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CONTEMPORARY ISSUE ON SEMINAR

A STUDY ON

Online Trading

Session: 200911

Presented at

Submitted By: - Submitted To:-

Manish Kumar Mr. Rajat Mendiratta

MBA II Sem.


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Acknowledgement

The beatitude, bliss & euphoria that accompany successful completion any task

would not be completed without the expression of appreciation of simple virtues

to the people who made it possible.

So, I take my immense pleasure in expressing a whole hearted thanks to all the

faculty members who guided me all the way making this project successful.

It is my privilege to express a deep sense of gratitude and thanks to Mr. RAJAT

MENDIRATTA for providing us various information directly related to project.

I am also thankful to Mrs. MAHIMA RAI (H.O.D.) for her guidance & cooperation

in this work.

I extend my gratitude and thankfulness to Apex Institute of Management &

Science.

Date:11/05/2010 Submitted By:

(Manish

Kumar)

Place: Jaipur


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Preface

The underlying aim of the seminar on contemporary issue as an integral part of

MBA program is to provide the students with practical aspects of the organization

working environment.

Such type of presentation helps a student to visualize and realize about the

congruencies between the theoretical learning in the premises of college and

actual followed by the organization. It gives the knowledge of application aspect

of the theories learnt in the classroom.

The seminar project in Online Trading is a complete experience in itself, which

provide me with the understanding. This has become as inspirable of my

knowledge of management being learned in MBA program.

Executive Summary


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There were times when man was a wanderer or a normal. He himself had to go place to

place in search of food, water and now everything is available at your doorstep just at the

click of the mouse. The growth of information technology has affected almost all sectors

of life. Internet has enabled us to get every information at our doorstep. When Internet

has affected all sectors he could stock markets the most important player of the

economy, has remained far behind? Like all other sectors Internet has set its feet in the

stock markets also.

All of these positive features of internet trading may lead the unwary investor to believe

that Internet trading is a way to take control of their finances and save more money in the

process. Unfortunately, this is not always the case. The advantages of Internet stock

trading have also its weaknesses and these weaknesses present significant drawbacks for

the average investor.

First and foremost, the average investor is not an expert in the financial markets. There is

a danger for allowing the autonomy of online trading to hull you into the belief that you

are an expert investor. An online investor sitting at home at a personal computer also

foregoes proper investment advice and financial planning, perhaps among the most

valuable services provided by traditional brokers.

Contents


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1. Introduction

(A) Capital Market

1

(B) Stock exchange

4

2. Online Trading

8

3. Research Methodology

30

4. Conclusion

38

5. References

39


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Chapter 1

Introduction to the capital market

The capital market is the market for securities, where companies and the government

can raise long term funds. The capital market includes the stock market and the bond

market. Financial regulators ensure that investors are protected against fraud. The capital

markets consist of the primary market, where new issues are distributed to investors, and

the secondary market, where existing securities are traded.

Capital market thus plays a vital role in channelizing the savings of individuals for

Investment in the economic development of the country. As a result the investors are not

constrained by their individual abilities, but by the abilities of the companies, which in

turn enhance the savings and investments in the country, liquidity of capital market is an

important factor affecting growth.

Since projects require long term finance, but on the other hand, the investor may not like

to relinquish control over their savings for a long time. A liquid stock market ensures a

quick exit without incurring heavy losses or costs. Thus development of efficient market

system is necessary for creating conductive climate for investment and economic growth.

Capital market Segment Primary And Secondary

Broadly , the comprises of two segments the new issue market which is commonly

known as primary market and the stock market which is known as secondary market.

Primary


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A primary offering, such as with a corporate bond, means you are buying it

directly from the issuer, at par value, usually. A secondary market is where you

sell or buy existing issues. I.E. If you bought a bond last year, now need to get

your principal, you can sell it in the secondary market. You may not get par value.

If rates are up since you bought the bond, then you will likely have to sell it at a

discount to be able to get rid of it. If rates have fallen since you bought it, you

could get a premium for it.

Secondary

The market where securities are traded after they are initially offered in the primary

market. Most trading is done in the secondary market. To explain further, it is trading in

previously issued financial instruments. An organized market for used securities. Bombay

Stock Exchange (BSE), National Stock Exchange NSE, bond markets, over-the-counter

markets, residential mortgage loans, governmental guaranteed loans etc.

