A WORK STUDY ON

BSE ONLINE TRADING IN CAPITAL MARKET

SEGMENT
With Special Reference To

STEEL CITY SECURITIES LIMITED

VISAKHAPATNAM
A Project Report Submitted In Partial Fulfillment
Of The Requirements for the Award of the Degree Of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

M. UMA MAHESHWAR REDDY

(REG NO: 06 ME - 00298)

Under The Esteemed Guidance Of

Dr. R. Madhusudana Raju

Professor Andhra University

DEPARTMENT OF MANAGEMENT STUDIES

ANDHRA UNIVERSITY
VISAKHAPATNAM

2006 - 2008

DEPARTMENT OF MANAGEMENT STUDIES

ANDHRA UNIVERSITY
VISAKHAPATNAM

CERTIFICATE
This is to certify that the project report titled,

BSE ON- LINE TRADING

CAPITAL MARKET SEGMENT, is a record done by M. UMA MAHESHWAR

REDDY (Regd. No.06

- ME - 00298) a student of final year MBA Executive

Program, School of Distance Mode Andhra University - Visakhapatnam. This work was
done for the partial fulfillment of the requirements for the award of degree of Master of
Business Administration(MBA).

Place :
Date :

Dr. R. Madhusudana Raju

Professor
Dept., of Management Studies
Andhra University
Visakhapatnam

CONTENTS
Chapter- I
Introduction
Need for the study
Objectives of the study
Methodology
Limitations
Chapter- II
Company Profile
Chapter- III
Introduction To cash markets
Trading process
Market Activities
Clearing and Settlements
Chapter - IV
VSAT

Chapter - V
Analysis & Interpretations

Findings
Summary
Suggestions
Bibliography

DECLARATION

I, M. UMA MAHESHWAR REDDY undersigned hereby

declare that the Project work on BSE ONLINE TRADING IN CAPITAL
MARKET SEGMENT submitted to ANDHRA UNIVERSITY in partial
fulfillment of the requirement for the Award of the MASTER OF
BUSINESS ADMINISTRATION is a record of bonafied research carried
out by me under the esteemed guidance of Dr. R. Madhusudana Raju,
Professor, Andhra University. I hereby declare that this project is a
genuine bonafied work done by me and is not submitted to any other
University or published any time before.

Place: Visakhapatnam
Date:
Signature

ACKNOWLEDGEMENT
It is with real pleasure that, I record my indebtedness to my project
work guide Dr. R. Madhusudana

Raju, Professor, ANDHRA

UNIVERSITY for his esteemed guidance and incessant support given in

presenting this project report successfully.
I am extremely grateful Mr. Satish Kumar Arya, Director
(Operations), and Steel City Securities Limited for their kind cooperation
support towards the completion of the project.
I express my sincere thanks to Mr. V.Srinivas, Senior Manager
(Systems) for his valuable support during the course of the project and
assistance in bringing out this project work.
I am also thankful to Mr.Y.Samba Murthy, Manager (Trading) and
all other staff members for their support towards the Completion of the
project.
I express my sincere thanks to Mr. Y.Ramesh Kumar, Asst
Manager, H.R. Dept. and, all other faculties for their valuable support and
contribution in successful completion of my assigned project.

Signature
INTRODUCTION
Trading in securities has been in vogue in India for a little over 200
years. Dealing in securities dates back to 1793, most of them being
transactions in loan securities of the East India Company. Rampant
speculation was a common feature even during those times. The broking
community prospered as there was high rise in prices which led to a share
mania during 1861-65. This bubble burst in 1865 when the American Civil
War ended. The brokers realised that investor confidence in securities
market could be sustained only by organising themselves into a regulated
body with defined rules and regulations. This realisation resulted in
formation of The Native Share and Stock Brokers Association which later
came to known as Bombay Stock Exchange. In 1875, these brokers
assembled at a place, now called Dalal Street.
Bombay

Stock

Exchange

is

voluntary, non-profit-making

association of broker members. It emerged as a premier stock exchange after

1960s. The increased pace of industrialisation caused by the two world wars,
protection to the domestic industry, and governments fiscal policies aided
the growth of new issues which, in turn, helped the BSE to prosper. BSE
dominated the Indian capital market by accounting for more than 60 percent

of the all-India turnover. On March 14, 1995, BSE turned to electronic

trading whereby brokers trade using computers. This system is known as the
BSE On-line Trading System (BOLT). Screen-based trading was initially
confined to 818 major scrips. Trading in all the 5,000 scrips of BSE was
transferred to BOLT on July 3rd, 1995. The introduction of BOLT helped in
improving trading volumes, significantly reducing the spread between buy
and sell orders, better trading in odd lot shares, fixed income instruments,
and dealings in the renunciation of rights shares.
In 1995, BOLT was limited to Mumbai, whereas NSE was operating
at the national level. As a result, BSE was losing countrywide business.
BSE, therefore, submitted a proposal for allowing installation of terminals
connected to BOLT in centres outside Mumbai. After rejecting the proposal
four times, on October 29, 1996, SEBI finally allowed BSE to use its BOLT
system nationwide. Today BOLT is spread over 399 centres with 1,463
VSATS (Very Small Aperture Terminals) and 2,347 TWSs (Trader Work
Stations). BSE, later set up a Central Depository System to demateralise
shares and promote demat trading.

Logo

The Stock Exchange, Mumbai is now Bombay Stock Exchange

Limited (BSE) a new name, and an entirely new perspective a perspective
born out of corporatisation and demutualisation. As a corporate entity, our
new logo reflects our new mission smoother, seamless, and efficient, which
ever way you look at it.
BSE is Asia's oldest stock exchange carrying the depth of
knowledge of capital markets acquired since its inception in 1875. Located
in Mumbai, the financial capital of India, BSE has been the backbone of the
country's capital markets

NEED FOR THE STUDY

The past decade was a golden age for stock exchange in India. It is
expected to continue the same system, which enhances the scope of future
corporate finance in India, thanks to the reforms in the stock market, cash
market or equities trading on stock exchange in India used to take place
through open country without use of information technology for immediate
matching or recording of trades. With the advent of technology the trading in
security or cash market is done with the trading terminals.
BSE Ltd places great of emphasis on Information Technology to
strengthen its functioning and performance. Operations & Trading
Department continuously upgrades the hardware, software and networking
systems, thus enabling the Exchange to enhance the quality and standard of
service provided to its members and other market intermediaries.
To facilitate smooth transaction, BSE had replaced its open outcry
system with BSE On-line Trading (BOLT) facility in 1995. This totally
automated screen based trading in securities was put into practice nationwide within a record time of just 50 days. Capital market reforms are a
major constituent of the overall economic reforms in India.

OBJECTIVES OF THE STUDY

To study the process of stock market transaction cycles.

To understand the process of clearing and settlement of equities
trading in Steel City Securities Ltd.
To evaluate the Returns of selected three Scrips
To evaluate the Standard Deviation of selected three Scrips .
To evaluate the Beta value of selected three Scrips .
To evaluate the Sensex Return by comparing with the closing prices
of present day and the previous day.

METHODOLOGY
The methodology implemented for the cash market trading process is
to get information from dealers, journals, Internet and books. Using these
windows, the user can buy or sell the shares by placing the orders, quoting
the price quantity of the shares.
PRIMARY DATA
Collecting the information from the head of the each department and
from the staff working in those departments.
Interacting with the operators at the compilers and at the client trading is
steel city securities Ltd.

Participating in mock trading conducted by cash market in India.

SECONDARY DATA
Referring the capital market (dealers) module published by BSE
certification in financial markets.
Referring the website of BSE and various other securities entities.

LIMITATIONS

1) The study of Online Trading in Cash Market in Steel City Securities

Limited done for a period of two months suffers from certain
limitations.
2) A complex subject involving various disciplines certainly cannot be
dealt with in depth both the view of constraint of time allotted for the
study and conditions of work

in which the project has been

completed.
3) While an attempt has been made to cover the subject in its entirely,
each section is capable of treatment in greater depth. Some of the
topics covered like trading, margins, VSAT connectivity, back office
systems are themselves subjects for a complete project, if they have
been dealt brief, if is hoped that the limitations in a general study in
regard to Online trading in Cash Market will be appreciated.
4) Lack of awareness among the people about the equities for investment
because of more volatility in Market.

STEEL CITY SECURITIES LIMITED

Steel city securities limited was established in 1995 with strong
platform in providing share broking facilities through VSATs at various
locations in Andhra Pradesh as well as in the neighboring states like Orissa,
Tamilnadu and Karnataka. It has the highest number of VSAT based
connected centers with dedicated trading terminals each for a group of 5 to 6
clients.
In 1998 the company had achieved phenomenal growth in all aspects.
The work force has been given top priority to meet and enhance our endless
support and services. The working style of this company is with full of
dedication and trust worthy. As of today the company is having very high
reputation, goodwill and confidence in the market.
In 2000 the company was approved as a depositary participant of
National Securities depositary limited, subsidiary of National Stock
Exchange of India limited. Having this facility the company has a greater
advantage in serving its customers. Very few trading members have this
facility as a one-stop service provider.
In 2001, Steel City Capital services private limited became the
member of Bombay Stock Exchange with 25 BOLT terminals across the

state. Having this facility, it now provides an opportunity to trade in

low-price scrips, which is not available in other exchanges.
In 2002, it was approved as a depositary participant of Central
Depositary services limited, subsidiary of Bombay Stock Exchange. Having
this facility it has a greater advantage to provide its customers the valuable
intra-depositary facility. Very few Trading members are having this facility
as an end-to-end service provider.
In 2004 Steel City Commodities Private Limited became the member
of NCDEX (National Commodity & Derivatives Exchange Limited) MCX
(Multi Commodity Exchange of India Ltd) to trade on Commodity Futures
through VSAT & Internet. A special concern on the Commodity Futures
Trading facility is extended to the associates and partners made available
through 20 centers and Regional Offices at Hyderabad, Vijayawada,
Tirupathi and Andhra Pradesh.
In 2004 it has come up with Private Network (VPN) to trade in all
segments of NSE/BSE/MCX/NCDEX with a single VSAT Connectivity. In
this mode of connectivity the BPs (Business Partners) will have greater
advantage towards Capital Investment, Expenditure and Surveillance.
It provides Support services to its clients like:

 Returns market watch

Latest world news
Charts
Bullion markets
Weather forecast
Other financial news
Technical and fundamental analysis of 6000 companies for client
Future investment plans.
Hence the company operates as a model stock broking service provider
and stands out in spite of stiff competition. It strictly follows the guidelines
of SEBI, NSE, BSE, NSDL and CDSL to have healthy wealthy business.

