC

Date Opening price Closing price Change in price

31-May-2013 156.50 154.20 -2.3

30-May-2013 152.50 156.60 4.1

29-May-2013 154.25 154.00 -0.25

28-May-2013 152.05 155.10 3.05

27-May-2013 150.95 152.30 1.35

24-May-2013 151.00 150.00 -1

23-May-2013 153.35 148.50 -4.85

22-May-2013 153.00 154.75 1.75

21-May-2013 159.05 152.30 -6.75

20-May-2013 160.15 159.55 -0.6

17-May-2013 156.10 159.90 3.8

16-May-2013 157.30 156.45 -0.85

15-May-2013 154.20 157.30 3.1

14-May-2013 154.10 153.95 -0.15

13-May-2013 154.00 153.85 -0.15

11-May-2013 155.00 154.15 -0.85

10-May-2013 156.50 155.00 -1.5

09-May-2013 156.00 156.30 0.3

08-May-2013 157.85 156.30 -1.55

07-May-2013 158.90 157.85 -1.05

06-May-2013 158.75 157.20 -1.55

03-May-2013 159.60 159.30 -0.3

02-May-2013 156.50 160.25 3.75

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Interpretation

The above graph represents the share values of a NTPC company.

From the above graph it is clearly known that the share value of NTPC Company

is increased high on the date 30/may/13 when compared to all the days, and the

share value is decreased high on the date 21/may/13.

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Share values of Infosys

Date Opening price Closing price Change in price

31-May-2013 2,342.00 2,411.70 69.70

30-May-2013 2,333.50 2,341.45 7.95

29-May-2013 2,370.00 2,352.40 -17.60

28-May-2013 2,370.00 2,366.20 -3.80

27-May-2013 2,341.20 2,372.70 31.50

24-May-2013 2,361.60 2,347.90 -13.70

23-May-2013 2,376.00 2,359.85 -16.15

22-May-2013 2,400.00 2,385.30 -14.70

21-May-2013 2,370.20 2,397.60 27.40

20-May-2013 2,346.00 2,372.05 26.05

17-May-2013 2,336.90 2,351.75 14.85

16-May-2013 2,353.50 2,332.60 -20.90

15-May-2013 2,353.00 2,360.45 7.45

14-May-2013 2,337.30 2,350.05 12.75

13-May-2013 2,355.00 2,339.60 -15.40

11-May-2013 2,360.10 2,361.95 1.85

10-May-2013 2,362.10 2,371.55 9.45

09-May-2013 2,351.90 2,361.40 9.50

08-May-2013 2,365.00 2,350.65 -14.35

07-May-2013 2,350.00 2,348.80 -1.20

06-May-2013 2,315.00 2,341.10 26.10

03-May-2013 2,296.75 2,307.95 11.20

02-May-2013 2,236.00 2,286.70 50.70

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Interpretation

The above graph represents the share values of an Infosys company.

From the above graph it is clearly known that the share value of Infosys Company

is increased high on the date 31/may/13 when compared to all the days, and the

share value is decreased high on the date 16/may/13.

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BROKERAGE CHARGERS

Here you will find a table comparing intraday brokerage charges and delivery brokerage

charges charged by different online brokers in India: Share khan, ICICIdirect, Motilal

Oswal, Religare, SBICAP Securities, Angel Broking, 5paisa, India bulls, UTI Securities, HDFC

Securities, India info line, Reliance Money.

