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  1. 1. Chapter-1: Introduction  INTRODUCTION  NEED FOR THE STUDY  OBJECTIVE OF THE STUDY  METHODLOGY  LIMITATIONSChapter-2: Overview of company Industrial profile:  INTRODUCTION  INDUSTRY SCENARIO  FUTURE FOCUES  GOVERNMENT POLICY  MAJOR PLAYER  ARTICLES RELATING TO NSE Company profile:  GENERAL PROFILE  FUCTIONAL PROFILChapter-3: Theoretical frameworkChapter-4: Data analysis & InterpretationsChapter-5: Summary suggestions  FINDINGS  BIBLIOGRAPHY  GLOSSARY 1
  2. 2. Chapter-1: Introduction  Introduction  Need for the study  Objectives of the study  Methodology  Limitation 2
  3. 3. INTRODUCTION OF THE STUDY India is a developing economy. Its prospering in all spheres. ShareMarket is a compelling determinant of the economy and the financial situation of acountry. Ever since the liberalization, privatization and globalization, the foreigninvestment in our country is booming. Share Market is a clear indicator of the developingtrend prevailing in our country. Statistics reveal that the trade volume has been increasingcontinuously, coupled with the ups & downs which is a nature of share trading. We areliving in an interlinked world. With growing volume of trade, it has become a necessitythat people are aware of the intricacies of the web world. Technology has changed the landscape of the stock markets. They now don‘t require atrading floor & can render services to the investors across the country from a singlelocation. Before screen based trading was introduced Regional Stock Exchanges wereplaying a very important role in the Capital Market as they were local investors. Nowthey all developed screen based trading, which is connecting floors with other stockExchanges. When you place an order to buy or sell stock, you might not think about where or howyour broker will execute the trade. But where and how your order is executed can havean impact on the overall costs of the transaction, including the price you pay for thestock. Here‘s what you should know about trade execution.SENSEX the benchmark indicator of share trading has more than tripled ever since on-line share trading commenced. It has become imperative to be a participant of this modeof trading.Meaning of Online Trading―Change is the law of nature‖. There were times when man was a wanderer or anormal. He himself had to go place to place in search of food, water and now everythingis available at your doorstep just at the click of the mouse. The growth of informationtechnology has affected almost all sectors of life. Internet has enabled us to get everyinformation at our doorstep. When Internet has affected all sectors he could ―stock 3
  4. 4. markets‖ the most important player of the economy, has remained far behind. Like allother sectors Internet has set its feet in the stock markets also.Share trading is a way for faster earning and losing money. In the recent years, a volatilemarket could be witnessed. In the desire to earn money in a quick manner, more andmore people have ventured out into share trading. Lack of awareness of many investorshas made them loose lakhs of money in the Stock Market. Wise play by many others hasmade them earn in crores.At such a time, it would be interesting to know the attitude of the players and theconditions in the market. A survey about investors and the share market in such a timewould be educative to tomorrow‘s investors. It could also lead to improvements in theconditions prevailing in Reliance Money that would facilitate increase in the sharetrading.In developing countries like India, there is a great set back in mobilization process due tovarious reasons. The attitude of the public, their affiliation to traditional investments inland and property, bullion and hoarding and above all the risk of uncertainty are some ofthe reasons. The fiscal commission (1949-50) recognized the fact that in India there is anacute shortage of long term capital for industrial ventures. But it was not until 1954- 55that the central board of directors of the reserve bank permitted established businesshouses to raise their new capital by issue of debentures at comparatively high rate ofinterest. Since the capital market is a place where the private savings are kept for a verylong period, it is highly necessary to protect the interests of these investors, if the capitalmarket has to grow. To safe guard the investor‘s interest, government has enacted lawssuch as: A) The Securities Act, 1938 (together with The Life Insurance Corporation Act, 1956). B) The capital issues (Control and Regulation Act, 1943). C) The Banking Companies Act, 1949. D) The Provident Fund Act and the rules 1957. 4
  5. 5. E) The Indian Companies Act, 1956. F) The Deposit Insurance Scheme, 1960. G) The Monopolies and Restrictive Trade Practices Act, 1969.A new era in capital markets in India has ushered in July 1991 with the starting of aprocess of financial and economic deregulation beginning with the devaluation of rupeeby about 20%. In July 1991 the industrial policy was totally reshaped to dispense withlicensing of all industries except the 18 scheduled industrial groups. Further removal ofMRTP limit on assets of companies, dilution of FERA (Foreign Exchange RegulationAct), and foreign trade liberalization etc., were some of the other reforms. Fiscal policywas rationalized to reduce the central budget deficit and public sector under takings werefreed from government controls by professionalizing their management, giving greaterautonomy to them and by disinvestments of their shares in favor of the public. Greaterrole is visualized for the private sector in the future investment growth. 5
  6. 6. NEED FOR THE STUDY Stock Exchange is integral part of the capital market. It is the most perfect type ofmarket for Security whether of Government or Semi- Government bodies or other publicbodies which are also for shares and debentures issued by joint stockenterprises, knowing about the latest and future development in the stock exchangetrading system. To know how the online trading process helps investors and brokers,latest and future development in the Stock Exchange Online Trading System, is useful forimmediate settlement. The capital markets perform an important function in mobilization of resources;liquidity of the stock markets is an important factor effecting growth. Many profitableprojects require long term finance; however investors do not relinquish their savings for along time. Capital market is a group of interrelated markets in which capital is raised infinancial form, is lent and borrowed (or) raised in a varying time periods (such as shortterm and long term).in a developing economy, the business of capital market is themovement of capital to the point of highest yield, a liquid stock market ensures a quickexit without incurring heavy losses (or) costs. Stock market is a vehicle through whichlong term finance is characterized for the various needs of industry, commerce,government and local authorities. Thus development of efficient financial markets isnecessary for creating conducive climate for investment and economic growth. The company offers the products and financial services space with offeringsranging from Equity research, Equities and derivatives trading, Commodities trading,Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, Go bondsand other small savings instruments to loan products and Investment banking. Steel City Securities Limited was incorporated on 22nd February 1995and raised equity of Rs.105 lakh on 24th June 1995 and obtained the membership of thelargest and prestigious National Stock Exchange of H-Limited (NSE) and Bombay StockExchange (BSE) in 2000, in its capital market segment. The first VSAT for its tradingworkstation (TWS) at Hyderabad was installed in 1995 and the second at Visakhapatnamin April 1996. 6
  7. 7. OBJECTIVES OF THE STUDY  To study overview of steel city security.  To know the online & offline screen based trading system adopted by steel city securities and about its communication facilities.  To know about the latest and future development in the stock exchange trading system.  To analyze the collected data.  To suggest the suitable measures for improving performance of the organization. 7
  8. 8. METHODOLOGY OF THE STUDYThe methodology implemented for the on-line trading process is logging and to theNEAT screen by filling the user id ,trading member id , pass word and new pass wordafter logging on the title bar ,ticker widow, toolbar market watch , inquiry window ,order/trade window and message window is displayed by placing the orders .quoting theprice and the quantity of the share.Primary data:Primary data was taken from studied the factor that is affecting the scrip movement bywatching daily trade and collected the primary data.Secondary data:Secondary data are already published data collected for some purpose other than the oneconfronting. The researcher at a given point of time. The secondary data can be gatheredfrom various sources like books, journals, research agencies .etc For this project secondary information is collected from the various sources like―business line‖ and ―economic time‖ and the NSE and BSE websites in the internet. The information regarding the online trading is collected from Watching the online trading live Collecting information from the head of each department and from the staff working in these department Referring the capital market module work book published by national stock exchange of India LTD. Interacting with the operators as the computer terminals and the clients trading in steel city securities pvt ltd. Participating in mark trading conducted by national stock exchange of India ltd 8
  9. 9. LIMITATIONS OF THE STUDY1. Some information is not available due to confidentiality. Due to that, the analysis may not be comprehensive.2. There are many constraints in studying the complex and complicated National stock exchange. Although the personal of steel city securities arev very cooperative and helpful, they are bound by their own rules and regulations.3. It is very difficult to take complete grip of the stock markets information and functioning during the one month of the study.4. It is complex process to evaluate the overall market.5. Difficult to calculate valuation concepts and understand the accounting policies. 9
