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Stock Broking
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BMA WEALTH CREATORS PVT. LTD.NBS
INTRODUCTION
ABOUT THE SECTOR
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BMA WEALTH CREATORS PVT. LTD.NBS
A stock market or equity market is a public entity (a loose network of
economic transactions, not a physical facility or discrete entity) for the
trading of company stock (shares) and derivatives at an agreed price;
these are securities listed on a stock exchange as well as those only
traded privately.
The size of the world stock market was estimated at about $38.6 trillion
at the start of October 2011.
The stocks are listed and traded on stock exchanges which are entities
of a corporation or mutual organization specialized in the business of
bringing buyers and sellers of the organizations to a listing of stocks
and securities together. The largest stock market in the United States,
by market capitalization, is the New York Stock Exchange (NYSE). In
Canada, the largest stock market is the Toronto Stock Exchange. Major
European examples of stock exchanges include the Amsterdam Stock
Exchange, London Stock Exchange, Paris Bourse, and the Deutsch
Börse (Frankfurt Stock Exchange). In Africa, examples include Nigerian
Stock Exchange, JSE Limited, etc. Asian examples include the
Singapore Exchange, the Tokyo Stock Exchange, the Hong Kong Stock
Exchange, and the Shanghai Stock Exchange. In Latin America, there
are such exchanges as the BM&F Bovespa and the BMV.
In India Bombay Stock Exchange (BSE) benchmark, Sensex & National
Stock Exchange (NSE), the 50-stock Nifty index.
The market in which shares are issued and traded, either through
exchanges or over-the-counter markets are also known as the stock
market. It is one of the most vital areas of a market economy because
it gives companies’ access to capital and investors a slice of ownership
in a company with the potential to realize gains based on its future
performance.
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BMA WEALTH CREATORS PVT. LTD.NBS
EVOLUTION OF THE INDIAN BROKERAGE MARKET
The Indian broking industry is one of the oldest trading industries
that had been around even before the establishment of the BSE in
1875. Despite passing through a number of changes in the post
liberalization period, the industry has found its way towards
sustainable growth. The evolution of the brokerage market is
explained in three phases: pre1990, 1990-2000, post 2000.
Early Years
The equity brokerage industry in India is one of the oldest in the Asia
region. India had an active stock market for about 150 years that
played a significant role in developing risk markets as also
promoting enterprise and supporting the growth of industry.
The roots of a stock market in India began in the 1860s during the
American Civil War that led to a sudden surge in the demand for
cotton from India resulting in setting up of a number of joint
stock companies that issued securities to raise finance. This trend
was akin to the rapid growth of securities markets in Europe and the
North America in the background of expansion of railroads and
exploration of natural resources and land development.
Bombay, at that time, was a major financial centre having
housed 31 banks, 20 insurance companies and 62 joint stock
companies. In the aftermath of the crash, banks, on whose building
steps share brokers used to gather to seek stock tips and share news,
disallowed them to gather there, thus forcing them to find a
place of their own, which later turned into the Dalal Street.
A group of about 300 brokers formed the stock exchange in Jul 1875,
which led to the formation of a trust in 1887 known as the
“Native Share and Stock Brokers Association”. A unique feature of
the stock market development in India was that that it was entirely
driven by local enterprise, unlike the banks which during the pre
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BMA WEALTH CREATORS PVT. LTD.NBS
-independence period were owned and run by the British.
Following the establishment of the first stock exchange in
Mumbai, other stock exchanges came into being in major cities in
India, namely Ahmadabad (1894), Calcutta(1908),Madras (1937), Uttar
Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets
Gained from surge and boom in several industries such as jute
(1870s), tea (1880s and 1890s), coal (1904 and 1908) etc, at different
points of time.
INDIA IN GLOBAL MARKETS
The stature and significance of India is growing in the world capital
markets. India is not only attracting greater interest from world
markets, but is also assuming increasing importance in global
finance. India is a major recipient of foreign institutional flows amongst
the emerging markets. Since the opening up of domestic stock markets
to foreign investors, cumulative net FII investments reached Rs 517 Bn
by 2008 end.
India is major destination of private equity flows into the emerging
markets.
India was host to the annual meetings/conference of the World
Federation of Exchanges (2005) and International Organization of
Securities Commission (IOSCO) (2007).
India emerged a trillion dollar market capitalization market in 2007,
and was among the top 10 stock exchanges in the world in terms of
market capitalization.
India is amongst the top fifteen stock exchanges in the world in respect
of equity turnover. India emerged as a leading player in commodities
futures market. India is amongst the top five in the number of
transactions. India is among the top five in respect of volume traded in
Stock Index Futures and Stock Futures. India is one of the few markets
with extensive dematerialization of shares. India’s T+2 securities
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BMA WEALTH CREATORS PVT. LTD.NBS
settlement cycle is at par with the global standards. Indian stock
markets have the largest number of listings, with trading taking place
in about 2,500-3,000 stocks. India’s most popular stock index (Sensex)
is constructed on the basis of full float methodology, one of the firsts in
the Asian region and a global standard. Indian market indices such as
Sensex and CNX Nifty are listed in foreign exchanges for trading as
ETFs.
THE BSE AND NSE
Most of the trading in the Indian stock market takes place on its two
stock exchanges: the Bombay Stock Exchange (BSE) and the National
Stock Exchange (NSE). The BSE has been in existence since 1875. The
NSE, on the other hand, was founded in 1992 and started trading in
1994. However, both exchanges follow the same trading mechanism,
trading hours, settlement process, etc. At the last count, the BSE had
about 4,700 listed firms, whereas the rival NSE had about 1,200. Out of
all the listed firms on the BSE, only about 500 firms constitute more
than 90% of its market capitalization; the rest of the crowd consists of
highly illiquid shares.
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BMA WEALTH CREATORS PVT. LTD.NBS
GENERAL INTRODUCTION
ABOUT THE COMPANY
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BMA WEALTH CREATORS PVT. LTD.NBS
Established in December 2004, BMA Wealth Creators is a financial
services provider and specializes in extending customized financial
solutions to individual and corporates. The Company works towards
understanding the financial ambitions of its clients and adjusts to its
risk profile accordingly. Their expertise combined with thorough
understanding of the financial markets results in appropriate
investment solutions for all.
BMA Wealth creators is a part of the BMA Group. Established in 1920s,
the Group has created its forte by promoting successful ventures in the
fields of coal mining, refractory, steel and Ferro alloy. In the form of
established names in the market such as BMA Stainless Steel (Captain
TMT Bars), Prop. Snowtex Udyog Ltd, Anjanery Ferro Alloys Limited,
Maithan Alloys Limited, Maithan Smelters Limited, BMA International
and BMA EcoPrint.
BMA Financial Services primarily focuses on offering diversified
financial planning services to corporate & individuals. Their spectrum of
services include financial planning, advising, executing, monitoring of
investments & more. With their team of financial consultants & experts
they ensure to deliver customized solution to all their clients. They
offer a wide range of financial services and solutions through their
varied services.
Wealth Management Services
Investment Advisory Services
Securities Broking, Equities and Derivatives
Distribution of Financial Products
Marketing of Equity and Mutual Fund IPO
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BMA WEALTH CREATORS PVT. LTD.NBS
Commodities Broking
Their expertise in each of these areas helps to achieve financial
objectives.
They provide full service functions, which include:
Planning
Advising
Executing
Monitoring your investments
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BMA WEALTH CREATORS PVT. LTD.NBS
INDUSTRY PROFILE
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BMA WEALTH CREATORS PVT. LTD.NBS
INDIAN SECURITIES MARKET
Meaning of securities
The issues in stock exchanges are called securities. This includes
shares and debentures issued by public companies, government and
semi-government bonds, debentures bonds issued by government
companies, etc. Indian stock market has a long history dated back to
19th century. At the end of 19th century Bombay stock exchange was
established in MUMBAI
Types of securities
Government Securities
Government securities refer to securities issued by the central
government or state government. Securities point of view, government
securities are considered to be better. It is called golden edge
securities.
