Transactions in STOCK MARKET

We buy Vegetables in the nearby shops in person, for our home. Now in some big cities by just making a phone call we can get the available vegetables in our home itself.

Likewise, previously to buy / sell a stock we ought to go directly to the stock Exchange. Later on by making a phone call, to our Share broker, we can buy / sell the desired stock and quantity. Now-a-days after the arrival of ( Internet ) Broadband anyone is able to buy / sell stocks in his own residence or even through mobile phones, etc.

After the arrival of Computers, since the share transactions are completely computerized, while purchasing a stock

# Name of the Purchaser
# No:of stocks purchased
# Buying price
# Buying time

all details are recorded and available. So that any intelligent adept can’t commit a crime. Even a person from a remote village can buy / sell stocks within a minute with the help of Computers.

THE SECONDARY MARKETS :-
There are 22 Stock Exchanges in India. The others are Bangalore and Bhuvaneswar Largely regional exchanges. Also 25 Commodity Exchanges are present in India. Due to the Arrival of Computers in Stock Market, the great disadvantage which occurred is, Regional stock Exchanges slowly fainted. The names of various regional Stock Exchanges in India are:-

REGIONAL STOCK EXCHANGES OF INDIA :
The list maintained by the Securities and Exchange Board of India (SEBI) is not current as of 2010.

AHMEDABAD
Name of Stock Exchange: The Stock Exchange, Ahmedabad
Address Kamdhenu Complex, Opp. Sahajanand College, Panjarapole, Ambawadi,
AHMEDABAD-380001.
Phone: (+91-079) 6449460, 6446733, 6441842, 6443058
Fax. (+91-079) 6442222
Tel. (+91-079) 6443131, 6447171
Fax. (+91-079) 6449966 / 448822

BANGALORE
Name of Stock Exchange: Bangalore Stock Exchange Ltd.,
Address "Stock Exchange Towers",
No. 51, Ist Cross, J. C. Road,
BANGALORE : 560 027
Tel. (+91-0281) 2995229, 2995234, 2995235
Fax. (+91-0281) 2995242 / 2277160
Tel. (+91-0281) 3311456

BARODA
Name of Stock Exchange: Vadodara Stock Exchange Ltd.,
Address Fortune Towers, Dalal Street, Sayajigunj,
BARODA 390 005.
Tel. (+91-0265) 340378
Fax. (+91-0265) 331452
E-mail vse@lwbdq.lwbbs.net
Tel. (+91-0265) 361433

BHUBANESWAR
Name of Stock Exchange: Bhubaneswar S. E. Assoc. Ltd.
Address: Falcon House, A- 22 Jharpara, Cuttack Road,
BHUBANESWAR 751 006.
Tel. (+91-0674) 582340, 582341, 582140
Fax (+91-0674) 582283

CALCUTTA
Name of Stock Exchange: Calcutta Stock Exchange Assoc. Ltd.,
Address: 7 Lyons Range,
CALCUTTA 700 001.
Tel. (+91-33) 220 6136, 3741, 1489, 1488, 6987
Fax. (+91-33) 2202514
Te.. (+91-33) 2206136

MADRAS
Name of Stock Exchange: Madras Stock Exchange Ltd.,
Address 11 Second Line Beach, Post Box No. 183,
MADRAS 600 001.
Tel. (+91-44) 510845, 512237
Fax. (+91-044) 5244897
Tel. (+91-44) 5221070

COCHIN
Name of Stock Exchange: Cochin Stock Exchange Ltd.,
Address: Post Box No. 3529, Veekshanam Road,
Ernakulam,
COCHIN 682 035.
Tel. (+91-0484) 369020, 367728
Fax. (+91-0484) 364864, 370471
Tel. (+91-0484) 364578, 367728

COIMBATORE
Name of Stock Exchange: Coimbatore Stock Exchange
Address "CSX Towers", 683-686 Trichy Road,
Singanallur,
COIMBATORE 641 005.
Tel. (+91-0422) 315100,315102
Fax. (+91-0422) 314937
Tel. (+91-0422) 572714