Secondary Market refers to a market where securities are traded after being initially

offered to the public in the primary market and/or listed on the Stock Exchange. Majority

of the trading is done in the secondary market. Secondary market comprises of equity

markets and the debt markets. For the general investor, the secondary market provides an

efficient platform for trading of his securities. For the management of the company,

Secondary equity markets serve as a monitoring and control conduitby facilitating

value-enhancing control activities, enabling implementation of incentive-based

management contracts, and aggregating information (via price discovery) that guides

management decisions.


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INDIAN CAPITAL MARKET AT GLANCE

1.

2020th century

1908 Formulation of Calcutta stock exchange

1939 Formulation of Lahore and madras stock exchange

1940 Formulation of U.P and Delhi stock exchange

1956 Securities contract and regulation act enacted

1957 Scam of Haridas Mundhra

1988 Securities and exchange board of India set up

1991 Scam of MS Shoes

1800

Trading of shares of east India company in Kolkata AndMumbai

185

0

Joint stock company came into existence

186

0

Speculation and feverish dealing in securities

187

5

Formulation of stock exchange of Mumbai

1894

Formulation of Ahmadabad stock exchange


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1992 SEBI given power Under SEBI act,1992

1993 Formation of National stock exchange

1995 HARSHAD MEHTA Scam

1995 SESA GOA Scam

1997 CRB scam

1998 BPL And Videocon Scam

21st century

2000 Depositories came into existence (electronic form of

shares)

2001 Ketan Parekh scam

2002 Start of rolling settlement and banning of Badla trading

2002 Introduction of T+3 settlement in April

2003 Introduction of T+2 settlement in April

2005 BSE Sensex touches all time high 6954 in January

2006 BSE Sensex touches all time high 12500,the highest

intraday fall of 1100

2007 BSE reaches the level of

2008 BSE touches all time high in January 2008

2008 Sensex saw its highest ever loss of 1,408 points at the end

of the session.

2008 Sexsex saw its 15 month low,from its all time high

2009 Sexsex saw its down trend &highest ever loss because of

Satyam case.

BRIEF ABOUT THE STOCK EXCHANGES


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Stock Exchange is a market like any other centralized market where both buyers

and sellers come and conduct their business of purchase and sale of shares &

securities. In other words, it is a market place for shares and securities where

trading takes place in a controlled and protected environment.

MEANING OF STOCK EXCHANGE

A stock exchange, share market or bourse is a corporation or mutual organization which

provides "trading" facilities for stock brokers and traders, to trade 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. Usually there is a

central location at least for recordkeeping, but trade is less and less linked to such a

physical place, as modern markets are electronic networks, which gives them advantages

of speed and cost of transactions. Trade on an exchange is by members only. The initial

offering of stocks and bonds to investors is by definition done in the primary market and

subsequent trading is done in the secondary market. A stock exchange is often the most

important component of a stock market. Supply and demand in stock markets is driven byvarious factors which, as in all free markets, affect the price of stocks (see stock

valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor must

stock be subsequently traded on the exchange. Such trading is said to be off exchange or

over-the-counter. This is the usual way that bonds are traded. Increasingly, stock

exchanges are part of a global market for securities.

CONCEPT OF SHARE TRADING
http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)


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The concept of share broking emerged after the establishment of the joint stock

companies. The ownership of the companies was divided into small parts and that every

part was called share. So, the term Share denominates some part in the ownership of

the company. The shares are freely transferable subject to the some certain restrictions.

When the need was felt to sell the shares by the owner of the shares, it was difficult to

find out the buyers of the shares who want to buy the shares at the price the seller want to

sell. At that time a need was felt to bring the buyers and sellers on a common platform.

To solve this problem, a group of persons came into picture, which used to bring the

buyers and sellers together for the trade of the shares. These persons are called the share

Brokers who find the persons who wish to buy or sell their securities. The whole process

of finding the buyers and sellers of the securities by the brokers is called the Share

Broking.

The origination of the Indian securities market may be traced back to 1975, when 22

enterprise brokers under a Banyan tree established the Bombay Stock Exchange (BSE).