Organization Structure:
The total control of the organization is under the chairman who is also
the managing director. Under him there are three executive directors for
surveillance operations and also a sleeping director.

Mr. G. Rajagopal Reddy the executive director looks after the market
development and opening of new franchisees. He also looks after
requirements of new and existing branches. Mr. K. Satyanarayana the
executive director. Surveillance has an inspection team under him for the
purpose of vigilance in all branches and franchisees.
Mr. Satish Kumar Arya is the director operation. He controls the
trading limits margins etc. All office related he deals matters. He is also
responsible for meeting the requirements and following the rules set by the
stock exchange.

Mr. G.S.R Prasad is the fourth director who does not play any role in
the day to day working of the company.
Senior Manager (Operations) is Mr. Murali is responsible for demat
with NSDL/CDSl. Senior Manager (Systems) is Mr. V. Srinivas who looks
after the networking, software, hardware and trading related requirements
and VSAT connectivity. Finance and accounts are 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 Bhushan is the
Marketing manager. He is also responsible for conducting various awareness

seminars. The legal issues with the company. Even without relation to the
company they render legal services.
The different branches and franchisees of the company report directly
to the head office in Visakhapatnam and any activity taken up by these
should be brought to the notice of the head office. Every branch has a branch
manager, Accountant, trading manager and trading operator. The company
has various Functional departments for its smooth functioning.

Board of Directors of Steel City Securities Limited

Chairman

cum

1.

Mr. G. Sree Ram Murthy

Managing Director

2.

Mr. G. Raja Gopal Reddy

Executive Director
Executive

3.

Mr. K. Satyanarayana

4.
5.

Mr. Satish Kumar Arya

Mr. G. Satya Ram Prasad

Director

(Surveillance)
Director (Operations)
Director

PERSONAL DEPARTMENT:
Planning: It involves in planning of human resource requirements and
forecasting of personnel needs, changing values, attitudes and behavior of
employees. The directors usually undertake it.

Directing: The personnel manager coordinates the managers at various

levels. The attainment of organization goals is possible through proper
directions.
Controlling: Top management does the controlling. They audit training
requirements and programmes, direct morals surveys, conduct separate
interviews.
Recruitment: Notifications are given in newspaper for vacancies to
stimulate eligible persons to apply for the job.
Selection: The respective managers select the candidates for their
departments. The letters of appointment or rejection are then sent to the
board of directions.
Placements: The directors are responsible for the placement of

the

employees. They may be placed in the head office and in the branches at
different places.
Training: The experienced persons in the job usually train the new recruits
in the company itself.
Promotions and Transfers: The skilled and eligible persons are promoted.
Transfers of persons are more but there is an increase in the salary of the
persons who are transferred.

Employee Relation: The relation between the management and the

employees is very cordial.
Employee Service: All the employees of the company from top to bottom
dedicate their sincere services with cooperation coordination, hard work and
Team spirit which results in the success of the company.

Steel City Securities Ltd. follows a functional organization system. It

provides various services which are provided through different departments.
They are
Trading (systems):
Deals with online trading facility through the VSAT.
Registration of clients and interaction with clients.
Dealing with new sub brokers and making them conversant
with the system.
Provides updated information of a day trading activities.

Data processing:
Opening of the account after the fulfillment of various formalities.
Shares are credited to the de-mat account by dematerializing the
physical shares and those brought from the secondary market.

 The process of setting the selling and buying obligation takes place
through the delivery instruction slip to their respective clients.
Accounts:
The function of the accounts department is to maintain a record of all
the pay-in, pay-out, cash received for de-mat account opening, account
closing, transaction charges for opening the account. Records of expenses
incurred and incomes earned from business are also maintained basing on
which year an annual report is prepared to which the latest data is annexed in
its last chapter.
Deliveries:
This department acts as an intermediary between stock exchange and
clients. Hence proper knowledge is very essential. Proper records of all
inward and outward stocks should be maintained failing which there may be
improper deliveries leading to penalties and disagreements with clients.
NSCCL is extended the responsibility of setting the delivery obligation of
sellers and buyers dealt in given settlement period.

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 his qualifications, date of birth etc. He has
to furnish his photographs and proof of identity through 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 company who voucher for the honesty
and integrity of the former.
3. Back ground of the client: A detailed background check of the client
is necessary. Only after a through check of his place of origin, his
business etc. the client is registered.
4. Strengths/Weaknesses of the client: The clients financial position is
also monitored only customers who have a sound financial position
are registered for trading.
5. Previous record of business: The previous record of business of the
client is checked to see the fairness in his dealing and promptness in
selling the outstanding debts.
6. Undertaking/Agreement: An undertaking is taken from the client to
the effect that the deals have been done on behalf of him by steel city

securities limited on his instruction and be is liable to the

profits/losses thereof.
7. Storing previous transaction: All transaction of the client are stored
for legality purpose. According to the guidelines of SEBI the
transactions of past five years have to be maintained.

INTRODUCTION
A Stock Exchange is a place that provides facilities to stockbrokers to
trade company stocks and other securities. A stock may be bought or sold
only if it is listed on an exchange. Thus it is the meeting place of the stock
buyers and sellers. Indias premier Stock Exchange are the Bombay Stock
Exchange and the National Stock Exchange.
Stocks are one of the most effective tools for building wealth, as
stocks are a share of ownership of a company. You thus have great potential
to receive monetary benefits when you own stock shares. Owning stocks of
fundamentally strong companies simply lets your money work harder for
you since they appreciate in value over a period of time while also offering
rich dividends on a periodic basis.
Stock trading happens on Stock Exchanges. To do so, you need to find
a suitable broker who will understand your needs and buy stocks on your
behalf. You can think of them as agents who will conduct transactions for
you without actually owning any of the securities themselves. In exchange
for facilitating or executing a trade, brokers will charge you a commission.
You can easily buy stocks through Steel City Securities, one of Indias

leading Stock Brokers, with services and products to cater to all your
investment needs, at very reasonable brokerage rates.

Stocks, also known as Equities, are shares in a company. It is the

certificate of ownership of a corporation. In simple terms, when you invest
in a companys stock or buy its shares, you own part of a company. Thus, as
a stockholder, you share a portion of the profit the company may make, as
well as a portion of the loss a company may take. As the company keeps
doing better, your stocks will increase in value and yield higher dividends.
Dividend: A sum of money, determined by a companys directors, paid to
shareholders of a corporation out of its earnings.

Primary and Secondary Markets

Primary Market
An Issuer/Company enters the Primary markets to raise capital. They issues
new securities in Exchange for cash from an investor (buyer). If the Issuer is
selling securities for the first time, these are referred to as Initial Public
Offers (IPOs). Summing up, Primary Market is the means by which
companies float shares to the general public in an Initial Public Offering to
raise capital.

Eg. If the promoters of a private company, say XYZ makes its shares
available to investors, company XYZ is said to have entered the primary
market.

Secondary Market
Once new securities have been sold in the Primary Market, an efficient
mechanism must exist for their resale, if investors are to view securities as
attractive opportunities. Secondary Market transactions are referred to those
transactions where one investor buys shares from another investor at the
prevailing market price or at whatever price both the buyer and seller agree
upon. The Secondary Market or the Stock Exchanges are regulated by the
regulatory authority. In India, the Secondary and Primary Markets are
governed by the Security and Exchange Board of India (SEBI). For eg. If
one of the investors who had invested in the shares of company XYZ sold it
to another at an agreed upon price, a Secondary Market transaction is said to
have taken place. Normally investors transact in securities using an
intermediary such as a broker who facilitates the process.

SMALL-CAP STOCKS
The stocks of small companies that have potential to grow rapidly are
classified as small-cap stocks. These stocks are the best option for an
investor who wishes to generate significant gains in the long run; as long he
does not require current dividends and can withstand price volatility.
Generally companies that have a market capitalization in the range of upto
250 Crores are small cap stocks.
As many of these companies are relatively new, it is difficult to
predict how they will perform in the market. Being small enterprises, growth
spurts dramatically affect their values and revenues, sending prices soaring.
On the other hand, the stocks of these companies tend to be volatile and may
decline dramatically.
Most Initial Public Offerings are for small-cap companies, although
these days large companies do tend to source the capital markets for
expansion plans. Aggressive mutual funds are also enthusiastic about adding
small-cap stocks in their portfolios. Because they have the advantage of
being highly growth oriented, small-cap stocks can forego paying dividends
to investors, which enables the profits earned to be reinvested for future
growth.

