Online Treding

MARWADI

A

PROJECT REPORT ON

PROBLEMS & PROSPECTS OF

ONLINE TRADING IN EQUITY MARKET IN RAJKOT CITY

MARWADI SHARES & FINANCE LIMITED

SUBMITTED BY :- GUIDED BY :-

MONIKA SORATHIYA MR. RATISH KAKKKAD

M.B.A. SEM-

ROLL. NO. 2

SUBMITTED TO :-

SARLABEN VASANTBHAI MALAVIYA

SCHOOL OF MANAGEMENT

RAJKOT.

YEAR 2011-2012

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DECLARATION

I , the Undersigned Mrs.MONIKA SORATHIYA, a student of 3rd Semester , MBA, at Saralaben Vasantbhai Malaviya School Of Management, hereby declare that the project work presented in this report is my own work and has been carried out under the supervison of Mr.Rathish Kakkad, professor at Saralaben Vasantbhai Malaviya School Of Management t, Rajkot.

This work has not been submitted to any other University for any other examination.

DATE:- -----------

PLACE:- RAJKOT MONIKA SORATHIYA

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PREFACE

Today’s world is competitive world, without a new development one would not be surviving in the competitive world. So new innovations are there in each and every field not only in India but in whole world , to provide comforts to the people. Private companies are trying best to provide satisfaction to the customers. Along with it Government is also helping indirectly companies in development.

As an M.B.A. student I must have practical knowledge in different fields like Finance, Marketing, H.R., etc. prevailing in the market. To get knowledge about practical market I have decided to have summer training project in Marwadi shares & finance ltd. who is spreaded throughout India whose headquarter is at Rajkot and providing services like Equities, Commodities, Depository , IPO, Mutual fund, PMS & Insurance. By getting in to the project of “Problems & prospects of Online trading in Equity market in Rajkot City”. The corporation is one of the leading Broking House and largest Depository Participant in the country.

DATE :- -------------

PLACE:- RAJKOT [MONIKA SORATHIYA]

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ACKNOWLEDGEMENT

It gives me immense pleasure and pride to present my summer training report for the 3rd semester of MBA undertaken at Marwadi Shares & Finance Ltd.

I am very glad to present this report before you whose works and ideas have been so helpful in working out on this project report. As I carried my way towards the completion of this project, I had many people involved directly or indirectly and all guiding me , directing me and motivating me towards attaining my specific goal.

First I would like to thank(--------------------------------) (DIRECTOR-SARLABEN VASANTBHAI MALAVIYA SCHOOL OF MANAGEMENT), -------------(President), ----------------(Trustee) & -------------(Trustee).

I forward my deep sense of Gratitude to Mr.Rathish Kakad (Associate Professor & project Guide )for his valuable guidance in the completion of this project.

I would also like to thank Mr. Mihir Bhimani for allowing me to undertake this project under their valuable guidance.

I owe my deepest gratitude towards the executives of Marwadi Shares & Finance Ltd., Rajkot, who have provided me immense help, guidance and co-operation.

I am very much grateful to my parents, friends and all those who have always been with me throughout this project have been completed.

And lastly, I would like to pass my sincere thanks to all those respondents who gave me their valuable time and making the project works a complete and genuine work.

MONIKA SORATHIYA

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INDEX

SR. NO. TOPIC PG. NO.

1 INDUSTRY OVERVIEWHISTORY OF THE STOCK BROKING INDUSTRYINTRODUCTION TO STOCK BROKING BUSINESS MAJOR PLAYERS IN THE INDUSTRYINDUSTRY ANALYSIS

2 COMPANY OVERVIEWGENERAL INFORMATIONPROFILE OF MARWADI SHARE & FINANCE LIMITEDHISTORYDEVELOPMENTMSFL’S PHILOSOPHYMISSION & VISIONMANAGEMENT TEAMMILESTONESSERVICESNETWORKNATIONAL & INTERNATIONAL IMAGE

3 RESEARCH METHODOLOGYRESEARCH PROBLEMOBJECTIVESHYPOTHESISSCOPE OF THE STUDYDATA COLLECTIONLIMITATIONSANALYSIS & INTERPRETATIONSCONCLUSIONFINDINGS & SUGGESTIONS

4 BIBLIOGRAPHY5 APPENDIX

QUESTIONNAIRE

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INDUSTRY OVERVIEW

HISTORY OF THE STOCK BROKING INDUSTRY INTRODUCTION TO STOCK BROKING BUSINESS MAJOR PLAYERS IN THE INDUSTRY INDUSTRY ANALYSIS

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HISTORY OF THE STOCK BROKING INDUSTRYIndian Stock Markets are one of the oldest in Asia. Its history dates back nearly 200 years ago. The earliest records of security dealings in India are meager and obscure.

By 1830’s Business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Through the trading list was broader in 1839, there was only half a dozen brokers recognized by Banks and Merchants during 1840 and 1850. The 1850’s witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the “Share Mania” in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (For Example- Bank of Bombay share which had touched Rs. 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business.

In 1887, they formally established in Bombay, the “Native Share and Stock Brokers’ Association” (which is alternatively known as “The Stock Exchange”). In 1895, the Sock Exchange acquired a premise in the same street and it was inaugurated in 1899.Thus the Stock Exchange at Bombay was consolidated.

Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.

INTRODUCTION TO STOCK BROKING BUSINESS

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Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country’s economic state of health. Stock market is a place where securities are bought and sold. It is exposed to a high degree of volatility; prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buy and sell securities on behalf of individuals and institutions for some commission.

The Securities and Exchange Board of India (SEBI) is the authorized body, which regulates the operations of stock exchanges, banks and other financial institutions. The past performance in the capital markets especially the securities scam by Harshad Mehta has led to tightening of the operations by SEBI. In addition the international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve , discipline and bring greater transparency in this sector, constant efforts are being made and to a certain extent improvements have been made.

1. Stockbrokers:

A broker is an intermediary who arranges to buy and sell securities on behalf of the clients (the buyer and the seller).

According to Rule 2 of SEBI Rules 1992, a stockbroker means a member of a recognized stock exchange or stock exchanges of which he or she is admitted as a member.

Stock market transactions are carried out on computerized systems and deals are recorded for inspection at any time.

Stock brokers independently may deal with the following:Operations for private clients and institutional clients.

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Some brokers act only as dealers (client investment managers) while others are principally advisors(equity sales advisors).Some brokers provide services for portfolio management and constantly review investments in the light of trends and developments in the market.Financial services brokers specialize in bond issues, handling institutional accounts or mutual funds.

In large firms, stock brokers work in the following areas:Deal with, and advise, smaller firms.Securities brokers work on behalf of firms with private clients to understand the investment plans and objectives of the client i.e. expectation for returns and interest in risk taking. They are representatives of brokerage firms and execute orders to buy and sell securities. They are equipped with both knowledge and experience to give advice on the sale and purchase of scripts and management of financial investments.Advise for investments.Carry out market transactions.The financial services in firms’ concerns pre-sales, sales and after sales services. These firms have departments to manage the sales and trading for the owners of securities, investment banking for firms and the government for the issue of securities and capital markets which form an essential arm for trading activities.

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As Securities Analysts:- Brokers may be required to advice on flotation of shares in conjunction with the merchant banks. They are expected to have knowledge of the market to be able to anticipate certain trends and make predictions.

As Investment Analysts:- The Investment Analyst provides accurate information to investors and fund managers. There are two major roles as an analyst.Institutional Analyst:- The process of analysis involves making predictions of the company’s future based on its past and present financial status.Stock Broking Analyst:- Investment Analysts work with firms which provide advise on buying and selling of shares and also with those firms which have funds to be managed. Fund managers in merchant banks, insurance and pension funds are involved with huge investments made by millions of investors. The funds are eventually disbursed as insurance claims, pensions etc. They are specializes financial advisors who provide advise on the how and where of details concerning investment. Investment Analysts study the company’s annual report; visit the organization, interview senior executive to assess statistical information, profits and import and export figures for the industry as a whole. Institutional analysis involves studying the entire sector.

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TRANSACTION CYCLE

A person holding assets (Securities/Funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange. The order is converted to a trade as soon as it finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading members securities/funds as per settlement cycle. Buyer/Seller delivers funds/securities and receives securities/funds and acquires ownership of the securities. A securities transaction cycle is presented above.

