Capital Market

Capital Market consists of two types:

a. Primary Market b. Secondary Market

a. Primary Market:

The primary market provides the channel for sale of new securities. Primary Market provides opportunity to issuers of securities; Government as well as Corporates, to raise resources to meet their requirements of investment and /or discharge some obligation.

Most companies are usually started privately by their promoter(s). However, the promoters capital and the borrowings from banks and financial Institutions may not be sufficient for setting up or running the business over a long term. So companies invite the public to contribute towards the equity and issue shares to individual investors. The way to invite share capital from the public is through a Public Issue . Simply stated, a public issue is an offer to the public to subscribe to the share capital of a company. Once this is done, the company allots shares to the applicants as per the prescribed rules and regulations laid down by SEBI.

They may issue the securities at face value, or at a discount/premium and these securities may take a variety of forms such as equity, debt etc. They may issue the securities in domestic market and/or international market.

Primarily, issues can be classified as a Public, Rights or Preferential issues (also known as private placements). While public and rights issues involve a detailed procedure, private placements or preferential issues are relatively simpler. The classification of issues is illustrated below:

Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer s securities.

A follow on public offering (Further Issue) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document.

Rights Issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders.

A Preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons under Section 81 of the Companies Act, 1956 which is neither a rights issue nor a public issue. This is a faster way for a company to raise equity capital.

The price at which a company's shares are offered initially in the primary market is called as the Issue price. When they begin to be traded, the market price may be above or below the issue price.

b. Secondary Market:

Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.

In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading venue in which already existing/pre-issued securities are traded among investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market.

The stock exchanges in India, under the overall supervision of the regulatory authority, the Securities and Exchange Board of India (SEBI), provide a trading platform, where buyers and sellers can meet to transact in securities. The trading platform provided by NSE is an electronic one and there is no need for buyers and sellers to meet at a physical location to trade. They can trade through the computerized trading screens available with the NSE trading members or the internet based trading facility provided by the trading members of NSE.

An efficient capital market ensures protection of interest of the investors. Therefore stock exchanges in India now operate with due recognition from securities and Exchange Board of India (SEBI) / the Government under the SEBI Act, 1992 and the securities Contracts (Regulation) Act, 1956 respectively .To regulate the securities market, SEBI was initially established in 1988 as an interim Board under control of the Ministry of Finance, Government of India. In 1992, the SEBI Act was passed through which the SEBI came into existence. Hence SEBI acquired statutory status by passing an ordinance, which was subsequently converted into an Act passed by the parliament. The main objectives of SEBI are to protect the

interest of the investors, regulate and promote the capital market by creating an environment. In 1992, Over The Counter Exchange Of India (OTCEI) came into existence where equities of small companies are listed. In 1994, National Stock Exchange (NSE) came into existence, which brought an end to the open out- cry system of trading securities, which was in vogue for 150 years, and introduced Screen Based Trading (SBT) system. BSE s On Line Trading System was launched on March 14, 1995. Now the trading in securities is done using screen based trading method through duly authorized members of the exchange.

Following are the main financial products/instruments dealt in the Secondary market which may be divided broadly into Shares and Bonds:

Shares: Equity Shares: An equity share, commonly referred to as ordinary share, represents the form of fractional ownership in a business venture.

Rights Issue/ Rights Shares: The issue of new securities to existing shareholders at a ratio to those already held, at a price. For e.g. a 2:3 rights issue at Rs. 125, would entitle a shareholder to receive 2 shares for every 3 shares held at a price of Rs. 125 per share.

Bonus Shares: Shares issued by the companies to their shareholders free of cost based on the number of shares the shareholder owns.

Preference shares: Owners of these kind of shares are entitled to a fixed dividend or dividend calculated at a fixed rate to be paid regularly before dividend can be paid in respect of equity share. They also enjoy priority over the equity shareholders in payment of surplus. But in the event of liquidation, their claims rank below the claims of the company s creditors, bondholders/debenture holders.

Cumulative Preference Shares: A type of preference shares on which dividend accumulates if remained unpaid. All arrears of preference dividend have to be paid out before paying dividend on equity shares.

Cumulative Convertible Preference Shares: A type of preference shares where the dividend payable on the same accumulates, if not

paid. After a specified date, these shares will be converted into equity capital of the company.

Bond: is a negotiable certificate evidencing indebtedness. It is normally unsecured. A debt security is generally issued by a company, municipality or government agency. A bond investor lends money to the issuer and in exchange, the issuer promises to repay the loan amount on a specified maturity date. The issuer usually pays the bond holder periodic interest payments over the life of the loan. The various types of Bonds are as follows:

Zero Coupon Bond: Bond issued at a discount and repaid at a face value. No periodic interest is paid. The difference between the issue price and redemption price represents the return to the holder. The buyer of these bonds receives only one payment, at the maturity of the bond.

Convertible Bond: A bond giving the investor the option to convert the bond into equity at a fixed conversion price.

Treasury Bills: Short-term (up to one year) bearer discount security issued by government as a means of financing their cash requirements.

STOCK EXCHANGE

Meaning of Stock Exchange

Section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) defines the term stock exchange as:

An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting and controlling the business of buying, selling and dealing in securities.

As per this definition it is clear that: a) A stock exchange is established by a group of individual. b) It may be registered or may not be registered under the act. c) It is established for the purpose of

a. Providing assistance and b. Controlling the activities connected with buying, selling and

dealing in securities. In simple terms A stock Exchange is a market where stocks and shares are bought and sold It is a place where any individual wishing to buy or sell a particular security can find a ready customer.

In essence, therefore, the stock exchange provide a convenient machinery where by the investor not only gets an easy market for his shares, but also the services of the experts who have the ability to assess successfully both the value and prospects of the shares which are being bought and sold. It provides a continuous an active market, where the almost ceaseless haggling of many buyers and sellers helps to determine the prices of shares with precision and certainty. It enables investors spread throughout the country to know at any moment of time what their investments are worth.

The stock exchange is thus a good e.g. of what the economist calls a perfect market. The authorities of the stock exchange also try to make the

market as nearly perfect as possible in the social and ethical sense by ensuring a reasonable measure of safety and fair dealing. The Stock Market in India is more than a century old and it had functioned continuously through the medium of organized Stock Exchanges. At present, there are twenty-two such Stock Exchanges in India recognized by

Government under the Securities Contracts (Regulation) Act, 1956. They are at

1. Ahmedabad 2. Bangalore 3. Baroda 4. Bhubaneswar 5. Bombay 6. Bombay (OTC) 7. Calcutta 8. Cochin 9. Coimbatore 10. Delhi 11. Gauhati 12. Hyderabad 13. Indore 14. Jaipur 15. Kanpur 16. Ludhiana 17. Madras 18. Mangalore 19. Meerut 20. Patna 21. Pune 22. Rajkot

These recognized Stock Exchanges operate under the Rules, Bye-laws and Regulations approved by Government and they constitute and organized capital market for securities issued by the Central and State Governments, Public Bodies and Joint Stock Companies.