Online Broker Brokerage for

Delivery

Brokerage for

Intraday trading

MMC*

SBICAP Securities

brokerage charges

0.50% 0.10% NIL

Share khan

brokerage charges

0.03% - 0.50% 0.03% - 0.10% NIL

Motilal Oswal

brokerage charges

0.30% - 0.50% 0.03% - 0.15%

5 paisa

brokerage charges

0.25% - 0.85% 0.07%

Angel Broking

brokerage charges

0.50% 0.02% - 0.03%

ICICI direct

brokerage charges

0.75% 0.15%

Indiabulls

brokerage charges

0.25% - 0.50% 0.05% - 0.10%

HDFC Securities

brokerage charges

0.50% 0.15%

UTI Securities

brokerage charges

0.80% 0.15%

Religare

brokerage charges

0.20% - 0.30% 0.02% - 0.03%

Reliance Money

brokerage charges

0.01% 0.01% card system

Geogit

brokerage charges

0.30% 0.03%

Indiainfoline

brokerage charges

0.50% 0.10% -

MMC=Minimum monthly commitment.

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Brokerage is usually negotiable:

Several of you trying to choose an online broker and open an online trading account must

have been frustrated trying to search for the exact brokerage charges charged by various

online brokers. But the fact is the brokerage charged by the same broker varies and in

several cases is negotiable. For example if you go and tell a brokerage house that you are

going to deposit 2 lakh rupees and try to convince them you are going to trade heavily,

they might consider reducing your brokerage. That is why in the above table you will find

only a range for the brokerage charges in some cases. But that should be enough to get an

idea.

Effective brokerage with taxes is more:

In addition to the above brokerage charges you will have to pay STT (Securities

Transaction Tax) at the rate or 0.02% of the total transaction amount. You will also be

charged 12.5% Service Tax on the brokerage amount (and not on the transaction

amount). For example, if your brokerage is 0.50% for delivery and you do a delivery

transaction of Rs.100/- then the total brokerage you pay is

0.50 (brokerage) + 0.02 (stt) + 0.063 (service tax) = 0.58.

Thus your effective brokerage (including all taxes) will be 0.58%. Similarly for brokerage

on intraday transactions.

One may also like to compare brokerages charged by the online brokers mentioned above

for trading in futures and options. I have traded options on SBICAP securities and have

been charged Rs.100/- flat brokerage fee for every options trade. I will probably find out

and also add a comparison table for brokerage charges for trading derivatives (futures and

options) later, if i see enough people google searching for the same. For futures, some

online brokers charge different brokerage for different legs of the trade, i.e. different for

buy and sell trade.

Except SBICAP Securities, I do not have any other trading account. So my

information is gathered from indirect sources. In case there are any inaccuracies please let

me know by posting a comment?

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FINDINGS

All the stock exchanges in India were mechanized in the year 1994 November.

That was the year when the stock exchanges introduced screen based trading

across the country.

While on line trading gives you speed and price advantage, there is some risk and

disadvantage to entering orders on-line. The page alerts you to any pitfalls you

should watch out for if you want to use the internet to trade stocks.

If you do commit to trading online, you must be careful when you enter stock

orders. It is easy to make mistakes, but the market and your brokers may not be

sympathetic. Once an order is submitted, there may be nothing you can do to take

it back if you made a mistake. The various types of orders you enter can be

confusing.

Individuals are restricted to first hand financial guidance. This simply means that

the individual is himself/herself alone to make the decisions.

Tax (sales tax and value added tax) evaluation becomes an issue, especially when

you are trading internationally.

Changes are that one has no idea who is dealing with on the other end, so it is

advisable to gather all the possible information about the party one is dealing with.

In short are full knowledge is to be known.

Online trading as left individual open to too much information. This is harmful

since it leaves brokerages wide open to sensitive data.

When network crashes there will be problems and delays due to a large influx of

traffic and rapid online trading criteria. For instance on 27th Oct 1997 there was a

one day crash, which caused online trading on the New York Stock Exchange to

stop and brokers were unable to conduct business.

If you are going to trade online, you were obviously the one making all the trading

choices. To make your trading decisions, you need to research your stocks and

constantly pay attention to market news. This will require some time, as you

pursue your sources of market information and use online tools.

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CONCLUSIONS

The comprehensive study of on “online trading system” at Share Khan has been an

enlightening experience stressing on the position aspects on security trading.

Dematerialization of shares and online trading has done in whole lot of good to the

issuer, investor, companies and country.