  11. 11. INTRODUCTIONStock Exchanges in India Stock profile represents the secondary market where existing securities shares anddebentures are traded. Stock exchange provides an organized mechanism for purchaseand sales of securities. By the end of 2005, there were 23 stock exchanges in our country.The investors want liquidity for their investments. Stock exchange provides a placewhere securities of different companies can be purchased and sold.History of Stock Exchanges Houses of exchanges arose in Europe during the 15th century. Trading wascarried on exchanges in terms of securities which represented goods. Antwerp, Layton,Amsterdam and London become celebrated all over Europe for their dealings in stockexchanges. Particularly the London stock exchange can be considered as the modern typeof stock market. It had more than 500 members in 1802. During, that time, the list ofsecurities traded had considerably expanded and a vast majority of them wereinternational in contact with the home issues. In 1987 the brokers organized themselvesinto the New York exchange board with a definite constitution. There were many changesand reorganizations and amalgamations till 1969, during the ―The New York stockexchange was formed with a maximum membership limited to 1100. The origin of stockexchanges in India is traceable in the latter half of the 19th century. At that time, capitalmarket dealings were limited to loan stock transactions of the East India Company. By1930, stock market took a turn with the emergency of sonic corporate stock anddevelopment of textile mills that resulted due to the American civil war which gaveIndian businessmen a global chance of quick profiteering by increasing exports of cottonto America and Europe at exorbitant prices. The trade boom lead to the establishment ifstock exchanges at Bombay, Ahmadabad and Calcutta. Despite the fact that unorganized stock market existed in Calcutta since 1830, thefirst organized stock exchange was set up at Bombay in 1877 under the name of ―NativeStock and Share Brokers Associations‖. The next stock exchange which emerged in thecountry was Ahmadabad share and Stock brokers Association which was founded in1894. The thirds stock exchange was set up at Calcutta in the year 1908. Though some 11
  12. 12. stock exchanges were setup before independence but there was no all India Legislation toregulate their working. To rectify this situation and to regulate the working of stockexchanges in the country, the securities contract (Regulation) Act was passed in 1956. At present, there are 23 recognize stock exchanges in the country. Further overthe counter exchanges and National Stock Exchange have also started functioning in ourcountry.NATIONAL STOCK EXCHANGE OF INDIA: of IndiaSince its inception in 1992, National Stock Exchange of India has been at the vanguard ofchange in the Indian securities market. This period has seen remarkable changes inmarkets, from how capital is raised and traded, to how transactions are cleared andsettled. The market has grown in scope and scale in a way that could not have beenimagined at the time. Average daily trading volumes have jumped from ` 17 crore in1994-95 when NSE started its Cash Market segment to ` 16,959 crore in 2009-10.Similarly, market capitalization of listed companies went up from ` 363,350 crore at theend of March 1995 to ` 6,009,173 crore at end March 2010.Indian equity markets are today among the most deep and vibrant markets in the world.NSE offers a wide range of products for multiple markets, including equity shares,Exchange Traded Funds (ETF) , Mutual Funds, Debt instruments, Index futures andoptions, Stock futures and options, Currency futures and Interest rate futures. OurExchange has more than 1,400 companies listed in the Capital Market and more than92% of these companies are actively traded. The debt market has 4,140 securitiesavailable for trading. Index futures and options trade on four different indices and on 190stocks in stock futures and options as on 31st March , 2010. Currency futures contractsare traded in four currency pairs. Interest Rate Futures (IRF) contracts based on 10year7% Notional GOI Bond are also available for trading.Incorporation and managementNSE was incorporated in November 1992, and received recognition as a stock exchangeunder the Securities Contracts (Regulation) Act, 1956 in April 1993. It is managed byprofessionals who do not directly or indirectly trade on the Exchange. The trading rights 12
  13. 13. are with trading members who offer their services to the investors. The Board of NSEcomprises of senior executives from promoter institutions and eminent professionals,without having any representation from trading members. While the Board deals with thebroad policy issues, the Executive Committees (ECs),which include trading members,formed under the Articles of Association and the Rules of NSE for different marketsegments, set out rules and parameters to manage the day-to-day affairs of the Exchange.The day-to-day management of the Exchange is delegated to the Managing Director whois supported by a team of professional staff. Therefore, though the role of tradingmembers at NSE is to the extent of providing only trading services to the investors, theExchange involves trading members in the process of consultation and participation invital inputs towards decision making.The Capital Market (CM) segment offers a fully automated screen based trading system,known as the National Exchange for Automated Trading (NEAT) system. This operateson a price/timepriority basis and enables members from across the country to trade withenormous ease and efficiency. Various types of securities e.g. equity shares, warrants,debentures etc. are traded on this system. The average daily turnover in the CM Segmentof the Exchange during 2009-10 was 16,959 crore. (US $3,757 million).Futures & Options (F&O)segment of NSE provides trading in derivatives instruments like Index Futures, IndexOptions, Stock Options, Stock Futures. The futures and options segment of NSE hasmade a mark for itself globally. In the Futures and Options segment, trading in S&P CNXNifty Index, CNX IT index, Bank Nifty Index, Nifty Midcap 50 index and single stocksare available. Trading in Mini Nifty Futures & Options and Long term Options on S&PCNX Nifty are also available. The average daily turnover in the F&O Segment of theExchange during 2009-10 was ` 72,392 crore (US $ 16,097 million).Contract NoteThe buying and selling brokers prepare notes after their mutual consent next day.Settlement The spot dealing are settled there in full. The settlement for ready delivery andforward contacts is one with a different procedure. 13
  14. 14. STOCK MARKET INTERMEDIATESClient Brokers They do simple brokering between buyers and sellers and earn only brokerage fortheir services for their services from the clients.Floor Brokers They are authorized clerks and sub brokers who enter the trading floor andexecute orders for the clients or for members.Jobbers and Market Makers They are members who are ready to buy and sell simultaneously in selectedscrip‘s, offering bid and offer rates for the brokers and sub brokers on the trading floorand earning profit through the margin between buying and selling rates. Markets makersundertake this work compulsorily for some companies and bank finance is available tothem.Arbitrageurs They are members who do inter market deals for a profit through differences inprices as between markets.TYPES OF SPECULATORS There are different types of speculators who are active on stock exchanges in India.They are known as Bull Bear Stag Lame DuckBull A bull of Tejiwala is an operator who expects prices to rise in future and sellssecurities in the future. A bull tends to throw his victims up in the airBear A bear of Mandiwala speculator expects prices to fall in future and sells securitiesat present with a view to purchase them at lower prices in future. Just as bear presses theirvictim down to the ground. 14
  15. 15. Stag A Stag is a cautious speculator in the stock exchange. He applies for shares innew companies and expects to sell them at premium if he gets an allotment. He sells theshares before being called to pay the allotment money.Lame Duck When a bear finds it difficult to fulfill his commitment, he is called struggling likea lame duck.THE IMPORTANT STOCK EXCHANGES IN INDIA ARE Bombay Stock Exchange (BSE) National Stock Exchange (NSE)BOMBAY STOCK EXCHANGE (BSE) Bombay Stock Exchange (BSE) is the first organized stock exchange set up atBombay in 1857. In the premier of apex stock exchange in India as it is distinguished notonly by its size but also it has been recognized permanently where recognition of otherstock exchanges is renewed in every 5 years. It is the oldest stock market. Earlier BSE was organized as voluntarily non-profit making association ofbrokers to regulate and protect their interest. After the Security Contracts (Regulation)Act was passed in 1956, BSE was the first Recognized Stock Exchange on a permanentbasis in 1957. Its business is no longer confined to Mumbai alone. At the end of 1995,there were 100 other cities in which it had set up business. The number of companies listed in the stock exchanges is more than 8,000 out ofwhich those listed in BSE are 6851. The capital listed in Bombay Stock Exchangeaccounts for about 40% of the overall capital listed in all the stock exchanges whereas, itsshare of the market capitalization amounts to around 9%. In BSE the total number ofcompanies‘ listed and total number of stocks issued is higher than any other stockexchanges. BSE switched over to electronic trading system in January 1995 called―Bombay Online Trading‖ (BOLT) system and this become fully operational in May1995. The BSE has allowed the expansion of online trading system to its members inother cities having terminals since August 1995. The daily turnover in BSE varies fromRs.400-800 crores. Brokers trading in NSE follow BSE to know the market. 15
  16. 16. SENSEX The index in BSE is Sensex. It stands for Sensitivity index. Senses consist of 30selected top companies of BSE based on the capitalization or on the performance weightage of the scrip‘s. SENSEX is not only scientifically designed but also based on globallyaccepted construction and overview methodology. First complied in 1986, SENSEX is abasket of 30 constituent stocks responding a sample of large, liquid and representativecompanies. The base year of SENSEX is 1978-79 and the base value is 100. The index iswidely reported in both domestic and international markets through print as well aselectronic media.NATIONAL STOCK EXCHANGE (NSE) IDBI and other National Level Financial Institutions inMumbai were responsible for setting the National Stock Exchange inNovember 1992, with a paid up equity capital of Rs.25 crores. TheGovernment in the same year recognized it and the exchange started operations inwholesale debt market in June 1994. The volume of daily trade in NSE is around Rs. 1,500/- to Rs.2, 000/- crores. Themarket capitalization of listed companies in NSE is Rs.2.52 lakh crores. There are morethan 1,000 permitted securities for trading in NSE.SEBI’S ROLE IN A STOCK EXCHANGE It was set up under the SEBI Act 1992 to protect the interests of investors insecurities and to promote the development of and regulate the securities market.SEBI‘S Power in relation to stock exchange:  It may call periodical return from stock exchange.  It has the power to prescribe the maintenance of certain documents by the stock exchange.  It can compel a public company to list its shares.  In certain areas it can license dealers in securities.  It can amend bye-laws of stock exchange.  It has a power to approve bye-laws of stock exchange. 16