MID-CAP STOCKS
Mid-cap stocks are typically stocks of medium-sized companies.
These are stocks of well-known companies, recognized as seasonal players
in the market. They offer you the twin advantages of acquiring stocks with
good growth potential as well as the stability of a larger company. Generally
companies that have a market Capitalization in the range of 250-4000 crores
are mid cap stocks.
Mid-cap stocks also include baby blue chips; companies that show
steady growth backed by a good track record. They are like blue-chip stocks
(which are large-cap stocks) but lack their size. These stocks tend to grow
well over the long term.
LARGE-CAP STOCKS
Stocks of the largest companies (many being blue chip firms) in the
market such as Tata, Reliance, ICICI are classified as large-cap stocks.
Being established enterprises, they have at their disposal large reserves of
cash to exploit new business opportunities.
The sheer volume of large-cap stocks does not let them grow as
rapidly as smaller capitalized companies and the smaller stocks tend to
outperform them over time. Inverstors, however gain the advantages of

reaping relatively higher dividends compared to small-and mid-cap stocks

while also ensuring the long-term preservation of their capital.
Badla mechanism:
Badla was allowed in the specified group of shares of BSE. This specified
group was also known as the forward group as one could buy or sell shares
in it without physical delivery. The carry forward session (badla session)
was held on every Saturday at BSE. A contract for current settlement could
be executed in any of the following three ways.
(i)

Delivery against a sale contract given and delivery against a

purchase contract received, and payment received/made at the
contract rate.

(ii)

Squaring off of transactions wherein a reverse transaction of either

buying or selling of shares squared up with the earlier outstanding
position and the difference in prices settled.

(iii)

A contract in respect of which delivery was given or taken and

which was not offset by an opposite transaction during the
settlement period, could be carried forward to the next settlement
period at the making up price, that is, the closing quotatation on the
last trading day and the difference between the contract rate and
the making up price settled. This postponement of the delivery of

or payment for the purchase of securities from one settlement

period to another was referred to as carry forward.
Badla involved four parties: the long buyer-a buy position in a stock
without the capacity to take delivery of the same, the short seller-a sell
position without having the delivery in hand, the financier, and the stock
lender.

Listing Categories:
Before badla was resumed in 1996, there were only two categories of
securities listed on BSE-the specified group of shares comprising the
securities in which carry forward deals were allowed and the cash group
shares in which no carry forward deals were permitted. Later, it was
observed that the facility of carry forward was not being used in all the
94 scrips in the specified group. Hence, after badla was resumed, the size
of the specified group was reduced to 32 scrips on April 3rd. 1996.
The BSE later decided to regroup the existing A and B group shares into
three categories.
A Group: This group consists of large turnover and high floating stock,
with large market capitalisation. In other words, scrips included in this
group are blue chip companies. Carry forward deals and weekly

settlement was allowed in this group. At present, there are 150 scrips in
this group.
B1 Group: This group includes scrips of quality companies with an
equity above Rs crore, with high growth potential and trading frequently.
No carry forward facility was allowed in this group. On June 2000, there
were 1,083 scrips in this group.

B2 Group: This group of scrips were just like those of B1 but with a
fortnightly settlement. However, in September 1996, BSE introduced
weekly settlement for all scrips listed on the exchange, thus doing away
with the distinction between B1 and B2 groups. This group consists of
low trading volume scrips, with equity below Rs 3 crore, and surveillance
measures initiated against most of them for suspected price
manipulations. On June 2000, there were 3,219 scrips in this group.
Subsequently, a Z group was introduced with scrips of companies that do
not meet the rules, regulations and stipulation laid down by the exchange.
It is a buyer-beware company. There are some 300 scrips in the group.

A new F group pertaining to the debt market segment was started with
effect from September 9, 1996.

TRADING PROCESS
BSE has main computer, which is connected through Very Small
Aperture Terminal (VSAT) installed at its office. The main computer runs on
a fault tolerant STRATUS mainframe computer at the exchange. Brokers
have terminals (Identified as the PCs) installed at their premises which are
connected through VSAT/Leased Lines/Modems.
As investor informs a broker to place an order on his behalf. The
broker enters the order through his PC, which runs under Windows NT and
sends signal to the satellite via VSAT at BSE office. A message relating to
the order activity is broadcast to the respective member. The order
confirmation message is immediately displayed on the PC of the broker.
This order matches with the existing passive order(s); otherwise it waits for
the active orders to enter the system. On order matching a message is
broadcast to the respective member.
Logging On
On clicking login ICON in the BOLT application, the following icons
appears on the TWS:
Member ID
Trader ID

 Password
In order to logon to BOLT system, the trader must specify a valid Trading
Member ID, Trader Id, (allotted to the trader to the Trading Member) and the
corresponding password. A valid combination of Trader ID, Trading
Member ID and password is needed to access the BOLT system.
Member ID: The Exchange assigns a Trading Member ID to each
Trading Member. The Trading Member ID is unique and functions as
a reference for all orders/trades of different trades. This ID is common
for all the trades of a particular trading member. The Trading Member
ID and Trader ID form a unique and valid combination.
Trader ID: Each Trading Member can have more than one trader/user
the number of users allowed for each main trading member is notifies
by the Exchange from time to time. Each Trader of a main Trading
Member must be registered with the Exchange and is assigned a
unique Trader ID. The trader IDs are allotted depending on the
connectivity viz. 1 to 200 for TWS users, 200 to 300 for IML users
and 600 to 700 for internet based traders.
Password: When a trader logs in the BOLT system he has to enter a
password. Password of Trader is set by the Admin Terminal.

The Trader can use this password only once for log in and system forces the
trader to change the password before commencing any other operation. Strict
security features are built in the system to protect any misuse. The password
appears in encrypted form and the complete secrecy is maintained. The
system ensures the change in password for all users periodically (password
expiry period is parameterized by the Exchange) which is set 15 days.
Change on Logon Password
To change the logon password at any point of time the trader will click on
the Change on Logon Password icon.
Logoff
For existing from the BOLT system (System Access) and fill in the requisite
details such as Member ID, Trader ID and Password and then click
the Log off button.
BOLT TWS LOCK
This facility will enable the Trading Member to leave his terminal (without
logging off), by providing password control in the BOLT application.
Trading Member/user can lock his terminal by choosing Lock Workstation
option. A window will pop-up indicating workstation locked. Password for
unlocking TWS will be same as BOLT log-on password for the specific
terminal.

Touchline Screen
This can be used to monitor price movements of the scrips in the market.
The Touch line can be profiled by the user. The touchline, by default,
displays all the scrips and their details. The touchline window will
automatically get rewritten whenever an order or trade takes place. The user
shall get to view the latest information. Double clicking on particular scrip
on the touchline takes the user directly to the Market View (Scripwise)
screen of that particular scrip. The details provided in the touchline are
Up/Down Arrow (Price movement indicator last trade to previous last trade)
ScripID, Bid Qty, Bid Rate, Offer Qty, Offer Rate, Open, High, Low, Close,
Last Trade Rate, % change (i.e. last trade rate to previous days closing
price).

MARKET OPENING SESSION

Market Watch
The Market Watch window is the third window from the top of the
screen that is always visible to the user. The Market Watch is the focal area
for users. The purpose of Market Watch is to setup and view trading details
of securities that are of interest to users. For each security in the Market
Watch, market information is dynamically updated.
Market Information Displayed
The one line market information displayed in the market watch
screen is for current best price orders available in the Regular Lot book. For
each security the following information is displayed:
a) The corporate action indicator "Ex/Cum"
b) The total buy order quantity available at best buy price
c) Best buy price
d) Best sell price
e) Total sell order quantity available at best sell price
f) The last traded price

g) The last trade price change indicator and

h) The no delivery period indicator "ND"
If the security is suspended, "SUSPENDED appears in front of the security.
If a question mark (?) appears on the extreme right hand corner for a
security, it indicates that the information being displayed is not the latest and
the system will dynamically update it.
Information Update
In the Market Watch screen, changes in the best price and quantities
are highlighted on a dynamic basis (in all pages of Market Watch). For
example, if the best price changes as a result of a new order in the market,
the new details are immediately displayed. The changed details are
highlighted with a change of colour for a few seconds to signify that a
change has occurred. The blue colour indicates that price/quantities have
improved, while the red colour indicates that the price/quantities have
worsened. If the last traded price is better than the previous last traded price
then the indicator `+' appears or if the last traded price is worse than the
previous last traded price then the indicator `-' appears. If there is no change
in the last traded price, no indicator is displayed.

Special Features of Market Watch screen

a) One of the best features of this software is that the user has the facility to
set up 500 securities in the market watch. The user can set up a maximum of
30 securities in one page of the market watch screen.
b) The details of the current position in the Market Watch defaults in the
order entry screen and the inquiry selection screen. It is therefore possible to
do quick order entries and inquiries using this feature. The default details
can also be overwritten.
c) Market Watch setup can be sorted alphabetically.
d) An indicator for corporate actions for a security is another feature in
market watch. The indicators are as follows:
'XD' - ex-dividend
'XB' - ex-bonus
'XI' - ex-interest
'XR' - ex-rights
'CD' - cum-dividend

'CR' - cum-rights
'CB' - cum-bonus
'CI' - cum-interest
'C*' - in case of more than one of CD, CR, CB, CI
'X8' - in case of more than one of XD, XR, XB, XI
e) The ex indicator in the market watch screen appears till the end of no
delivery period in which the security goes ex benefit. In case, a security goes
ex benefit without having any no delivery period, ex indicator is displayed
only on the ex day.

