A

Case Study
On
"ILLEGAL PLEDGING OF KARVY"
With reference to
KARVY STOCK BROKING LIMITED

Submitted in partial fulfillment for the award of degree

Of
BACHELOR OF BUSINESS ADMINISTRATION

By
D.KALYAN KUMAR
Reg. No: 117152607008
Under the guidance of
Mr. R. NAVEEN KUMAR, MBA, M.Com, (Ph.D.),A.P.SET

DEPARTMENT OF MANAGEMENT STUDIES

SAI SARANYA DEGREE COLLEG

Affiliated to Andhra University, Visakhapatnam

Denkada Road, Vizianagaram

Pin-535002
2017-2020

1
 DECLARATION

It is to certify that the case study entitled “ILLEGAL PLEDGING OF

KARVY” submitted by me in partial fulfillment for the degree of Bachelor of Business
Administration of ANDHRA UNIVERSITY, Visakhapatnam comprises only my
original work and due acknowledgment has been made in the text to all other material
used.

I further declare that to the best of my knowledge and belief that the project
report does not contain any part of any work which has been submitted for the award of
any other degree/diploma/certificate in this University or any other universities.

Place: Vizianagaram D.KALYAN KUMAR

Date: 117152607008

2
 CERTIFICATE

This is to certify that the case study entitled “ILLEGAL PLEDGING OF

KARVY” with reference to “KARVY STOCK BROKING LIMITED” is a bonafide

work carried out by D. Kalyan Kumar, Reg No: 117152607008 Under my guidance and
supervision for the award of degree of Bachelor of Business Administration of
ANDHRA UNIVERSITY, Visakhapatnam during year 2017-2020.

Mr. R. NAVEEN KUMAR

Place: Vizianagaram
Department of Management Studies
Date: SAI SARANYA DEGREE COLLEGE

3
 CERTIFICATE BY THE EXAMINERS

This is to certify that the case study entitled “ILLEGAL PLEDGING OF

KARVY” submitted by D. Kalyan Kumar, Reg No: 117152607008 has been

examined by the undersigned as a part of examination for the award of degree of
Bachelor of Business Administration, ANDHRA UNIVESITY, Visakhapatnam.

Mr. R. NAVEEN KUMAR

Internal Examiner External Examiner

Date:

HEAD

DEPARTMENT OF MANAGEMENT STUDIES

SAI SARANYA DEGREE COLLEGE

4
 ACKNOWLEDGEMENTS

I sincerely acknowledge my grateful thanks to Sri P. Ramana Chairman, Sai

Saranya Degree college for providing me opportunity and lending his support to does
the project work.

My grateful thanks to Mr. P. Prakash Rao Principal, Sai Saranya Degree

college for giving me an opportunity to do this project work.

I choose this moment to acknowledge, gratefully Mr. R. Naveen Kumar lecturer and
Head, Department of Management Studies for his contribution and support in completion
of this project.

I am greatly indebted to Mr. R. Naveen Kumar who inspite of being extraordinarily

busy with his duties took time out to hear, to guide and keep me on correct path.

Last but not the least, there are so many who shared valuable information that
helped in the successful completion of this project. I owe a great to all of them.

Place: D. Kalyan Kumar

Date: 117152607008

5
 CONTENTS

CHAPTERS TITLE PAGE

CHAPTER-I INTRODUCTION

Need for the Study

Objectives

Scope

Methodology

Limitations

Cauterization

CHAPTER-II Industry Profile

Organization/

Company Profile

CHAPTER-III Theoretical Frame Work of the Study

CHAPTER-IV Data Analysis and Interpretation

CHAPTER-V Summary ,Findings and Suggestion

INTRODUCTION

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Karvy has taken loans to the tune of Rs 600 crore by pledging securities worth more than
Rs 2,300 crore of 95,000 clients with lenders, including Bajaj Finance. Of these, 95,000
clients, nearly 83,000 of them have got back their securities, which were illegally
transferred by KSBL to its own account. The latest ruling came following an appeal by
Bajaj Finance, which has given loans to the tune of Rs 345 crore to Karvy against
pledged securities.

Bajaj Finance moved the tribunal against a SEBI order passed on 22 November, which
prohibited the transfer of securities from an account of KSBL with immediate effect,
saying due to this directive the non-banking finance company could not invoke the
pledge. The regulator, through an order passed on 22 November, had barred KSBL from
taking new clients in respect of its stock broking activities and also prevented it from
using the power of attorney (PoA) given by clients after the broker was found to have
allegedly misused clients' securities.

The order was a result of a preliminary report forwarded by the NSE on the non-
compliances observed with respect to pledging/misuse of client securities by Karvy."In
the interim further transfer of securities shall remain suspended from DP
account...named Karvy Stock Broking Ltd (BSE)," the tribunal said in an order. The
SAT has asked the regulator to hear "the appellant (Bajaj Finance) on the basis of their
representation dated 23 November, 2019 and or any other additional representation
which they may like to make. If the appellant is desirous to make any additional
representation it shall be made latest by 4 December, 2019".It further directed SEBI "to
consider the representation(s) of the appellant and, after giving an opportunity for
personal hearing, pass an order as per law .Leading stock exchanges NSE and BSE on
suspended Karvy's trading licence. The Securities Appellate Tribunal (SAT) on Tuesday
suspended the further transfer of investors securities that Karvy Stock Broking Ltd had
pledged with lenders. The move comes a day after the market regulator SEBI's
directive to NSDL to transfer the investors' securities, held by Karvy Stock Broking Ltd
(KSBL), in their respective accounts. The decision resulted in nearly 83,000 investors
getting back their securities that were illegally transferred by the broker to its own
account and were even pledged without any authorization

NEED FOR THE STUDY

7
In one of the biggest cases of funds misappropriation by a broking firm, market regulator
Sebi has banned Karvy Stock Broking from accepting new clients. It has also instructed
depositories NSDL and CSDL to not honour Karvy's instructions where clients' power of
attorney (PoA) trades are involved. PoA is a regular practice that authorises the broker to
debit the shares directly from the client's demat account to settle a trade. Market experts
say brokers often misuse clients' PoAs to transfer latter's money or securities into their
own account to execute proprietary trades, something the market regulator prohibits.
While it has not been proven in the case of Karvy yet, Sebi's statement does suggest so.

Proprietary trade is when a financial firm dabbles into stocks with its own money to earn
extra revenues other than the commission fee coming in from clients. As per Sebi's
statement, Karvy moved clients' pledged shares (against which they receive margin
funding from the broker) to its own account via off-market deals and transferred a net
amount of Rs 1,096 crore to its group company, Karvy Realty Private Limited between
April 1, 2016, and October 19, 2019.

"Brokers are quite powerful in India. They are not only exchange members but also
depository participants. Exchanges are supposed to send you SMS/email when shares are
transferred based on details provided in your master report. Who prepares that master
report? DPs. They can easily change the registered number or email while they transfer
your shares to their pool account through which they execute prop trades," So, it is very
important to know about such scandals to avoid falling in trap any further.

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 OBJECTIVE

The study aims to achieve the following objectives:

 To understand the concept of ILLEGAL PLEDGING.

 To understand the concept of default of investments.
 To identify the causes of such scandals.
 To study the effect of kavry fraud on the market .
 To analyse and understand the case in detail.

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 SCOPE OF THE STUDY

The study has the following scope:

 The study could suggest measures for the investors to avoid future scams.

 The study may help the government in creating & implementing new strategies
to control investors frauds.

 The study will help to select appropriate techniques suited to manage the stock
brokers and develop a time bound action plan to check their actions.

 This study includes the concept of pledging.

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 RESEARCH METHODOLOGY
This chapter presents the brief outline of various dimensions of the research, tools and
techniques and methods used to achieve various research objectives has been discussed.
RESEARCH DESIGN
The methodology for this research is designed considering the above facets. In order to
accomplish the stated objectives, the researcher will utilize a combined approach that
embraces features of both descriptive and analytical research designs.

MATERIAL AND METHODS

For this study, secondary data was collected.

DATA SOURCES
Data will be gathered from the secondary sources to achieve the stated objectives. It
includes:
 Annual reports of the karvy.
 RBI Report on Trend and Progress of scam in India.
 Manual of instructions for investors and lenders.
 Research Papers and Published Articles.

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 LIMITATIONS

 This study is only restricted to Karvy stock broking ltd.

 The result of the study may not be applicable to any other organization.

 The conclusion of the study is based on the secondary Information. Thus,

some amount of subjectivity might remain.

 The basis for identifying the scam and updates is taken from the news
articles and news.

 The time period for the study is not sufficient

12
 INDUSTRY PROFILE

The information in this section has not been independently verified by us, the
lead managers or any of our or their respective affiliates of advisors. The information
may not be consistent with other information compiled by third parties within or outside
India. Industry sources and publication generally state that the information contained
therein has been obtained from sources generally believed to be reliable but their
accuracy, completeness and underlying assumptions are not guaranteed and their
reliability cannot be assured. Industry and Government publications also prepared based
on information as of specific dates and may no longer be current or reflect current trends.
Industry and Government sources and publication may also base their information on
estimates, forecasts and assumptions which may prove to be incorrect. Accordingly,
investment decisions should not be completely based on such information.