The recognized Stock Exchanges at Bombay and Indore are voluntary non-profit-making associations, while the Calcutta, Delhi, Bangalore, Cochin, Ludhiana, Gauhati and Kanpur Stock Exchanges are joint stock companies limited by shares and the Madras, Hyderabad and Pune Stock Exchanges are approved by the Central Government, there is a board uniformity in their organization.

The Governing Body of a recognized Stock Exchange has wide governmental and administrative powers. It has the power, subject to

Government approval, to make, amend and suspend the operation of the Rules, Bye-laws and Regulations of the Exchange. It also has complete jurisdiction over all the members and in practice its powers of management and control are almost absolute. Under the constitution, the governing body has the powers to admit and expel members; to warn, censure, fine and suspend members and their partners, attorneys, remisiers, authorized clerks and employees; to approve the formation and dissolution of partnerships and appointment of attorneys, remisiers and authorized clerks to enforce attendance and information, adjudication disputes and impose penalties; to determine the mode and conditions of stock exchange business and regulate stock exchange trading in all its aspects; and generally to supervise, direct and control all matters and activities affecting the Stock Exchange.

FUNCTIONS AND SERVICES OF STOCK EXCHANGE

In a capitalist economy, the stock exchange assumes a very important role. Without an efficient stock exchange, the savings of the community, which are essential for economic progress and productive efficiently, would be used much less completely and much more wastefully. The economic services which are securities market renders to a country with a large private sector are thus of considerable importance.

a) In the first place, the security market provides an organized market for the securities which ensures efficient marketability and price continuity for shares so necessary for the needs of the investors.

b) Secondly, it provides for a reasonable measure of safety and fair dealing in the buying and the selling of the securities.

c) Thirdly, though the interplay of the demand for and the supply of securities, a properly organized stock exchange assists in reasonably correct evaluation of securities in terms of their real worth.

d) Lastly, through such evaluation of securities, the stock exchange helps the orderly flow of distribution of savings as between the different types of competitive investments.

Functions:

1. The provisions of the highly liquid and continuous market are one of the most useful functions of the stock exchange. Such a market ensures liquidity of the capital, i.e. it enables the conversion of a

capital asset into cash quickly with a minimum of loss. This implies the existence of the broad and continuous market, i.e. a place where there are frequent purchases and sales and where shares and securities could be bought and sold at comparatively small variations from the last quoted price.

2. Another function of the stock exchange is the evaluation of securities at their true worth and through it the direction of the flow of savings into the most productive firms of investment. The existence of a stock exchange enables a constant and accurate formation and registration of prices as they change in response to the varying forces of demand and supply.

3. They also facilitate direct placing of new capital by industrial enterprises. Thus, the companies whose shares are listed on an organized stock exchange can sell their securities, better than those which are not so listed; this facilitates new financing by industry. The fact that a new security is to be listed on a stock exchange also improves its sale prospects.

4. An organized stock exchange also ensures, through its regulations and by-laws a reasonable degree of safety and fair dealings to the investors. The sanctity of contracts entered into on the stock exchange is strictly insisted upon a fraudulent practices eliminated.

5. A stock exchange also ensures that its members and brokers, through whom the public deals in securities on the exchange, are men of means, integrity and technical skill so that the risk of default is minimized.

WORKING OF STOCK EXCHANGE

For Membership in Stock Exchange The regulations governing the admission of members of the recognised Sock Exchanges are uniform in terms of the provisions of the Securities Contracts (Regulations) Rules, 1957. These Statutory Rules provide that no person shall be eligible to be elected as a member

1. if he is less than 21 years of age; 2. or is not a citizen of India; 3. or has been adjudged bankrupt, insolvent or has compounded with

his creditors; 4. or has been convicted of an offence involving fraud or dishonesty; 5. or engaged as principal or employee in any exchange.

1. OLD WORKING PATTERN OF STOCK EXCHANGE:

Transactions in shares were done on the floor of the exchange, which was a place of great commotion and hectic activity. The floor used to be crowded with members and their assistants, since only members of the stock exchange were allowed to transact business on the floor of the exchange. As soon as an order was received from the client, the broker noted it down in his order book. He then went to the floor himself or instructs his authorized clerk to put it through. The floor of the exchange was divided into a number of separate booths, one for each particular security, where the business in that scrip was transacted. Transactions on the floor of the exchange could be put through only in terms of the specified unit of trading which may be in lots of 5, 10 or even 100 shares depending mainly on its paid up value.

Transactions on the floor of the exchange were done by word of mouth and no contract was signed at the time the bargain was struck. Only the broker notes down in a small pad the firm s name, the membership number, the shares purchased or sold and the price. After the close of business, the authorized clerk used to enter the day s transactions in the books maintained in the office with all particulars, such as brokerage, name of the party etc. The broker then prepared a Contract Note to the other broker or party as the case may be and informed the client accordingly. On the next day, the Contract Notes are compared by each broker and they are signed by the opposite parties. The Contract Note is then sent to the client. As investor can buy shares either for cash or for the account. A cash transaction was completed by payment of cash and delivery of cash either immediately or within a short time. Settlement of cash transactions was affected by hand delivery between the members themselves. The seller gave shares certificates to his broker along with the transfer form duly signed in favor of the buyer. The seller s broker then handed over the certificate, together with the transfer form, to the buyer s broker, and also recovered from him the price of the shares. He the passed on the price of the shares to the seller after deducting his brokerage charges.

2. NEW WORKING PATTERN OF STOCK EXCHANGE:

The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a nationwide, on-line, fullyautomated screen based trading system (SBTS) where a member can punch into the computer the quantities of a security and the price at which he would like to transact, and the transaction is executed as soon as a matching sale or buy order from a counter party is found.

NSE is the first exchange in the world to use satellite communication technology for trading. Its trading system, called National Exchange for Automated Trading (NEAT), is a state of-the-art client server based application. At the server end all trading information is stored in an inmemory database to achieve minimum response time and maximum system availability for users. It has uptime record of 99.7%. For all trades entered into NEAT system, there is uniform response time of less than one second.

The client may go to the broker s office or place an order on the phone/internet or as defined in the Model Agreement, which every client needs to enter into with his or her broker.

