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INTRODUCTION

Online trading refers to buying and selling securities via the Internet or other electronic means such a wireless access, touch-tone telephones, and other new technologies. Technology is revolutionizing every field of human endeavor and activity. The rapid growth in number, volume and value of securities in the Indian capital market expose the limitation of handling and dealing in securities in physical/Paper mode; the shortcomings of the market became manifest in terms of bad deliveries, delays in transfer and irregular settlement etc. Primary market is also referred to as New Issue Market. Primary market operations include new issues of shares by new and existing companies, further and right issues to existing shareholders, public offers, and issue of debt instruments such as debentures, bonds, etc. The number of listed companies rose from 2265 in 1980 to over Rs. 6800 at the end of 1998 the daily turnover accordingly shot up Rs. 25 crores in 1979-80 to about Rs 260 crores in 1994-95. The number of shareholders increased from 10 lakhs in 198 to 1.5 crores in 1998. The number of share holder and investors in mutual funds has also risen sharply from about 2 million to over 40 million during this period , rendering this nation to the position of having the second largest investor population in the world next only to USA. It eliminates the risk of bad deliveries, which in turn eliminates all costs and wastage of time associated with follow up for rectification. This reduction in risk associated with bad delivery has lead to reduction in Brokerage to the extent of 0.5% by quite a few brokerage firms. Screen-based trading facilitates the investor to keep a track of the transaction from the source to the end .He can punch in the orders and see the results at the bottom of the screen. Thus, one can get instant trade confirmation.

The investor should familiarize himself with order entry screen and the software provided to him. Any mistake made while inputting an order can cause him significant financial loss. Moreover, he will be responsible for any losses caused by lack of knowledge and/or experience. When an order is placed and executed, he becomes liable for payment of the securities. Active trading is dependent upon a number of specialized software systems. Disruptions or failure of any electronic systems utilized may lead the investor with an open position at which time losses can occur. Definition of Online Trading: The increasingly popular activity of buying and selling securities over the internet, or to a lesser extent, through a broker's proprietary software.

Process of Online Trading:


Step-1: 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:
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.

NEED FOR THE STUDY: Stock exchange is the integral part of the capital market. It is the most perfect type of market for securities whether of govt. Semi govt. bodies or other public bodies as for shares and debentures issued by the joint stock enterprise. Stock exchange provides liquidity to the listed companies they give quotations to the listed companies and help in trading raising funds from the market stock. Exchange provides ready Marketability and unequal facility for the transfer of ownership of stock shares and securities. Stock market in India is more than century old and has functioning effectively through the medium of recognized stock exchanges the stock market which is the integral part of the capital has a major impact on the functioning of the economy in turn the monsoon and agriculture industrial growth and performance of the corporate sector in particular reflection the fundamental in the economy would influenced the some of capital stock market and since the capital market in playing a major role in the Indian economy from the past several years there is an essential need to study the tone of the capital market in India.

OBJECTIVE OF THE STUDY: To know the on-line screen based trading system adopted by SHRIRAM

INSIGHT SHARE BROKERS LTD and about its communication facilities. To know about the latest and future development in the stock exchange trading system. To study investors reasons to trade online where investors have control over their account can make their own decision for their actions, and are independent. To examine the security system around the funds and investing its adequacy. To study the mode of risk management with a specific reference to mark into market.

SCOPE OF THE STUDY: The scope of the study analyzes us to know how the online trading activities are carried out in SHRIRAM INSIGHT SHARE BROKERS LTD. The trading on stock exchange in India used to take place to open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient with imposed limits on trading volumes and efficiency. In order to provide efficiency liquidity and transparency energy introduced a national wide online fully automated Screen Based Trading System (SBTS). Where a member can punch into the computer quantizes of securities and the price at which he likes to transact are the transact means exhausted as soon as it finds a matching sales are buy order from a counter party.

SIGNIFICANCE OF THE STUDY: Shriram insight share brokers ltd. is one of Indias leading financial services providers with strong presence in South India. It was incorporated in 1994 and over the years it acquired a name of trust through Equity and Commodity Broking businesses. In 2007, Baring India Private Equity Fund II Ltd., a leading private equity firm of international repute acquired a majority stake in the Company. outcry system of trading SHRIRAM INSIGHT SHARE BROKERS LTD has developed a computerized screen of replace the conventional manual system trading computers are all the eligible members. The representatives of M/S Tata Eixsi (India) LTD have taken up the installation of Computers regarding earthling ups etc. The software installed in VECTOR (Vector Engine for Centralized Trading & online Reporting) a product developed by CMC to implement a fully automated trade execution system. A lot of information is online so they can keep up-to-date with what is happening in the trading world.

METHODOLOGY:
Research methodology will help us to know what is the research methods, techniques used in fulfilling the study conducted in SHRIRAM INSIGHT SHARE BROKERS LTD. It also helps in giving scientific justification of the problems, which are all methods are relevant and which are not relevant, why particular research method is appropriate for the study. Research Design: Research design stands for advance planning of the methods adopted for collecting the relevant data and techniques to be used in their analysis, keeping in view the objective of the research and the availability of staff, time and money. Sampling Design: A sampling design is a procedure the researcher would adopt in selecting the items for the sample. In fulfilling my project I have selected 100 members randomly from SHRIRAM INSIGHT SHARE BROKERS LTD to find out the Online Trading in the organization and how it does brings bad or good impact for both Investors and the organization. In random sampling each and every item in the population have equal chance of inclusion in the sample and each one of the possible samples has the same probability of being selected.

Type of Data Collection:


The collection of data can be classified into 2 categories Primary Data Secondary Data

Primary Data: Primary data was collected through observing and interviewing employees of SHRIRAM INSIGHT SHARE BROKERS LTD and through questionnaire method. Secondary Data: The secondary data has been collected from SHRIRAM INSIGHT SHARE BROKERS LTDs website. Structured questionnaire: Structured questionnaire is a printed list of questions to be filled by the respondents. The structured questions should be short as possible and simple to understand. The questionnaire was designed such that it helps to elicit the accurate information. Observation Method- This method is that subjective bias is eliminated. This is independent of respondents willingness to respond. Interview Method- this method of data collection involves of oral-verbal stimuli and reply in terms of oral-verbal response. In fulfilling this project in SHRIRAM INSIGHT SHARE BROKERS LTD personal interview method is used i.e. direct personal investigation.

LIMITATIONS OF THE STUDY: The study is confined to online trading procedure only. Exhaustive analysis, problem of listing, management of trade, SEBI guidelines relating to are not covered due to limited time to keep the study in manageable limits. Analysis has been done with in a limited boundary or area where the information is lacking behind from other investors when compared to entire geographical area. Getting appropriate response from the respondents. Getting appointment from the investors. The study is limited to current time period. The study is purely for academic purpose.

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INDUSTRY PROFILE
STOCK EXCHANGE:
Stocks (Shares, equity) are traded in stock exchange. India has two big stock exchanges (Bombay Stock Exchange - BSE and National Stock Exchange - NSE) and few small exchanges like Jaipur Stock Exchange etc. Stock Broker: Investor requires a Stock Broker to buy and sell shares in stock exchanges (BSE, NSE etc.). Stock Broker is registered member of stock exchange. A stockbroker can register to one or more stock exchanges. Only stockbrokers can directly buy and sell shares in Stock Market. An investor must contact a stockbroker to trade stocks. Broker charge commissions (brokerages) for their service. Brokerage is usually a percent of total amount of trade and varies from broker to broker. Stock Trading: Traditionally stock trading is done through stockbrokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constraints, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading. Online Stock Market Trading is an Internet based on stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker. In this case these Online Stock Trading companies are stockbroker for the investor. They are registered with one or more Stock Exchanges.

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Mostly Online Trading Websites in India trades in BSE and NSE. There are two different type of trading environments available for online equity trading. Installable software based Stock Trading Terminals. These trading environments require software to be installed on investors computer. This software is provided by the stockbroker. This softwares require high speed internet connection. These kind of trading terminals are used by high volume intraday equity traders. Below is the detail comparison of major Online Stock Market Trading websites in India. This comparison is to help investor to take calculated decision while searching for new trading portal. 1. ICICI Direct 2. Share khan 3. India bulls 4. 5Paisa 5. Motilal Oswal Securities 6. HDFC Securities 7. Reliance Money 8. IDBI Paisa Builder 9. Religare 10. Geojit 11. Networth Stock Broking 12. Kotak Securities 13. Standard Chartered-STCI Capital Markets Ltd 14. Angel Trade 15. HSBC Invest Direct DEFINITION OF STOCK EXCHANGE: Stock exchange means anybody or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. It is an association of member brokers for the purpose of self-regulation and protecting the interests of its members. It can operate only if it is recognized by the Government under the securities contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act by the central government, Ministry of Finance.