INTRODUCTION TO FINANCIAL SYSTEM:

Finance is the integral part of modern business. Financial system provides the
principal means by which the savings are transformed into investments. Financial market
is a part of financial system. It is a market for creation and exchange of financial assets.
They play a pivotal role in allocating resources in an economy. The main functions of
financial markets are to facilitate price discover, provide liquidity and reduce the cost of
transacting.

India’s financial sectoris diversified and expanding rapidly. It comprises of

commercial banks, insurance companies, non-banking financial companies, cooperatives,
pension funds, mutual funds and other smaller financial entities.

The main functions of financial system are:

 To facilitate creation and allocation of credit and liquidity

 To serve as intermediaries for mobilization of savings;

 To assist the process of balances economic growth;

 To provide the financial convenience;

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  To cater to the various credits needs of business houses.

REGULATORY INFRASTRUCTURE:

As the maker and enforcer of laws in a society, the government has the
responsibility for regulating the financial system. The two major regulatory arms of the
government of India are the Reserve Bank of India and Securities and Exchange board of
India.

Reserve Bank of India: As the central banking authority of India, the Reserve Bank of
India performs the following traditional functions:

 It provides currency and operates the clearing system for the banks.

 It formulates and implements monetary and credit policies.

 It functions as the banker’s bank.

 It supervises the operations of credit institutions

 It regulates foreign exchange transactions.

 It moderates the fluctuations in the exchange value of rupee

 It seeks to integrate the unorganized financial sector with the organized financial
sector.

 It encourages the extension of the commercial banking system in the rural areas
and development of new institutions.

Securities Exchange Board of India: SEBI has been entrusted with the responsibility of
dealing with the various matters relating to the capital market. SEBI’s principal tasks are:

 Regulate the business in stock exchanges and any other securities markets.

 Register regulate the capital market intermediaries (brokers, merchant bankers,

portfolio managers and so on).

14
  Register and regulate the working of mutual funds.

 Promote fraudulent and unfair trade practices in securities market.

 Promote investor’seducation and training of intermediaries of securities markets

 Regulate substantial acquisition of share and takeovers of companies.

 Perform such other functions as may be prescribed.

TYPES OF FINANCIAL MARKET:

Based on credit requirement for short-term and long-term purposes, financial

markets are divided into two categories:

Money market: It is a market which deals with short term lending and borrowing
activities for liquidity adjustments.

Capital market: It is a market which deals with long term lending and borrowing
activities marking supply and utilization of funds.

Bond market: It is a market which provide financing through the issuance of bonds, and
enable the subsequent trading thereof.

Commodity markets:It is a market which facilitate the trading of commodities.

STOCK EXCHANGE IN INDIA

At the end of the June 1989, there were 18 recognized stock exchanges in India.
Among the 18 stock exchanges, the first organized stock exchange set up at Bombay in
1875 is distinguished not only by its size but also it has been recognized permanently,
while the recognition for other markets is renewed every 5 years. Stock markets are
organized either as voluntary, non-profit making associations (Bombay, Ahmadabad,
Indore) or public limited companies (Calcutta, Delhi, Bangalore) or company limited by
guarantee (Madras, Hyderabad).

In India, the growth of stock exchanges has been linked to the growth of

15
corporate sector. Though a number of stock exchanges were set up before independence
but, there was no all India legislation to regulate they’re working. Every stock exchange
followed its own methods of working. To rectify this situation; SECURITY
CONTRACTS (REGULATIONS) ACT was passed in 1956.

In 1965, 22 separate provincial stock exchanges were merged into 3 regional

stock changes and in 1973 these, in turn, were combined to form the National Stock
Exchange (NSE) under the title of the stock exchange that has trading floors in many
former provincial in our country. The over-the counter exchanges being 21 as regional
stock exchanges in our country. The over-the counter exchange of India began its
operations in 1992. Since 1995, trading in securities is screen based (on-line)

BOMBAY STOCK EXCHANGE

The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai;
popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in
Asia. It is located at Dalai Street, Mumbai, India.

Bombay Stock Exchange was established in 1875. There are around 5,600 Indian
companies listed with the stock exchange, and has a significant trading volume. As of
October2006, the marketcapitalization of the BSE was about Rs. 33.4 trillion (US $ 730
billion). The BSE SENSEX (Sensitive index), also called the BSE 30, is a widely used
market index in India and Asia. As of 2005, it is among the 5 biggest stock exchanges in
the world in terms of transactions volume.

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History:

An informal group of 22 stockbrokers began trading under a banyan tree opposite the
Town Hall of Bombay from the mid-1850s, 1875, was formally organized as the
Bombay Stock Exchange (BSE).In January 1899, the stock exchange moved into the
Brokers’ Hall after it was inaugurated by James MacLean. After the First World War, the
BSE was shifted to an old building near the Town Hall. In 1956, the Government of
Indiarecognized the Bombay Stock Exchange as the first stock exchange in the country
under the Securities Contracts (Regulation) Act.1995, when it was replaced by an
electronic (E-Trading) system named BOLT, or the BSE Online Tradingsystem. In 2005,
the status of the exchange changed from an Association of Persons (AOP) to a full-
fledgedcorporationunder the BSE (Corporatization and Demutualization) Scheme, 2005
(and its name was changed to The Bombay Stock Exchange Limited).

BSE Sensex:

The BSE SENSEX (also known as the BSE 30) is a value-weighted index composed of
30 scrip’s, with the base April 1979 = 100. The set of companies which make up the
index has been changed only a few times in the last 20 years. These companies account
for around one-fifth of the market capitalization of the BSE.

SENSEX:

First compiled in 1986 was calculated on a "Market Capitalization-Weighted"

methodology of 30 component stocks representing a sample of large, well-established
and financially sound companies. The base year of SENSEX is 1978-79. The index is
widely reported in both domestic and international markets through print as well as
electronic media. SENSEXis not only scientifically designed but also based on globally
accepted construction and review methodology. From September 2003, the SENSEX is
calculated on a free-float market capitalization methodology. The "free-float
MarketCapitalization-Weighted" methodology is a widely followed index construction
methodology on which majority of global equity benchmarks are based.

The growth of equity markets in India has been phenomenal in the decade gone by. Right
from early nineties the stock market witnessed heightened activity in terms of various
bull and bear runs. More recently, the bourses in India witnessed a similar frenzy in the

17
'TMT' sectors. The SENSEX captured all these happenings in the most judicial manner.
One can identify the booms and bust of the Indian equity market through SENSEX.

The values of all BSE indices are updated every 15 seconds during the market hours and
displayed through the BOLT system, BSE website and news wire agencies.

SENSEX calculation:

SENSEX is calculated using a "Market Capitalization-Weighted" methodology.

As per this methodology, the level of index at any point of time reflects the total
market value of 30 component stocks relative to a base period. (The market
capitalization of a company is determined by multiplying the price of its stock by the
number of shares issued by the company). An index of a set of combined variables (such
as price and number of shares) is commonly referred as a 'Composite Index' by
statisticians. A single indexed number is used to represent the results of this calculation
in order to make the value easier to work with and track over time. It is much easier to
graph a chart based on indexed values than one based on actual values.

 
The base period of SENSEX is 1978-79. The actual total market value of the
stocks in the Index during the base period has been set equal to an indexed value of 100.
This is often indicated by the notation 1978-79=100. The formula used to calculate the
Index is fairly straightforward. However, the calculation of the adjustments to the Index
(commonly called Index maintenance) is more complex.

 
The calculation of SENSEX involves dividing the total market capitalization of 30
companies in the Index by a number called the Index Divisor. The Divisor is the only
link to the original base period value of the SENSEX. It keeps the Index comparable
over time and is the adjustment point for all Index maintenance adjustments. During
market hours, prices of the index scripts, at which latest trades are executed, are used by
the trading system to calculate SENSEX every 15 seconds and disseminated in real time.
During market hours, prices of the index scripts, at which trades are executed, are
automatically used by the trading computer to calculate the SENSEX every 15 seconds

18
and continuously updated on all trading workstations connected to the BSE trading
computer in real time.

VISION

"Emerge as the premier Indian stock exchange with best-in-class global practice in
technology, products innovation and customer service."

MISSION

As a center of learning, our mission is to promote an open learning environment that

bring together people, cultures and ideas from around the world, changing lives and
helping transform organization through innovative learning programs.

BSE OBJECTIVES:

 To safe guard the interest of investing public having dealings on the exchange.
 To establish and promote honorable and just practices in securities transactions.
 To promote, develop and maintain well regulated market in securities.
 To promote industrial development in the country through efficient resource
mobilization by the way of investment in corporate securities

BSE MILESTONES

9th Jul 1875 The Native Share & Stock Broker's Association formed

2nd Feb 1921 Clearing House started by Bank of India

31st Aug 1957 BSE granted permanent recognition under Securities

Contracts (Regulation) Act (SCRA)

2nd Jan 1986 SENSEX, country's first equity index launched (Base
Year:1978-79 =100)

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10th Jul 1987 Investor's Protection Fund (IPF) introduced

3rd Jan 1989 BSE Training Institute (BTI) inaugurated

25th Jul 1990 SENSEX closes above 1000

15th Jan 1992 SENSEX closes above 2000

30th Mar 1992 SENSEX closes above 4000

1st May 1992 SEBI Act established (An Act to protect, develop and
regulate the securities market)

29th May 1992 Capital Issues (Control) Act repealed

1992 Securities Appellate Tribunal (SAT) established

14th Mar 1995 BSE On-Line Trading (BOLT) system introduced

19th Aug 1996 First major SENSEX revamp

12th May 1997 Trade Guarantee Fund (TGF) introduced

21st Jul 1997 Brokers Contingency Fund (BCF) introduced

1997 BSE On-Line Trading (BOLT) system expanded nation-

wide

1st Jun 1999 Interest Rate Swaps (IRS) / Forward Rate Agreements
(FRA) allowed

22nd Mar 1999 Central Depository Services Ltd.(CDSL) set up with other
financial institutions

15th Jul 1999 CDSL commences work

11th Oct 1999 SENSEX closed above 5000

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11th Feb 2000 SENSEX crosses 6000 intra-day

9th Jun 2000 Equity Derivatives introduced

1st Mar 2001 Corporatizations of Exchanges proposed by the Union

Govt.

