Final Report on Stock Exchange

8/6/2019 Final Report on Stock Exchange

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EXECUTIVE SUMMARY

This report is an effort to study the whole system of securities trade andvarious regulatory bodies that govern the system.

The report brings to light the SEBI (Securities and Exchange Board of India)

act that governs the securities transactions and the working of the stock

exchanges. The SEBI board constituted under this act is the regulatory body

that enforces the act and periodically makes changes to the structure of the

system in the interest of the investor. The SAT (Securities Appetite Tribunal)

decides any case that may arise due to the rulings of the SEBI board.

Next we have the depository (NSDL, CSDL) which registers and governs the

depository participants (Stock Holding Corporation of India Ltd.). The

depositories are governed by the SEBI and must follow the rules and

regulation of the Depositories Act, 1996.

Then we would take a look of the various securities market. The history and

the present scenario of some of the major stock markets of India (BSE, NSE)

are introduced.

This makes the ground for the detailed study of the UPSE (Uttar Pradesh

Stock Exchange), one of the only functional regional stock market in the north

India other than NSE. The functioning of the departments is explained with

special emphasis on the margin department.

Hope this report will be able to enhance the knowledge of the investor about

the stock market.

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INTRODUCTION

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Introduction

Uttar Pradesh Stock Exchange Association Ltd. was inaugurated on 27th

August, 1982 and occupies one of the prominent place among the Stock Exchanges

in India . It plays an important role in the development of the capital market of

North India. Initially, it had only 350 members which has grown up to 540 at present.

The membership is open to companies even beyond the territories of Uttar Pradesh.

Currently, the exchange has 843 listed companies with a total capitalisation of

Rs.81184 crores.

UPSE Securities Ltd. is a 100% owned subsidiary of the U.P. Stock Exchange

Association Ltd. and was incorporated on 19th of April, 2000. Its main object is to

obtain membership of the big exchanges like BSE or CSE. It aims at providingtrading facilities on these bigger exchanges to the members of U.P. Stock Exchange

as a sub-brokers according to the policies/guidelines issued by SEBI.

The Company acquired the membership of Bombay Stock Exchange (BSE) and

commenced an online trading on BSE On-Line Trading System (BOLT) from 29th

of January, 2001. Currently, 43 members are trading on BSE through the Company,

96 have been registered with SEBI as sub-brokers and 153 have applied for

participation. The Company has also been admitted as member of CSE and further

steps are being taken in this regard.

Investor's Service Center / Library of UPSE

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R&D Wing of UPSE is in function since 1992 under the directions of SEBI and it

provides valuable services to the investors. Investor's Service Centre maintains a well

equipped library of Books, journals, periodicals and Newspapers on Financial

Markets.

They maintain the records of day to day quotations of major exchanges, the annual

reports,of companies, PRIME Directory , complete set of volumes of the Stock

Exchange, Mumbai Directories. Along with this it also maintains the news letters,

daily bulletin, books on Capital Markets, Investor Awareness, Budget, Taxation with

other relevant books.

The UPSE has been organising summer camps to give trainings to Company

Secretaries and MBAs from different institutes giving them complete data and

helping the student to know the practical day-to-day working of the exchanges.

Along with this it also organises Investor Awareness Shows.

The changing technology have helped the exchange to install a corporate database

of over 7000 companies. The rates of UPSE, BSE and NSE is displayed live for the

benefit of investors

Evaluation of function

Uttar Pradesh Stock Exchange Association Ltd are back foot in the stockmarket as compare of NSE and BSE due their bad functioning.

The best function are should happen in following way

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The functions of stock exchange are as following

1. Main activities:

To promote the savings and for them to be analyzed towards of carrying

through investment projects that otherwise wouldnt be possible you needthat the issuing institution of the securities to be admitted for quoting. The

negotiations will be done on the primary market.

To provide liquidity to the investors. The investor can recuperate the

money invested when needed. For it, he has to go to the stock exchange

market to sell the securities previously acquired. This function of the stock

market is done on the secondary market

.

2. Functions as an organization are:

To guarantee the legal and economic security of the agreed contracts.

To provide official information about the quantities that are negotiated and

of the quoted prices.

To fix the prices of the securities according to the fundamental law of the

offer and the demand.

Specifying a bit more and centering on the two main agents that intervene in the market,

investors and companies, we could do the following classification:

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3. Functions in favor of the investor:

It permits him the access to the profitable activities of the big companies.

It offers liquidity to the security investments, through a place in which to

sell or buy securities.

It permits for the investor to have a political power in the companies in

which he invests its savings due that the acquisition of ordinary shares

gives him the right (among other things) to vote in the generalshareholders meetings of the company in question.

It offers the possibility of diversifying your portfolio by enlarging the

field of strategy of investments due to alternative options, as could be the

derived market, the money market, etc.

4. Function in favor of the companies:

It supplies them with the obtaining of long-term funds that permits the

company to make profitable activities or to do determine projects that

otherwise wouldnt be possible to develop for lack of financing. Also, this

funding signifies a less cost than if obtained at other channels.

The securities quoted at the stock exchange market usually have more

fiscal purpose advantages for the companies.

It offers to the companys free publicity, which in other way would

suppose considerable expenses. The institution is objecting of attention of

the media (television, radio, etc.) in case any important change in its

owners (the share holders)

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MARKET INTERMEDIARIES REGULATION AND

SUPERVISION DEPARTMENT (MIRSD)

The Market Intermediaries Regulation and Supervision Department is responsible for

the registration, supervision, compliance monitoring and inspections of all market

intermediaries in respect of all segments of the markets viz. equity, equity

derivatives, debt and debt related derivatives. The Department also handles the work

related to action against the intermediaries for regulatory violations (As regards

action it is clarified that the current practice of issuing show cause notices,

appointment of Enquiry/Adjudication officers and consequential action up to serving

of Chairmans order and maintenance of database will be with the respective

Divisions). The following divisions will perform the functions of the department.

MARKET REGULATION DEPARTMENT (MRD)

The Market Regulation Department is responsible for supervising the functioningand operations (except relating to derivatives) of securities exchanges, their

subsidiaries, and market institutions such as Clearing and settlement organizations

and Depositories. (hereinafter collectively referred to as Market SROs) The

following Divisions will perform the functions of the Department.

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Division of Market supervision

The Division will hand the work related to conducting compliance, examinations and

inspections of Market SROs

Investor Complaints Cell

The cell would receive complaints relating to the market SROs from the Office of

Investor Assistance and Education (OIAE) and take follow up action and report back

to the OIAE. If regulatory action is required, the Cell shall inform the Division of

SRO Administration besides reporting to OIAE.

DERIVATIVES AND NEW PRODUCTS DEPARTMENT

(DNPD)

Division of Policy and Supervision

The Division is responsible for supervising the functioning and operations of

derivatives exchanges and related market organizations. In order to accomplish its

tasks, this division would be responsible for the following:

Derivatives market policy issues.

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Approval of new derivative products

Monitoring the functioning of derivatives exchanges including conducting

inspections and compliance exams.

Prescribing and Monitoring risk management and settlement practices in

derivatives exchanges

Developing the trading and settlement framework for new products.