There are only 2 Stock Exchanges in India

NATIONAL STOCK EXCHANGE (NSE)

BOMBAY STOCK EXCHANGE (BSE)

NATIONAL STOCK EXCHANGE (NSE)

NSE introduced for the first time in India, fully automated screen based trading. It uses a modern, fully computerized trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest.

The NSE trading system called 'National Exchange for Automated Trading'

(NEAT) is a fully automated screen based trading system, which adopts the principle of an order driven market.

The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.

The National Stock Exchange (NSE) is India's leading stock exchange covering various cities and towns across the country. NSE was set up by leading institutions to provide a modern, fully automated screen-based trading system with national reach. The Exchange has brought about unparalleled transparency, speed & efficiency, safety and market integrity. It has set up facilities that serve as a model for the securities industry in terms of systems, practices and procedures.

NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure, market practices and trading volumes. The market today uses state-of-art information technology to provide an efficient and transparent trading, clearing and settlement mechanism, and has witnessed several innovations in products & services viz. demutualization of stock exchange governance, screen based trading, compression of settlement cycles, dematerialization and electronic transfer of securities, securities lending and borrowing, professionalization of trading members, fine-tuned risk management systems, emergence of clearing corporations to assume counterparty risks, market of debt and derivative instruments and intensive use of information technology.

Turnover on the Exchange -

The average daily turnover of the Exchange during the financial year 2004-05 (April-March) was Rs.10,967.27 crores.

The average number of daily trades recorded during the above period was 6,765 lakhs

BOMBAY STOCK EXCHANGE (BSE)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education programmes and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.

Turnover on the Exchange -

The average daily turnover of the Exchange during the financial year 2003-2004 and 2004-05 (April-March) was Rs. 1978.81 corers and Rs. 2050.26 corers respectively.

The average number of daily trades recorded during the above period was 7.98 lacs and 9.38 lacs respectively.

REASONS FOR NON - TRADING IN INDIAN STOCK EXCHANGE

There are certain serious defects in the working of our stock exchanges, particularly the major exchanges such as Bombay Stock Exchange (BSE).

Lack of integration

There was no proper integration between all the stock exchanges

with too much variation in prices of shares in the different markets.

Specified and non-specified shares

Major Stock Exchanges follow the peculiar practice of classifying listed shares into specified group and unspecified group. The shares in the specified group are provided certain special facilities like settlement period, carry forward and clearing to promote speculation. There is absolutely no economic justification for this categorization and for granting artificial encouragement to a handful of companies. At present, market liquidity is limited to these speculative shares only, whereas investors would prefer liquidity for all the shares, across a broad front.

Margins

The margins levied by Indian Stock Exchanges on speculative transactions are wholly of discretionary character, varying from share to share and from day to day, ranging from zero to 40 per cent. Higher margins are ingeniously avoided. There is a strong incentive to collude for the buyer and seller for the purpose of avoiding margin payments. Despite a whole array of daily, carry forward and ad hoc margins, numerous defaults take place in several Stock Exchanges,

wherever the market crashed. Besides, the margin system has not provided reasonable guarantee of the market s financial integrity.

The system of settlement and carry forward (badla): The settlement system varies from one stock exchange to another but BSE has a fortnightly system. This is responsible for high price fluctuations and high risk exposure to market participants. It is often responsible for excessive speculation.

Investors interest

The trading activity in our exchanges have been designed and evolved to benefit only the brokers and interests of the genuine investors are generally ignored. The investors confidence in market machinery is weak, as most of them have a suspicion that they are always cheated on price by the brokers. They do not feel assured that they will get a fair deal when transacting.

IMPACT OF STOCK EXCHANGES IN INDIA:

Following are the changes due to the existence of Stock Exchange:

1. Mobilization of savings

The savings of the individuals are easily mobilized in various types of industries. Therefore the amount of investments in the stock exchange increases.

2. Increase in rate of return on investment

The investors get more rate of return i.e. the market rate and not the normal bank rate which is much lower.

3. Availability of funds for growth of industries.

The amount of funds required for the growth of the industries are easily available whereas there was always shortage of capital.

4. Diversification of industries

Due to the availability of funds the industry becomes financially strong and have scope or diversification due to which more strong in the market.

5. Increase in employment

Growth and diversification of industries leads to increase in the amount of work and thus increase job opportunities for the unemployed.

6. Increase in standard of living

The increased job opportunities and the availability of goods of higher quality has increased the standard of living of people.

7. Increase in GDP.

Increase in business in overall all industries has automatically lead to the rise in GDP of the country and thus its prosperity.

8. Decrease in Trade Deficit.

Due to growth in industries the country is becoming self-sufficient leading to decrease in trade deficit.

THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

ORIGIN OF SEBI

A fair and efficient securities market plays an important role in a country s efforts towards industrialization. It directly affects mobilization and efficient channelising of savings of the household sector into productive enterprises. By offering attractive rewards in the form of returns and capital appreciation, the securities market encourages thrift and risk taking and finally, it helps enterprises to raise money in a cost effective manner.

Though India has along history of stock exchanges with Bombay Stock Exchange having set up as early as in 1887, the securities market really emerged from the periphery into the main stream of the country s financial system only since the beginning of the decade of 1880 s. Indeed the growth of the securities market has been one of the significant economic processes of the decade in the country.

By the end of the decade, the securities market in India witnessed a spectacular growth, both in terms of its ability to mobilise resources and to allocate it with some efficiency. The corporate sector began to relay on the securities market increasingly to finance its long term requirements of funds and it completed almost on equal terms with the term lending institutions which were hitherto the sole purveyors of long term finance.

Simultaneously, there was also a growth in the awareness of and interest in investment opportunities available in the securities available in the securities market among the savers. To help to sustain this growth, and crystalise the awareness and interest into a committed, discerning and growing pool of investors, investors rights must be fully protected; trading malpractices must be prevented and structural inadequacies of the market removed. The government therefore felt the need of setting up a statutory apex broad to promote orderly and healthy growth of the securities market and for investor protection.

OBJECTIVES OF SEBI

SEBI seeks to create an environment which would facilitate mobilization of adequate resources through the securities market and its efficient allocation. This environment which would include rules and regulations, institutions, and their inter-relationships, instruments, practices, infrastructure within an appropriate policy framework, should have an overall air of fairness. The market must inspire confidence all around.

In accomplishing these objectives, SEBI would be responsive to the needs of the three groups which basically constitute the market:

The Issuers of securities

The investors, and

The market intermediaries.

