By:Pallavi Mittal (2010143)

Pankaj Bhutoria (2010144)

Status of Online Stock Trading in India

Contents

Trading

Screen based trading

Online trading

Installable software based Stock Trading

Terminals

Web (Internet) based trading application

Facts

TradingTraditionally, people used to gather at the

Exchange and bids and offers were made by

open outcry.

Disadvantages:

1. Lack of liquidity and transparency

2. Long settlement periods

3. Benami transactions

Screen based TradingNSE introduced a nationwide, on-line, fully

automated screen based trading system(SBTS)

Member can punch into the computer the

quantities of a security and the price at which

he would like to transact.

Transaction is executed as soon as a matching

sale or buy order from a counter party is

found.

Benefits of screen based trading over traditional method A safe and convenient way to hold securitiesImmediate transfer of securitiesNo stamp duty on transfer of securitiesElimination of risks associated with physical

certificates such as bad delivery, fake securities, delays, thefts etc.

Reduction in paperwork involved in transfer of securities

Reduction in transaction costNo odd lot problem, even one share can be tradedNomination facility

Disadvantages of screen based trading

Commission to broker

Control in hand of broker

Limitation for buying stock

Time consuming

Minimum buy/sell

Online Trading

There are two different type of trading

environments available for online equity

trading.

1. Installable software based Stock

Trading Terminals

2. Web (Internet) based trading

application

Installable software based Stock Trading Terminals

Software installed on investors computer.

Software are provided by the stock broker.

This kind of trading terminals are used by

equity traders.

NSE has 345 member brokers.

Installable software based Stock Trading TerminalsAdvantages: 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.

Disadvantages: 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.

Web (Internet) based trading application

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.

AdvantagesReal time stock trading without calling or

visiting broker's office.Display real time market watch, historical

datas, graphs etc.Investment in IPOs, Mutual Funds and Bonds.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.

Disadvantages

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.

FactsThe total numbers of investor accounts were

115.9 lakh at NSDL and 75.2 lakh at CDSL at the end of April 2011.

The number of investor accounts in April 2011 increased by 0.4 percent at NSDL while the same has increased by 0.5 percent at CDSL over the previous month.

A comparison with corresponding period of previous year shows, there was an increase in the number of investor accounts while to the extent of 9.8 percent at NSDL and 13.3 percent at CDSL

References

NSE www.nseindia.com

SEBI www.sebi.gov.in

www.chittorgarh.com/newportal/online-

stock-brokers-list.asp

THANK YOU