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MAJOR PLAYERS IN THE INDUSTRY

There will not be more than ten players, out of which there will be six or seven who will continuously survive. There will be one or two new entrants every year to try and make a lot of money and eventually will find out reality the hard way.

1) MARWADI SHARES & FINANCE LIMITED:

One of the top-2 stock-broking houses in India, with a dominant position in both institutional and retail broking. The group has proven track record of success during its 16 years journey in the financial services sector.”Win a Trust & have a Faith” are two major elements of their success. MOST is amongst the best capitalized firms in the broking industry in terms of net worth. The institutional business unit has relationships. The website of Marwadi Shares & Finance Ltd, one of the firms licensed to provide online broking, gets 10,000-12,000 enquiries a month about online trading. (www.marwadionline.com)

2) MOTILAL OSWAL SECURITIES LIMITED:

One of the top-3 broking houses in India, with a dominant position in both institutional and retail broking, MOST is amongst the best-capitalized firms in the broking industry in terms of net worth. The institutional business unit has relationships. The website of Motilal Oswal Securities, one of the firms licensed to provide online broking, gets 7,000-8,000 enquiries a month about online trading.

3) SHAREKHAN:

Sharekhan is an equities focused organization tracing its lineage to SSKI (S S KANTILAL ISHWARLAL SECURITIES PVT. LTD.), a veteran equities solutions company with over 8 decades of experience in the Indian stock markets. Sharekhan brings the user –friendly online trading facility, coupled with a wealth. Stockbroker S S Kantilal Ishwarlal’s Sharekhan (www.Sharekhan.com)

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turned the fee structure of the broking industry upside down in July by introducing a trade-as-much-as-you-want scheme of Rs. 1,000 a month.

4) ICICI DIRECT.COM:

ICICI Direct (www.icicidirect.com) was the first broker to introduce a brokerage of 0.85 per cent per trade. ICICI’s differentiators are an integrated service encompassing broking, banking and depository services from ICICI Bank. ICICI Direct’s pricing structure depends on how much the investor trades and ranges between 0.85 per cent and 0.4 per cent as trade volume increases.

5) 5 PAISA.COM:

5paisa is the trade name of India Infoline Securities Private Limited (5paisa) ,member of National Stock Exchange and The Stock Exchange, Mumbai both. 5paisa is a wholly owned subsidiary of India Infoline Ltd, India’s leading and most popular finance and investment portal. 5paisa offers to buy and sell shares on with speeds comparable and at times better than NSE’s NEAT Terminal. This speed and reliability comes only with perseverance of pioneer backed by huge investment in technology! In July, Probity’s 5paisa.com was the next one introducing a brokerage rate , probably the lowest in India, of 0.05 per cent a trade.

6) KOTAK SECURITIES:

Kotak Securities introduced e-broking with the option of trading against securities. Kotakstreet.com is the ideal place for you to trade on since we offer you the following benefits: Kotakstreet.com is the online division of Kotak Securities Ltd., India’s leading stock broking house. Experienced team with stock market expertise to understand your needs Rich content of Stock Research, Company Information, Online Charts, Live Quotes and Portfolio Manager along with portfolio Advice. KEAT- A powerful trading system offered to every client.

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7) MID PLAYERS:

As a mid-sized player now, Elite sees a niche for itself – something that may allow it to co-exist with the biggies. “They (larger players like Marwadi, Motilal Oswal, Kotak securities, Sharekhan) are relatively new in the retail business. We have now grown to over 5,000 clients and have 120 employees,” says Bhandari.

Another way of making good in a small size is to follow the route taken by the Delhi-based Quantum Securities. It has built competitive barriers by carving out a niche as a’ boutique shop’. It has a branch in Mumbai and caters to about 500 clients-most of them HNIs and a few institutions –to which it offers portfolio management and research. Though small, the firm has been able to build a strong brand.

8) SMALLER PLAYERS:

There is one option though: the small, standalone players can provide their customers online trading through NSE’s dotexplaza.com platform. Twenty-eight players, out of a total 70 offering online trading on the NSE, are using this facility currently.

Another issue stifling the smaller players is the Securities and Exchange Board’s tightening compliance and risk management norms, which have become tougher of late, and increased business costs like support staff. As a result, sub-brokers infamous for their lack of compliance for basic stuff like books of accounts and issuing proper contract notes have suffered.

Each player is supremely confident of the success of his respective pricing strategy and revenue model, even though the services they are offering at such attractive rates seem impractical and unsustainable. Only time will tell whether the confidence is misplaced or not.

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INDUSTRY ANALYSIS

Internet-based stock trading, while still in its infancy in the country, has the potential to really benefit the investor, with its ability to offer greater speed and transparency, at a much lower cost.

Anup Bagchi, chief operating officer of ICICIdirect , hit the nail on its head: “Stock broking has been a cottage industry, attributed by strong distribution, a good price proposition ,and a ‘know-me’ culture. Corporate brokers – with deeper pockets, emphasis on branding and nationwide presence – are changing all that.”

OVERVIEW OF MARKET LEADER, FOLLOWER, CHALLENGER & NICHER STRATEGY

1) MARKET LEADER STRATEGY(ICICI):

ICICI is a player, which is completely fighting on the basis of the online trading business. It does not offer the offline trading. ICICI is one of the late entrants.ICICI has been providing three combinations of the facilities like the combination of BROKER-BANKER and DP INTERFACE, which provides it the distinctive advantage.Internet stock trading will be the presence of a wide array of tested and proven technologies to choose from, at low costs. And, as time goes by, value addition will become the norm for the existing software.

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As ICICI is a bank having its branches nationwide it can have the broking interface in the more and more cities. Thus it can expand its presence in the more and more markets.ICICI does not say that the client should have the account in A or in B bank but it is providing the facility of net banking with the wide number of banking options.ICICI has aggressive marketing strategies. So from offering an assortment of services including portfolio management to vanilla broking, business is booming for broking houses. At ICICIDirect, daily orders have zoomed to 70,000. Six months ago, it was barely touching 30,000.

2) CHALLENGER STRATEGY:

The challengers are Marwadi, Sharekhan, 5 paisa and India bulls, Motilal oswal, Kotak securities………………….

EXPANDING THE BRANCHES

Marwadi plans to expand its network of over 250 to 350 branches.A Karvey consultant plans to rapidly expand its network of over 200 to 350 branches.Kotak claims a presence in all the major cities with 53 branches and 180 franchises.Sharekhan is now present in 113 cities with 38 branches and 163 franchises.India bulls have 82 branches in 65 cities.

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APPROACH OF THE PLAYERS

Marwadi, Sharekhan, Karvey, Indiabulls and Investment believe that online trading can be just one part of their strategy.Sharekhan believes that “A strategic combination of branches and franchisees allows us to expand quickly and monitor quality, as the branches become nodal points.”On the other hand, Indiabulls believes that delivering the desired customer experience is not possible through the franchisee route. Instead, he focuses on a company-owned branch network.That is also true for Karvey, which has mostly stuck to the branch route.

STRATEGY FOR THE INVOLVEMENT IN THE OTHER FINANCIAL SERVICES

Karvey has positioned itself as all-in-one financial shops.Sharekhan and Kotak are also into distribution of other financial products like Insurance and Mutual funds. With the setting up electronic exchanges for commodity trading, the big equity brokers are also able to offer commodity futures trading to clients.

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MARKETING STRATEGIES

From extending their branches, strengthening sales force, direct marketing and hiring training consultants, to changing their advertising and even expanding their call centre operations; the players are going all out to woo retail investors.

At ShareKhan they are using different tactics to attract investors. The financial site will soon be kicking off a broking contest as there are prizes to be won in the Sharekhan site. With its “The guide to the financial jungle” positioning, Sharekhan’s Arora says that it is trying up with online financial and general sites for advertising and co-branding exercises. Sharekhan’s marketing spend, which had dipped to Rs. 1 crore (Rs 10 million) last year, will go up to Rs. 4 crore (Rs. 40 million) in current fiscal. “Our marketing outlay is 6 per cent to 7 per cent of our revenue”.Kotak Securituies will have fine-turned its positioning with a “You are safe” tagline. And road shows have become big game at Infrastructure Leasing & Financial Services Investment Ltd to lure customers. Kotak Securities has changed its positioning. For what began as Zindagi ka hisab kitaab created by Grey advertising, it shifted to the more high profile agency Ogilvy & Mather when it became a bank early this year.Outfits like Sharekhan and Motilal Oswal have hired consultants to train their personnel. Some like Motilal even send their managers to the Indian Institutes of Management to keep them abreast of the latest technological developments.