Over the last 130 years, the Indian securities market has evolved continuously to become

one of the most dynamic, modern international standards both in terms of structure and in

terms of operating efficiency.

OPERATIONS OF LUDHIANA STOCK EXCHANGE

TURNOVER

Ludhiana Stock Exchange is one of the leading Stock Exchanges among the Regional

Stock Exchanges of the country, and has been providing trading platform for the

investors situated in Punjab, J&k, Himachal Pradesh & Chandigarh. At present, it has 357

listed companies and among them, 231 are listed as regional companies. It had been

generating significant amount of the business in the secondary market. It recorded a peak

turnover of Rs.9154 crores during the year 2000-2001. The structural changes that took

place in the recent past in the Capital Market of the country had a negative impact on the

trading volume of the Regional Stock Exchanges. There has been a significant reduction

of turnover during the financial year 2001-2002, but the reduction in the turnover of the


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Exchange has been more than adequately compensated by substantial rise in the turnover

of LSE Securities Limited, a subsidiary of Ludhiana Stock Exchange.

LISTING

Listing is one of the major functions of a Stock Exchange wherein the securities of the

Companies are enlisted for trading purpose. Any Company incorporated under

Companies Act,1956, coming out with an IPO, has to mandatorily list its shares on a

StockExchange.

The Listing Department of Ludhiana Stock Exchange deals with listing of securities,

further listing of issues like bonus and rights issues, post listing compliance of the

companies which are already listed with Ludhiana Stock Exchange. The Companies

desirous of listing its securities on the Exchange have to sign a Listing Agreement

with the Stock Exchange. After getting the listing approval, the Company has to

ensure and report compliance of the post listing requirements. The listing section of

the LSE monitors the post-listing compliance of all the listed companies and follows

up with the companies,which are found deficient in compliance.

Functions of Stock Exchange

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;

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

capital into companies and thus, companies can use the capital.2. It provides an orderly regulated market for securities.

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

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

investors.


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5. It facilitates take overs by means of acquiring majority of shares traded on the

stock market.

6. It acts as a clearing house of business information.

7. It motivates the managers of well reputed companies, to retain their shares in A

group, to improve performance.

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

shares into specified shares in the exchange.

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

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

Chapter 2Chapter 2

On Line TradingOn Line Trading

Meaning of Online Trading

Change is the law of nature. There were times when man was a wanderer or a

normal. He himself had to go place to place in search of food, water and now everything

is available at your doorstep just at the click of the mouse. The growth of information

technology has affected almost all sectors of life. Internet has enabled us to get every

information at our doorstep. When Internet has affected all sectors he could stock

markets the most important player of the economy, has remained far behind? Like all

other sectors Internet has set its feet in the stock markets also.

Internet trading commissions are clearly posted on the websites of the various services,

and are typically a fixed rate charge, depending upon the type of security being traded

and the size of trade. In theory, therefore, an Interest investor always knows what

commission he is being charged on each trade. Internet investors can take as much time


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at the Brokers' workstations reach the central computer and are matched by the computer

based on price and time priority.

Both the exchanges have switched over from the open outcry trading system to a fully

automated computerized mode of trading known as BOLT (BSE On Line Trading) and

NEAT (National Exchange Automated Trading) System. It facilitates more efficient

processing, automatic order matching, faster execution of trades and transparency. The

scrips traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups.

The 'A' group shares represent those, which are in the carry forward system (Badla). The

'F' group represents the debt market (fixed income securities) segment. The 'Z' group

scrips are the blacklisted companies. The 'C' group covers the odd lot securities in 'A',

'B1' & 'B2' groups and Rights renunciations. key regulator governing Stock Exchanges,Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants

in Indian secondary and primary market is the Securities and Exchange Board of India

(SEBI) Ltd.

DIFFERENCE BETWEEN ONLINE AND OFFLINEDIFFERENCE BETWEEN ONLINE AND OFFLINE

TRADINGTRADING

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 alone when

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.


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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.

Points of difference between online trading and ofline trading are

as follows:

1. Online trading is very expensive as compare to manual trading or offline trading.

2. Online trading consumes less time as compare to manual trading.

3. Online trading has very helpful to finding the records easily but offline trading takes

more time to finding the records.