Semi-government Securities
The bonds and debentures issued by public utility services are known
as semi government securities. Security point of view, place for the
category of securities comes after the government securities. The
payment of invested money with interest on such securities is
guaranteed by the government.
Investment Securities
The security that is suitable in view of investment is called investment
securities. A certain fixed income is expected from such securities, and
comparatively price is also remaining stable. For example the
government and semi-government securities, issued by banks and
insurance companies come under this category.
Speculative Securities
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BMA WEALTH CREATORS PVT. LTD.NBS
The prices of securities that fluctuate largely called speculative
securities. The speculators have special interest in such securities.
They earn profit under the impression of future increase or decrease in
prices
Trustee Securities
Such securities in which some trust money can be invested, is called
trustee securities.
Industrial Securities
Industrial security is a wider term and it includes the securities of Bank,
Insurance, and industrial activities etc. Only the securities issued by
business institutions are categorized separately as industrial securities.
Registered Securities
Registered securities are those which are registered with the
concerned institutions book. Registered securities can be transferred
from one person to another through Registered.
Bearer Securities
Bearer securities can be transferred by mere delivery from one person
to another. The names of bearer securities are not deemed to be its
owner.
Listed Securities
The securities that include in the list of recognized stock exchanges, is
called listed securities. Only listed securities are transacted in stock
exchanges.
Cleared Securities
Those securities that have been recognized by the stock exchanges for
transactions are called cleared securities.
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BMA WEALTH CREATORS PVT. LTD.NBS
STEPS TO PURCHASE SECURITIES:
The following procedure may be followed by a purchaser of securities
at a stock exchange:
1. Selection of a broker:
Since only members can deal in securities at a stock exchange, the
intending buyer will have to take the help of a broker for purchase of
securities. The broker may be engaged either directly or through the
mediation of a bank with which the intending buyer has dealings. The
latter, or course is generally preferred, since the banks are integrity of
the broker.
2. Placement of order:
Ordinarily the broker recommends for purpose of investment a number
of securities and indicates in each case the advantages and
disadvantages of investing funds in it, the risk involved, anticipated
return, prospects of appreciation and deprecation. The investor, on the
basis of the advice of broker draws upon the order wherein he
generally specifies the price at which the different securities may be
purchased.
3. Making of a contract:
After receiving the order the broker or his authorized agent goes to the
hall of the stock exchange where the securities required are dealt with.
He announces his requirement by shouting in the hall during the time
allotted for dealings in the particular class of securities, In response to
his 'shouting' another broker who has an order with him to sell those
securities, may accept his offer or may make a counter offers.
Instead of shouting in the hall, another alternative open to broker is to
contact the members in their cabins and find out whether they are
willing to sell the securities he wants to buy After negotiations with
them a bargain is struck.
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BMA WEALTH CREATORS PVT. LTD.NBS
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BMA WEALTH CREATORS PVT. LTD.NBS
4. Preparation of contract note:
A book called "sauda book" is maintained by each broker. After
recording the transaction of purchase or sale of securities in the book,
the broker will get the signatures of the other member brokers with
whom he had the dealing in confirmation of the purchase of sale. A
copy of the transactions recorded in this book is submitted by the
broker to the stock exchanges at the end of the day. This facilitates
reconciliation by stock exchanges of all transactions for purchases with
sales and vice versa.
5. Settlement of the transactions:
The broker or members of the stocks exchanges settle the transactions
on the settlement day on behalf of their clients. The mode and time of
settlement depends on the nature of transactions, i.e. whether it is a
ready delivery transactions or a forward delivery transaction.
In case a person wants to sell the securities, practically the same
procedure, as discussed above, will have to be followed.
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BMA WEALTH CREATORS PVT. LTD.NBS
HISTORY OF EQUITY MARKET
Market-oriented economic reforms in India began in 1991. With the
removal of Administrative controls on bank credit and the primary
market for securities, the capital markets came to occupy a larger role
in shaping resource allocation in the country. This led to a heightened
interest amongst policy makers in the institutional development of
securities markets. The efforts towards empowering the securities
market regulator (SEBI), and the first efforts towards attracting foreign
portfolio investment began early in the reforms process. Almost
immediately after the reforms began, there was a prominent scandal
on the fixed income and equity markets, which was exposed in April
1992.
This set the stage for an unusual policy intervention: the establishment
of a securities exchange, the National Stock Exchange (NSE), by the
government.
Contrary to most expectations, NSE succeeded, becoming the largest
equity market in 1995. NSE pioneered many important innovations in
market design in India. The most important of these included
nationwide electronic trading (1994), the clearing corporation as a
central counterparty (1996) and paperless settlement at the depository
(1996). NSE was a pioneer amongst securities exchanges in the world
in using a “demutualised” structure, where brokerage firms did not
own the exchange.
The demutualised structure helped in keeping NSE focused on the
needs of investors as opposed to the profit maximization of brokerage
firms. The creation of the new exchange, clearing corporation and
depository were important accomplishments of institution building.
From 1996 onwards, debates about policy issues on the equity market
were dominated by questions about the role for leveraged trading.
There was a proposal to have a spot market based on “rolling
settlement” (where leverage is limited to intra–day positions only).
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BMA WEALTH CREATORS PVT. LTD.NBS
In 2001, a major crisis broke on the equity market. It involved
numerous elements: large leveraged positions which went wrong,
accusations of market manipulation, a payments crisis at the Calcutta
exchange, fraud in the banking system, ethics violations at the Bombay
Stock Exchange,
This crisis was valuable in breaking this five–year deadlock and moving
on with reforms. In June 2001, trading in index options commenced &
within a matter of weeks, liquidity improved sharply.
Over the 1990s, the equity market became a nationwide platform with
real–time capability for trading and settling stock transactions.
However, comparable improvements in the infrastructure for funds
transfer in the country have not taken place.
Beyond technical questions of market design, the most important
concerns about the securities markets today are questions of
governance and policy formulation Securities markets have made
significant progress in terms of exploiting modern trading technology
and modern financial instruments. However, the regulatory capacity on
the part of both exchange institutions and SEBI is highly limited.
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BMA WEALTH CREATORS PVT. LTD.NBS
STOCK MARKET
The term 'the stock market' is a concept for the mechanism that
enables the trading of company stocks, other securities, and
derivatives.
The stocks are listed and traded on stock exchanges which are entities
(a corporation or mutual organization) specialized in the business of
bringing buyers and sellers of stocks and securities together.
Equity/Share
Total equity capital of a company is divided into equal units of small
denominations, each called a share. For example, in a company the
total equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of
Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the
company then is said to have 20,00,000 equity shares of Rs 10 each.
The holders of such shares are members of the company and have
voting rights.
There are now stock markets in virtually every developed and most
developing economy, with the world's biggest markets being in the
United States, UK, Germany, France, India and Japan.
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BMA WEALTH CREATORS PVT. LTD.NBS
THE BOMBAY STOCK EXCHANGE IN INDIA
Function and purpose
The financial system performs three main tasks:
first, it handles transfer of payments; second, it
channels savings to investments with a good
return for future consumption; and third, it
spreads and reduces (local enterprise)
economic risks in relation to the players'
targeted returns.
The smooth functioning of all these activities facilitates economic
growth in that lower costs and enterprise risks promote the production
of goods and services as well as employment. In this way the financial
system contributes to increased prosperity.
The stock market is one of the most important sources for companies
to raise money. Rising share prices, for instance, tend to be associated
with increased business investment and vice versa. Share prices also
affect the wealth of households and their consumption. Therefore,
central banks tend to keep an eye on the control and behaviour of the
stock market and, in general, on the smooth operation of financial
system functions.
Trading
Participants in the stock market range from small individual stock
investors to large hedge fund traders, who can be based anywhere.