GAUHATI
Name of Stock Exchange: Gauhati Stock Exchange Ltd.,
Address: Saraf Buildings Annexe, A. T. Road,
GAUHATI 781 001(ASSAM).
Tel. (+91-0361) 533667, 533670, 72, 73
Fax. (+91-0361) 543272

HYDERABAD
Name of Stock Exchange: Hyderabad Stock Exchange Ltd.,
Address: 3-6-275 Himayatnagar,
HYDERABAD 500 029.
Tel. (+91-040) 597709, 10, 12
Fax. (+91-040) 240804
Tel. (+91-040) 4618251

INDORE
Name of Stock Exchange: Madhya Pradesh Stock Exc Ltd.,
Address: Rajani Bhawan, 3rd Floor, M. G. Road,
Opp. High Court,
INDORE 452 002.
Tel. (+91-0731) 432841-46
Fax. (+91-0731) 432849
Tel. (+91-0731) 432844

JAIPUR
Name of Stock Exchange: Jaipur Stock Exchange Ltd.,
Address: Rajasthan Chamber Bhavan, M. I. Road,
JAIPUR 302 001.
Tel. (+91-0141) 564962, 568335, 563521, 560201
Fax. (+91-0141 ) 563517
Tel. (+91-0141) 563521, 565163

KANPUR
Name of Stock Exchange: Uttar Pradesh Exchange Assoc Ltd.,
Address: Padam Towers, 14/113 Civil Lines,
KANPUR 208 001.
Tel. (+91-0512) 293115, 293174, 293134, 293437
Fax. (+91-0512) 293175

LUDHIANA
Name of Stock Exchange: Ludhiana Stock Exchange Assoc. Ltd.,
Address: Phiroze Gandhi Market,
LUDHIANA 141 008.
Tel. (+91-0161) 39318, 39319
Fax. (+91-161) 405756
Tel. (+91-0161) 405756

MUMBAI
Name of Stock Exchange: The Stock Exchange, Mumbai
Address Phiroze Jeejeebhoy Towers, Dalal Street,
MUMBAI 400 023.
Tel. (+91-22) 2655581, 2655626, 2655860-61
Fax. (+91-22) 2658121
Tel. (+91-22) 2655665

MANGALORE
Name of Stock Exchange: Mangalore Stock Exchange Ltd.,
Address: Kodialbail, 4th floor, Ram Bhavan Complex,
MANGALORE 575 003.
Tel. (+91-0824) 441214, 440813/ 581/ 275/ 597/ 254
Fax. (+91-0824) 440736
Tel. (+91-0824) 351137, 22361

MEERUT
Name of Stock Exchange: Meerut Stock Exchange Ltd.
Address: Kingsway Building
345 Bombay Bazar
Meerut Cantonment - 250 001
India

NEW DELHI
Name of Stock Exchange: Delhi Stock Exchange Assoc. Ltd.,
Address: 3 & 4/4B,
Asaf Ali Road, Near Turkman Gate
New Delhi - 110006.
Tel. (+91-11) 3724387, 3352951
Fax. (+91-11) 3379660, 3271302
Tel. (+91-11) 6219593, 6420710

OTC EXCHANGE OF INDIA
Name of Stock Exchange: OTC Exchange of India,
Address: 92 Maker Towers 'F', Cuffe Parade,
MUMBAI 400 005.
Tel. (+91-22) 2188164-68/2188511
Fax. (+91-22) 2188012/2188503
Tel. (+91-22) 2068468

PATNA
Name of Stock Exchange: Magadh Stock Exchange Association,
Address Ashiana Plaza, 9th Floor, Budh Marg,
PATNA 800 001.
Tel. (+91-0612) 223644, 222852
Fax. (+91-0612) 220960
President -
Tel. (+91-0612) 226568, 235712
Fax. (+91-0612) 235712

PUNE
Name of Stock Exchange: Pune Stock Exchange Ltd.,
Address: PMT Commercial Building, Deccan Gymkhana,
PUNE 411 004.
Tel. 328771, 772, 782, 783, 786
Fax. 212 328773

RAJKOT
Name of Stock Exchange: Saurashtra-Kutch Stock Exchange Ltd.
Address: Popatbhai Sorathia Bhavan, Sadar Bazar
RAJKOT 380 001
Tel. (+91-0281) 474673, 474699, 474686
Clg House: 447360
Fax. (+91-0281) 443431

SIKKIM
Name of Stock Exchange: The Sikkim Stock Exchange Association Ltd .
Address:Kundeh Khang
Tibet Road
Gangtok -737101 .

