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Online Share Trading – Benefits And Pitfalls
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Online Share Trading – Benefits And Pitfalls

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  • 1. Online Share Trading Benefits and Pitfalls J.Karthikeyan Director, Finerva Financial Solutions Pvt Ltd FINERVA
  • 2. Agenda
    • History – Your Sharing
    • Entities Involved
    • Benefits for Each Entity
    • Pitfalls for Each Entity
    • Discussions
    FINERVA
  • 3. History
    • Stock Exchanges
    • BSE
    • NSE
    • Volume Online
    FINERVA
  • 4. Entities Involved
    • Individual Investors
    • Intermediaries
    • The Government & The Regulator
    • Excluded: Large & Institutional Investors, Mutual funds and Financial Institutions
    FINERVA
  • 5. Benefits & Pitfalls for the Government and the Regulator
    • Benefits
      • Settlement Period is reduced and monitored easily – Events like Harshad Metha Scam cannot happen
      • Better control on the traders – through Demat Accounts – PAN linked
      • Better control on Intermediaries
      • Easy & More Collection of Tax – STT & Volumes
      • Environment friendly
      • IPO processing easier faster and more economical – promotes development
    FINERVA
  • 6. Benefits & Pitfalls for the Government and the Regulator
    • Pitfalls
      • Effort required for Implementation
        • Education – Investor Education Fund
        • Infrastructure – processing, verifying documents
      • Errors in Processing – Trade / Settlement Guarantee Fund
      • Scams like multiple demat accounts - Roopalben Panchal (14,807) 45,000 in all
    FINERVA
  • 7. Benefits & Pitfalls for the Intermediaries
    • Benefits
    • Higher income – Higher transactions
    • Better Management of Portfolios – Easier and Faster
    • Transparent Operation – Clear Communication, Processing, Accounting
    • More Products – Futures, Options, Debt
    FINERVA
  • 8. Benefits & Pitfalls for the Intermediaries
    • Pitfalls
    • More investment required – margin money and client leverage
    • More risky if client is highly leveraged – Mark-to-Market
    • More research required
    • Higher regulator visibility and intervention
    • Lesser Investment sin Mutual funds
    FINERVA
  • 9. Benefits and Pitfalls for Individual Investors
    • Benefits
    • Easier to maintain
    • Cost per transaction is reduced
    • Easier and Faster to Trade - Buying or Selling
    • Transparent Transactions
    • Accounting is automatic
    FINERVA
  • 10. Benefits and Pitfalls for Individual Investors
    • Pitfalls
    • More Transactions – More cost
    • Day-Trading Addiction - Brad Barber and Terrance Odean in the US market shows that 82% of the day traders lose money.
    • Higher Visibility to the Taxman
    • Lack of Research and Knowledge
    • No Verification on Decision
    FINERVA
  • 11. DISCUSSION
    • THANK YOU
    FINERVA