PRESENTED BY;

RIGZIN ANGMO RIYA BISWAS

 Traditionally

stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading.

 Investor

requires a Stock Broker to buy and sell shares in stock exchanges (BSE, NSE etc.). Stock Broker are registered member of stock exchange. A stock broker can register to one or more stock exchanges. Only stock brokers can directly buy and sell shares in Stock Market. An investor must contact a stock broker to trade stocks. Broker charge commissions (brokerages) for their service. Brokerage is usually a percent of total amount of trade and varies from broker to broker.

 Stocks

(Shares, equity) are traded in stock exchange. India has two big stock exchanges (Bombay Stock Exchange - BSE and National Stock Exchange - NSE) and few small exchanges like Jaipur Stock Exchange etc. Investor can trade stocks in any of the stock exchange in India.

 The

Bombay Stock Exchange, founded in the 1870s, is the oldest stock exchange in Asia. With 6,000 companies listed from every imaginable industry. Most Foreign Companies have started investing heavily in the Indian stock markets and with most industries giving healthy returns on investments, indications are that the markets will continue to perform above expectations. India boasts of the third highest investor base in the world, unthinkable till a few years ago.

The Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition. This automated, screen-based trading platform called BSE On-line trading (BOLT) currently has a capacity of 8 million orders per day. The BSE has also introduced the world's first centralized exchange-based internet trading system, BSEWEBx.co.in to enable investors anywhere in the world to trade on the BSE platform.

The National Stock Exchange (NSE) is the worlds third largest stock exchange in terms of transaction volumes. The NSE is based out of Mumbai. NSE is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading. National Stock Exchange (NSE) was promoted by leading financial institutions, banks, insurance companies and other financial intermediaries in India.

NSE India commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. NSE India pioneered commencement of Internet Trading in February 2000, which led to the wide popularization of the National Stock Exchange (NSE) in the broker community. The year 2008 saw introduction of Stock and Currency derivatives by the NSE India.

NSE was set up with the objectives of: Establishing nationwide trading facility for all types of securities Ensuring equal access to investors all over the country through an appropriate telecommunication network Providing fair, efficient & transparent securities market using electronic trading system Enabling shorter settlement cycles and book entry settlements Meeting International benchmarks and standards

Electronic trading, sometimes called etrading, is a method of trading securities (such as stocks, and bonds), foreign currency, and exchange traded derivatives electronically. It uses information technology to bring together buyers and sellers through electronic media to create a virtual market place.

 Online

Stock Market Trading is an internet based stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker. In this case these Online Stock Trading companies are stock broker for the investor . They are registered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades in BSE and NSE.

The major financial products and services of the Online trading in India are like equities mutual funds life insurance general insurance loans share trading commodities trading portfolio management financial planning.

1.

2.

3.

4.

To register with an online trading portal and get into an agreement with the firm to trade in different securities. The order processing is done in correct timings as the servers of the online trading portal are connected to the stock exchanges. They can also get updates on the trading and check the current status of their orders either through e-mail or through the interface. Brokerages also provides research content on their websites, such that the clients can take their own decisions on stocks before investing.

 Reduced

cost of transactions Greater liquidity Greater competition Tighter spreads Increased transparency

Number of years

% practicing e-Trading

1-2 years

68

3-4 years

25

5-6 years

METHOD

Online trading

20

Manual trading

66

Both

14

a)

Benefits to the users Benefits to the brokers

b)

1.
2. 3. 4.

Lower transaction cost Transparency Convenience Procedural benefits

1.

2.
3.

Business potential Easier risk management Lower staff cost

E- broking in India has become increasingly popular as people from all walks of the society can easily be a part of the stock market and look after their investments on their own and with a few simple clicks of a button. Those who are in the corporate fields or run a business of their own and yet want to earn a few more extra bucks gladly turn to E- broking in India which is fast and gives you all the information required irrespective of where you are in the world.

 Login

on to an electronic communication network through the internet. Then user access his e trading account with the help of secure customer password. After that the user can connected directly with one or more exchanges and any transaction would be instantenous or irrevocable.

Scalability of trading system

E trading system

Integration with third party system

Security model

There are two different type of trading environments available for online equity trading A. Installable software based Stock Trading Terminals B. Web (Internet) based trading application

 These

trading environment requires software to be installed on investors computer. These software are provided by the stock broker. These software's require high speed internet connection. This kind of trading terminals are used by high volume intra day equity traders.