Market Timings
Trading on the equities segment takes place on all days of the week
(except Saturdays and Sundays and holidays declared by the Exchange
in advance). The market timings of the equities segment are:
Normal Market Open: - 09:15 hours
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BMA WEALTH CREATORS PVT. LTD.NBS
Normal Market Close: - 15:30 hours
LISTING
Listing means admission of securities of an issuer to trading privileges
on a stock exchange through a formal agreement. The prime objective
of admission to dealings on the Exchange is to provide liquidity and
marketability to securities.
SECURITIES
"Securities" is a generic term describing a transferable certificate of
ownership in an investment product. An investment product includes
notes, bonds, stocks, futures, contracts and options.
A Security gives the holder an ownership interest in the assets of a
company. For example, when a company issues security in the form of
stock, they give the purchaser an interest in the company's assets in
exchange for money.
There are a number of reasons why a company issues securities:
meeting a short-term cash crunch or obtaining money for an expansion
is just two.
TRADING IN INDIA
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.
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BMA WEALTH CREATORS PVT. LTD.NBS
REGULATOR
WHO REGULATES THE SECURITIES MARKET?
The responsibility for regulating the securities market is shared by
Department of Economic Affairs (DEA), Department of Company Affairs
(DCA), Reserve Bank of India (RBI) and Securities and Exchange Board
of India (SEBI).
WHAT IS SEBI AND WHAT IS ITS ROLE?
The Securities and Exchange Board of India (SEBI) is the regulatory
authority in India established under Section 3 of SEBI Act, 1992. SEBI
Act, 1992 provides for establishment of Securities and Exchange Board
of India (SEBI) with statutory powers for (a) protecting the interests of
investors in securities (b) promoting the development of the securities
market and (c) regulating the securities market. Its regulatory
jurisdiction extends over corporates in the issuance of capital and
transfer of securities, in addition to all intermediaries and persons
associated with securities market. SEBI has been obligated to perform
the aforesaid functions by such measures as it thinks fit. In particular, it
has powers for:
1. Regulating the business in stock exchanges and any other
securities markets
2. Registering and regulating the working of stock brokers, sub–
brokers etc.
3. Promoting and regulating self-regulatory organizations
4. Prohibiting fraudulent and unfair trade practices
5. Calling for information from, undertaking inspection, conducting
inquiries and audits of the stock exchanges, intermediaries, self –
regulatory organizations, mutual funds and other persons
associated with the securities market.
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BMA WEALTH CREATORS PVT. LTD.NBS
CLEARING CORPORATION
A Clearing Corporation is a part of an exchange or a separate entity
and performs three functions, namely, it clears and settles all
transactions, i.e. completes the process of receiving and delivering
shares/funds to the buyers and sellers in the market, it provides
financial guarantee for all transactions executed on the exchange and
provides risk management functions. National Securities Clearing
Corporation (NSCCL), a 100% subsidiary of NSE, performs the role of a
Clearing Corporation for transactions executed on the NSE.
Rolling settlement all open positions at the end of the day mandatorily
result in payment/ delivery ‘n’ days later. Currently trades in rolling
settlement are settled on T+2 basis where T is the trade day. For
example, a trade executed on Monday is mandatorily settled by
Wednesday (considering two working days from the trade day). The
funds and securities pay-in and pay-out are carried out on T+2 days.
FACTORS AFFECTING THE PRICES OF SECURITIES IN STOCK
EXCHANGE
Rates of dividend declared by companies.
Changes in the capital structure of companies.
Present economic condition of the institution.
Change in the management and control.
Strikes of employees.
Government policies towards industrial licensing and taxation.
Rate of interest in money market and availability of credit.
Business cycles.
Circulation of money.
National politics and change in government.
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BMA WEALTH CREATORS PVT. LTD.NBS
Financial market can be divided into following sub-
markets
Markets can be classified into different categories depending upon
characteristics of market or instrument used to create categories.
Securities created by institutions in the markets normally pay an
interest on the nominal amount (the amount shown on the certificate
or contract). The interest-bearing securities market is split into money
market and the capital market, based on the term to maturity (the
term left to redemption of the debt) of the securities.
The capital market is the market for issue and trade of long terms
securities.
The money market is that of short-term securities .The money market
is basically concerned with the issue and trading of securities with
short term, maturities or quasi-money instrument .The instruments
traded in the money market are Treasury Bill, Certificates of Deposits
(CDs), Commercial paper (CPs), Bills of exchange and other such
instruments of short term maturities (i.e. not exceeding 1year with
regard to the original maturity).
The Bond market, which provide financing through the issuance
of bonds, and enable the subsequent trading thereof.
Commodity markets, which facilitate the trading of
commodities.
The derivatives markets, which provide instrument for the
management of financial risk.
Futures markets, which provide standardized forward contracts
for trading products at some future date
Insurance markets, which facilitate the redistribution of various
risks.
Foreign exchange markets, which facilitate the trading of
Foreign exchange.
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BMA WEALTH CREATORS PVT. LTD.NBS
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BMA WEALTH CREATORS PVT. LTD.NBS
CAPITAL MATKET
PRIMARY MARKET
The market for instruments (also called securities) issued for the time,
is called the primary market. Because the standardization of these
instruments. Different needs in the market at different times, and
different views of economic factors, these instruments are traded
between institutions after they have been issued for the first time. If a
leader needs his money before redemption date of the loan, the lender
could trade the loan by selling the certificate to another institution. The
buyer of the instrument pays the seller and amount (the present value
the future cash flows of the loan), and the buyer becomes the new
lender. The market where instrument are traded subsequent to the first
issue is called the secondary market.
SECONDARY MARKET
The secondary market in some of the securities is a very active,
market. Activities in the secondary market have strong determining
influence on issue in the primary market as liquidity, market rates,
scale of demanded. Of specific instruments are reflected in the
secondary market. The variable of the economy in these markets are
expressed through the interest rate (the price mechanism) determined
in the rate and value at which issue can take place in the primary
market. The secondary markets give the investor the opportunity to
manage his portfolio in terms of risk and return ratio, liquidity, etc. The
investor receives or wants to receive on his investment (called the
yield); can be managed within certain parameters and by using
different strategies of buying and selling different instruments and
investments in the secondary market.
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BMA WEALTH CREATORS PVT. LTD.NBS
TO BUY THE SHARES:
There are basically two ways to buy the shares of the company. The
ways are:-
Buying from the primary market
Buying from the secondary market
Buying from the primary Market
It means that buy the shares directly from companies when the make
new issues of shares or come out with IPOs. One can also get rights
issue and bonus shares.
Reasons to buy Shares from Primary Market
Listing gains are the chief attractions of buying the shares I the primary
market. The following are the important reasons to pick the shares
through IPOs, rather than buy them from the market:
The first reason is that often companies issue their shares cheaply and,
later, when these shares are listed on the stock Exchange, they list at a
premium (higher than the price at which they were issued). So make a
lot of money if sell the shares soon.
It also happens that companies who are going public or listing shares
for the first time also usually offer their shares cheap, and could go on
to become very successful, IPOs thus offer investors the chance to
participate in their prosperity cheaply.
Buying From the Secondary Market
It means buy the shares of a company that is already listed people can
buy them from the stock exchange through brokers.
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BMA WEALTH CREATORS PVT. LTD.NBS
PRESENT SCENARIO
OVERVIEW
India has witnessed a consistently strong growth of over 7%+ over the
past 5 years. This, along with the positive regulatory environment, has
attracted foreign investors to India. The number of FIIs registered in
India has increased to 1711 in April 2010 from 513 in 2003. Increasing
foreign participation has been significantly positive for capital market
intermediaries in India.
FY09 remained a lackluster year, with FII being net sellers for
~US$10bn. Retail investors’ participation also remained low during
FY09, which impacted performance of capital market intermediaries.
With Indian economy moving on an up cycle during FY10, FIIs infused
~$20bn in Indian capital markets, and retail participation also
improved through insurance and mutual fund route. Corporate
fund raising activity (through QIPs, IPO, and debt syndication) has also
gained m momentum during FY102.
