47975483 summer-training-project

Summer training project on
Ludhiana stock exchange
&
Its subsidiary company
Under taken at Ludhiana stock exchange
Submitted to:-
Pooja M. Kohli.
(EXECUTIVE DIRECTOR)
Submittedby:-
Meenu Sood
(A-136)
MBA
(DBIMCS)

Preface
This report is the result of my weeks of “summer training” at Ludhiana stock
exchange. Summer training is an integral part of MBA course and efficient
utilization of material , time and resources which are very much important
for successful completion of any taste. In order to be competent all the
students are required to take a real time project work. This exposure to
project work will help them to knew that how academic knowledge is applied
in actual business situations.
Keeping all this in view, this project report of
“Ludhiana stock exchange securities Ltd” is prepared the all rounded
encouraging support by many persons towards this report, this report has
created confidence in me regarding the approval of subject matter.
Actually this report is a result of an assignment, to improve myself
and again confidence. In this I have done my best to make it a genuine body.
But as well all knows a maximum
“TO ERROR IS HUMAN”. Therefore, there is a chance for some mistake.
Also a critical appraisal by anyone will be heartly welcomed.
For the accomplishment of any objective mgt of material, time
financial resources is very important. Above to this coordination determines
degree of success. Keeping this in view, repot of ”FUNCTIONING OF
LUDHIANA STOCK EXCHANGE”
is prepared by all the rounded encouraging support by many persons towards
this report has created in me the confidence regarding the approval of the
subject matter.
The present report is well arranged in a coherent manner. In my
project I have made the study of all the depts and consulting heads staff
members of various respective depts.
Actually this report is an result of an assignment, to improve myself and gain
confidence, in this i have done my best to make it a genuine study but there
is a chance of mistake.

Acknowledgement
“You cannot discover new oceans unless you have the courage to
lose sight of the share”
The world of capital market was far
from us,but we got an opportunity to emission the capital mkt at
Ludhiana stock exchange. We are indebted to our Teachers and
Gurus who molded at this junction of our career from where we
can take off better in the competitive scenario of today’s world.
We would like to thanks Miss Pooja M
Kohli (Executive Director), Ludhiana stock exchange securities
limited for giving us an opportunity to do our SUMMER
TRAINING in this esteemed organization.
It’s my privilege to express the
everlasting feeling of indebtness to Mr.kuber kansal and Mr. Atul
chikersal(coordinator)for their valuable suggestions constructive
outcome and untiring help during the summer training.
A feeling of elathim insists me on
expressing my heartiest thanks, deep sense of gratitude to all my
major advisors for their judicious impeccable.
Meenu Sood

STUDENT DECLARATION
I hereby declare that the
Analytical study
On
OVERALL STUDY ON
LSE and its SUBSIDIARY COMPANY
IN
LUDHIANA STOCK EXCHANGE
Submitted in partial fulfillment of the
Requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION
To Punjabi University, patiala is my original work and not submitted for the award of
any other diploma, degree.
Place: Ludhiana Meenu sood
Date Signature

CERTIFICATE
This is to certify that the project report entitled “LSE
and its SUBSIDIARY COMPANY” submitted by
Ms. Meenu Sood is a bona fide piece of work
conducted under my direct supervision and guidance.
No part of this work has been submitted for any other
degree of any other university.
It may be considered for evaluation in partial
fulfillment of the degree of Masters in Business
Administration.
Pooja M. Kohli
Signature

CONTENTS:-
1. Introduction of Stock Exchange
• History
• Features
• Functions
• List of regional stock exchanges
2. Introduction of Ludhiana stock exchange
• Profile
• Achievements
• Objectives
• Operations
3. Introduction to LSE Securities Ltd.
• Features
• Board of Directors
4. Introduction to Departments of stock exchange
• Operation Dept.
 Margin section
 Clearing section
 Mkt surveillance section
 Computer section.
=Service Deptt.
 Legal section
 Investor grievance section
 Listing section
 Accounts deptt.
 Technical deptt.
 Membership deptt.
 Personnel deptt.
 Depository deptt.

5. Regulatory frame work of stock exchange
6. Conclusion.
7. Bibliography
INTRODUCTION
TO
STOCK
EXCHANGE

INTRODUCTION TO STOCK EXCHANGE
A stock exchange is an institution of capital mkt which generates
capital and provides the same to industrial houses. A stock
exchange is nervous system of capital mkt. the changes in the
capital mkt are brought about by a complex set of factore, all
operating on the mkt simultaneously.
A stock exchange is the key institution facilitating the issues
and sale of various types of securities it is a pivot around which
every activity of the capital mkt revolves. In the absence of stock
exchanges, the people with saving would hardly invest in
cooperate securities for which there would no liquidity (buying and
selling facility). Corperate investments from the general public
would have been thus lower.
Stock exchanges thus represent the mkt place for buying and
selling of securities and ensuring liquidity to them in interest of the
investors. The stock exchanges are virtually the nerve centre of the
capital mkt and reflect the health of the country’s economy as a
whole.
The stock exchange is a place or a mkt were securities,
shares, debentures, bonds. Mutual funds of join stock companies,
central and state govt. organization, local bodies and foreign govt.
are brought and sold. A stock exchange is a plateform for the trade
of already issued securities through primary mkt. It is the essential
pillar of the private sector and corporate economy. It is the open
auction mkt were buyer and seller meet and evolve a competitive

price for the security. It reflect hope aspiration and fears of people
regarding the performance of the economy.
It is a mkt as well as the sources for the capital. Corporate
and government raise sources from the mkt. The house hold invest
there savings in the securities.
The stock exchange defined.
The supreme court of India has defined the role of stock exchanges
in these words:
“A stock exchange fulfills the vital function in the economic
development of a nation. Its main function is to liquefy capital by
enabling a person who has invested money in, say a factory or a
railway to convert it in by disposing off his share in the enterprises
to someone else.”

HISTORY OF STOCK EXCHANGE IN
INDIA
The stock started in the pre independence era. It is discussed as
below:-
S.No YEAR Development of stock exchanges
1. 18th
century Trading of shares of east India company in
kolkata and Mumbai was started.
2. 1850 Joint stock companies came into existence
3. 1860 Speculations in securities was done for first.
4. 1875 Formation of stock exchange in Mumbai.
5. 1894 Formation of Ahmadabad stock exchange.
6. 1908 Formation of Calcutta stock exchange
7. 1939 Formation of Lahore and madras stock
exchange.
8. 1940 Formation of U.P and Delhi stock exchange
9. 1956 Securities contract(regulation)Act was
enacted
10. 1988 SEBI was setup.
11. 1992 SEBI was given statutory powers under
SEBI Act.
12. 1993 NSE was formed for first.

13. 2000 Depositories was introduced.
14. 2002 Start of rolling settlement and banning of
BADLA trading.
15. 2003 Introduction of T+2 settelment.
FEATURES OF STOCK EXCHANGE
1. Stock exchanges have been an association of individual
members called member broker.
2. Stock exchanges are formed for the express purpose of
regulating and facilitating the buying and selling by an
institution at large.
3. Stock exchange operate with due recognition with govt. under
securities and contract regulation act 1956.
4. The member brokers are middleman who transact on behalf of
public for commission.
5. BOD limit is given by SEBI.
6. Total 13 directors are in every stock exchange.
7. Board is headed by president.
8. SEBI has been set to oversee the orderly development of stock
exchange.
9. Stock exchange list the companies who wishes to raise the
funds of cap.from public.
10. Stock exchange facilitates trading in securities of the public
sector companies as well as govt.securities.