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3) NICHER STRATEGIES

The nicher’s in the online stock broking segment are Geojit Financial Services, Quantum Securities and Elite.

The Kerala-based Geojit Financial Services has built some strength in commodities trading and is leveraging it to compete nationally.Delhi-based Quantum Securities. It has built competitive barriers by carving out a niche as a ‘boutique shop’. It has a branch in Mumbai and caters to about 500 clients-most of them HNIs and a few institutions-to whom it offers portfolio management and research. Though small, the firm has been able to build a strong brand.Elite sees itself as the niche and is having a base of 5000 clients with 120 employees.

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INDUSTRY ANALYSIS BY PORTER’S FIVE FORCES MODEL

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1) COMPETITORS:

Marwadi Shares & Finance Ltd, ICICI Web Trade Ltd, 5 Paisa.com, Kotak Securities Ltd, India Bulls, Motilal Oswal Securities Ltd, HDFC Securities Ltd, Asit C Mehta etc. They have been explained in the earlier portion of this project report under the heading of the “THE MAJOR PLAYERS”.

2) BUYERS:

Small InvestorsFranchise/Business PartnersMutual Fund CompaniesInstitutional InvestorsHUFHNIsNRIsFIIs

BARGAINING POWER OF BUYERS

The bargaining power of the buyers is higher as there many potions available for them.The clients can bargain on the brokerage charge as well as on the trading limit/exposure limit/deposits.The brokers will have to remain the negotiable at the rates.They will have to provide the differential price structure as far as the worth of the client is concerned.

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3) SUBSTITUTES:

Offline TradingGold’sInsuranceBank FDMutual FundsCommodities

THREAT OF SUBSTITUTE PRODUCTS

The attitude of the people for the investment depends on their ability to take risk and to go for the safer side and their past experiences.

Offline trading is the biggest substitute of the online trading. Though online has substituted the offline trading though some of the rigid investors are not ready to enter into the new segment, they are hesitant to use it and still they are stuck to the traditional way of trading.There is an option as like the share trading is the commodities trading which can be done in the two ways like National and the International trading. The people who are very much familier with the commodities and their market want to go for the commodities trading. In this market the farmer and the gold merchants are the most interested parties.The people who have the fear of the share market ups and downs they want to make an investment in the safer side and will invest in the Mutual Funds, which is comparatively safer.The other investment option open for the investors is the investment in the Banks by which they are earning regularly a flat rate of interest with the minimal of the risk.

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The most traditional way is to invest in the Gold, which is the safest one. The totally risk averse people will invest in the Gold.As stockbrokers are venturing into other territories, other financial service providers are moving into the broking business. The broker-franchiser faces his biggest challenge yet from banks, which can get into broking using their network of branches. The latest breed to wake up to opportunity is the PSU.

4) SUPPLIERS:

BankSecurities Exchange Board of India(SEBI)DepositoryISPsBSENSEMCXNCDEXNSDLCDSLDPs

BARGAINING POWER OF SUPPLIERS

A broker can go for the vertical integration by providing the facilities like banking, broking and DP services both on the single roof. Generally most of the players are able to give the full facilities with reared to the broker and the DP combination but all are not able to go for the 3-way combination.

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There is no option left for the SEBI as it is one of the authorities and all the players will have to follow the rules and the regulations issued by SEBI hook or crook.There are two depositories in India NSDL and CDSL the DP will have to follow the rules issued by them without any of the argument.

5) POTENTIAL ENTRANTS:

The Financial InstitutionsDPsBanks

THREAT OF NEW ENTARNTS

It becomes really an easier job for the DP to enter into the business. As the Rajkot branch of SHCIL is providing the DP services but there is surely a threat to enter into the business of broking, as it would be an easier job for it.

As most of the work of the broker is with the banks thus the banker can provide with the facilities of the broking under the name of the bank. At the same time some of the banks are the depository participants which possess the power to enter into this segment.

The financial institutions as like Insurance companies, Loan-giving companies can enter into this business with some of the resource available.

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CHARACTERISTICS OF THE INDUSTRY:

Vulnerable to stock market fluctuations:- Nearly all of the company’s revenues are derived from stock broking business(online as well as offline), which is a major cause of concern. Stock markets, like any economy, are cyclical in nature. While bull phases are generally accompanied by significant growth in brokerages, during downturns, revenues could fall at a faster rate. While the company has announced its intention to enter the asset management business, presumably to reduce its dependence on one revenue stream, we feel that the company does not have any prior experience in this business and to that extent, risks are enhanced.

Low entry barrier in the online space:- It is easy for an established offline player (brokerages, banks and NBFCs) to enter the online trading space. As a matter of fact, most of the current online trading players initially started off with an offline presence. Considering the cost benefits of being in the online space, this segment could attract lot more competition going forward.

Also, India Bulls is hampered by the lack of banking presence, which is an essential part of the whole online broking transaction process. For instance, almost 15% of the online trading transaction by India Bulls’ customers is carried out through the HDFC Bank’s payment gateway. This in itself might lead to conflict of interest, as the HDFC group also offers its own online trading service through HDFC Securities. There exists the threat of the key bank withdrawing its gateway support in order to promote its own interest. More importantly, there exists the threat of poaching of the current online trading customers of Indiabulls. Banks, due to a captive base of customers are in a better position to offer retail broking services to its clients. The

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entry of HDFC Bank and ICICI Bank in the online trading space could be viewed in this context.

This business is changing:-

APPROACH OF CLIENTS:- Clients are looking for Quality guidance, Research and products like Portfolio Management Schemes(PMS), which a big player can provide. Earlier, only persons were just relying on the personal relations with the brokers.

CONSOLIDATION:- In the last two years, India’s 9,500-plus brokers have seen their industry go into a consolidation mode. Many on-the-brink brokers have traded the comfort of independence for the rig ours of a franchisee. In the face of aggressive branding by bigger, corporatized broking houses, the trend is intensifying.

REASONS FOR THE TRANSFORMATIONThe push came from technology:- The regional brokers were rendered redundant by technological advancements. So, their members had to shift business, shut shop, or become sub-brokers of NSE or BSE brokers.The obsolescence of the regional brokers encouraged the larger brokers to look at a national play more enthusiastically:- Thus players like ICICI Web Trade(Owner of ICICIDirect.com), HDFC Securities, ShareKhan, India Bulls securities, Karvy Consultants, IL&FS Investment and Motilal Oswal began to expand nationally. Now, the biggies are getting bigger, while the smaller players are getting marginalized.Branding has become very important:- As firms try to cut through the clutter with the help of a differential. Smaller players have found it

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difficult to cope with the expenses of research, investor seminars, and aggressive advertising things that are commonplace in today’s broking business. “The quality of research we provide is the core value proposition,” says Motilal Oswal’s vice-president (equity advisory) Satish Nair. His company’s research services are branded as ‘Inquire’.Broking commissions have gone down:- Broking commissions have gone down(from 1% to about 0.5% in five-six years), making the survival of independent brokers difficult. Lower margins mean small brokers have become even more dependent on day traders. Most small brokers even indulge in their own trading to bolster revenues, leaving them exposed to the vagaries of the markets. Many have supplementary businesses too.The rules of the game have changed:- In 1992, brokers were allowed to function as a corporate with limited liability, but there was no major incentive to corporatize. In 1997, the allowance of capital gains exemptions on becoming a corporate broker removed the major disincentive towards corporatization. The change is evident: out of the 894 current Members of NSE, just 78 are proprietorial or partnerships. Corporatization encouraged professionalism. Indiabulls’ head of national marketing and sales, G. Banga, proudly says that 95% his team consists of postgraduates. Pay packets have also become variable and success-driven.