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HISTORY OF STOCK EXCHANGE: The only stock exchanges operating in the 19 th century were those of Bombay set up in 1875 and Ahmadabad set up in 1894. These were organized as voluntary non profit-making association of brokers to regulate and protect their interests. Before the control on securities trading became central subject 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 Bombay stock exchange was recognized in 1927 and Ahmadabad in 1937. During the war boom, a number of stock exchanges were organized in Bombay, Ahmadabad and other centers, but they were not recognized. 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 committees recommendations and public discussion, the securities contracts (regulation) Act became law in 1956. FUNCTIONS OF STOCK EXCHANGE: Maintains activity training Fixation of prices Ensures safe and fare dealings Aids in financing the industry Dissemination of information Performance end users Self regulating organization BYLAWS: Besides the above act, the securities contracts (regulation) rules were also made in 1975 to regulative certain matters of trading on the stock exchanges. There are also bylaws of the exchanges, which are concerned with the following subjects.

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Opening/closing of the stock exchanges, timing of trading, regulation of blank transfers, regulation of Badla or carryover business, control of the settlement and other activities of the stock exchange, fixating of margin, fixation of market prices or making up prices, regulation of taravani business (jobbing), etc., regulation of brokers trading, brokerage chargers, trading rules on the exchange, arbitrage and settlement of disputes, settlement and clearing of the trading etc. REGULATION OF STOCK EXCHANGES: The securities contracts (regulation) act is the basis for operations of the stock exchanges in India. No exchange can operate legally without the government permission or recognition. Stock exchanges are given monopoly in certain areas under section 19 of the above Act to ensure that the control and regulation are facilitated. Recognition can be granted to a stock exchange provided certain conditions are satisfied and the necessary information is supplied to the government. Recognition can also be withdrawn, if necessary. Where there are no stock exchanges, the government licenses some of the brokers to perform the functions of a stock exchange in its absence. SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI): SEBI was set up as an autonomous regulatory authority by the government of India in 1988 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matter connected therewith or incidental thereto. It is empowered by two acts namely the SEBI Act, 1992 and the securities contract (regulation) Act, 1956 to perform the function of protecting investors rights and regulating the capital markets.

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INDIAN STOCK MARKET:


HISTORICAL BACKGROUND: The stock market provides a market place for the purchase and sale of securities evidencing the ownership of business property or of a public or business debt. The origin of the stock market therefore goes back to the time when securities representing this property or promises to pay were the first issued and made transferable from one person to another. The earliest record of securities dealing in India were loan transactions of East India company, way back in the eighteenth century. By 1830s there was a perceptible increase in the volume of business, not only in loan but also in corporate stock and shares. In 1850, the companies Act introducing limited liability was enacted and with it commenced the era of modern joint stock enterprise in India. The Act also served to generate investor interest in corporate securities. From 1850 to 1865, the history of brokers and their rise to power in Bombay is the history of Premchand Roychand. Brokerage business attracted many people into the field and by 1860, the number of brokers had increased to 60. An important early in the development of the stock market in India was the formation of Native share and s tock Brokers Association in Bombay, in 1857, the precursor of the present day Bombay stock Exchange. Infact, the oldest stock exchange in Asia is the BSE having been established in 1875, while the Tokyo stock Exchange was founded in 1878. The setting up of BSE was followed by the formation of associations in Ahmadabad (1894), Calcutta (1908) and Madras (1937).

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NATIONAL STOCK EXCHANGE


The NSE was incorporated in November 1992 with an equity capital of Rs.25 crores, the International Securities Consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has prepared the detailed business plans and installation of hardware and software system. The Promotion for NSE were financial institutions, insurance companies, banks and SEBI capital market Ltd., infrastructure leasing and financial services and stock holding corporation ltd. It has been set up to strengthen the move towards professionalization of the capital market as well as provide nationwide securities trading facilities to investors. NSE is not an exchange in the traditional sense where brokers own and manage the exchange. A two tier administrative set up involving a company board and a governing aboard of the exchange is envisaged. NSE is a national market for shares PSU bonds, debentures and government securities since Infrastructure and trading facilities are provided. NSE-NIFTY: The NSE on April 22, 1996 launched a new equity Index. The NSE -50. The new index, which replaced the existing NSE-100 index is expected to serve as an appropriate Index foe the new segment of futures and options. Nifty means National Index for Fifty Stocks. The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an aggregate market capitalization of around Rs 1,70,000 crores. All companies includes in the Index have a market capitalizations in excess of Rs. 400 crores each and should have traded for 85% of trading days at an impact cost of less than 1.5% The base period for the index is the close of prices on Nov 3, 1995, which make one year of completions of operations of NSEs capitals markets segments. The base values of the Index have been set at 1000. 16

NSE--MIDCAP INDEX: The NSE midcap Index or the Junior Nifty comprises 50 stocks that represent 21 abroad Industry groups and will provide proper representation of the madcap segments of the Indian capitals Market. All stocks in the index should market capitalizations of greater than Rs. 200 corers and should have traded 85% of the trading days at an impact cost of less 2.5%. The base period for the index is Nov 4, 1996, which signifies two years for completion of operations of the capitals market segment of the operations. The values of the Index have been set at 1000. Average daily turnover of the present scenario 258212 (lakhs) and number of averages daily trades 2160(lakhs). Ex: Satyam computers.

BOMBAY STOCK EXCHANGE


The stock exchange, Mumbai, population known as BSE was established in 1875 as The Native share and stock brokers association, as a voluntary non-profit making association . It has an evolved over the years into its present status as the premier stock exchange in the Asia, even older than the Tokyo stock Exchange, which was founded in 1878. The exchange, while providing an efficient and transparent market for trading in securities, uphold the interest of the investors and ensure redressed of their grievances, whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by making available necessary information inputs and conducting investor education programmes. A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive directors is the apex body ,which decides the policies and regulates the affairs of the exchange. The executive director as the chief executive officer is responsible for the day today administration of the exchange. The average daily turnover of the exchange 17

during the year 2000-01 (April March) was Rs. 3984.19 crores and average number of daily trades 5.69 lakhs. How ever the average daily turn over of the exchange during the year 2001-02 has declined to Rs. 1244.10 crores and number of average daily trades during the period to 5.17 lakhs . The average daily turnover of the exchange during the year 2002-2003 declined and number of average daily trades during the period is also decreased. The Ban on all deferral product like BLESS AND ALBM in the Indian capital market by SEBI with effect from July 2, 2001 , abolition of account period settlements, introduction of compulsory rolling settlement in all script traded on the exchange with effect from DEC 31 , 2001 ,etc., have adversely impacted the liquidity and consequently there is a considerable decline in the daily turn over at the exchange . The average daily turn over of the exchange is 110363 (lakhs) and number of average daily trades 1057 (lakhs). BSE INDICES: In order to enable the market participants, analysts etc., to track the various ups and downs in the Indian stock market, the exchange has introduced in 1986 in the Indian stock market . It is a Market an equity stock index called BSE--SENSEX that subsequently became the barometer of the moment of the share prices Capitalization Weighted index of 30 components stocks representing a sample of large, well established and leading companies. The base year of is1978-79. The Sensex is widely report in both domestic and International market through print as well as electronic media. Sensex calculated using a market capitalization weighted method. As per this methodology. The level of the index reflects the total market value of all 30- component Stock from different industries related to particular base period. The total market value of a company is determined by multiplying the price of its stock by the number of Shares outstanding. Statisticians call an index of set of combined variable (such as price and 18 present scenario

number of shares) a composite Index. An indexed number is used to represent the result of this calculation in order to make the value easier to work with and track over a time. It is much easier to graph a chart based on Indexed values than one based on actual value world over majority of the well-knowing indices are using Market capitalization weighted method. In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 30 companies in the Index comparable over a period or time and if the reference point for the entire Index maintenance adjustments. SENSEX is widely used to describe the mood in the Indian stock markets. Base year average is changed as per the formula new base year average = old base year average *(new market value / old market value, there are24 stock exchanges recognized under the securities Contract (regulation) Act,1956.At present there are 19 are working).