11. The recognition accorded to a stock exchange is valid for
period of 5 years subject to satisfactory performance of stock
exchange during this period.
12. Daily total turnover of all the stock exchanges is Rs.70000
crores (approx.)
13. In India only recognized stock exchanges can operate.
14. Stock exchanges provide finance for production outputs.
15. It is a nerve centre.
FUNCTIONS OF STOCK EXCHANGES
1. It channelises the household savings into investments.
2. It plays vital role in the development of economy of the
country.
3. Provides liq1uidity and transpirancy.
4. It encourages the companies to perform the best
possible way.
5. Ensure funds and capital to flow into profitable
enterprises.
6. Increase the mkt value of shares.
7. Protect interest of investots.
8. Provide platform for investors to trade.
9. To ensure recognized code of conduct.
10. Stock exchanges indirectly helps in providing
employment to millions of peoples.

LIST OF VARIOUS REGIONAL STOCK EXCHANGES:
S.NO Name of Stock
Exchange
Year of
establishment
Type of
Organizations
1. Bombay stock exchange 1875 Voluntary non-profit
organization
2. Ahmadabad Stock
exchange
1897 Voluntary non-profit
organization
3. Calcatta stock exchange 1908 Public limited
company
4. M.P stock exchange
Indore
1930 Voluntary non-profit
organization
5. Madras stock
exchange
1937 Co. limited by
guarantee
6. Delhi stock exchange 1940 Public limited
company
7. Hydrabad stock
exchange
1943 Co. limited by
guarantee
8. Banglore stock
exchange
1957 Pvt. Converted into
public ltd.
Company
9. Cochin stock
exchange
1978 Public limited
company
10. U.P stock exchange
kanpur
1982 Public limited
company
11. Pune stock exchange 1982 Co. ltd. By
guarantee

12. Ludhiana stock
exchange
1983 Public limited
company
13. Jaipur stock exchange 1983 Public limited
company
14. Gwahati stock
exchange
1984 Public limited
company
15. Kanaar stock
exchange
1985 Public limited
company
16. Magadh stock
exchange
1986 Co. ltd. By
guarantee
17. Bhubaneshwar stock
exchange
1989 Co. ltd. By
guarantee
18. Saurashtra stock
exchange
1990 Co. ltd. By
guarantee,
unrecognised
19. Vadodara stock
exchange
1990 Private limited
company.
20. Meerut stock
exchange
company
21. OTCEI stock
exchange
1993 Pure demutulised
22. National stock
exchange
1995 Pure demutulised
23. Coimbatore stock
exchange
company
24. Sikkim stock
exchange
company
25. Multi commodity
exchange(MCX)
2008 Public limited
company
26. NCDEX 2009 Private limited

organisation
From above Saurashtra, Magadh, Hyderabad,and
Mangalore are unrecognized and rest are recognized. BSE
is in worlds 5th
position in transaction.
MCX and NCDEX are the new exchanges which only deals
in commodities.

INTRODUCTION
TO
LUDHIANA
STOCK
EXCHANGE

INTRODUCTION OF LUDHIANA
STOCK EXCHANGE
PROFILE:-
It was established n the year 1981 at near clock tower,Ludhiana
with 220 members by Sh.S.P.Oswal and Sh. B.M. Munjal leading
industrialists to fulfill a vital need of having a stock exchange in
the region.since,its inception LSEA(Ludhiana Stock Exchange
Association limited)has grown phenomenally switched from
manual trading to screen based trading on 18th
November 1996
and no.of listed companies increased from 160 in 90’s to 376 of
which 245 are regional and 131 are non regional companies(as on
March 31,2005).
LSEA has played an important role in generating for the
companies in the states of Punjab,Himachal Pradesh,Haryana,and
jammu Kashmir. bt now in LSE there are 212 regional and 114 are
non regional out of 326 registered companies.
Out of 295 broker members there are 156 are registered with
NSE and 121 are registered with BSE and remaining are registered
with both.
In Feb 2002 the trading is closed due to lack of funds and
infrastructure as compare to NSE and BSE.
Total listed capital of the aforesaid companies(regional and
non regional)is 3072.6 approx.
Now the present addressof the stock xchange is feroze
Gandhi Market ,ferozepur road ,Ludhiana and exchange has an
ultra mound building which is centrally air conditioned.
LSE has its own index as 1993 base yearand index is based
on prices as on 1st
April.
LSEA published its own bulletin at the interval of a quarter.
Govrening board consists of 12 directors.out of which 6 are
Shareholders directors,3are trading member directors
3 are public interest directors and 1 is Executive director.

SHAREHOLDER DIRECTORS OF LSE
LTD.
1. CHAIRMAN- Sh.Padam Prakash Kansal
2. VICE CHAIRMAN-Sh. Joginder kumar
3.TRADING MEMBER DIRECTOR-Sh.Sanjay
Anand
4.TRADING MEMBER DIRECTOR-Sh.T.S.
Thapar
5.SHAREHOLDER DIRECTOR-Sh,Ravinder
nath Sethi
6.SHAREHOLDER DIRECTOR-Sh.Ashok kumar
7.PUBLIC INTEREST DIRECTOR-Sh.Ashwani
kumar
8.PUBLIC INTEREST DIRECTOR-Dr.Raj Singh
9.PUBLIC INTEREST DIRECTOR-Sh.Ved
Prakash Gaur
10.DING MEMBER DIRECTOR-Sh.Sunil Gupta
11.SHAREHOLDER DIRECTOR-Sh.Varun
Chhabra
12.SHAREHOLDER DIRECTOR-Sh.Satish
Nagpal
13.EXECUTIVE DIRECTOR-Pooja.M.Kohli

ACHIEVEMENTS OF LSE
• First regional stock exchange to give proposal of
making subsidiary as broker of NSE and BSE for
survival of stock exchange and second to start
operations like broker of NSE and BSE.
• First regional stock exchange to starttrading in
commodities market by subsidiary.
• First regional stock exchange to start courses on
capital market,only BSE is performing this sort of
activities andNSE uis also performing courses on
capitqal market only for members but LSE will star
outsiders also.
• Derivative trading is done in LSE.
• Commodity trading is also done here.
• LSE also introduced a settlement guarantee
fund (SGF). The SGF guarantees settlement of
transactions and the carryforward facility
provides liquidity to the market.
• LSE became the first in India to start LSE
Securities Ltd., a 100% owned subsidiary of
the exchange. The LSE Securities got the
ticket as sub-broker of the NSE. In 1998, the
exchange also got permission to start
derivative trading.
• For the settlement of dematerialised securities,
the Ludhiana Stock Exchange has also been
linked up with National Securities Depository
Ltd. (NSDL).