Regulatory action was required. As regards action it is clarified that the current

practice of issuing show cause notices, appointment of

Enquiry/Adjudication officers and consequential action up to serving of

Chairmans order and maintenance of database will be with the Division.

CORPORATE FINANCE DEPARTMENT (CFD)

The Corporate Finance Department deals with matters relating to

i. Issuance and listing of securities, including initial and continuous listing

requirements

ii. corporate governance and accounting/auditing standards

iii. corporate restructuring through Takeovers / buy backs

iv. Delisting

The following divisions form part of this Corporation Finance Department:-

Division of Issues and Listing (DIL)

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The division of issues and listing handles works relating to the following:-

1. Policy pertaining to

I. primary market

II. disclosures (initial as well as continuous)III. listing

IV. corporate governance

V. Employee Stock Option

VI. Preferential issues

VII. Qualified Institutional Placement (QIP)

VIII. common electronic filing platforms viz. EDIFAR & CFDs

IX. listing conditions and

X. vanishing companies in consultation with Ministry of Corporate Affairs (MCA)

through the framework of Coordination and Monitoring Committee (CMC), set up by

Government of India.

2. Issue of observations on the draft offer documents of public and rights issues.

3. Operational matters pertaining to accounting standards, compliance with corporate

governance, guidance to Stock Exchanges on listing matters, vanishing companies

in consultation with respective Registrar of Companies, allegations of non-

compliance with listing agreement etc.

4. The following Committees of SEBI:-

Primary Market Advisory Committee (PMAC)- to advise SEBI on policy

issues pertaining to Primary Market.

SEBI Committee of Disclosures and Accounting (SCODA) - to advise SEBI

on disclosures and accounting related issues.

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5. Regulatory action where required(As regards action it is clarified that the current

practice of issuing show cause notices, appointment of Enquiry/Adjudication

officers and consequential action upto serving of Chairmans order and

maintenance of database will be with the Division).

Division of Corporate Restructuring

The Division will handle the work relating to:

Policy related to corporate restructuring

Substantial Acquisition and Takeovers

Buy back of securities

Delisting of Securities

Coordinating with the Takeover Panel

Regulatory action where required. (As regards action it is clarified that the

current practice of issuing show cause notices, appointment of

Enquiry/Adjudication officers and consequential action up to serving of

Chairmans order and maintenance of database will be with the Division).

Investor complaints relating to corporate restructuring.

INVESTMENT MANAGEMENT DEPARTMENT (IMD)

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The Investment Management department is responsible for registering and regulating

mutual funds, venture capital funds, foreign venture capital investors, collective

investment schemes, including plantation schemes, Foreign Institutional Investors,

Portfolio Managers and Custodians. The following Divisions will perform thefunctions of the Department;

The Divisions handle the following works related to their respective entities:

Registrations

Policy related issues

Inspections

Investor Complaints

. Regulatory actions.

Division of Foreign Institutional Investors and Custodian

The Division will handle all work related to:

FIIs

Custodians

Regulatory action wherever required.

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Division of Collective Investment Schemes:

This Division administers the SEBI (Collective Investment Schemes) Regulations

1999. It includes work relating to the following:

Existing CIS entities

Investigating complaints of purported CIS entities

Grant of provisional registration to existing CIS entities in terms of

regulation 73 of the Regulati

Taking action against the entities for non compliance with the regulations like,

prohibitory orders and launching prosecutions against errant entities and their

promoters/ directors and key management personnel.

Providing evidences in courts pertaining to prosecution proceedings.

Registration of Collective Investment Management Companies - CIMC

The above activities are also conducted at the regional offices of SEBI, wherever the

address of the CIS entity is located.

INTEGRATED SURVEILLANCE DEPARTMENT (ISD)

The integrated Surveillance department is responsible for monitoring market

activity through market systems, data from other departments and analytical

software. The department would be responsible for:

Developing, maintaining and operating an integrated market surveillance

system are including monitoring of all segments of the markets.

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Methodologies for capturing information from media review, public

complaints and tips, other agencies, exchanges, and direct solicitations;

assignment of staff to handle functions; method of logging and cataloguing

information; criteria for evaluating and distributing information; input intotracking and other systems.

Recognizing potentially illegal activities and referrals to Investigations,

Enforcement or other department

INVESTIGATIONS DEPARTMENT (IVD)

The Investigations department is responsible for:

Conducting investigations on potentially illegal market activities.

Providing referrals to the enforcement department.

assisting the enforcement department in enforcing SEBI action against

violators.

(As regards action, the current practice of issuing show cause notices,

appointment of Enquiry/Adjudication officers and consequential action up to

serving of Chairmans order and maintenance of database will be with the

Department).

ENFORCEMENT OF DEPARTMENT (EFD)

Enforcement Department is responsible for proceedings related to regulatory action

and obtaining redress for violations of securities laws and regulations against all

market participants, issuers and individuals and other entities that breach securities

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laws and regulations. The following Divisions will perform the functions of the

Department;

Division of Regulatory Action

The division shall enforce action against market misdemeanors through

SEBI administrative proceedings. The role of the Division shall commence

from the time the hearing before Chairman/Board is proposed. The Division

will assist the Chairman/Board in its proceedings, prepare the orders, handle

all matters relating to SAT, appeals against SAT orders and Court cases

relating to regulatory action. The Division will also frame the procedures

relating to the above matters.

Division of Prosecutions

The division shall handle work related to filing prosecution proceedings

through the courts and follow up to obtain conviction. The Division will also

frame procedures for cooperation with public prosecutors, other agencies and

for making referrals to prosecutors and other government agencies

.

LEGAL AFFAIRS DEPARTMENT (LAD)

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against alleged violators who are within SEBIs disciplinary jurisdiction. The

department would directly report to Chairman.

OFFICE OF INVESTOR ASSISTANCE AND EDUCATION

(OIAE)

The Office will support SEBIs operations by handling investor complaints centrally

and be the focal point of SEBIs investor education effort. The Office would be the

single point interface with investors and would receive complaints relating to all

departments, forward to the concerned departments, follow up and respond to

investors. The office shall set up necessary systems and procedures to handle his

function.

The Office will also receive complaints relating to issues, transfer of shares,

dividends, compliance with listing conditions, corporate governance issues under the

purview of the Corporation Finance department (Division of Issues and Listing) and

take follow up action.

GENERAL SERVICES DEPARTMENT (GSD)

This department would support all of the internal operations of SEBI. The

Department will have the following divisions.

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Human Resources Division

The Human Resources Division will perform all the functions in its role

as the principal personnel and human resources authority in SEBI.

Information Technology Division

This division would perform its role as the technical support group for SEBI

Treasury and Accounts Division

The Division will handle work related to:

Development of SEBIs internal budget and accounting systems

Presentation of reports and budgets to the SEBI Board

Maintaining internal accounting records, developing internal control

systems for collections and disbursements and other financial controls

Managing SEBIs investments

Facilities Management Division

The division will be responsible for the establishment and maintenance of the

physical facility housing the regulator and related needs.

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Official Language Division

The Division will handle the work related to compliance with Governments official

language policy and Translation of certain documents into the official language.

Office of the Secretary to the Board

The Office of the Secretary shall coordinate Board meetings, record and maintain

Board decisions.

Communications Division

The division would be responsible for all communications of SEBI. These include:

Media releases and other forms of communication including the

publication of SEBI materials.