1st Feb 2001 BSE Webx Launched

4th Jun 2001 BSE PSU index introduced

15th Jun 2001 WDM operations at commenced

1st Jun 2001 Index Options launched

2nd Jul 2001 VaR model introduced for margin requirement calculation

9th Jul 2001 Stock options launched

11th Jul 2001 BSE Teck launched, India 's First free float index

25th Jul 2001 Dollex 30 launched

1st Nov 2001 Stock futures launched

29th Nov 2001 100% book building allowed

31st Dec 2001 All securities turn to T+5

1st Apr 2002 T+3 settlement Introduced

15th Feb 2002 Negotiated Dealing System (NDS) established

1st Feb 2002 Two way fungibility for ADR/GDR

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1st Sep 2003 SENSEX shifted to free-float methodology

1st Jan 2003 India 's first ETF on SENSEX - ‘SPICE' introduced

16th Jan 2003 Retail trading in G Sec

1st Apr 2003 T+2 settlement Introduced

1st June 2003 Bankex launched

1st Dec 2003 T group launched

17th May 2004 Second biggest fall of all time, Circuit filters used twice in
a day (564.71 points, 11.14%)

2nd Jun 2004 SENSEX closes over 6000 for the first time

20th May 2005 The BSE (Corporatisation and Demutualisation) Scheme,

2005
(the Scheme) announced by SEBI

8th Aug 2005 Incorporation of Bombay Stock Exchange Limited

12th Aug 2005 Certificate of Commencement of Business

19th Aug 2005 BSE becomes a Corporate Entity

7th Feb 2006 SENSEX closed above 10000

7th Jul 2006 BSE Gujarati website launched

21 st Oct 2006 BSE Hindi website launched

2nd Nov 2006 Shares BSE SENSEX India Tracker listed at Hong Kong
Stock Exchange

2nd Jan 2007 Launch of Unified Corporate Bond Reporting platform :

22
 Indian Corporate Debt Market (ICDM)

7th Mar 2007 Singapore Exchange Limited entered into an agreement to

invest ina 5% stake in BSE

16th May 2007 Appointed Date under the Scheme i.e. Date on
whichCorporatisaton and Demutualisation was achieved.
Notified by SEBI in the Official Gazette on 29.06.2007

10th Jan 2008 SENSEX All-time high 21206.77

1st Oct 2008 Currency Derivatives Introduced

18th May 2009 The SENSEX raised 2110.70 points (17.34%) and Index-
wide upper circuit breaker applied

7th Aug 2009 BSE - USE Form Alliance to Develop Currency &
Interest Rate Derivatives Markets

24th Aug 2009 BSE IPO Index launched

1st Oct 2009 Bombay Stock Exchange introduces trade details facility
for the Investors

5th Oct 2009 BSE Introduces New Transaction Fee Structure for Cash
Equity Segment

25th Nov 2009 BSE launches FASTRADE™ - a new market access

platform

4th Dec 2009 BSE Launches BSE STAR MF – Mutual Fund trading
23
 platform

7th Dec 2009 Launch of clearing and settlement of Corporate Bonds

through Indian Clearing Corporation Ltd.

14th Dec 2009 Marathi website launched

18th Dec 2009 BSE's new derivatives rates to lower transaction costs for
all

4th Jan 2010 Market time changed to 9.0 a.m. - 3.30 p.m.

20 th Jan 2010 BSE PSU website launched

22nd Apr 2010 New DBM framework @ Rs.10 lakhs - 90% reduction in
Membership Deposit

12th May 2010 Dissemination of Corporate Action information via

SWIFT platform

23rd July 2010 Options on BOLT

11th Oct 2010 Launch of Fastrade on Web (FOW) - Exchange hosted

platform

21st Sep 2010 First to introduce Mobile-based Trading

29th Sep 2010 Introduction of Smart Order Routing (SOR)

4th Oct 2010 EUREX - SENSEX Futures launch

22nd Nov 2010 Launch of SLB

12th Nov 2010 Commencement of Volatility Index

24
 10th Dec 2010 Launch of SIP

27th Dec 2010 Commencement of Shariah Index

28th Mar 2016 BSE STAR Mutual Fund Processes 81000 orders worth
Rs. 270 Crore Record Order in single Day

3rd Feb 2017 BSE becomes India’s 1stlisted Stock Exchange

19th Jan 2018 BSE STAR Mutual Fund introduce e-mandate facility

22 Feb 2012 Launch of S&P BSE -GREENEX to promote investments

in green India

19th Feb 2013 BSE enters into Strategic Partnership with S&P Dow Jones
Indices.

28th Jan 2014 Launch of interest Rate Futures (BSE IRF)

08th Jan 2015 BSE commenced live trading from its Disaster Recovery
site in Hyderabad

BSE - other Indices: Apart from BSE SENSEX, which is the most popular stock index
in India, BSE uses other stock indices as well:

 BSE 500

 BSE PSU

25
  BSE MIDCAP

 BSE SMLCAP

 BSE BANKEX

NATIONAL STOCK EXCHANGE (NSE)

National stock exchange of India Ltd was started in 1992 with a paid-up equity of
Rs.25croses. The government recognized it in the same year and NSE started is
operations in wholesale in Nov 1994.

NSE MISSION

NSE mission is setting the agenda for change in the securities markets in India.
The NSE was set-up with the main objectives of:

 establishing a nation-wide trading facility for equities, debt instruments and

hybrids,

 ensuring equal access to investors all over the country through an appropriate
communication network,

 providing a fair, efficient and transparent securities market to investors using

electronic trading systems,

 enabling shorter settlement cycles and book entry settlements systems, and

 meeting the current international standards of securities markets.

The logo of the NSE symbolizes a single nationwide securities trading facility
ensuring equal and fair access to investors, trading members and issuers all over the
country. The initials of the Exchange viz., N, S and E have been etched on the logo and
are distinctly visible. The logo symbolizes use of state-of-the-art information technology
and satellite connectivity to bring about the change within the securities industry. The

26
 logo symbolizes vibrancy and unleashing of creative energy to constantly bring about
change through innovation.

NSE MILESTONE

November 1992 Incorporation

April 1993 Recognition as a stock exchange

May 1993 Formulation of business plan

June 1994 Wholesale Debt Market segment goes live

November 1994 Capital Market ("Equities) segment goes live

March 1995 Establishment of Investor Grievance Cell

April 1995 Establishment of NSCCL. the first Clearing Corporation

June 1995 Introduction of centralized insurance cover for all trading members

July 1995 Establishment of Investor Protection Fund

October 1995 Became largest stock exchange in the country

April 1996 Commencement of clearing and settlement by NSCCL

April 1996 Launch of S&P CNX Niiiv

June 1996 Establishment of Settlement Guarantee Fund

November 1996 Setting up of National Securities Depository Limited, firs

depository in India, co-promoted by NSE

November 1996 Best IT Usage award by Computer Society of India

August 1998
Commencement of trading/settlement in demateriaiized securities
February 1999
December 1996 Dataquest award for Top IT User

27
December 1996 Launch of CNX Niftv Junior

February 1997 Regional clearing facility goes live

November 1997 Best IT Usage award by Computer Society of India

28
January 2003 Commencement of trading in Retail Debt Market

June 2003 Launch of Interest Rate Futures

August 2003 Launch of Futures & options in CNXIT Index

June 2004 Launch of STP Interoperability

August 2004 Launch of NSE electronic interface for listed companies

March 2005 'India Innovation Award' by EMPI Business School, New Delhi

June 2005 Launch of Futures & options in BANK Niftv Index

December 2006 'Derivative Exchange of the Year', bv Asia Risk magazine

January 2007 Launch of NSE - CNBC TV 18 media center

March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com

June 2007 NSE launches derivatives on Niftv Junior & CNX 100

October 2007 NSE launches derivatives on Niftv Midcap 50

January 2008 Introduction of Mini Niftv derivative contracts on 1st January 2008

March 2008 Introduction of long-term option contracts on S&P CNX Nifty Index

June2008 Launch of NCFM - Derivatives Market (Dealers) Module Test ir Hindi

language

September 2008 Launch of FEDAI-NSE Currency Futures (Basic) Module

29
Jan 2003 Commencement of trading in Retail Debt Market

June 2003 Launch of Interest Rate Futures

August 2003 Launch of Futures & options in CNXIT Index

June 2004 Launch of STP Interoperability

August 2004 Launch of NSE electronic interface for listed companies

March 2005 'India Innovation Award' by EMPI Business School, New Delhi

June 2005 Launch of Futures & options in BANK Niftv Index

December 2006 'Derivative Exchange of the Year', bv Asia Risk magazine

January 2007 Launch of NSE - CNBC TV 18 media center

March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com

June 2007 NSE launches derivatives on Nifty Junior & CNX 100

October 2007 NSE launches derivatives on Nifty Midcap 50

January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008

March 2008 Introduction of long-term option contracts on S&P CNX Nifty Index

June2008 Launch of NCFM - Derivatives Market (Dealers) Module Test ir Hindi

language
September 2008 Launch of FEDAI-NSE Currency Futures (Basic) Module

Jan2009 Launch of Mutual Funds: A Beginners Module

Feb2009 Launch of NCFM - Capital Market (Dealers) Module Tesiir

Gujarati and Hindi languages

Feb20O9 Launch of Shariah BCEs on Feb 4. 2009

Mar2009 Launch o\' "Options Trading Strategies Module"