• Beside them some more achievements are:-
1. “LSE” brand is popular among masses. The brand
image of LSE can be capitalized.
2.LSE have requisite infrastructure for the Capital
Market activities which includes a multi-storeyed,
centrally air conditioned building situated in the
financial hub of the city i.e. Feroze Gandhi Market.
3. LSE have well experienced staff handling
operations of Stock Exchange.
4. LSE have competent Board and professional
management.
5. LSE have much needed networking of sub brokers
in the entire region, who are having rich experience in
Stock Market operations for the last 25 years.
6. LSE have more than 40,000 clients spread across
Punjab, Himachal Pardesh, Jammu & Kashmir and
adjoining areas of Haryana and Rajasthan.
7. The turnover of LSE subsidiary is the highest
amongst all subsidiaries of Regional Stock
Exchanges in India.

OBJECTIVES OF LSE
nt at NSE aInvestor grievances:- The major objective of LSE is
the handling of investors complaints and grievances. For this
purpose it has established investors grievances cells that receives
complaints from investors.
• LSE floated its subsidry company, LSESL, with objectives of
obtaining trading right on bigger stock exchanges.
• Improving trading settlement from T+2 to T+1.
• Providing platform for free mkt.
• Safeguarding general public interest.
• Keep an effective surveillance on member brokers.
• Reduction in huge paper works.
• The major objective of LSE is introduction of NEAT (National
Exchange for Automated Trading) system.
• Effective clearing and settlemend BSE

Operation of Ludhiana Stock Exchange:-
The Ludhiana stock exchange is the technology savvy, forward
looking and modern regional stock exchange.
DATE OF ESTABLISHMENT
Date of incorporation: October 17,1981.
Date of recognition : April 29,1983.
Governing council, committees and Administation.
The council of mgt of the exchange consist of 13 members of
which:
=> shareholder director : 6 members
=> Trading member director : 3 members
=> Executive Director : 1 member
=> Public interest director : 3 members

At every Annual General Meeting, 1/3rd
of the Elected directors
retaired by rotation, Administartion of the exchange is managed by
the exective director who is assisted by the company secretaty and
a team of executives, assistants, technicians and sub staffs. The
exchange has three statutory committees namely:-
 Disciplinary Committee.
 Arbitration committee.
 Default committee.
In addition it has five advisory and standing committees
including the investors grivances committee, to assist
the Administration.
THE LUDHIANA STOCK EXCHANGE
WORKS AS FOLLOWING:-
It has following departments:-
1.Secretarial department
2.Membership department
3.Technical department
4.Legal department
5.IGC department
6.Accounts department

7.Listing department
8.Personnel department
9.Internal control department.
1. Secretarial department :-LSE is a public ltd.
Company.the min. cap. Required is 5 lac .
Minimum member required is 7 members.
SEBI nominates the public relation director.
What this department does:-
• To convene the meetings of the Board this dept.
is responsible.
• 7 days before this meeting ,a notice about the
place,date, time ,is sent to board by this
department.
• To draft/compile the agenda of the meeting and
send to board members.
• Board proceedings are recorde in the form of
minutes which is drafted within 30 days and
given to chairman of committee and board.
The 2 committes of this dept are:-
1.STATUTORY COMMITTEE
2.NON STATUTORY COMMITTEE

1.STATUTORY COMMITTEE:-It includes the
following :-
• Investor service committee
• Disciplinary committee
• Default committee
• Arbitrary committee
2.NON STATUTORY COMMITTEE:-
• HRM committee
• Computer committee
• Share transfer committee
• Facility mgt. committee
• Audit committee
• Trading membership committee.
2.Membership department:-It is primary and secondary
department without which working of entrepreneurs and
members of any stock exchange is impossible .All the
members are required to comply with rules under
SCRA,1956.
ELIGIBILITY OF MEMBER SHIP:-
The applicant should be citizen of India and must have
completed 21 years of age.
REQUIREMENTS FOR INDIVIDUAL MEMBERS OF EXCHANGE:-

1. Age limit:- Minimum=21 years.Maxmimum=60
years.
2. Qualification:-
a. Matriculation.
b. He should at least have 3 yrs capital mkt experience.
c. He should not be bankrupt.
d. Person should also be registered from SEBI.
REQUIREMENT FOR CORPORATE MEMBER OF EXCHANGE:-
A.The company should be registered under section 322
of the companies Act.
B.Company should not be bankrupt.
C.Minimum paid up capital required is Rs. 25 lacs.
D.The copies of MOA and AOA
E.Qualification and proof of age.
In LSE 295 members are there out of which 156 are
registered with NSE and 1321 are registered with
BSE.and rest with both.
.
3.Technical department:-The head of this department is
Mr. Navraj singh
This department holds all the technical problems in the
techniques. This department of LSE is regulating
the activities related to the fields of electrical ,
mechanical and civil engineering besides having
other functions like that of security.
There are some of the important
aspect:-

1.electrification of building.
2.Air conditioning plants.
3.Maintenance of the generator.
4.fire fighting system
5.Maintenance of the telephone
exchange
6.Water supply
SECURITY:- These is an additional charge given to
this department. The supervision of
the security staff, maintenance of
metal detector is also under this
previous.
4.legal department:-The head o f this
department is Mr. Prashant saluja .it holds all
the legal formalities to be done on every
department and on the stock exchange.
1. to define stock exchange against any
type of case.
2. To see that all the SEBI guidelines are
followed.
3. to see all the govt. rules and
regulations are followed.

4. to check that all the work which is
going one is legal .
5. To suggest selective and correct
measures when needed.
6. Monthly report to SEBI regarding case
of total pending , total solved etc.
5.IGC:-The head of this deparment is again
Mr. Prashant Saluja.It solve all the investor
related problems and does the following
services:-
INVESTOR RELATED SERVICES
:- INVESTOR GRIEVANCES:-the exchange has
enabled special arrangements to handle investors grievance or
complaints .It has established an investor grievance cell that
receives complaints with companies and member-
Broker to ensure this satisfactorily redressal have been
fully computerized. In addition ,to 6this the exchange has an
investor grievance committee. It is the committee between
members and brokers.
:-INVESTOR PROTECTION FUND:-
The exchange has set up an investor protection fund in the monthof
January, 1990 for providing compensation to individual investors
in case of a member of the exchange. The fund has a corpus of
Rs.78.60 lacs as of February 28, 2005. In case nay member –
broker default to meet his obligation towards investors in respect

of deals that took place through the trading system of the stock
exchange, then the concerned investors are compensated from the
fund.
:-INVESTORS SERVICES CENTRE:-
The exchange has set up an investor’s service centre in its premises
for providing information regarding to the general public. The
centre has a well- equipped library, which subscribe to leading
economic financial dailies and periodicals. It also stores the annual
reports of the company listed at the stock exchange.
6.Accounts department:- The head of this
department is Mr. Kuber Kansal.This department
makes and holds all the financial reports of the
company and present it quarterly.
FUNCTIONS:-
• To make and receive payment to the outside
agencies(cos. Listed at LSE,brokers working in
LSE.)
• To keep the record of all incoming and outgoing
money and preparation of financial matters at
the end of the financial year.
• To get the a/cs audited from the 3rd
party.
• To disburse personnel expenses.