This has aided capital market intermediaries’ fee-income. The
secondary capital market volumes clocked a growth of 60% yoy to Rs.
978bn (annual average) during FY10 from Rs609bn in FY09. Presently
close to 77% of the capital market volumes comprise of F&O
volumes as compared to 61% in FY05. Change in the capital
market volume mix has tempered market share of top 10 capital
market intermediaries during FY10.
Moreover, lower delivery volumes in the cash segment have
impacted brokerage yields during FY10. We opine that the market
share of most of the capital market intermediaries will remain
under pressure going forward. With increased competition, brokerage
yields are expected to remain flat despite higher focus of the
intermediaries on the cash segment. We have assumed a 15% CAGR
over FY11-12 in capital market volumes from current average of Rs
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BMA WEALTH CREATORS PVT. LTD.NBS
978bn. Operating cost of capital market intermediaries is largely
variable in nature. Cost effective distribution model - franchisee and
online trading through portals also helps in keeping a check on
operating cost. And, thus operating and net profit margins are
likely to remain stable. Post recent correction stock prices of capital
market intermediaries are trading at significant discount to the
benchmark index valuations.
The Indian retail brokerage industry consists of companies that
primarily act as agents for the buying and selling of securities
(e.g. Stocks, shares, and similar financial instruments) on a commission
or transaction fee basis. It has two main interdependent segments.
RAPID GROWTH
The last decade has been exceptionally good for the Stock markets in
India. In the back of wide ranging reforms in regulation and market
practice as also the growing participation of foreign institutional
investment, stock markets in India have showed phenomenal growth
in the early 1990s.
The stock market capitalization in mid-2007 is nearly the same
size as that of the gross domestic product as compared to about
25 percent of the latter in the early 2000s. Investor base
continued to grow from domestic and international markets. The
value of share trading witnessed a sharp jump too. Foreign
institutional investment in Indian stock markets showed continuous rise
reaching about USD10 bn in each of these years between FY04 to
FY06.
Electronic trading, digital certification, straight through processing,
electronic contract notes, online broking have emerged as major trends
in technology. Risk management became robust reducing the
recurrence of payment defaults. Product expansion took place in a
speedy m manner. Indian equity markets now offer, in addition to
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BMA WEALTH CREATORS PVT. LTD.NBS
trading in equities, opportunities in trading of derivatives in futures and
options in index and stocks.
CORPORATE PROFILE
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BMA WEALTH CREATORS PVT. LTD.NBS
ORIGIN OF THE ORGANIZATION
In the 1920s, Mr Bhuramal Agarwalla, founder of the BMA Group, had
made a foray into the obscure energy industry with a mission to
assume eminence in the coal mining business. With his vision and
character, he managed to place the business on a higher pedestal. By
adhering to bi-pronged philosophy of risk-taking and fostering an ethic-
based environment, he cautiously promoted excellence through quality
to meet the expectations of both domestic and international clients.
Taking inspiration from this, the group has scaled many heights
venturing into Refractory’s, Smelting, Ferrous Alloys, and Coke is
leading by example.
In the age of Second Generation Reforms, the company has
successfully passed down its mantle to the Fourth Generation. The
group has successfully fused traditional methods with modern mantra
of management to come out with flying colours. The group has taken
multifarious initiatives, some of which have already yielded dividends.
They are manufacturers and exporters of ferrous alloys, refractory’s
etc. The holistic production process combines a perfect balance
between product availability, manufacturing procedure, quality supply
chain and a geographical dispersion of marketing and operations. Over
the years the BMA Group has become a single reliable source for
resources and a Group you can count on for delivery and quality.
Service to the customer goes beyond the sale of products by providing
technical advice for economic and efficient applications and
maintenance for products supplied by the group companies.
29
BMA WEALTH CREATORS PVT. LTD.NBS
Group Companies are:
National Refractories Refractories Unit West Bengal
The Behar Potteries Ltd. Refractories Unit West Bengal
Anjanery Ferro Alloys Ltd. Ferro Alloys Unit Jharkhand
Maithan Alloys Ltd. Ferro Alloys Unit West Bengal
Maithan Smelters Ltd. Ferro Alloys Unit Meghalaya
Premium Fuels Metallurgical Coke Unit West Bengal
Corporate Social Responsibility should be the inherent motive of every
business house. The Group BMA takes its commitment seriously and
has imbibed this responsibility into its mission. It actively participates
in community development through three ways: philanthropy, civic
leadership & public policy and grass root efforts. The company provides
generous support & leadership to a wide range of organizations that
cater to cultural, civic, environmental, health and human services.
30
BMA WEALTH CREATORS PVT. LTD.NBS
GROWTH OF THE ORGANISATION
DIFFERENT VENTURES OF BMA GROUP
1. Refractories
Companies under Refractories:-
National Refractories (Prop. Snowtex Udyog Ltd) - An ISO
9001:2000 company
The Behar Potteries Ltd.
2. Ferro Alloys
Companies under Ferro Alloys:-
Anjaney Ferro Alloys Ltd.
Maithan Alloys Ltd.- An ISO-9001:2000 company
Maithan Smelters Ltd.
3. Coal & Coke
Companies under Coal and Coke
Premium Fuels (Prop. Snowtex Udyog Ltd.)
4. Steel Product
Manufacturing & exporting of stainless steel & allied products that are
tested to comply with international standards.
5. Export and Import
Companies under Export and Import
BMA International
EXPORT AND IMPORT ITEMS:
1. Refractory
Alumina Silicate Bricks
Insulation Bricks
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BMA WEALTH CREATORS PVT. LTD.NBS
Monolithics
Special Refractories
2. Ferro Alloys
High Carbon Ferro Manganese
High Carbon Ferro Manganese(LowPhos)
Medium Carbon Ferro Manganese
Low Carbon Ferro Manganese
High Carbon Silico Manganese
Medium Carbon Silico
Manganese
6. Financial Services
Wealth Management Services
Investment Advisory Services
Securities Broking Equities and Derivatives
Distribution of Financial Products
Marketing of Equity and Mutual Fund IPO
Commodities Broking
Companies under Financial Service
BMA Wealth Creators Pvt. Ltd
BMA Commodities Pvt. Ltd
32
BMA WEALTH CREATORS PVT. LTD.NBS
ABOUT COMPANY
BMA Wealth Creators Pvt. Ltd. is a premier financial services
organisation, providing individual and corporate with customized
financial solutions. They work towards understanding your financial
goals and risk profile. Their expertise combined with thorough
understanding of the financial markets results in appropriate
investment solutions for you. At Wealth Creators they realize your
dreams, needs, aspirations, concerns and resources are unique. This is
reflected in every move they make with and for you. They have deep
appreciation for the Value of building an everlasting relationship with
YOU. BMA Wealth Creators Pvt., Ltd. was formerly known as BMA Stock
Broking Pvt., Ltd. and changed its name in July 2007
Their financial services corporate entities are represented by
BMA WEALTH CREATORS LTD. - which holds corporate
membership in National Stock Exchange Ltd, Bombay Stock
Exchange Ltd. and Central Depositories Securities Ltd
BMA COMMODITIES PVT. LTD . - This holds corporate
membership in commodities exchange of NCDEX and MCX. It is
also is SEBI approved AMFI registered Mutual Fund advisory and
intermediary.
They inherit the legacy of BMA group which has been one of the
dominant entities in Ferrous and Ferro Alloy industry in India. The BMA
Group has created its niche in by promoting successful ventures in the
fields of coal mining, refractory, steel and Ferro alloy. The strive to
achieve excellence and dynamic growth has been possible through
optimum mix of technology, customer orientation, best business
practices, forging alliances, high quality standards and proactive
business culture. Currently they've presence in 1650 location PAN
India. Presently company has 5,000 employees in all over India.