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NAME OF THE STOCK EXCHANGE Bombay Stocks Exchange Ahmadabad Share and stock brokers association Calcutta stock exchange association Ltd Delhi Stock exchange association Ltd Madras stock exchange association Ltd Indore stock broker association Ltd Bangloore stock exchange Hyderabad stock exchange Cochin stock exchange Pune stock exchange ,U.P stock exchange Ludhiana stock exchange Jaipur stock exchange Ltd Gauhati stock exchange Ltd Manglore stock exchange Maghad stock exchange Ltd, Patna Bhuvaneshwar stock exchange association Ltd Over the counter exchange of India , Bombay Saurastra Kuth stock exchange Ltd Vsdodard stock exchange Ltd Coimbatore stock exchange Ltd The Meerut stock exchange National stock exchange Intergrated stock exchange

YEAR 1875 1957 1957 1957 1957 1958 1963 1943 1978 1982 1983 1983-84 1984 1985 1986 1989 1989 1990 1991 1991 1991 1991 1999

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GROWTH OF STOCK EXCHANGE IN INDIA: The stock market activities in India were relatively on a low key during the beginning of the decade of 80s securities mainly because of the allies regime till 1947. Afterwards, the Government of India concentrated more on administration and less on development and pursuit of the philosophy of public sector dominating the economy. Stock Exchange was placed under the exclusive regulation of the Government through proclamation in 1930s of the constitution of India. During the 1950s & 1960s Indian economy was dominated by the public sector, which was consider as the major vehicle for economic and industrial development. This trend has changed since mid 80s with liberalization of Government policies and greater freedom given to private sector. This policy of progressively deregulating the economy led to the emerge of stock market as a major instrument of finance for industry and trade. India can boast of being one of the oldest stock markets in Asia. The Bombay Stock exchange (BSE) was founded in 1875, while the London Stock Exchange was established in 1773. PRESENT SCENARIO: The decade of 80s witnessed the emergence of stock Market as major source of finance for trade and industry. The process of liberalization and deregulation has led to a pace of growth almost unparalleled in the history of any nation. Average annual capital mobilization from market, which used to about Rs.70 crores in the 60s and about Rs. 90 crores in the 70s increased manifold during the 80s with the amount raised in 1989-90 being of the order of Rs.647.3 crores. The number of listed companies rose from 2265 in 1980 to over Rs. 680 the end of 1998 the daily turnover accordingly shot up Rs. 25 crores in 1979-80 to about Rs 260 crores in 1994-95. The number of shareholders increased from 10 lakhs in 198 to 1.5 crore in 1998.

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The number of share holder and investors in mutual funds has also risen sharply from about 2 million to over 40 million during this period , rendering next only to USA. At present, there are 19 Stock Exchange recognized under securities Contracts (Regulation) Act, 1956. These recognized stock exchanges mobilize and direct the flow of saving of the general public into productive channels of investment. this nation to the position of having the second largest investor population in the world

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COMPANY PROFILE
Introduction:
Shriram Insight is the Unique Retail Equity Broking House of India and part of prestigious Shriram Group Companies. Incorporated in 1995, Shriram Insight Share Brokers Ltd. was promoted by professional entrepreneurs and incubated by Shriram Group. Shriram Insight commenced operations with corporate membership on NSE in cash segment in 1996. Membership in derivatives segment on NSE acquired in 2003.Currently registered member of NSE & BSE for equities & derivatives, CDSL for depository. It serves investment need of more then 1,00,000 of Indian investors through country-wide branch base and state of art network backbone. Shriram Insight possesses competitive Analytical and Fundamental Market Research Team. It extends its superior Market Knowledge and Equity Analysis to our clients and help them in achieving their optimum investment requirement. It believes - customer satisfaction is our living. Shriram Insight Share Brokers Ltd. is the Stock-Broking arm of the Rs. 13,500 crore Shriram Group, a name to reckon with in the financial services sector for the past 3 decades and market leader in truck finance business. With over 1,000 branches, 12,000 employees, 50 lac investors and a 80,000 strong agency force, Shriram has evolved into a premier financial supermarket providing a host of services including stock-broking, distribution of investment products, property development, industrial investments, risk management, insurance products and consumer finance. Backed by this strong pedigree, Shriram Insight commenced stock broking operations in the year of 1999 and presently services around 1,00,000 customers through over 300 online trading centers spanned across the country. A Corporate Trading Member of the National Stock Exchange (SEBI Registration No. INB/INF 230947033) in both the Equity and Derivatives segment and The Stock Exchange, Mumbai (SEBI 23

Registration No. INB 010947035) in the Equity segment. The Company is also a registered Member of the Multi-Commodity Exchange (MCX) as well as a Depository Participant with Central Depository Services Ltd. ( IN/DP/CDSL/293/2005)

Logo:

Vision:
At Shriram Insight Share Brokers Ltd., were firm believers in this maxim. Insight into market trends, insight into the ever-changing world of technology and above all, insight into individual client needs and psychology thats what makes up our very essence, our corporate vision. Help smallest of Investors to create wealth. Take bourses to the masses through awareness. Provide efficient & transparent services. Control client risk Build relationship.

Mission:
Mission is to keep the customer satisfaction by creating unmatched value for everyone through dependable, effective, transparent and profitable broking services as focal point of all our operations, adopt the best international practices in customer service, be the most innovative in product development, establish presence all over India, ensure sustained value addition to all stake holders and to up hold corporate value and corporate governance.

Guiding Principles:
Customer care and satisfaction Corporate governance Creating and innovation

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Competitiveness Indias one of the largest Financial Services Network. State-of-the- art Technology and Infrastructure. Comprehensive Service Offerings. 40,00,000 customers, 5,000 branches & service centers across India. Rs.25,000 crores - assets under management. Active participation in social causes.

Why Shriram

PRODUCTS & SERVICES:


1.Capital Market Services: Shriram Insight has experienced trading consultants and advanced trading tools will provide the personalized support to achieve our long-term goals via the stock markets. With our client centric approach, state of art infrastructure it is able to add around 1000 clients in its basket in short span of 2 years of its registration. It serves multitude of its retail investing customers through its own office at Culcutta with numerous & efficient dealers eager to respond on our wise call. It feels proud with its rapidly increasing client base in a little time horizon, and it serves to our valuable clients in the following segments. Capital Market Segment Future & Option Market Segment Investment Advisory Services

2. Commodity Market Services: Futures Trading in Commodities has opened up spectacular growth opportunities and advantages not only for large cross section of market participants like: producers, processors, traders, corporate, trading centers, importers, exporters, co-operatives, industry associations but for investors community too. It offers unparalleled efficiencies, unlimited growth and infinite rewarding opportunities to all market participants and investors. 25

This market affords us a very dynamic field for diversified investment & trading opportunities in addition to equity markets. The immense benefits of futures trading are opened, for all market participants and investors alike, to be realized. This Commodity segment has proved to be one more pillar of strength of the Shriram Insight, of course due to positive and enthusiastic response from its Business Associates and its retail clientele spread over many trading centers in multi-states. The performance of the company in this segment has been very satisfying one due to whole-hearted involvement and encouraging response from its Business Associates and retail investor-clients spread over many trading centers in multi-states in the country. The Shriram Insight is in the high gear still to cover many more cities & trading centers in wider variety of commodities reaching out to more and more retail end-use investors to realize the countrys dream of making our India an International Hub of Trading in many agricultural commodities and precious metals. 3. Depository Services: Depository: A depository holds shares and securities in electronic form in our name, just as a bank holds our deposits in our account. Besides holding securities, a depository also provides services related to our transactions in securities. Central Depository Services (India) Ltd., (CDSL): It has received approval from SEBI in February 1996. It is promoted by The Stock Exchange, Mumbai (BSE) jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank. CDSL commenced its operations from July 1996. It has depository participants (like agents called branches) through out India.

Shriram Insight offer following services as D.P...

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Opening of Demat account Dematerialization Rematerialization Maintaining record of holdings in electronic form Settlement of trades by delivering/ receiving underlying securities Settlement of off-market trades Providing electronic credit in respect of securities allotted under IPO Receiving non-cash corporate benefits, such as, allotment of bonus and rights shares, stock split, etc. Pledging/Un-pledging of securities Providing periodical statement of transactions Registering nomination.

4. Mutual Funds: Shriram Insight announces that you will now be able to invest in Mutual Funds through it. It has started this service for a few mutual funds, and in the near future will be expanding our scope to include a whole lot more. Applying for a mutual fund through us is open to everybody, regardless of whether you are a Shriram Insight customer. To invest in a fund, all we have to do is download the application form, print it out, fill it in and send it over to Shriram Insight. It do the rest for us. 5. Currency Derivatives: Indian investor can now add one more 'investment option' in their portfolio current derivatives. Regulatory approval from RBI and SEBI was recently made available and this allows exchanges in India to launch currency derivatives for trading, similar to equity/commodities derivatives trading. With launch of currency derivatives in India through stock exchanges, there would be dynamic shift in currency trading and hedging. Indian entity would be able to take positions on the external value of the rupee without having an underlying foreign currency exposure. It would enhance overall efficiency of the currency market via transparency in pricing, increase investor based and categories, enhancing

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opportunities to invest and eliminate counter-party risk. Currency Derivatives is an emerging segment in India & to tap this emerging segment it has acquired the membership of Currency Derivatives under lucrative investment options. It offer its broking services in Currency Derivatives segment which provides access to a new asset class for trading to all Resident Indians. Currency derivatives is a product with benefits, such as: Access to a new asset class for trading to all Resident Indians Hedging current exposure: Importers and exporters can hedge future payables and receivables. Borrowers can hedge Foreign Currency loans for interest or principal payments. Hedge for offshore investment for Resident Indians.

Arbitrage opportunity for entities who can access onshore and non deliverable forward markets. Volatility and multiplier make it a significant trading option for traders. Recent Developments: Nov 30, 2009: Shriram EPC Signs MoU with NWEPDI for Power Projects in India. Sep 26, 2009: Leitner Shriram Opens Wind Turbine Generators Production Facility in India. Sep 03, 2009: Shriram EPC's Subsidiary OGPL To Build Wind Farm In Czech Republic. Scope: Provides key company information for business intelligence needs. The report contains critical company information business structure and operations, the company history, major products and services, key competitors, key employees and executive biographies, different locations and important subsidiaries. The report provides detailed financial ratios for the past five years as well as interim ratios for the last four interim periods. 28

Financial ratios include profitability, margins and returns, liquidity and leverage, financial position and efficiency ratios.