To the issuers, it should afford a market place in the market place in which they can confidently look forward to raising all the finance they need in an easy, fair and efficient manner.

To the investors, it should provide a high degree of protection of their rights and interests, through adequate, accurate and authentic information and disclosure of such information on a continuous basis. The market should be efficient, but above all fair to the investors.

To the intermediaries, it should offer a competitive, professionalized and expanding market with adequate and efficient infrastructure so that they are able to render better and responsible services to the investors and the issuers.

All investors carry certain risk and it is for the investor to take risk and choose his investments. SEBI cannot eliminate risk or its consequences. The existence of SEBI does not remove the need on the part of the investor to carefully consider where he wants to invest his money or the possibility that his investment decision may go wrong.

JOB ENTRUSTED TO SEBI

1. SEBI shall create a proper and conductive atmosphere (i.e. it

includes the rules and regulations, trade practices, customs and relations among institutes, brokers investors and companies) required for raising money from the capital market. It shall endeavour to restore the trust of investors and particularly safeguard the interest of the small investors. This can be achieved by meeting the needs of the persons connected with securities market and establishing proper co-ordination among the three main groups i.e. investors, corporate sectors and intermediaries which is directly connected with its operations.

2. SEBI shall educate investors and make them aware of their rights in clear and specific terms. It shall provide investors with formation and see that the market maintains liquidity, safety and profitability of the securities.

3. SEBI shall create proper investment climate to enable corporate sector to raise industrial securities easily, efficiently and at affordable minimum cost.

4. SEBI shall develop a proper infrastructure so that market automatically facilitates expansion and growth of business middlemen like brokers, jobbers, commercial banks, mutual funds etc. which will ensure that they provide efficient services to their constituents i.e. investors and corporate sector at competitive price.

5. SEBI shall make more effective the laws in the existing status as far as they relate to the industrial securities, mutual funds, investments in units, LIC saving plan, chit fund companies and securities issued by housing/ industrial societies and corporation with purpose of making investment in housing/industries projects etc.

6. SEBI shall create the framework for more open, orderly and unprejudiced conduct in relation to takeover and mergers in the corporate sectors to ensure fair and equal treatment to all the security holder and to facilitate such takeovers and mergers in the interest of efficiency by prescribing a mechanism for more orderly conduct.

ROLE OF THE SEBI

To achieve its objectives, the SEBI shall play a dual role by working as a controlling authority and a development institution. The role of SEBI in brief is as under:

1. It shall devise laws with unified set of objectives, single administrative authority and an integrated framework to deal with all the aspects of the securities market.

2. It shall introduce a system of two-stage disclosure at the time of initial issue and make compulsory of the companies to provide detailed information to all the stock exchange, journalists and investors on their demand.

3. It will examine the feasibility of introducing a dealers network by which securities can be brought and sold over the counter like in a retail shop which will smoothen liquidity and investment opportunities.

4. It will see to that the intermediaries are financially sound and equipped with professional and competent manpower.

5. It shall make law-making and observance flexible enough to suit the prevailing market conditions and circumstances and will also ensure that the rules are versatile and non-rigid to provide automatic and self regulatory growth.

6. It shall establish an effective inspection machinery which is expected to act like an umpire which will provide to its players timely guidance, encouragement and incentives and impose upon them a self discipline to observe the rules of the game.

7. It shall operate a Security Compensation Fund in order to protect investors who suffer financial loss arising from the failure of a stock broker to meet his contractual obligations.

8. It shall strive to prohibit the malpractices prevailing in market such as insider trading, kerb trading, shares cornering, unreasonable delay in effecting share transfer by companies by specifically providing the statute for prohibiting and banning these practices. The Board shall work as an authority to execute such provision and it will be responsible to ensure that they really work effectively.

SEBI (Stock Brokers & Sub- Brokers) Rules, 1992

Rule 2(e), Stock-broker means a member of a stock exchange. Rule 2(f), Sub-broker means any person not being a member of a stock exchange who acts on a behalf of a stock- broker as an agent or otherwise for assisting in buying, selling, dealing in securities through such stock broker. A stock-broker or sub-broker shall not buy, sell, and deal in securities, unless he holds a certificate granted by SEBI (Rule 3).

Capital Adequacy Norms for Brokers:

Each stock broker is subject to capital adequacy requirements consisting of two components:

1. Basic minimum capital, and 2. Additional or optional capital related to volume of business.

The amount of base minimum capital varies from exchange to exchange. The form in which the base minimum capital has to be maintained is also stipulated by SEBI. Exchange may stipulate higher levels of base minimum capital at their discretion.

Conditions for grant of certificate to Stock-broker (Rule 4)

SEBI may grant a certificate to a stock- broker subject to the following conditions namely:

a. He holds membership of any stock exchange, b. He shall abide by the rules, regulations and bye-laws of the stock

exchange or stock exchanges of which he is a member of; c. in case of any change in the status and constitution, the stock broker

shall obtain prior permission of SEBI to continue to buy, sell or deal in securities in any stock exchange.

d. He shall take adequate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaint and keep SEBI informed about the number, nature and other particulars of the complaints received from such investors.

Conditions of grant of certificate to sub-broker (Rule 5)

SEBI may grant a certificate to a sub-broker subject to the following conditions, namely:

a. he shall pay the fees in the manner provided in the regulations, b. he shall take adequate steps for redressal of grievances of the

investors within one month of the date of the receipt of the complaint and keep SEBI informed about the number, nature and other particulars of the complaints received,

c. in case of any change in the status and constitution, the sub-broker shall obtain prior permission of SEBI to continue to buy, sell or deal in securities in any stock exchange, and

d. he is authorized in writing by a stock-broker being a member of a stock exchange for affiliating himself n buying, selling or dealing in securities.

SEBI (Stock Brokers & Sub-brokers) Regulations, 1992.

In terms of regulation 1(g), small investor means any investor buying and selling securities on a cash transaction for a market value not exceeding rupees fifty thousand in aggregate on any day as shown in a contract note issued by the stock-broker.

Registration of Stock Broker

A stock broker applies in the prescribed format for grant of a certificate through the stock exchange or stock exchanges, as the case may be, of which he is admitted as a member (Regulation 3). The stock exchanges forwards the application form to SEBI as early as possible as but not later than thirty days from the date of its receipt. SEBI takes into account for considering the grant of a certificate all matters relating to buying, selling, or dealing in securities and in particular the following, namely, whether the stock broker:

a. is eligible to be admitted as a member of a stock exchange. b. Has the necessary infrastructure like adequate office space,

equipped and man power to effectively discharge his activities, c. Has any past experience in the business of buying, selling or dealing

in securities, d. Is subjected to disciplinary proceedings under the rules, regulations

and bye-laws of a stock exchange with respect to his business as a stock broker involving either himself or any of his partners, directors or employees and

e. Is a fit and proper person.