4. In the help of online trading, there is no chance of any errors while doing the trading.

in offline trading there are some errors exist like barriers of communication .

5. With the help of online trading, we know the international market rate of share very

easily.

DEMATERIALISATION OF SHARES

Dematerialization is the process where in shares certificates or other securities held in

physical form are converted into electronic form and credited to demat account of an

investor opened with a depository participant. SEBI has made compulsory trading of


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shares of all the companies listed in stock exchanges in demat form with effect from 2nd

January 2002.The procedure of opening a demat account with DP is similar to opening an

account with a bank.

ELECTRONIC SETTLEMENT OF TRADE

A. Procedure for purchasing dematerialized securities

The procedure for purchasing dematerialized securities is also similar to the procedure for

buying physical securities.

1. Investor instructs DP to receive credits into his account in the prescribed form.

There may be one time standing instruction or separate instruction each time to

receive credits.

2. Investor purchases securities in any of the stock exchanges linked to depository

through a broker.

3. Broker receives payment from investor and arranges payment to clearing

corporation.

4. Broker receives credit to securities in clearing account on the payout day.

5. Broker gives instructions to DP to debit clearing account and credit clients

account. Investor receives shares into his account by way of book entry.

B. Procedure of selling dematerialized securities

The procedure for selling dematerialized securities in stock exchanges is similar as

selling physical securities. The only major difference is that instead of delivering physical

securities to the broker, the investor instructs his DP to debit his demat account with the


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for stock transactions. with incredible foresight, he saw the solution at hand, some day

everyone would own computers and invest through them with unprecedented efficiency

and control. And today his dream has become a reality.


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SHARE OF ONLINE TRADING IN TOTAL CASH TURNOVER OF

NATIONAL STOCK EXCHANGE

TABLE-1(year 2008)

MONTH CASH TURNOVERONLINE TURNOVER

(RS. CRORES)

RATIO

January 1,48,829.84 1,130.49 0.76

Februmy 1,35,932.23 1,573.62 1.16

March 60,226.21 849.81 1.41

April 35,615.63 268.9 0.76

May 48,329.11 343.92 0.71

June 42,783.00 238.47 0.56

July 27,227.76 401.68 1.48

August 29,417.15 388.98 1.32

September 35,322.82 453.58 1.28

October 35,326.454 604.17 1.71

November 42,132.23 805.86 1.91

December 54,467.79 1,048.24 1.92


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Internet Based Trading through Order Routing Systems

Internet based trading on conventional exchanges, uses the Internet as a medium for

communicating client orders to the exchange, through broker web sites. Brokers web sites may

serve a variety of functions. These may include;

Allowing the clients to directly trade through investors;

Advertise the broker dealers services to potential investors;

Offer market information and investment tools similar to those offered by information

vendor or SRO web sites;

Offer real-time or delayed quote information, continuously update quotes while the

user visits other sites, or allow investors to create a personal stock ticker;

Provide market summaries and commentaries, analyst reports and trading strategies

and market data on currencies, mutual funds, options, market indices and news; and

Offer investors access to portfolio management tools and analytic programs;

Information on commission and fees; and

Account information and research reports.

In an Order Routing system, a broker offering Internet trading facility provides an electronic

template for the customer to enter the name of the security, whatever it is to be bought or sold,

the quantity and whatever the order is a market or limit order. Once the brokers system receives

this information.

Use of Internet as Alternative Trading Systems (Provision for price discovery

and matching outside conventional exchanges)

In foreign jurisdiction, Alternative trading systems have been developing outside

conventional securities markets, which provide investors with additional proprietary electronic

trading facilities for securities that are traded principally on securities exchanges, or other

organized markets. They have price discovery functions, matching systems and crossing systems.


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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

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.

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.

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 specific stocks

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

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.


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

which leads to easy and paperless trading for you.

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.

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.

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 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

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.

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

houses provide access to many of the popular banks.


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The. bank account linked with the trading account invariably has an A TM free. Most partner

banks offer Internet banking as well. This results in ones money becoming available to him

whenever he like from his trading account. Conversely in case he spot an opportunity in the

market he can immediately allocate money from his savings account to his trading account and

make profits.