Human Resources: Human Resource is the key factor to any service sector industry. We have a strong and vibrant workforce in every field of our activity, be it research, systems, accounts, marketing or networking. With the manpower strength of over 1100 employees, the Company is managed by a highly motivated, qualified & talented team of professionally qualified CA's, MBA's, Engineers, etc with proven track records. Customer Focus: Despite a rapidly expanding client base and a dizzying increase in transaction volumes, each client at Shriram Insight is special. We specialise in building long term relationships with our customers by providing them with the four things they desire most, viz., speed, convenience, reliability and personalised service. Our continuous strive to provide best service to our clients, results in receipt of not a single Arbitration Award against the company since its inception. Technology: Stock-broking being a process intensive activity, issues such as speed, accuracy, round-the-clock system availability and system security are of paramount importance and technology forms the backbone of the business. Which is why Shriram Insight is technology driven. We boast of state-of-the-art technology and an in-house team of highly competent software and networking engineers who constantly review systems and procedures to ensure operational efficiency. All our branches are connected through Wide Area Network (WAN) and are served by a centralized back office processing system, which enables clients to obtain up to date information online at the click of a button. Equity Research: Equity Research at Shriram Insight is more than just an activity its a passion. Our in-house team of dedicated and diligent equity research analysts, backed by the support of consultant experts, is constantly engaged in analyzing industry and 29

sectoral trends while keeping an eagle watch on daily ups and downs on the bourses. Daily Technical Analysis Reports on market trends and unbiased and objective investment advice is provided on request to every kind of investor - the untutored and the expert to make sure his hard-earned money moves that extra mile. The Research team is equipped with latest software and analytical tool with the aid of which company and sector specific reports are published from time to time based on a judicious blend of fundamental and technical analysis. Corporate social responsibility Concern for man and his fate must always form the chief interest of all technical endeavours Never forget this in the midst of your diagrams and equations" -Albert EinsteinAt the heart of Shriram Group, lies The Great Human touch, the commitment to community and social welfare. Our Social philosophy is to create societal balance through active engagement and contribution by our team and partners to bring about a total transformation in the society. Shriram Properties has been actively engaged with multiple social causes in addition to the Social welfare measures undertaken by Shriram Group. Please refer to shriram welfare trust for Shriram Groups Social Welfare Initiatives. In addition, the Employees of Shriram Properties continuously support the needs of Children of a Blind School in Bangalore, including books, stationery, learning aids, uniforms and infrastructure support. The employees at Shriram Properties participate in the integration of the blind children into the mainstream, by conducting events and sharing their experiences to motivate and inspire the children to emerge as responsible citizens. Distinctive recent annals towards accomplishing the CSR: 1. Adopting 500 underprivileged Children from Ten rural Schools in and around Pudukottai (Tamil Nadu), providing them educational support like meeting their 30

School Fees, providing them with School uniform, Books & Stationeries including School bags, breakfast nutritional powder, evening tuition classes. Besides, the children are also given motivational training in Soft skills. This Yeoman Service is rendered by Shriram Properties through GIVE LIFE Trust (http://www.givelife.in/) 2. Through Shiram foundation, Ashram Children Homes is assisted. Ashram caters to more than 500 children and destitute mothers in the city and outskirts of Chennai. Ashram also serves as a Transit Care and Foster Care centre with a Fit Institution certification under the Juvenile Justice Act 2000, by the Child Welfare Committee in Chennai, India. 3. Again, through Shriram Foundation, 830 Children of Stone Quarry workers near Thiruneermalai and Less privileged Children of the Schools in Vichur village (Thiruvallur District, Tamilnadu, India) and Anaikoil village (Nagapattinam District Tamilnadu, India) are also supported. 4. Contribution to Shivaram Trust whose objective is to impart Vedas, Preserve our culture, Spread the awareness aboutVedas - an institution based on the Gurukulam style of functioning. At Pudukottai, Tamil Nadu Sri Bhuvaneshwari Vidhya Bhavan (Nursery and Primary School) is opened in June 2009 by Sri Bhuvaneshwari Trust with a noble mission of providing Quality education to poor and needy children. Not a single rupee is collected in any form. Books, Notebooks, Uniforms are all provided free of cost to the students. Major chunk of contribution is from Mr.Murali, Managing Director in his personal capacity. Shrirams, Social responsibility towards the Target Customer, is demonstrated within the organization through the way we look at a business opportunity. These include the following. Legal Compliance Value for Money 31

keeping up the promise of quality products and services Being honest and Transparent Promoting high standards of ethics throughout the company As a big Corporate House, we are proud of our quality and

professionalism, at the same time we take pride in being socially responsible Corporate Citizen.

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THEORETICAL FRAMEWORK
Online trading refers to buying and selling securities via the Internet or other electronic means such a wireless access, touch-tone telephones, and other new technologies. Technology is revolutionizing every field of human endeavor and activity. The rapid growth in number, volume and value of securities in the Indian capital market expose the limitation of handling and dealing in securities in physical /Paper mode; the short comings of the market became manifest in terms of bad deliveries, delays in transfer and irregular settlement etc. Primary market is also referred to as New Issue Market. Primary market operations include new issues of shares by new and existing companies, further and right issues to existing shareholders, public offers, and issue of debt instruments such as debentures, bonds, etc. The number of listed companies rose from 2265 in 1980 to over Rs. 6800 at the end of 1998 the daily turnover accordingly shot up Rs. 25 crores in 1979-80 to about Rs 260 crores in 1994-95. The number of shareholders increased from 10 lakhs in 198 to 1.5 crores in 1998. The number of share holder and investors in mutual funds has also risen sharply from about 2 million to over 40 million during this period , rendering this nation to the position of having the second largest investor population in the world next only to USA. It eliminates the risk of bad deliveries, which in turn eliminates all costs and wastage of time associated with follow up for rectification. This reduction in risk associated with bad delivery has lead to reduction in Brokerage to the extent of 0.5% by quite a few brokerage firms. Screen-based trading facilitates the investor to keep a track of the transaction from the source to the end .He can punch in the orders and see the results at the bottom of the screen. Thus, one can get instant trade confirmation. The investor should familiarize himself with order entry screen and the software provided to 33

him. Any mistake made while inputting an order can cause him significant financial loss. Moreover, he will be responsible for any losses caused by lack of knowledge and/or experience .when an order is placed and executed, he becomes liable for payment of the securities. Active trading is dependent upon a number of specialized software systems. Disruptions or failure of any electronic systems utilized may lead the investor with an open position at which time losses can occur. The National Stock Exchange (NSE) followed by the stock exchange Mumbai (BSE) in 1995, first introduced electronic medium of trading. There was a time when an individual investor has to go to an exchange trading Ring to have his order executed .Today the premier exchanges of the country want To come to his door step ,or rather his desktop .Relationship marketing is really gaining momentum. The countrys two biggest exchanges the BSE and NSE have embraced the internet in an effort to leverage the power of this medium to reach out to the hitherto untapped masses. Says NSE former managing director ,RH .PATIL, our internet initiative is in line with our basic thrust which we have been following from day one ,when we Were conceived as a National Exchange with a mission to spread every where , To be as close to investors as possible. In India Geojit securities, a leading brokerage house has the distinction of being the first to offer online Trading as well as for derivatives According to functional basis financial markets are classified into two types. They are 1. Money markets (short-term) 2. Capital markets (long-term) According to institutional basis again classified in to two types. They are 1. Organized financial market 2. Non-organized financial market.

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The organized market comprises of official market represented by recognized institutions, bank and government (SEBI) registered/controlled activities and intermediaries. The unorganized market is composed of indigenous bankers, moneylenders, individual professional and non-professionals. MONEY MARKET: Money market is a place where we can raise short-term capital. Again the money market is classified in to Inter bank call money market Bill market and Bank loan market Etc.

Eg; treasury bills, commercial papers, CD's etc. CAPITAL MARKET: Capital market is a place where we can raise long-term capital. Again the capital market is classified in to 2 types and they are 1. Primary market and 2. Secondary market. 1. PRIMARY MARKET Primary market is generally referred to the market of new issues or market for mobilization of resources by the companies and government undertakings, for new projects as also for expansion, modernization, addition, diversification and upgradation. Primary market is also referred to as New Issue Market. Primary market operations include new issues of shares by new and existing companies, further and right issues to existing shareholders, public offers, and issue of debt instruments such as debentures, bonds, etc. The primary market is regulated by the Securities and Exchange Board of India (SEBI a government regulated authority).