News conferences and responding to inquiries from the press

Protocol and Security Division

The division will handle work related to:

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Protocol duties for visits/ meetings of senior officials of SEBI and

coordinating visits of dignitaries to SEBI,

Security and Fire fighting duties in the office and residential premises of

SEBI,

Functioning of mailing desk and reception,

General upkeep of the office premises and maintenance of SEBI buildings,

Verification of dead stock inventory for SEBI's offices and residential

premises

DEPARTMENT OF ECONOMIC AND POLICY ANALYSIS

(DEPA)

The Department will handle its functions through the following Divisions:

Division of Policy Analysis (DPA)

This division would look after the following:

a) Partnering/vetting of policy/concept papers.

b) Need based research

c) Regulatory Impact Assessment (RIA) and benchmarking of regulations.

d) Research Support to Committees and Working Groups set up by SEBI.

e) Development of Strategic Action Plan/Vision Statement.

f) Any other tasks that may be assigned.

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Division of Economic Analysis (DEA)

This division would look after the following:

a) Tracking and analysis of market developments.

b) Tracking and analysis of other economic developments.

c) Repository of data (and data analysis)

d) Preparation and publication of Annual Report.

e) Preparation and publication of SEBI Bulletin and Handbook of Statistics.

f) Conducting periodic Investor Survey.

g) History of Securities Market Project.

h) Any other tasks that may be assigned.

OFFICE OF THE CHAIRMAN (OCH)

Office of the Executive Assistant to Chairman

The office will be responsible to provide such administrative and other support as the

Chairman may require. The functions would include strategic planning and

managing new initiatives.

Office of International Affairs

The office would perform the following:

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Implement information-sharing initiatives with international regulators

Participate in international regulatory organizations

Handle all matters related to Foreign assisted projects

Establish guidelines for interaction with foreign Government agencies

and foreign jurisdictions, including providing technical assistance.

THE REGIONAL OFFICES (ROs)

The Regional Office will handle work as per existing delegation and shall continue to

report to functional heads for specific departmental functions while reporting

administratively to SEBI Executive Directors.

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Objectives of the study

This research is an opportunity for me to develop my practical knowledge. It

provides me a valuable exposure to the corporate culture and also how to work is done in

stock exchange. There are few basic objectives of the study are as follows:-

Practical knowledge of the concepts.

To analyze the functioning of U.P.S.E

To determine reason or non listing so many companies.

To determine that how the changing trends affect investors behavior.

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Significance of the study

Study on functioning of stock exchange basically helps in determined the reason behind,

why it facing difficulties to none performing well in stock market and also in on line

trading of companies share in the primary and secondary market. The significance of

the study is as follows:-

To improve the performance in the market

To improve the functioning in the organization

To catch up more interaction of inverter in the market

To attract the companies for listing

To develop the technology advancement

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INDUSTRY PROFILE

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THE INDIAN CAPITAL MARKET

AN OVERVIEW

The Indian capital market is more than a century old. Its history goes back to 1875, when

22 brokers formed the Bombay Stock Exchange (BSE). Over the period, the Indian

securities market has evolved continuously to become one of the most dynamic, modern,

and efficient securities markets in Asia. Today,

Indian market confirms to best international practices and standards both in terms of

structure and in terms of operating efficiency .Indian securities markets are mainly

governed by a) The Companys Act1956, b) the Securities Contracts (Regulation) Act

1956 (SCRA Act), and c) the Securities and Exchange Board of India (SEBI) Act, 1992.

A brief background of these above regulations are given below

a) The Companies Act 1956 deals with issue, allotment and transfer of securities and

various aspects relating to company management. It provides norms for disclosures in

the public issues, regulations for underwriting, and the issues pertaining to use of

premium and discount on various issues.

b) SCRA provides regulations for direct and indirect control of stock exchanges with an

aim to prevent undesirable transactions in securities. It provides regulatory jurisdiction

to Central Government over stock exchanges, contracts in securities and listing of

securities on stock exchanges.

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c) The SEBI Act empowers SEBI to protect the interest of investors in the securities

market, to promote the development of securities market and to regulate the security

market.

The Indian securities market consists of primary (new issues) as well as secondary

(stock) market in both equity and debt. The primary market provides the channel for sale

of new securities, while the secondary market deals in trading of securities previously

issued. The issuers of securities issue (create and sell) new securities in the primary

market to raise funds for investment. They do so either through public issues or private

placement. There are two major types of issuers who issue securities. The corporate

entities issue mainly debt and equity instruments (shares, debentures, etc.), while the

governments (central and state governments) issue debt securities (dated securities,

treasury bills). The secondary market enables participants who hold securities to adjust

their holdings in response to changes in their assessment of risk and return. A variant of

secondary market is the forward market, where securities are traded for future delivery

and payment in the form of futures and options. The futures and options can be on

individual stocks or basket of stocks like index. Two exchanges, namely National Stock

Exchange (NSE) and the Stock Exchange, Mumbai (BSE) provide trading of derivativesin single stock futures, index futures, single stock options and index options. Derivatives

trading commenced in India in June 2000

Other leading cities in stock market operations

Ahmadabad gained importance next to Bombay with respect to cotton textile industry.After 1880, many mills originated from Ahmadabad and rapidly forged ahead. As new

mills were floated, the need for a Stock Exchange at Ahmadabad was realized and in

1894 the brokers formed "The Ahmadabad Share and Stock Brokers' Association".

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What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was

to Calcutta. Also tea and coal industries were the other major industrial groups in

Calcutta. After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute

shares, which was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and 1908. On June 1908, some leading brokers formed "The

Calcutta Stock Exchange Association".

In the beginning of the twentieth century, the industrial revolution was on the way in

India with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel

Company Limited in 1907, an important stage in industrial advancement under Indian

enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies

generally enjoyed phenomenal prosperity, due to the First World War.

In 1920, the then demure city of Madras had the maiden thrill of a stock exchange

functioning in its midst, under the name and style of "The Madras Stock Exchange" with

100 members. However, when boom faded, the number of members stood reduced from

100 to 3, by 1923, and so it went out of existence.

In 1935, the stock market activity improved, especially in South India where there was a

rapid increase in the number of textile mills and many plantation companies were

floated. In 1937, a stock exchange was once again organized in Madras - Madras Stock

Exchange Association (Pvt.) Limited. (In 1957 the name was changed to Madras Stock

Exchange Limited).

Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with

the Punjab Stock Exchange Limited, which was incorporated in 1936.

What are the SENSEX & the NIFTY?