6.) Unparalleled Safety:

Most sites are secure using 128-bit algorithms -highest available commercially anywhere in the

world. Moreover even if somebody broke in and tampered with ones account the money from

the stocks he sold or the stock bought from the money in his account is in his account only.

7.) Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in this case no Short sale is

possible i.e. the seller will not be able to sell the securities unless he has their actual possession.

In the case of a demat account (required for an online transaction), when a seller wants to sell the

securities, his demat account is checked by the Depository Participant before executing the sale

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

securities.

8.) Offers greater transparency:

Online trading gives greater transparency to the investors by providing them an audit trail. This

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

settlement and finally ending with a credit to the depository account of the investor. All these

stages are subject to inspection, thus bringing in transparency into the system.

9.) Ease of trade:

It is the ease of doing the trade through net, with a click of mouse, one can buy or sell any share

that is dematerialized.

Other than the above-mentioned advantages, Internet trading provides some additional

advantages to the investors, brokers and also helps the nation to channelize the resources. Net


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trading would increase competition in the market hence increase in the bargaining power of the

investors. The entire communication between the investor, broker and exchange would take

place within milliseconds.

PROBLEMS OF ONLINE BROKING

There is a flip side to everything and online trading is no exception.

Chart

21%

23%

27%

11%

14%

4%

More Costly

Lack Of Know ledge

Loyalty to Traditional Broker

Lack of Trust

Slow Speed

Other

Source:- www.lse.co.in

27% Loyality is of traditional broker

23% people says that online trading is more costly than manual trading.

21% people not prefer online trading because of lack of knowledge.

So, the main problems of online trading are as follows:

1.) "Server not found":


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This may appear on ones screens when he is desperately trying to get out of an unprofitable

position. Some of the online sites are providing a telephone number for use in case their sites are

overloaded or their server down.

2.) Connectivity of the Broker with NSE:

Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours during

trading hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of ones broker he is protected only if the

company is taking proper precautions against such attacks and if proper backup is regularly been

taken. He may like to choose a brokerage that has a stated security policy and contingency plan

in place.

4.) Non-availability of a seamless interface:

As a client one will access the NSE through a server of the online brokerage and this may

involve queuing delays. If a number of client access the server the server takes its own time

sending the orders to the NSE server. He must check out the seamlessness of this interface before

selecting an online brokerage. The faster the orders are processed the more seamless is the

interface.

5.) Non- availability of personalized advice:

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If he

want advice on a particular stock in his portfolio he may not even be able to get that.

6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading on margin. That

is where the brokerage firm lends you money by leveraging his account, allowing him to buy a

large amount of securities by putting up only a small amount of money. He may have forgotten

what he read in the small print of his agreement, but the brokerage firm has the right to change


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the maintenance margin requirements without any warning or notice to him. In fact, the firm has

the right to liquidate his securities holdings (and it can pick and choose which ones) without any

notice to one if he fail to meet the margin call. And there he was leveraged to the hilt, hoping to

hit a home run when he discovered that he is required to make a large deposit that he cannot

make. The next thing one know, the firm is selling off his securities at a point in time that is not

the best for him. These are the perils of trading on margin.

7.) Little use of advisory services:

The advisory services being promised by the brokers would be of little use to investors looking

for an insight into the market. Many would not like to rely on research reports, which are there

for all. So, net investors will have to do their own research and take their own decision, whether

wild or wise.

8.) Increased charges:

Some of the brokers are of the view that they would have to provide advisory services to the

customers. But with increased volumes, they will have to follow the international practice of

charging a little more than the normal charges from a customer looking for personal advice.

WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING

Several broking houses now offer online trading facilities. You can trade online with e-

brokerages such as ICICI Direct, Kotakstreet, India bulls, India info lines 5paisa.com and

HDFC securities.

If you are already comfortable trading with your regular broker, here are few reasons why you

may consider switching to trading online, or at least another avenue of trading. an obvious

advantage of online trading is that your transaction would be virtually paperless. Your trading

account would be linked to your demat and bank account, ensuring a smooth transaction process.


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So, generally following steps are followed while doing the trading through the Internet:

Step-I:

Those investors interested in doing the trading over Internet system, that is,NEAT - ISX (NSE),

should approach the brokers and register with the Stock Broker.