7.Listing department:-The head of this department is
Mr. Sudesh Kumar. It lists the companies those who
want to issue their holdings in the public.
Guidelines for Listing
Listing means admission of securities to dealings on a recognized stock
exchange. The securities may be of any public limited company, Central,t
State Government, quasi governmental and other fina
institutions/corporations, municipalities, etc.
The objectives of listing department are mainly to :
• provide liquidity to securities;
• mobilize savings for economic development;
• protect interest of investors by ensuring full disclosure.
BSE has set various guidelines and forms that need to be adhered to
submitted by the companies. These guidelines will help companies to exped
fulfillment of the various formalities and disclosure requirements that are req
at various stages of
• Public Issues
o Initial Public Offering
o Further Public Offering
• Preferential Issues
• Indian Depository Receipts
• Amalgamation
• Qualified Institutions Placements
8.Personnel department:-The head of this
department is Mrs. Geeta Goyal.
Chec

It helps in the Recruitment of the personnel, whenever
and wherever a vacancy arises.It also helps in the
maintenance of attendance register.the personnel
department also helps in the appointment of the clerks,
representative brokers. This department fulfills all the
vacant seats of the LSE.
9.Internal control department:-This dept.is
introduced newly in the LSE.this department is headed
under :-
• SECRETARIAL:-This department is headed
under Mrs.Sarabjeet Kaur .Under this department
all the records are maintained and all the
minutes of the Board meetings are recorded.It
helps in the drafting and compiling of the
agenda of all the meetings.
• FINANCE:-Finance is the life blood of every
organization. The head of this department is
Mr.Kuber Kansal.
This deptt. helps in arranging finance from various
activities in the stock exchange. It decides that from
where the finance will come and where it will be
utilized in the best possible manner so that in future
benefits can be availed from that finance.it also see
that the finance where is used is properly used or not.
The Internal control department controls the
internal working of the LSE.It puts effective conyrol
on the member brokers and other staff members and

see that they are working in a well behaved manner or
not and if not than proper control is put on them so
that they can work properly in future.It helps the
clients in giving proper information so that they can
work properly.
TRADING SYSTEM:-
Online screen based trading system commenced at LSE on
November 18,1996 .however .w.e.f. 23rd
jan.2002 there has been
no trading at our exchange.
ONLINE TRADING THROUGH VSATS
With the objective to broad based business oppurtunities to the
investors and members,the change has set up 37 trading terminals
at remote cities in thestate of Punjab,delhi,and union territory of
Chandigarh.Now from October 1999 ,trading through
VSATs(Very Small Apurture Terminal) is being smoothly
conducted.
SETTLEMENT GUARANTEE
FUND(SGF)
Ludhiana stock exchange implemented a settlement guarantee fund
(SGF)w.e.f. April 6, 1998.It providesguarantee of all the genuine
trades made through the screen based trading system of the stock
exchange.The SGF had a corpus of Rs. 13.34 crores and
membership of 176 brokers as on data available upto 2007.

DEPOSITORY SYSTEM
It is an instituition which deals in securities as a bank deals in
funds.
Ludhiana stock exchange commenced trading in Demat shares
from November 16,1998 by becoming a participants of NSDL
and CDSL. The exchange has set up in house DP services to
facilitate trading and settlement in DEMAT securities.
CLEARING AND SETTLEMENT
There is weekly settlement cycle prevailing at the LSE. Which
commences on Monday and ends on Friday .at the end of each
settlement, members are given scripwise delievery notes.The
members are required to depositthe scrips sold by them to the
clearing houses on the second working day following the day of
transaction. Payments against delievery are made by purchasing
members also on the aforesaid day. The stock exchange
management ensures that strict compliance is made with the
condition for trading,settlement schedule.
ROLLING SETTLEMENT

The exchange introduced the rolling settlement in 10 srips w.e.f.
January 10, 2000 and in another 34 scrips w.e.f. march 21.2000
and in another 119 scrips w.e.f. May 8, 2000.
It is the trading system of the securities in the
transaction that is buying and selling of securities.
The transaction can be secured up by a counter
transaction on the same day only.initially settlement system was
T+5 but was graduallu reduced to T+2 on 1st
April ,2003.
TRADING ON BIGGER STOCK
EXCHANGES
The exchange acquired the membership of NSE and BSE
through its subsidiary. The LES securities limited, with the
objective of providing an enabling mechanism to its member
brokers to trade on NSE and BSE as sub brokers of LSE
Securities limited.
Trading at BSE and NSE commenced through
the subsidiary routes from September 2000 and December 2000,
respectively, and the trading in F&O segment of NSEcommenced
in February 2002.
The average daily trading volumes on BSE, NSE
(capital market) and NSE (F&O) during the month of February
2005 has ben Rs.18 crores , Rs. 38 crores and Rs. 144 crores
respectively.

CORPORATE MEMBERSHIP OF NSE
AND BSE
SEBI , at the initiative of LSE , permitted smaller stock
exchanges to trade in bigger stock exchanges through
their subsidiary companies .LSE floated its subsidiary
company, the LSE Securities Limited, with the the
objectives of obtaining trading rights on bigger stock
exchanges. It obtained corporate membership of
both NSE and BSE. AT present 100 and 60 members of
LSE are operating on NSE AND BSE respectively
through the subsidiary route.
REVENUE STREAMS
The streams of corporate membership of NSE and
BSE is a self financing project and will generate
surplus after meeting operations expenses at a
very low break -even point.

DEPOSITORY PARTICIPANT DP
SERVICES
The company has a depository participant of NSDL
and is the only depository in the region having On-
line real time connectivity with NSDL. DP operation
of the company not only benefited the investors of
the region , but also proved to be a source of
income for the company.
LISTING OF SECURITIES AT LSE

At present, Ludhiana Stock Exchange has 330 listed
companies, out of which 214 are regional and 116 are Non-
regional. The total listed capital of aforesaid companies is
Rs. 3168.91 Crores appx. The market capitalization of the
said companies is more than Rs. 3372.34 crores. The Stock
Exchange is covering the vast investor base through the
listing of abovesaid companies, which are situated in the
region comprising of Punjab, Himachal Pardesh, Jammu &
Kashmir, Chandigarh.

INTRODUCTION
TO
LUDHIANA
STOCK
EXCHANGE
&
SECURITIES LTD

INTRODUCTION OF LUDHIANA
STOCK EXCHANGE AND SECURITIES
LTD.
Introduction;-
It is wholly subsidiary company of Ludhiana stock exchange.It has
been formed with the objectives of growth and survival of LSE as
an instituition through increased volumes and liquidity in trading at
the exchange. The main objectives of the co is “ To establishand
carry on the business of the stock broking as a member of
recognized stock exchange (s) in India or abroad and other allied
matters and for this purpose to buy,obtain or acquire stock
exchange membership or membership rights in India or abroad.”
Trading member of MCX-Stock Exchange Limited. Trading
Members of LSE can access NSE and BSE by registering
themselves with SEBI as Sub-brokers of LSESL.
LSE Securities Ltd., was incorporated in 07TH January, 2000 with
a view to revive the capital market in the region and for taking full
advantage of the emerging opportunities being provided by
expansion of bigger stock exchanges like NSE and BSE. The
company since its inception has marched forward rapidly and has
maintained consistent growth record.
-.
-LSE SECURITIES LIMITED (LSESL) is a subsidiary of the
Ludhiana Stock Exchange Limited under the policy formulated by
the Securities and Exchange Board of India (SEBI) for Revival of
Small Stock Exchanges.The policy enunciated by the SEBI permits
a stock exchange to float a subsidiary, which can take up
membership of larger stock exchanges, such as the National Stock
Exchange of India Ltd. (NSE), and Bombay Stock Exchange Ltd.
(BSE). LSESL has been registered by SEBI as a Trading-cum-
Clearing Member in the Capital Market segment and Futures &