30
 2015 Entered into a memorandum of understanding to enhance the level of
cooperation with the London Stock Exchange GroupRenamed CNX
NIFTY to NIFTY 50

2016 Launched NIFTY 50 index futures trading on TAIFEXLaunched

platform for sovereign gold bond issuancesLaunched electronic book-
building platform for private placement of debt securities

2017 Launch of Trading on Sovereign Gold Bond (SGB),

Launch of an international exchange in Gujarat International Finance
Tech City - International Financial Service Centre. NSE IFSC
Exchange

2018 NSE signs Post-Trade Technology and Strategic Partnership

Agreement with Nasdaq

NSE announces launch of Tri-Party Repo on Corporate Debt

Securities

NSE becomes the first Indian stock exchange to be part 30 exempted

by Commodity Futures Trading Commission (CFTC), enables access
for US clients.

NSE launches e-Gsec Platform for retail

Introduction of Cross Currency Derivatives contracts on EUR-USD,

GBP-USD and USD-JPY

NSE other indices:

 S&P CNX Nifty
 CNX Nifty Junior
 CNX 100
 S&P CNX 500
 CNX Midcap & S&P CNX Defty
 CNX Midcap 200

COMPANY PROFILE
INTRODUCTION

One fateful evening in the summer of 1982, 5 young men who worked for a renowned
chartered accountancy firm decided that it was time they struck out on their own to create an
enterprise that would someday become an iconic name in the financial services space.

They came from ordinary middle-class backgrounds. They had two assets: one was
their education and the other an unquenchable desire to succeed. They had a lot stacked
against them: the environment was not conducive to entrepreneurship: technology was not
fully supportive, financial markets were largely unregulated: they were based out of
Hyderabad while most key players in the financial world were in Mumbai or other metros
and the wolf was at the door. The odds seemed insurmountable.

These remarkable young men’s “Never say die” approach held them in good stead
over the years. They stuck to their dreams, burnt the midnight oil, embraced technology and
made it work for them and through sheer dint of determination, eventually overcame all
obstacles.

First came the registry business, followed by broking, and the rest became a lesson for
every young individual to emulate

PROMOTERS & MANAGEMENT TEAM

Mr. C. Parthasarathy Chairman & Managing Director

M. Yugandhar Managing Director

Mr. M. S. Ramakrishna Director

Mr. V.Mahesh Managing Director (Karvy Data

Management)

Mr. V. Ganesh CEO (Karvy Computershare)

Mr. Sushil Sinha WholetimeDirector(KarvyComtrade)

Mr. P. B. Ramapriyan Vice President & Head(Financial Product

 Distribution)

WHAT IS KARVY?

The Karvy Group is today a well-diversified conglomerate. Its businesses straddle the
entire financial services spectrum as data processing and managing segments. Since most of
its financial services were focused, the need to build scale and skill in the transaction
processing domain became imperative. Also, during stresses environment in the financial
services segment, the non-financial business brings in a lot of stability to the group’s
businesses.

Karvy’s financial services business is ranked among the top-5 in the country across its
business segments. The Group services over 70 million individual investors in various
capacities, and provides investor service to over 600 corporate hoses, comprising the best of
Corporate India.

The Group offers stock broking, depository participant, distribution of financial

products (including mutual funds, bonds and fixed deposits), commodities broking, personal
finance advisory services, merchant banking & corporate finance, wealth management, Forex
& currencies, registrar & Transfer agents, Data Analytics, Market Research among others.

Karvy prides itself on remaining customer centric as all times through a combination
of leading-edge technology, professional management and a wide network of offices across
India.

Karvy is committed to its quest as an Equal Opportunity Employer and believes in

rights for differently-abled persons. We have over 12% employees who are challenged in
some form in one of our prominent businesses.

WHY KARVY?
 Karvy's business entities address a heterogeneous swathe of population from the
super-rich, to the nouveau riche, the ubiquitous middle class, the lower classes (the SEC E3
according to the new Social Economic Classification), urban and the rural folks. All of whom
either make a living through large business (corporate world), SMEs, professional services,
traders, farmers, labour, blue- and white-collar jobs and the government.

Another key feature of Karvy has been its ability to offer leading edge advice based
on incisive ideas that are strongly rooted in high quality research on every conceivable aspect
of investments be it equities, forex, commodities, bonds, fixed returns, debt instruments or
any other investment grade asset class. The customer has always been at the center of every
Karvy initiative.

VISION:

To achieve and sustain market leadership, Karvy shall aim for complete customer
satisfaction, by combing its Human and Technological Resources to provide class quality
services. In the process karvy shall strive to meet and exceed customer’s satisfaction and set
industrial standards.

MISSION:

“Our mission is to be a leading and preferred services provider to our customers, and we aim
to achieve this leadership by building an innovative, enterprising, and technology driven
organization which will highest standards of services and business ethics."

KARVY GROUP
 The Karvy Group is a premier integrated financial services provider, ranked among
the top-5 in the country across its business segments. The Group services over 70 million
individual investors in various capacities, and provides investor services to over 600
corporate houses. Karvy Group established its presence through a wide network of s over 450
branches, for 900 offices) covering in excess of 400 cities and towns

Karvy covers the entire spectrum of financial services, viz stock broking, depository
participant, distribution of financial products (including mutual funds, bonds and fixed
deposits), commodities broking, personal finance advisory services, merchant banking &
corporate finance, wealth management, NBFC, among others.

The Group is professionally managed and ranks among the best in technology,
operations and research across the financial industry. The Karvy Group has evolved over the
last three decades and today it assumes many avatars. Broadly the group pursues two lines of
businesses and can be graphically represented as follows:

THE LIST OF COMPANIES?

Karvy Stocks Broking LTD
Equity Broking, Depository Participant, Distribution of Financial Products (Mutual Funds,
FD and Bonds), Wealth Management Services, Currency Derivatives, Portfolio Managemrnt
Services

KarvyComtrade LTD
Commodities Broking

Karvy Capital LTD (Formerly Karvy Capital Private LTD)

NBFC & Portfolio Manager

Karvy Investment Advisory Services LTD (Formerly know as Karvy Insurance Broking
LTD)
Investment Advisory Services

Karvy Holdings LTD

Core Investment Company
Karvy Middle East LLC
Wealth Management Products for NRI’s

Karvy Realty (India) LTD

Realty Services

Karvy Financial Services LTD

Non-Banking Financial Services

Karvy Insurance Repository LTD

Insurance Repository services

Karvy Forex & Currencies Private LTD

Currency and forex services

Karvy Consultants LTD

Consultancy and Advisory Services, Publications

Karvy Computershare Private LTD

Registrar and Share Transfer agent

Karvy Computershare E.L.L (Formerly known as FakhroKarvy Computershare W.L.L)

Agent for Custody & Registration of Securities, Registered Administrator

Karvy Data Management Services LTD

Data Management Services

Karvy Investor Services LTD

Merchant Banking and Corporate Finance

Karvy Insights LTD

Market Research

Karvy Analytics LTD Analytics

Karvy Solar Power LTD
Power Generation

Karvy Global Services LTD

Business Process Outsourcing

Karvy Global Services Inc, USA

Business Outsourcing

Karvy Inc, USA

Institutional Broking.

KARVY STOCK BROKING LIMITED MILESTONES

2004

“Best Depository Participant in the country” award.

2006

ISTD_ “Vivekananda National Award” for Excellence in HRD & Training

2007

“Amity Corporate Excellence” award at the 9th International Business Summit and Research
Conference-INBUSH (International Business Horizon) which was held at a glittering
function in Noida. This award was conferred by Amity International Business School, Noida.

2007

Bagged ace award by receiving the coveted Annual Award for 2006 for "Best CEO, bating
HK Practices", by. the Uttar Pradesh Chapter of National Institute of Personnel
Management (NiPM). The Award has been conferred to Mr. C Parthasarathy CMD, Karvy
Group, for his contribution to HR practices in Lucknow, organized by UP chapter of NIPM.

2010
"Largest E-Broking House in India" at BSE Equity Broking Awards 2010 by Dun &
Bradstreet held in ITC Grand Maratha, Mumbai. This award is based on the study carried out
by the world's leading provider of business information, knowledge and insight. Dun &
Bradstreet in association with the oldest stock exchange in India, the Bombay Stock
Exchange.

The BSE-D&B Equity Broking Awards recognizes the brokerage firms based on the number
of online accounts, volume of online trade, and service delivery of their online trading
platform. Karvy Stock Broking Limited has won this prestigious award for its aid of the art.
in-house developed KarvyOnline. a comprehensive online investment that enables investors
to invest, anytime from anywhere.