Step-2:

After registration, the broker will provide to them a login name, password and a personal

identification number (PIN).

Step-3:

The client places order via the net by logging on to his

The broker accepts and executes the order and

places it with the exchange

The exchange accepts the order after checking the share

The broker makes the payment either directly via the client

bank account or pays through its own account and recovers

The exchange receives money and completes the

The client is intimated about the settlement

either through the demat or via e-mail.


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Actual placement of an order, Using the place order window as under can then place an order:

(a) First by entering the symbol and series of stock and other parameters such as quantity and

price of the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step-4:

It is the process of review. Thus, the investor has to review the order placed by clicking the

review option. He may also re-set to clear the values.

Step-5:

After the review has been satisfactory; the order has to be sent by clicking on the send option.

Step-6:

The investor will receive an "Order Confirmation" 'message along with the order number and the

value of the order.

Step- 7:

In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as

invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a

time lag of about ten seconds is there in executing the trade.

Step-8:

It is regarding charging payment, for which there are different modes. Some brokers will take

some advance payment from the, investors and will fix their trading limits. When the trade is

executed, the broker will ask the investor for transfer of funds by the investor to his account.

THE MECHANICS OF ONLINE TRADING


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CLIENT BROKER STOCK EXCHANGE

Places an order on

the net on the

brokers website

through the

distinctive I.D.

code

Accepts theorder, Checks

the clients

Identity and

places the

order with the

stock

exchange

Accepts the orderafter checking the

scrip limit of the

broker for the day

Executes the

orderThe settlement of

the deal (buy/sell

order) getsreflected in his

Demat account.

The client is

intimated about

the execution of

the deal by e-mail.

Pays the broker

pending physical

delivery.

Pays the

Exchange

though his

owns account

and receives it

from the client

account.

Receives the

money and

completes the

settlement

34

Rolling Settlement Cycle :

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 and BSE, 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/BSE 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.

Concept Of Buying Limit


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Suppose you have sold some shares on NSE and are trying to figure out that if you can use the

money to buy shares on NSE in a different settlement cycle or say on BSE. To simplify things

for ICICI Direct customers, we have introduced the concept of Buying Limit (BL). Buying Limit

simply tells the customer what is his limit for a given settlement for the desired exchange.

Assume that you have enrolled for a ICICI Direct account, which requires 100% of the money

required to fund the purchase, be available. Suppose you have Rs 1,00,000 in your Bank A/C and

you set aside Rs 50,000 for which you would like to make some purchase. Your Buying Limit is

Rs 50,000. Assume that you sell shares worth Rs 1,00,000 on the NSE on Monday. The BL

therefore for the NSE at that point of time goes upto Rs 1,50,000. This means you can buy shares

upto Rs 1,50,000 on NSE or BSE. If you buy shares worth Rs 75,000 on Tuesday on NSE your

BL will naturally reduce to Rs75,000. Hence your BL is simply the amount set aside by you

from your bank account and the amount realized from the sale of any shares you have made less

any purchases you have made. Your BL of Rs 50,000, which is the amount set aside by you

from your Bank account for purchase is available for BSE and NSE. As you have made the sale

of shares on NSE for Rs.100000, the BL for NSE & BSE rises to 1,50,000. The amount from

sale of shares in NSE will also be available for purchase on BSE. ICICI Direct

Future Agenda:

Under the existing legal and regulatory framework, SEBI registered brokers can offer trading on

Internet through order is routing systems. However, with the rapid development of the

technology, we have to evolve fisher steps in this direction it is therefore proposed that as the

next step link between the depositories and banks shall be established after the necessary

regulations have been passed. This would reduce the clearing and settlement time and would also

minimize the risk of all the participants involved in the transactions. We have to look forward

towards achieving an ideal scenario where all the services related to securities markets including

marketing of initial public offers on internet, providing investment advisory services to the

clients, broking, clearing and settlement etc., are provided on the Internet by an intermediary. In

a nutshell it can be said that we are moving towards a one-stop service center.


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Chapter 3

RESEARCH METHOD

The basic task of research is to generate accurate information for use in decision making.

Research can be defined as the systematic and objective process of gathering, recording and

analyzing data for aid in making business decisions.