33
BMA WEALTH CREATORS PVT. LTD.NBS
MANAGEMENT TEAM
MISSION
“To be a premier financial supermarket providing integrated
investment services”
VISION
“To provide integrated financial services building investor wealth and
confidence”
34
MANAGING DIRECTOR & CEO - ANUBHAV BHATTER
DIRECTOR - AVINASH AGARWAL, SUDHANSHU AGARWAL.
COO - SAIKAT GANGULY
HEAD OF OPERATIONS AND RMS AND DIRECTOR - SHIV KUMAR DAMANI
VICE PRESIDENT AND HEAD OF FRANCHISEE DEVELOPMENT - ASIT
KUMAR GHOSH
BMA WEALTH CREATORS PVT. LTD.NBS
FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION
ORGANIZATION OF BROKERAGE FIRMS
The firms that specialize in creating, trading and selling "securities" are
often referred to as brokerage firms. Like any type of business, a
brokerage firm has various departments to perform different functions,
all of which are related in one way or another to the trading and selling
of securities. However, not all firms have every department that
follows. In fact, many small firms, called specialty firms or boutiques,
perform just one of the functions.
BACK OFFICE
In BMA, Mr Jay Valani is the head of operating department and he takes
care of the function of Back – Office. The Back office function acts as a
back bone of any share broking firm as the work which the personnel in
back office has to perform is very crucial and important for the client as
well as the firm. Any mistake from the personnel might become a
liability for the firm, for e.g. if there is short delivery or pay in of clients
share then for those shares auction takes place for which they have to
pay the price for the same. Hence the back office function calls for the
full concentration level of the personnel while doing his or her work. If
the back office section detects any error it should draw the attention of
the higher authority for the corrective action. Basically the back office
function includes responsibilities like transaction processing,
settlement and other administration functions.
CLIENT REGISTRATION DEPARTMENT (CRD)
In order to trade in the market the client has to fill up the agreement
between the Client-Broker-Sub broker which is known as tripartite
agreement and also know your client forms with necessary
requirement attached to it, has to been send to CRD. In the mean while
35
BMA WEALTH CREATORS PVT. LTD.NBS
the client or sub broker has to feed the all information in masters and
has to submit it in s/w which can be viewed by the client broker and
sub brokers end. After receiving the forms the employees in the CRD
verifies it and checks with the master, and everything is matched, it
gives instructions for the activation of the client to the surveillance
department. And once it get activated CRD informs to client by putting
the details in the ftp site which can be viewed at their end and can
start trading.
And if the details do not match or any particular attachment is not
there then they inform through ftp site where the client and sub broker
can view the current status. If any changes has to made like change in
name or address or in brokerage they have to inform to CRD and they
get it changed.
DELIVERY AND ACCOUNTS DEPARTMENT
Basically the employees in the Delivery department have to look after
the pay in and pay out of shares and Accounts department has to look
after the pay in and pay out of funds.
Pay in of shares
Now a days pay in of the shares is done automatically which is known
auto delivery out. NSE/BSE has the record of how much pay in of
shares is due from the seller s broker. The bank in which the broker has
his account, which is only for clearing member, the download of auto
delivery out is taken through the NSE s site. Then the broker gets the
print out of the delivery out report which shows whether NSDL/CDSL
has received the pay in correctly or not. After confirming it from the
bank the shares are sent from pse account to NSE/BSE and confirm the
pay in. Suppose if they are any short delivery of shares then NSE/BSE
gives debit to the pse account and similarly brokers debit it to sub
brokers/clients account and then NSE/BSE can charge penalty for short
pay in.
36
BMA WEALTH CREATORS PVT. LTD.NBS
37
BMA WEALTH CREATORS PVT. LTD.NBS
Pay out of shares and funds
When shares are purchased by the client then he gives money to sub
broker which he delivers to pse and pse sends to nse/bse as funds pay
in against which nse/bse gives payout of funds and also gives delivery
of shares to pse and in return pse gives the pay out of shares and
payout of funds to the respective sub brokers at present T+2 basis,
which means the day of trade plus two days.
Inter-settlement transaction
Intersettlement transactions are the necessary adjustments between
the broker and the client for which client has to give request to the
broker, for e.g. if the client has sold 20 share of reliance in settlement
number 154, but if the client request to broker/ sub broker to adjust
this pay in against the payout in settlement number 158 then it is
called as inter settlement transaction. d. Cash management and
transfer of funds Cash/ funds is the lifeblood of any organization so
management of cash and transfer of funds form a very important
aspect of the accounts department. This includes constant check and
reconciliation of the bank account of the sub broker.
Preparation Bank Reconciliation statement
Bank reconciliation state is very important as it helps the accountant to
understand the balance of cash in the respective bank account and if
there is any difference between in balance as per the sub brokers book
and as per our books it has to be rectified immediately and should be
informed immediately. There could be many reasons because of which
there can be indifference in cash and bank balances and doing bank
reconciliation statement can rectify these difference.
Preparing the cash statement
This statement gives the details of the transactions of previous days. It
shows all the debits and credits given to each and every client, margin
38
BMA WEALTH CREATORS PVT. LTD.NBS
from the sub broker, net balances, net stock payment (normal/auction)
and net stock receivable(normal/auction)
Checking the Daily Funds Statements
Daily funds give the details of pay in and pay out of funds and also
show whether it was normal or auction. This report has to be checked
by the accountant and find whether there is any short delivery, if yes
then get the short delivery report from the delivery department.
Undertake the work of recovery
The job of recovery is very is very difficult and this is one of the
important functions of the accounts personnel for this he has to be very
strict person and see that the job is done.
THE SYNDICATE DEPARTMENT
The corporate and municipal finance departments do not sell
securities. This task falls to the syndicate department, which
coordinates the initial sale of new securities to both individual abd
institutional investors. The work of this department is discussed in
greater detail in the section on underwriting.
39
BMA WEALTH CREATORS PVT. LTD.NBS
ORGANIZATION STRUCTURE
40
Head Office
Regional OfficeBranches
& Franchise
sClient
Branches
& Franchise
s
Branches
& Franchise
s
Business
AssociatesClient
Regional Office Regional Office
BMA WEALTH CREATORS PVT. LTD.NBS
SERVICES AND PRODUCT OF THE ORGANIZATION
Wealth Management Services
BMA Wealth Creators Pvt., Ltd. operates as a financial services
organization in India. It provides individual and corporate financial and
investment solutions. They give their customer path so that they can
efficiently increase their wealth. Expert team of BMA Wealth Creators
always suggest their customer so that they can invest their money in
such a way that it will make their wealth healthier.
Investment Advisory Services
Under BMA Wealth Creators Limited, it delivers advisory services to a
cross-section of customers. The service is backed by a team of
dedicated and expert professionals with varied experience and
background in handling investment portfolios. They are continually
engaged in designing the right investment portfolio for each customer
according to individual needs and budget considerations with a
comprehensive support system that focuses on trading customers'
portfolios and providing valuable inputs, monitoring and managing the
portfolio through varied technological initiatives. This is made possible
by the expertise it has gained in the business over the years. It covers
the latest of market news, trends, investment schemes and research-
based opinions from experts in various financial fields.
Securities Broking Equities and Derivatives
BMA Wealth Services Pvt. Ltd is also gives the service of Security
Broking, Equities and derivatives for their customer.
Distribution and Marketing of Equity and Mutual Fund IPO
Company also distributes different financial instruments like “Demat
Account” and also does the marketing of equity, mutual fund and IPOs
for their customers.
41
BMA WEALTH CREATORS PVT. LTD.NBS
Depository Services
Depository is an organisation which holds your securities in electronic
(also known as ‘book entry’) form, in the same manner as a bank holds
your money. Further, a depository also transfers your securities without
actually handling securities, in the same day as a bank transfers funds
without actually handling cash. BMA Wealth Creators Limited gives
their customer depository services also.
Commodities Broking
Commodity trading is an investing strategy that involves the buying
and selling of goods that are classified as commodities. There are
many similarities between commodity trading and the trading activity
involved with stocks. One key difference has to do with the difference
between what is traded. Company also gives the services of
commodity broking services for customers who want to trade in
commodity.