COMMODITY EXCHANGES OF INDIA :
§ Multi Commodity Exchange of India Limited (MCX)
§ National Commodity & Derivatives Exchange Limited (NCDEX)
§ Indian National Multi-Commodity Exchange (NMCE)
§ Commodity Exchange Limited ICEX.

Exchange	Abbreviation	Location	Product Types
Asian Derivative Exchange	ADX	Kathmandu,Nepal	Energy, Industrial Metals, Precious Metals
Commodities & Metal Exchange Nepal Ltd.	COMEN	Nepal	Gold and Silver
National Spot Exchange Limited	[NSEL]	Mumbai, India	Spot Trading in commodities, E-Series
Nepal Derivative Exchange Limited	[NDEX]	Kathmandu,Nepal	Agricultural, Precious Metals, Base Metals, Energy
Mercantile Exchange Nepal Limited	MEX	Kathmandu,Nepal	Agricultural, Bullion, Base Metals, Energy
Nepal Spot Exchange Limited	NSE	Kathmandu,Nepal	Agricultural, Bullion
Indian Commodity Exchange Limited	ICEX	India	Energy, Precious Metals, Base Metals, Agricultural
Multi Commodity Exchange	MCX	India	Precious Metals, Metals, Energy, Agricultural Products
National Multi-Commodity Exchange of India Ltd	NMCE	India	Precious Metals, Metals, Agricultural
Bhatinda Om & Oil Exchange Ltd.	BOOE	India	Agricultural
National Commodity and Derivatives Exchange	NCDEX	India	All

All the Trading facilities are provided only through their members. Therefore memberships or seats , on the exchange are valuable assets. The majority of seats are commission broker seats, most of which are owned by large full service brokerage firms.

Regional Exchanges also sponsor trading of some firms that are traded on National Exchanges. This dual listing enables local brokerage firms to trade in shares of large firms without needing to purchase memberships on the larger exchanges like BSE and NSE. This for example, Infosys is listed on the Bangalore stock exchange apart from BSE and NSE. However, BSE and NSE are still the preferred exchanges for large Traders.

Like that in various Cities stock Exchanges were present. After the formation of “ NATIONAL STOCK EXCHANGE – NSE ” in 1994 , since Mumbai stock exchanges alone are computerized all others are having tie up with NSE. Let us look at a glance to the World Stock markets:- 

Sl.No	Name of the Exchange	Listed Companies	Grade	Market Capitalization	Status
1	Bombay stock exchange	4900	World – 1	70,46,748 Crores	OCT - 2010
2	N.S.E.	2200		68,94,911 Crores	NOV – 2010.

But before entering the stock market to buy / sell stocks, we need an account like a Bank account, called “ De-mat Account ” and “ Broking account ”. In previous years a certificate          ( Paper form ) will be given on authority to stocks purchased.

Many disadvantages were found in issuing those in paper form. Those printed in Paper must be kept safe, may be torn out, burnt in fire, destroyed in Water etc.

After the arrival of Computers, as a substitute to Paper Certificates, by the Electronic methods, all were converted to Digital format (Paper-less).

TRADING ACCOUNT:- 
Any person to buy / sell stocks in stock market, a “ Broker ” is required, who is an authorized member of the Stock Market. We have to open a “Trading Account” to a “Broker” as desired by us.

Without Trading account we can’t do business with any Broker. There are Hundreds of Brokers each of them may be having branches in various towns.