ORDER MANAGEMENT
Order Management consists of entering orders, order modification,
order cancellation and order matching.
1) Limit Orders: These are orders for buying and selling a certain quantity
of particular scrip at a specified price or better, if possible.
In case the required quantity or part of the required quantity is not available
at the price specified, the balance-unexecuted quantity would be stored as a
standing limit order at the specified price. Standing limit orders would be

killed by the system, either at the end of the session or day depending upon
the choice exercised by the Trading Member when the order was entered.
Pending Orders could, however be cancelled or modified at anytime.
2) Market Orders: Market orders, unlike limit orders, are orders to buy or
sell a certain quantity of particular scrip at the best prices prevailing in the
market at that time. The prevailing prices are called the touchline prices.
3) Hit and Take Orders: This is a variation of the market orders. It allows
for faster execution without cluttering up the limit order book. To make a
quick deal, select a scrip, enter the quantity and client Id and select
institution id and click on Hit (for sell) and take (for buy) button as per the
requirement. The order will matched at the Touchline price to a quantity
available in the market.
4) ODD Lot Orders: The odd lot orders are executed on grab mechanism.
Members have to invoke Odd-lot Grab window to grab the odd lot orders
available in the system. Members cannot enter exact market lot quantity but
multiplies of market lot quantity is allowed.
The procedure for entering the odd lot order is stated below.
i)

The trading member will have to enter their odd lots orders
through the main order entry screen by pressing the odd-lot
pushbutton. However, incase they want to accept the counterparty

order they will have to go to the odd lot window and grab the
counter party order.
ii)

BSE has provided facility to the investors for trading in the right
renunciation forms through this window. Trading in the right
renunciation forms is permitted on BOLT system from the date of
opening of the right issue and it is suspended three days prior to
the closure of the right issues.

5) Block Deal Orders: This order facility is being provided to the Traders
based on SEBI specifications which are stated below.
i) Execution Time: The traders will be allowed to enter the Block Deal
Orders only during the first 35 minutes of the continuous trading session.
ii) order size: The minimum order size should be either
a) 5,00,000 shares or
b) Rs. 5 crore order value
iii)

Order matching logic: The Block deal buy/sell orders entered by

the traders shall go to the common block deal order book and shall
be matched against the opposite counter buy/sell block deal order
for same quantity and same rate.

6) Basket Orders: Basket trading will facilitate traders to enter orders in a

set scrips (e.g. SENSEX scrips or user defined scrips) in a single order. Once

and order is placed in the basket entry screen, the orders will follow the path
of Market orders.
7) Stop Loss Orders: To minimize the loss of the investor, the BOLT

system provides a mechanism, which is called as Stop Loss orders.

Suppose, an investor/trader has bought some shares of a company at some
price and later on he was watching other scrips. Suddenly the price of the
scrip, he has bought starts going down an the investor/trader is not aware of
this as he is occupied in watching other scrips. In that situation the
investor/trader will suffer a loss. The said investor/trader doesnt want to
suffer a loss of more than Rs.x per share. BOLT system provides a facility
whereby the trader/investor can put a stop loss order (opposite order-in our
example sell order) immediately on execution of its buy order.

Order Modification
All orders can be modified in the system till the time they do not get
fully traded and only during market hours. Once an order is modified, the
branch order value limit for the branch gets adjusted automatically.
Following is the corporate hierarchy for performing order modification
Functionality

 A dealer can modify only the orders entered by him.

A branch manager can modify his own orders or orders of any dealer under
his branch.
A corporate manager can modify his own orders or orders of all dealers and
branch managers of the trading member firm. However, the corporate
manager/branch manager cannot modify order details
such that it exceeds the branch order value limit set for the day. Order
modification cannot be performed by/for a trading member who is
suspended or de-activated by the Exchange for any reason.
Order Cancellation
Order cancellation functionality can be performed only for orders
which have not been fully or partially traded (for the un traded part of
partially traded orders only) and only during market hours.
Single Order Cancellation
Single order cancellation can be done during trading hours either
by selecting the order from the outstanding order screen or from the function
key provided. Order cancellation functionality is available for all book types.

Quick Order Cancellation

Quick Order Cancellation (Cancel All) is an extension of Single
Order Cancellation enabling a user to cancel multiple outstanding orders in
various trading books subject to the corporate hierarchy. The different filters
available for canceling orders by using quick order cancellation facility are
symbol, series, book type, branch, user, PRO/CLI/WHS, client account
number and buy/sell.
Order Cancellation for Disabled Member
The Exchange disables a member from trading due to various
reasons. In case a member is disabled from trading by the Exchange, all
pending orders in all books except for Negotiated Trade orders of the
member are immediately cancelled by the system. A message: Order
Number cancelled due to suspension is displayed at the message window
screen at the trader workstation. Inquiry screens such as MBP, Market Watch
and trader specific screens such as Outstanding Orders, Activity Log etc. get
updated accordingly.

Order Matching
The buy and sell orders are matched on Book Type, Symbol, Series,
Quantity and Price.
Matching Priority
The best sell order is the order with the lowest price and a best buy
order is the order with the highest price. The unmatched orders are queued in
the system by the following priority:
By Price
A buy order with a higher price gets a higher priority and similarly, a sell
order with a lower price gets a higher priority. E.g. Consider the following
buy orders:
1) 100 shares @ Rs. 35 at time 9:30 a.m.
2) 500 shares @ Rs. 35.05 at time 9:43 a.m.
The second order price is greater than the first order price and therefore is
the best buy order.

By Time
If there is more than one order at the same price, the order entered earlier
gets a higher priority. E.g. consider the following sell orders:
1) 200 shares @ Rs. 72.75 at time 9:30 a.m.
2) 300 shares @ Rs. 72.75 at time 9:35 a.m.
Both orders have the same price but they were entered in the system at
different time. The first order was entered before the second order and
therefore is the best sell order.
Trade Management
A trade is an activity in which a buy and a sell order match with each
other. Matching of two orders is done automatically by the system.
Whenever a trade takes place, the system sends a trade confirmation
message to each of the users involved in the trade.
Trade Conformations (SAUDAS):
It displays all the trades that have been executed by the Trader till the
current time (in descending order). Trading Members/trader has got the
option of viewing trades based on client-wise, scrip-wise or time-wise or by

order Id. Further the window also displays the total of the trades count based
the filtration selected by the trader. A save option has been provided in the
system menu of the Saudas window the trader will have to click on the top
left hand corner of the Saudas window to save i) Normal trades life and ii)
Odd lot trades file. The Trading Member can view/save all the Trades
executed from its various TWSs from its ADMIN Terminal.
Trade Modification
The user can use trade modification facility to request for modifying
trades done during the day. The user can request the Exchange to modify
only the trade quantity field. Moreover, the new quantity requested must be
lower than the original trade quantity. If the user is a Corporate Manager of a
trading member firm, he can request for trade modification for the trades of
any dealer of the trading members firm and if he is a Branch Manager of a
branch, then he can request for trade modification for any dealer of the
branch of the trading member firm. The user can request for trade
modification either from the previous trades screen or by using the function
key provided in the workstation. Trade Modification Request is sent to the
Exchange for approval and message to that effect is displayed in the

message me window. The counter party to the trade also receives this
message.
Trade Cancellation
The user can use trade cancellation screen for canceling trades done
during the day. If the user is a corporate manager of a trading member firm,
he can request for trade cancellation for the trades of any dealer of the
trading members firm and if he is a branch manager of a branch, then he can
request for trade cancellation for the trades for any dealer of the branch of
the trading member firm. The user can request for trade cancellation either
from the previous trades screen or by using the function key provided in the
workstation. The trade cancellation request is sent to the Exchange for
approval and message to that effect is displayed in the message window.
Auction
The Exchange on behalf of trading members for settlement related
reasons initiates auctions. The main reasons are Shortages, Bad Deliveries
and Objections. There are three types of participants in the auction market.
(a) Initiator: The party who initiates the auction process is called an
initiator.

(b) Competitor: The party who enters on the same side as of the initiator is
called a competitor.
(c) Solicitor: The party who enters on the opposite side as of the initiator is
called a solicitor. The trading members can participate in the Exchange
initiated auctions by entering orders as a solicitor.
Entering Auction Orders
Auction order entry allows the user to enter orders into auctions that
are currently running. To view the information about currently running
auctions invoke Auction Inquiry screen. Further one can view one's own
outstanding orders for any auction by invoking Outstanding Order Inquiry
for auction market. All auction orders are valid for the trading day only.

Margins
Categorization of stocks for imposition of margins
The Stocks which have traded at least 80% of the days for the previous 18
months shall constitute the Group I and Group II.

 Out of the scrips identified above, the scrips having mean impact cost of
less than or equal to 1% shall be categorized under Group I and the scrips
where the impact cost is more than 1, shall be categorized under Group II.
The remaining stocks shall be classified into Group III.
The impact cost shall be calculated at 15th of each month on a rolling basis
considering the order book snapshots of the previous six months. On the
basis of the impact cost so calculated, the scrips shall move from one group
to another group from the 1 st of the next month.
Daily margins payable by members consists of the following:
1. Value at Risk Margin (VaR)
2. Mark to Market Margin (MTM)
Daily margin, comprising of the sum of VaR margin and mark to

market

margin is payable. The margins are computed at client level. A member

entering an order needs to enter the client code. Based on this information,
margin is computed at the client level, which will be payable by the trading
members on T+1 basis.

Mark to Market Margin:

Mark to market margin is computed on the basis of mark to market loss of
a member. Mark to market margin is calculated by marking each transaction
in a scrip to the closing price of the scrip at the end of trading. In case the
security has not been traded on a particular day, the latest available closing
price at the NSE is considered as the closing price.
In the event of the net outstanding position of a member in any security
being nil, the difference between the buy and sell values

would be

considered as notional loss for the purpose of calculating the mark to market
margin payable. MTM profit/loss across different securities within the same
settlement is set off to determine the MTM loss for a settlement. Such MTM
losses for settlements are computed at client level.
Value at Risk-based Margin:
The VaR rate is applied to gross exposure to determine VaR-based
margin. Computation of VaR Rate. VaR rate is a single number, which
encapsulates whole information about the risk in a portfolio.