Options segment of NSE and Capital Market segment of BSE and
NCE
FEATURES OF LUDHIANA STOCK
EXCHANGE AND SECURITIES
LIMITED
• The company has a paid-up capital of Rs 5.55
crores
• The Council of the management of the Company
comprises of 10 directors of which 3are broker
members and 7non-brokers. Five non broker
members are Independent Directors of eminent
status from the field of finance, law and
management and remaining two are Chief
Executive Officer of LSE Securities Limited and
Executive Director of the holding company
(Ludhiana Stock Exchange), who are on the
Board of the company as ex-officio Directors
• Operations of the company are run in a
professional, transparent and fair manner keeping
in view of the interest of investors as well as
other stake-holders.
• The LSE Securities Ltd. commenced trading
operations in Capital Market Segments of BSE
and NSE in September, 2000 and December 2000
respectively. The turnover of the Company at

NSE and BSE is growing by leaps and bounds
ever since in incorporation. There was
encouraging response from the sub-brokers
specially at NSE counters.During the financial
year 2005-06, the Company recorded a turnover
of Rs. 7975 crores and Rs.3834 crores in "Capital
Market" segments of NSE and BSE respectively.
For the year ended 2005-2006, there were 128
sub-brokers registered for NSE and 68 for BSE.
• The LSE Securities Ltd. commenced trading
operations in Future and Options Segment of
NSE in February 2002. The Company became the
first subsidiary of any Regional Stock Exchange
which commenced trading in “F&O” Segment of
NSE.
• The LSE Securities Limited has provided facility
to its sub-brokers for trading on NSE and BSE
through VSAT counters which are located
outside Stock Exchange Building
• In order to provide professional services to the
investors of LSE Securities Limited through its
sub-brokers, the company motivated its sub-
brokers and its staff to qualify the certification in
financial markets conducted by NSE.
• The LSE Securities Ltd. commenced its
operations as Depository Participant of NSDL in
August 2000.
• In order to further strengthen its services to sub-
brokers and investors, the Company applied for

the DP of CDSL. It started DP operations of
CDSL in December 2001
• As a result of efficient services and competitive
rates, the Company has been able to increase its
market share in the DP business at the cost of
other DPs in the region. As on date DP of NSDL
and CDSL of the Company at Ludhiana is
servicing over 35000 beneficiary accounts.
• To increase its presence in the region further, the
company plans to open its branches of
Depository Services in the major cities of the
region. To start with, it has already opened its
branches at Jalandhar Amritsar and Chandigarh.
• It acts as financial consultants and provide
advice,services,consultancy in various fields such
as general administration,
secretarial,commercial,financial,legal,economic,d
irects and indirect taxation and other levies.
• It also helps in obtaining trading rights on bigger
stock exchanges.

BOARD OF DIRECTORS OF LSESL
DETAILS OF DIRECTORS OF LSE SECURITIES LIMITED
Sr.No. Name Designation Date of Appointment
1. Mr. Anurag Arora Chairman 26.09.2009
2. Mr. Vishal Goomber Vice-Chairman 27.09.2008
3. Mr. Jatinder Garg
Member-
Director
26.09.2009
4. Mr. Manjit Singh Sarna
Member-
Director
27.09.2008
5. Mr. Lalit Kishore
Member-
Director
27.09.2008
6. Mr. Susheel Bhakoo
Public
Representative
Director-
Independent
Director
12.03.2008
7. Mr. Vijay K. Bansal
Public
Representative
Director-
Independent
Director
12.03.2008
8. Dr. Prem Kumar Public 14.02.2009

Representative
Director-
Independent
Director
9. Dr. Anil Kumar Angrish
Public
Representative
Director-
Independent
Director
19.07.2007
10. Mr.Pawan Kumar Garg
Public
Representative
Director-
Independent
Director
27.08.2008
11. Mrs. Pooja M. Kohli
LSE-
Representative
Director
14.02.2009
Last. Chief executive officer cum director is Mr.Rajesh K.
Sharma.
ADDRESS:-Feroze Gandhi market,
Ludhiana 141001
Punjab .

INTRODUCTION
TO
DEPARTMENT
S
OF
LUDHIANA
STOCK
EXCHANGE

DEPARTMENTS OF LUDHIANA STOCK
EXCHANGE AND THEIR WORKING
In order to fulfill its objectives of safety and security to
the investment of the investor to provide the proper
service under the prescribed guidelines of SEBI ,
there are many different departments under which
different departments under which different functions
are performed , which are assigned to those
departments. These are following departments of LSE:-
Operational Department:-
Margin
Section
Clearing
House
Market
Surveillance
Computer
Section

Service Department:-
Legal Department
Secretarial
Department
Listing Section
Accounting Section
Technical Section
Membership
department
Personnel
Department
Depository
Department

All the department perform specific function and all
the section are inter connected with each other. There
is an organized network of recording of activities
performed there. But before studying the inter
dependence of section , here is the detail of all.
OPERATIONAL DEPARTMENT
MARGIN SECTION:-
It is necessary for every stock exchange to establish
margin section margin has been created for the safety
purpose of the client so that he can”t be defaulted and
doesn’t suffer loss that much which he cant bear to pay
out.
In case of forward trading margin is not there but if
it is under stock exchange margin is always kept for
safety.
The basic function is to collect different types of
margin from brokers as per regulation given by SEBI.
The idea behind the section is:-
1. To prevent the members from doing excessive
speculation trading.
2. To keep track of the members who are expected
to default in future.
Thus margin section by
keeping a track of base minimum capital and addition

base minimum capital and by setting exposure limit
for each broker member ensures that any member
buy or sell scrips in proportion to his net worth. To
make these relations practical every broker has to
deposit certain %age of the total transactions done by
him either by way of cash in the bank or by scrips.
The Deposit Act as a security money with the stock
management for the particular broker.Margin money
is charged both on total turnover and total purchase of
the brokers.
FUNCTIONS OF MARGIN SECTION
• To collect BMC , ABMC
• To keep track on the member brokers.
• Collection of the margin.
• Release of the margins
BASE MINIMUM CAPITAL:-
Each broker is required to deposit with the stock
exchange Rs. 50,000 in the form of cash/FDR/Bank
guarantee of the scip from the approved list.
For getting membership in
NSE and BSE 2,50,000 is deposit for registration. Out
of this 100,000 shares are issued and balance 1.5 lac
are given for trading. (1.5 lac is BMC)
1.5 *8 times is 12 lac. Upto this he can do trading.
If any person is not satisfied
with 12 lac than he can give margin and that is

again multiplied with 8. that is called ADDITIONAL
BASE MARGIN CAPITAL(ABMC).
INTRA DAY GROSS EXPOSURE LIMIT
Each broker would have an intra day gross exposure
limit is sum total value of purchase and sale of each
scrip would be equal to 25 times(in case of NSE and
BSE) of the sum total of permanent security deposited
by him. It indicates the aggregates of sale and
purchase and calculated on daily bases.
NET EXPOSURE LIMIT
Each member would have a net position limit i.e. net
volume of purchase and sale of each scrip would be
equal to 8.5 times in case of NSE and 6 times in case
of BSE of the subtotal of BMC and ABMC. So it
indicates the difference between sale and purchase
are calculated on daily bases. Net position of each
member at the end of the day would be carried out
on the next day.
PAYMENT OF MARGIN:-
Member brokers are required to make payment of
margin by 10:30 am on the T +1 basis.
TYPES OF MARGIN
1. Value at Risk margin(VAR):-This margin is
developed by CHICAGO STOCK EXCHANGE.