 Orders

directly send to stock exchanges rather then stock broker. This makes order execution very fast. It provides almost each and every information which is required to a trader on a single screen including stock market charts, live data, alerts, stock market news etc.

 Location

constrain - You cannot trade if you are not on the computer where you have installed trading terminal software. It requires high speed internet connection. These trading terminals are not easily available for low volume share traders.

 These

kind of trading environment doesn't require any additional software installation. They are like other internet websites which investor can access from around the world through normal internet connection.

Real time stock trading without calling or visiting broker's office. Display real time market watch, historical datas, graphs etc. Check the trading history; demat account balance and bank account balance at any time. Provide online tools like market watch, graphs and recommendations to do analysis of stocks. Place offline orders for buying or selling stocks. Set alert to inform you certain activity on the stock through email or sms. Customer service through Email or Chat. Secure transactions.

 Website

performance - sometime the website is too slow or not enough user friendly. Little long learning curve especially for people who doesn't know much about computer and internet. Brokerages are little high.

 Internet

stock-trading in India is a recent phenomenon and began as recently as January 2000. Although there are more than 40 e-brokers, the industry is still in a nascent stage as online trades account for merely Rs.700 million, which is a negligible percentage of the total stock trade. The leading e-brokers in the Indian markets are ICICIDirect, india bulls, motilalOswal, 5 PAISA, etc.

1.
2. 3. 4. 5. 6. 7. 8. 9.

10.
11. 12. 13.

14.

ICICIDirect Sharekhan Indiabulls 5PaisaMotilal Oswal Securities HDFC SecuritiesReliance IDBIPaisaBuilder Religare Geojit Networth Stock Broking Kotak Securities Standard Chartered-STCI Capital Markets Ltd Angel Trade HSBC InvestDirect

1.

2.

3. 4.

Ask for Demo: Contact the broker who provide online trading service and ask him to give you a demo of product. Check if the broker trades in multiple stock exchanges. Usually most of the Online Trading Websites trade in NSE and BSE in India. Check the integration of Brokerage account, Demat account and Bank account. Compare brokerages with other peer companies.

1. Proof of residence (Address proof)Driving license Voter's ID Passport Photo credit card Photo ration card Utility Bill (Telephone, Electricity etc) Bank Statement 2. Proof of identity Driving license Voter's ID Passport Photo ration card 3. PAN Card 4. Two photographs

The magic trading which is supposedly possible through the mechanism of E-Trading is a long way to materialize. It is has not spread its wing on the Indian soils. In fact, there are lots of practical limitations for the *E-Trading* to gain momentum. 1. Rupee Not Ready In fact the basic requirements for the working of E-Trading is the full convertibility of rupee. Unfortunately, the Indian rupees is yet to become fully convertible. This is a single most crucial handicap facing the global electronic trading by companies in India.

2. In India, although electronic funds transfer take place, this is done within the frontiers of the country. Banking System Not Ready Banking system is not prepared to facilitate the working of global trading. Since banks occupy a pivotal role in the mechanism of international trade.

3. It is important that they must be position to facilitate the electronic and paperless trade at the global level. Laws of land is Not Ready The existing legislations governing the e- banking operations require the recording and presentation of evidence of payments in physical form. These laws such as laws of evidence, criminal laws, the central excise and direct tax laws do not recognize completely the electronic funds especially at global level.

4. Infrastructure Not Ready Although, Reserve Bank of India is committed in providing excellence in banking services by way of adopting e-banking or e-commerce facilities but adequate step have not yet been taken to create, maintain and strengthen the infrastructure like international communication facilities.

5.

6.

7.

The low density of telephones, low Internet penetration, and low installed base of computers are responsible for the poor availability of the Internet. Very few online payment gateways are available, hindering the smooth growth of the industry. Fifth, the concept of trading on computers through the Internet requires a change in the habits of people; enhancing trust in these techniques may take more time.

Barriers Lack of Security Lack of Privacy Inadequate E-Payment facilities Lack of Computer literacy Lack of IT infrastructure Lack of IT-skilled personnel Lack of appropriate laws related to ecommerce Preference for face-to-face transaction

% 21 11 10 8 14 4.5 11.5 20

 Current

Web-based electronic commerce systems are lacking in efficient electronic brokerage. However, brokerage plays an important role in many electronic commerce transactions. Over the past few years significant research has been done in the area of electronic commerce, based on distributed object technology.