SEBI on being satisfied that the stock-broker is eligible, grants a certificate to the stock-broker and sends intimation to that effect to the exchange or stock exchanges, as the case maybe. Where an application for a grant of a certificate does not fill the requirements, SEBI may reject the application after giving reasonable opportunity of being heard.

Fees by Stock Brokers Every applicant eligible for grant of a certificate shall pay such fees and in such manner as specified in Schedule III. Provided that the SEBI may on sufficient cause being shown permit the stock-broker to pay such fees at any time before the expiry of six months from the date for which fees become due( Regulation 10). Where a stock-broker fails to pay the fees, SEBI may suspend the registration certificate , whereupon the stock broker shall cease to buy, sell or deal in securities as a stock-broker.

Appointment of Compliance Officer: Every stock broker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions etc. issued by SEBI or the central govt. and for redressal of investors grievances. The compliance officer shall immediately and independently report to SEBI any non-compliance observed by him.(Regulation 18A)

SEBI s Rule of Direct Billing to the End Client-2004

In this rule, the sub broker will stop dealing with the broker on behalf of the clients. There will be direct communication; the brokers will make bills and reports for the clients. Also the funds and shares transfer will be only between the broker and the client. In this case, the sub broker will get out of this cycle and will act as a branch of the broker.

For this purpose of direct billing the client has to be registered with the broker. He has to enter in a tri-party agreement i.e. with the broker, sub broker and the client himself. He has to comply with various details to facilitate trading like Address, Identity proof, bank proof, DP details proof , pan card proof etc. With the help of these details the client registers himself with the brokers.

This SEBI rule was brought in because there was misuse of funds and shares of the clients. They were mislead and there was scope for the sub broker to do scams.

In order to increase the trade, make the stock market stronger and

secure, it needs to achieve the confidence of the investors. This can be gained by bringing about transparency in dealings and transactions of every client.

IMPORTANCE OF SUBSIDIARIES

Subsidiaries is a company whose 50% or more shares are held by

another company and hence its management is controlled by the Parent Company. Rhe Parent Company is called the Holding Company .

The Subsidiary company can be acquired by purchasing its shares and getting control over it or brought into existence for doing a particular kind of business separate from the parent company.

The Stock Exchanges established its subsidiaries because according to the SEBI rule one exchange cannot trade or deal in another. Therefore in order to increase business they established a subsidiary of their own and deal in other exchanges.

The main exchanges in India are NSE and BSE. The total number of exchanges in India are 24 but since the amount of trading and listing of companies in these exchanges is less they need to trade in other exchanges through a subsidiary.

Hence, the subsidiaries formed acts as a broker, makes its own sub brokers and clients.

As a broker, the subsidiary takes membership of various exchanges it wants to trade in or deal in. He further makes its sub brokers who further makes his clients and registers himself for trading purpose.

In the subsidiary company it has various Depts. Like Accounting Dept, Systems Dept, Custody Dept, Surveillance Dept., etc. The sub broker trade on their bolts and it is further processed at the broker level. Transfer of funds and securities is through this intermediary.

They also provide depository services to the sub brokers and their clients. Proper training sessions are also conducted for the sub brokers to help them in trading.

Importance of Subsidiaries:

1. They can be easily set up by the Stock Exchange.

2. Are more well set up than the normal brokers.

3. Investors feel safe in big hands and hence they get confidence to trade.

4. Increase in trade leads to increase in income of the exchange and hence helps the economy in return.

5. They can easily set up their branches in various locations.

6. Training the sub brokers and investors is easier for them.

7. Sometimes if the stock exchange is comparatively small and the transactions are not much in it then the subsidiary helps it to survive.

8. Due to the emergence of the subsidiary the trade has increased in the capital market.

INTRODUCTION OF PSE SECURITIES

Pune Stock Exchange Ltd. is a company limited by guarantee. The Exchange was established on 2nd Sept. 1982 to cater to the needs of the growing investor community in the city.

Starting small, with 35 members and a few lac rupees business initially, the exchange has grown tremendously to over 185 members and about 15-20 crores of business daily. Much of the work is computerised with a smooth settlement system. Over 310 companies are listed with the Stock Exchange.

The Exchange, while providing an efficient market also upholds investors interests and ensures redressal of their grievances. It also strives to educate and enlighten investors by making available necessary information inputs.

Pune Stock Exchange opted for the on-line screen based trading in 1995. The Exchange has been successfully using a screen based Trading System, based on VECTOR (Versatile Engine for Centralised Trading and On-line Reporting) and developed and implemented by CMC Ltd, for more than three years now. The present operations cover 183 broker members and 9 workstations for administration, Market Operations and Surveillance activities of PSE.

Pune Stock Exchange has been looking into the possibilities of widening its activities to different parts of Pune city and to other cities like Satara, Sangli, Solapur, Kolhapur, Ahmednagar, Aurangabad, Nashik and Mumbai.

PSE ranks 7th in the country & here are the Highlights for 2005.

The income of the Stock Exchange from Listing Fees, Interest and Dividend decreased marginally, compared to last year due to the overall drop in the interest rates of the Bank deposits and bonds.

We could achieve a target whereby we have invested almost 90 to 95% of our invisible amount in the long-term form.

Efforts are being made to prepare the quarterly financial results of the Exchange from the coming year.

The Exchange took several steps to reduce the expenditure wherever it was possible, by implementing the proverb of "A penny saved is a penny earned".

During the year under review, we arrived at a revised salary agreement with our staff union where we have agreed to give a 25% rise while seeking a commitment for 3 years.

A new Panel of Auditors has been formed for a period of three years. It will carry out quarterly inspection of accounts books of members / brokers.

Our Stock Exchange has undertaken a time bound programme to get ourselves prepared to face 'Y2K' problems of computers.

The Exchange had planned to organize various Training Programmes for the investors,

The Exchange recorded a turnover of Rs. 4,824.06 crores this year as compared to the last year's turnover of Rs. 8,624.47 crores.

The Exchange Completed all the 51 settlements exactly as per the settlement calendar.

The Exchange has received an in-principle approval from SEBI for the Trade Guarantee Fund. The initial corpus of the fund is about Rs. 4.80 crores.

The Exchange has shifted the administrative office to Shivleela Chambers, Sadashiv Peth, Kumthekar Marg, Pune.