This system comes of 100% of the market risk
through the use of different statistical
formulae.VAR margin is calculated on daily basis.
2. Market To Market Loss(MTML):- It is
calculated after the close of trading cycle.in each
settlement mkt to mkt loss is in a scrip would be
netted against mark to market profit in the other
scrip. But such netted would be allowed only on
the scrip prescribed by SEBI. Thus , stock
exchanges collects on daily basis 100% notional
loss from each broker for every scrip. It is
calculated as the difference between buying and
selling price and current value(closing price) of that
scrip at the end of the day.
3. Exposure Margin:-Exposure margin is charged
5% -10% of the sale and purchase of shares.
CLEARING DEPARTMENT:-
This department takes care of pay in and pay out of
securities. In LSE now adays, the system i.e. prevalent
for trading is T+2 that means settlement of transaction
should take place within 2days.SEBI decided the
following activities schedule for exchange for T+2
rolling settlement.

Sr.No. Day Description of
activity
1. T Trade date
2. T+1 Custodian
confirmation
day/deposit of
margin
3. T+2 Pay in/ Pay out of
securities/ funds
4. T+3 Auction day
5. T+4 Pay in/ Pay out of
Auction/ closeout of
shortages as soon as
possible.
PROCEDURE:-
1. when shares are being sold by the sub –broker, he
on the basis of settlement schedule i.e.T+2 has
to download all the information of shares being
sold to the broker, then the broker will further
download this to the delievery officeNSE and
BSE.This process is called PAY IN
SECURITIES.
2. After pay in sec. pay out takes place.In this step
all the information about the scrip would first be
downloaded to the broker by NSE, then it
would be downloaded to sub- broker.

AUCTION:-
Auction of securities can be done at local level of
NSE and BSE.It can be done if the sub –broker
doesnot give all the information to the broker i.e.
in case if broker fails to deliver the scrips on T+2
delivery day.
The n it is the responsibility of clearing house to sttel the
undelivered scrips by conducting auction of pending
securities and T+5 cycle will start.But in case if the
funds are not settled by the sub- broker then his
terminal would be de- activated and it would be
activated only on the repayment of funds.
PENALTY:-
In case sub broker does not give all the information to
the broker then he has to, pay penalty of 1%
according to BSE ano 0.25%according to NSE
IN CASE OF AUCTION AT NSE,BSE:-
Auction in case of NSE,BSE would be done at the
closing price +20% of the value or settlement trade
date to auction date , high price which ever is higher.

CLOSE OUT:-
In case the shares of particular scrips are not
available on the date of auction then it is the
obligation of the solicitor (exchange) to give monitory
benefits to initiatori.e. buyer against the default of
defaulter of securities in this manner settlement cycle is
completed.
MARKET SURVEILLANCE DEPARTMENT:-
The main task of this section is to see the market
sanctity is maintained and the investors are not
cheated. So market surveillance entails scientifically in
identifying points ina stock price movement or
trading volumes, which don,t match with the co.,s
fundamentals. So the price and volume trends in a
stock exchange are checked for abnormalities,
scientifically.this department keeps a check on
trading and coordinates with the margin department
and keeps a close watch on the increase and
release of limits. It helps in checking:-
1. Unusual price rigging.
2. Insider trading
3. False markets
4. frauds
A crucial aspect of any surveillance system is
trecking brokers whose trading activities are consent
rated in few stocks and confirm the doubt with

them. Now SEBI fixed certain online inspect in
parameters of stock watch system and asked all
the stock exchanges for modern imposition of the
online surveillance by stock exchanges to mitigate
the risk of default.
COMPUTER SECTION OR EDP:-
The computer section is the nerve centre
of the entire tock exchange.This section
remains active all the time and is directly
involve in all the activities, of LSE. This
section is also known as EDP
i.e.ELECTRONIC DATE PROCESSING.It
prepares several reports namely:-
1. Sub-brokers wise delievery bill received
order(after payment).
2. Downloading of delievery orders
3. downloading of receiving orders
4. sub- broker wise final settlement
5. HDFC bank enteries.
TIMING FOR TRADING SECTION
Market opens 9:oo am
Trading session 9:30 am to 15:30 pm
Closing session(trading) 3:30 pm to 3:40 pm
Post closing 3:40 pm to 4:00 pm
Back up session 4:00 pm to 5:00 pm
The computer section play a pivot role in
generating reports supplying daily

quotations processing data for settlement
of transactions.
FUNCTIONS:-
1. There are four servers of NSE , 1
back up survey NSDL server and
CDSL server, so computer department
has to maintain all these servers
properly.
2. All types of report, which is asked
by SEBI, are sent by the computer
department.
3. The work of system maintenance is
also being done by the computer
department(hardware problems,
software problem or any problem or
any problem or problem related to the
system).
4. Computer department also has to
maintain a back up reports.
5. They had also to deliever the
reports to different epartments i.e.
clearing, margin, account.
REPORTS MAINTAINED BY COMPUTER
DEPARTMENT:-
1.Scrip wise summary statement:-

In this type of report all the detail
about the scrips with the sub brokers
has to deal with the qty. wise
statement of the scrips purchase
position, net position and average
rate of the scrips are included.
2.Scrip wise detail statement:-
In this particular statement all the
details about the scrips is included.
It included information like how
much shares are being purchased or
sold by client and also its rates, it
also includes information about the
price at which he purchased or sold
his scrip.
3.Receive order statement:-
As the name indicates the particular
statement includes the no. of shares
the broker will receives and also
qty,symbol of the scrip.
4.Delievery order statement:-
This particular statement includes the
information of how much shares are
to be delievered by the broker.
5.Final obligation:-
In this particular report the obligation
of a broker i.e. whether he has to pay
or receive is being included after
including all the charges(i.e
miscellaneous , service tax, stamp duty,

NSE charges,BSE charges) and all this
amount is being deposited in bank.
6.Margin sheet:-
It goes to each member and is also kept
by the computer department as a record.
In this, how much margin the broker has
to pay and which type of margin he has
to pay is included.
Out of these mentioned reports receive
order statement and delivery order
statement are not delivered to FAO. Rest
of all the reports are to be submitted to
NSE, BSE and FAO.
1.Matching statements:-
NSE sends reports to LSE included all
the information related to scrips in detail
and this particular report is being crossed
checked by computer department so as to
ensure accuracy of the information.
1. Contract note:-
It is sent to NSE , BSE and FAO in 24
hrs. it includes the name of registred
office, dealing office if any, address of a
member, registration no., client address,
settlement no..

SERVICE DEPARTMENT:-
Legal section:-
Whenever there is a dispute between two
brokers, between client and brokers and
move to court, the legal dept. come in
picture to fight for the cause of investers
and against defolting members. It plays
an important role in working governance
and keeps a “Dog Watch”. On all the
matters related to the stock exchange.
Functions:-
7. to settle the investors grievances and
compliance(IGC).
8. to define stock exchange against any
type of case.
9. To see that all the SEBI guidelines are
followed.
10. to see all the govt. rules and
regulations are followed.
11. to check that all the work which is
going one is legal .
12. To suggest selective and correct
measures when needed.