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Function: The main services of the primary market are origination, underwriting, and distribution. Origination deals with the origin of the new issue. Underwriting contract make the shares predictable and remove the element of uncertainty in the subscription. Distribution refers to the sale of securities to the investors. The following are the market intermediaries associated with the market: Merchant banker/book building lead manager Registrar and transfer agent Underwriter/broker to the issue Adviser to the issue Banker to the issue Depository Depository participant

Investors protection in the primary market: To ensure healthy growth of primary market, the investing public should be protected. The term investor protection as a wider meaning in the primary market. The principal ingredients of investors protection are: Provision of all the relevant information Provision of accurate information and Transparent allotment procedures without any bias.

2. SECONDARY MARKET: The primary market deals with the new issues of securities. Outstanding securities are traded in the secondary market, which is commonly known as stock market or stock exchange. The secondary market is a market where scrips are traded. It is a market place which provides liquidity to the scrips issued in the primary market. Thus, the growths of secondary market depend on the primary market. More the number of companies entering the primary market, the greater is the volume of trade at the secondary market. Trading activities in the secondary market are done through the 36

recognized stock exchanges which are 23 in number including Over the Counter Exchange of India, National Stock Exchange of India and Interconnected Stock Exchange of India. Secondary market operations involve buying and selling of securities on the stock exchange through its members. The companies hitting the primary market are mandatorily required to list their shares on one or more stock exchanges in India including stock exchanges. Listing of scrips provides liquidity and offers an opportunity to the investors to buy or sell the scrips. The following intermediaries in the secondary market: Broker/member of stock exchange buyers broker and sellers broker Portfolio Manager Investment advisor Share transfer agent Depository Depository participants.

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 1. Ministry of finance 2. The Securities And Exchange Board of India 3. Governing body Members of the stock exchange: The securities contract regulation act 1956 has provided uniform regulation for the admission of members in the stock exchanges. The qualifications for becoming a member of a recognized stock exchange are given below: The minimum age prescribed for the members is 21 years. He should be an Indian citizen. He should be neither a bankrupt nor compound with the creditors. 37

He should not be convicted for fraud or dishonesty. He should not be engaged in any other business connected with a company. He should not be a defaulter of any other stock exchange. The minimum required educational is a pass in 12th standard examinatio

Meaning of demat:
A demat account allows you to buy, sell and transact shares without the endless paper work and delays. It is also safe, secure and convenient. What is Demat account? Demat refers to a dematerialized account. Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, you need to open a demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. Why demat? 1. 2. The demat account reduces brokerage charges. It enables quick ownership of securities on settlement resulting in

increased liquidity. 3. It avoids confusion in the ownership title of securities, and provides

easy receipt of public issue allotments. 4. It also helps you avoid bad deliveries caused by signature mismatch,

postal delays and loss of certificate in transit. 5. It eliminates risks associated with forgery, counterfeiting and loss due

to fire, theft or mutilation. 6. Demat account holders can also avoid stamp duty (as against 0.5

percent payable on physical shares), avoid filling up of transfer deeds. Steps involved in opening a demat account: Opening an individual demats account is a two-step process:

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1.

Approaching a DP and fill up the demat account-opening booklet. The

web sites of the NSDL and the CDSL list the approved DPs. 2. We receive an account number and a DP ID number for the account.

The cost opening and holding a demat account: There are four major charges usually levied on a demat account: 1. 2. 3. 4. Account opening fee Annual maintenance fee Custodian fee Transaction fee.

Online Equity Trading:


Through the internet, investors can quickly find affordable market research Stock information, and economic news. They often can have their broker/dealers execute trades almost instantaneously, while generally incurring lower Commissions. These facilities for online investing can thus provide significant benefits to many investors. At the same time, investors should recognize that online trading might present Special risks. For example, investors should understand that execution of their orders might be delayed during times of high market trading volume. Investors should appreciate the usefulness of limit orders, and they should treat bulletin boards and monetary with skepticism. E-broking or trading of stock market shares on the internet has captured the minds of individual investor worldwide. Report says more than seven million American Investors have gone online in the last 5-7years, and this number is likely to double in the next two years in many other countries including India , individual investors have come out in open support of this new trading system. The Internet has democratized the investing world by giving every web-enabled individual access to a rich reservoir of data and analyses on the stock market. In India, exchanges have been very proactive, rather than waiting. They have chosen to be the harbingers of change by allowing members who fulfill the criteria to take advantage of the internet by facilitating a 39

computer-to-computer trading link. Using internet, a broker can set up a NSE trading facility in a remote town at a far lower cost, which makes penetration of capital markets easier in rural areas. BSE has already embarked on a campaign of investor education and awareness about the benefits of online trading and the security features built into The internet trading system to be effected via the exchange trading plaza. there is A tremendous potential for growth in the online trading market as more and more Brokers are going online. Both BSE and NSE are trying to provide a cost-effective solution for their Members to provide a standards-based internet trading facility to their clients at a Fraction of the cost, of what it would cost the broker if he went alone. The typical Cost of setting up a decent sized internet trading solution is between Rs 10 to 15Crores, which a large number of brokers are unlikely to be affordable. The BSE Therefore Plans to offer an exchange based system that leverages the economies of scale to offer routing via a centralized engine with the additions of content of Companies, available with the exchange. BSE has introduced an application Service provider model, which has widely been accepted. NSE has formed a 50-50 joint venture with I-flex solutions to offer the Exchange trading solutions. The joint venture christened dotex international in addition to providing access to the exchanges order matching system will also allow access to fundamental analysis, balance sheet analysis and any other relevant company information. The BSE too is offering tools like technical analysis and scrip related information etc. on the site at a cost, which is 10 to 20%of the cost of the broker going solo. In India quite a number of websites today, offer online trading and e-Broking over the internet. These are either wholly specialized services or are being offered as an extension to an already existing offline business model. Popular Websites like ICICI direct.com investmartindia.com, Geojitsecurities.com, 5paosa.com, kotakstreet.com, sharekhan.com, offer basic online buying and selling of shares through major stock exchanges like the NSE , BSE and other or broking firm ,it differs from the way 40 regional stock exchanges .Although, in that the automation is built into the principle it is very much like how it is done traditionally and physically through a broker

system ,with the individual maintaining control of the path of transaction till the stage of execution .Only Demat (Dematerialization) shares can be traded on the internet.

Following are the sailent features and benefits offered to individuals who desire to trade online trading through various e-broking firms: Convenience Liquidity advantages Tracking Technology benefits In order to stay ahead in the competition e-broking firms have to provide their members with innovative schemes and clearly visible advantages in terms of Hassle-free transacting and more Obviously low brokerage rates. Online trading is bottle for the Indian investors purse. The entry of competitive price online broking services has brought the excitement back in a rather lack luster market. It has exposed the investors to the dynamics of day trading. Online trading also has a role to play in economic factors such as the mobilization of savings. From a macro economic perspective in the us, about 15% of savings were invested in equities in 1996. The concept of online trading is eminently flexible due to scalability of infrastructure and other evolving product offerings. Consequently the many benefits of online trading will continue to attract investors, which in turn in economics of massive scale from the going mass of transaction. In turn, this will enable web managers of online trading sites to constantly upgrade their product offering can enhance the quality of online trading experience, on a continuous basis.

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On-Line surveillance:
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ONLINE TRADING PLATFORM:


They are three types of online trading platforms are their: 1. Easy usage 2. Advance usage 3. Super usage ONLINE TRADING PLATFORM A) Easy usage: It is a powerful browser based trading system for those who are relatively new to online investing. A unique integrated account, linking your banking, broking, and demat accounts. Our cutting-edge trading interface gives you the power to research stock trends, find the latest stock quotes and make fast trades right from the computer you already have. You no longer have to depend on someone else to handle your trades - the power to make your mark on the stock market is in your hands. EASY Usage simplifies the online trading process and gives you unlimited access to your trading history to see where you started, where you are now and where 44

you have room to grow. And with our research and stock watch tools, you can be ready to trade stock at a moment's notice. Benefits of Easy usage: Trading on NSE & BSE World class resources Integrated Bank, Demat and Trading Accounts Get Current & Historical Order Status Monitor your orders Updated buying power Anywhere access Access to all back end reports and data Online Research & Exchange Calls.

B) Advance usage: Advance Usage is a Applet-based system designed specially for Active Traders. Customers can also trade on Advance Usage where they have access to live streaming quotes, which enables them to keep track of real-time price movement. Multiple market watch, message window and trading window, all in one screen, to help customers track individual stocks and make timely trades when investing online. Fast & capable trading application to power your online account. Benefits of Advance usage: Streaming quotes Market Depth Window Trading on NSE & BSE Anywhere access Create Multiple Watch lists

C) Super usage:

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Trade along side professional stock brokers from the comfort of your own home or office. Super Usage is an advanced, customizable online trading platform built exclusively for active traders like you. SUPER Usage launches right from your desktop and offers professional, complimentary tools that can help give you an advantage in the marketplace. SUPER Usage makes the most of state-of the-art technology to deliver power, speed and reliability. Benefits of Super usage: Personalized Stock Quote Lists Fully Customizable display Streaming Intraday, Daily and Weekly Charts Quick Quote.