  17. 17. STEPS TO BE FOLLWOED BY AN INVESTOR TO TRADE ON NSE SCRIPS 1. The client should open a DEMAT Account 2. Open a trading account 3. The client will be provided with a Trading ID 4. He becomes a client  Professional  Retail  Institutional 5. Then client can trade on NSE scrip’s on automated screen 17
  18. 18. Steps are:1. He should open a de-mat account.2. He has to open a trading account to trade in the particular brokerage company.3. Then he will be given a trading number to trade on NSE scripts in the particular.4. Brokerage Company.5. Then he becomes a client to the particular brokerage companyClients in the brokerage companiesClients are of three types, those are1. Professional Clients2. Retail Clients3. Institutional ClientsProfessional ClientsThe Client involves in the speculation activities. He buys and sells shares on daily basis.His brokerage charges will be low.Institutional ClientsHere the broker trades on NSE on behalf of the institution. Then the client can trade onthe NSE Scripts on ―Automated Screen‖.How to TradeHe can buy and sells shares through ―NEAT‖ National Exchange Automated Trading)It adopts the order driven market against the quote driven market.NSE TRADING SYSTEMTrading NSE introduced for the first time in India, fully automated screen based trading. Ituses a modern, fully computerized trading system designed to offer investors across thelength and breadth of the country a safe and easy way to invest.The NSE trading system called ―National Exchange for Automated Trading‖ (NEAT) is afully automated screen based trading system, which adopts the principle of an orderdriven market. 18
  19. 19. Market Timings Trading on the equities takes place on all days of the week (except Saturdays andSundays and holidays declared by the Exchange in advance). The market timings of theequities segment are:Normal Market Open : 09:00AMNormal Market Close : 15:30 PMThe closing session is held between l5:50 am and 16:00 pm.Limited Physical Market Open : 09:00 amTrading market start : 09:15AMLimited Physical Market Close : 15:30 pmMarket Segments The Exchange operates the following sub segments in the equities segment1. Rolling Settlement.2. Limited Physical Market.3. Institutional Segment.4. Trade for Trade Segment1. Rolling Settlement In a rolling settlement, each trading day is considered as a trading period and tradesexecuted during the day are settled based on the net obligations fore the day.At NSE trades in rolling settlement are settled on a T+2 basis i.e., on the 2nd working day.For arriving at the settlement day all intervening holidays, which include bank holidays,NSE holidays, Saturdays and Sundays are excluded. Typically trades taking place onMonday are settled on Wednesday, Tuesday‘s trades settled on Thursday and so on.2. Limited Physical Market Pursuant to the directive of SEBI to provide an exit route for small investorsholding physical shares in securities mandated for compulsory dematerialized settlement,the exchange has provided a facility for such trading in physical shares not exceeding 500shares. This market segment is referred to as ―Limited Physical Market‖ (small window).The limited Physical Market was introduced on June 7, 1999. 19
  20. 20. 3. Institutional Segment The Reserve Bank of India had vide a press release on October 21, 1999, clarifiedthat Inter Foreign institutional Investor (Inter-FIT) transactions do not require priorapproval or post-facto confirmation of the Reserve Bank of India, since such transactionsdo not effect the percentage of overall holding in Indian Companies (Inter FITtransactions are how ever nor permitted in securities where the FII holdings have alreadycrossed the overall limit due to any reason). To facilitate execution of such interInstitutional deals in companies where the cut-off limit of FIT investment has beenreached, the exchange introduced a JICW market segment on December 27, 1999.The Securities where FIT investors and FIT holdings has reached the cut off limit asspecified by RBI (2% lower than the ceiling specified by RBI) from time to time wouldbe available for trading in this market type for exclusive selling by FIT clients. The cutoff limits for companies with 24% ceiling is 22%, for companies with 30% ceiling, is28% and for companies with 40% ceiling is 38%. Similarly, the cut off limit for publicsector banks (including State Bank of India) is 18% whose ceiling is 20%. The list ofsecurities eligible / become ineligible for trading in this market type would be notified tomembers from time to time.4. Trade for Trade Segment Trading in this segment is available only for the securities which have not establishedconnectivity with both the depositors as per SEBI directive. The list of these securities isnotified by SEBI from Lime to time. On account of surveillance action.The Organization The National Stock Exchange of India Limited has genesis in the report of theHigh Powered Study Group on Establishment of New Stock Exchanges, whichrecommended promotion of a National Stock Exchange by financial institutions (FIs) toprovide access to investors from all across the country on an equal footing. Based on therecommendations, NSE was promoted by leading Financial Institutions at the behest ofthe Government of India and was incorporated in November 1992 as a tax-payingcompany unlike other stock exchanges in the country. 20
  21. 21. On its recognition as a stock exchange under the Securities Contracts (Regulation)Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market(WDM) segment in June 1994. The Capital Market (Equities) segment commencedoperations in November 1994 and operations in Derivatives segment commenced in June2000. Corporate Structure NSE is one of the first de-metalized stock exchanges in the country, where theownership and management of the Exchange is completely divorced from the right totrade on it. Though the impetus for its establishment came from policy makers in thecountry, it has been set up as a public limited company, owned by the leadinginstitutional investors in the country. From day one, NSE has adopted the form of a demutualised exchange - theownership, management and trading is in the hands of three different sets of people. NSEis owned by a set of leading financial institutions, banks, insurance companies and otherfinancial intermediaries and is managed by professionals, who do not directly orindirectly trade on the Exchange. This has completely eliminated any conflict of interestand helped NSE in aggressively pursuing policies and practices within a public interestframework. The NSE model however, does not preclude, but in fact accommodatesinvolvement, support and contribution of trading members in a variety of ways. Its Boardcomprises of senior executives from promoter institutions, eminent professionals in thefields of law, economics, accountancy, finance, taxation, and etc, public representatives,nominees of SEBI and one full time executive of the Exchange.Number of listed companies On the capital market segment, equity shares of 685 companies are listed and 572companies are permitted to trade as of October 31, 1999. On the wholesale debt marketsegment, 797 securities are listed and 517 securities are permitted to trade as of October31, 1999. Of the 797 securities listed, 369 are Government Securities/T-Bills and thebalance account for other securities. 21
  22. 22. NSE IndicesThe indices used by NSE are known under the following names: S. No. Old Name New Name 1. NIFTY S&P CNX NIFTY 2. DEFTY S&P CNX DEFTY 3. CRISIL 500 EQUITY INDEXs S&P CNX 500 EQUITY INDEX 4. NIFTY JUNIOR CNX NIFTY JUNIOR 5. CRISIL MIDCAP 200 CNX MIDCAP 200 INDEX 6. CRISIL PSE CNX PSE INDEX 7. CRISIL IBG CNX IBG INDEX 8. CRISIL MNC CNX MNC INDEXPromoters NSE has been promoted by leading financial institutions, banks, insurance companiesand other financial intermediaries:  Industrial Development Bank of India Limited  Industrial Finance Corporation of India Limited  Life Insurance Corporation of India  State Bank of India  ICICI Bank Limited  IL & FS Trust Company Limited  Stock Holding Corporation of India Limited  SBI Capital Markets Limited  Bank of Baroda  Canara Bank  General Insurance Corporation of India  National Insurance Company Limited  The New India Assurance Company Limited  The Oriental Insurance Company Limited 22
  23. 23.  United India Insurance Company Limited  Punjab National Bank  Oriental Bank of Commerce  Indian Bank  Union Bank of India  Infrastructure Development Finance Company Ltd. NSE Family: NSCCL NCCL NSETECH IISL DotEx Intl. Ltd. NSE.ITNSCCL National Securities Clearing Corporation Ltd. (NSCCL), a wholly-ownedsubsidiary of NSE, was set up in August 1995. It was the first clearing corporation in thecountry to provide notations/settlement guarantee that revolutionized the entire conceptof settlement system in India. It commenced clearing operations in April 1996. It hasbeen set up to bring and sustain confidence in clearing and settlement of securities; topromote and maintain short and consistent settlement cycles.NSDL Prior to trading in a dematerialized environment, settlement of trades requiredmoving the securities physically from the seller to the ultimate buyer, through the seller‘sbroker and buyer‘s broker, which involved lot of time and the risk of delay somewhere 23