2011

Awarded the “Broker with Best Corporate Desk for Commodity Broking” at the prestigious
Bloomberg UTV Financial Leadership Awards 2011 held in Hotel Taj Land send, Mumbai.
Hon’ble Finance Minister of India then, Shri. Pranab Mukerjee was the Chief Guest. The
awards have been decided by eminent jury consisting of reputed economists, management &
financial consultants.

Bloomberg UTV Financial Leadership Awards Have been instituted to acknowledge the
contribution of the country’s financial champions for extraordinary work done in financial
sector. This award is a reflection of KarvyComtrade – Corporate Desk’s unparalleled
strengths in providing unique risk management strategies and hedging calculators for
Corporates. KarvyComtrade’s ability to handle large volumes of trade efficiently with
Prompt, accurate and tailor-made services by a talented pool of professionals ensures that
Karvy remains relevant to client at laa times.

2011

Adjudged as the “Best Analyst in Base Metal Category” at the prestigious “Best Marker
Analysts Awads 2011” by Zee Business in association with NCDEX (National Commodity &
Derivatives Exchange Limited). The award ceremony was graced with the presence of
eminent dignitaries.

Zee Business Best Market Analysis Awards have been instituted to honour the contributions
of India’s leading financial experts in empowering the retail investors. The Nominations for
the Awards were invited from Commodities & Stock Broking companies and fund houses
and were being judged on overall returns achieved for the stocks, Commodities, Sectors and
Companies, the analysts tracked from April 2010 to December 2010.

2014

Won the prestigious ZE Business Award for the “Best Agi. Analyst” 2014 in the fifth edition
of India’s Best Market Analyst Awards on Saturday, 13th Dec. 2014 at The LaLit in Mumbai.

KARVY’S ACCOLADES

 Winners of SKOCH- BSE Aspiring nation awards 2015.

 Won ‘NSDL Star Performer Award 2014 for Highest Asset Value.

 Winners of SKOCH-BSE Order of merit award 2015.

 Won ‘Broker E-Broking House in India by Dun & Bradstreet 2010.

 Won ‘Broker with Best corporate desk for commodity broking 2011’

 India ‘s no I registrar and securities transfer agent.

 ISO 9002 Certified Operations by DNV.

 Largest Independent Distributor.

 Most of India’s 500 fortune companies are serviced by Karvy.

 Every 20th trade in stock market is done on the Karvy platform.

 Every 6th investor in India invests though Karvy.

 Amongst top 10 stock brokers in India.

 Amongst top 3 depository participants.

  Amongst top 10 investment bankers.

The Karvy Group is a premier integrated financial services provider, ranked among
the top-5 in the country across its business segments. The Group services over 70 million
individual investors in various capacities, and provides investor services to over 600
corporate houses.

The Karvy Group has evolved over the last three decades and today it assumes many
avatars. Broadly the group pursues two lines of businesses and can be graphically represented
as follows:

FINANCIAL SERVICES

EQUITY BROKING SERVICES

Stock markets are considered unpredictable, but they reflect the mood of the
economy. Over the years, investment in equities is considered to be die best long-term wealth
maximization option. The gap between unpredictability and a safety anchor in the market is
bridged by the in-depth knowledge of market functioning and changing trends, planning with
foresight and choosing one's options with care. From that perspective, our equity broking and
advisory services are beyond just a medium for buying and selling stocks and shares. Instead,
we provide services which are multi-dimensional and multi-focused in its scope.

Karvy can boast of the largest-owned network among financial-services companies in

India. This has ensured that wherever a potential customer is located, it is never too far from
a Karvy office. Given the wide network, there are a number of trading terminals that provide
retail stock-broking facilities. Our services have increasingly offered customer-oriented
convenience which we provide to a spectrum of investors— high net-worth or otherwise—
with equal dedication and competence.

We offer online trading on both key platforms—National Stock Exchange and

Bombay Stock Exchange. More importantly, we make trading safe to the maximum possible
extent by accounting for several risk factors and planning accordingly. We have created a
very robust trading platform that facilitates customers to trade online not only in equities, but
also buy fixed deposits, mutual funds, commodities, currencies and also participate in a
public issue. Our online platform enables customers to view their portfolio online and also
access our various research reports and views on stocks. It also provides them with a facility
to communicate with our research/advisory teams online.

This crucial information is provided as a constant feedback to our customers, through

daily reports delivered twice-the Morning moves, which predicts the market and the report
itself is reviewed.

To add to this repository of information, we publish a monthly magazine, the

Finapolis, which analyzes personal finance and offers share market tips and take a close look
at various investment options and product available in the market. Moreover, our weekly e-
newsletter, KarvyBazaar Baatein, keeps you informed on key trends and companies which
are categorized as large cap, mid cap and small cap, we also analysis packages and provide
customized advisory services to help you make the right financial moves to specifically suit
your portfolio.

DEPOSITORY PARTICIPANT SERVICES

The onset of the technology revolution in the financial-services industry saw the
emergence of KSBS as an electronic custodian registered with the National Securities
Depository Ltd (NSDL) National Securities Depository Ltd (CSDL) in 1998. We set
standards enabling further comfort to the investor by promoting paperless trading across the
country, emerging as the top-3 depository participant in India, in terms of customer serviced.

Offering a wide trading platform with dual membership of NSDL and CDSL, KSBL
is a powerful medium for trading and settlement of dematerialized shares. We have
established live DPMs, internet access to demat accounts, and an easier transaction process in
order to offer great convenience to individuals and corporate investors. A professionally
managed team and the latest technological expertise have been allocated exclusively to our
demat division, including technological enhancements likes SPEED-e. this makes our
response time quick and our delivery impeccable. Moreover, a wide national network makes
our efficiencies accessible to all.
WEALTH MANAGEMENT SERVICES

Karvy, with over 25 years’ expertise in the financial markets, is offering

comprehensive wealth management solutions for its customers through Karvy Private Wealth
(KPW). Our wealth mangers provide direction to a client’s financial decisions, enabling him
achieve his financial and life goals of the client, assess his risk tolerance level, examine his
current financial status, and identify a strategy to full his goals.

Wealth management is an all-encompassing service, providing comprehensive

research-based advisory along with convenient and personalized investment execution. KPW
offers an unmatched product basket, ranging from debt, equity, mutual funds, insurance,
derivatives, commodities. Structured products, international funds, art funds and real estate. It
is a unique service aimed at transforming clients’ dreams into reality.
 THEORITICAL FRAME WORK OF STUDY

1)stock broking firm

A stockbroker, share holder registered representative (in the United States and

Canada), trading representative (in Singapore), or more broadly, an investment
broker, investment adviser, financial adviser, wealth manager, or investment
professional is a regulated broker, broker-dealer, or registered investment adviser (in the
United States) who may provide financial advisory and investment management services and
execute transactions such as the purchase or sale of stocks and other investments to financial
market participants in return for a commission, markup, or fee, which could be based on a flat
rate, percentage of assets, or hourly rate. Examples of professional designations held by
individuals in this field, which affects the types of investments they are permitted to sell and
the services they provide include chartered financial consultants, certified financial
planners or chartered financial analysts (in the United States), chartered strategic wealth
professionals (in Canada), chartered financial planners (in the UK), and Master of Business
Administration. The Financial Industry Regulatory Authority provides an online tool
designed to help understand professional designations in the United States

History of stock broking

The first recorded buying and selling of shares occurred in Rome in the 2nd century BC.
After the fall of the Western Roman Empire, stockbroking did not become a profession until
after the Renaissance, when government bonds were traded in Italian city-states such
as Genoa and Venice. In 1602, the Amsterdam Stock Exchange (now Euronext Amsterdam)
became the first official stock market with trading in shares of the Dutch East India
Company, the first company to issue stock.[2] In 1698, the London Stock Exchange, opened at
a coffeehouse.[3] On May 17, 1792, the New York Stock Exchange opened under a platanus
occidentalis (buttonwood tree) in New York City, as 24 stockbrokers signed the Buttonwood
Agreement, agreeing to trade five securities under that buttonwood tree.

What does a stock broking firm do

Many individual investors trust their money with large securities firms or investment dealers.
Large brokerage firms typically have thousands of employees. The most recognized firms
give investors confidence that a seasoned team of professionals manages their investments.

However, we usually only interact with a single employee, such as our investment advisor or
broker. So how does a large securities house really work?

In this article, we will look at a typical securities firm. Our overview will include some of its
different departments and the roles of various employees.

How a Large Securities Firm May Be Structured

Typically, a large firm has the following departments:

 Sales
 Underwriting and Financing
 Trading
 Research and Portfolio Management
 Administration

Many small boutique firms may serve only a single department of a business, such as retail
sales. Even in these limited operations, their activities likely resemble those of the respective
department of a larger firm.

Sales

The sales department usually employs the largest number of people in a securities firm. It is
also the area that individual retail investors interact with the most. Within the retail sales
force, investment advisors may focus on servicing a specific area of the investment industry.
Alternatively, they may provide a "one-stop-shop" for all retail investment needs.

For example, a particular investment advisor may act only as a stockbroker. They can offer
other services as well, such as mutual fund transactions, bond trading, and life insurance
sales. In a small firm, the activities of the investment advisor are likely to be more diverse.
A second division within the sales department is institutional sales. It is primarily involved in
selling new securities issues to traders working at institutional client firms. These client firms
may include pension funds and mutual funds. Sometimes, a hot new securities issue generates
so much interest it quickly becomes oversubscribed. In those cases, the job of institutional
sales is as simple as allocating shares to reward their best clients. Such rewards can help to
keep top client firms loyal.

