By: PallaviMittal (2010143) PankajBhutoria (2010144) Status of Online Stock Trading in India
Contents Trading Screen based trading Online trading Installable software based Stock Trading Terminals Web (Internet) based trading application Facts
Trading Traditionally, people used to gather at the Exchange and bids and offers were made by open outcry. Disadvantages: Lack of liquidity and transparency Long settlement periods Benami transactions
Screen based Trading NSE introduced a nationwide, on-line, fully automated screen based trading system(SBTS) Member can punch into the computer the quantities of a security and the price at which he would like to transact. Transaction is executed as soon as a matching sale or buy order from a counter party is found.
Benefits of screen based trading over traditional method A safe and convenient way to hold securities Immediate transfer of securities No stamp duty on transfer of securities Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. Reduction in paperwork involved in transfer of securities Reduction in transaction cost No odd lot problem, even one share can be traded Nomination facility
Disadvantages of screen based trading Commission to broker Control in hand of broker Limitation for buying stock Time consuming Minimum buy/sell
Online Trading There are two different type of trading environments available for online equity trading. Installable software based Stock Trading Terminals Web (Internet) based trading application
Installable software based Stock Trading Terminals Software installed on investors computer. Software are provided by the stock broker. This kind of trading terminals are used by equity traders. NSE has 345 member brokers.
Installable software based Stock Trading Terminals Advantages: Orders directly send to stock exchanges rather then stock broker. This makes order execution very fast. It provides almost each and every information which is required to a trader on a single screen including stock market charts, live data, alerts, stock market news etc. Disadvantages: Location constrain - You cannot trade if you are not on the computer where you have installed trading terminal software. It requires high speed internet connection.
Web (Internet) based trading application Doesn't require any additional software installation. They are like other internet websites which investor can access from around the world through normal internet connection.
Advantages Real time stock trading without calling or visiting broker's office. Display real time market watch, historical datas, graphs etc. Investment in IPOs, Mutual Funds and Bonds. Check the trading history; demat account balance and bank account balance at any time. Provide online tools like market watch, graphs and recommendations to do analysis of stocks. Place offline orders for buying or selling stocks. Set alert to inform you certain activity on the stock through email or sms. Customer service through Email or Chat. Secure transactions.
Disadvantages Website performance - sometime the website is too slow or not enough user friendly. Little long learning curve especially for people who doesn't know much about computer and internet. Brokerages are little high.
Facts The total numbers of investor accounts were 115.9 lakh at NSDL and 75.2 lakh at CDSL at the end of April 2011. The number of investor accounts in April 2011 increased by 0.4 percent at NSDL while the same has increased by 0.5 percent at CDSL over the previous month. A comparison with corresponding period of previous year shows, there was an increase in the number of investor accounts while to the extent of 9.8 percent at NSDL and 13.3 percent at CDSL
References NSE www.nseindia.com SEBI www.sebi.gov.in www.chittorgarh.com/newportal/online-stock-brokers-list.asp