  24. 24. along the chain. To obviate these problems, NSE to promote dematerialization ofsecurities joined hands with LTI and IDBI to set up the first depository in India called the―National Securities Depository Limited‖ (NSDL). The depository system gained quickacceptance and in a very short span of time it was able to achieve the objective oferadicating the paper from the trading and settlement of securities.NSE InfoTech Services Ltd Information Technology has been the backbone of conceptualization, formation,running and the success of National Stock Exchange of India Limited (NSE). NSE hasbeen at the forefront in spearheading technological changes in the securities market. Itwas important to give a special thrust and focus on Information Technology to retain theprimacy in the market. Towards this a wholly owned subsidiary NSE InfoTech ServicesLimited (NSETECH) was incorporated to cater to the needs of NSE and all its groupcompanies exclusively.NSE.IT NSE.IT Limited, a 100% technology subsidiary of NSE, was incorporated inOctober 1999. It provides the securities industry with technology that ensurestransparency and efficiency in the trading, clearing and risk management systems.Additionally, NSE.IT provides consultancy services in the areas of data warehousing,internet and business continuity plans. Amongst various products launched by NSE.ITare NEAT XS, a Computer-To-Computer Link (CTCL) order routing system, NEAT XS,an internet trading system and Probes, professional broker‘s back office system.SCSL India Index Services and Products Limited (SCSL), a joint venture of CRISIL andNSE, was set up in May 1998 to provide indices and index services. It has a licensing andmarketing agreement with Standard and Poor‘s (S&P), the world‘s leading provider ofinvestible equity indices, for co-branding equity indices. SCSL is India‘s first specializedcompany focusing upon the index as a core product. It provides a broad range of services,products and professional index services. It maintains over 90 equity indices comprisingbroad—based benchmark indices, sect oral indices and customized indices. 24
  25. 25. NCDEX NSE joined hand with other financial institutions in India viz., ICICI Bank,NABARD, LIC, PNB, CRISIL, Canara Bank and IIFCO to promote the NationalCommodity & Derivatives Exchange (NCDEX which provides for a world classcommodity exchange platform for Market Participants to trade in wide spectrum ofcommodity derivatives. Currently NCDEX facilitates trading of 41 agro based commodities, 2 precious metals, 6 base metal, 2 energy products and 3 polymers.CAPITAL MARKET (EQUITIES) SEGMENT Settlement Guarantee Fund Mar 31, 2006 Rs. 4,055.18 crores Investor Protection Fund May 31, 2007 Rs. 196.74 crores Number of securities available for trading May 31, 2007 1,526 Record number of trades Feb 28, 2007 47,78,407 Record daily turnover (qt) Jan 05, 2005 6,765 lakhs Record daily turnover (value) Mar 31, 2006 Rs.17,315.06 crores Record market capitalization May 29, 2007 Rs.39,14,386 crores Record value of S&P CNX Nifty Index Jun 04, 2007 4362.95 Record value of CNX Nifty Junior Index Jun 20, 2007 8397.05 Record Pay-in/Pay-out (Rolling Settlement): Funds Pay-in/Pay-out (N2006077) May 02, 2006* Rs. 4,110.52 croresSecurities Pay-in/Pay-out (Value)(N2006077) May 02, 2006* Rs. 7,293.25 crores Securities Pay-in/Pay-out(Quantity) May 15, 2006* 2,443.71 lakhs (N2006086) *Settlement Date Settlement Guarantee Fund Mar 31, 2006 Rs. 13,032.36 crores Investor Protection Fund May 31, 2007 Rs. 44.56 crores Record daily turnover (value) Apr 27, 2006 Rs. 60,433.75 crores Record number of trades May 31, 2007 916,645 WHOLESALE DEBT SEGMENT Number of securities available for trading May 31, 2007 3,277 Record daily turnover (value) Aug 25, 2003 Rs.13,911.57 crores 25
  26. 26. Different types of NSE logos:Technology in NSE: Across the globe, developments in information, communication and networktechnologies have created paradigm shifts in the securities market operations.Technology has enabled organizations to build new sources of competitive advantage,bring about innovations in products and services, and to provide for new businessopportunities. Stock exchanges all over the world have realized the potential of IT andhave moved over to electronic trading systems, which are cheaper, have wider reach andprovide a better mechanism for trade and post trade execution. NSE believes that technology will continue to provide the necessary impetus forthe organization to retain its competitive edge and ensure timeliness and satisfaction incustomer service. In recognition of the fact that technology will continue to redefine theshape of the securities industry, NSE stresses on innovation and sustained investment intechnology to remain ahead of competition. NSEs IT set-up is the largest by anycompany in India. It uses satellite communication technology to energize participationfrom around 320 cities spread all over the country. In the recent past, capacityenhancement measures were taken up in regard to the trading systems so as to effectivelymeet the requirements of increased users and associated trading loads. With up gradationof trading hardware, NSE can handle up to 6 million trades per day in Capital Marketsegment. In order to capitalize on in-house expertise in technology, NSE set up a separate 26
  27. 27. company, NSE.IT, in October 1999. This is expected to provide a platform for taking upnew IT assignments both within and outside India and attaining global exposure. NEAT is a state-of-the-art client server based application. At the server end, alltrading information is stored in an in-memory database to achieve minimum responsetime and maximum system availability for users. The trading server software runs on afault tolerant STRATUS main frame computer while the client software runs underWindows on PCs. The telecommunications network uses X.25 protocol and is the backbone of theautomated trading system. Each trading member trades on the NSE with other membersthrough a PC located in the trading members office, anywhere in India. The tradingmembers on the various market segments such as CM / F&O , WDM are linked to thecentral computer at the NSE through dedicated 64Kbps leased lines and VSAT terminals.The Exchange uses powerful RISC -based UNIX servers, procured from Digital and HPfor the back office processing. The latest software platforms like ORACLE 7 RDBMS,GUPTA - SQL/ORACLE FORMS 4.5 Front - Ends, etc. have been used for theExchange applications. The Exchange currently manages its data centre operations,system and database administration, design and development of in-house systems anddesign and implementation of telecommunication solutions. NSE is one of the largest interactive VSAT based stock exchanges in the world.Today it supports more than 3000 VSATs. The NSE- network is the largest private widearea network in the country and the first extended C- Band VSAT network in the world.Currently more than 9000 users are trading on the real time-online NSE application.There are over 15 large computer systems which include non-stop fault-tolerantcomputers and high end UNIX servers, operational under one roof to support the NSEapplications. This coupled with the nationwide VSAT network makes NSE the countryslargest Information Technology user. In an ongoing effort to improve NSEs infrastructure, a corporate network hasbeen implemented, connecting all the offices at Mumbai, Delhi, Calcutta and Chennai.This corporate network enables speedy inter-office communications and data and voiceconnectivity between offices In keeping with the current trend, NSE has gone online on the Internet. Apart fromhaving a 2mbps link to VSNL and our own domain for internal browsing and e-mail 27
  28. 28. purposes, we have also set up our own Web site. Currently, NSE is displaying its livestock quotes on the web site ( which are updated online.Industry scenario: Milestones of NSE  November 1992 Incorporation  April 1993 Recognition as a stock exchange  May 1993 Formulation of business plan  June 1994 Wholesale Debt Market segment goes live  November 1994 Capital Market (Equities) segment goes live  March 1995 Establishment of Investor Grievance Cell 28
  29. 29.  April 1995 Establishment of NSCCL, the first Clearing Corporation June 1995 Introduction of centralized insurance cover for all trading members July 1995 Establishment of Investor Protection Fund October 1995 Became largest stock exchange in the country April 1996 Commencement of clearing and settlement by NSCCL April 1996 Launch of S&P CNX Nifty June 1996 Establishment of Settlement Guarantee Fund November 1996 Best IT Usage award by Computer Society of India December 1996 Commencement of trading/settlement in dematerialized securities December 1996 Dataquest award for Top IT User December 1996 Launch of CNX Nifty Junior February 1997 Regional clearing facility goes live November 1997 Best IT Usage award by Computer Society of India May 1998 Promotion of joint venture, India Index Services & Products Limited (SCSL) May 1998 Launch of NSEs Web-site: July 1998 Launch of NSEs Certification Programmed in Financial Market August 1998 CYBER CORPORATE OF THE YEAR 1998 award February 1999 Launch of Automated Lending and Borrowing Mechanism April 1999 CHIP Web Award by CHIP magazine October 1999 Setting up of NSE.IT January 2000 Launch of NSE Research Initiative February 2000 Commencement of Internet Trading June 2000 Commencement of Derivatives Trading (Index Futures) September 2000 Launch of Zero Coupon Yield Curve December 2000 Commencement of WAP trading June 2001 Commencement of trading in Index Options July 2001 Commencement of trading in Options on Individual Securities November 2001 Commencement of trading in Futures on Individual Securities December 2001 Launch of NSE VaR for Government Securities January 2002 Launch of Exchange Traded Funds (ETFs) October 2002 Launch of NSE Government Securities Index 29
  30. 30.  January 2003 Commencement of trading in Retail Debt Market June 2003 Launch of Interest Rate Futures August 2003 Launch of Futures & options in CNXIT Index June 2004 Launch of STP Interoperability August 2004 Launch of NSE‘s electronic interface for listed companies March 2005 ‗India Innovation Award‘ by EMPI Business School, New Delhi June 2005 Launch of Futures & options in BANK Nifty Index December 2006 Derivative Exchange of the Year, by Asia Risk magazine January 2007 Launch of NSE – CNBC TV 18 media centre March 2007 NSE, CRISIL announce launch of June 2007 NSE launches derivatives on Nifty Junior & CNX 100 October 2007 NSE launches derivatives on Nifty Midcap 50 January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008 March 2008 Introduction of long term option contracts on S&P CNX Nifty Index April 2008 Launch of India VIX April 2008 Launch of Securities Lending & Borrowing Scheme August 2008 Launch of Currency Derivatives August 2009 Launch of Interest Rate Futures November 2009 Launch of Mutual Fund Service System December 2009 Commencement of settlement of corporate bonds February 2010 Launch of Currency Futures on additional currency pairs March 2010 NSE- CME Group & NSE - SGX product cross listing agreement April 2010 Financial Derivative Exchange of the Year Award by Asian Banker July 19, 2010 Commencement of trading of S&P CNX Nifty Futures on CME July 19, 2010 Real Time dissemination of India VIX. July 28, 2010 LOI signed with London Stock Exchange Group October 12, 2010 Introduction of Call auction in Pre-open session October 28, 2010 Introduction of European Style Stock Options October 29, 2010 Introduction of Currency Options on USD INR November 9, 2010 Launch of mobile trading for all investors December 29, 2010 NSCCL Rated ―CCR AAA‖ for third consecutive year January 05, 2011 NSE receives Financial Inclusion Award 30