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The Sensex is an "index". What is an index? An index is basically an indicator. It gives

you a general idea about whether most of the stocks have gone up or most of the stocks

have gone down. The Sensex is an indicator of all the major companies of the BSE. The

Nifty is an indicator of all the major companies of the NSE. If the Sensex goes up, itmeans that the prices of the stocks of most of the major companies on the BSE have

gone up. If the Sensex goes down, this tells you that the stock price of most of the major

stocks on the BSE have gone down. Just like the Sensex represents the top stocks of the

BSE, the Nifty represents the top stocks of the NSE. Just in case you are confused, the

BSE, is the Bombay Stock Exchange and the NSE is the National Stock Exchange. The

BSE is situated at Bombay and the NSE is situated at Delhi. These are the major stock

exchanges in the country. There are other stock exchanges like the Calcutta Stock

Exchange etc. but they are not as popular as the BSE and the NSE. Most of the stock

trading in the country is done though the BSE & the NSE. Besides Sensex and the Nifty

there are many other indexes. There is an index that gives you an idea about whether the

mid-cap stocks go up and down. This is called the BSE Mid-cap Index. There are

many other types of index. Unless stock markets provide professionalized service, small

investors and foreign investors will not be interested in capital market operations. And

capital market being one of the major sources of long-term finance for industrial

projects, India cannot afford to damage the capital market path. In this regard NSE gains

vital importance in the Indian capital market but if we see the Sensex & Nifty graph

there is a great variation.

HISTORICAL PERSPECTIVE

The history of Indian stock market is about 200 years old. Prior to this the Hundis and

bills of exchange were in use, specially in the medieval period, which can be considered

as a form of virtual stock trading but it was certainly not an organized stock trading. The

recorded stock trading can be traced only after the arrival of East India Company. The

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first organized stock market that was governed by the rules and regulations came into the

existence in the form of The Native Share and Stock Brokers' Association in 1875.

After gone through numerous changes this association is today better as Bombay Stock

Exchange, which remains the premier stock exchange since its inception. During thisperiod several other exchanges were launched and some of which were closed also.

Presently, there are 19 recognized stock exchanges out of which four are national level

exchanges and the remaining are regional exchanges. National Stock Exchange,

established in 1992, was the last exchange. Although the regional level exchanges are in

existence the volume of trading in these exchanges is negligible. National Stock

Exchange and Bombay Stock Exchange are the leaders of Indian Securities Market in

terms of listing, trading and volumes. The last 15 years of the Indian securities market

can be considered as the most important part of the history where the market gone

through the post liberalization era of Indian economy and witnessed the formation of

Securities and Exchange Board of India (SEBI) which brought substantial transparency

in share market practices and thus managed to bring in trust of not only domestic

investors but also the international ones.

DEMAT ACCOUNT

Demat refers to a dematerialized account.

Though the company is under obligation to offer the securities in both physical and

demat mode, you have the choice to receive the securities in either mode.

If you wish to have securities in demat mode, you need to indicate the depository and

also of the depository participant with whom you have depository account in your

application.

It is, howeverdesirable that you hold securities in demat form as physical securities

carry the risk of being fake, forged or stolen.

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Just as you have to open an account with a bank if you want to save your money, make

cheque payments etc, Nowadays, you need to open a demat account if you want to buy

or sell stocks.

So it is just like a bank account where actual money is replaced by shares. You have to

approach the DPs (remember, they are like bank branches), to open your demat

account. Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro,

200 of HLL and 100 of ACC. All these will show in yourdemat account. So you don't

have to possess any physical certificates showing that you own these shares. They are

all held electronically in your account. As you buy and sell the shares, they are

adjusted in your account. Just like a bank passbook or statement, the DP will provide

you with periodic statements of holdings and transactions.

The most important thing required to trade in share market is Demat account. Demat or

Dematerialized account is to store stocks in electronics form. It is just like opening a

bank account to store your money. Now nobody is interested to keep shares in physical

forms and going for electronic based filing of shares. This has changed the style of

operation in main Indian stock markets like BSE Sensex (Bombay Stock Exchange

Sensitive Index) and Nifty (National Stock Exchange of India) and its brokers.

How to Open a Demat Account

It is like opening a bank account. You have to approach a depository participant to open

an online trading or demat account. Most of the banks are DPs too.

Documents Required

You will have to submit few documents with the application form to open a demat

account. As per latest Govt. of India rule PAN (Personal Account Number) card is must

for opening a demat account. These are the documents required to open a demat account

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1. Photo Copy of PAN Card (Mandatory)

2. Two Passport size photos

3. Address Proof Ration Card/Passport/Driving License/Voters ID Card/BSNLTelephone/LIC Policy

4. Latest Bank Statement and photocopy of Bank Passbook.

SEBI

In 1988 the Securities and Exchange Board of India (SEBI) was established by the

Government of India through an executive resolution, and was subsequently upgraded as

a fully autonomous body (a statutory Board) in the year 1992 with the passing of the

Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place

of Government Control, a statutory and autonomous regulatory board with defined

responsibilities, to cover both development & regulation of the market, and independent

powers has been set up. Paradoxically this is a positive outcome of the Securities Scam

of 1990-91.

The basic objectives of the Board were identified as:

To protect the interests of investors in securities;

To promote the development of Securities Market;

To regulate the securities market and

For matters connected therewith or incidental thereto.

Since its inception SEBI has been working targeting the securities and is attending to the

fulfillment of its objectives with commendable zeal and dexterity. The improvements in

the securities markets like capitalization requirements, margining, establishment of

clearing corporations etc. reduced the risk of credit and also reduced the market.

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SEBI has introduced the comprehensive regulatory measures, prescribed registration

norms, the eligibility criteria, the code of obligations and the code of conduct for

different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It

has framed bye-laws, risk identification and risk management systems for Clearing

houses of stock exchanges, surveillance system etc. which has made dealing in securities

both safe and transparent to the end investor

Another significant event is the approval of trading in stock indices (like S&P CNX

Nifty & Sensex) in 2000. A market Index is a convenient and effective product becauseof the following reasons:

It acts as a barometer for market behavior;

It is used to benchmark portfolio performance;

It is used in derivative instruments like index futures and index options;

It can be used for passive fund management as in case of Index Funds.

Functions and Responsibilities

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

the issuers of securities

the investors

the 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 appeals process to

create accountability. There is a Securities Appellate Tribunal which is a three member

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tribunal and is presently headed by a former Chief Justice of a High court -Justice N.K.

Sodhi. A second appeal lies directly to the Supreme Court.

SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and

successively (e.g. the quick movement towards making the markets electronic and

paperless rolling settlement on T+2 basis). SEBI has been active in setting up the

regulations as required under law. It is regulating body.

BOMBAY STOCK EXCHANGE

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now

spanning three centuries in its 133 years of existence. What is now popularly known as

BSE was established as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange in the country which obtained permanent recognition (in

1956) from the Government of India under the Securities Contracts (Regulation) Act

1956. BSE's pivotal and pre-eminent role in the development of the Indian capital

market is widely recognized. It migrated from the open outcry system to an online

screen-based order driven trading system in 1995. Earlier an Association of Persons

(AOP), BSE is now a corporatized and demutualised entity incorporated under the

provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization and

Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India

(SEBI). With demutualization, BSE has two of world's best exchanges, Deutsche Borse

and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by

providing it with an efficient access to resources. There is perhaps no major corporate in

India which has not sourced BSE's services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed

companies and the world's 5th in transaction numbers. The market capitalization as on

December 31, 2007 stood at USD 1.79 trillion. An investor can choose from more than

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4,700 listed companies, which for easy reference, are classified into A, B, S, T and Z

groups.

NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE), located in Bombay, is India's first debt

market. It was set up in 1993 to encourage stock exchange reform through

system modernization and competition. It opened for trading in mid-1994. It

was recently accorded recognition as a stock exchange by the Department of

Company Affairs. The instruments traded are, treasury bills, government

security and bonds issued by public sector companies.