There are basically two techniques adopted for obtaining information:

1. Primary Data.

2. Secondary Data.

Primary Data is gathered specifically for the project at hand through personal interviews with the

accounts officers.

Secondary data is previously collected and assembled for some project other than the one at

hand. It is gathered and recorded by someone else prior to current needs of the researcher. It is

less expensive than the primary data.

SECONDARY DATA

Secondary data was collected from Ludhiana Stock Exchange

Scope of study:

The study is limited to Ludhiana Stock Exchange , Firoz Gandhi Market Ludhiana

Data Collection:

Data is collected from secondary sources.


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According to this survey we find that 44% people says that we are investing the money

online from one year and 26% people says that we are investing the money online from 2

years and 19% to 11% people says that we are investing money online from 3 to 4 year.

so we can say that now online trading is very popular in the modern market.

2. How will you describe your experience with on-line trading till date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

Sample size 100

0

10

20

30

40

50

60

Experience

I find it very easy to operate

I find it very difficult tooperate

I feel it is not secure

Any other

According to this survey we find that 60% of people find very easy to operate and 15%

people find diffcuilt two operate and 10% and 15% people find no secure and any other.

so we can say that online trading is very simple to operate and easy to understand.

3. what amount of money you invest normally ?


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0

5

10

1520

25

30

35

40

Time

daily

weeklymonthly

more than 1 month

According to this survey we find that 10% of people do trade Daily and 40% people

do trade weekly and 32% and 18% people do trade month and more than month. So

we can say that people are generally invest in stock market weekly basis.

5. which trading you prefer?

(a) On line trading (b) Manual trading

(c) Both


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SampleSize 100

0

10

20

30

40

50

Relationship

On line trading

Offline trading

Both

According to this survey we find that 20% people prefer online trading and 32%

people prefer offline trading rest of 48% people prefers both. So we can say that

mostly people are awareness about the on line trading and because of this reason the

mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

(a) Yes (b) No


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Sample Size 100

0

10

20

30

40

50

60

70

Settleled

Yes

No

According to this survey we find that 30% people says yes and 70% people says no. so

we can find that on line trading is not settled in the Indian psyche because some people

are not experience towards online trading.

7. What shortcomings do you feel in Indian On-Line trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(c) any other

Sample Size 100


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0

10

20

30

40

50

Shortcomings

Lack of awareness

Shortage of

expertise

Shortage Of Infra

structure

any other

According to this survey we find that 15% of people says lack of awareness 49% says

Shortage of expertise and 14% people says Shortage Of Infra structure and 22% says any

other. So we can say that mostly people are shortage of experience about the Indian

derivatives market or share market.

8. Which media would you prefer the most for investment?

(a) T.V (b) Newspaper

(c) Magazines (D) Journals

0

10

20

30

40

50

60

Media

T.V

Newspaper

Magazines

Journals


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According to this survey we find that 55% people Prefer T.V and 25% people prefer

newspaper and 10% people prefer magazines and 10% people prefer journals. So we can

suggest that mostly people are very easily grapped the knowledge through T.V.

Chapter 4

CONCLUSION

Online trading is the new concept in the stock market. In India, online trading is still at its

infancy stage. Online trading has made it easy to trade in the stock market as now people can

trade while sitting at their home. Now stock market is easily accessible by the people. There are

some problems while doing the trade through the internet. Major problem faced by online trader

is that the investors are loyal to their traditional brokers, they rely upon the suggestions given by


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their brokers. Another major problem is that the people don't have full knowledge regarding

online trading. They find it difficult to trade themselves, as a wrong entry made by them, can

bring them huge losses.

Nevertheless to say that online trading has the bright future as the percentage of the trade done

through online trading is increasing day by day.

Chapter 5

References

BIBLIOGRAPHY

BOOKS

C. R. Kothri, Research Methodology, Vishwa Prakshan


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MAGAZINES

Business World

LSEs Magazine

INTERNET SITES

www.nseindia.com

www.bseindia.com

www.on-linetrading.com

www.sebi.gov.in

www.lse.co.in
http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/http://www.bseindia.com/http://www.on-linetrading.com/http://www.sebi.gov.in/