  31. 31. Many more stock exchanges were established during 1980s, namely: 1. Cochin Stock Exchange (1980) 2. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982) 3. Pune Stock Exchange Limited (1982) 4. Ludhiana Stock Exchange Association Limited (1983) 5. Gauhati Stock Exchange Limited (1984) 6. Kanara Stock Exchange Limited (at Mangalore, 1985) 7. Magadha Stock Exchange Association (at Patna, 1986) 8. Jaipur Stock Exchange Limited (1989) 9. Bhubaneswar Stock Exchange Association Limited (1989) 10. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989) 11. Vadodara Stock Exchange Limited (at Baroda, 1990) 12. Coimbatore Stock Exchanged) Government Securities: The government securities market has witnessed significanttransformation in the 1990s. With giving up of the responsibility of allocating resourcesfrom securities market, government stopped expropriating seignior age and startedborrowing at near – market rates. Government securities are now sold at market relatedcoupon rates through a system of auctions instead of earlier practice of issue of securitiesat very low rates just to reduce the cost of borrowing of the government. Major reformsinitiated in the primary market for government securities include auctions system(uniform price and multiple price method) for primary issuance of T-bills and centralgovernment dated securities, a system of primary dealers and non-competitive bids towiden investor base and promote retail participation, issuance of securities acrossmaturities to develop a yield curve from short to long end and provide benchmarks forrest of the debt market, innovative instruments like, zero coupon bonds, floating ratebonds, bonds with embedded derivatives, availability of full range (91-day and 382 day)of T-bills, etc.e) Articles: The articles of association of steel city securities limited.National stock exchange 31
  32. 32. f) Major Players: 32
  33. 33. COMPANY PROFILEHISTORICAL BACKGROUND OF THE COMPANY: Steel City Securities Limited was incorporated on 22nd February 1995 and raisedequity of Rs.105 lakh on 24th June 1995 and obtained the membership of the largest andprestigious National Stock Exchange of H-Limited (NSE) and Bombay Stock Exchange(BSE) in 2000, in its capital market segment. The 1st VSAT for its trading workstation(TWS) at Hyderabad was installed in 1995 and the 2nd at Visakhapatnam in April 1996. Presently, there are 64 VSATS installed at more than 50 centers in AndhraPradesh, Orissa, Tamilnadu and Karnataka. There are 219 computer trading terminalsput together connected to their VSAT at the centers (each VSAT can have 5 TWSconnected). Since its inception the service of this organization is prompt and there is nota single instance of payout of funds / deliveries delay to any client, from the beginningthe firm is committed to continue the same service in future also. Companies‘ basicprinciple is total commitment in service to all clients with all transparency and ensuresthat is it their sacred policy not to indulge in own trading, there are no self-motives ornecessity to cancel or delay anything. Every branch is fully equipped and independentlyconnected to the NSE Hub at Mumbai; every branch is having 2 to 5 trading terminalsconnected to VSAT. The company performance has not parallel on NSE.Steel City Securities Ltd. follows a functional organization system. It provides variousservices, which are provided through different departments.Various Functional Departmentsi. PlanningIt involves planning of human resources requirements, recruitment, selection, training,ii. Directing In this company the personnel manager coordinates various managers atdifferent levels as the personnel functions are concerned. The willing and effectivecooperation of employees for the attainment of organizational goals is possible throughproper directions. 33
  34. 34. iii. Controlling: In SCSL, the controlling is done by the top management, in this aspect they doauditing training programmes, directing morale surveys, conducting separate interviewsare some of the functions of the top management in controlling.iv. Recruitment It is the process of searching for prospective employees and stimulating them toapply for jobs in the organization. In SCSL, if they want any person, they will givenotification in newspaper in order to stimulate the eligible persons to apply for that job.v. Employee Relation The company has recruited required personnel and trained them for operations ofthe company at all braches and to maintain cordial relations between the management andthe Employee Service All the employees of the company from top to bottom dedicate their sincereservices with co-operation, co-ordination, hard work and team spirit which results insuccessful performance of SCSL which helped SCSL to become of the best stock brokingfirm in India.vii. Selection It is the process of ascertaining the qualifications, experience, skill, knowledge,etc. of an applicant with a view to appraise his/her suitability to a job. The topmanagement in this organization shall do the selection. They send the letters ofappointment or rejection to the board of directors.viii. Placement It is the process of assigning the selected candidates with most suitable job. InSCSL, the directors do the selection of the candidates for placement. The placement maybe in the head office or in branches of SCSL which are different places.ix. Training The selected candidates will be shown placement in one of the branches of SCSLand are given proper training. The trainers are the most experienced persons.x. Promotions and Transfers: In SCSL, the personnel management provides promotion to the skilled and eligible 34
  35. 35. persons. The transfers of persons are more in this company but they will be an increase inthe salary of the persons who are transferred to other branches.xi. Activities of the organization: SCSL provides different services. These services are provided through variousdepartments.xii. Trading Department: This area mainly deals with online trading facility which is received throughVSAT into the server and finally into Hub going to the trading system. Interacting withthe clients, admitting the clients or investors or sub-brokers and helping out in openingthe accounts and facilitating them with the direct interaction with the online tradingfacility, etc. are the other works done by the Trading Department. The main aspect isconcerned with the involvement of investors or clients or sub brokers to participate intrading. A particular day‘s trading on the different scripts can be viewed online which isprovided by the NEAT trading software by NSE and the original positions are determinedby the end of the trading day, i.e., at 3.30 p.m. where there itself a back up is saved andthat particular day‘s trading position of each client is determined by the back officeprocess made by the depository participants. So trading department has a very importantrole in a member of NSE like SCSL to provide updated information of a day‘s tradingactivities.TRADING AND SETTLEMENT: One of the basic services provided by SCSL as member of NSE and NSDL is tofacilitate transfer of securities from one demat accounts to the other on the instruction ofthe account holder. In NSDL depository system both transfer and the transferee have togive instructions to their DPs for delivering and receiving of securities. However, thetransferee can give ‗Standing Instructions (SI)‘ to its DP for receiving in securities.Transfer of securities from one demat accounts to the other may be done for any of thefollowing purposes: Transfer due to a transaction done on a person to person basis i.e., an‗off market‘ trade Transfer arising out of a transaction done on a stock Exchange.Transfer arising out of a transmission and account closure. 35
  36. 36. STOCK MARKET TRADING The trading on stock exchanges in India used to take place through open outcrywithout use so information technology for immediate matching or recording of trades.This was time consuming and inefficient. This imposed limits on trading volumes andefficiency. In order to provide efficiency, liquidity and transparency, NSE introduced anation-wide on-line fully-automated screen based trading system (SBTS) where amember can punch into the computer quantities of securities and the prices at which helikes to transact and the transaction is executed as soon as it finds a matching sale or buyorder from a counter party. SBTS electronically matches orders on a strict price/timepriority and hence cuts down on time, cost and risk of error, as well as on fraud resultingin improved operational efficiency. It allows faster incorporation of price sensitiveinformation into prevailing prices, thus increasing the informational efficiency ofmarkets. It enables market participants, irrespective of their geographical locations, totrade with one another simultaneously, improving the depth and liquidity of the market. Itprovides full anonymity by accepting orders, big or small, from members withoutrevealing their identity, thus providing equal access to everybody. It also provides aperfect audit trail, which helps to resolve disputes by logging in the trade executionprocess in entirety. This sucked liquidity from other exchanges and in the very first yearof its operation, NSE became the leading stock exchange in the country, impacting thefortunes of other exchanges and forcing them to adopt SBTS also. Today India can boastthat almost 100% trading take place through electronic order matching.I. NEAT SystemThe NEAT system supports an order driven market, wherein orders match on the basisof time and price priority. All quantity fields are in units and prices are quoted in IndianRupees. The regular lot size and tick size for various securities traded is notified by theExchange from time to time.II. Market TypesThe Capital Market system has four types of market.A. Normal Market Normal market consists of various book types wherein orders are segregated asRegular Lot Orders, Special Term Orders, Negotiated Trade Orders and Stop Loss 36