TO COPE WITH COMPETITION:

Brokers are also trying to get into investment advisory and wealth management. It is a new area where they will compete with other wealth management players and private banking divisions of banks. It is a specialized area and brokers without strong expertise will not be able to offer this effectively.

The more aggressive ones are not stopping just there. Indiabulls proposes to use a part of the issue proceeds to diversify in segments like housing finance, consumer goods lending, non-bank deposits and insurance services. The company has already forayed into insurance through its subsidiary.

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TACTICS TO ACHIEVE IN THE INDUSTRY:

The players-whether big or small –get all of 330 minutes to trade every trading day. But in the same time, bigger players rake in much more money per employee than smaller players.

Mass market:- In a Mass-market model, a maximum of 150 orders can be placed by a single dealer in a day. The dealers employed, who are not supposed to offer advice, are not very expensive. The big players have more terminals- they generate more volumes, and hence, higher profits. The total volume makes up for the smaller orders

High Net worth Individuals (HNIs):- A big broker can hire expensive staff, provide value-added services, and still book more profits per employee than a small broker. It is the big player who can plough back big money and expand.

For premium service, qualitative advisory is offered. A big brokerage house employs relationship managers (RMs). Other costs are Infrastructure and Support. Big brokers can employ many RMs. The common costs, which include Advertising, Infrastructure and Research, get spread over and the profit per employee goes up. A qualified RM, costing up to Rs 3 lakh a year, can earn the company Rs 12 lakh a year. The offering would be focused on personalized advisory and consultation. The facilities can be provided online or through branches offering personalized solutions.

IMPACT OF ONLINE TRADING ON BROKING INDUSTRY

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The advent of Internet-based trading in the country will change the face of the Indian capital market very soon in terms of the volume of transactions, the nature and settlement of trade, and the profile of market participants.Soon, Internet brokers will announce a flat rate per transaction instead of the present system of calculating brokerage as a percentage of the value. If the system enables the Internet broker to have seamless trading and settlement through the network, there is no cost differential between a trade of Rs 50 lakh and a trade of Rs 5. The broker will straightway announce his per-trade brokerage in absolute numbers. When this happens, it will be a rude shock to the broking community unless it changes very fast.Today, as per NSDL statistics, we have only 2.5 million investors with demat accounts in the country. Considering various investor combinations that are holding accounts, we can presume the country has roughly 5-8 lacs active investors now. This figure is unbelievably small compared to the potential number of investors, which is anything between 300 million and 350 million.When we take into consideration the way transaction risk and cost in the Indian Capital Market is coming down, there will be a massive surge in the number of investors and also in volumes.The only way to manage this kind of potential growth is to adopt state-of-the-art trading techniques. The growth of the Internet-based trading as a mass trading technique in the country is unstoppable, going by the indicators available and the signals for the future. When it ultimately gathers momentum, the biggest beneficiary will be the investor, who will be able to trade with greater speed and transparency, and at lower costs.

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BSE (THE BOMBAY STOCK EXCHANGE):

The stock exchange, Mumbai, popularly known as “BSE” was established in 1875 as “The Native Share and Stock Broker’s 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 demutualized and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country to have obtained permanent recognition in 1956 from the Government 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 redress 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 programme 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 every year by rotation), Three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.

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MARWADI

NSE (NATIONAL STOCK EXCHANGE):

NSE was incorporated in 1992 and was given recognition as a Stock Exchange in April 1993. It started operations in July 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments.

NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access to investors’ irrespective of geographical location. The high level of information dissemination through online system has helped in integrating retail investors on a nation-wide basis. The standards set by Exchange in terms of Market Practices, Products; Technology and Service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Market to Its present form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of Market Practices, Infrastructure, Technology, Risk Management, Clearing and Settlement and Investor Service.

COMPANY OVERVIEW

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MARWADI

GENERAL INFORMATIONPROFILE OF MARWADI SHARES & FINANCE LIMITEDHISTORYDEVELOPMENTMSFL’S PHILOSOPHYMISSION & VISIONMANAGEMENT TEAMMILESTONESSERVICESNETWORKNATIONAL & INTERNATIONAL IMAGE

GENERAL INFORMATION

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MARWADI

Marwadi Group is a widely renowned financial services group in Saurashtra.It had its genesis in the year 1992 with the incorporation of Marwadi Shares

&Finance Pvt. Ltd. (MSFPL). In the year 1996, it became a corporate member of

National Stock Exchange of India Ltd. (popularly known as NSE), which was

then an untested platform for securities trading. MSFPL’s perspicacity had it

that in future this new platform – which was highly leveraged on technology –

would be the main liquidity purveyor in securities business. Marwadi Group’s

Vision now stands proven with NSE now at the commanding heights of Indian

securities market.

Marwadi Group has built up customer trust and reliability, speed ofexecution, research advice, personalized services through qualitative service

and prompt redress of queries. Marwadi Group has more than 100000

customers, whose various investment needs Marwadi Group are servicing,

indicates their index of customer credibility. The company has always been

driven by a desire to create values for its customers by ethical and transparent

business practices, reverence for professionalism and implementation of

cutting-edge technology.

Marwadi Group is driven by its three founder directors SHRI KETAN MARWADI, a Civil Engineer by profession and the major brain behind Marwadi Group, SHRI DEVEN MARWADI an expert at risk management systems and SHRI SANDEEP MARWADI who is guiding the technology and systems in the Company.

At present 30% of the Company owned by Caledonia Investments plc and the India Capital Growth Fund – highly respected UK listed institutions.

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MARWADI

Marwadi Group has immersed growth with a team of more than 1100 dedicated employees serving more than 1750 pin codes, 1,20,000 Broking clients and 1,41,000 DP clients. With a Network of more than 70 branches and more than 700 Franchisee/Sub-brokers, having above 4,900 Concurrent Trading Terminals its turnover on exchange reaches 1.51% and in Retail Segments 3.02%.

A convincing index of its customer loyalty is that nearly 75% of its customers have been with Marwadi Group for many years. Marwadi group strength lies in its team of confident, young, talented, qualified & experienced professionals to carry out different functions under the able leadership of its management.

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MARWADI

PROFILE OF MARWDI SHARES & FINANCE LIMITED

Marwadi is a Gujarat based financial service group dealing in equities / commodities broking and portfolio management services. Marwadi Shares and Finance Limited is a huge and very reputed organization in the world of securities and finance. The organization enjoys a large market share with highly loyal customers, who in-turn provides a huge business to them.

The company has been famous for its various services in different sectors viz. cash market, derivatives and commodities. The Marwadi Group has emerged as one of the top 20 stock broking houses in India, having membership on:-

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MARWADI

From a decade, all financial service groups are offering stock -broking and commodity - broking through NSE, BSE, NCDEX and MCX. Marwadi also offer depository services as DP of NSDL and CDSL.

HISTORYMarwadi Shares And Finance Pvt. Ltd. was in corporated in the year 1992. In the year 1996, it became a corporate member of National Stock Exchange of India Ltd. (popularly known as NSE), which was then an untested platform for securities trading. Soon it became a member of SKSE and also started its depository services.

Marwadi Sales and Finance P. Ltd. when acquired membership of National Stock Exchange of India Ltd., it was the time when Govt. had just started liberalization. Capital market being at the base of every thing else was among the first few sectors taken up for liberalization and alignment with global benchmarks. NSE was therefore a result of Government’s policy to modernize stock market and give our investors a cost - effective trading and settlement system.

They enter into the stock market coincided with Government's initiative to give a modern Stock exchange. Marwadi had then very presciently felt that this development would change the very structure and content of the market. Then, when Depository system was introduced to automate the settlement system, we became the first Corporate DP in 1998 to bring this concept to investor's doorstep in Saurashtra. Marwadi had very early on seen that the future lay in the ability to network and use technology to its fullest possible extent. Relying on your judgment, we used technology extensively which resulted in efficient client servicing.

It also saw the synergy that lay in providing a bouquet of services under one roof. It is this realization that led us in the year 2003 to go for membership of National Level Commodity Exchanges, which were set up as part of Govt's policy to bring commodity market on par with the capital market in terms of integrity and practices.

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MARWADI

DEVELOPMENTIn the last 15 years Marwadi group has grown into a network of more than 70 branches with an 850+ committed professional people and 475+ channel partners across India. Marwadi has kept the faith of over 1.90 lacs investors and it's growing.