Insurance Services
BMA Wealth Creators Pvt. Ltd also gives the insurance services to their
customer. Company has tied-up with different insurance companies for
insurance services. Company gives Life Insurance and General
Insurance both.
42
BMA WEALTH CREATORS PVT. LTD.NBS
BMA WEALTH CREATORS DEALS WITH
EQUITY/SHARE
BMA Wealth Creators deals with different equity and shares of different
companies. Total equity capital of a company is divided into equal units
of small denominations, each called a share. For example, in a
company the total equity capital of Rs 2,00,00,000 is divided into
20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a
Share. Thus, the company then is said to have 20,00,000 equity shares
of Rs 10 each. The holders of such shares are members of the company
and have voting rights. Experts of the company suggest people to
invest their money in a right equity or share so that they can get good
return from that.
DEBT INSTRUMENT
Company also deals with debt instrument. Debt instrument represents
a contract whereby one party lends money to another on pre-
determined terms with regards to rate and periodicity of interest,
repayment of principal amount by the borrower to the lender.
In the Indian securities markets, the term ‘bond’ is used for debt
instruments issued by the Central and State governments and public
sector organizations and the term ‘debenture’ is used for instruments
issued by private corporate sector.
DERIVATIVE
Derivative is a product whose value is derived from the value of one or
more basic variables, called underlying. The underlying asset can be
equity, index, foreign exchange (forex), commodity or any other asset.
Derivative products initially emerged as hedging devices against
fluctuations in commodity prices and commodity-linked derivatives
remained the sole form of such products for almost three hundred
years. The financial derivatives came into spotlight in post-1970 period
43
BMA WEALTH CREATORS PVT. LTD.NBS
due to growing instability in the financial markets. However, since their
emergence, these products have become very popular and by 1990s,
they accounted for about two third of total transactions in derivative
products.
COMMODITY
A market that transacts business with commodities of all nature
referred as commodity markets. Commodity market does not
necessarily require you to buy or sell the commodities but you can
even exchange them. Commodity market works on certain principles.
Firstly the trading has to be done only for standard products. Secondly
the transaction takes place through a future contract. According to this
contract the commodities will be sold or bought on a future date.
However the price at which they are sold will be the price agreed
during the contract. Similarly commodity marketing also makes use of
another type of contract called spot contract. In this contract the goods
are to be transferred as soon as the contract is made.
MUTUAL FUND
A Mutual Fund is a body corporate registered with SEBI (Securities
Exchange Board of India) that pools money from individuals/corporate
investors and invests the same in a variety of different financial
instruments or securities such as equity shares, Government securities,
Bonds, debentures etc. Mutual funds can thus be considered as
financial intermediaries in the investment business that collect funds
from the public and invest on behalf of the investors. Mutual funds
issue units to the investors. The appreciation of the portfolio or
securities in which the mutual fund has invested the money leads to an
appreciation in the value of the units held by investors. Mutual fund is
for the customers who do not have the knowledge about share or stock
market. In that case customer gives the investment amount, what they
wish to invest in share market, to the company and company invest
44
BMA WEALTH CREATORS PVT. LTD.NBS
the amount on behalf of the customer in market. Experts of the
company decides where to invest the money for their customer
DEMAT ACCOUNT
Company also provides their customer De mat Account. The term De
mat, in India, refers to a dematerialised account for individual Indian
citizens to trade in listed stocks or debentures. Company provides
customer Demat Account facility who wants to transact in share
market. The Securities Exchange Board of India (SEBI) requires the
investor to maintain a Demat account. In a demat account shares and
securities are held in electronic form instead of taking actual
possession of certificates. A Demat Account is opened by the investor
while registering with an investment broker (or sub broker). The Demat
account number which is quoted for all transactions to enable
electronic settlements of trades to take place.
Access to the demat account requires an internet password and a
transaction password as well as initiating and confirming transfers or
purchases of securities. Purchases and sales of securities on the Demat
account are automatically made once transactions are executed and
completed.
The demat account reduces brokerage charges, makes
pledging/hypothecation of shares easier, enables quick ownership of
securities on settlement resulting in increased liquidity, avoids
confusion in the ownership title of securities, and provides easy receipt
of public issue allotments.
It also helps you avoid bad deliveries caused by signature mismatch,
postal delays and loss of certificates in transit. Further, it eliminates
risks associated with forgery, counterfeiting and loss due to fire, theft
or mutilation. Demat account holders can also avoid stamp duty (as
against 0.5 per cent payable on physical shares), avoid filling up of
transfer deeds, and obtain quick receipt of such benefits as stock splits
and bonuses.
45
BMA WEALTH CREATORS PVT. LTD.NBS
46
BMA WEALTH CREATORS PVT. LTD.NBS
Fees Involved in Demat Account
There are four major charges usually levied on a demat account:
Account opening fee, annual maintenance fee, custodian fee and
transaction fee. All the charges vary from DP to DP.
Account-Opening Fee
Depending on the DP, there may or may not be an opening account
fee. BMA Wealth Creators and some private banks, such as ICICI Bank,
HDFC Bank and UTI Bank, do not have one. However, players such as
Globe Capital, Karvy Consultants and the State Bank of India do so. But
most players levy this when you re-open a demat account, though the
Stock Holding Corporation offers a lifetime account opening fee, which
allows you to hold on to your demat account over a long period. This
fee is refundable.
Annual Maintenance Charge
Company also charges maintenance charge to maintain Demat
Account with the company. This is charges as yearly basis. This is also
known as folio maintenance charges, and is generally levied in
advance.
47
Account Opening Fee
Annual Maintenance Charge
Custodian Fee
Transaction Fee
BMA WEALTH CREATORS PVT. LTD.NBS
Custodian Fee
This fee is charged monthly and depends on the number of securities
(international securities identification numbers — ISIN) held in the
account. It generally ranges between Rs 0.5 to Rs 1 per ISIN per month.
DPs will not charge custody fee for ISIN on which the companies have
paid one-time custody charges to the depository.
Transaction Fee
The transaction fee is charged for crediting/debiting securities to and
from the account on a monthly basis. The fee also differs based on the
kind of transaction (buying or selling). Some DPs charge only for
debiting the securities while others charge for both. The DPs also
charge if your instruction to buy/sell fails or is rejected. In addition,
service tax is also charged by the DPs.
In addition to the other fees, the DP also charges a fee for converting
the shares from the physical to the electronic form or vice-versa. This
fee varies for both demat and remat requests. For demat, some DPs
charge a flat fee per request in addition to the variable fee per
certificate, while others charge only the variable fee.
Apart from all these charges one more charge is involved in
share trading and that is known as:-
Brokerage
Company gives the facility to their customer to sell or purchase stock
and other products of the company. For this facility given by the
company they charged some commission from the customer. This
commission is generally known as brokerage. And also company, who
deals with share and all other similar products, generally known as
broking houses.
48
BMA WEALTH CREATORS PVT. LTD.NBS
Rates comparison of BMA Wealth Creators from other
companies:-
Brokerage Rate
1. Advance Brokerage Scheme (ABS)
BMA Wealth Creators takes the brokerage as advance for 12 months.
As per the trading doing by the customer their brokerage is being
reduced from the advance brokerage given by them. These rates are
different in case of advance brokerage chosen by the customer. BMA
Wealth Creators offers flexibility of low brokerage as your trade
volumes go high to higher.
You Pay (RS.) Variable Brokerage Time Limit.
Delivery Intraday
1,000 0.40 0.04 12 Months
2,000 0.30 0.03 12 Months
5,000 0.25 0.025 12 Months
10,000 0.20 0.02 12 Months
20,000 0.15 0.015 12 Months
25,000 0.10 0.01 12 Months
50,000 0.05 0.005 12 Months
Features:-
Flexibility to choosing slab rate as per your investment pattern.
Time valid for 12 months.
Trading allowed both in Equity and Commodity.