For Example:- You desired to Buy / Sell stocks in stock market. An advance Cheque must be given to your Broker. Based upon the value of your Cheque, the broker finds no difficulty to buy / sell stocks within the Cheque value.

Supposing no advance payment is given ! On what basis he can purchase stocks? He may confuse or never buy stocks on your behalf.

On your request your broker can purchase the desired stocks, and quantity as mentioned by you. After purchasing he may give the (Buy order Execution ) Buying order form to you. After purchasing the stocks, the no: of stocks will be increased, and money will get reduced in your Trading Account.

While selling stocks, share document if given to your Broker, he may sell to another Broker, and collect the money. And the stock selling price will be credited in your Trading account. As needed by you, the sold amount from the Broker can be collected by means of a Cheque. After depositing in your Bank account can be encashed.

Traditionally for several years share transactions were performed in the above manner. Auction had taken place at which cost, the Broker purchased at which cost said to us, were all entirely suspicious.

Moreover, everyone felt that the Trading transactions were conducted in Dark room atmosphere, so that no investor is aware of the Truth happening Inside.

DE-MAT ACCOUNT:- ( De- Materialized account )
In the above situation Transparent Auction method was Introduced. Previously within the stock exchange auction conducted only in the presence of several stock brokers, was modified, and then with the help of Computer ventilation’s due to the Technological Development, made visible to everyone.

The Auction Bids offered by investors were visible in “ ON LINE ”. Brokers were able to open branches throughout the country and in various cities. Auction and Bargaining were conducted in front of the Computer Screen.

In olden method, the stocks bought / sold will be known to the Brokers within the Auction Hall. But in Computerized Transaction, Auction and Bargaining visible to everyone, none is necessary to show their Identity.

While purchasing stocks as an authority of stocks purchased a copy of “ Share Certificate” will be given. Those were also be recorded like name of the purchaser, no: of stocks in the Company Registrar’s documents.

Since all the certificates were in Physical or Material form it can be visibly seen, touched, and taken in hand, watch its colour, even smell the paper, etc…

Share certificate while kept in home due to the following reasons like Lost, theft, Fire, Flood, may get damaged and possibilities are also there, to get completely Destroyed. Instead of securing in Material form an alternative method to this, would be better for all.

The solution to the above problem is De-Mat account. Material can be said as physical form whereas, De-Material can be said as immaterial form. No Shape, can’t be seen, can’t be touched etc. Only we can realize and feel its presence.

Like the money kept safely in Banks, Shares in De-Mat form are maintained safely by Organizations called ( Depository Participants ) D.P’s. Like the money saved in Bank account, the stocks are saved in De-Mat form by the D.P’s. like giving Cheque’s, here Delivery Instruction slips.

While Buying Stocks :-

1. Cheque given to the Broker.
2. Money gets reduced in the Bank account, and increases in the Trading account.
3. According to our instruction buying order executed.
4. Money reduces in Trading account.
5. Stocks increases in De-Mat account.

The stock Exchange informs the Registrar and the records are renewed. Only the cheque given, and the instruction, to buy the stocks, said to the Broker are our duty. Balance all are happening automatically.

While Selling Stocks :- 
Delivery instruction Slips are given to the Broker. Name and no: of stocks are to be mentioned.

1. According to our instruction selling the stocks executed.
2. Stocks decreases in De-Mat account.

Informed to Registrar and records are renewed.
Trading account balance increases.
Broker issues Cheque.
Money gets reduced in Trading account.

ADVANTAGES OF DE-MAT :-
1. No need for delivery.
2. Delivery forms duly filled is not necessary to be checked out.
3. For name transfer share transfer stamps need not be bought.
4. Registered post may not be sent.
5. Dividend, Bonus, Rights losses are never, for the time taken for name transfer.
6. Monthly statements including stocks purchased / sold will be sent to us. ( List )
7. No need to find place to keep safe.
8. Address changes need not be informed to all the stocks purchased companies, instead the  

    De-mat account maintaining company alone be informed.
9. No need to see share certificate.
10. Regarding postal department dividend warrant cheque’s missing, receiving delayed, forget 

       depositing in bank, depositing in bank all those burdens are set free.
11. Apart from this our bank account no; can be informed them, easier to credit our dividend in    

      our bank account.