The institutional sales department often generates a significant portion of the firm's profits.
Institutional sales benefit from the large dollar volume of transactions and
the commissions from both new issues and existing accounts. Unsurprisingly, institutional
salespeople are some of the best-paid personnel in the entire firm. The institutional sales
department works closely with the firm's trading department to maintain accounts in good
standing.

Underwriting And Financing

The firm's institutional sales division also works closely with the underwriting or financing
department. This department coordinates new securities issues and follow-up securities issues
on the secondary market. The underwriting or finance department negotiates with the
companies or governments issuing the securities. They establish the type of security, its price,
an interest rate where appropriate, and other special features and protective provisions.

The firm's underwriting or financing department may be split into two divisions. One division
deals with matters of corporate finance, while the other focuses on government finance. In a
large firm, these departments would be quite distinct. The needs of corporations and
governments are very different.

For example, the corporate finance department would require familiarity with stocks, bonds,
and other securities. The government department might focus on bond and Treasury
bill issues.

Trading

The firm's trading department also has separate divisions that trade different types of
securities. These divisions may focus on trading bonds, stocks, or other specialized financial
instruments. Traders in the bond division may also have a narrower emphasis on one part of
the bond market. They may focus on Treasuries, municipal bonds, money
market instruments, or corporate debt.

The stock-trading department executes orders from retail and institutional sales staff.
Historically, stock traders maintained close links with traders on the floors of
stock exchanges. With the rise of electronic trading, stock traders might be trading with
computers instead of other human beings.

The firm's trading department may also have divisions geared toward other specialized
instruments. Depending on the firm, they might have divisions for mutual funds, exchange-
traded funds, options, commodities, or futures contracts.

Research and Portfolio Management

The research department supports all other departments. Its securities analysts provide vital
analysis and data to aid traders, salespeople, and underwriters. This information is necessary
for the selling and pricing of existing securities and new issues. The firm's research
department may consist of economists, technical analysts, and research analysts. Researchers
also specialize in specific types of securities or particular industries.

The research department may be further divided into retail and institutional divisions.
However, firms with only one research department may make reports aimed at institutional
clients available to retail investors. If the firm hosts a single institutional research department,
it will also cover potential new issues, takeovers, and mergers. Together with the retail
department, analysts may be further involved in structuring portfolios for individual and
small-business accounts.

Administration

The administration department is a vital component of the firm's organization. It maintains

proper paperwork and accounting for all trades and transactions. More importantly, it ensures
compliance with securities legislation and oversees internal human resources.
All trades made by the firm must be accounted for and recorded. All incoming and outgoing
funds and securities must be continually balanced. Securities must be checked for registration
and delivery requirements, plus dividend payments must be credited to accounts as received.

In the credit and compliance division, brokerage employees constantly monitor accounts for
compliance with industry and internal guidelines. This monitoring ensures payments and
securities are received by their due dates and that margin accounts fulfill applicable margin
requirements.

The financial division oversees accounting matters, such as payroll, budgeting, financial
reports, and statements. Minimum capital levels are maintained according to industry
requirements. That guarantees the various departments within the firm hold sufficient funds
to accommodate changes in the firm's business.

The Bottom Line

Despite their importance to the financial industry and the economy, securities firms are still
somewhat of a mystery to average investors. Securities firms tend to maintain a rather
secretive culture, mainly due to the players' specialized roles and occupations.

Many retail investors only interact with their financial advisor or broker. It is also
increasingly common for self-directed investors to use a brokerage firm's trading platform
without talking to any employees. This situation leaves most people with a lack of insight
into the broader set of roles within securities firms.

TOP 10 STOCK BROKING COMPANIES IN INDIA

Angel Broking Pvt Ltd

The Indian stock broking firm Angel Broking Pvt Ltd was established in the year 1987. The
leading stock broking company is headquartered in Mumbai, India. Angel Broking Pvt Ltd is
providing a range of services including Equity Trading, Portfolio Management, Mutual
Funds, IPO, Depository Services, Investment Advisory etc. Its subsidiaries are Angel
Commodities Broking Pvt Ltd, Angel Fincap Pvt Ltd, Angel Financial Advisors Pvt Ltd,
Angel Securities Ltd.

BSE Ltd

BSE Ltd is one of the top stock broking companies in India. It is located at Dalal Street, Kala
Ghoda, Mumbai (formerly Bombay), Maharashtra, India. Bombay Stock Exchange was
established in the year 1875. Bombay Stock Exchange founded by one of the most influential
businessmen of the 19th century, Premchand Roychand. The Bombay Stock Exchange is the
oldest exchange in Asia.

Edelweiss Financial Services Ltd

Edelweiss Financial Services Pvt Ltd is one of the leading stock broking companies in India.
The company is headquartered in Mumbai, Maharashtra. The company is majorly involved in
following types of business including asset management, life insurance, capital marketing,
credit card, commodities etc. The company mainly focuses on especially mortgages for
housing, loans for agriculture and credit. Edelweiss was founded in November 1995 by
Rashesh Shah and Venkat Ramaswamy. Its operations started from February 1996. It was a
small office with 3 employees located near Akbarally’s in the Fountain area of Mumbai.

HDFC Securities Ltd

HDFC Securities Ltd was founded in the year 2000. The leading stock broking company is
headquartered in Mumbai, Maharashtra. It is one of the top stock broking companies in India.
HDFC Securities Ltd has branches all Indian major cities and towns.

Karvy Stock Broking Ltd

Karvy Stock Broking Ltd was founded in the year 1982. The leading stock broking company
is headquartered in Hyderabad, Telangana, India by 5 young men worked for the renowned
chartered accountancy firm. The company offices are located all across India. The top stock
broking company has started the business of commodity trading in the year 2000. It is also
into the business of forex trading. In September 2008, the group launched an online trading
and investment portal offering an extensive range of financial products and solutions across
different classes.

Kotak Securities Ltd

Kotak Securities Ltd was founded in the year 1994.  It is headquartered in Mumbai,
Maharashtra. It is one of the top stock broking and financial services company in India. It is
the subsidiary of Kotak Mahindra Group and corporate member of National Stock Exchange
of India and Bombay Stock Exchange.

Motilal Oswal Securities Ltd

Motilal Oswal Securities Ltd is one of the top stock broking companies in India.
The company was founded in the year 1987 and it is headquartered in Mumbai, India. Motilal
Oswal Securities Ltd is a well-diversified financial services firm offering a range of financial
products and services, such as private wealth management, retail broking and distribution,
institutional broking, asset management, investment banking, private equity, commodity
broking, currency broking and principal strategies. The company has a network spread over
more than 500 cities and towns.

National Stock Exchange of India Ltd

National Stock Exchange of India Ltd was founded in the year 1992, located in Mumbai,
India. NSE was the first exchange in the country to provide a modern, fully automated
screen-based electronic trading system. The company is offering to trade into following
segments-

Equities- Equities, Indices, Mutual Funds, Exchange Traded Funds, Initial Public

Offerings, Security Lending and Borrowing Scheme

Derivatives-  Equity Derivatives, Currency Derivatives, Interest Rate Futures

Sharekhan Ltd

Sharekhan Ltd is one of the top stock broking companies in India. The company is
headquartered in Mumbai. It offers online security broking and portfolio services to
institutions and large corporate houses as well as individual investors. The company operates
as a subsidiary of BNP Paribas SA. Sharekhan Ltd was founded in the year 2000. It is one of
the pioneers of online trading in India. It offers a broad range of financial products and
services. The company is present in over 575 cities through 153 branches, more than 2,500
business partners.

Zerodha

Zerodha, the leading stock broking company in India was founded in the year 2010. It is
headquartered in Bangalore, Karnataka, India. The leading financial services company offers
retail and institutional broking, currencies and commodities trading, mutual funds, and bonds.
The company has its presence in all major Indian cities.

2) Sebi

The Securities and Exchange Board of India (SEBI) is the regulator for the securities market

in India owned by the Government of India

It was established in 1988 and given Statutory Powers on 30 January 1992 through theSEBI

Act 1992.

Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market. It became an autonomous body on 12
April 1992 and was accorded statutory powers with the passing of the SEBI Act 1992 by
the Indian Parliament. Soon SEBI was constituted as the regulator of capital markets in India
under a resolution of the Government of India. SEBI has its headquarters at the business
district of Bandra Kurla Complex in Mumbai and has Northern, Eastern, Southern and
Western Regional Offices in New Delhi, Kolkata, Chennai, and Ahmedabad respectively. It
has opened local offices at Jaipur and Bangalore and has also opened offices
at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013 - 2014.

Controller of Capital Issues was the regulatory authority before SEBI came into existence; it
derived authority from the Capital Issues (Control) Act, 1947.

The SEBI is managed by its members, which consists of the following:

 The chairman is nominated by the Union Government of India.

 Two members, i.e., Officers from the Union Finance Ministry.
 One member from the Reserve Bank of India.
 The remaining five members are nominated by the Union Government of India, out of
them at least three shall be whole-time members.

After the amendment of 1999, collective investment schemes were brought under SEBI
except nidhis, chit funds and cooperatives.