49
BMA WEALTH CREATORS PVT. LTD.NBS
1000 2000 5000 10000 20000 25000 500000
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
Delivery Brokerage of BMA as per dif-ferent Slab
Delivery Brokerage of BMA as per different Slab
1000 2000 5000 10000 20000 25000 500000
0.005
0.01
0.015
0.02
0.025
0.03
0.035
0.04
0.045
Intraday charges of BMA as per different slabs
Intraday charges of BMA as per different slabs
50
BMA WEALTH CREATORS PVT. LTD.NBS
2. Unlimited Trade scheme (UTS):
No account opening charges
Flexibility of choosing slab as per your trading pattern
Free trading software and intraday charting
Research call on mobile and trading market watch
Client has the flexibility of trading through branch, online or
integrated desk
Intraday Delivery, Brokerage & Future – 0.01 per Trade
Option – 1 Rupees per Lot (Each Leg)
Plan Cash Market Cash + Future + Option + Currency
Fees 7500 15000
Offer Period 3 Months 3 Months
Exclusive of service tax
51
BMA WEALTH CREATORS PVT. LTD.NBS
Brokerage rate of other companies:-
Broking Houses Delivery Intraday trading
SBICAP Securities 0.50% 0.10%
Share khan 0.03% - 0.50% 0.03% - 0.10%
Motilal Oswal 0.30% - 0.50% 0.03% - 0.15%
Angel Broking 0.50% 0.02% - 0.03%
ICICI direct 0.75% 0.15%
India bulls 0.25% - 0.50% 0.05% - 0.10%
HDFC Securities 0.50% 0.15%
UTI Securities 0.80% 0.15%
Religare 0.20% - 0.30% 0.02% - 0.03%
Geogit 0.30% 0.03%
Indiainfoline 0.50% 0.10%
SBI C
AP Secu
rities
Shere
khan
Motilal O
swal
Angel B
rokin
g
ICICI Dire
ct
Indiabulls
HDFC Se
curiti
es
UTI Se
curiti
es
Religa
reGeo
git
IndiaInfolin
e0.00%0.10%0.20%0.30%0.40%0.50%0.60%0.70%0.80%0.90%
Brokerage for Delivery
Brokerage for Delivery
52
BMA WEALTH CREATORS PVT. LTD.NBS
SBI C
AP Secu
rities
Shere
khan
Motilal O
swal
Angel B
rokin
g
ICICI Dire
ct
Indiabulls
HDFC Se
curiti
es
UTI Se
curiti
es
Religa
reGeo
git
IndiaInfolin
e0.00%0.02%0.04%0.06%0.08%0.10%0.12%0.14%0.16%
Brokerage for Intraday
Brokerage for Intraday
Account Opening Charge
Name of the Broking House Account Opening Charge
BMA Wealth Creators NIL
Sherekhan Rs.750
India Bulls Rs.900
ICICIDirect.com Rs.750
SBI RS.500
HDFC Securities Rs.799
GEOJIT FINANCIAL SERVICES Ltd RS.650
Angel Broking Rs. 740
UTI Securities Rs. 499
India infoline Rs. 555
SMC Indian Rs. 499
53
BMA WEALTH CREATORS PVT. LTD.NBS
BMA Wea
lth Crea
tors
Shere
khan
India Bulls
ICICIDirect.
com SB
I
HDFC Se
curiti
es
GEOJIT
FINANCIAL S
ERVICES
Ltd
Angel B
rokin
g
UTI Se
curiti
es
India infolin
e
SMC In
dian0
100200300400500600700800900
1000
Account Opening Charges
Account Opening Charges
54
BMA WEALTH CREATORS PVT. LTD.NBS
MAJOR COMPETITORS
Among all the Indian brokerage companies, the top Brokerage Firms in
India can be listed as below:
Name Kotak Securities Limited
Terminals 4320
Sub Brokers 910
No. of Employees 4008
No. of Branches 350
Name Karvy Stock Broking Limited
Terminals 1700
Sub Brokers 19000
No. of Employees 3910
No. of Branches 581
Name Indiabulls
Terminals 2876
Sub Brokers NA
No. of Employees 5873
No. of Branches 522
Name IL&FS Investmart Limited
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BMA WEALTH CREATORS PVT. LTD.NBS
Terminals 1644
Sub Brokers NA
No. of Employees 1900
No. of Branches 294
Name Motilal Oswal Securities
Terminals 7923
Sub Brokers 890
No. of Employees 2193
No. of Branches 63
Name India Infoline
Terminals 173
Sub Brokers 173
No. of Employees NA
No. of Branches 605
Name Angel Broking Limited
Terminals 5715
Sub Brokers NA
No. of Employees 284
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BMA WEALTH CREATORS PVT. LTD.NBS
No. of Branches NA
Name Anand Rathi Securities Limited
Terminals 1527
Sub Brokers 320
No. of Employees 4566
No. of Branches 220
Name Geojit
Terminals 627
Sub Brokers 247
No. of Employees 343
No. of Branches 314
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BMA WEALTH CREATORS PVT. LTD.NBS
MICHAEL PORTER’S FIVE FORCES ANALYSIS & SWOT
ANALYSIS
Porter's five forces analysis is a framework for the industry analysis
and business strategy development developed by Michael E. Porter of
Harvard Business School in 1979. It uses concepts developed in
Industrial Organization (IO) economics to derive five forces which
determine the competitive intensity and therefore attractiveness of
a market. Attractiveness in this context refers to the overall industry
profitability. An "unattractive" industry is one where the combination of
forces acts to drive down overall profitability. A very unattractive
industry would be one approaching "pure competition".
Porter referred to these forces as the micro environment, to contrast it
with the more general term macro environment. They consist of those
forces close to a company that affect its ability to serve its customers
and make a profit. A change in any of the forces normally requires a
company to re-assess the marketplace. The overall industry
attractiveness does not imply that every firm in the industry will return
the same profitability. Firms are able to apply their core competences,
business model or network to achieve a profit above the industry
average.
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BMA WEALTH CREATORS PVT. LTD.NBS
The five forces model relevant to the Indian brokerage
industry
The Bargaining Power of Customers
Lack of Expertise Curtails Bargaining Power
Retail investors often lack the knowledge and expertise in the
financial sector that calls them to approach the broking houses.
Low Product Differentiation Proves Beneficial the retail broking
services provided by the various com panies are homogeneous
with very low product differentiation. This allows customers to
enjoy a greater bargaining power.
The Bargaining Power of Suppliers
Increased Dependence on IPOs -There is a growing dependence
of corporate on broking houses with the rising number of IPO’s
coming to the market.
The Intensity of Competitive Rivalry
Move towards consolidation-Lot of brokerage com panies are
moving towards consolidation with the smaller ones becoming
either franchisees for the larger brokers or closing operations.
Increased Focus of Banks in Retail Broking Various foreign banks
like ABN Amro and others are planning to enter the Indian retail
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brokerage industry.
Online Trading Competes with Traditional Brokerage There is
an increasing demand for online trading due to consumer’s
growing preference for internet as compared to approaching the
brokers.
Threat of New Entrants
Entry of Foreign Players New forms of trading including T+2
settlement system, dematerialization etc are strengthening
the retail brokerage market and attracting foreign companies
to enter the Indian industry.
The Threat of Substitute Products
Alternative Investment Options Various alternative forms of
investment including fixed deposits with banks and post offices etc
act as substitutes to retail broking products and services. Now even
various banks provide similar type of services. They also give the same
service of portfolio management and wealth management.
SWOT ANALYSIS
STRENGTHS
Multiples engines of growth- an integrated financial services
platform
Well established and continuously expanding geographical
footprints
Unique, stable and scalable business model
Adoption of technology -screen based trading, electronic
matching, and paperless securities
Centralized operations, effective risk management, and
control on large interconnected operations spanning multiple
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locations, which is enabled by telecom connectivity and low
costs
Accessibility of capital increases and margin finance increases
WEAKNESSES
Lack of visible goodwill among minor players
Lack of trust on companies by customers
Psyche of people in India is converging
Companies are still running on selling concept
Weak infrastructural facilities
Compliance with strict rules and norms set by govt.