After establishing supremacy in Gujarat, now expanding nationwide and to fuel growth plans they recently raised capital from UK-based investment companies. Marwadi got 5th rank in best broking houses also.

Its bold initiatives starting with the journey from capital market up to commodities market has given them synergies in operations, enabling it to pass on the advantage to customers. As an organization, have achieved a leader's position by ensuring total satisfaction of customers through world class services.

Utilize ultra modern technology for timely, seamless and accurate data processing. Proactively seek customer’s feedback in improving upon our

service delivery modes. Promptly respond to customer issues in order to

maximize client’s satisfaction.

Caledonia Investments plc. , and Marwadi Shares and Finance Limited has announced that Caledonia has acquired 19.67% equity stake in Marwadi.

Caledonia is an investment trust listed on the London Stock Exchange with net assets in excess of £1.2 billion. Commenting on the investment, Mr. Tim Ingram, Chief Executive of Caledonia, said, “We are very pleased to have made this investment which we

believe will assist Marwadi in realizing the great potential this business has for

further growth in India.”

Mr. Ketan Marwadi, Chairman & Managing Director of Marwadi Group, said, “We are delighted to welcome Caledonia as a shareholder. We look

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MARWADI

forward to a long-term association with them and are confident that with their valuable support, we can realize our vision to make Marwadi one of India’s leading retail brokerage houses.” Mr. Ketan Marwadi further states that earlier in the month of December 2006, India Capital Growth Fund Limited, a Guernsey (UK) registered investment Company listed on AIM in London had subscribed for 15.66% stake Equity in Marwadi through its Mauritius subsidiary, ICGU Limited. American Orient Capital Partners India was advisors to Marwadi on this transaction.

MSFL’S PHILOSOPHY

The Group has its basic philosophy, “YOUR MONEY IN SAFE HANDS”, which proves the transparency of Marwadi Group in business.

MISSION & VISION“ To Be a world-class financial services provider By arranging all conceivable

financial services Under one –roof at affordable costs. Through cost effective

delivery systems, And achieve organic growth in Business by adding newer

lines of Business”.

MANAGEMENT TEAM

CHAINRMAN & MANAGING DIRECTOR : MR. KETAN MARWADI

WHOLE TIME DIRECTORS : MR. DEVEN MARWADI

DIRECTOR : MR. SANDEEP MARWADI

CTO : MR. LAKHAN BAMBHANIA

SR. VP-BUSINESS DEV. & HR : MR. HARESH MANIAR

VP-ACCOUNTS & FINANCE : MR. SANJAY THAKRAR

VP-OPERATIONS : MR. GOVIND CHAVAN

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MARWADI

JOINT VP – DP : MR. ARVIND GAMOT

JOINT VP –SYSTEM : MR. LAXMAN SONAGARA

CHIEF COMPLIANCE OFFICER & CS : MR. TUSHIT MANGUKIYA

JOINT VP-FINANCE & ACCOUNTS : MR.SURESH VINCHHI

JOINT VP-FINANCE & ACCOUNTS : MR.JAYANT VITHLANI

ASST. V.P. : MR.BHARATBHUSHAN ARORA

ASST. V.P. : MR. HASMUKH PIPALIA

ASST. V.P. : MR. BHARGAV PATHAK

SR. MANAGER-ADM./GENERAL & HR : MR. AKSHAY GOSWAMI

SR. MANAGER-AUDIT & COMPLIANCE : MR. JATIN VORA

SR. MANAGER-COMMODITY : MR. SARFARAZ MUNSHI

SR. MANAGER-DP FRONT/BACK OFFICE : MR. RAJIV BHATT

SR. MANAGER-BRANDING : MR. MIHIR BHIMANI

SR. MANAGER-PAY-IN-COLLE : MR. JAYANTILAL SARDHARA

SR. MANAGER-OPERATION : MR. HASMUKH PIPALIYA

SR. MANAGER-MARKETING : MR. MANOJ MANKAD

SR. MANAGER-MARKETING : MR. DIGANT PATEL

SR. MANAGER-TRAINING : MR. MIHIR BHIMANI

SR. MANAGER- RISK MGT. : MR. VINOD RATHOD

MANAGER-IPO & MF : MRS. LEENA PUROHIT

MANAGER-MARKETING : MR. RUSHI VASHU

MANAGER- IBT : MR. ARJUN MEHTA

ASST. MANAGER-EDP : MR. DUSHYANT RAVAL

ASST. MANAGER-IPO & MF : MR. PRASHANT SORATHIYA

KEY MILESTONES1992… Marwadi Shares And Finance Pvt. Ltd was incorporated.

1996… Became a corporate member of NSE .

1998… Became a member of Saurashtra Kutch Stock Exchange (SKSE).

1999… Launched Depository services under NSDL.

2000… Started derivatives trading on NSE.

2003… Became corporate member of NCDEX & MCX.

2004… Became a corporate member of BSE.

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MARWADI

2004… Launched Depository Services under CDSL.

2005… Launched Portfolio Management Services.

2006… MSFPL Converted to public limited.

2006… The company raised private equity from ICGU Limited, a wholly

Owned subsidiary of India Capital Growth Fund.

2006… Launched Browser based online trading service.

2007 … Raised capital from a UK-based investment companies .

2007… Received Approval from FMC to open commodity business at

Chicago, London, Dubai & Singapore.

2008… Ranked 5th largest stock broking company by D&B .

2009… Ranked Top 10 broking company by D&B.

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MARWADI

MSFL’S EFFICIENT SERVICESSTOCK BROKING

COMMODITIES BROKING

DEPOSITORY SERVICES

PORTFOLIO MANAGEMENT SERVICES

MUTUAL FUND PRODUCTS

IPO SUBSCRIPTION SERVICES

INSURANCE SERVICE

QUALITATIVE RESEARCH IN STOCK & COMMODITIES

NEW PAN CARD SERVICE

DEMAT & REMAT

COMMODITY TRADING

DERIVATIVE TRADING

ONLINE TRADING (www.marwadionline.com)

RESEARCH BASED INFORMATION

DPs

SERVICES OF MSFL

Equities & Services

Looking for an easy and convenient way to invest in equity

and take positions in the futures and options market using

our research and tools. To start trading in Equity, all you

need to do is open an online trading account. You can get

help opening the account and get guidance on how to trade in Equity.

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http://www.marwadionline.com/

MARWADI

Also have a various scheme to open Demat a/c. like A1 for short term

investment, B1 for small investors. And Z1 for long term investment. Some

lifetime refundable scheme also available that are mention below.

Commodity

Enter the whole new world of commodity futures.

Investors looking for a fast-paced dynamic market with

excellent liquidity can NOW trade in Commodity Futures

Market. The Commodity Exchange is a Public Market

forum and anyone can play in these vital Commodity Markets. Marwadi

Commodity Broker (P) Ltd can certainly be your point of entry to the

Commodity Markets. Marwadi is a registered trading-cum-clearing member of

NCDEX and MCX. Participation is not difficult. All you need is to open an

account with us. We shall offer you advice and research on investments.

Internet Trading

Making the right trade at the right time! Welcome to E-Broking

service which brings an experience of online buying and selling of

shares with just a click.

A detail resource like live quotes, charts, research and advice helps you take

proper decisions. Our robust risk management system and 128 bit encryption

gives you a complete security about money, shares, and transaction

documents.

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MARWADI

Depository Participant

In the times of T+2 having a Demat account linked to your

trading account becomes more convenient. The non-trading

members also can avail of our Depository services. You receive

regular account reports and an efficient service at all times. Marwadi is a

member of both NSDL and CDSL.

IPO

IPO or Initial Public Offer presents good opportunities for

netting high returns on your investments in a relatively short

period of time - if you invest early. Get information on IPO

news, Forthcoming IPO’s and a lot more .

Mutual Funds

Transact in a wide range of Mutual Funds. Mutual Funds are an

attractive means of saving taxes and diversifying your investment

portfolio. So if you are looking to invest in mutual funds, Marwadi

offers you a host of mutual fund choices under one roof; backed by in-depth

information and research to help you invest smartly.