Margin Payment & Payout

Payment of margin:
The daily margin for rolling settlements is payable on T+1 day. The
margin is collected together for all settlements for all clients. Members are
responsible to compute margin payable and to make suitable margin
payments on the due date. Members are required to deposit the margin
money due in cash, bank guarantee or FDRs, rounded off to the next higher
multiple of Rs.10,000/-.
Payout of margin:
The margins deposited in cash on a given day may, if NSCCL chooses
not to exercise its lien, be returned to the member on the subsequent day
after adjustment for margin, additional base capital and any other funds
dues. NSCCL may, at its discretion may retain part or whole of the amount
releasable cash margin, with respect to any member as a risk containment
measure.
Upfront margins collection:
Members are required to ensure collection of upfront margin from their
clients at rates mentioned below and deposit the same in a separate

clients account, in respect of trades in Normal market which would result

in a margin of Rs.50,000/or more, after applying the margin percentages as given below:
Failure to pay margins
Non-payment of either the whole or part of the margin amount due will be
treated as a violation of the Bye Laws of the Clearing Corporation and will
attract penal charges and other actions as prescribed by NSCCL.
Dematerialisation and Electronic Transfer of Securities
Traditionally, settlement system on Indian stock exchanges gave rise
to settlement risk due to the time that elapsed before trades were settled by
physical movement of certificates.
There were two aspects: First relating to settlement of trade in stock
exchanges by delivery of shares by the seller and payment by the buyer. The
second aspect related to transfer of shares in favour of the purchaser by the
issuer.
To obviate these problems, the Depositories Act, 1996 was passed to
provide for the establishment of depositories in securities with the objective

of ensuring free transferability of securities with speed, accuracy and

security by
(a) Making securities of public limited companies freely transferable subject
to certain exceptions;
(b) Dematerializing the securities in the depository mode; and
(c) Providing for maintenance of ownership records in a book entry form. In
order to streamline both the stages of settlement process, the Depositories
Act envisages transfer of ownership of securities electronically by book
entry without making the securities move from person to person.

BACK OFFICE
Clearing and Settlement
The clearing and settlement mechanism in Indian securities market
has witnessed significant changes and several innovations during the last
decade. These include use of the state-of-art information technology,
emergence of clearing corporations to assume counter party risk, shorter
settlement cycle, dematerialization and electronic transfer of securities, finetuned risk management system, etc., though many of these are yet to
permeate the whole market.
Till recently, the stock exchanges in India were following a
system of account period settlement for cash market transactions. T+2
rolling settlement has now been introduced for all securities. The members
receive the funds/securities in accordance with the pay-in/pay-out schedules
notified by the respective exchanges. Given the growing volume of trades
and market volatility, the time gap between trading and settlement gives rise
to settlement risk. In recognition of this, the exchanges and their clearing
corporations employ risk management practices to ensure timely settlement
of trades. The regulators have also prescribed elaborate margining and
capital adequacy standards to secure market integrity and protect the

interests of investors. A member settles the trades irrespective of default and

the exchange follows up with the defaulting member subsequently for
recovery of his dues to the exchange. Due to setting up of the Clearing
Corporation, the market has full confidence that settlements will take place
on time and will be completed irrespective of possible default by isolated
trading members. Movement of securities has become almost instantaneous
in the dematerialized.
Environment. Two depositories viz., National Securities
Depositories Ltd. (NSDL) and Central Depositories Services Ltd. (CDSL)
provide electronic transfer of securities and more than 99% of turnover is
settled in dematerialized form. All actively traded scrips are held, traded and
settled in demat form. The obligations of members are downloaded to
members/custodians by the clearing agency. The members/custodians make
available the required securities in their pool accounts with depository
participants (DPs) by the prescribed pay-in time for securities. The
depository

transfers

the

securities

from

the

pool

accounts

of

members/custodians to the settlement account of the clearing agency. As per

the schedule determined by the clearing agency, the securities are transferred
on the pay-out day by the depository from the settlement account of the

clearing agency to the pool accounts of members/custodians. The pay-in and

pay-out of securities is effected on the same day for all settlements.
Select banks have been empanelled by clearing agency for
electronic transfer of funds. The members are required to maintain accounts
with any of these banks. The members are informed electronically of their
pay-in obligations of funds. The members make available required funds in
their accounts with clearing banks by the prescribed pay-in day. The clearing
agency forwards funds obligations file to clearing banks which, in turn, debit
the accounts of members and credit the account of the clearing agency. In
some cases, the clearing agency runs an electronic file to debit members
accounts with clearing banks and credit its own account. On pay-out day, the
funds are transferred by the clearing banks from the account of the clearing
agency to the accounts of members as per the members obligations. In the
T+2 rolling settlement, the pay-in and pay-out of funds as well as securities
take place 2 working days after the trade date.

Transaction Cycle

A person holding assets (securities/funds), either to meet his liquidity needs

or to reshuffle his holdings in response to changes in his perception about
risk and return of the assets, decides to buy or sell the securities. He selects a
broker and instructs him to place buy/sell order on an exchange. The order is
converted to a trade as soon as it finds a matching sell/buy order. At the end
of the trade cycle, the trades are netted to determine the obligations of the
trading members to deliver securities/funds as per settlement schedule.
Buyer/seller delivers funds/securities and receives securities/ funds and

acquires ownership of the securities. A securities transaction cycle is

presented in Figure
Settlement Process
While BSE provides a platform for trading to its trading
members, the National Securities Clearing Corporation Ltd. (NSCCL)
determines the funds/securities obligations of the trading members and
ensures that trading members meet their obligations. NSCCL becomes the
legal counter party to the net settlement obligations of every member. This
principle is called novation '' and NSCCL is obligated to meet all settlement
obligations, regardless of member defaults, without any discretion. Once a
member fails on any obligations, NSCCL immediately cuts off trading and
initiates recovery. The clearing banks and depositories provide the necessary
interface between the custodians/clearing members (who clear for the
trading members or their own transactions) for settlement of funds/securities
obligations of trading members. The core processes involved in the
settlement process are:

Determination of Obligation:
NSCCL determines what counter-parties owe, and what
counter-parties are due to receive on the entitlement date. The NSCCL
interposes itself as a central counter party between the counter parties to
trades and nets the positions so that a member has security wise net
obligation to receive or deliver a security and has to either pay or receive
funds.
Pay-in of Funds and Securities:
The members bring in their funds/securities to the NSCCL.
They make available required securities in designated accounts with the
depositories by the prescribed pay-in time. The depositories move the
securities available in the accounts of members to the account of the
NSCCL. Likewise members with funds obligations make available required
funds in the designated accounts with clearing banks by the prescribed payin time. The NSCCL sends electronic instructions to the clearing banks to
debit members accounts to the extent of payment obligations. The banks
process these instructions, debit accounts of members and credit accounts of
the NSCCL.

Pay-out of Funds and Securities:

After processing for shortages of funds/securities and arranging
for movement of funds from surplus banks to deficit banks through RBI
clearing,

the

NSCCL

sends

electronic

instructions

to

the

depositories/clearing banks to release pay-out of securities/funds. The

depositories and clearing banks debit accounts of NSCCL and credit
settlement accounts of members. Settlement is complete upon release of
pay-out of funds and securities to custodians/members.
Risk Management:
NSCCL has put in place a comprehensive risk management
system, which is constantly monitored and upgraded to pre-empt market
failures. It monitors the track record and performance of members and their
net worth; undertakes on-line monitoring of members positions and
exposure in the market, collects margins from members and automatically
disables members if the limits are breached.

Settlement Agencies
The NSCCL, with the help of clearing members,
custodians, clearing banks and depositories settles the trades executed on
exchanges.
NSCCL:
The NSCCL is responsible for post-trade activities of a stock
exchange. Clearing and settlement of trades and risk management are its
central functions. It clears all trades, determines obligations of members,
arranges for pay-in of funds/securities, receives funds/securities, processes
for shortages in funds/securities, arranges for pay-out of funds/securities to
members,

guarantees

settlement,

and

collects

and

maintains

margins/collateral/base capital/other funds.

Clearing Members:
They are responsible for settling their obligations as
determined by the NSCCL. They have to make available funds and/or
securities in the designated accounts with clearing bank/depository
participant, as the case may be, to meet their obligations on the settlement

day. In the capital market segment, all trading members of the Exchange are
required to become the Clearing Member of the Clearing Corporation.
Custodians:
A custodian is a person who holds for safekeeping the documentary
evidence of the title to property belonging like share certificates, etc. The
title to the custodians property remains vested with the original holder, or in
their nominee(s), or custodian trustee, as the case may be. In NSCCL,
custodian is a clearing member but not a trading member. He settles trades
assigned to him by trading members.
Clearing Banks:
Clearing banks are a key link between the clearing members and
NSCCL for funds settlement. Every clearing member is required to open a
dedicated settlement account with one of the clearing banks. Based on his
obligation as determined through clearing, the clearing member makes funds
available in the clearing account for the pay-in and receives funds in case of
a pay-out.

Depositories:
A depository is an entity where the securities of an investor are
held in electronic form. The person who holds a Demat account is a
beneficiary owner. In case of a joint account, the account holders will be
beneficiary holders of that joint account. Depositories help in the settlement
of the dematerialized securities each custodian/ clearing member is required
to maintain a clearing pool account with the depositories. He is required to
make available the required securities in the designated account on
settlement day. The depository runs an electronic file to transfer the
securities from accounts of the custodians/clearing member to that of
NSCCL. As per the schedule of allocation of securities determined by the
NSCCL, the depositories transfer the securities on the pay-out day from the
account of the NSCCL to those of members/custodians.
Professional Clearing Member:
NSCCL admits special category of members namely,
professional clearing members. Professional Clearing Member (PCM) may
clear and settle trades executed for their clients (individuals, institutions
etc.). In such an event, the functions and responsibilities of the PCM would

be similar to Custodians. PCMs may also undertake clearing and settlement

responsibility for trading members.

