Trading & Settlement in stock market. this slides include trading procedures in stock exchange. speculation and types of speculators. NSDL

1. Mr. Rathesh J
Asst. Prof,
New Horizon College,
Kasturinagar

2. Clearing corporation
 Responsible for post trade activities.
 National Securities Clearing Corporation Ltd.
(NSCCL) 1st Clearing corporation in the country
Clearing Members
 Link between accounts with clearing bank &
depositories
Custodians
 They settle trade on behalf of trading members
 At present there 13 custodians

3. Clearing Banks
Link between clearing members & clearing
corporation
Depositories
Depositories holds securities in
dematerialized form
National Securities Depositories Ltd. (NSDL)
Central Depositories Services Ltd. (CDSL)
Professional Clearing Member
They clear & settle trades executed for
their clients

4. Speculation is the practice of engaging
in risky financial transactions.
Parties engaged in speculation are
called as Speculators
Types of Speculators
Jobber: jobber is a professional
speculator who has complete
information of shares he deals
He transact in his own name
Jobber is member of stock exchange
only deals with members

5. Bull:
 He purchase various types of shares to sell them at
higher price in future.
Bear:
 Bear always in position to dispose of securities
which he does not possess.
 He takes advantage of an expected fall in price.
Lame duck
 When bear fails to meet his obligations. Bear agrees
to deliver shares on specific date but if he fails to
deliver because of non availability of shares.
Stag
 He purchases shares from new company & shown
himself as genuine investor.
 He purchase shares to resell at profit.

6. Selection of a broker
Opening DEMAT account
Placing the order
Executing the order
Settlement
On spot delivery settlement (T+2)
Forward settlement (T+5, or 5 or 7)

7. Depositories means a central location for
keeping securities on deposit
A Depository can be compared to a bank
for securities
Objectives
To avoid risk of settlement
Reduce the time for transfer of securities
Reduce the cost of transactions
Enhance the efficiency
Centralized system for handling securities

8. Services to investors
Services to participants
Demat Account opening
Dematerialization
Rematerialization
Settlement of trades

9. The Depositories Act, 1996
National Securities Depositories ltd.,
August 8, 1996 (NSE)
Central Depositories Services ltd., Feb
1999 (BSE)

10. No stamp duty
Elimination of risk
No postal charges
Facility to pledge

11. Depository Participant (DP) is described
as an agent of the depository.
They are the intermediaries between
the depository and the investors.
The relationship between the DPs and
the depository is governed by an
agreement made between the two
under the Depositories Act.
There were 288 DPs of NSDL and 597
DPs of CDSL registered with SEBI.

12.  First Depository in India
 8977 Average number of accounts opened per
day
 Established infrastructure based on
international standards

13.  Industrial Development Bank Of India (IDBI)
 Unit Trust Of India (UTI)
 National Stock Exchange (NSE)
 State Bank Of India
 Global Trust Bank Limited
 City Bank
 Standard Chartered Bank
 HDFC Bank
 HSBC
 Deutsche Bank
 Dena Bank
 Canara Bank

14. NSDL is managed by professional board
of directors.
The day to day operations are
conducted by managing director.
To assist MD, the board appoints 15
members of executive committee

15.  Enables dematerialization & Rematerialization
 Maintains investors’ holdings in electronic form.
 Settlement of securities traded on exchanges.
 Carries out settlement of trades (off market –
traders)
 Transfer of securities.
 Pledging of dematerialized securities.
 Electronic credit in public offerings of co’s
 Receipt of non-cash corporate benefit in
electronic form
 Stock lending and borrowing

16. 1. Elimination of bad deliveries
2. Elimination of risk with physical
certificate
3. No stamp duty for transfers
4. Immediate transfer & registration
5. Faster settlements cycle
6. Reduction in handling of paper
7. Elimination of problems in change of
address
8. Reduction in brokerage

17.  CDSL is the second Indian central securities
depository based in Mumbai
 CDSL received the certificate of commencement
of business from SEBI in February, 1999.
OWNERSHIP
 CSDL was promoted by Bombay stock exchange
(BSE) in association with several Indian and
foreign banks. The initial of the company is
rupees 104.50 cores.

18. Bombay Stock Exchange
Bank Of India
Bank Of Baroda
State Bank Of India
HDFC Bank ltd
Standard Chartered Bank
Canara Bank
Central Bank Of India
Bank Of Maharashtra
The Jammu And Kashmir Bank ltd
The Calcutta Stock Exchange

19.  A professional board of director with vast
experience in capital market and banking.
 The day to day operations are conducted by
MD / CEO in his/her functions, the board
appoints the management team of 10
members.