The Organization

The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges, which recommended

promotion of a National Stock Exchange by financial institutions (FIs) to provide access

to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of

the Government of India and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,

1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)

segment in June 1994. The Capital Market (Equities) segment commenced operations in

November 1994 and operations in Derivatives segment commenced in June 2000.

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Depository

What is a Depository?

A depository holds shares and other securities of investors in electronic form. Through

Depository Participants (DPs), it also provides services related to transactions in

securities. Its structure and functioning are similar to the Bank. Presently in India, there

are two depository viz. National Securities Depository Limited (NSDL) and Central

Depository Services (I) Limited (CDSL). Both of them are registered with SEBI.

What is a DP?

DP is a member of a Depository who offers its services to hold securities of Investors

(Beneficial Owners) in dematerialized form. DP is like a Bank branch. It is an agent of

the depository. DP works as an interface between Depository and Investors. DPs are

required to be registered with SEBI. If an investor wants to avail the services offered by

Depository, he has to open a Demat account with DP similar to opening of a bank

account with a branch of the bank.

Depository is responsible for keeping stocks of investors in electronics form. There are

two depositories in India, NSDL (National Securities Depository Ltd) and CDSL

(Central Depository Services Ltd).

CSDL (Central Securities Depository Ltd.)

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CSDL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading

banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank,

Standard Chartered Bank, Union Bank of India and Centurion Bank.

CSDL was set up with the objective of providing convenient, dependable and secure

depository services at affordable cost to all market participants.

CSDL received the certificate of commencement of business from SEBI in February,

1999.

Honorable Union Finance Minister, Shri Yashwant Sinha flagged off the operations of

CSDL on July 15, 1999.

Settlement of trades in the demat mode through BOI Shareholding Limited, the clearing

house of BSE, started in July 1999.

All leading stock exchanges like the National Stock Exchange, Calcutta Stock

Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmadabad, etc have

established connectivity with CDSL.

As at the end of Dec 2007, over 5000 issuers have admitted their securities (equities,

bonds, debentures, and commercial papers), units of mutual funds, certificate of deposits

etc. into the CSDL system.

About NSDL

Although India had a vibrant capital market which is more than a century old, the paper-

based settlement of trades caused substantial problems like bad delivery and delayed

transfer of title till recently. The enactment of Depositories Act in August 1996 paved

the way for establishment ofNational Securities Depository Limited (NSDL), the first

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depository in India. This depository promoted by institutions of national stature

responsible for economic development of the country has since established a national

infrastructure of international standards that handles most of the securities held and

settled in dematerialized form in the Indian capital market.

Using innovative and flexible technology systems, NSDL works to support the investors

and brokers in the capital market of the country. NSDL aims at ensuring the safety and

soundness of Indian marketplaces by developing settlement solutions that increase

efficiency, minimize risk and reduce costs. At NSDL, we play a quiet but central role in

developing products and services that will continue to nurture the growing needs of the

financial services industry.

In the depository system, securities are held in depository accounts, which is more or

less 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

Promoters / Shareholders

NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the

largest development bank of India, Unit Trust of India (UTI) - the largest mutual fund in

India and National Stock Exchange of India Limited (NSE) - the largest stock exchange

in India. Some of the prominent banks in the country have taken a stake in NSDL.

NSDL Facts & Figures

As on December 31, 2008

Number of certificates eliminated (Approx.) : 550 Crore

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investors. Any dividends or capital gains collected from the underlying securities go

back to the investors. According to an expert group constituted by the finance ministry

in India, in August 2004, participatory notes constituted about 46 % of the cumulative

net investments in equities by FIIs.

Any entity investing in participatory notes is not required to register with SEBI

(Securities and Exchange Board of India), whereas all FIIs have to compulsorily get

registered. Trading through participatory notes is easy because participatory notes are

like contract notes transferable by endorsement and delivery. Secondly, some of the

entities route their investment through participatory notes to take advantage of the tax

laws of certain preferred countries. Thirdly, participatory notes are popular because they

provide a high degree of anonymity, which enables large hedge funds to carry out their

operations without disclosing their identity.

Participatory notes in brief are as follows:

What are participatory notes or PNs? Participatory notes are instruments used by foreign

funds which are not registered to trade in domestic Indian Capital Markets. PNs are

derivative instruments issued against an underlying security permitting holders to get a

share in the income from the security.

How does it work? Investors who buy PNs deposit their funds in US or European

operations of Foreign Institutional Investors (FII) operating in India. The FII uses its

proprietary account to buy stocks.

Why do investors use PNs? Reason for using PNs is to keep investor name anonymous,

some investors have used them to save transaction and overhead costs.

Tax officials fear that PNs are becoming a favourite with a host of Indian money

launderers who use them to first take funds out of country through Hawala and then get

it back using PNs.

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COMPANY PROFILE

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Uttar Pradesh Stock Exchange Association Ltd.

The UP Stock Exchange association limited, Kanpur is situated at a very

important place. It holds a very important position among other existing stock

exchanges in India. The exchange was inaugurated on 27th august 1982 by the

then finance minister Shri Pranab Mukharjee. from the very first day it has

been playing role in the development of the capital market of north India.

Incorporation in 15th NOV 1979 and Commencement of business on 5th

May 1982 has made a long way through the time.

The UP Stock Exchange association limited, Kanpur occupies a very

prominent place among the existing Stock Exchanges in India. The exchange

was inaugurated on 27th august 1982 by the then finance minister Shri Pranab

Mukharjee. Right from its inception it has been playing a very prominent role

in the development of capital market of northern India. UPSE is the only.

Initially it had 350 members which have now increased to 540 members

belonging to almost all important cities of the country. Members living

outside Kanpur have contributed a lot by creating the equity cult in whole of

the Uttar Pradesh. Not only these members are highly qualified and

professional and devoted to the cause of capital formulation in the country.

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The Exchange was initially started in the rented building but with the

efforts of our members, a new complex was constructed and was inaugurated

by his Excellency Shri R. Venkatraman the then President of India on 8 th

February, 1989.

At present we have 843 companies listed with the total capitalization of

Rs. 81184 Crores. The annual turnovers of this Exchange for the last three

years are: 1998-99: 18429 Crores, 1999-2000: 23876 Crores and 2000-01:

25112 Crores. Thus every year we have increased our turnover creating more

and more awareness among the people of Northern India.

This stock Exchange is wedded to the investors protection and investors

education as we have firm conviction that any investor protection cannot be

achieved without proper awareness and education of investors. Thus the

Exchange has a very active investor service Cell and also a very equipped

Research and Development Wing is functioning. We have also a very

effective system of readdressing the investors complaints.

The Exchange has one of the best developed Exchanges of the country so

far its infrastructure is concerned. The Ex-Finance Minister Dr. Manmohan

Singh, Ex-Commerce Minister Shri Pranab Mukharjee, other central Ministers

and Chief Ministers Uttar Pradesh have visited this Exchange and appreciated

its efforts in maintaining the transparency and the integrity of the market. To

keep pace of changing technology the Exchange has embarked upon the

Project of Screen Based Trading. The On-Line Trading based on VECTOR

Software supplied by CMC has commenced on UPSE from 11th November

1997.