SETTLEMENT PROCESS IN CM SEGMENT OF BSE

BSE
1

DEPOSITA
RIES

NSCCL

8
6

CLEARING
BANKS

7
2

CUSTODIANS/
CM S

Explanations:
(1)

Trade details from Exchange to NSCCL (real-time and end of day

trade file).
(2) NSCCL notifies the consummated trade details to CMs/custodians who
affirm back. Based on the affirmation, NSCCL applies multilateral netting
and determines obligations.
(3) Download of obligation and pay-in advice of funds/securities.

(4) Instructions to clearing banks to make funds available by pay-in time.

(5) Instructions to depositories to make securities available by pay-in-time.
(6) Pay-in of securities (NSCCL advises depository to debit pool account of
custodians/CMs and credit its account and depository does it).
(7) Pay-in of funds (NSCCL advises Clearing Banks to debit account of
custodians/CMs and credit its account and clearing bank does it).
(8) Pay-out of securities (NSCCL advises depository to credit pool account
of custodians/CMs and debit its account and depository does it).
(9) Pay-out of funds (NSCCL advises Clearing Banks to credit account of
custodians/CMs and debit its account and clearing bank does it).
(10) Depository informs custodians/CMs through DPs.
(11) Clearing Banks inform custodians/CMs.

Risks in Settlement
The following two kinds of risks are inherent in a settlement system

Counter party Risk:

This arises if parties do not discharge their obligations fully when
due or at any time thereafter. This has two components, namely replacement
cost risk prior to settlement and principal risk during settlement.
The replacement cost risk arises from the failure of one of the
parties to transaction. While the non-defaulting party tries to replace the
original transaction at current prices, he loses the profit that has accrued on
the transaction between the date of original transaction and date of
replacement transaction. Both parties encounter this risk, as prices are
uncertain. It has been reduced by reducing time gap between transaction and
settlement and by legally binding netting systems.
The principal risk arises if a party discharges his obligations but
the counter party defaults. The seller/buyer of the security suffers this risk
when he delivers/makes payment, but does not receive payment/delivery.
This risk can be eliminated by delivery vs. payment mechanism.

The Liquidity risk, which arises if one of the parties to transaction

does not settle on the settlement date, but later. The seller/buyer who does

not receive payment/delivery when due, may have to borrow funds/securities

to complete his payment/delivery obligations
The Third party risk, which arises if the parties to trade are
permitted or required to use the services of a third party which fails to
perform. For example, the failure of a clearing bank, which helps in
payment, can disrupt settlement.
System Risk: This comprises of operational, legal and systemic risks. The
operational risk arises from possible operational failures such as errors,
fraud, outages etc. The legal risk arises if the laws or regulations do not
support enforcement of settlement obligations or are uncertain. Systemic risk
arises when failure of one of the parties to discharge his obligations leads to
failure by other parties. The domino effect of successive failures can cause a
failure of the settlement system. These risks have been contained by
enforcement of an elaborate margining and capital adequacy standards to
secure market integrity, settlement guarantee funds to provide counter-party
guarantee, legal backing for settlement activities and business continuity
plan, etc.

Normal Market
In a rolling settlement, trade day is T day, T+1 day and T+2 day for
NSCCL. The trades executed each trading day are considered as a trading
period and trades executed during the day are settled based on the net
obligations for the day. At BSE, trades in rolling settlement are settled on a
T+2 basis i.e. on the 2nd working day. Typically trades taking place on
Monday are settled on Wednesday,
Tuesday's trades settled on Thursday and so on.
Activity

Day

Trading

Rolling Settlement Trading

Clearing

Custodial Confirmation

T+1 working days

Delivery Generation

T+1 working days

Securities and Funds pay in

T+2 working days

Securities and Funds pay out

T+2 working days

Settlement

Valuation of shortages based

on closing Prices

T+1 closing prices

Post Settlement Auction

T+3 working days

Bad Delivery Reporting

T+4 working days

Auction settlement

T+5 working days

Rectified bad delivery pay-in

and pay-out

T+6 working days

Re-bad delivery reporting

and pickup

T+8 working days

Close out of re-bad delivery

and funds pay-in & pay-out

T+9 working days

Funds Settlement
Currently, NSCCL offers settlement of funds through 10 clearing
banks namely Canara Bank, HDFC Bank, Global Trust Bank, IndusInd
Bank, ICICI Bank, UTI Bank, Centurion Bank, Bank of India and IDBI
Bank, Standard Chartered Bank. Every Clearing Member is required to
maintain and operate a clearing account with any one of the empanelled

clearing banks at the designated clearing bank branches. The clearing

account is to be used exclusively for clearing & settlement operations.
Clearing Account:
Every Clearing Member is required to maintain and operate a clearing
account with any one of the empanelled clearing banks at the designated
clearing bank branches.
The Clearing Bank will debit/ credit the clearing account of clearing
members as per instructions received from the Clearing Corporation. A
Clearing member can deposit funds into this account in any form, but can
withdraw funds from this account only in self name.
Funds shortages:
In pursuance of chapter IV of the Byelaws of the NSCCL and
Regulations framed there under, all clearing members are requested to note
that on account of settlement funds shortages trading may not be permitted
and securities payout withheld as as per the norm in Place from time to time.

Penal Charges
Penalties are charged to members for:
Failure to fulfill their funds obligations
Failure to fulfill their securities deliverable obligations
Gross Exposure & Turnover Violations
Margin Shortages
Security Deposit Shortages

Other violations in respect of client code modifications, nonconfirmation of custodial trades, company objections reported against the
members' etc.

Shortages Handling
On the securities pay-in day, NSCCL identifies short deliveries and
the respective clearing member is debited by an amount equivalent to the
securities not delivered by him and valued at a valuation price. This is called
a valuation debit.
A valuation debit is also conducted for bad delivery by clearing
members. NSCCL conducts a buying-in auction for security shortages on the

day after the pay-out day through the NSE trading system. If the buy-in
auction price is more than the valuation price, the member is required to
make good the difference.

VSAT NET WORK CONNECTIVITY

VSAT- Very small aperture Terminal
VSAT is the most important component in on line trading.
NSE offers its services with over 3000 VSATs spread all over the country.

REQUIREMENTS
The cost of a leased line is around 3.5 lacks. For installation it requires a
dish antenna of 1.8 meters diameter. NSE server Trading is done on
Mainframe. Back Office on mainframe on Unix servers with oracle
database. System requirements include Branded Pentium or higher II, III,
IV [processors on EICON card-(WAN Interface) which costs around one

lakh provided by HCL Comnet Server +4 nodes with Pentium or higher

processor. Windows NT Operating system for all servers and nodes.

CONNECTIVITY
VSATs are connected through INSAT-3B satellite. NSE and BSE use
leased lines in Mumbai for providing services to corporate members each
line costs 1 lack per year. VSATs are connected through INSAT-3B and in
turn are connected to NSE hub in Mumbai. With more than 3000 VSATS
spread across the country. NSE is considered to be the top 10 in the world in
providing services through VSATs.
MAINTENANCE
It does not require maintenance up to 3 year after it takes up to Rs. 1000
per month for maintenance. HCL Comnet provides maintenance for BSE. An
annual contract costs around 1.2 lakhs.
PROBLEMS
Problems occur in connectivity due heavy net working or sudden
increase in Network traffic because of market volatility \ burst of orders.

LEGAL FRAMEWORK
This section deals with legislative and regulatory provisions relevant
from the viewpoint of a trading member. The four main legislations
governing the securities market are:
(a) the Securities Contracts (Regulation) Act, 1956, which provides for
regulation of transactions in securities through control over stock exchanges;
(b) the Companies Act, 1956, which sets out the code of conduct for the
corporate sector in relation to issue, allotment and transfer of securities, and
disclosures to be made in public issues;
(c) the SEBI Act, 1992 which establishes SEBI to protect investors and
develop and regulate securities market; and
(d) the Depositories Act, 1996 which provides for electronic maintenance
and transfer of ownership of dematerialized securities.

Securities Contracts (Regulation) Act, 1956

It provides for direct and indirect control of virtually all aspects of securities
trading and the running of stock exchanges and aims to prevent undesirable
transactions in securities. It gives Central Government regulatory
jurisdiction over
(a) Stock exchanges through a process of recognition and continued
supervision,
(b) Contracts in securities
(c) Listing of securities on stock exchanges. As a condition of recognition, a
stock exchange complies with conditions prescribed by Central Government.
Organized trading activity in securities takes place on a specified recognized
stock exchange. The stock exchanges determine their own listing
regulations, which have to conform to the minimum listing criteria set out in
the Rules.
Companies Act, 1956
It deals with issue, allotment and transfer of securities and various
aspects relating to company management. It provides for standard of
disclosure in public issues of capital, particularly in the fields of company

management and projects, information about other listed companies under

the same management, and management perception of risk factors. It also
regulates underwriting, the use of premium and discounts on issues, rights
and bonus issues, payment of interest and dividends, supply of annual report
and other Information.
SEBI Act, 1992
The SEBI Act, 1992 was enacted to empower SEBI with statutory
powers for
(a) protecting the interests of investors in securities,
(b) promoting the development of the securities market, and
(c) regulating the securities market. Its regulatory
jurisdiction extends over corporates in the issuance of capital and transfer of
securities, in addition to all intermediaries and persons associated with
securities market. It can conduct enquiries, audits and inspection of all
concerned and adjudicate offences under the Act. It has powers to register
and regulate all market intermediaries and also to penalise them in case of
violations of the provisions of the Act, Rules and Regulations made there

under. SEBI has full autonomy and authority to regulate and develop an
orderly securities market.