ONLINE TRADING IN COMMODITIES:


INTRODUCTION: Commodities Futures trading! in India have a long history. The first commodity futures market appeared in 1875. But the new standardized form of trading in the Indian capital market is an attractive package for all the people who earn money through speculation by trading into FUTURES. It is a well-known fact and should be remembered that the trading in commodities through futures exchanges is merely, old wine in a new bottle. The trading in commodities was started with the first transaction that took place between two individuals. We can relate this to the ancient method of trading i.e., BARTER SYSTEM. This method faced the initial hiccups due to the problems like: store of value, medium of exchange, deferred payment, measure of wealth etc.. This led to the invention of MONEY. As the market started to expand, the problem of scarcity piled up.

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The farmers/traders then felt the need to protect themselves against the fluctuations in the price for their produce. In the ancient times, the commodities traded were the Agricultural Produce, which was exposed to higher risk i.e., the natural calamities and had to face the price uncertainty. It was certain that during the scarcity, the farmer, realized higher prices and during the oversupply he had to loose his profitability. On the other hand, the trader had to pay higher price during the scarcity and vice versa. It was at this time that both joined hands and entered into a contract for the trade i.e., delivery of the produce after the harvest, for a price decided earlier. By this both had reduced the future uncertainty. One stone still remained unturned- surety of honoring the contract on part from either of the parties. This problem was settled in the year 1848, when a group of traders in CHICAGO came forward to standardize the trading. They initiated the concept of to-arrive contract and permitted the farmers to lock in the price upfront and deliver the grain at a contracted date later. This trading was carried on a platform called CHICAGO BOARD OF TRADE, one of the most popular commodities trading exchanges today. It was this time that the trading in commodity futures picked up and never looked back. Although in the 19th century only agricultural produce was traded as a futures contract, but now, the commodities of global or at least domestic importance are being traded over the commodity futures exchanges. This form of trading has proved useful as a device for HEDGING and SPECULATION. The commodities that are traded today are: Agro-Based Commodities Wheat, Corn, Cotton, Oils, Oilseeds etc.. Soft Commodities.. Coffee, Cocoa, Sugar etc Livestock. Live Cattle, Pork Bellies etc Energy.. Crude Oil, Natural Gas, Gasoline etc Precious Metals.. Gold, Silver, Platinum etc Other Metals Nickel, Aluminum, Copper etc

Structure of the commodity market:


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Rolling settlement system: Under rolling settlement system, the settlement takes place n days (usually 1,2,3 or 5days) after the trading day. The shares bought and sold are paid in for n days after the trading day of the particular transaction. Share settlement is likely to be completed much sooner after the transaction than under the fixed settlement system. The rolling settlement system is noted by T+N i.e the settlement period is n days after the trading day. A rolling period which offers a large number of days negate the advantages of the system. Generally longer settlement periods are shortened gradually. SEBI made RS compulsory for trading in 10 securities selected on the basis of the criteria that they were in compulsory demats list and had daily turnover of about Re.1 crore or more. Then it was extended to A stocks in Modified Carry Forward Scheme, Automated Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme (BELSS) with effect from dec 31, 2001.

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SEBI has introduced T+5 rolling settlement in equity market from July 2001 and subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement experience it was further reduced to T+2 to reduce the risk in the market and to protect the interest of the investors from 1st April 2003. Activities on T+1: Conformation of the institutional trades by the custodian is sent to the stock exchange by 11.00 am. A provision of an exception window would be available for late confirmation. The time limit and the additional changes for the exception window is dedicated by the exchange. The exchanges/clearing house/ clearing corporation would process and download the obligation files to the brokers terminals late by 1.30 pm on T+1. Depository participants accept the instructions for pay in securities by investors in physical form up to 4 pm and in electronic form up to 6 p.m. the depositories accept from other DPs till 8p.m for same day processing. T+2 activities: The depository permits the download of the paying in files of securities and funds till 10.30 am on T+2 from the brokers pool accounts. The depository processes the pay in requests and transfers the consolidated pay in files to clearing House/clearing Corporation by 11.00am/on T+2. The exchange/clearing house/clearing corporation executes the pay-out of securities and funds latest by 1.30 pm on T+2 to the depositories and clearing banks. In the demat mode net basis settlement is allowed. The buy and sale positions in the same scrip can be settled and net quantity has to be settled.

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At the end of each trading day, concluded or locked-in trades are received from NSE by NSCCL. NSCCL determines the cumulative obligations of each member and electronically transfers the data to Clearing Members (CMs). All trades concluded during a particular trading period are settled together. FUNDS SETTLEMENT Currently, NSCCL offers settlement of funds through 13 clearing banks namely Canara Bank HDFC Bank Indusind Bank ICICI Bank Bank of India UTI Bank 50

IDBI Bank Standard Chartered Bank HSBC Ltd Kotak Mahindra Bank SBI Union Bank of India Citibank Funds pay-in obligation is required to have clear funds in his a/c on or before

11.00 a.m. on the scheduled pay-in day. The payout of funds is cr. to the clearing account of the members on or after 1.30 p.m. on the scheduled payout day. Clearing Account: The clearing account is to be used exclusively for clearing operations i.e., for settling funds and other obligations to the Clearing Corporation including payments of Margins and penal charges. Clearing Members are required to authorize the Clearing Bank to access their clearing account for debiting and crediting their accounts, reporting of balances and other information as may be required by NSCCL from time to time as per the specified format.

Safety of Transaction on the Internet: The safety of transaction on the internet depends on encryption system used. The better the transaction system , the more difficult it is for any person to Hack the site .Internationally ,the best system available today ,it is the 128-Bit Encryption, a system, which even the pentagon uses. Since in the online business, the order placed have pass through the network of public carriers, there exists a risk of data being intercepted or modified by a hacker or anyone with malicious intentions.

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According to industry experts , in future when the quantum of funds Manage by the online brokers reach significant levels a security related issues Would take the center stage .However, most of the domestic player use some kind of securities features to enable safe transaction on the net .Encryption , build on the Secured socked layer (SSL) protocol developed by Netscape ,provides sufficient amount of security to the customers. Although , a majority of players offer 40-Bits Encryption method , ICICI and investment have already graduated to 128-Bit Encryption technology .Though the data transmitted in the form of plain text is Quite vulnerable , encrypted data has a much better level of protection. It is true that pricing is still the unique selling proposition at the moment, But security could be the trump card for tomorrow. security and trust are the two important parameters, which will be crucial in determining a clients long term Relation with the broker. Mr. Anup Bagchi. COO at ICICI Direct, Brokerages are practically a nonissue, going by the US experience. What matters more are things like trust and security especilly because the service involves dealing with peoples cash as well as stocks. The customer is also responsible for ensuring safety of online transactions. He normally gets a secured user ID and password, the secrecy of which is to be maintained entirely by him. If the transaction system requires no manual intervention, it becomes safer. Among the Indian sites, ICICI Direct. Com, Investsmart India Ltd., Sharekhan, Indiabulls.com are among the few fully integrated online trading sites. It enables the elimination of the possibility of any manual intervention. Thus, orders can be directly sent to the exchange, ensuring that the investor gets the best and right Price.

Advantages of Online Trading:


Many customers, who have chosen to trade shares online today , had at one Point of time been trading through offline brokers .After realizing the advantages of trading shares online, they have switched over to online trading now. However, before choosing an online trading site ,all the sites should be compared in order to form a decision. 52

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 when to brokers office .Thus, we have access to a lot more information online to self teach ourselves.

It eliminates the risk of bad deliveries, which in turn eliminates all costs and wastage of time associated with follow up for rectification. This reduction in risk associated with bad delivery has lead to reduction Brokerage to the extent of 0.5% by quite a few brokerage firms. Screen-based trading facilitates the investor to keep a track of the transaction from the source to the end .He can punch in the orders and see the results at the bottom of the screen. Thus, one can get instant trade confirmation. in

Online trading has left room for small organizations to compete with Multinational organizations, since is no longer a legit issue. Being online does not identify the size of any particular organization.

Online trading has allowed companies to locate themselves were 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 the can exercise it over their accounts thus comprehend what is going on the trade. It is like going back to school and reeducating 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 stocks for long-term basis. Now they can invest in stocks, and index options, mutual funds, individuals, government, corporate, municipal bonds, various types of IRA account, mortgages and even insurance.

Online trading has it possible for one to find investment options that were not available on a regular basis, like off-beat net stock, eccentric unique things and trading in global market. only to enquire about the prices of various scripts, Internet trading connects the stock exchanges directly of the investor ,who should make sure that the online trading site ,he selects provides him the trading screen ,which uses the push technology to display prices. Using the push technology the trading screen

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display the real time prices of 10 to 15 script s at a glance, unlike pull technology where in one needs to type the quote every time one needs the price. Internet has made it possible for broking firms to transmit key market information to all clients at one go. Market watch screen gives live ticks update on the desktop, where by the investor can set a number of scripts of his choice, which will keep ticking through streaming quotes without manual intervention. Clients find it easier and convenient to interact with their broker in a web-enable environment. In the past there were instances of broker misleading the information given to them by their clients, because of communication lags. This led in effect ruined several investors. The internet ensures speedy and correct flow of information between all users. Online trading sites provide professional advice to investors. Many investors are not knowledgeable about the stock markets and need advice about their investment decisions.