PSE Securities Ltd. was incorporated as a Pvt. Ltd. Company on 9th Dec 1999, with its main object of carrying out business as stockbrokers through its authorized branches. The Company is a subsidiary of Pune Stock Exchange. The Company was converted into a Public Ltd. Company on 13th

April 2000.The Registered Office of the company is situated at Shivleela Chambers, 752, Sadashiv Peth, R.B.Kumthekar Marg, Pune - 411030.

The Company is a member of National Stock Exchange and the Stock Exchange, Mumbai. The Company does not carry out any business of stock broking by itself but only through its authorized branches of Pune Stock

Exchange. Apart from stock broking business, the company also provides Depository services as Depository Participant of CDSL.

PSE Securities Ltd. is a member broker of both BSE and NSE. Due to lack of business on regional stock exchange, SEBI established a subsidiary of Pune Stock Exchange Ltd. in 1999. PSE Securities Ltd. is a non-profit making company. All the brokers of Pune Stock Exchange Ltd. have now registered with PSE Securities Ltd. as sub brokers. The main business activity of this company is broking and depository. It is a depository participant of Central Depositories Services (India) Ltd. (CDSL). The Company has BSE and NSE operations and respectively department.

1. Trading 2. Surveillance and Risk Management 3. Settlement (Intra & Inter) 4. Depositories Participant of CDSL 5. Billing and Accounts

PSE Securities are divided into Four departments under each Segment:

NATIONAL STOCK EXCHANGE (NSE)

BOMBAY STOCK EXCHANGE (BSE)

CENTRAL DEPOSITORY SERVICES INDIA LIMITED (CDSL)

SURVELLIANCE

INFORMATION TECHNOLOGY (I.T.)

BILLING & ACCOUNTS DEPARTMENT

PSESL

SUB-BROKER INDIVIDUAL INVESTOR

a) Central Depository Services India Limited (CDSL)

Introduction to CDSL: -

The Central Depository Services India Limited (CDSL) was established in 1999 and is the second depository in India. Its objectives are to provide convenient, dependable, and secure depository services, and facilitate holding of Demats (securities in the electronic form). Its network covers 100 cities and offers always on connectivity to around 500 centers nationwide .The company has handled Demat for over 8000 million securities settlements .The number is still growing and will continue since the government plans to phase out physical trading of shares.

PSE SECURITIES

NSE DEPARTMENT

BSE DEPARMENT

CDSL DEPARTMENT

SURVELLIANCE DEPARTMENT

SYSTEMS DEPARTMENT

CDSL DEPARTMENT

SURVELLIANCE DEPARTMENT

SYSTEMS DEPARTMENT

BILLING & ACCOUNT

DEPARTMENT

BILLING & ACCOUNT

CDSL connects to 172 Depository Participants (DPs) nationwide through its network, which supports 149,832 investor accounts and spans 355 branches. Every branch has access to the company s online database.

CDSL, firstly, encouraged the system of settlement from a Paper format to a T+ 3 mode (pure electronic format) .It also pioneered online inter-depository transfers, where movement of stocks between the depositories take place throughout the business days. The Indian Finance Ministry has announced the destination days for the Indian Capital Market to move to a T+2 settlement regime by April 2003. CDSL achieved the target, given by Indian Finance Ministry, well within the deadlines. CDSL received the certificate of commencement of business from SEBI on February 1999. All the leading stock exchange like the NSE, Calcutta stock exchange, Delhi stock exchange. The stock exchange Ahmedabad etc have established connectivity with CDSL.

At the end of December, 2004 over 4900 issuers have admitted their securities (equities, bonds, debentures, commercial papers (CPs), units of mutual funds, certificate of deposits (CDs) etc.) into the CDSL system.

Depository Participant (DP):

A depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant ,who as an agent of the depository , offers depository services to investors.

According to SEBI guidelines, Financial institutions, Banks, Custodians, Stock brokers etc. are eligible to act as DPs.The investor who is known as beneficial owner (BO) has to open a Demat Account through any DP for Dematerialization of his holdings and transferring securities .

The balances in the investors Account, recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide each investor (who is client of that DP), at regular intervals (like weekly, monthly, quarterly, etc.) A statement of account, which gives the details of securities holdings and transactions. CDSL received the certificate of commencement of business form SEBI in February 1999. All leading stock exchanges like the National Stock Exchange (NSE), Calcutta Stock Exchange, Delhi Stock Exchange, and the Stock Exchange- Ahmedabad, etc have established connectivity with CDSL.

PSESL started its CDSL operations in Dec. 2003. As a DP, PSESL is providing the facilities on behalf of its depository: -

Dematerialization & Re-materialization:

- PSESL on behalf of its depository provides facilities of dematerialization and re-materialization of shares certificates. Dematerialization is the process under which an investor submits the physical shares certificates with a Dematerialization Request Form (DRF) to its DP in order to convert their physical shares into an electronic form. Re-materialization is the reverse process of the dematerialization i.e. converting back the shares from the electronic form to physical certificates.

Maintaining the investor s holdings: - PSESL maintains the record of holding of their sub-broker in the electronic form and provides a record at the end of month.

Settlement of securities: -

It affects all the settlements of the securities traded in the BSE through its CDSL department. It also carries out settlement of trades not done in the stock exchange. These trades are known as off market trades. It also transfers the securities to its clients account for such traded securities.

Pledging and Hypothecation: - It also carries out pledging and hypothecation of dematerialized securities on behalf of CDSL. An investor (called pledgor ) who is willing to pledge his dematerialized securities, requests his DP by submitting the Pledge Request Form (PRF) for pledging his dematerialized securities. The pledgor receives the cash against these securities from the pledgee (the one who accepts the pledgor s holding and forwards money for his acceptance). The pledgee accepts the securities and forwards the cash towards the pledgor through his DP. However, the ownership continues to remain with the pledgor.

Receipts of non cash corporate benefits: -

PSESL, as a DP, receives all non-cash corporate benefits like bonus issue, etc. in electronic form on behalf of the investors and credit the same to the investors account accordingly.

Stock lending and borrowing:-

The company is also providing stock lending and borrowing facilities to its clients under the CDSL operations. An investor, (called lender) who is willing to lend his dematerialized securities, requests his DP to lend those securities and receives cash once his securities are accepted by the another party (the party who accepts the securities is called the borrower

Business rules for trading on NSE through PSE Securities Ltd.

1. Only Members of PSE duly registered by SEBI would be allowed to be registered as sub-brokers of PSES. Only such registered sub-brokers of PSES, who are termed, as Sub-brokers hereafter would be allowed to trade & operate on the NSE segment through PSES.