  37. 37. Orders depending on their order attributes.B. Odd Lot Market The odd lot market facility is used for the Limited Physical Market.C. Ret debt Market The RETDEBT market facility on the NEAT system of capital market segmentis used for transactions in Retail Debt Market session. Trading in Retail Detail Markettakes place in the same manner as in equities (capital market) segment.D. Auction Market In the Auction market, auctions are initiated by the Exchange on behalf oftrading members for settlement related reasons.E. Accounts Department The function of accounts department is to maintain a record of all pay in, payout; cash received for demat account opening, account closing, and transaction chargesfor operating the account. Records of expenses incurred and incomes earned frombusiness are also maintained basing on which every year an Annual Report is prepared.F. Deliveries DepartmentDeliveries department acts as an Intermediary between stock exchange and clients andso proper knowledge is needed without which the results may be hazardous.Proper records of all inward and outward stocks should be maintained failing whichthere may be improper deliveries leading to penalties and disagreement with clients. Inthe secondary market operations when shares and securities are bought or sold, thechange of hands of the possession of these shares or securities from seller to the buyerwill discharge the delivery obligation of the seller. In case of BSE, the clearing house isBOISL and in case of NSE, NSCCL is extended to the responsibility of settling thedelivery obligations of sellers and buyers dealt Ina given settlement period.G. Rolling Settlement for Demat Securities for both BSE and NSE:-i. Introduction to Dematerialized Rolling Segment a. Trading of dematerialized securities is available both on NSE and BSE. b. At NSE, dematerialized securities are traded in two separate segments called ‗AE Segment‘ and ‗BE Segment‘ which are in addition to the segment for trading in securities in the Normal Segment (account period settlement) where compulsory 37
  38. 38. dematerialized trading is only allowed. In case of AE segment, dematerialized securities are traded only in market lots, whereas in BE segment these can be traded in multiples of one share. c. At BSE, dematerialized securities are traded in a separate segment called Demat Rolling Segment and normal segment (account period settlement) where compulsory dematerialized trading is only allowed. In Demat Rolling Segment, the trades are settled on T+5 bases.ii. Rolling Settlement CycleTrading in rolling settlement is quite similar to trading in normal settlement except thatthe normal segment follows weekly account period settlement and rolling settlementfollows T+5 Settlement. For example, all trades executed on a particular day (T), nettedintra day, will be settled on the following fifth (T+5) working day. The trades done on aday cannot be netted off against those done on the earlier day. Trades executed onMonday will normally be settled on next Monday (T+5). Both Pay-in and pay-out will beon the same day. The difference between a rolling settlement and weekly account periodsettlement can be illustrated by the following figure: T + 5 Rolling Settlement Weekly Account Period 38
  39. 39. STRUCTURE OF THE ORGANISATION: The total control of the organization is under the Chairman who is also theManaging Director. Under him there are three Executive Directors for surveillance &operations and also a Sleeping Director. Mr.G.Sree Ram Murthy is the Chairman cum Managing Director, Mr.G.RajaGopalReddy the Executive Director looks after the market development and opening of newfranchisees. He also looks after requirements of new and existing branches.Mr.K.Satyanarayana the Executive Director, surveillance has an inspection team underhim for the purpose of vigilance in all branches and franchisees. Mr.Satish Kumar Arya is the Director Operations. He controls the trading limits,margins etc. All office related matters are dealt by him. He is also responsible formeeting the requirements and following the rules set by the stock exchanges.Mr.G.S.R.Prasad is the fourth Director who does not play any role in the day to dayworking of the company. General Manager (Operations) is Mr.Murali is responsible for De-Mat withNSDL / CDSL. General Manager is Mr.V.Srinivas who looks after the Networking,Software, Hardware and trading related requirements and VSAT connectivity. Financeand accounts were looked after by Mr.Ramu who is a Chartered Accountant. Mr. Samba Murthy is responsible for the trading and registration of new clients.He is the Trading Manager. Mr. Krishna Naga Bhutan is the Marketing Manager. He isalso responsible for conduction various awareness seminars. The legal section deals withthe investor‘s problems and legal issues with the company. Even without relation to thecompany they render legal services 39
  41. 41. The different branches and franchisees of the company report directly to the HeadOffice in Visakhapatnam and any activity taken up by these should be brought to thenotice of the Head Office. Every branch has a Branch Manager, Accountant, TradingManager and Trading Operator. The company has various functional departments for itssmooth functioning. Steel City Securities Ltd. follows a functional organization system. It providesvarious services, which are provided through different departments.BOARD OF DIRECTORS OF STEEL CITY SECURITIES LIMITED Sri G.Sree Rama Murthy Chairman and Managing Director Sri G.RajaGopal Reddy Executive Director Sri K.Satyanarayana Executive Director (S) Sri Satish Kumar Arya Director Operations Sri G.Satya Rama Prasad DirectorsThe various service departments in SCSL are: Systems Departments Inspection Department Personal Department Accounts Deliveries Depository Participant Research and Development 41
  43. 43. STEPS TAKEN BEFORE THE REGISTRATION OF THE CLIENT:1. Registration of the Client: The customer has to fill in the registration form and provide details of hisQualifications, Date of Birth etc. He has to furnish his photographs and proof of Identitythrough PAN Card, Driving License or Voter Identity Card.2. Introduction of the Client: The customer has to be introduced by one of the existing clients of the companywho voucher for the honesty and integrity of the former.3. Background of the Client: A detailed background check of the client is necessary. Only after a thoroughchecks of his place of origin, his business etc. the client is registered.4. Strengths / Weaknesses of the Client: The client‘s financial position is also monitored. Only customers who have asound financial position are registered for trading.5. Previous record of business: The previous record of the business of the client is checked to see the fairness inhis dealings and promptness in settling the outstanding debts.6. Undertaking / Agreement: An undertaking is taken from the client to the effect that the deals have been doneon behalf of him by Steel City Securities Ltd on his instruction and is liable to the profits/ losses thereof.7. Storing previous transactions: All transactions of the client are stored for legality purpose. According to theguidelines of SEBI, the transactions of the past five-year have to be maintained. 43
  44. 44. COMPANY POLICY: The basic policy of SCSL is not to indulge in own trading. The basic principle ofSCSL is total commitment in service to all clients. The service of SCSL is prompt andhence there are not delays in payout of funds or deliveries to any client. SCSL collectspay in T+1 and its payout in T+3 days. Through SCSL, trade in NSE per day is 200crores whereas; trade in BSE per day is 4 crores.Capital: The base capital is set up a trade center is 1 crore, SCSL raised equity of Rs.105lakhs during its incorporation. Earlier, SCSL paid Rs.75 lakhs as base capital to NSEwhen it was set up. Every trade corporation has to maintain a reserve of some amountwith NSE. At present, SCSL has 7.5 crores as margin with NSE.Working Staff: There is 100 to 150 staff employed in SCSL. The staff draws a salary basing onthe cadre they are employed. The salaries in SCSL vary from Rs.2000 to Rs.20000 permonth basing on the cadre of the employee.Employee Recruitment: In SCSL, the top managements select the candidate and the letter of appointmentor rejection is sent to the Board of Directors. The Directors do the placement in SCSL.The placement can either be in the Head Office or in any other branches of SCSL.Planning: It involves planning of Human Resource Department i.e. recruitment, selection,training etc. it also involves forecasting of personnel changing values, attitudes andbehavior of employees.Directing: In this company, the personnel manager co-ordinates various managers at differentlevels as the personnel functions are concerned. The wilting and effective co-operation 44
  45. 45. of employees for the attainment of organization goals is possible through properdirection.Controlling: In SCSL, the top management does the controlling. In this aspect, they do auditingtraining programmers; directing moral surveys are some of the functions of the topmanagement.Recruitment: It is the process of searching for prospective employees and simulating them toapply for jobs in the organization. In SCSL, if they want any person, they will givenotification in newspaper in order to simulate eligible persons to apply for that job.Employee Relation: The employee relation at all levels remains cordial. Training, Promotion andTransfers are done in SCSL to motivate and increase the morale of the staff. All theemployees in SCSL from top to bottom perform their services with sincerity, hard work,dedication and with team spirit due to which SCSL is considered as one of the best stocktrading firm in India.Selection, Placement and Training: The top management shall do the selections. Placement is in the head office and inthe branches of SCSL, which are in different places. Selected candidates are placed inone of the branches of SCSL and gives proper training.Functions of the SCSL: SCSL provides mock trading to its clients and members. SCSL provides complete automated system both in trading and settlement process. SCSL enables clients to trade both in NSE and BSE. SCSL converts the paper shares into electronic shares through DMAT Process. SCSL provides market information. SCSL acts as clearing member for trades taking place through SCSL. SCSL is a depository participant of NSDL &CDSL and it is a trading and Clearing member of NSE & BSE. 45
