Online Share Trading     Benefits and Pitfalls J.Karthikeyan, CFP CM Director – Research & Consulting, Finerva Financial S...
Agenda <ul><li>History – Your Sharing </li></ul><ul><li>Entities Involved </li></ul><ul><li>Benefits for Each Entity </li>...
History <ul><li>Stock Exchanges  </li></ul><ul><li>BSE – 1875 – BOLT 1995 </li></ul><ul><li>NSE – NEAT (National Exchange ...
Entities Involved <ul><li>Individual Investors </li></ul><ul><li>The Government & The Regulator (SEBI) </li></ul><ul><li>I...
Benefits & Pitfalls for the Government and the Regulator <ul><li>Benefits </li></ul><ul><ul><li>Settlement Period is reduc...
Benefits & Pitfalls for the Government and the Regulator <ul><li>Pitfalls </li></ul><ul><ul><li>Effort required for Implem...
Benefits & Pitfalls for the Intermediaries <ul><li>Benefits </li></ul><ul><li>Higher income – Higher transactions </li></u...
Benefits & Pitfalls for the Intermediaries <ul><li>Pitfalls </li></ul><ul><li>More investment required – margin money and ...
Benefits and Pitfalls for Individual Investors <ul><li>Benefits </li></ul><ul><li>Easier to maintain </li></ul><ul><li>Cos...
Benefits and Pitfalls for Individual Investors <ul><li>Pitfalls </li></ul><ul><li>More Transactions – More cost </li></ul>...
DISCUSSION <ul><li>THANK YOU </li></ul>FINERVA
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Online Trading Pros & Cons

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Online Trading Pros & Cons

  1. 1. Online Share Trading Benefits and Pitfalls J.Karthikeyan, CFP CM Director – Research & Consulting, Finerva Financial Solutions Pvt Ltd FINERVA
  2. 2. Agenda <ul><li>History – Your Sharing </li></ul><ul><li>Entities Involved </li></ul><ul><li>Benefits for Each Entity </li></ul><ul><li>Pitfalls for Each Entity </li></ul><ul><li>Discussions </li></ul>FINERVA
  3. 3. History <ul><li>Stock Exchanges </li></ul><ul><li>BSE – 1875 – BOLT 1995 </li></ul><ul><li>NSE – NEAT (National Exchange for Automated Trading) – 1992 </li></ul><ul><li>Volume Online – Close to Rs.One lakh crores per day </li></ul>FINERVA
  4. 4. Entities Involved <ul><li>Individual Investors </li></ul><ul><li>The Government & The Regulator (SEBI) </li></ul><ul><li>Intermediaries </li></ul><ul><ul><li>Stock Exchanges (Cash & Derivatives) </li></ul></ul><ul><ul><li>Brokers, corporate brokers, sub-brokers, derivatives brokers </li></ul></ul><ul><ul><li>FIIs </li></ul></ul><ul><ul><li>Custodians </li></ul></ul><ul><ul><li>Depositories </li></ul></ul><ul><ul><li>Depository Participants </li></ul></ul><ul><ul><li>Merchant Bankers </li></ul></ul><ul><ul><li>Bankers to an Issue </li></ul></ul><ul><ul><li>Underwriters </li></ul></ul><ul><ul><li>Credit rating agencies </li></ul></ul><ul><ul><li>Venture capital funds – Indian & Foreign </li></ul></ul><ul><ul><li>Registrars and Share transfer agents </li></ul></ul><ul><ul><li>Portfolio Mangers, MFs, Collective Investment Schemes </li></ul></ul><ul><ul><li>Stock lending Schemes </li></ul></ul><ul><li>Large & Institutional Investors </li></ul>FINERVA
  5. 5. Benefits & Pitfalls for the Government and the Regulator <ul><li>Benefits </li></ul><ul><ul><li>Settlement Period is reduced and monitored easily – Events like Harshad Metha Scam cannot happen </li></ul></ul><ul><ul><li>Better control on the traders – through Demat Accounts – PAN linked </li></ul></ul><ul><ul><li>Better control on Intermediaries </li></ul></ul><ul><ul><li>Easy & More Collection of Tax – STT & Volumes </li></ul></ul><ul><ul><li>Environment friendly </li></ul></ul><ul><ul><li>IPO processing easier faster and more economical – promotes development </li></ul></ul>FINERVA
  6. 6. Benefits & Pitfalls for the Government and the Regulator <ul><li>Pitfalls </li></ul><ul><ul><li>Effort required for Implementation </li></ul></ul><ul><ul><ul><li>Education – Investor Education Fund </li></ul></ul></ul><ul><ul><ul><li>Infrastructure – processing, verifying documents </li></ul></ul></ul><ul><ul><li>Errors in Processing – Trade / Settlement Guarantee Fund </li></ul></ul><ul><ul><li>Scams like multiple demat accounts - Roopalben Panchal (14,807) 45,000 in all </li></ul></ul>FINERVA
  7. 7. Benefits & Pitfalls for the Intermediaries <ul><li>Benefits </li></ul><ul><li>Higher income – Higher transactions </li></ul><ul><li>Better Management of Portfolios – Easier and Faster </li></ul><ul><li>Transparent Operation – Clear Communication, Processing, Accounting </li></ul><ul><li>More Products – Futures, Options, Debt </li></ul>FINERVA
  8. 8. Benefits & Pitfalls for the Intermediaries <ul><li>Pitfalls </li></ul><ul><li>More investment required – margin money and client leverage </li></ul><ul><li>More risky if client is highly leveraged – Mark-to-Market </li></ul><ul><li>More research required </li></ul><ul><li>Higher regulator visibility and intervention </li></ul><ul><li>Lesser Investments in Mutual funds </li></ul>FINERVA
  9. 9. Benefits and Pitfalls for Individual Investors <ul><li>Benefits </li></ul><ul><li>Easier to maintain </li></ul><ul><li>Cost per transaction is reduced </li></ul><ul><li>Easier and Faster to Trade - Buying or Selling </li></ul><ul><li>Transparent Transactions </li></ul><ul><li>Accounting is automatic </li></ul>FINERVA
  10. 10. Benefits and Pitfalls for Individual Investors <ul><li>Pitfalls </li></ul><ul><li>More Transactions – More cost </li></ul><ul><li>Day-Trading Addiction - Brad Barber and Terrance Odean - Research on the US market shows that 82% of the day traders lose money. </li></ul><ul><li>Higher Visibility to the Taxman </li></ul><ul><li>Lack of Research and Knowledge </li></ul><ul><li>No Verification on Decision </li></ul>FINERVA
  11. 11. DISCUSSION <ul><li>THANK YOU </li></ul>FINERVA

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