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MARWADI

PMS

Can you analyze the prices of 1,500 shares every

morning? Can you afford to gamble only on the

recommendations from your friends and the information

overload from magazines and financial dailies? And, of

course, more importantly, if you happen to be a High Net worth Individual, do

you have the time to judge which advice is reliable, authentic and has the least

chance of failure? With Marwadi PMS, you can be assured that your

investments are in safe hands! Give your portfolio the expert edge to smoothly

steer towards wealth creation.

Research

Welcome to the Marwadi Online Research ‘Habit’ - the

special research cell where some of India's finest financial

analysts bring you intensive research reports on how the

stock market is faring, when is the right time to invest,

when to execute your order and more. Study reports on Capital Market,

Commodity Market, Mutual Funds, IPO’s and Economy on daily, weekly or

monthly basis. And last, but not the least, you can get these expert tips and

recommendations as SMS on to your mobile phone.

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MARWADI

MARWADI SHARES & FINANCE LIMITED

MARWADI COMMODITY BROKER PRIVATE LIMITED

Registered & corporate Office:

‘Marwadi Financial Plaza’

Nr. Nana Mava Main Road, Off, 150ft Ring Road,

Rajkot-360005, PH:- 3011000,2332001

E-mail: [email protected] / Web: www.marwadionline.com

Corporate Head office at Rajkot

Located in the prime location of the city

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mailto:[email protected]

MARWADI

9 storied building

Three level parking facilities

To establish national level Tele-caller center

75,000 sq feet area

High speed elevators

To establish national level library

Facility for Gym and recreation

Head Office at Rajkot over 12,000 sq feet of built up area.

450 plus computers with fiber optic connectivity and 60 servers across

our offices

Capacity of 2 mbps at a time

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MARWADI

Gen Set with 125 KVA load capacity, automatically starts functioning in

3 seconds in case primary electricity supply fails

MARWADI’S PRESENCE

Team of More than 1100+ dedicated employees

Network of More than 69 branches

Serving more than 1750 pin codes

Having more than 768 Franchisee / Sub-brokers

Serving about 1,20,000 Broking clients

Serving about 1,41,000 DP clients

Having 3538 Concurrent Trading Terminals

WHY YOU SHOULD INVEST WITH MARWADI

Trust & Reliability:- We maintain a high degree of integrity and

commitment to help achieve your financial goals, even when the going

gets tough. Perhaps that's why 75% of our customers have stayed with

us for many years.

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MARWADI

Speed of Execution :- Marwadi Group has 1200+ professionals who have

built robust systems and processes that enable swift action and prompt

service like quick demat transfers, timely payments, instant SMS alerts

etc.

Research Advice: - Our investment advice is based on in-depth research

done in collaboration with the renowned market-expert Mr. Rajesh Jain

our stock market research periodical, has made sound investing a habit

with our clients.

Personalized Services :- Every person's need is unique. We take it upon

ourselves to first understand your needs and then deliver to make their

investing experience comfortable, secure & rewarding.

TRADITIONAL IN VALUES, NOT IN BUSINESS

This group is founded by three brothers - KETAN, DEVEN & SANDEEP

Marwadi. Now 30% of the Company owned by Caledonia Investments

plc and the India Capital Growth Fund – highly respected UK listed

institutions.

We value your money (and trust us, we'll do everything to make it grow)

but we value your relationship more. all our clients feel at home while

trading with us, knowing fully well that their financial aspirations are

being handled with care. we hope you'll let us have the honor of serving

you soon…

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MARWADI

NETWORK OF MSFL

Ahmedabad (C G Road) Jamnagar

Ahmedabad (Panjarapore) Jamshedpur

Ahmedabad (Maninagar) Jetpur

Amreli Junagadh

Anand Jodhpur

Ankleshwar Jaipur

Bangalore Kadi

Baroda Kalol

Bharuch Keshod

Bhavnagar Pune

Bhuj Rajkot (Star chamber)

Chandigarh Rajkot (Pedak road)

Chennai Rapar

Cochin Salem

Coimbatore Savarkundla

Delhi Surat

Dhoraji Surendranagar

Dahod Una

Dhrangdhra Unjha

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MARWADI

Disha Upleta

Gandhidham Valsad

Gondal Vapi

Godhra Veraval

Hyderabad V.Vidhyanagar

Indore Visnagar

Jamkhambhaliya Wankaner

OPENING SHORTLY

LUNAWADA

SIDHPUR

HIMATNAGAR

KHEDBRAHMA

NATIONAL & INTERNATIONAL IMAGE

The Marwadi Group has emerged as one of the top 20 stock broking houses in India.

Received Approval from FMC to open commodity business at Chicago, London,

Dubai and Singapore.

In the year 2007, raised capital from a UK-based investment companies.

At present 30% of the Company owned by Caledonia Investments plc and the India

Capital Growth Fund – highly respected UK listed institutions.

Among BSE’s top ten volume Drivers in the equity segment during the year 2007-08.

Ranked 5th leading Brokerage House of India by Dun & Bradstreet.

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MARWADI

Among BSE’s top ten Volume drivers in F&O segment in the year 2006-07.

Ranked 23rd among the most trusted companies of Gujarat by SARA in association

with Zee Business.

ONLINE TRADING DESCRIPTIONONLINE TRADING DESCRIPTION

““ Online Trading has the potential to turbo-change the time you spendOnline Trading has the potential to turbo-change the time you spend

in front of your computer. There is nothing more exhilarating, morein front of your computer. There is nothing more exhilarating, more

daring, and more conceivably rewarding than making the right tradesdaring, and more conceivably rewarding than making the right trades

at the right time”.at the right time”.

1)1) INTRODUCTION:INTRODUCTION:

Gone are the days when you left orders with your broker, received

conformations on the price and quantity of the shares at the end of

the day and the payment made upfront or received after delays. Your

securities settlement took days to reflect in your account. Internet

has changed the way do trading. The entire process is speedy with

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MARWADI

limited to zero paper work. The process of online trading has become

seamless.

Internet trading in stocks eliminates the hassles of running around

the broker, uncertainty over the exact price of purchase, writing out

cheques and giving instructions to depository participants (a broker

with a demat account). An investor can do his own research on the

Net before making a deal. The websites offering e-broking have all

the information needed to make an informed purchase or sale. Till

recently, such information was the exclusive preserve of big

investors. Internet trading in India is expected to account for 10% of

the trading volume of the stock exchanges in a year and would grow

to 25 to 30% in the next few years.

Though the spread of the Internet has been slow in India, players are

catching on fast, at least in the online stock trading business. Internet

trading or e-broking seems to have passed through its teething

troubles and more players are now entering the fray. Given the

suitability of the product and rising demand, therefore, it is no

surprise that E-broking has captive the imagination of the consumer

and created a new breed of investor- the day- trader- whose impulse

to buy, own and sell is, and must be, matched by swift transaction

processes. Online brokerage houses aim to provide real-time quality

information and research, high transaction efficiency and customer

service. This include stock analysis tools like technical analysis charts

provided by Marwadi, stock tips, latest research reports, company

analysis, trends in the market, real-time market commentary, market

scoops and breaks etc. all these tools will help in making the investor

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MARWADI

better informed and better equipped to make intelligent

investments.

Online brokerage houses in India might offer folio services sooner

than most people expected. It is predicted that with net trading

becoming important, we could be a year away from active trading.

And another year away from online traders moving into sophisticated

activities like folio services.

Online brokerage houses abroad are already offering folio services.

Foliofn.com, a foreign online brokerage firm, for instance, allows its

investors to buy fractional shares and treats a portfolio trade as a

single order. Unlike the conventional portfolio management services,

these are less expensive. These are charged like any other stock

trading services.

While substantial progress has been made by stock exchanges and

SEBI with screen based trading and dematerialization, a typical retail

investors still feels the pinch of high brokerage. With his regular

broker, sitting in and mortar set-up, he did not have access to real

time, quality research and information. E-broking is yet another

milestone in trading, which has substantially reduces brokerage

charges and transaction costs to the investors. The online brokerage

houses play on volumes, not margins and brokerage.

Flexible systems with high levels of connectivity are vital to e-broking.

But with increasing bandwidth and laying of optical fibers for

transmission of data, this problem will also solved.