13. Monthly report to SEBI regarding
case of total pending , total solved etc.
This dept. also deals with transfer of
shares. In order to be a member of a
stock exchange a person has to hold at
least one share. If the member wishes
to sell his ticket, he has to intimate the
secretarial dept. in adance. A notice is
given there after in newspaper for
objection with in ten days of such a
notice, the clients can lodge there
claims. A ten day notice is also to be
displayed in the notice board of stock
exchange for objection to be raised by
members. This dept. covers-
>Personnel dept.
>Membership.
Investor Grievance Section:-
LSE has formed a separet investor
grievance cell, which receives
complaints from investors against
companies. And member broker to
ensure there satisfactory redressal.
In 1959, MOF said that for every
exchange it is maindatory to set up a
committee to handle the investor
complaints.

“justice delay, justice deny”,--
Gandhi ji.
Types of investor grievances:-
1. Against listed companies.
2. Against member brokers.
Procedure:-
i. Compliant to be filed in
comsurned exchange.
ii. Forward to conserned listed
company.
iii. Advice to resolve in 45 days.
iv. Reminder to resolve in 30 days.
v. Advice to appear companies
officials investors grieveances
committee(IGC).
vi. Trading suspend.
vii. Matter forward to SEBI.
viii. SEBI imposes penalties of 1 lac
per day from delay maximum to 1
crore or which ever is less.
ix. Appeal to SAT(Securities
Appellate Tribunal).
Secretarial Department:-
An LSE has personnel dept. in its
orgainstional chart. Main duties.
Responsibilities of this dept is as
follows.:

 Maintenance of records of
minutes like :-
1. Meeting of BOD.
2. meeting of vatious committees.
3. Meeting of members.
4. minutes of AGM.
5. Minutes of extraordinary general
meeting.
.
Listing section:-
For doing in LSE the co. first have to be listed and the
function of the listing of the co. is done by listind dept. for
getting listed the concerned co. has to pay a certain fee and
that fee would depend upon the authorized capital of the
co..
Listing means admission of the securities of a co. to
deal on a recognized stock exchange
Listing is governed under the
following act:-
Companies act, 1956
SCRAct,1956
SEBI guidelines
Necessity of listing:-
• In case the co. goes public.

• If the co. declares in the
prospectus
• Co. to do so in SCRact,1956
Benefits of the listing:-
• stock exchange provide platform
for free market.
• Securities available a the
competitive prices
• Listed shares preferred for
investments.
• Listing safeguards general
public interest.
• Provide liquidity to the
securities of the co.
• Easier to get loan for listed
cos.
Main documents:-
• MOA and AOA
• Copy of prospectus or
statement in lieu of
prospectus
• Copy of offer of sale and
circulars of the
advertisements.

• Copy of balance sheet
• Certified copies of the
agreement with the
financial instituition, selling
agent ,etc.
• List of top 50
shareholdings
• A brief history of the co.
since its in incorporation
• Particulars of shares and
debentures issues
• Statement containing
particulars , if any ,
commission and brokerage
etc.
• Share holding pattern.
ANNUAL LISTING FEES:-
Paid up capital listing fees:-
Upto 1crore 7000
1 to 5 crore 10000
5 to 10 crore 18000
10 to 20 crore 36000
20 to 50 crore 54000
50 to 75 crore 90000

After this every increase in
the paid up cap. With 5 crore
than fee will increase
2500rs.and will be added to
this.
ACCOUNTS DEPARTMENT:-
It deals with the maintenance of records regarding
income and expenditure of the stock exchange . it also
prepares annual accounts of the stock exchange.most of
the work in this department of LSE is done manually
although help is taken from computer for making
trial balance, income and expenditure statement and
b/s.this report is generally published in august every
year.
FUNCTIONS:-
• To make and receive payment to the outside
agencies(cos. Listed at LSE,brokers working in
LSE.)
• To keep the record of all incoming and outgoing
money and preparation of financial matters at
the end of the financial year.
• To get the a/cs audited from the 3rd
party.
• To disburse personnel expenses.
SOURCES OF FUNDS OF LSE:-

• Initial listing fees from the co.
• Annual listing from companies
• Membership fees from brokers at the beginning
• Annual computer fee from broker
• Annual library charges from brokers
• Fines and penalties from broker.
• Service charges from brokers
• Interest earned on fixed deposits
• Electricity charges per room.
• Maintenance charges.
TECHNICAL DEPARTMENT:-
This department of LSE is regulating the
activities related to the fields of electrical ,
mechanical and civil engineering besides having
other functions like that of security.
There are some of the important
aspect:-
1.electrification of building.
2.Air conditioning plants.
3.Maintenance of the generator.
4.fire fighting system

5.Maintenance of the telephone
exchange
6.Water supply
SECURITY:- These is an additional charge given to
this department. The supervision of
the security staff, maintenance of
metal detector is also under this
previous.
MEMBERSHIP DEPARTMENT:- It is primary
and secondary deptt. Without
entrepreneurs can effectively do the
working of any stock exchange is
impossible all the member are
required to comply with rules under
the SCRact,1956.
This deptt, deals with the membership
of individual and corporaye members
the trade in market is done through
the authoriswed member who are
duly registered with concerned stock
exchanges and SEBI.
CATEGORIES OF MEMBER BROKER:-

MEMBER:-
Individual corporate
ELIGIBILITY OF MEMBER SHIP:-
The applicant should be citizen of India and must have
completed 21 years of age.
REQUIREMENTS FOR INDIVIDUAL MEMBERS OF
EXCHANGE:-
3. Age limit:- Minimum=21 years.
Maxmimum=60 years.
4. Qualification:-
e. Matriculation.
f. He should at least have 3 yrs capital mkt experience.
g. He should not be bankrupt.
h. Person should also be registered from SEBI.
REQUIREMENT FOR CORPORATE MEMBER OF EXCHANGE:-
F. The company should be registered under section 322
of the companies Act.
G.Company should not be bankrupt.
H.Minimum paid up capital required is Rs. 25 lacs.
I. The copies of MOA and AOA
J. Qualification and proof of age.

Through sale and transfer of membership:-
a. Member can sell or transfer there membership rights
with all requirements to obtain prior approval from
SEBI.
Personnel department:-
. The dept carries out the activities as follows:-
1. Recruitment of the personnel, whenever and wherever a
vacany arises.
2. Maintenance of attendance register.
3. Appointment or removal of floor clerks or authorized
represcntatives of brokers.
4. Maintain records of leaves and overtime of employees.
5. Promotion, demotion ,registration,conveyance and
allowance ,etc.
Depositary Department:-
“An institution which deals in securities as a bank deals
in funds”.
The depository Act 1996 defines “a compsny formed and
register under companies act 1956”.and which has been
granted a certificate of registration under sub section 1A
of section 12 of the SEBI act 1992.