De-Mat accounts are maintained by two Organizations namely

1.National Securities Depository Limited (N.S.D.L.) and
2.Central Securities Depository Limited (C.S.D.L.).

Both the two Organizations are maintaining the India’s entire De-Mat accounts. Between the Investors and the above two Organizations there may be D.P’s. The D.P’s most probably be your Broker. For extreme safety ness Trading account, and De-Mat account can de opened from two different Brokers. But many difficulties can be found.

Opening a Broking Account:- 
While selecting the Brokerage firm, the following points, can be taken into account,

1. Broker’s experience in the Field,
2. About him or his promoters any cases filed in SEBI,
3. The experience gathered by his customers,
4. Both Online / Offline facilities are provided,
5. To give personal advice or to guide regarding share Trading, persons are available,
6. The qualities of your Relationship Manager, Etc….. are to be considered before opening an 

    account.

Brokerage Charges:-

According to the rules and regulations released by N.S.E. and B.S.E. more than 2.5% of Brokerage charges shall not be collected.

Comparison between major brokerage firms

ICICI Securities

HDFC Securities

UTI Securities

5 Paisa (Indian Infoline)

Indiabulls

Account Opening Charges

Rs.750

Rs.750

Rs.600

Rs.750

Rs.500

Brokerage (%)

Delivery

Intraday

Delivery

Intraday

Delivery

Intraday

Delivery

Intraday

Delivery

Intraday

0.75

0.15

0.75

0.15

.80

.15

0.251

0.071

0.5

0.10

With all taxes and other charges per 100

0.92

0.19

0.92

0.19

0.97

0.19

0.87

0.12

0.64

0.12

Transaction Charges (selling)

Rs.20 or 0.04% of transaction, whichever is more

Rs.23 or 0.04% of  transaction, whichever is more

Rs.23 or 0.04% of  transaction, whichever is more

Rs.23 or 0.04% of  transaction, whichever is more

Rs.17

Exposure on Cash

NIL

4 times

NIL

4 times

NIL

NIL

NIL

NIL

2/4 times

12 times

Exposure on Securities

NIL

NIL

NIL

NIL

75% 0f  the Market Value

Minimum Margin

-

-

Rs.10,000

Rs.2,500

NIL

Annual Maintenance Charges

Rs.350

Rs.500

Rs.250

Rs.300

NIL

Banking facility

ICICI Bank

HDFC

UTI Bank

-

All Banks

Net Banking facility

ICICI Bank

HDFC

UTI Bank

-

HDFC/ICICI/ Citibank

Charting

NA

NA

NA

Thru software2

Thru Software

Historical Data

NA

NA

NA

NA

Available for the last 4-5 yrs & linked to the s/w

Intra day cut off time

3 pm

3 pm

3 pm

3 pm

3:10 pm

Relationship Manager

N.A.

N.A.

NA

NA

Assigned to every client

* 1. The brokerage will be charged on the condition of Monthly fixed fee of Rs.800/- or Yearly Rs.8, 000/-. And whatever trading you did the brokerage will get deducted from this amount with the mentioned rate. I.e. you are require to trade approx volume of Rs.14, 00,000 per month to get the benefit of this already paid amount. * 2. Only intraday 

Who can open the De-mat Account ?
1. Indian Citizens (Including minor )
2. Companies
3. Partnership Organizations
4. Trusties.
5. Hindu Joint Families (H.U.F)
6. Anglo Indians
7. Non resident Indians (N.R.I) and
8. Foreign Institutional Investors (FII’s)

Documents needed for Opening De-mat Account :-

1) Application form ( signed with more than 50 signatures )
2) Passport size photos + Nominee photo
3) PAN Card Xerox
4) Address proof
5) Bank Account ( with 3 or 6 months statement )
6) De-mat account charges ( A/C payee Cheque or cash )

The Items traded in Stock market :-

1) Shares or Stocks
2) Government / Private Debt Instruments.
3) Mutual Fund Schemes.
4) E.T.F’s ( Gold , Silver )
5) Futures & Options
6) Currency

TRADING PATTERN OF THE INDIAN STOCK MARKET 
Indian Stock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange(s). They are broadly divided into two categories, namely,

Specified Securities ( Forward List) and  
Non-Specified Securities (Cash List).