The Depository system has reduced the time lag in delivering and settlement of

securities but also supported the cause of providing more liquidity to the security

holder, the need for setting up of a depository, paper less trading through online

trading system and settlement became in evitable and unavoidable for the smooth and

efficient functioning of the capital market. This system has proven its worthiness by

increasing in the settlement will be done with in the day in future is in itself an

indication of how great a boon in this system of Online trading.

E-brokerages provide convenience, encourage increased investor participation and

lead to lower up front costs. In the long run, they will likely reflect increased market

efficiency as well. In short run, however, there are a number of issues related to

transparency, investor’s misplaced trust, and poorly aligned incentives between e-

brokerages and markets, that may impede true market efficiency.

For efficiency to move beyond the user interface and into the trading process,

consumers need a transparent window to observe the actual flow of orders, the time of

execution and the commission structure are various points in the trading process. In

this regard, institutional rules, regulations and monitoring functions play a significant

role in promoting efficiency and transparency along the value chain in electronic

markets. Our analysis confirms that in the context of online stock markets, the need

for such intervention and oversight it particularly strong.

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SUGGESTIONS

The overall performance of Share Khan, DP and ONLINE TRADING is good.

Here are the suggestions for further improvements of the performance in the future.

Volume of paper work is small but it is very complicated to maintain data

in system so try to reduce that by regular audit and updating data.

Most of DPs do not have the necessary infrastructure to handle the high

workload of transactions lending to many error by DPs, so by giving full

infrastructure information to every DP can avoid this problem

The pool a/c does not know the true owner of the shares and hence

dividends are paid to the broker instead of owners, by this broker can do

any manipulations or any fraud with the owner, for this the owner can

loose his dividend. Hence for this try to pay the dividend directly to the

owner.

If the shares are fake/forged which delivered by the broker the shareholder

can loose that system and have to receive another lot of issued shares from

the broker in 21 days, this system stands abused as soon as possible.

The online trading is easy to work but it is costly to maintain and difficult

to learn.

It should increase the speed of executing the orders.

Mutual funds trading for other companies have to be encouraged. If phone

orders are encouraged, trading in z securities are allowed, bank account for

instant transfer are provided and offline option are given then Share

Khan would be definitely improving in the turnover.

Necessary steps should be taken by the exchanges to deal with the

situation arising due to break down in online trading.

Instant bank account should be provided as the other companies are

providing, because this helps the Share Khan in dealing directly with the

investors.

Another important thing, which has to be taken into considerations, is

portfolio management. It should have a separate department for portfolio

management and should guide the investors. Share Khan takes initiative

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steps for portfolio valuation of the investor’s .Then investors will be

attracted towards the Share Khan to a greater extent.

Share Khan has to give more adverts through the media stating the

advantages to the investors.

Leverages should be provided to the investors till settlement. Then only it

encourages the investors to take active part in online trading of the stock

exchange

The software or the system used in online trading should be advanced

and the persons who operate should have minimum knowledge or if they

are very well versed about the functioning of the system then it will be

helpful in smooth functioning of online trading.

In Share Khan investors cannot do their own trading on the system, every

time they have to consult the DP members and has to tell to hold the shares

by his name, instead of this provide the web trading facility to investors by

this they can do their own trading by sitting in front of internet.

I recommend the exchange authorities to take steps to educate Investors about

their rights and duties. I suggest to the exchange authorities to increase the

investors’ confidences.

I recommend the exchange authorities to be vigilant to curb wide fluctuations

of

Prices. The speculative pressures are responsible for the wide changes in the

price, not

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BIBLIOGRAPHY

BOOKS Author

Indian Financial System -M.Y.Khan

Marketing of Financial Services -V.A.Avadhani

Investment management -V.K.Bhalla

Security Analysis and Portfolio Management -V.A.Avadhani

Webilography : www.nseindia.org

www.bseindia.com

www.nsccl.com

www.sharekhan.com

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