Disadvantages of Online Trading:


The ease and speed of online trading can give the investor a false sense of security and encourage him to trade more frequently without paying any heed to market basics like, researching a company or knowing the risk he is going to assume. The concept of chat rooms, which has become very popular with the investors, may provide them with misleading information. Chat room participants are often paid to high light certain stocks. Online trading is not always instantaneous. In a rapidly changing market, orders may not get executed at the price on the computer screen .This is because even a nano seconds delay can put one out of the race for that particular stock at that particular price. Delays in execution usually arise due to various technological choke -points like the internet slowing down to heavy traffic or if the modems , computer or internet service provider (ISP) is mal functioning .If the investor dose not factor in these technological lags while entering into a volatile market ,he may suffer heavy losses.

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The investor should familiarize himself with order entry screen and the software provided to him. Any mistake made while inputting an order can cause him significant financial loss. Moreover, he will be responsible for any losses caused by lack of knowledge and/or experience .when an order is placed and executed, he becomes liable for payment of the securities.

Active trading is dependent upon a number of specialized software systems. Disruptions or failure of any electronic systems utilized may lead the investor with an open position at which time losses can occur.

Customers trading on-line may have difficulty accessing their account due to high internet traffic or because of systems capacity limitations .Customers trading through representatives of on- line firms ,when on-line trading has been disabled or in not available because of system limitation, may have difficulty reaching account representatives on the telephone during periods of high volume.

Trouble Shooting:
1. From the Investors points of view: To prevent any technological choke point, the investor can place a limit order an not a market order when entering a volatile market. A limit order gets executed only at a specific price. The is a, buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher .By entering a limit order rather than a market order, he will not be caught buying a stock a price he hadnt planned for due to the problems faced with bandwidth. Security is the key requirement for the investors protection. It is absolutely essential to protect the user identification and password. He must also protect against computer entry by some one other than himself after initializing his system. The system should not be left unattended and must be properly shut down when he is not actively using it. The investor is responsible for all trades entered under his user identification and password. For his protection, frequent changing of password is recommended. It is very important that he reconciles his account on a daily basis

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2. From the brokers point of view: In the absence of any direct interface the organization and the clients, online share trading firms should maintain seamless communication with their clients. But, this is not always the case. Customers orders can be slowed down for reasons outside of the firms control. But explaining clearly to customers rather than merely disclaiming liability through complex and legalistic language would go a long way towards shorting up the customers confidence in the firm.

INTERNET TRADING AND ONLINE INVESTING:


INTERNET FRAUD: How to Avoid Investment Scams: The serves as an excellent tool for investors, allowing them to easily and inexpensively research investment opportunities. But the internet is also an excellent tool for fraudsters. Thats why you should always think twice before you invest your money in any opportunity you learn about through the internet. This alert tells you hoe to spot different types of internet fraud, what the SEC is doing to fight internet investment scams, and how to use the internet to invest wisely. Navigating the Frontier: The internet allows individuals or companies to communicate with a large audience without spending a lot of time, effort, or money. Anyone can reach ,ten thousands of people by building an internet website, posting a message on an online bulletin board, entering a discussion in a live chat room, or send help investors gather valuable information, some online newsletters are tools for fraud. Some companies pay the people who write online newsletters cash or securities to tout or recommend their stocks .While this isnt illegal, the federal securities laws require the newsletters to disclose who paid them, the amount and the type of payment. But many fraudsters fail to do so. Instead, they will lie about the payments they received; their fraudsters fail to do so. 56

Instead, they will lie about the payments they received, their independence, their so-called research and their track records. Their newsletters masquerade as sources of unbiased information, when in fact they stand to profit handsomely if they convince investors to buy or sell particular stocks. Some online newsletters falsely claim to independently research the stocks they profile. Others spread false information or promote worthless stocks. The most notorious sometime scalp the stocks they type, driving up the price of the stock with their baseless recommendations and then selling their own holding at high prices and high profits. To learn how to separate the good from the bad, read our tips for checking out newsletters. E-mail Spams: Because spam-junk e-mail- is so cheap and easy to create, fraudsters increasingly use it to find investors for bogus investment schemes or to spread false information about a company. Spam allows the unscrupulous to target many more potential investors than cold calling or mass mailing. Using a bulk e-mail program, spammers can send personalized messages to thousands and even millions of internet users at a time. How to Use the Internet Wisely If you want to invest wisely and steer clear of frauds, you must get the facts. Never ever, make an investment based solely on what you read in an online newsletter or bulletin board posting, especially if the investment involves a small, thinly-traded company that isnt will known and even think about investing on your own in small companies that dont file regular reports with the SEC,Unless you are willing to investigate each company thoroughly and to check the truth of statement about the company .For instance, youll need to: Get financial statements from the company and be able to analyze them. Verify the claims about new product development or lucrative contracts. Call every supplier or customer of the company and ask if they really do business with the company. 57 every

Check out the people running the company and find out if they have ever made money for investors before and it doesnt stop there.

ONLINE INVESTMENT FRAUD: New Medium, same old scam: The types of investment fraud seen online mirror the frauds perpetrated over the phone or through the mail. Remember that fraudsters can use a variety of internet tool to spread false information, including bulletin boards, online newsletters, spam, or chat including internet relay chat or web page chat. They can also build a glitzy, sophisticated web page. All of these tools cost very little money and can be found at the fingertips of fraudsters. Consider all offers with skepticism. Investment frauds usually fit one of the following categories: The pump and Dump Scam: Its common to see messages posted online that urge readers to buy a stock quickly or tell you to sell before the prices goes down. Often the writers will claim to have inside information about an impending development or to use an infallible combination of economic and stock market data to pick stocks. In reality, they may be insiders or paid promoters who stand to gain by selling their shares after the stock price is pumped up by gullible investors. Once these fraudsters sell their shares and stop hyping the stock, the price typically falls and investors lose their money. Fraudsters frequently use this plan with small, thinly traded companies because its easier to manipulate a stock when theres little or no information available about the company.

The Pyramid: Be wary of messages that read .How To Make Big Money From Your Home Computer!!! One online promoter claimed that investors could turn 45 into$60000 in 58

just three to six weeks, in reality, this program was nothing more than a products toted do not even exist-they are merely scams, be wary of opportunities that promise spectacular profits or guaranteed returns. If the deal sounds too good to be true, then it is probable. Off-Shore Frauds: At one time, off-shore schemes targeting U.S. investors cost a great deal of money and were difficult to carry out. Conflicting time zones, differing currencies and the high costs of international telephone calls and overnight mailings made it difficult for fraudsters to prey on U.S. residents. But the internet has removed those obstacles. Be extra careful when considering any investment opportunity that comes from another country, because its difficult for U.S. law enforcement agencies to investigate and prosecute foreign frauds.

DATA ANALYSIS & INTERPRETATION


Awareness of online trading
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Table 5.1: PARTICULARE Yes No TOTAL INVETORS RESPONSE 90 10 100

Graph 5.1:

INTERPRETATION: From the above graph we can say that 90% of the people are aware of online trading and 10% of them are not aware of it.

Participation in the share market


Table 5.2:

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PARTICULARE Yes No TOTAL

INVETORS RESPONSE 63 37 100

Graph 5.2:

INTERPRETATION: From the above graph we can say that 63% people actively participate in share market and 37% of do not participate.

Online investors of various categories


Table 5.3: PARTICULARE INVETORS RESPONSE

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Uncertain newcomer Moderate active trader Active day trader Hands in every pot TOTAL

33 27 27 13 100

Graph 5.3:

INTERPRETATION: The above graph depicts that 33% of them are uncertain newcomer, 27% of them belong to moderate active trader category and active day trader and 13% of them belongs to hand in every pot category.

Demat Account Customers


Table 5.4:

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PARTICULARE Yes No TOTAL

INVETORS RESPONSE 67 33 100

Graph 5.4:

INTERPRETATION: From the above graph we can say that 67% of the investors have Demat account and 33% of them doesnt have Demat account.

The depository you take into consideration for accessing Demat account
Table 5.5: PARTICULARE INVETORS RESPONSE 63

NSDL CDSL TOTAL

77 23 100

Graph 5.5:

INTERPRETATION: From the above graph we can say that 77%of the people are in favor of NSDL depository and 23% are in favor of CDSL depository.

Favour of Demat Account

Table 5.6: PARTICULARE INVETORS RESPONSE 64

Yes No TOTAL

77 23 100

Graph 5.6:

INTERPRETATION: From the above graph we can say that 77% of the people are in favor of demat account and 23% of them are not in favor of it.

Most Preferable Attribute While Investing

Table 5.7:

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PARTICULARE Rate of return Liquidity Convenience Regulation TOTAL

INVETORS RESPONSE 40 43 7 10 100

Graph 5.7:

INTERPRETATION: From the above graph we can say that Liquidity (43%) is most preferable among all the attributes.