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OPPORTUNITIES
Structure of the industry, market size, and growth rates-
huge potential in Indian market
Government is continuously liberalizing the market
Proactive and progressive nature of Indian brokerage industry
(India ranks amongst top five globally in this segment)
Economy is still growing at healthy rate leading to
investment/capital requirement Huge market opportunity for
wealth management service providers as Indian wealth
management business is transforming from mere wealth
safeguarding to growing wealth.
Leveraging technology to enable best practices and processes
Corporates looking at consolidation/acquisitions/restructuring
opens out opportunities for the corporate advisory business.
THREATS
High degree competition
Fluctuations in government policies
Political framework
Developing Indian economy Companies must develop and implement
physical, administrative and technical safeguards to achieve the
following goals:
Ensure the security and confidentiality of customer records
and information
Secure against any anticipated threats or hazards to the
security or integrity of such information.
Secure against unauthorized access to or use of such
information that could result in substantial harm or
inconvenience to any customer Corporate espionage.
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WORK PROFILE
At BMA Wealth Creators Pvt. Ltd., I learnt how the work of a
Relationship Manager is done. I have studied and experienced the work
of a Relationship Manager. Some Roles and Responsibilities of a
Relationship Manager are as under:
A relationship manager supervises the policies and procedures
employed by a company to ensure a good level of customer care is
provided to existing clients.
ROLES
1. Be an expert on the equity market – how, what when of the
market.
2. Be a smart guy and be a lackey for the customer.
3. Have the ability and resources to sort out all problems of the
customer – preferably in a jiffy.
4. Run odd jobs, sort out problems, anticipate and solve
problems.
In reality the RM :
1. Has no training, or very little training by the time he starts
talking to the customer.
2. He is under tremendous target pressure on day onwards
3. He has to achieve a lot of sales targets of a product that the
organisation wants to sell – damn what the client wants (that
is incidental)
RESPONSIBILITIES
Customer Service
A relationship manager works at all levels of a business from the head
office to front-line customer-focused operations. He helps initiate and
sustain an efficient customer service policy for all levels of the
organization. A relationship manager typically delegates work tasks to
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a customer service team, but may also interact directly or via
telephone with important customers or clients. He must also ensure
that company's guidelines are strictly adhered to when managing
customer concerns.
Marketing
A relationship manager plays a key role in marketing new products and
retaining existing customers. She often maintains a computer database
or develops software outlining the preferences and previous purchases
of all registered customers. This information can then be used for mail
distribution and cold-calling to market new products to the right
customers. She also develops feedback procedures for customers and
attends seminars to stay knowledgeable of any developments in
marketing techniques that could be initiated by a firm, as stated on the
Prospects website.
Data Analysis
A relationship manager produces reports on the level and nature of
complaints fielded by an organization and submits them to other
management. He also uses this data for research analysis to identify
more efficient ways of dealing with complaints to save an organization
time and money, and to improve its reputation. A relationship manager
should have proficient written skills for reporting purposes and should
be skilled in data analysis using computer software.
Staff Supervision
Relationship managers’ work closely with employees to provide
guidance and to ensure the best resolution for the customer and the
company is identified. A relationship manager should be adept at
managing and training available staff resources. She should also be
able to prioritize work activities, delegate responsibility to key
personnel and multitask when required. A relationship manager should
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have excellent communication skills as she will be required to
communicate with staff from all levels of a business.
DESCRIPTION OF LIVE EXPERIENCES
My internship experience at BMA Wealth Creators Pvt. Ltd., Ahmedabad
was very good. I have learnt so many things regarding stock market as
well as corporate life. Nothing can be understood without practical
knowledge. Things we study in a classroom will be clarified when we
experience it in real world.
I was given a task of cold calling at the office. List of contact numbers
of unknown persons was handover to me and I supposed to call them
and converting them into the prospective clients of the company. This
thing was very helpful to check our communication skills and behaviour
to strangers. I used to call people and 9 out of 10 times there was
negative response. Sometime people behave rudely when I call them.
But the useful thing is to keep our mind cool. It helps to increase the
patience level of one.
After doing cold calling my colleague and I have to go in the market for
marketing our products. We were given pamphlets of the company and
brochures of new brokerage plans. We had visited most of the
commercial building on C.G. Road. Our job was to meet the different
people and make them understand about our brokerage plans. After
giving all details we try to convert them into our clients. The
experience of meeting new people with different thoughts and ideas
was indeed a great learning for us. We learnt how the behaviour of
Relationship manager affects on the client. We used to collect the
contact details of each person we met for further use for company.
Sometime we had to come with empty hand at office. Sometimes
people even not allow us to enter their office. At that moment we felt
very disappointed but it happens when we are thrown into the real
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world. Each thing learnt during the internship was priceless and we had
gained so much knowledge about the real world.
We had enjoyed a lot with our guide and we had celebrated the
Birthday of our Branch Manager also. Sometimes we were threatened
by our guide but it all legal when you are in the corporate life and it is
helpful to increase our performance. The overall experience of the
summer internship was so much knowledgeable and helpful for my
upcoming future.
PERFORMANCE
At BMA Wealth Creators Pvt. Ltd., we were required to attempt the
work done by the Relationship Manager of the company. We were not
given any kind of work target show our performance during the
internship, but we were required to learn all the work of the
Relationship Managers.
During the early days of our internship I had done cold calling through
telephone and gathered a 15 prospective people who are ready to
meet us for further information.
I used to go into the market for door to door marketing where I had
gathered a so much knowledge regarding marketing skills. I had
collected so many contact details of the people who are interested to
deal with our company after my efforts during the meetings.
So the overall performance of mine was very good and helpful to
organisation as well as me. I had gained the knowledge of the stock
market as well as the corporate life.
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LEARNING EXPERIENCES
It’s hard to sum up the lessons you learn in an internship. I think the
valuable realization I’ve come to understand is that the companies that
employ interns, generally understand your limitations.
Some learning experiences:
1. An internship is a chance to “pay your dues” early on. People
who don’t have work experience often join the career force and
find themselves a little behind the game. By gaining those early
experiences as an intern, you (generally) earn yourself a bit more
of a leg-up to start.
2. Internships give you exposure to new and interesting
professional situations…with a safety net. The good internships
are with companies who “get” that you’re an intern. They give
you real opportunities for practical application of skill, but are
also there to catch you if there is a problem along the way.
3. You test your comfort zone. Until you really, really shake things
up (like I have) you never really know what you’re capable of.
Sometimes it takes a burst bubble for you to really get a grasp of
your full potential.
4. I understand how to talk the customers. For example first ask
the about customers trading equity or commodities customer
say that equity that which company you have doing equity
trading and how much brokerage you give after that
understand the BMA UTS scheme. Customer says –
commodities than I will understand the ABS scheme. Because
UTS scheme not allowed in commodities market.
5. I have study about company franchisee term and condition. I
have learnt about company franchisee. Company offers
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franchisee of 50000RS and we take brokerage of 10000000
transaction on 1000 RS company take.
6. I have study about company derivatives. I have learnt about
futures option and currency
7. I have study about company demat account forms. I have
learnt demat account forms and how to open and which type
of document requirement of company. For example pan card
license and residential proof.
8. I have met the some customer. I have learnt about customer
behavior and how to understand about company scheme and
other facilities.
9. I understand BMA marketing strategy. First understand the
customer business income and how much turnover they have
done in per day and which facilities give of the others company.
10. I have seen online trading and I have done the how to
operate BMA nest trader software and what are the function of
the nest trader and how its work.
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BIBLIOGRAPHY
WEBSITES :
www.bmawc.co.in
www.investopedia.com
www.moneycontrol.com
www.equitymaster.com
www.sebi.gov
www.nseindia.com
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