  46. 46. Facilities provided to Client in SCSL: Gross exposure facility given in SCSL is 5 times. But, up to 10 times, it is relaxedto clients. Turnover facility given in SCSL to clients is 33.33 times. But, the restrictionsare not considered. Minimum of Rs.20, 000 margins money is collected fromprofessional clients who trade for speculation purpose. For deliver purpose, no marginmoney is collected. Due to the total commitment in service to its clients, SCSL isconsidered to be one of the best Stock Broking Companies in India.NSE Branches of SCSL:Mumbai GudiwadaSecunderabad KakinadaGajuwaka CuddapahVizianagaram GunturTirupathi ProddutturBhimavaram NarsaraopetVijayawada ChilakalurpetMellor EluruNandyala OngoleNSE Franchisees:Rourkela Berhampur (2)Srikakulam VisakhapatnamChennai KukatpalliAnantapur BakaramChittor TenaliAmalapuram PidigurallaMadanapalli Hanumakonda 46
  47. 47. SECURITIES TRADED IN SCSL: In SCSL all the shares, scripts, stocks, bonds, debentures, derivatives, governmentsecurities, debt instruments etc. can be traded. But generally, trading is mostly done inscripts listed in BSE & NSE. The government securities and the corporate securities can be traded throughNEAT system in NSE. Only trading mechanism available in the debt market was thetelephone market before June 1994 when NSE launched wholesale debt market (WDM)segment. This provides the only formal platform for trading of a wide range of debtsecurities. Though many trades in the gilt‘s takes place through telephone, a longer chunkof trades get rented through NSE brokers. Trading in derivatives of securities commenced in June 2002 with the enactment ofenabling legislation in early 2000.THE TRADING PROCESS: Steel City Securities Limited provides stock trading services to its clients andmembers. It enables the clients to trade in both NSE & BSE. Through the computertrading terminals in SCSL, the client places an order to buy or sell the shares. After thetrade is confirmed, the client receives the settlement net positions. SCSL collects themargin, brokerage, service tax & commission from the clients for the trades taking placein SCSL. SCSL converts the physical shares into the electronic shares through D-MATprocess. Clearing and settlement of trades, dematerialization of shares, providing marketinformation to the clients are daily chores in SCSL, apart from trading.1. DOCUMENTATION: The trading member or stockbroker shall enter into an agreement in the specifiedformat provided by NSE with the client before accepting orders on latter‘s behalf. Thesaid agreement shall be executed on non-judicial stamp paper of adequate value, dulysigned by both the parties on all the pages. This agreement is known as ‗MemberConstraint Agreement‘. Copy of this agreement is to be kept with the trading memberpermanently. 47
  48. 48. B) MILE STONESYear wise milestones of our Evolution Year Activity / Milestone 1995 • The company was incorporated • Obtained the Membership in National Stock Exchange of India Limited in October andcommenced equity broking • Installed 1st VSAT and Started the Operations in Hyderabad in December 1996 • The company has become successful in starting its operations at Visakhapatnaminstalling the 2nd VSAT in April • Changed the registered office of company on April 15, 1996 1999 • Foray in distribution of financial products • Set up 10th centre during the year 2000 • SEBI‘s Approval as Depository Participant of National Securities Depository Limited • Own In-house back office software developed named ―STEEL PACK‖ 2001 • Obtained Membership of BSE by Steel City Capital services Pvt. Limited • Maintained 3,353 DP client accounts 2002 • SEBI‘s Approval as Depository Participant of Central Depository Services (I) Limited • Started the operations of Futures & Options segment in May • Incorporated Steel City Insurance Agencies Private Limited in August • Maintained 7,617 DP client accounts • Set up the 50th Centre 2003 • Commenced distribution of insurance products •Maintained 22,678 DP client accounts 2004 • Membership of Multi commodity exchange of India Limited and National Commodity &Derivatives Exchange Limited • Started the operations of Mutual Funds in February • Maintained 37,497 DP client accounts • Set up the 100th Centre 48
  49. 49. 2005 • Maintaining 46,712 DP client accounts as on date. • Set up more than 200 centre‘s. • Applied for Registration of Trademark and obtained T.M.No. 1350172 and also the said Trademark is accepted for registration. • Accredited with ISO 9001:2000 certification with the scope of ―Service Provision for Stock/Securities Market Operations, Depository Participant Services, Other Allied and Customer Support Services‖ from AQA International, LLC, USA, ANAB Accredation No. 010694, Certificate No. 5825 dated November 1, 2005 valid from November 1, 2005 to November 1, 2008. • Commenced the Procedure for empanelment of the company in various Institutions • Launching internet e-broking portal as www.steelcitynettrade.comc) Objectives:The main objects of the Company as contained in our Memorandum of Association arereproduced below:1. To carry on Investment business and to purchase, acquire, hold and dispose of orotherwise invest in shares, debentures stocks, bonds, obligations and securities, issued orguaranteed by any Company constituted or carrying on business, in India or elsewhereand debenture stocks, bonds, obligations and securities issued or guaranteed by anyGovernment, State dominion, sovereign ruler, commissioner public body or authority,supreme, municipal, local or otherwise whether in India or elsewhere.2. To carry on business as consultants and advisors in marketing personnel, taxation,technology, projects setting up, loan syndication, project appraisal, research anddevelopment including rendering of services such as share brokers, sub-brokers, dealers,underwriters, merchants, bankers, registrars to issue and share transfer agents, portfoliomanager and all allied matters including sponsoring and setting up of mutual fund andventure capital fund. 49
  50. 50. 3. To carry on the business of investment Company and to invest in, acquire, subscribe,hold, alter, resell and deal in investments in any shares, stocks, bonds, securities,debentures whether convertible or otherwise issued or to be issued by any public limitedcompanies or private limited companies registered under the Companies Act, 1956 or anystatutory modification or re-enactment thereof and/or any companies carrying on businessin India and subject to such approval as may be necessary according to the law for thetime being in force, to invest moneys of the Company in shares, debentures and othersecurities of any company registered abroad and/or any statutory corporations and toinvest in securities of Central Government and State Governments in India, public bodiesor authorities anywhere and to carry on all and every other business which is generallycarried on by investment companies.4. To apply for and become in India or abroad member of any Stock Exchange, Securities& Exchange Board of India, Over The Counter Trading and Exchange of India, NationalStock Exchange and any other similar authority, body or institution as may be establishedfrom time to time and also to carry on and act as stock brokers, C, F & O, mutual funds,clearing members, margin trading, primary dealers and syndicate members and to do allincidental acts and things necessary for the attainment of foregoing objects.D) UNIQUE ACHIEVEMENT:To be at the top providing the best, prompt, transparent, committed, highest quality ofservices to all retail, high net worth, institutional clients at every place in the country allthe time. 50
  51. 51. E) SWOT ANALYSIS: Strengths Weaknesses• Integrated online trading in terms of brokerage services in equities, derivatives, commodities and depository services • Insignificant presence in overseas and• Presence at 97 Cities/Towns as on date institutional segment through 225centres with plans of opening 100 • Awareness about our e-broking portal is additional centres yet to be created among masses+• Strong brokerage and depository services • Yet to obtain approval of Trademafor clientelebase created over the past 10 years developing into brand of operations• In-house developed back-office software, own • Our first e-broking network, ready economiccommunication portal is to launch shortly. model ofoperations etc. Opportunities Threats• Additional centres will increase the clientle •Competition from existing and new base and in-turn will increase revenue entrants• Retail sector is expected to grow due to • Downturn or volatility of securities and com reduction in interest rate and opting for new • Slowdown of Indian and global economy opportunities inequity and relate instruments • Change in government and economic• Rapid penetration of Internet and computers policies including personal taxation may will be instrumental in increasing e-broking affect our volume and fund mobilization business 51
  52. 52. F) FUTURE PLANS:The Company is one of the early broking companies, which started full services to big &small retail clients going to their doorstep in Towns, Semi-urban Towns, who utilized thefinancial market services fully welcoming the ONLINE services at their own place. TheOpportunities are infinite across the villages, towns, cities and metros and remainuntapped by the existing companies engaged in the similar field and segment. We haveassessed the vast potential in the retail segment due to technology revolution and thus,focused in rendering our brokerage services in these places by putting up more centresand also adding more financial products over a period of time since inception.Immediate Future Plans:After having already established business operations of over the past 10 years in retailbroking and other ancillary services, we have planned for further expansion in terms ofthe following: 100 additional centers to be opened in India and specially at the locations where the potential exists Thrust on distribution of financial products by leveraging on high net worth individual and other brokerage clients to support the overall growth Adding general insurance products distribution in addition to present life insurance products Tapping scope in Commodity Futures market through all the centre‘s situated across India as many of the present centre‘s are not offering commodities brokerage services Launching internet online trading to provide access and reach to all the location in India and abroad and having interfacing with company depository services In near future, we have plans to open branches in Singapore, Malaysia, Dubai, London, New York and to enroll with almost prominent Institutions to provide institutional broking services. 52