2. PSES would neither trade for investors directly nor for its own. Except for to rectify mistakes arising out of Operational issues.

3. PSES sub-brokers would be allowed to trade in Capital market segment & only in those securities, where SEBI has made delivery in DEMAT form compulsory for all categories.

4. All sub-brokers would be given maximum three login Ids either on LAN &/Or WAN(s) at the same time. One login ID gives access to both NSE and other segment (if provided by SDG) on one terminal. If Sub-brokers want separate NSE and other segment on different terminals then two login Ids are consumed. Additional I.D.s can be obtained by payment of Charges/fees as decided by PSES.

5. All sub-brokers would be the authorized users for the SDG s CTCL connectivity & trading system through PSES. Sub-brokers may attach additional authorized users as required, to trade & operate on NSE segment for which the sub-brokers would be responsible for the obligations created by them in the market & also the legal issues attached. Each such user would be given a login ID for the purpose of trading on the NSE segment and other segments. (Approval for authorized user reqd. format attached along with.)

6. Deposits: Each sub-broker would be required to give initial deposit of Rs. 25,000/- in the form of cash. This may further be increased in the form of additional deposit in multiple of Rs. 10,000/- in the proportion 30% cash (on which interest would be payable considering issues related to taxation) and 70% Bank Guarantee (validity for the BG should be a minimum of 1 year

with a three month claim period from the expiry of the aforesaid BG). (This additional deposit should be placed for a minimum period of 91 days placed with NSE by PSES to avail interest facility.)

If additional capital is placed for less than 3 months, no interest will be paid. An interest would be paid after considering T.D.S., other I.TAX & Legal factors. Sub-broker has to inform PSES to keep F.D. of this A.B.C.

7. Trading limits:

Sub-broker would be given limits as under:

Turnover limits 30.00 times the total deposit Maintained with PSES

Gross Exposure Limits Margins Applicable in Rs. Slabs (Rs.) 1) 00 to 40 lacs Nil Margin 2) 40 to 70 lacs 05% above 40 lacs 3) 70 to 100 lacs 01.50 lacs + 10% of above 70 lacs 4) Above 100 lacs 04.50 lacs + 30% of above 100 lacs It is pointed out that the deposit maintained with PSES, as initial deposit and additional deposit will be considered for the purpose of trading limits, viz. intraday turnover limit ,Gross Exposure Limits and other margins. Actual margin computed by PSES would be deducted from the above capital & accordingly trading limits will be given on T+1 basis. Members can avail the facility of early Payin of both funds & Securities & accordingly limits will be replenished. A request letter to that effect has to be sent in the prescribed format to PSE Securities. & will be subject to receipt of funds/deliveries to PSE Securities account.

Members may please take a note of revised provisions with respect to margins based on VAR:

Method of computing Gross Exposure for exposure limits and VAR Margin: Gross exposure for a member, across all securities in rolling settlements, shall be computed as absolute (buy value + sell value), across all open settlements. Open settlements shall be all those settlements for which

trading has commenced and for which settlement payin is not yet completed. The total gross exposure for a member on any given day shall be the sum total of the gross exposure computed across all the securities in which a member has an open position. This gross exposure shall be used for the purpose of exposure limits and for imposing VAR margin. For the purpose of gross exposure limits, sum of exposure in account period settlement and open positions in rolling settlement, which are yet to be settled, shall be considered.

Daily margin for rolling settlements:

1. AR based margin:

VAR margin shall be applicable for all securities in rolling settlement. VAR margin rate file for each security shall be disseminated at the end of each trading day and the same shall be applicable on the positions at end of next trading day. The same will be made available in the FTP server by 7.00 pm at the end of each trading day.

VAR margin rate shall constitute of the following: 1.1 Value at Risk (VAR) based margin, which shall be the higher of

the security VAR or index VAR, the index being NIFTY, subject to a minimum of 5%.

1.2 Additional VAR Margin: 12% as specified by SEBI.

1.3 Security specific Margin: NSCCL may stipulate security specific margins for the securities from time to time.

The VAR based margin shall be capped at 100%.

2. Mark to Market (MTM) Margin:

MTM profit/loss across different securities within the same settlement shall not be set off to determine the MTM loss for a settlement.

The daily margin for rolling settlements shall be payable in cash on T+1 day. The margin shall be collected together for all settlements.

8. The cost of trading on the PSES capital Market segment would be as follows: Particulars:

Service Charges (Excl. of any other levies but inclusive of Service

Tax).

1) Brokerage: 01 paisa / share on all trades. 2) Transaction charges: 0.01% on turn-over (minimum 1 paisa) 3) Delivery charges: 0.01 % extra on delivery. (Minimum 1 paisa)

Above charges are inclusive of NSE Transaction charges. Registered sub-brokers of PSES who have not completed 5 years in

PSE shall pay the SEBI fees in excess of the above-mentioned charges. However PSES reserves the right to change the mentioned levies & taxes as & when required.

Any other Government charges/fees, service charges are to be paid extra at actuals. Any thing demanded by SEBI &/ Government with / without retrospective effect will be charged at actuals.

9. For all trades executed, during a particular trading period by a registered sub-broker & its authorized users, a multilateral netting procedure is adopted to determine the net settlement obligation of the registered sub-broker (delivery/receipt positions). Final obligation report is being downloaded to every sub-broker. On the basis of this report actual delivery effect comes into force. Members are required to maintain clear balances & effect pay-in 24 hours before the NSE deadline date & time. All sub-brokers are further requested to cross verify the final bill before delivering the shares to PSES pool account. All outstanding positions will be considered for the purpose of exposure & margin calculations. However, against the obligation, sub-brokers can avail the facility of early pay-in of securities/funds against their obligations subject to a conditions stipulated by NSE. The sub-brokers would be required to intimate the same to PSES in the prescribed format attached herewith. The effect of exemption of margins & gross exposure would be given only after the relevant securities have been credited to the pool account of PSES. The minimum value of each security delivered for the purpose of early pay-in should be Rs. 25,000/-. The same would be applicable in case of early pay-in of funds. The effect of exemption of margins & gross exposure would be given only after the relevant funds have been debited from the settlement account of the sub-broker & confirmation has been received by PSES for the same, after the receipt of the funds. The sub-brokers would be required to intimate the same to PSES in the prescribed format attached herewith. Under current circumstances, the facility of early Payin is restricted only for Var margin release. However, this

facility will be extended soon for the purpose of gross exposure & trading limits also as soon as operations are streamlined. Registered sub-brokers can avail the facility of inter-settlement transfer subject to a condition of T+1 basis. E.G.: For payout of shares in sett. Normal/2001001, inter-settlement transfer request will be accepted for settlement normal/2001002 only. This should be delivered at PSES office in writing on T+2 basis in prescribed format available at FTP server. Nominal additional charges @ 0.03% of value (minimum 10/-Rs.) Will be collected from such sub-broker on execution date. This facility is available subject to receipt of shares from exchange. 10. At the end of trading session PSES would generate contract notes separately for each sub broker for the trades done by him through PSES giving therewith the contract numbers. These contracts would be downloaded in an electronic mode through appropriate connectivity within 3 hours from close of the market to the respective TWS s of the sub-brokers or to such other convenient locations to which the sub brokers have access. In addition PSES would be giving hard copies of the contract notes as per the statutory requirement. Similarly bills would be downloaded within 48 hours from the end of the settlement. Once downloaded through FTP, are supposed to be served on all sub-brokers.