Traditional brokerage was previously a personalized industry with

individual brokers operating through firms. Then the business went

through a process of corporatization.

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MARWADI

2)2) THE FEATURES FOR THE ATTRACTIVENESS FOR ONLINE TRADING: THE FEATURES FOR THE ATTRACTIVENESS FOR ONLINE TRADING:

FREE RESEARCH:- Online investors are the free research provided

by the online firms. Previously this was available only to large

institutional investors. In addition to fundamental information

about stocks, bonds and mutual funds sophisticated tools like

technical analysis reports and charts are also available for free.

Some of these are also customizable, either fully or partly. The

problem for investors is one of information overload and how to

absorb all the information provided as well as analyze and act upon

it. Recognizing this need, some firms have taken concrete steps to

summarize and focus the information to meet with individual

requirements.

PRICE ALERTS:- Price alerts are a standard feature with most

brokers. The new online brokers do not have any legacy systems

and in spite of making heavy investments in technology (which is

the backbone of any online trading system) have very low

transaction costs, typically about less than 10% of full service

brokers cost.

WELL EQUIPED SYSTEMS PROVISIONS:- The main challenge facing

online brokers is to build new revenue streams. Trading volumes is

the primary driver and not account balances as in the case of typical

full service brokers. Also with growth rates ranging from 50% to

100% per annum, managing such growth is a major challenge.

Systems have to be equipped to handle the surge in trading

volumes, have adequate capacity, financial controls to manage risk,

customer service and quality.

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MARWADI

ADDITIONAL CAPACITY TO TAKE ADDITIONAL LOAD DURING PEAK

TRADING TIMES:- During peak trading times the system must be

equipped to take on additional load without compromising on

speed of execution. Online customers, especially the day traders

who provide the bulk of the volume, are now extremely careful

about these matters and their expectation levels have significantly

increased over time. Online firms are selling basically virtual

products and do not have a lot of storage or shipping costs as they

are brokering information that can and is sent out over the internet

at minimal or zero cost.

OTHERS:-

To eliminate the risks and hassles associated with paperwork.

To come out of the risk of losing the shares certificates.

Freedom from bad delivery and counterfeit dealings.

To make trading faster and safer with the help of different

facilities.

To ensure the safety and soundness of the capital market.

PARTICIPANTS IN ONLINE TRADINGPARTICIPANTS IN ONLINE TRADINGIndividual investors, Institutional investors, broker and just about anyone

having access to a computer and an account with a broker (in case of non

broker participants) can trade online. As explained earlier the requirements

are minimal and the biggest advantage of online trading is the do it yourself

method giving one a sense and feeling of control. Of course reduced

transaction costs, free research and anytime trading are some of the other

added benefits.

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MARWADI

In many cases there are no commissions for transactions up to 1000 shares,

irrespective of value. The broker dealer earns his revenue typically by market

making. A point to be noted is that in no case can an individual investor trade

directly with another investor, all orders are routed through a broker only.

HOW PARTICIPANTS DO INDULDGE INTO THEHOW PARTICIPANTS DO INDULDGE INTO THE

ONLINE TRADINGONLINE TRADING

The sale or purchase of shares involves three steps: placement of order (for

sale or purchase), payment (for purchase) and delivery of shares. Since

payments through the Internet are not yet legally valid in India, for most small

investors e-trading is currently restricted to the placement of order. However,

once cyber laws are passed by parliament – which is likely to happen in a

couple of months – entire trading could happen online, Says D. R. Mehta,

chairman of the Securities and Exchange Board of India (SEBI): “The complete

cycle of Internet trading, from booking orders to payments, will go online only

after cyber laws are passed by Parliament”.

With the onset of Online trading the Investor can place his or her

orders through the Internet by logging on to the broker’s site and

entering orders for execution directly.

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MARWADI

Due to technological advances, which have made this possible in

the first place, orders are executed directly without manual

intervention (in most cases, as during high volatility days online

brokers may execute orders manually). The broker dealer may

have an open trading system or a proprietary system for execution

of the trades.

These orders placed by investors are routed through the broker

dealer who forwards it to the exchange for execution.

In case the broker dealer is not a market maker in that particular

stock the order is normally routed to another market maker for

execution.

Investors place open or market orders or limit orders (which

typically attract a higher commission).

In online trading the orders are simply consolidated by the broker

and routed through the firms systems to the exchange for execution.

The whole concept is one of consolidation and high-speed automatic

execution, without manual intervention (in most cases). This is

possible on account of the technological advances in Information and

Communication Technology.

Once an order is executed it becomes a trade, which is settled. The

clearing and settlement procedures are the same as for a normal

trade executed manually by a broker, the order for which may have

been placed either in person or on the phone.

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MARWADI

Net trading involves a major and paradigm shift in convenience for

investors and participants. An electronic link between all the

participants and investors could increase the security and decrease

risk.

SECURITY IISUSES FOR ONLINE TRADINGSECURITY IISUSES FOR ONLINE TRADING

Online trading is anonymous and the concerns about security are

well founded. The major issue is that of impersonation for placing

orders and access to confidential data. The dealings are impersonal

as the computer and a complex set of relationships replace the

interaction with the customer. Technological advances permit the

design of several security features to safeguard privacy and

genuineness of the customer. Today digital certification, encryption

through a SSL (Secure Socket Layer), dynamic HTML for stock order

verification can also be used. In fact the new Pentium III

microprocessor chip has a serial number, which could also be used

to trace and verify transactions. Emerging new technologies like

Voice recognition software, biometrics can easily be used for

identification and verification purposes. Also the traditional

methods of establishing limits for individual clients, based on their

deposits, past behavior, credit rating, etc. can be effectively utilized

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to control and manage risk. Issues like online surveillance, control

and risk management are critical and various systems to address

this problem have been developed and are in use. The laws for E-

trading are not clearly enacted as yet and only draft legislation has

been prepared. In India two drafts bills have been prepared, one for

E-Commerce and one the Information Technology bill.

Internationally also no clear picture has emerged especially with

regard to Cross border dealings and taxation.

Surveillance systems will also have to cope with the high speed and

high volume of transactions generated by online trading. This will

need to be done at the broker’s end as most exchanges have online

surveillance systems in place. The stock exchanges themselves will

not be exposed to additional risks as all the risk is borne by the

stockbrokers directly. In any case stock exchanges have pre set

exposure limits for all brokers; these are linked to capital adequacy

and margins.

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RESEARCH METHODOLOGYRESEARCH METHODOLOGY

RESEARCH PROBLEMRESEARCH PROBLEM

OBJECTIVESOBJECTIVES

HYPOTHESISHYPOTHESIS

SCOPE OF THE STUDYSCOPE OF THE STUDY

DATA COLLECTIONDATA COLLECTION

LIMITATIONSLIMITATIONS

ANLYSIS & INTERPRETATIONANLYSIS & INTERPRETATION

CONCLUSIONCONCLUSION

FINDINGS & SUGGESTIONSFINDINGS & SUGGESTIONS

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RESEARCH PROBLEMRESEARCH PROBLEMAlthough the information technology revolution has reduced distances and

created a global village, only a few, isolated pockets in India are privy to these

facilities and the inherent advantages that stem from the NET. And yet, for the

business savvy stockbroker, these isolated IT villages have thrown up

tremendous opportunities. With just two technologies to choose from,

Internet-based stock trading is still in its infancy in the country. Thus, there is

limited choice for early entrants – NSE.IT and Financial Technologies. These

technologies offer front-end trading software, by providing the investor with a

trading platform. For the broker, they act as an interface between the stock

exchange, the bank and the Depository Participant (DP) for executing banking

and securities transactions.

As like the other financial services like “Net Banking”, the stock trading has also

entered into the online segment with the big expectation for the positive

response from the stockbrokers. Thus our research study is to make focus on

the problems like to know the problems faced by the online brokers and the to

find out the prospect of the online trading in the Rajkot City.

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OBJECTIVES OF RESEARCHOBJECTIVES OF RESEARCHThis study mainly concentrates on the Potentiality of the Online

Trading in the Rajkot city. Therefore, the study has been carried out

keeping in view the following objectives:

To know the prospects and problems of online trading.

Review the awareness level for the online trading among the

traders.

To know the expectations of the traders from the online

brokers.