To increase the further business and to facilitate the On-Line trading

facility to about 22 members at Lucknow an additional trading Floor has been

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established at Lucknow. At present at the additional trading at Lucknow 22

Lucknow based members have been allotted Computer Terminals which have

been connected with UPSE main server via VSAT.

As per recent decision of SEBI for the revival of the smaller Stock

Exchanges in the country, they can obtain the membership of big Stock

Exchanges like, BSE, NSE, and CSE etc. through forming a subsidiary

company of the Exchange and in turn the members of the Exchange can trade

through the said subsidiary as sub-broker(s).

Accordingly we have incorporated a wholly owned subsidiary namely

UPSE Securities Ltd. and obtained the membership of BSE to enable the

members of UPSE on BOLT.

Main objective of UPSE

1. To organize and carry on the stock exchange and regulate

the business of exchange and stock and share, debentures and

debenture stocks. Government securities, bonds and equities of any

description and with a view to establish and conduct stock exchange in

Kanpur.

2. To acquire the membership of any other recognized

exchange in India and abroad including membership of OCTEL, broad

base the operations of the stock exchange for the benefit of the general

public and investor.

3. To promote one or more subsidiary whether wholly or

partly owned, with object to promote the trade in share and stocks,

debenture bond and other securities of any description issued by

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companies statutory corporation, government of state or union

government, financial institution.

4. Provides quotation for shares/stock for fascinating and

marketability.5. Extends liquidity (conversion in to cash) to such stock as

they are easily marketable and traded.

6. Provides an orderly regulated market for securities whose

prices are determined by the free market forces of supply and demand.

7. Promotes savings and investments in the economy by

attracting funds for investment in corporate share and securities.

Location and other communication details:

THE UTTAR PRADESH STOCK EXCHANGE ASSOCIATION LTD.

Padam Towers, 14/113, Civil Lines, Kanpur-208001

Telephone No: 2338115, 2338074

Fax No: 0512-2338175/2338220

Email Address: [email protected],

Website: upse-india.com

DEPARTMENTS

1. R & D department

2. Membership Inspection / Grievances / Complain / Audit

3. Listing

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4. Market operation department (Margin)

5. Secretarial Department

6. Surveillance Department

7. EDP (Computer)

1. R & D, Library and Investor service department

Research and development wing of the Uttar Pradesh Stock Exchange

Association Limited has been functioning eve since 1992 under SEBI

direction and providing valuable services to the investors. The wing presently

names investor service center has a well maintained, library comprising of

books, journals, periodicals, and newspapers on financial market, annual

reports of companies, prime directory etc.

They maintain the records of day to day quotations of major exchanges,

the annual reports of companies, PRIME directory, complete set of volumes

of the Stock Exchange, Mumbai Directories. Along with this it also maintains

the news letters, daily bulletin, books on Capital Markets, Investor awareness,

Budget Taxation with other relevant books.

The UPSE has been organizing summer camps to give trainings to

Company Securities and MBAs different institutes giving those complete data

and helping the student to know the practical day-to-day working of the

exchanges. Along with this it also organizes Investor Awareness Shows.

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The changing technology has helped the exchange to install a corporate

database of over 7000 companies. The rates of UPSE, BSE, and NSE are

displayed live for the benefit of investors.

There are three main function of this department

To render investor services

To maintain library

To conduct research and development

All the above facilities are provided free of cost to one and all any query is

mandatory attended by the help desk situated in the investor service center,

headed by a responsible official of the exchange.

2. Membership and Grievances

There are two types of membership

1. Shareholder

2. Trading member

Eligibility for membership

To have the membership of the stock exchange one has to satisfy the

following criteria

1. He has to be the citizen of India.

2. Experience of 2 year in the securities department.

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3. Capital of 10 lakh (individual) and 20 lakh (company).

4. He must submit 4 lakh as Base Minimum Capital (BMC). This

becomes operational in the stock market.

a) The BMC must comprise of at least of 50% of cash or cashequivalents (FDR, bank guarantee, etc)

b) Other 50% can comprise of the following type of assets (shares-

valued on the daily basis)

5. He must submit extra money as Margin, to trade in shares of the stock

exchange.

a) The margin again has to be of 50% of cash or cash equivalents

(FDR, bank guarantee, etc.)

b) Other 50% can comprise of the following type of assets (shares-

valued on the daily basis)

6. No association with defaulter member, i.e. the member has to provide

an undertaking of not being involved with defaulting broker.

Procedure to get membership

Application screening committee (UPSE) Board approval (UPSE)

SEBI approval

Grievances and problems

There are of two types of problem between the investor and the following

parties

1. Companies

2. Broker

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It can invite investor claim by advertising in the newspapers.

The assets of the defaulting party are disbursed to the lenders and the

surplus goes to the investor protection fund (IPF).

If the asset of the defaulting party falls the lenders demand, 1 lakh(maximum) can be released from the IPF, condition being it is per person

case.

Disciplinary committee

The department takes care of the imaginaries that occur that during the

regular conduct of the business of the stock exchange.

It can penalize the party involved in the earlier mentioned acts with

following

1. Financial fines

2. Expulsion

Investor grievance with the broker or vic e versa goes to the Investor Service

Committee (ISC).

Investor having complained against any company then the case goes to the

Arbitration committee.

Here the investor only has to deposit arbitration fees but no security.

Whereas the brokers has to deposit 100% of the award, given against him by

the ISC.

The legal path for complaints of the investor is as follows:

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ISC Arbitration committee District judge High court Supreme

Court

The various measures that court can take on the litigation of this type are asfollows:

1. Set aside

2. Confirm

3. Reprimand (send back the order to the lower court)

3. LISTING

Recruitment with respect to the listing of securities on a recognized

stock exchange

A public company as defined under the act 1956, desirous of getting its

securities listed on a recognized stock exchange, shall apply for the purpose to

the stock exchange and forward alone with its application the following

documents and particulars:

a) Memorandum and article of association and in case of a debenture issue, a

copy of the trust deed.

b) Copies of all prospectuses or statement in lieu of prospectuses issued by the

company at any time.

c) Copies of offer for the sale and circulars or advertisements offering any

securities for subscription or sale during the last five years.

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d) Copies of balance sheet and audited accounts for the last five years, or in the

case of new companies, for such shorter period for which account have been

made up.

e) A statement showing-

i. Dividend and cash bonuses, if any, paid during the last ten years (or

such shorter period as the company has been in existence, whether as

a private or public company).

ii. Dividend or interest in arrear, if any.

f) Certified copy of agreement or other documents

relating to arrangements with or between:-

i. Vendors and /or promoters

ii. Underwriters and sub-underwriters.

iii. Broker and sub-broker.

g) Certified copies of agreement with

i. Managing agents and secretaries and treasures.

ii. Selling agents

iii. Managing directors and technical directors

iv. General Manager, sales manager, manager or secretary.

h) Certified copy of every letter, report, balance sheet, valuation,

contract, court order or other document, or other document, part of

which is referred to in any prospectus, offer for sale, circular or

advertisement offering securities for subscription or sale, during the

last five years.