Equity shares of dividend paying, growth-oriented companies with a paid-up capital of at least Rs.50 million and a market capitalization of at least Rs.100 million and having more than 20,000 shareholders are, normally, put in the specified group and the balance in non-specified group.  

Types of Transactions 
The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:

They are :
(a) Spot delivery transactions                                                                                        

 " For delivery and payment within the time or on the date stipulated when entering into the contract which shall not be more than 14 days following the date of the contract " : and 

(b) Forward transactions 

 " Delivery and payment can be extended by further period of 14 days each so that the overall period does not exceed 90 days from the date of the contract". 

The latter is permitted only in the case of specified shares. The brokers who carry over the out standings pay carry over charges (can tango or backwardation) which are usually determined by the rates of interest prevailing. 

A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell securities on his own account and risk, in contrast with the practice prevailing on New York and London Stock Exchanges, where a member can act as a jobber or a broker only. 

The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-to-face trading with bids and offers being made by open outcry. However, there is a great amount of effort to modernize the Indian stock exchanges in the very recent times. 

Indian stock exchange allows a member broker to perform following activities: 

1. Act as an Agent, 
2. Buy and sell securities for his clients and charge commission for the same, 
3. Act as a trader or dealer as a principal, 
4. Buy and sell securities on his own account and risk. 

Over The Counter Exchange of India (OTCEI) 
Traditionally, trading in Stock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry.

The age-old traditional trading mechanism prevailed in the Indian stock markets gave way to many functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long settlement periods and binami transactions, which adversely affected the investors to a great extent. 

In order to overcome these inefficiencies, and to provide improved services to investors, the country's first ringless, scripless, electronic stock exchange - OTCEI - was created in 1992 by country's premier financial institutions – 

Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and Can Bank Financial Services. 

Trading at OTCEI is done over the centres spread across the country. Securities traded on the OTCEI are classified into: 
Listed Securities -  
The shares and debentures of the companies listed on the OTC can be bought or sold at any OTC counter all over the country and they should not be listed anywhere else 
Permitted Securities -  
Certain shares and debentures listed on other exchanges and units of mutual funds are allowed to be traded 
Initiated debentures -  
Any equity holding at least one lakh debentures of a particular scrip can offer them for trading on the OTC. 

OTC has a unique feature of trading compared to other traditional exchanges. That is, certificates of listed securities and initiated debentures are not traded at OTC. The original certificate will be safely with the custodian. But, a counter receipt is generated out at the counter which substitutes the share certificate and is used for all transactions.

In the case of permitted securities, the system is similar to a traditional stock exchange. The difference is that the delivery and payment procedure will be completed within 14 days.

Compared to the traditional Exchanges, OTC Exchange network has the following advantages:
OTCEI has widely dispersed trading mechanism across the country which provides greater liquidity and lesser risk of intermediary charges.
Greater transparency and accuracy of prices is obtained due to the screen-based scrip less trading.
Since the exact price of the transaction is shown on the computer screen, the investor gets to know the exact price at which s/he is trading.
Faster settlement and transfer process compared to other exchanges.
In the case of an OTC issue (new issue), the allotment procedure is completed in a month and trading commences after a month of the issue closure, whereas it takes a longer period for the same with respect to other exchanges.

Thus, with the superior trading mechanism coupled with information transparency investors are gradually becoming aware of the manifold advantages of the OTCEI.

Advantages of OTCEI :-
1. Greater liquidity and lesser risk of intermediary charges due to widely spread trading 
    mechanism across India,
2. The screen based scrip less trading ensures transparency and accuracy of prices,
3. faster settlement and transfer process as compared to other exchanges,
4. Shorter Allotment procedure ( in case of a new issue ) than other exchanges.