Awareness on the Nature of risk involved in online Trading


Table 5.8: PARTICULARE INVETORS RESPONSE

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Yes No TOTAL

83 17 100

Graph 5.8:

INTERPRETATION: From the above graph we can say that (83%) majority of the people are aware of risk involved in online trading.

Brokers Activities Involved in Online Trading


Table 5.9: PARTICULARE INVETORS RESPONSE 67

Yes No TOTAL

50 50 100

Graph 5.9:

INTERPRETATION: From the above graph we can say that 50% of the investors check brokers activities and 50% do not check.

Changes in earlier Trading and at Present Trading

Table 5.10:

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PARTICULARE Yes No TOTAL

INVETORS RESPONSE 100 0 100

Graph 5.10:

INTERPRETATION: From the above graph we can say that 100% of the people are aware of online trading and 0% of them are not aware of it.

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The System do you feel more Convenient in Trading


Table 5.11: PARTICULARE Yes No TOTAL INVETORS RESPONSE 20 80 100

Graph 5.11:

INTERPRETATION: From the above graph we can say that 20% of the people are in favor of screen based trading and 80% of them in favor of outcry system.

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Security in Online Trading


Table 5.12: PARTICULARE Yes No TOTAL INVETORS RESPONSE 85 15 100

Graph 5.12:

INTERPRETATION: The above graph indicates 85% people believe that online trading is secure. This shows that the online trading has taken a good place in the minds of Indian stock traders and the Indian consumer or investor is moving towards online trading faithfully.

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Importance of Security Factor for Online Trading


Table 5.13: PARTICULARE Strongly Agree Agree Neither agree nor disagree Disagree Strongly disagree TOTAL Graph 5.13: INVETORS RESPONSE 40 22 5 23 10 100

INTERPRETATION: Majority of the people agree that they consider security as an important factor when they go for online trading, while 23 respondents disagree with this fact. Five people have neutral opinion.

Investors Interest to Trade Online


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Table 5.14: PARTICULARS Equity Portfolio Management Commodities Future and options TOTAL Graph 5.14: INVESTORS RESPONSE 55 5 18 12 100

INTERPRETATION: Maximum number of people prefers to trade in equity online. The second preference is to trade in Portfolio management which is about 5%. 18% deal in Commodities and 12% deal in future and options.

Role of Online Trading In Growth and Development Of Indian Stock Market


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Table 5.15: PARTICULARS Yes No TOTAL INVESTORS RESPONSE 86 14 100

Graph 5.15:

INTERPRETATION: About 86% people responded that online trading has helped the growth and development of Indian stock market and 14% people disagree with this fact.

Investors Preferable Methods


Table 5.16: 74

PARTICULARS Online Offline Both TOTAL

INVESTORS RESPONSE 62 25 13 100

Graph 5.16:

INTERPRETATION: More than half number of people prefer online trading, 25% people prefer offline trading while 13% people prefer both online and offline.

Online Trading is Easy and Fast Way of Trading


Table 5.17:

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PARTICULARS Yes No TOTAL

INVESTORS RESPONSE 92 8 100

Graph 5.17:

INTERPRETATION: Maximum people say that online trading is easy and fast way of trading while 8 people say it is not easy and fast way of trading.

Introduction of Online Trading has Helped in Attracting the New Investors


Table 5.18: 76

PARTICULARS Yes No TOTAL Graph 5.18:

INVESTORS RESPONSE 92 8 100

INTERPRETATION: About 92 people feel that online trading has helped in attracting the new investors while 8 people believe that it does not attract new investor.

Agree with the Extended Timings of Trading Hours


Table 5.19:

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PARTICULARS Yes No TOTAL

INVESTORS RESPONSE 37 63 100

Graph 5.19:

INTERPRETATION: Only 63 people are satisfied with extended trading hours and majority of people i.e., 37 are not happy with the extended hours of trading.

Awareness about Equities Market


Table 5.20:

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PARTICULARS
Yes No TOTAL

INVESTORS RESPONSE
92 8 100

Graph 5.20:

INTERPRETATION: From the above graph we can say that 92 of the people are in favor of demat account and 8 of them are not in favor of it.

FINDINGS:

1. Online trading is more powerful & advantageous than manual trading.

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2. The software or the systems used in online trading should be advanced and the persons who operate should have minimum knowledge. 3. Tips are available for trading online and invest wisely. So that the investor can avoid the fraud. 4. It should increase the speed of executing the orders. 5. Due to invention of online trading here has been greater benefit to the investors as they could buy/sell shares as and when required. 6. It has to take necessary steps to attract the customers through the Internet. 7. Instant bank account should be provided as the other companies are providing. 8. It should have separate department for portfolio management. 9. Most of the investors like to trade along with brokers. 10. Online makes direct contact between the investors and it avoids the presence of middleman. 11. Majority of the people consider security as an important factor for online trading, while 33 respondents disagree with this fact. Five people have neutral opinion. 12. Maximum number of people prefer to trade in Equity online.

SUGGESTIONS:

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The suggestion to exchange authorities is to take steps to educate investors about their rights and obligation, try to increase investors confidence. I suggest the exchange authorities need to appoint skilled people for executing online operations. Try to explain them how fraud will take place so that they will be alert and they can take necessary steps to avoid the frauds. Genuine investors are not at all interested in the speculative gain as their investment is based on the future profits, therefore the authorities of exchange should be more vigilant in imposing heavy margin to curb the speculative of securities.

The companies should come up with more and more innovative features in their web portals. The customer should be educated regularly regarding the new technologies and of online trading and also other relevant information The companies should make efforts to promote online trading and awareness about its benefits. The companies should look after to develop more safe and secure ways of transacting business online. The companies should make maximum efforts to detect fraud cases and minimize them. To amend the various Acts for minimizing the fraudulent activities in online trading. The company should make awareness about preference shares rather than equity shares.

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CONCLUSION:
Due to changes in technology SHRIRAM INSIGHT SHARE BROKERS LTD has changed its trading activities into online trading system. So that transactions will be performed efficiently. Things have changed for the better with the SHRIRAM INSIGHT SHARE BROKERS LTD going online coupled with endeavors to stream line the whole trading system, thing have changed dramatically over the last 3-4 years. New and advanced technologies have breached geographical and cultural barriers and have brought the country wide market to doorstep. In the present scenario and to compete the RSEs would require sound infrastructure and trading as per international standards. The concept of business have changed and today it has become service to clients or to provide the best possible service to clients or to engage into new business practices in the other exchanges of the world . In order to stem the flow of business from the regional center to the metro centers and to impart liquidity introductions of online trading is necessary. i.e demand of the day presently. Tips are available for trading online and to invest wisely, so that the investors can avoid the frauds. The introductions of online trading would influence in the investors resulting in an increase in the business of the exchange. It has helped the brokers handling a vast amount of transactions and this can be achieved through delivering and settlement system with adequate protections to investors system. The trading of SHRIRAM INSIGHT SHARE BROKERS LTD on the first day was Rs 1.8 crores. Due to invention of online trading there has been greater benefit to the investors as they could sell /buy shares as and when required and that to with online trading will inspire confidence in investors resulting in increase in business of exchange.

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QUESTIONNAIRE:
1. Are you aware of online trading? (a) Yes (b) No

2. Do you actively participate in the share market? (a) Yes (b) No

3. Which online investor category you belong to? (a) Uncertain newcomer (c) Active day trader 4. Do you have a Demat account? (a) Yes (b) No (b) Moderate active trader (d) Hand in every pot

5. Which depository do you take into consideration for accessing Demat account? (a)National Securities Depository Limited (NSDL) (b)Central Depository Services Limited (CDSL) 6. Are you in favour of Demat account? (a)Yes (b) No

7. Which is the most preferable attribute while investing? Comment (a) Rate of return (c) Convenience (b) Liquidity (d) Regulation

8. Are you aware the nature of risk involved in online trading? (a) Yes (b) No

9. Do you check brokers activity involved in online trading? (a) Yes (b) No

10. Do you feel any changes in earlier trading and at present trading? (a)Yes (b) No 83

11. Which system do you feel more convenient in trading? (a) Outcry system (b) Screen based system

12. Do you feel online trading is secure? (a) Yes (b) No

13. Is security an important factor for online trading? (a) Strongly Agree (d) Disagree (b) Agree (e) Strongly Disagree (c) Neither Agree nor Disagree

14. In which of the following do you trade online (a) Equity (c) Commodities (b) Portfolio Management (d) Future and Options

15. Do you think online trading has helped the growth and development of Indian stock market? (a) Yes (b) No

16. Which of the following methods do you prefer? (a) Online (b) Offline (c) Both

17. Do you think online trading is easy and fast way of trading? (a) Yes (b) No

18. Do you think introduction of Online Trading has helped in attracting the new investors thus increasing the trading volumes at stock market? (a) Yes (b) No

19. Do you agree with the extended timings of trading hours? (a) Yes (b) No

20. Do you know about Equities market? (a)Yes (b) No

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