Name Designation

Ajay Tyagi Chairman

Gurumoorthy
Whole time member
Mahalingam

S.K Mohanty Whole time member

Ananta Barua Whole time member

Madhabi Puri Buch Whole time member

N S Vishwanathan Part-time member

Anand Mohan Bajaj Part-time member

K V R Murty Part-time member

V Ravi Anshuman Part-time member

The Preamble of the Securities and Exchange Board of India describes the basic functions of
the Securities and Exchange Board of India as "...to protect the interests of investors in
securities and to promote the development of, and to regulate the securities market and for
matters connected there with or incidental there to".

SEBI has to be responsive to the needs of three groups, which constitute the market:

 issuers of securities
 investors
 market intermediaries

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-

executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its judicial
capacity. Though this makes it very powerful, there is an appeal process to create
accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and
is currently headed by Justice Tarun Agarwala, former Chief Justice of the Meghalaya High
Court.[7] A second appeal lies directly to the Supreme Court. SEBI has taken a very proactive
role in streamlining disclosure requirements to international standards.

Powers[edit]

For the discharge of its functions efficiently, SEBI has been vested with the following
powers:

 to approve by−laws of Securities exchanges.

 to require the Securities exchange to amend their by−laws.
 inspect the books of accounts and call for periodical returns from recognised
Securities exchanges.
 inspect the books of accounts of financial intermediaries.
 compel certain companies to list their shares in one or more Securities exchanges.
 registration of Brokers and sub-brokers

3) Nsdl

National Securities Depository Limited (NSDL) is an Indian central securities

depository based in Mumbai.[3] It was established in August 1996 as the first electronic
securities depository in India with national coverage. It was established based on a suggestion
by a national institution responsible for the economic development of India .
Although India had a vibrant capital market which is more than a century old, the paper-
based settlement of trades caused substantial problems such as bad delivery and delayed
transfer of title. The enactment of Depositories Act in August 1996 paved the way for
establishment of National Securities Depository Limited (NSDL), the first depository in
India. It went on to establish infrastructure based on international standards that handles most
of the securities held and settled in de-materialised form in the Indian capital markets.

In the depository system, securities are held in depository accounts, which are similar to
holding funds in bank accounts. Transfer of ownership of securities is done through simple
account transfers. This method does away with all the risks and hassles normally associated
with paperwork. Consequently, the cost of transacting in a depository environment is
considerably lower as compared to transacting in certificates. In August 2009, number
of Demat accounts held with NSDL crossed one crore.

4) Pledging

A pledge is a bailment that conveys possessory title to property owned by a debtor

(the pledgor) to a creditor (the pledgee) to secure repayment for some debt or obligation and
to the mutual benefit of both parties. [1][2] The term is also used to denote the property which
constitutes the security.[3] The pledge is a type of security interest.

Pledge is the pignus of Roman law, from w As the pledge is for the benefit of both parties,
the pledgee is bound to exercise only ordinary care over the pledge. The pledgee has the right
of selling the pledge if the pledgor fails to make payment at the stipulated time. No title to a
third party purchaser is guaranteed following a wrongful sale except in the case of property
passing by delivery, such as money or negotiable securities. In all other cases that person
must show they are a bona fide purchaser, for (good) value, without notice (BFP). In the case
of some types of property as defined on the detailed laws of the jurisdiction such a new
possessor (BFP) must have first consulted (before purchase) revealing no other ownership
and then made a public notice or registered their title in a court-recognised Register before
the pledgor. After a wrongful sale by a pledgee (e.g. where the pledgor has been keeping to
his payment schedule and will have the right to redeem the goods if continuing to do so), the
pledgor cannot recover the pledge/the value of the pledge without a tender of (full payment
of) the amount due (secured under the pledge).[3] This contrasts with the general law of
mortgages where most mortgagors can sustain a cause of action (sue) on a wrongful sale to
restore the property into their qualified ownership provided they bring any payment arrears
up to date — they do not need to redeem the mortgage immediately.hich most of the modern
European-based law on the subject is derived, but is generally a feature of even the most
basic legal systems. It differs from hypothecation and from the more usual mortgage in that
the pledge is in the possession of the pledgee. [3] It is similar, however, in that all three can
apply to personal and real property. A pledge of personal property is known as a pawn and
that of real property is called an antichresis.

WHAT IS PLEDGING OF SECURITIES?

Pledging here refers to an activity in which the borrower (pledgor) of funds uses securities as
a form of collateral to secure the funds it borrows or takes from the lender (Pledgee).

In other words, it is a secondary market activity in which securities are provisionally moved
from the pledgor’s/debtor’s securities account into the pledgee’s/creditor’s securities account
to back a debt facility as a form of collateral. When securities are pledged, the
pledgee/creditor maintains possession of the pledged securities; however the pledgee/creditor
does not have full ownership or title to the pledged securities unless default takes place.

5) Power of Attorney
A power of attorney (POA) is a legal document giving one person (the agent or attorney-in-
fact) the power to act for another person (the principal). The agent can have broad legal
authority or limited authority to make legal decisions about the principal's property, finances
or medical care. The power of attorney is frequently used in the event of a principal's illness
or disability, or when the principal can't be present to sign necessary legal documents for
financial transactions.

A power of attorney can end for a number of reasons, such as when the principal dies, the
principal revokes it, a court invalidates it, the principal divorces his/her spouse who happens
to be the agent or the agent can no longer carry out the outlined responsibilities.

Conventional POAs lapse when the creator becomes incapacitated, but a “durable POA”
remains in force to enable the agent to manage the creator’s affairs, and a “springing POA”
comes into effect only if and when the creator of the POA becomes incapacitated. A medical
or healthcare POA enables an agent to make medical decisions on behalf of an incapacitated
person.

KEY TAKEAWAYS

 A power of attorney (POA) is a legal document giving one person, the agent or
attorney-in-fact the power to act for another person, the principal.
 The agent can have broad legal authority or limited authority to make decisions about
the principal's property, finances or medical care.
 The power of attorney is often used when a principal becomes ill or disabled, or when
they can't be present to sign necessary legal documents for financial transactions.

Understanding Power of Attorney

A power of attorney should be considered when planning for long-term care. There are
different types of POAs that fall under either a general power of attorney or limited power of
attorney.

A general power of attorney acts on behalf of the principal in any and all matters, as allowed
by the state. The agent under a general POA agreement may be authorized to take care of
issues such as handling bank accounts, signing checks, selling property and assets like stocks,
filing taxes, etc.

A limited power of attorney gives the agent the power to act on behalf of the principal in
specific matters or events. For example, the limited POA may explicitly state that the agent is
only allowed to manage the principal's retirement accounts. A limited POA may also be
limited to a specific period of time, e.g., if the principal will be out of the country for, say,
two years.

Most powers of attorney documents allow an agent to represent the principal in all property
and financial matters as long as the principal’s mental state of mind is good. If a situation
occurs where the principal becomes incapable of making decisions for him or herself, the
POA agreement would automatically end. However, someone who wants the POA to remain
in effect after the person’s health deteriorates would need to sign a durable power of attorney
(DPOA).
 Karvy Stock Brooking Limited case
The Securities and Exchange Board of India (Sebi) banned Karvy Stock Broking Ltd (KSBL)
over client defaults worth Rs 2,000 crore with immediate effect on November 23. It’s been
banned from taking on new clients and executing trades for existing customers. This follows
an investigation by the National Stock Exchange (NSE) which found that Karvy had
allegedly sold client stocks pledged with it through associated entities. The regulator has told
depositories not to act upon any instructions by Karvy Stock Broking on the basis of powers
of attorney given to the brokerage house in order to prevent further misuse of client
securities.

“There is need for urgent regulatory intervention to prevent further misuse of clients’
securities,” Sebi whole time member Ananta Barua said in his ex-parte ad interim order late
Friday. Sebi said depositories should monitor movement of securities into and from
depository participant accounts of Karvy Stock Brookings’s clients to ensure the
latter’s operations are not affected.

The National Stock Exchange had said Karvy Stock Broking misused powers of attorney
given by its clients. Karvy sold client securities in the market through entities it controls and
used the funds for its own purposes. “It is only during inspection by NSE this account came
to notice. NSE report finds that there are numerous transactions in DP account no. 11458979,
named Karvy Stock Broking Ltd (BSE), whereby securities of the clients have been
moved.”The securities were transferred to this account, misusing powers of attorney, Sebi
said. “The securities lying in the aforesaid DP account actually belong to the clients which
are the legitimate owners of the securities,” the regulator said.

“Therefore, KSBL did not have any legal right to create any kind of pledge on these
securities. Even if the client securities were pledged, it should have only been for meeting the
obligation of the respective clients which was not observed in this case . This casts suspicion
on the role of Karvy, Sebi said. “Considering the issue of misuse of clients’ securities by
Karvy Stock Broking in unauthorized manner, for its own use and purposely not disclosing
the DP account no. 11458979, named Karvy Stock Broking Ltd (BSE) to the exchanges in
their reporting create a serious doubt on the conduct and integrity of Karvy Stock Broking
Ltd,” the regulator said. Sebi observed that prima facie a net amount of Rs 1,096 crore had
been transferred by Karvy Stock Broking to its group company, Karvy Realty.