  53. 53. B) FUCTIONAL PROFILEa) Production:A) Equity brokerage servicesWe are member of NSE and BSE and offer secondary market broking services to our variousretail customers. As on date, we have a registered client base of 36,311 nos. We offer equityand derivatives broking services through dedicated dealers and managers. All our centers areconnected via VSAT, VPN and CTCL. Brokerage services are provided to active trades, retailinvestors and high net worth investors with advisory assistance by our dedicated dealers andmanagers located at our centre‘s based on technical, fundamental and market research carriedout by our research team. The retail customer acquisition has seen accelerated growth owing towide spread branch and franchisee network of the Company. All our customers are connectedwith our network and the network system is depicted below:a) Exchange NetworkWe are having accessibility to trade in four different exchanges namely National StockExchange (NSE), Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange(MCX) and National Commodity & Derivative Exchange (NCDEX). Presently two majorservice providers are existing in the country, one is HCL Comment Ltd. and other is HugeEscorts Ltd (HECL). HCL has got wide range of expandability and reliabilitywith rugged Technology as per the Indian Climate Conditions. HECL has also got high spreadof Network throughout the country. The present VSAT Network throughout the country isbeing operated by Extended-C Band and KU-Band Technology. These two technologies aremost ideal for Stock Broking.Connectivity: The Exchanges have installed VSAT with the support of HCL Com net andHUGES at most of our centre‘s. All end users are being connected via Indian satellite toaccess NSE/BSE/MCX/NCDEX Trading Servers installed at Mumbai.Accessibility: In each VSAT location, we have 5 to 7 Terminals to trade in differentExchanges as per client request. All four exchanges have provided free software like NEAT(National Exchange for Automated Trading), BOLT (Bombay Online Trading), MCX (Trader 53
  54. 54. Workstation) and NCDEX (National Commodity and Derivative Exchange). These FrontendTrading screens are called as Market watch, through which Client can place orders Between9.00am to 3.30pm daily in Capital Market, Futures & Options and Commodities segments.Since Commodity Market has dependency on International Bullion Markets, the Live Market-Watch is available up to 11.50pm daily. On functional side all four soft ware‘s are user-friendly to handle the client order requests. Client can also cancel or Modify their orderrequests as per their will and market conditions. All four exchanges are working from Mondayto Friday and no Trading activity is done on Saturdays and Sundays. In case of Commoditysegment, the exchange is open for trading from Monday to Friday and on Saturday till 2.00pm.Maintenance: VSAT downtime has been maintained by the HCL Com net and HUGES. Theyhave region wise support to attend the downtime immediately within 4 to 6 hours. Inventory ofspares is also maintained at the region level.b) Virtual Private Network (VPN):We have facilities for our clients to trade in all three segments (Cash, F&O and Commodity) ina single VSAT connectivity through CTCL (Computer to Computer Link) software. ThisNetwork is basically for better surveillance and more functional features comparing to theExchange provided software. Since Exchanges do not provide any CTCL software, we haveapproached CTCL Software Vendors empanelled by the Exchanges. There are many CTCLSoftware Vendors available in the Market today. This Network is maintained by the HCLComnet from NOIDA (UP). HCL Comnet has their own HUB at NOIDA to provideInteractive and Broadcast Bandwidth to connect between Central and Remote sites.Connectivity: We have our Branches and Franchisee locations in entire Andhra Pradesh,Karnataka and Orissa. In these locations we have installed VSAT with the support of HCLComnet. All end users are being connected via Indian Satellite to access CTCL Trading Serverinstalled at Visakhapatnam.Accessibility: In each VSAT location we have 3 Terminals to trade in different Exchanges asper client request. SCSL has bought licensed CTCL software ODIN (Open Dealer IntegratedNetwork) from Financial Technologies Limited, Mumbai. This Front–end can support MultipleMarket watch screens, through which client can place orders between 9.00am to 3.30pm dailyin Capital Market, Futures & Options and Commodities segments. Since Commodity Markethas dependency on International Bullion Markets, the Live Market- Watch is available up to 54
  55. 55. 11.50pm daily. On functional side all four software are user-friendly to handle the client orderrequests. Client can also cancel or modify their order requests as per their will and marketconditions. All four exchanges are working from Monday to Friday and no Trading activity isdone on Saturdays and Sundays. In case of Commodity segment, the exchange is open fortrading from Monday to Friday and onSaturday till 2.00pm. Maintenance: VSAT downtime ismaintained by the HCL Comnet. They have region wise support to attend the downtimeimmediately within 4 to 6 hours. Inventory of spares is also maintained at the region level.c) Remote Access Service (RAS) This is a low-cost solution to encourage our clients to connect to Trading Servervia DIAL-UP (Through local Telephone or Broad Band Lines). This Network is wellsupported for the clients within the 20 to 40 km radius. Order confirmation speed ismarginally slow in comparison with VSAT Connectivity.Connectivity: We have RAS users at many centers. In these locations we have installedRASROUTERS. All end users are being connected via telephone or Broad Band Lines toaccess CTCL Trading Server installed at all our Branches and Franchisee locations.Accessibility: In each RAS location we have Terminal to trade in different exchange as perclient request‘sB) FINANCE: 55
  56. 56. ACCOUNTS: The Accounts/ Finance department maintains the accounts in Steel city securities Ltd.The accounts are prepared in three forms. They are:  Client-wise net positions,  Scrip-wise net positions,Pay-in and Pay-out settlement of fundsC) PERSONAL:Manpower:We have experienced and well-qualified personnel, handling greater responsibilities, workflow, communication, compliance, correspondence, implementation, auditing, maintenance,documentation etc. As per Exchange guidelines we keep NCFM qualified persons in thetrading operations. We also conduct functional training programs for newly joined employeesbefore commencement of branch operations. We have developed extensive in-house trainingpackage. The Company has an excellent reward policy by offering performance basedincentives in addition to salary. At present we are having total manpower strength of 343inclusive of 292 permanent employees and 51 on probation.RECRUITMENT PROCESS:It is the process of searching for prospective employees and stimulating them to apply for jobsin the organization. In SCSL, if they want any person, they will give notification in newspaperin order to stimulate the eligible persons to apply for that job.Selection It is the process of ascertaining the qualifications, experience, skill, knowledge, etc. ofan applicant with a view to appraise his/her suitability to a job. The top management in thisorganization shall do the selection. They send the letters of appointment or rejection to theboard of directors.Placement:It is the process of assigning the selected candidates with most suitable job. In SCSL, thedirectors do the selection of the candidates for placement. The placement may be in the headoffice or in branches of SCSL which are different places.Training: 56
  57. 57. The selected candidates will be shown placement in one of the branches of SCSL andare given proper training. The trainers are the most experienced personD) MARKETING PRODUCT: shares PRICE: depend on the stock transaction amount (brokerage cost, service cost) PLACE: Vishakhapatnam PROMOTION: web sites, populates 57
  59. 59. THEORETICAL FRAME WORKSTOCK EXCHANGEThe term ―STOCK EXCHANGE‖ implies is evident from the following feature of anexchange.S - Securities provider for investorT - Tax benefits, planning and examples0 - Optimum return of investmentsC - Caution approachK - Knowledge of MarketE - Eligibility for accrualsX - Exchange of securities transactedC - Cyclopedia of listed companiesH - High yieldA - Authentic informationN - New entrepreneurs encouragedG - Guidance to investors and companiesE - Equity cult 59
  60. 60. INDIAN STOCK BROKING HOUSES The Indian capital market has undergone numerous changes in over the years.Traditionally stock market booms and decline have laid numerous Problems for lay investors.A close interaction of these problems revealed that these were due to paper based trading andsettlement. The short learning of the markets become manifest in the bad deliveries, delays intransfers and irregular settlement etc. the remedial measure was dematerialization under thedepository system. With the introduction of de-mat system in 1996 and in effect from January1998, investors in capital market need to have de-mat ac. and trading ac. stock broking housesplay a vital role in this field. These stock broking houses become depository participant ofNSDL&CDSL arid help lay investors to trade in capital markets without any hassles.Brokerage: The maximum brokerage that can be charged by a broker is decided by the stockexchanges as per the Exchanges regulations. The SEBI (stock brokers and sub brokers),1992stipulates that sub broker cannot charge from his clients commission which is more than 1.5%of the value mentioned in the respective purchase (or)sale note.The trading member can charge:1. Brokerage charged by member broker.2. Penalties arising on specific default on behalf of client. (Investor).3. Service tax as stipulated. In India, now many stock broking houses have come up. some of the major players aresteel city security Ltd., ICICI, India bulls, MotilalOswal, etc. some companies provide on lineservices, some of them are provide only off line services and some are provide both on Line &off-line. E.g. steel city securities Ltd Over the years stock markets matured as the platforms for making Investments. Herewe can‘t forget the role played by SEBI (Securities Exchange Board Of India). The regulationspassed by SEBI in monitoring and controlling the trading practices made it comfortable for theinvestors. Over the last few decades, the average person‘s interest in the stock market hasgrown exponentially. What was once a toy of the rich has now turned into the vehicle of choicefor growing wealth? This demand coupled with advances in trading technology has opened upthe markets so that now a day nearly anybody can own stocks. 60