Depositories Act, 1996

The Depositories Act, 1996 provides for the establishment of
depositories in securities with the objective of ensuring free transferability of
securities with speed, accuracy and security by
(a) making securities of public limited companies freely transferable subject
to certain exceptions.
(b) dematerializing the securities in the depository mode.
(c) Providing for maintenance of ownership records in a book entry form. In
order to streamline the settlement process, the Act envisages transfer of
ownership of securities electronically by book entry without making the
securities move from person to person. The Act has made the securities of
all public limited companies freely transferable, restricting the companys

right to use discretion in effecting the transfer of securities, and the transfer
deed and other procedural requirements under the Companies Act.

Analysis and Interpretation

Stocks of the major group companies like Reliance has been
taken for analysis and interpretation, as this is one of the biggest
Private Sector Company in India and has multiple operations in
India and abroad. The economic structure of India depends on
such a biggest company also.
To evaluate the three major group companies has been taken
for analysis and interpretation which are as under :
Stocks from Reliance Group:
1) Reliance Industries Ltd
2) Reliance Petroleum Ltd
3) Reliance Natural Resources Ltd
For every scrip the below said formulas are to be taken into account
for calculation of Return, Variance, Standard Deviation and Beta values.
Calculation of Return:

Todays price Yesterdays price

Todays security return =

* 100
Yesterdays price
Todays Sensex Yesterdays Sensex

Todays market return =

* 100
Yesterdays Sensex

Calculation of Variance:
Variance (2) = 1/n 1 (Xi x)
Calculation of Standard Deviation:
=

variance ()

Calculation of Beta:

n XY (x) (y)
________________
n X (X)

Beta describes the relationship between the Stocks return and the Sensex
returns.
Conditions:
If = 1, it indicates that the market Sensex returns and stock return volatility
will be equal that means if market Sensex return increase with one percent

simultaneously the stock return also increase with one percent. If the market
Sensex returns decrease with one percent simultaneously the stock return
will decrease by one percent.
If > 1, it indicates that the market Sensex returns increase or decrease by
one percent but the stock return increase or decrease by more than one
percent.
If < 1, then if the market Sensex returns increase or decrease by one
percent but the stock return decrease or increase by less than one percent.

1) Reliance Industries Ltd

Date

Sensex
BSE
Return
Sensex(X) X

20/12/2007
24/12/2007
26/12/2007
27/12/2007
28/12/2007
31/12/2007
1/01/2008
2/01/2008
3/01/2008
4/01/2008
7/01/2008
8/01/2008
9/01/2008
10/01/2008
11/01/2008
14/01/2008
15/01/2008
16/01/2008
17/01/2008
18/01/2008
21/01/2008
22/01/2008
23/01/2008
24/01/2008
25/01/2008
28/01/2008
29/01/2008
30/01/2008

19147.5
19851.1
20199.5
20208.2
20211.6
20257.1
20309.7
20469.4
20345.2
20604.3
20826.9
20855.1
20869.8
20577.1
20894.8
20701.4
20213.9
19884.7
19662.3
19013.7
17605.4
16803.8
17594.1
17221.7
18361.7
18152.8
18091.9
17758.6

31/01/2008
1/02/2008
4/02/2008
5/02/2008

17648.7
18242.6
18660.3
18663.2

X2

3.67463115
1.75506647
0.04307037
0.01682485
0.22511825
0.25966204
0.78632378

13.5029141
3.08025831
0.00185506
0.00028308
0.05067823
0.06742438
0.61830508

0.60675936
1.27351906
1.08035701
0.13540181
0.07048636
1.40250506
1.54394934
0.92558914
2.35491319
1.62858231
1.11844785
3.29869852
-7.4067646
4.55314847
4.70310287
2.11661864
6.61955556

0.36815692
1.6218508
1.16717128
0.01833365
0.00496833
1.96702043
2.38377957
0.85671526
5.54561615
2.65228035
1.2509256
10.881412
54.8601618
20.731161
22.1191766
4.48007446
43.8185158

1.13769422
0.33548543
-1.8422609

1.29434814
0.11255048
3.39392523

Script
RIL Script Return
(Y)
Y
Y2
2714.7
2788.05
2896.7
2894.35
2898.35
2881.05
2847.1
2861.8
2902.9
2985.85
3015.6
3050.5
3031.95
3027.05
3128.15
3216.3
3162
3098.35
2996.25
2779.5
2544.2
2358.05
2554.85
2490.55
2609.55
2564
2575.65
2469.6

(XY)

2.701956017
3.896988935
-0.081126799
0.138200287
-0.596891335
-1.178389823
0.516314847

7.300566
15.18652
0.006582
0.019099
0.356279
1.388603
0.266581

9.928692
6.839475
-0.00349
0.002325
-0.13437
-0.30598
0.405991

1.436159061
2.85748734
0.996366194
1.157315294
-0.608097033
-0.161612164
3.339885367
2.817959497
-1.688275347
-2.012966477
-3.295302338
-7.234042553
-8.465551358
-7.316641773
8.34587901
-2.516781807
4.778061071

2.062553
8.165234
0.992746
1.339379
0.369782
0.026118
11.15483
7.940896
2.850274
4.052034
10.85902
52.33137
71.66556
53.53325
69.6537
6.334191
22.82987

-0.8714
3.639065
1.076431
0.156703
-0.04286
0.226662
5.156614
-2.60827
3.975742
3.278282
3.685624
23.86293
62.70235
33.31376
39.25153
5.327067
31.62864

-1.745511678
0.454368175
-4.117407256

3.046811
0.20645
16.95304

1.985859
-0.15243
7.585338

2479.5
2541.65
2592.6
0.01554101 0.00024152 2616

0.400874636
2.506553741
2.004603309

0.1607
6.282812
4.018434

-0.24808
8.434855
4.589931

0.90256885

0.814631

0.014027

-1.4889

-1.7670561

382.17

252.7

0.61885509
3.36512038
2.28969555

0.38298162
11.3240352
5.2427057

213.7998

Graphical representation of Reliance Industries Ltd Return and Sensex

Return

Interpretation:
Standard deviation of the stock return : 3.51
Variance of stock return : 12.32
Standard deviation of the Sensex return: 2.62
Variance of the Sensex return: 6.89
Beta: 1.18
Here the beta value is greater than one, it indicates that the risk exposure is
high, and this script is advisable for the risk takers for having more return.
One percent change in market Sensex return causes 1.18 percent change in
Reliance Industries Ltd. In the above graph it is clear that depending on the
Sensex return the volatility of Reliance Industries Ltd return can be
identified, the series 1 represents the Sensex return and the series 2
represents the stock return.

2) Reliance Petroleum Ltd

Date

Sensex
BSE
Return
Sensex(X) X

20/12/2007
24/12/2007
26/12/2007
27/12/2007
28/12/2007
31/12/2007
1/01/2008
2/01/2008
3/01/2008
4/01/2008
7/01/2008
8/01/2008
9/01/2008
10/01/2008
11/01/2008
14/01/2008
15/01/2008
16/01/2008
17/01/2008
18/01/2008
21/01/2008
22/01/2008
23/01/2008
24/01/2008
25/01/2008
28/01/2008
29/01/2008
30/01/2008
31/01/2008
1/02/2008
4/02/2008
5/02/2008

19147.5
19851.1
20199.5
20208.2
20211.6
20257.1
20309.7
20469.4
20345.2
20604.3
20826.9
20855.1
20869.8
20577.1
20894.8
20701.4
20213.9
19884.7
19662.3
19013.7
17605.4
16803.8
17594.1
17221.7
18361.7
18152.8
18091.9
17758.6
17648.7
18242.6
18660.3
18663.2

3.67463115
1.75506647
0.04307037
0.01682485
0.22511825
0.25966204
0.78632378

13.5029141
3.08025831
0.00185506
0.00028308
0.05067823
0.06742438
0.61830508

0.60675936
1.27351906
1.08035701
0.13540181
0.07048636
1.40250506
1.54394934
0.92558914
2.35491319
1.62858231
1.11844785
3.29869852
-7.4067646
4.55314847
4.70310287
2.11661864
6.61955556
1.13769422
0.33548543
-1.8422609
0.61885509
3.36512038
2.28969555

0.36815692
1.6218508
1.16717128
0.01833365
0.00496833
1.96702043
2.38377957
0.85671526
5.54561615
2.65228035
1.2509256
10.881412
54.8601618
20.731161
22.1191766
4.48007446
43.8185158
1.29434814
0.11255048
3.39392523
0.38298162
11.3240352
5.2427057

0.01554101

0.00024152

-1.4889

213.7998

RPL
Script (Y)
207.95
216.5
223.85
219.6
222.45
223.2
226.3
228.15
232.3
244.65
251
246.6
232.05
218.25
219.75
225.25
219.7
220.95
219.3
208.75
172.15
146.7
169.15
161.3
173
168.3
171.55
161.1
160
167.95
173.35
177.25

Script
Return
Y

Y2

(XY)

4.11156528
3.394919169
-1.898592808
1.297814208
0.337154417
1.388888889
0.817498895

16.90497
11.52548
3.604655
1.684322
0.113673
1.929012
0.668304

15.10849
5.958309
-0.08177
0.021836
0.0759
0.360642
0.642819

1.818978742
5.316401205
2.595544656
-1.752988048
-5.900243309
-5.946994182
0.687285223
2.502844141
-2.463928968
0.56895767
-0.746775289
-4.810761514
-17.53293413
-14.78361894
15.30334015
-4.640851315
7.253564786
-2.716763006
1.93107546
-6.091518508
-0.682805711
4.96875
3.215242632

3.308684
28.26412
6.736852
3.072967
34.81287
35.36674
0.472361
6.264229
6.070946
0.323713
0.557673
23.14343
307.4038
218.5554
234.1922
21.5375
52.6142
7.380801
3.729052
37.1066
0.466224
24.68848
10.33779

-1.10368
6.770538
2.804115
-0.23736
-0.41589
8.340689
1.061134
-2.31661
5.802339
-0.92659
0.835229
15.86925
129.8623
67.31201
71.97318
9.822912
48.01538
3.090846
-0.64785
11.22217
0.422558
16.72044
7.361927

2.249783675

5.061527

0.034964

-10.209167

1107.9

423.76

Graphical representation of Reliance Petroleum Ltd Return and Sensex

Return

Interpretation:
Standard deviation of the stock return : 5.97
Variance of stock return : 35.73
Standard deviation of the Sensex return: 2.62
Variance of the Sensex return: 6.89
Beta: 1.98
Here the beta value is greater than one, it indicates that the risk exposure is
high, and this script is advisable for the risk takers for having more return.
One percent change in market Sensex return causes 1.98 percent change in
Reliance Petroleum Ltd. In the above graph it is clear that depending on the
Sensex return the volatility of Reliance Petroleum Ltd return can be
identified, the series 1 represents the Sensex return and the series 2
represents the stock return.