The term depository means a palce where something is
deposited for keeping in bank in which other deposit
funds or other depository securities.
Names of Depositories:-
a. NSDL(National Security Depository LTD.)
b. CDSL(Central Depository Service Ltd.)
NSDL is about 10 years old.
Depository System:-
It is concerned with conversion of physical
security to electronic form, settlement of trades in
electronic transfer of ownership of shares and
electronic custody of securities. This electronic
system is faster then the paper work.
COMMENCMENT OF BUSINESS:-
For commencement of business of depository one
has to take certain following steps:-
A.Registration:-
As per the rules of SEBI act, a depository can deal
in securities only after obtaining the certificate of
registration from SEBI . On being satisfied with the
eligibility parameters of a company to act as
depository SEBI may grant certificate of registration
subject to certain conditions.

B.Commencement of business:-
A depository which has obtained a registration, can
start operation only after getting a certificate of
commencement of business from SEBI.Depository
must apply for and obtained a certificate of
commencement of business from SEBI with in 1
year from the date of receiving a certificate of
registration from SEBI.
C.Rights and obligation of depositories:-
The depository has some rights and obligations
under the depository act 1996.
• Every depository must have adequate
methods for reviewing,monitoring and
properly evaluating its methods and
procedures.
• For its smooth functioning it should
properly conduct inspection at appropriate
times and should forward the repot of
inspection to the SEBI.
• It should maintain such a system so, as to
ensure that all the records are properly
maintain and there is no loss or
destruction of records.

• In event of the loss of any type of record.It
should have the adequate back up system
for back up of records.
SERVICES OF THE DEPOSITORY:-
Depository was established under depository
sevices act,1996. these depository services are
provided through DP.
RECORDS TO BE MAINTAINED WITH
DP:-
Records like:-
1. Records of securities dematerialized and
rematerialize.
2.The name of the transfer of transferee.
3.Account no. , bank a/c of v all client.
4.No. of shares the client has in his account.
5.Records of approval , notice entry and cancellation of
pledge.

6.Some other records which are said to be maintained
by SEBI.
STRUCTURE OF DP:-
For any client it is necessary for him to firstly open
an account with the DP. There are mainly 2 types
account:-
a. Beneficiary account:- There are the accont of
investor where their security are held in
electronic form.
b. clearing member account:- any trade done on the
exchange in a particular settlement has to be
settled tgrough clearing member. For this purpose
there is a claring account of clearing
member(broker).
He collect in this account all the securities sold by
different client any deliver the same to the
exchange. In code of purchase he receives the
securities from NSDL and distributes same to the
client.
Dematerialisation (De-mat):-

It is a process were physical form of shares is being
converted into electronic mode. Such acc. Is
maintained in DP.
1. the client opens De-mat acc. With any DP.
2. upon De-mat, the certificates are destroyed and
credit entry of exactly equal no. of securities is
created in DP in electronic mode.
3. The BO acc. Of holder is credited.
4. The securities loss there identity.
Securities that can be Dematerialised:-
1. Shares, bonds, debentures.
2. Units of mutual funds.
3. certificate of deposits.
4. Unlisted securities.
DE-MAT CHART:-
1
6
2 5
3
x
Investor DP
NSDLR & T agent

DE-MAT PROCESS:-
1. The register holder of the securities will make the request.
2. Securities must be recognized by depository as eligible.
3. The company issuer should have established connectivity
with the depository.
4. The holder to have a beneficiary account.
5. The A/C to be in the same name as appear on the
securities certificates to be de -materialized.
REMATERIALISATION:-
this process is the reverse of the dematerialization
It is the process by which the electronic holding of
the shares is converted into physical form.
REMAT CHART:-

REMAT PROCESS:-
1. The beneficial owner of the securities to make the
request to DP in DRF.
2. DP enter the remat request in DRM.
3. The DP forwards DRF to the issuer or to its
R&T agent.
4. The request to be made with in 7 days of
accepting it from the client.
5. The issuer or the R&T agent verifies the RRF &
confirms to DP.
6. The DP on receiving confirmation of debits the
client A/C& informs the client.
7. The issuer /R&T agent prepares physical security
certificates to be issued to B.O.
8. The certificates are dispatched to the B.O.
9. No trading is possible on the securities sent for
REMAT.
Depository
participant
Benefial
owner(Invest
or)
R&T agent
Depository

PLEDGE:-
Any member can take the loan against the
securities.For this purpose the depository pledge the
securities of the client.The shares of the client
would be sealed.no one can take his shares out.The
pledge so created can be closed on either
repayment of loan or can be invoked on default. The
pledge shares can not be leaded.

REGULATORY
FRAMEWORK
OF
LUDHIANA
STOCK
EXCHANGE

REGULATORY FRAMEWORK OF
STOCK EXCHANGE
For the control of the capital market and these stock
exchanges the government has made some rules and
laws with which exchanges have to comply with,
which are as follows:-
Legislations governing securities market:-
1. Securities Contract (Regulations) act,1956
2. Companies Act,1956
3. Securities and Exchange Board Of India ,1992
4. Depositories Act ,1996
1. Securities Contract (Regulations) act,1956:-
Its main objectives are:-
• To control over stock exchanges through
recognition and continued supervision.
• To control over stock exchanges through
contracts in securities.
• To control over stock exchanges through listing
of securities.

2. Companies Act,1956:-
It was established on the following grounds:-
• To control cos. Mgt.
• To secure allotment and transfer of securities.
• Provision regarding prospectus and public issue of
cos.
• Policies regarding payment of interest and
dividend.
• To keep ensure regular supply of annual reports
and there information to shareholders and stock
exchanges.
• Premium, discount, rights and bonus issues.
• Substantial acquisition of share.
3. Securities and Exchange Board Of India ,1992:-
• It came into existence on the 30th
june 1992.
• To protect the interest of the investors .
• To promote the development of the securities
market.
• To regulate the securities market.
• To exercise control over the securities market
intermediates.
• Present Chairman is Mr.C.B. BHAVRE.

4. Depositories Act ,1996:-
An recent development in the securities market was
electronic form of the shares or securities and
vanishing the certificate system and reduce the time
of the settlement of the delieveries and payments
and also secure the delievery of the securities for
this two main depiository companies came into
existence i.e. CDSL and NSDL. The main objective
of the depository act are:-
• To make the securities freely transferable.
• Dematerialization of the securities.
• To provide ownersh in the depository mode.
• No role of the companies with regard to
transfer of shares..

CONCLUSION:-
LSE is the one of the best regional stock
exchange.even it is the first regional exchange which
has its subsidiary co. named as LUDHIANA STOCK
EXCHANGE AND SECURITIES LTD.it has many
sub centres in the different cities Chandigarh,
Amritsar ,and Jallandhar .
It ensures that the funds of the investor
are used properly.it is governed by a good Legal
Framework.Its subsidiary co. helps in obtaining
trading rights on the bigger stock exchanges and
even it carries on the business of custodian &
depository.It has the renowned members in its BOD.
They work under the regulations of the SEBI,NSE
and BSE.
So after working on this project I concluded
that trading through this company is safe for every
investor as the trading is fully transferable and there
is very less chance of any complaint.

BIBLIOGRAPHY
Newspapers :-
• The business standard
• The economics times
MAGAZINES:-
• Business World
• LSE’s Magazine
• The business standard
INTERNET SITES:-
• www.nseindia.com
• www.bseindia.com
• www.sebi.gov.in
• www.lse.co.in

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