STOCK BROKING

Presented By:
 Tanushree Hiran
INTRODUCTION
STOCK MARKET
FIRST STOCK MARKET IN INDIA
EARLY SYSTEM OF STOCK BROKING
PRESENT SYSTEM OF STOCK
BROKING
VARIOUS SOCK MARKETS IN INDIA
 Ahmedabad  Jaipur
 BSE  Ludhiana
 Bangalore  Chennai
 Bhubanshewar  Magadh
 Kolkata  Manglore
 Cochin  NSE
 Coimbatore  Pune
 Delhi  OTCEI
 Gauhati
 Hyderabad
 vadodara
 Stock Broker

A stock broker is a member of a recognized stock

exchange who buys, sells or deals in securities.
A certificate of registration from SEBI is mandatory to act
as a broker. He will have to abide by its rules, regulations
and by-laws, pay the prescribed fees.
REGISTRATION-A broker seeking registration with SEBI,
has to apply through stock exchange of which he is a
member. Application
Must be forwarded by exchange to SEBI within 30 days
from date of receipt.
SEBI checks whether or not he is eligible for a
membership.
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 PAYMENT OF FEE-fee is paid as per
the annual turnover, that is
aggregate of sale and purchase price
of securities received and receivable
by stock broker.
 CODE OF CONDUCT-integrative,
promptness and fairness
 BOOKS TO BE MAINTAINED –register
of transactions, client ledger, cash
book etc.
Capital adequacy norms for broker
 BASE MINIMUM CAPITAL- a
minimum amount is to be maintained
with stock exchange
 ADDITIONAL CAPITAL RELATED TO
VOLUME OF BUSINESS; in addition to
minimum base capital
SUB-BROKER
Sub broker acts on behalf of a stock broker as
agent or otherwise for assisting investors in
buying, selling or dealing in securities through
such broker, but he is not a member of stock
exchange.
To act a sub-broker, a certificate of registration is
required.
If the sub-broker wants to do the business
with more than one broker, he needs to be
separately registered with SEBI for such broker.
 GENERAL OBLIGATION-
1- PAYMENT OF FEE- Annual fee RS 1000 for
initial period of 5 years, than afterwards annual
fee of RS 500 is payable
2 AGREEMENT-Agreement between the broker
and sub-broker for defining the duties and
authority
FOREIGN BROKERS
SEBI has issued separate guidelines for foreign brokers to
assist foreign institutional investors
REGISTRATION-For registration a foreign broker has to
disclose to SEBI, names of overseas stock exchange
where he is registered.
TRANSACTIONS IN ACCOUNTS-The foreign currency
denominated account of the registered foreign broker
would be credited with inward remittance brought in
by him.
MARKET OPERATION-A foreign broker can operate on
behalf of a registered FIIs. He cannot deal in securities
on his own account as a principal.
REPORTING SYSTEM-Foreign broker has to submit monthly
report to SEBI.
INSPECTION-SEBI can inspect books and accounts of
foreign broker.
STOCK MARKET
(CASH/NORMAL) TRADING
Segments for Cash Trading
 Wholesale Debt Market Segment
 Capital Market
 Trading in Central Government
Securities segments
Wholesale Debt Market Segment
 Trading Members
 Participants
 Trading System
 Basis of Trading
 Clearing & Settlement
Capital Market Segment
 Trading Mechanism
 Online IPOs
 Clearing & Settlement
 Settlement Agencies
 Risk Management System
Trading of Central Government
Securities Segment
Online trading
Online trading system
 The client has to enter the stock code and other
parameters such as quantity and price of the scrip on
the place order window
 The client can review the order placed by clicking the
review option. He can also reset to clear the values.
 Satisfactory orders are sent by clicking the send
option.
 The client receives an order confirmation message
with number and values of the order.
 If the order is rejected by the broker or stock
exchange for certain reason invalid price limit, a
related message appears at the bottom of the screen.
The time taken to execute the order is 10 second
Continued…..
 When the trade is executed ,the brokers asks for the
transfer of funds by the investors to his account.
Stocks are credited/debited according to the buy/sell
oeder in the demat accounts
Website offer;
 News and research report

 BSE and NSE movement

 Stock analysis

 Freebies

 IPO and mutual fund centers and movement of

international stock exchange
Advantages and
disadvantages of online stock
trading

Advantages

1 - The most advantageous aspect of online trading is the

immediate access to the account and one can easily be
updated with the latest stock information and news of the
company in which you have invested or want to invest.

2 - There is a proper check over the portfolios by using the

accounts opened through brokerage firms in online stock
trading
 3- The other most important advantage of the online
trading is that the company permits the investor to
chart the profitable stocks and to update the investor
with latest news and updates of the stock market.
 4 - Online stock investing has helped a lot in saving
time and money by enjoying the thrill of trade at our
convenience in the ambience of our home.
 5- There is another facility provided by the online
brokerage firms to contact the other trained brokers
and investment counselors for the guidance if
required while trading
 6- More flexibility in terms of being able to see what options
are available to you and scan the market.

 7- More control on our transactions. You can decide

exactly what price and time you wish to buy, down to the
fraction of a second, as well as change your order whenever
you feel like. No waiting on the phone or having to go in
person to a branch.

 8- Inexpensive and affordable commission charges

Commissions per trade online are much lower. For
example:- 5 paisa.com offer competitive rates. They charge
only 5 paisa for Rs 100 of trade done, which is 0.05%.
brokerage. In case of trade that result in delivery, they
charge an additional 0.20% for back office and securities
handling
Disadvantages

 Technical Reliability

 The investor is alone

 Lack of set of standards for service
 Derivatives
Meaning:-Derivatives such as options and
futures, are financial contracts which derive their
values from the underlying assets or securities.

An option is the right, but not the obligation to buy or

sell something on a specified price.

An option is a contract between two parties to buy or

sell specified number of shares at a later date for an
agreed price.
Futures and Options trading system:-

The futures and options trading

system of the NSE, called the NEAT-
F&O trading system, provide a fully
automated screen-based trading for
Nifty futures and options as well as
stock futures and options on a
nationwide basis through an online
monitoring and surveillance
mechanism .
A.Trading Members
B.Clearing Members
C.Professional Members
D.Participants
Order Types and condition:-
-Day order
-Good till cancelled order
-Good till Day/Date order
-Immediate or cancel order
Stop loss order
-Market price order
-minimum fill order
-All or none order
Scope of Stock Broking
IMPACT OF STOCK BROKING ON
INDIAN MARKET
 Competition in the brokerage industry
 Transparency
 Anonymity
 Gains outside Bombay
 Operational Efficiency
 Improved market efficiency
 Different services under a roof
Conclusion
 Until 1988, stock exchanges were more or less self-
regulatory organisations within the broad overall
supervision of Govt. under the provisions of the
Securities Contracts (Regulation) Act.
 The SEBI now ensures that they discharge their self-
regulatory role well by laying down their framework of
regulation and monitoring its observance.
 A notable development relating to organisations
characterises the emergence of the stock market
system in India in the last decade.
 The foreign institutional investors are playing a
significant role in the markets.
 SEBI has put in place a different set of guidelines for
foreign bankers. The main elements of the framework
of operation of foreign brokers are registration with
SEBI, transaction, market operations, reporting system
and their inspections by SEBI.
 The introduction of derivative trading since June 2000
has completely transformed the broking as a
professional service.
 References
 www.nseindia.com
 Financial Services
-M.Y.Khan
 Security Analysis & Portfolio Management
-Pandian