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i) A statement containing particulars of the date of, and parties to

all material contracts, agreements (including agreement for technical

advice and collaboration) concessions and similar other documents

(except those entered into in the ordinary courses of business carriedon or intended to be carried on by the company) together with a brief

description of the terms, subject matter and general nature of the

documents.

j) A brief history of the company since its incorporation giving

details of its activities including any reorganization, reconstruction or

amalgamation, changes in its capital structure (authorized, issued and

subscribed) and debenture borrowings if any.

k) Particulars of shares and debentures issued

i. For consideration other than cash, whether in whole or part,

ii. At a premium or discount or,

iii. In pursuance of an opinion.

l) A statement containing particulars of any commission, brokerage,

discount or other special terms including an opinion for the issue of

any kind of the securities granted to any person.

m) Certified copies of

i. Acknowledgement card or the receipt of filling offer document

with the securities and exchange board of India.

ii. Agreement, if any, with the industrial finance corporation,

industrial credit and Investment Corporation and similar bodies.

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Particulars of shares forfeited.

A list of highest ten holder of each class or kind of securities of the

company as on the date of application along with the particulars asto the number of shares or debentures held by and the address of

each such holders.

Particulars of shares or debentures for which permission to deal is

applied for:

Provided that a recognized stock exchange may either generally by its

buy laws or in any particular case call for such further particulars of

documents, as it deems proper.

An initial listing fee for a company to get listed with the Uttar Pradesh Stock

Exchange is 10500.

The Annual listing fees structure is as follows:

Capital (in crore) Fees

Up to 1 6000

1.5 9000

5.10 14000

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10.20 28000

Each additional 1 crore over 20 crore onwards in the capital will attract Rs

4600 more in addition to 28000.If other company from different state listed with BSE or NSE the company

will be charged 50% of the above fees.

One day free run for the stock is provided to estimate the value of the

stock. That is, there is no circuit limits to the stock for the first day of the

trading of a stock.

Indian primary market ushered in an era of free pricing in 1992. Following

this, the guidelines have provided that the issuer in consultation with

Merchant Banker shall decide the price. There is no price formula stipulated

by SEBI. SEBI does not play any role in price fixation. The company and

merchant banker are however required to give full disclosures of the

parameters, which they had considered while deciding the issue price. There

are two types of issues one where company and LM fix a price (called fixed

price) and other, where the company and LM stipulate a floor price or a price

band and leave it to market forces to determine the final price (price discovery

through book building process).

To have voluntary delisting, company must be listed in BSE and NSE.

For compulsory delisting, the stock exchange takes action against the

company. If there is violation of the listing clauses, the company can be listed.

4. MARGIN DEPARTMENT

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New scheme for margin is implemented from the date 30 June.

In the new system of margin there is the concept of Upfront Margin.The upfront margins consist of the following types of margins VAT

(Value at Risk) and ELM (Extreme Loss Margin).

The VAR and ELM is fixed for the different scripts.

The Z group of shares can attract VAR and ELM of 100%, where as for

the B and A group share could attract lesser percentage.

Marked to Market is a special type of margin.

Further details please refer to the specialization portion of the report.

5. SECRETARIAL

Governing Board

According to the article of association of the exchange governing board

comprises of

1. Six director elected under the provision of the article of association of the

exchange.

2. Person not exceeding two is nominated by SEBI as director

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3. Four people from public as public representatives nominated by the governing

board of the exchange subject to SEBI approval.

4. One executive director appointed by the governing board subject to prior

approval of SEBI.

However w.e.f. 12-07-2002 SEBI has suspended the governing board of

the exchange and appointed an administrator to perform the power and

function of the governing board, under section 11 of SCRA, 1956.

According to the new regulation every stock exchange will now have a

board of director.

Power to Frame and Amend Regulations

Subject to the provisions of these Bye-laws and the Rules of The

Exchange, the Governing Board or the Committee appointed by the

Governing Board shall have exclusive powers to frame Regulations from time

to time for efficient functioning and operations of the Exchange and to

regulate the functioning and activities of the trading members of the

Exchange, sub-brokers, remises, authorized persons, approved users, Clearing

House or Clearing Corporation, Clearing Banks, company or issuer and all

other persons operating under or through them or dealing with them both

inter-se and in relation to the Exchange and to regulate Listing of Securities

by an issuer, including providing for arbitration between an issuer or a

company and an investor or any affected person. The Governing Board or the

Committee may, from time to time, amend, add to, alter, modify, delete or

repeal any of the provisions of the Regulations, as may be deemed necessary

or appropriate or if so desired or directed by SEBI. The Regulations shall

provide for necessary authorization for effect. Any amendments, additions or

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alterations to any Regulations made by the Governing Board or the

Committee in pursuance of the powers conferred by the Rules of the

Exchange and these Bye-laws, together with the reference to the Bye-law or

Bye-laws to which such Regulations relate to, shall be communicated toSEBI. The Regulations brought into force by a direction of SEBI may be

amended, added, or altered by the Governing Board or the Committee, subject

to the condition that such amendments, additions or alterations shall come into

force only after the prior approval of SEBI; except those amendments,

additions or alterations

Which are stricter in its nature than those directed by SEBI.

Without prejudice to the generality of the foregoing, the Governing Board

or the Committee may time to time prescribe the Regulations with a view to

organize, facilitate, maintain, manage, control and regulate the operations,

functions and supervision of the exchange and to regulate the activities and

functioning of the trading members, clearing members, custodians, sub-

brokers, remisiers, authorized persons, approved users and issuers of

securities, as may be necessary or expedient, and provide for necessary

authorization wherever requirements are operational in its nature and such

requirements need to be enforced with immediate effect in the following

matters:

3.1.1 Listing of Securities

3.1.2 Trading on the exchange

3.1.3 Transaction in Securities Subject to Risk Management &

Surveillance

3.1.4 Clearing and Settlement of Transactions

3.1.5 Conciliation and Arbitration

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3.1.6 Setting-up of Settlement Guarantee Fund, Investors Protection

Fund and Other Funds

Subject to the provisions of SCRA, the SEBI Act and the Rules andRegulations framed there under and the directives issued there under, the

Governing Board shall have power to vary, amend, add to, alter, modify,

delete or repeal any of the provisions of the Rules and/or Bye-laws of the

exchange framed by it, as may be deemed necessary for the effective and

efficient management of the Exchange and to achieve its objects. Such

changes in the Rules and/or Bye-laws referred to above shall come into force

only after prior approval of SEBI. Such changes provided in the Bye-laws

shall be subject to the requirement of the previous publications in the Gazette

of India and the official Gazette of the State in which the principal office of

the stock exchange is situate, and shall come into force only after prior

approval of SEBI> the Exchange shall place on its website any changes that

amy be required to be carried out in its Bye-laws for public comments

simultaneously while publishing them in the Gazette of India and the official

Gazette of the State as required.

6. Surveillance

This department was established in 1995 under the requirement of the

SEBI. The main objective of the surveillance function of the exchange is

to manage risk by taking necessary action timely. All instruments traded in

the market come under the surveillance umbrella of UPSE.