How does it work?

Trade details are available for verification on the same day (i.e. T itself) after 19:00 hours IST.

The investor needs to input minimum details of the trade viz. client code (provided by the trading member), security details (symbol and series), order number, trade number, trade quantity and price (excluding brokerage). All the above details are mandatory.

If an identical match is found for the details provided, a confirmation along with the details of the trade is displayed to the investor. If no match is found, a message is displayed to that effect.

Where no match is found, investors are advised to contact their trading member for clarification. For further assistance, please contact the Investor Grievances Cell of the Exchange.

Trade details for the last 5 trading days will be available on the website. That is, trades executed on 'T' day, can be verified till the T+4th day. *

All trades can be verified.

Business Growth in CM Segment

Month/Year

No of

co.s listed*

No. of co.s

permitted*

No. of co.s

available for

trading*

No. of

trading

days

No. of co.

traded

No. of trades

(lakh)

Traded Quantity (lakh)

Turnover

(Rs.cr)

Average

Daily Turnover (Rs.cr)

Average

Trade Size

Demat Securities Traded (lakh)

Demat

Turnover

Market Capitalisation

(Rs.cr)*

Current Month

Jun-2005

987

1

854

23

861

477

70,485

111,39

7

4,843

23,374

70,485

111,397

1,727,502

May-2005

977

1

842

22

875

412

56,516

86,802

3,946

21,020

56,516

86,802

1,654,995

Apr-2005

973

1

836

20

952

367

51,26

82,718

4,13

22,5

51,265

82,718

1,517,908

5

6

27

2004-2005

970

1

839

253

870

4,510

79

7,684

1,140,071

4,506

25,279

797,684

1,140,07

1

1,585,585

2003-2004

909

18

787

254

804

3,780

713,301

1,099,535

4,328

29,088

713,301

1,099,53

5

1,120,976

2002-2003

818

107

788

251

899

2,398

364,065

617,98

9

2,462

25,771

364,049

617,984

537,133

2001-2002

793

197

890

247

1,019

1,753

278,408

513,16

7

2,078

29,274

277,717

512,866

636,861

2000-2001

785

320

1,029

251

1,201

1,676

329,536

1,339,510

5,337

79,923

307,222

1,264,33

7

657,847

1999-2000

720

479

1,152

254

--

984

242,704

839,05

2

3,303

85,270

153,772

711,706

1,020,426

1998-1999

648

609

1,254

251

--

546

165,327

414,47

4

1,651

75,911

8,542

23,818

491,175

1997-1998

612

745

1,357

244

--

381

135,685

370,19

3

1,520

97,164

--

--

481,503

1996-1997

550

934

1,484

250

--

264

135,561

295,40

3

1,176

111,895

--

--

419,367

1995-1996

422

847

1,269

246

--

66

39,912

67,287

276

101,950

--

--

401,459

1994-1995

135

543

678

102

--

3

1,391

1,805

17

60,167

--

--

363,350

This is the main screen which appears after putting the Username and password. Every Sub broker is given his Username and password. He is also given the category of a sub broker i.e. he can only view the reports and put the requests but cannot edit any data in the software.

Right on top of this menu we can see whether it is NSE or BSE or F&O segment. Beneath that there is a box which indicates when the password needs to be changed. It s mandatory to change password within 15 days for safety purpose. Besides

this there is ticker i.e. the message flashed for the sub brokers about various reports, bills etc.

On the left hand side is the menu .The main types are:

Management Reports: These reports are concerning the addition of new clients in Software, delivery

reports of shares, auction bills, securities shortage reports, etc.

Finance Accounting:

In this, the ledger balances of the clients can be seen .The funds payin and payout reports can also be seen through this menu.

Utilities:

In this, the client s details, settlement calendars, auction calendar, etc. can be seen.

The details of the delivery of shares can be obtained from:

Again a new menu appears on its right hand side of the main menu. The above screen appears when we are in Clientwise Reports. Once the partycode is submitted, all the scrips in which the party has dealt in appears. The settlement wise dealing in each can thus be obtained by clicking on them.

OTHER DELIVERY REPORTS

SHARE REPORTS

SHARE REPORTS

The party can also view the auction bill in this software. For this he has to go in

They then have to fill various details like Sett. Type, Sett. No., Party Code and submit it. The auction bill of that particular Sett appears on the screen.

Auction Reports Auction Bill

The client wise securities payin payout shortage reports can also be obtained. This is necessary for the client to know whether he has made the delivery of the scrips sold. Also it gives the payout shoratge reports which tells about shortage of shares received from exchange, which helps in further dealing in shares.

The party/sub broker needs to request for the payout of securities. In this option the sub broker needs to put the quantity of shares he wants the payout of. The rest of the shares are then lying with the broker in the Beneficiary A/C.

If in the next Settlement the Client sells the shares, they are automatically intersettled.

Finance Reports gives various types of reports to the client. The main report is the Party Ledger Summary. This shows their ledger balances as per their various settlements and their net balance. This helps to know the funds position of the sub broker and the client.

Utilities option helps to get the client information, settlement calendar, etc. The settlement calendar of various types helps us to know the date on which the settlement took place, the date of securities payin/ payout, funds payin/ payout of that settlement, etc.

PRADNYA SOFTWARE

Before the use of Pradnya software, the companies used the Bitsoft Software. In this software various reports, bills, etc.were made but it could be accessed only by the broker. These reports then had to be kept in FTP site of the company and further the Sub brokers could see it. There was no transparency in dealings. In Pradnya software all the reports , bills, information is transparent between all the parties. The data maintained by the broker can be accessed by the sub broker and the client at their end easily through net also. Every client can see his daily position through this software at his home itself instead of going to the sub broker for details.

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