3) Reliance Natural Resources Ltd.

Date

Sensex
BSE
Return
Sensex(X) X

20/12/2007
24/12/2007
26/12/2007
27/12/2007
28/12/2007
31/12/2007
1/01/2008
2/01/2008
3/01/2008
4/01/2008
7/01/2008
8/01/2008
9/01/2008
10/01/2008
11/01/2008
14/01/2008
15/01/2008
16/01/2008
17/01/2008
18/01/2008
21/01/2008
22/01/2008
23/01/2008
24/01/2008
25/01/2008
28/01/2008
29/01/2008
30/01/2008
31/01/2008
1/02/2008
4/02/2008
5/02/2008

19147.5
19851.1
20199.5
20208.2
20211.6
20257.1
20309.7
20469.4
20345.2
20604.3
20826.9
20855.1
20869.8
20577.1
20894.8
20701.4
20213.9
19884.7
19662.3
19013.7
17605.4
16803.8
17594.1
17221.7
18361.7
18152.8
18091.9
17758.6
17648.7
18242.6
18660.3
18663.2

3.67463115
1.75506647
0.04307037
0.01682485
0.22511825
0.25966204
0.78632378

13.5029141
3.08025831
0.00185506
0.00028308
0.05067823
0.06742438
0.61830508

0.60675936
1.27351906
1.08035701
0.13540181
0.07048636
1.40250506
1.54394934
0.92558914
2.35491319
1.62858231
1.11844785
3.29869852
-7.4067646
4.55314847
4.70310287
2.11661864
6.61955556
1.13769422
0.33548543
-1.8422609
0.61885509
3.36512038
2.28969555

0.36815692
1.6218508
1.16717128
0.01833365
0.00496833
1.96702043
2.38377957
0.85671526
5.54561615
2.65228035
1.2509256
10.881412
54.8601618
20.731161
22.1191766
4.48007446
43.8185158
1.29434814
0.11255048
3.39392523
0.38298162
11.3240352
5.2427057

0.01554101

0.00024152

-1.4889

213.7998

RNRL
Script (Y)
162.25
168
171.4
168.65
177.85
182.35
181.8
194.6
202.25
208.75
227.85
244.15
228.35
208.35
207.2
222
217.35
216.1
217.1
205.75
158
115.55
139.45
131.55
144.35
144.3
146.3
136.55
135.3
138.9
143.9
153.95

Script
Return
Y

Y2

(XY)

3.543913713
2.023809524
-1.604434072
5.455084495
2.530222097
-0.301617768
7.04070407

12.55932
4.095805
2.574209
29.75795
6.402024
0.090973
49.57151

13.02258
3.55192
-0.0691
0.091781
0.569599
-0.07832
5.536273

3.931140802
3.213844252
9.149700599
7.153829274
-6.471431497
-8.758484782
-0.551955844
7.142857143
-2.094594595
-0.575109271
0.462748727
-5.228005527
-23.20777643
-26.86708861
20.68368672
-5.665112944
9.730140631
-0.034638033
1.386001386
-6.664388243
-0.915415599
2.66075388
3.599712023

15.45387
10.32879
83.71702
51.17727
41.87943
76.71106
0.304655
51.02041
4.387327
0.330751
0.214136
27.33204
538.6009
721.8405
427.8149
32.0935
94.67564
0.0012
1.921
44.41407
0.837986
7.079611
12.95793

-2.38526
4.092892
9.884943
0.968641
-0.45615
12.28382
-0.85219
-6.61135
4.932588
0.936613
-0.51756
17.24561
171.8945
122.3298
97.27751
11.99088
64.40921
0.039407
-0.46498
12.27754
0.56651
8.953757
8.242245

6.984016678

48.77649

0.108539

7.7521128

2398.9

559.77

Graphical representation of Reliance Natural Resources Ltd Return

and Sensex Return

Interpretation:
Standard deviation of the stock return : 8.79
Variance of stock return : 77.38
Standard deviation of the Sensex return: 2.62
Variance of the Sensex return: 6.89
Beta: 2.62
Here the beta value is greater than one, it indicates that the risk exposure is
high, and this script is advisable for the risk takers for having more return.
One percent change in market Sensex return causes 2.62 percent change in
Reliance Natural Resources Ltd. In the above graph it is clear that depending
on the Sensex return the volatility of Reliance Natural Resources Ltd return
can be identified, the series 1 represents the Sensex return and the series 2
represents the stock return.

Summary
The past decade has a golden age of stock exchange of India. It is
raised to dominate the future of corporate finance in India, thanks to the
reforms in stock market. Earlier in the initial days of secondary market,
derivatives trading on stock exchange in India used to take place through
open outcry without use of information technology for immediate matching
or recording of trades.
The need for the study is felt as many as people in India are aware of
trading process in stock market.
After liberalization in 1991, our stock markets experienced drastic
changes due to setting up SEBI in 2000. Integration of market, new
technology, in trading, introduction of derivatives trading, foreign
participation etc. These led to the development of Stock Market.
There is much development in the volumes of National Stock
Exchange from the introduction of online trading. There are no geographical
barriers for the stock exchanges and the regional stock exchanges are
suddenly exposed to heavy competition from other stock exchanges in India
as well as abroad. As there is much competition faced by international

standard and give better services to the clients. This will facilitate National
Stock Exchange to survive in the competitive world.
The faces of business have changed and today it is service oriented
industry. Hence the survival would require them to provide the best possible
service to clientele, or to engage into new business practices hither to
practice in other exchanges. The introduction of online trading will inspire
confidence in investor resulting into the increase in business of the
exchange. National Stock Exchange has seen some hope with introduction of
online trading as it witnessed a maximum turnover on the first day of online
trading.
It is observed from the study that due to the capital market crisis and
economic crunch in Indian economy.
It is too happy to say that SEBI was very much actively continuing
working of Stock Exchanges and brokers. Both SEBI and stock
exchanges are given greater importance to the investor protection.
The online trading system has inspired confidence in investors
resulting into the increase in business of the exchange. National Stock
Exchange has seen hope with introduction of online trading as it
witnessed maximum turnover.

 This studies concludes that the online trading system has facilitated
brokers / members with many services. They can very much aware of
marketing conditions, company performances, closing price, opening
price etc.
National Stock Exchange has controlled the price rigging and price
manipulation by imposing circuit filters and other restrictions. SEBI
has very much aware of day to day price movements and giving
guidelines to stock exchange in imposition of circuit filters.
Online trading has providing a many privileges to investors. If
investor are willing he can see the price movement on the concerned
brokers computer screen. By this he can well aware of value of his
shares.
It is to say happy that the system service provided to brokers is
perfect.
It is to say happy that with effect from 2001 all the scrips are brought
in to Daily settlement with this the heavy price fluctuation are
controlled.
The Indian securities market, considered one of the most promising
emerging markets, is one of the top eight markets of the world. Bombay
Stock Exchange Ltd. At present, 23 stock exchanges operate are recognized

in India. The stock exchanges provide facilitates for trading in securities.

Securities markets provide a common platform for transfer of funds from
those who have them in excess to those in need of them.
In tune with the global stock markets that began to recover from the
second half of 2003, Indian stock markets too witnessed rapid growth.
Indias two leading indices, the most popular BSE Sensex, and the one most
used by the markets the National Stock Exchanges S&P CNX Nifty rose to
record levels. Both primary and secondary market activity experienced sharp
surge.
The equity market is all excited, and going places. No doubt, you
want to get your share of the action. However, there is more to it than that.
So, how should you choose a broker? That you need to be careful in
choosing the brokerage stating the obvious. Besides the quality of service,
the choice of the broker may also have a bearing in the transaction cost.

Suggestions
1. For an effective trading process SCSL should provide more and
perfect sources of information for the investors or traders.
2. SCSL can increase the number of investors by educating potential
individuals and corporate about capital market.
3. SCSL can increase its business by reaching more potential investors
by appointing sales persons and proper advertisement and setting up
new branches in potential areas.
4. Apart from operations, theoretical knowledge about the stocks and
markets is essential for the staff in trading section.
5. Well-experienced computer operators should operate to reduce errors
in trading. As a small error may tie up the whole trading for the day.
6. Provide trading programs to the employees in order to get them
adjusted to the changes in the stock market.
7. If the investors take more risk the more returns can be expected.
8. Before investing the investor should observe the volatility of the
market.

Bibliography
Websites
www.bseindia.com
www.capitalmarket.com
www.sebi.com
Books Referred

Indian Financial System, PATHAK

BCSM (BSEs Certification on Securities Market)