Analyze the satisfaction level from the current brokers.

To identify the most preferred media to attract for the online

trading.

HYPOTHESISHYPOTHESIS1) Null Hypothesis:-

H0 :- “Online Trading is problematic and not a prospective

Trading for the Rajkot City.

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2) Alternative Hypothesis:-

H1 :- “Online Trading is problematic but it is prospective in the

Rajkot City.

H2 :- “Online Trading is a problematic and also there are no

chances for the prospects of the online trading in the

Rajkot City.

H3 :- “Online Trading consists no problems and at the same

time there is a huge prospects for the online trading in

the near future for the Rajkot City.

SCOPE OF THE STUDYThis study will be useful to :-

Online and Offline clients

The persons who want to enter into the stock markets.

The financial or other corporate wishing to enter into the Online

Trading.

Different brokers and sub-brokers.

Students

DATA COLLECTIONA) SECONDARY DATA :-

The secondary data has been collected from the study of the different

materials as follows:

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Web sites

Marwadi Rajkot Head Office Literature

Discussion with the manager

B) PRIMARY DATA :-

Sampling Design :- The sampling design selected is the “ Simple

Random Sampling” method. The whole data has been collected

randomly without any kind of the selection.

Instrument : - The research has been conducted with the help of the

Questionnaire. Questionnaire was the unit through which the whole

information has been collected. The whole questionnaire has been

divided into 4 parts and each part was headed under the different

headings. The 1st part was telling about the General trading or

investing experience of the respondent/trader. The 2nd part was

related with the Experience /Awareness of Online Trading. The 3rd

part was the main and it was concentrating mainly on the Online

Trading section which is full of the questions that given us the

guideline to complete our study. And the 4th part was relating to

Personal Details of the respondents, which was optional.

Sampling Universe : - The sampling universe was the finite sample

space. The sampling universe chosen is “The Share-Traders”.

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Sampling Unit : - The sampling unit selected is “The Share market

Traders of the Rajkot City.”

Sample Size :- The sample size for research has been 200 share

traders of the Rajkot City.

Focus Group :- The Online as well as Offline traders were supposed

to respond to this questionnaire.

MODE OF COLLECTION OF DATAA) PERSONAL :- The print copy of the Questionnaire has been presented

before the respondents personally in order to note the behavior of the

people while filling in the questionnaire. There were 100 of the

respondents who were personally filled the questionnaire.

B) MAIL :- The direct mail has been sent to the e-mail address of the target

audience. The e-mail addresses of the people who were trading into the

share market has been collected and they were directly sent the mail

which they are supposed to submit online. The e-mail addresses were

collected from the Marwadi office, from the google group search and to

some of the relatives who are indulged in this field.

LIMITATIONS OF THE STUDY1) SIZE :- The objective of the study is to find out the problems and the

prospects of the online trading within the Rajkot City. The sample size

taken is just 200 respondents, which may not be the perfect for the

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research. But this is our limitation. The Rajkot City is the very big area

and for that the size of the 200 respondents might be very less.

2) BIASNESS :- The respondents might be bias in responding or on the

other hand we might be biased indirectly in selecting the sampling

the design. The respondents might conceal or give the wrong

information to us and which might cause on the result of this

research. Thus this is one of the limitation of our research.

3) REPRESENTATION :- As we have gone for the sample survey and not

for the population survey all the trader of this City are not being

selected. The sample size is just 200 respondents. There might be the

wrong selection of the sample. Sometimes, the sample selected may

or may not be the representative of the whole mass. This might draw

the research into the different direction.

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DATA ANALYSIS AND INTERPRETATION

1) Do you invest in stock market ?

No Answer Frequency Percentage

1 Yes 200 100%

2 No 0 -----

Total 200 100%

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2) If yes, in which stock do you trade ?


1 NSE 59 29.5%

2 BSE 42 21%

3 Both 99 49.5%

Total 200 100%

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3) Generally you are doing which type of transaction?


1 Intraday 89 44.5%

2 Delivery based 111 55.5%

Total 200 100%

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4) Through which of the following company(s) do you trade online?


1 Marwadi 36 18%

2 Sharekhan 69 34.5%

3 Angel Bro 95 47.5%

4 Asit C Mehta ----- -----

5 India Bulls ----- -----

6 Kotak Secu ----- -----

7 ICICI Direct ----- -----

8 5 Paisa ----- -----

9 Others ----- -----

Total 200 100%

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5) Since how many Years you are dealing?


1 6 Months 31 15.5%

2 1 Year 14 7%

3 1-3 Years 24 12%

4 3-5 Years 56 28%

5 More than 5 Yrs 75 37.5%

Total 200 100%

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6) Do you know computers?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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7) Are you aware of online trading facility; Up coming & available in India

now-a-days?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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8) Do you trade online ?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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9) If yes, Do you possess sufficient knowledge about online trading ?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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10) Is online trading simple for you ?


1 Yes 200 100%

2 No ----- ------

Total 200 100%

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11) Which media would you prefer most for investment?


1 Telecalling 34 17%

2 News paper 25 12.5%

3 TV 29 14.5%

4 Magazines 4 2%

5 Journals ----- -----

6 Reference 37 18.5%

7 Personal Exp 71 35.5%

8 Other ----- -----

Total 200 100%

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12) What induced you to begin online share trading?


1 Reference by friends 59 29.5%

2 Online advertisements 67 33.5%

3 Advice by financial consultant 74 37%

Total 200 100%

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13) How often do you do online share trading ?


1 Daily Basis 89 44.5%

2 Weekly Basis ----- -----

3 Monthly Basis ----- -----

4 Irregular 111 55.5%

Total 200 100%

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14) Does the site guide you online trading ?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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15) Is the information provided by your online stock broker

Sufficient ?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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16) Does your broker’s site provide you with up-to-date news about

IPOs ?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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17) Are you aware of T+2 method of trading ?


1 Yes 200 100%

2 No ----- -----

Total 200 100%

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18) Do you feel that there is more transparency in online share

trading ?


1 Yes 116 58%

2 No 84 42%

Total 200 100%

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19) Do you find problems of time delay between filling an application form & getting

user name & password ?


1 Yes 65 32.5%

2 No 135 67.5%

Total 200 100%

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20) Have you ever experienced irregularity in ticker price ?


1 Yes 65 32.5%

2 No 96 48%

3 Can’t say 39 19.5%

Total 200 100%

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21) Have you ever experienced disappearance of shares from your

demat account ?


1 Yes 20 10%

2 No 180 90%

3 Don’t know ----- -----

Total 200 100%

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22) What do you do when you have purchased some shares & want to

sell it BUT your computer not working properly ?


1 Try @ another cyber café 14 7%

2 Wait until computer gets ready ----- -----

3 Tell your broker about pending

transaction

26 13%

4 Ask your broker to square up your

account

160 80%

Total 200

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23) How would you rate the Internet & Telecommunication facility ?


1 Poor ----- -----

2 Average 26 13%

3 Good 174 87%

Total 200 100%

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24) Do you feel that the trading volume will increase in near future ?


1 Yes 75 37.5%

2 No 125 62.5%

Total 200 100%

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25) What short comes do you feel in Indian Online Trading ?


1 Lack of awareness amongst investors

about Online Trading

148 74%

2 Shortage of domestic technical expertise 49 24.5%

3 Shortage of Infrastructure facilities 3 1.5%

4 Any other ----- -----

Total 200 100%

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26) How will you describe your experience with online trading till

date ?


1 Very easy to operate 104 52%

2 Very difficult to operate ----- -----

3 Not secure 96 48%

4 Any other ----- -----

Total 200 100%

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GENDER


1 MALE 67 33.5%

2 FEMALE 133 66.5%

Total 200 100%

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AGE


1 Below 25Yrs 45 22.5%

2 25-35Yrs 53 26.5%

3 35-45Yrs 30 15%

4 Above 45Yrs 72 36%

Total 200 100%

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THE SEGMENTS IN WHICH THE RESPONDENTS ARE SPREAD


1 Employed 24 12%

2 Self employed 32 16%

3 Business 52 26%

4 Service 69 34.5%

5 House wife 23 11.5%

6 Others ----- -----

Total 200 100%

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Documents

Online Treding