Further, Karvy Stock Broking had sold excess securities to the tune of Rs 485 crore through
nine related clients. It had also transferred excess securities to six out of these nine related
clients to the tune of Rs 162 crore. On subsequent verification, it was observed that securities
worth Rs 257.08 crore had been pledged on behalf of four out of the nine clients. Karvy also
purchased securities amounting to Rs 228.07 crore between June 1to September 8 this year.
Market regulator Securities and Exchange Board of India (Sebi) on 23rd , November night
ordered to barred Karvy Stock Broking Ltd. from taking on new clients after finding alleged
client fraud of ₹2,000 crore. Sebi said the firm misused client collateral for its own trades. As
per Sebi’s intermediary regulations, brokerage firms cannot create additional pledges on
clients’ securities. In an effort to prevent further misuse of clients securities, Sebi, as an
interim measure, barred Karvy from taking any more clients in respect of its stock broking
business till the regulator completes its investigations. Karvy was also been barred from
acting on behalf of its clients.

Sebi has initiated a forensic audit to establish the extent of alleged misuse of client pledges,
and directed exchanges and depositories to initiate disciplinary proceedings against the
brokerage firm. However, in view of the fact that Karvy manages a large number of clients,
Sebi is ensuring smooth operations by asking depositories to monitor the flow of money from
clients’ accounts.
Sebi said Karvy, despite not having any legal rights to create a pledge on these securities and
generate funds, did so to the tune of ₹2,000 crore. “Even if the client securities were pledged,
it should be (used) only for meeting the obligation of the respective clients," said Sebi
member Ananta Barua in a 12-page order.

The order said an NSE inspection showed Karvy had transferred a net amount ₹1,096 crore
to its group firm Karvy Realty between April 2016 and October 2019.The brokerage also sold
pledged client shares via off-market transfer as its own in five out of nine client accounts
amounting to ₹228.07 crore in 2019, and transferred stocks worth ₹27.8 crore from 156
clients. None of these trades were executed or authorized by the clients.

Apart from prohibiting the entity from taking new clients in respect of its stock broking
activities, the watchdog directed NSDL and CDSL not to act upon any instruction given by
Karvy in pursuance of power of attorney given by its clients. Karvy has been given 21 days
time from the date of receiving the order to file its objections or responses, if any, PTI
reported.
The non-banking finance company ‘BAJAJ FINANCE’ had moved the tribunal against the
Sebi order saying that because of this directive it could not invoke the pledge.The Securities
Appellate Tribunal (SAT) suspended further transfer of investor securities that Karvy Stock
Broking Ltd (KSBL) had pledged with lenders.
A preliminary report given by the NSE had pointed out that securities worth Rs 2,300 crore
of more than 95,000 clients were transferred by KSBL to one demat account which was never
disclosed by the brokerage to the bourses. This had led to Sebi placing curbs, in an ex-parte
interim order, on KSBL transferring securities from one of its accounts.

The latest ruling from the SAT came after an appeal by Bajaj Finance, which had an exposure
of around Rs 312 crore against the pledge of listed shares.Its counsel submitted before the
SAT that Karvy has an outstanding obligation of over Rs 344 crore, which includes
applicable interest and other charges and that its rights were affected by the Sebi order.

Senior counsel Janak Dwarkadas said that Bajaj Finance has been lending funds towards
working capital requirements to Karvy against pledge of securities since December 2014.
Further, there was an undertaking from Karvy that such pledged securities were self owned
and not from clients’ accounts. Given the tightened regulatory approach, Bajaj Finance had
no reason to doubt the pledges made by Karvy for obtaining loans, he added.

He further submitted that with Karvy violating certain clauses of the loan agreement and
withdrawing beyond the sanctioned amount, a loan recall notice was issued to Karvy seeking
refund of the entire outstanding amount of Rs 345 crore. In the event of failure by Karvy to
refund the amount, the NBFC was planning to invoke the pledge. However on account of the
Sebi order, which prohibited transfer of securities with immediate effect, it could not invoke
the pledge.
 CONCLUSION
It isn’t that they cannot find the solution. It is that they cannot see the problem," said the
English writer G.K. Chesterton. It seems fair to use this description for the Securities and
Exchange Board of India (Sebi), which for years, has been trying to protect clients’ funds and
securities from unscrupulous brokers. Nearly five years ago, after a number of cases of
siphoning by brokers surfaced,  The need of the hour was exemplary justice, accompanied
with better inspection and surveillance capabilities and, perhaps, even shifting the role of
regulating brokers out of stock exchanges.
Nearly five years hence, we have more rules to protect client funds and securities, but we
also have a bigger scam. Karvy Stock Broking Ltd coolly pledged clients’ securities and
raised funds of about ₹2,800 crore, and reports suggest it even sold some client securities.
After a diktat by Sebi to the depositories, most of the securities have been returned to the
clients. But the lenders to Karvy are now crying foul and have approached the Securities
Appellate Tribunal for relief. The silver lining in all of this mess is that the legal squabble
may throw some light on where current regulations and processes fall short.

But only changing rules won’t help; more needs to be done. Hopefully, the Karvy fiasco, as
big as it is, will serve as a wake-up call and result in some tough decisions by the markets
regulator, and by its bosses. And if, as news reports suggest, the regulator is unhappy with
stock exchanges and their inspection capabilities, Sebi should consider moving this
regulatory task either within its doors or to an independent regulatory organization. The buck,
after all, stops with Sebi.
The next lesson is that there is no substitute for exemplary justice. The big deterrent for
market participants, who consider playing with client funds and securities, is that the
punishment in previous such cases was really severe. While it may well be the case that some
of Karvy’s clients signed up for products that involved the pledge of securities and leverage
—an ongoing forensic audit and the outcome of the case in SAT will throw light on this—the
big question is what action Sebi will take against Karvy’s promoters and management if,
indeed, there was misappropriation of clients’ assets. If the punitive action stops at a penalty
and a suspension of trading licence, it will hardly work as a deterrent for the next in line. In
that case, no amount of rules or inspections will help.

The other big lesson for the regulator is that it needs to pull up its socks when it comes to
resolution for clients in such cases. Thousands of Karvy’s clients had to go through a
harrowing time, because of the way things have played out since the regulator took action
against their broker about two weeks ago.

“Sebi can take a leaf out of the US Securities Investor Protection Corp. (SIPC), which takes
over operations of brokers that have failed. They do this by appointing a trustee to run the
operations of a failed broker, to complete the settlement of pending transactions, among other
things. A trustee may also transfer customer accounts to another solvent brokerage firm in
what is known as a bulk transfer. Such measures would have helped Karvy’s customers, who
are now stuck with a broker who has not been shut down but is not functioning either.
 FINDINGS
 Brokers would offer margining like this: Brokers usually take a loan by pledging the
securities at say 10-12% from NBFCs and then provide margins for five days
(typically Monday-Friday) at 18% to clients.
 Karvy altogether had a different process. Karvy didn’t move the fully paid security to
depository. You had to ask them to move it to depository. That’s the reason some of
Karvy’s clients received dividends reflected at broker level rather than at their bank
account.
 Technically the money raised from pledging pool account should be used towards
client margin funding only. But Karvy used this money for its own purpose.
  Karvy by default didn’t move client purchase of security to depository, rather held it
in pool account and would give it back to client whenever he does a transaction (like
selling it).
 Even SEBI was unable to track the pool account as it was mix of both unpaid/partially
paid and fully paid securities. It didn’t have a name on which client it belongs. Karvy
could have managed to always maintain it to say all of them are partially paid/unpaid.
 Karvy by pledging this quasi pool account raised money to cater its real estate
business and other business.
 SUGGESTIONS
1)  Investors should ensure that pay-out of funds/securities is received in your account within
working day from the date of pay-out.
2) investors must be careful while executing the PoA (Power of Attorney) - specify all the
rights that the stock broker can exercise and timeframe for which PoA is valid. It may be
noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
3) Register for online applications viz Speed-e and Easiest provided by Depositories for
online delivery of securities as an alternative to PoA.
4) investors must note that securities provided by you towards margin are not permitted to be
pledged by your Stock Broker for raising funds.
5) Do not keep funds and securities idle with the Stock Broker. Regularly login into your
account to verify balances and verify the demat statement received from depositories for
correctness.
6) Check messages sent by Exchanges on a monthly basis regarding funds and securities
balances reported by the trading member and immediately raise a concern if you notice a
discrepancy.
7) If you observe any discrepancies in your account or settlements, immediately take up the
same with your stock broker and if the Stock Broker does not respond, with the
Exchange/Depositories.
8)sebi/ nsdl must take necessary steps to avoid such unnecessary frauds and scams. It must
impose srict regulations on the stock brokers
 BIBLOGRAPHY
 Annual reports of the IL&FS.
 RBI and SEBI Report on Trend and Progress of the case on IL&FS.
 News papers & Journals.
 Research Papers and Published Articles.
 Company website

News articles and links

 https://www.morningstar.in/posts/55879/karvy-stock-broking-scandal.aspx
 https://www.livemint.com/money/personal-finance/karvy-not-a-solitary-case-why-
didn-t-sebi-act-early-11575312902150.html
 http://www.karvywealth.com/wealth-management-case-studies
 https://economictimes.indiatimes.com/wealth/invest/karvy-stock-broking-scandal-
how-retail-investors-can-safeguard-against-such-frauds/articleshow/72303278.cms
 https://www.thehindubusinessline.com/opinion/columns/karvy-case-and-the-games-
brokers-play/article30169158.ece
 https://www.moneycontrol.com/news/business/markets/karvy-case-sebi-raises-
estimated-misuse-to-rs-2800-crore-report-4690631.html