Purpose of the surveillance

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Purpose of surveillance is to prevent risk which may arise due to-

a. Carry forward trade

b. Trade away from market price

c. Price manipulationd. Insider trading

e. Circular trading

f. Creation of false market

In order to detect abnormal behavior/movement, it is necessary to

know the normal market behavior. The necessary actions are initiated like

imposition of special margin, suspensions; deactivation of terminals, etc. to

control abnormal behavior, the department carries out investigation. If necessary,

based on the preliminary examination/analysis and suitable action are taken

against members involved based on investigation. The detailed explanations of

the various surveillance activities are as follows:

On-line surveillance

One of the most important tools of the surveillance is the on-line real time

surveillance system with main objective of detecting potential market abuses at a

necessary stage to reduce the ability of the market participants. To unduly

influence the price and volume of the scripts traded at the exchange, improve the

risk management system and strengthen the self regulatory mechanism at the

exchange the system has a facility to generate the alters on-line based on certain

preset parameters like price and volume variation in scripts; members crossing

intraday limit or gross exposure limit.

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Off-line surveillance

The of-line surveillance system comprises of the various reports based on

different parameters and securities, thereof.1) High-low difference in price

2) Percentage change in price over a week/fortnight/month.

3) Top scripts by turnover

4) Scripts hitting new high/low, etc.

The surveillance action or investigations are initiated in the scripts

identified in the scripts identified from the above-stated reports.

It takes finds the irregularities and ensures the proper working of the stock

exchange. Surveillance ensures risks arising of the daily trading are managed

efficiently, by enabling proper collection of the margins.

Settlement guarantee fund is made for the payment of the Clint of a

defaulting broker.

Various Forms of errors practices are as follows

1. Insider tradingis utilization of the internal

information of a company to manipulate the price of the share of the company,

before that information is made public. To avoid such irregularities, the

surveillance department keep track of the people insider to the companies and

their trading

2. Price rigging it is way by which a company

tries to manipulate the prices of the shares in the stock market.

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3. Punching errors that occur while operator

types the order on the computer terminal.

4. Humors are another threat to the proper working

of the stock exchanges. These are false stories that are made up to manipulate

the prices of the share. Humor verifications another function of the stock

exchange and specially the surveillance department.

7. EDP (Computer Department)

Stock trading has evolved tremendously. Since the very first Initial

Public Offering (IPO) in the 13th century, owning shares of a company has been a

very attractive incentive.

Even though the origins or stock trading go back to the 13th century, the

market as we know now today did not catch on strongly until the late 1800s.

Cooperation between technology and society has led the push for effective and

efficient way of trading. Technology has allowed the stock market to grow

tremendously, and all the while society has encouraged the growth. Within

seconds of an order of a stock, the transaction can now take the place. Most of the

recent advancements with the trading have been due to Internet. The interest has

allowed online trading. In contrast to the past where only those who could afford

the expensive stock brokers could trade, but now anyone who wishes to be active

in the stock market can do so at a very low cost per transaction. Trading can even

be done through computer-mediated communication (CMC) using mobile devices

such as handheld computers and cellular phones. These advances in technology

have made day trading possible.

The stock market has now grown so that some argue that it represents a

countrys economy. This growth has been enjoyed largely to the credibility and

reputation that the stock market has earned.

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In the screen-based systems, the trading ring is replaced by the computer

screen and distant participants can trade the shares with each other through the

computer network. The screen-based trading system, enhance the information

efficiency of the marker as more participants trade at a faster speed. A largenumber of participants, geographically separated, can trade simultaneously at

high speed.

FINANCIAL ANALYSIS

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The annual turnovers of this exchange for past three years are:

Year Total Turnover

(Single Sided)

(Rs. In Crores)

Delivery

turnover

% of turnover

to Delivery

2006-07 806.50 0.28 0.03

2007-08 476.39 0.98 0.21

2008-09(upto

31.10.2008)

170.60 0.05 0.03

This stock exchange is wedded to the investors protection and investors education as

UPSE has firm conviction that any investor protection cannot be achieved without

proper awareness and education of investors. Thus, the exchange has a very active

investor service cell and also a very equipped research and development wing in

functioning. UPSE has also very effective system of readdressing of the investors

complaints.

RISK MANAGEMENT

1. The deposits of the sub brokers, viz Base Minimum Capital, additional capital and

margin advance is being treated as capital deposits for the purpose of computation and

adjustment / collection of the margins.

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2. The one third of the capital deposits of the respective sub-brokers is blocked as

upfront margins and the rest two-third is available for trading.

3. At the end of the day, the total margin obligation for the day of the respective sub

brokers are deducted from total capital deposits of the sub broker.4.The remaining capital deposits of the respective sub brokers , after such deduction ,is

treated as available in the same manner, as stated above for the next day trading of the

sub broker .

5. The margin obligations for the day, so deducted, if released after pay in of relevant

settlement and the same is added back to the capital deposits of the sub brokers,

available for the subsequent trading.

6. The minimum capital required to trade as a sub broker in the company is Rs 150,000

and the additional capital may be deposited in the multiples of Rs 50,000 /- for

enhancing the trading limits.

Some other basic information about the company are:

UPSEC will open equivalent number of bank accounts for each sub brokers in the

name and style of UPSEC securities ltd. These banks accounts will be opened

either with Standard Chartered Bank ,

M.G road, Kanpur or with UTI bank LTD, Mall Road, Kanpur as per the choice

of the sub broker concerned.

It will be the responsibility of the sub brokers to clear all the dues / pay in of

their clients within time as per the schedule of the UPSEC i.e. T+1 basis.

The shortfall in the pay in of the fund, if met by the sub broker from their own

account, shall be credited to the contingency deposit account of the sub brokers.

UPSEC will not pay any interest on this deposit.

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Every client of the sub- broker will have to clear his / her debit balance in respect

of the transactions undertaken latest by T +4 days.

UPSEC will issue the contract notes to all the clients of the sub- brokers on the

regular basis.

Brokerage will be charged from the clients of the sub brokers as per the

instructions filled up in the client registration forms received through the sub-

brokers or any written modification authorized by the clients and the sub brokers

thereafter.

The share of brokerage of UPSEC from the total brokerage charged to the clients

of the sub-brokers shall be 0.009% subject to minimum of 1 paisa per share.

UPSEC shall refund the excess brokerage to its sub brokers weekly.

All other statutory and legal charges such as stock exchange turnover charges,

stamp duty, STT, service tax etc as applicable will be levied separately in the

contract notes issued to the clients of the sub brokers.

Sub- brokers who are interested in second, third trading terminal are allowed to

have them by allotting them separate ID on the following terms and conditions:

- Sub broker will have to pay a sum of Rs 5000 for each such trading

terminal.

- Separate monthly charges such as TWS charges, VSAT support charges etc as

applicable from time to time will have to be paid by the sub broker for each

such terminal.

- Each such terminal shall be subject to fulfillment of margin and other

applicable business rules.

- Presently BSE has allowed trading only in cash segment.

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TRADING ON BSE STARTED ON -- 29-11-2001

NUMBER OF REGISTERED SUB-BROKER -- 113

NUMBER OF ACTIVE MEMBERS -- 70

CURRENT NUMBER OF CLIENTS -- 8000(APPROX)

TURNOVERS (IN CRORES)2000-01( FROM 29-01-2001) -- 67.99

2001-02 -- 981.88

2002-03 -- 1907.64

2003-04 -- 2334.55

2004-05 -- 2493.73

2005-06 -- 1813.24

2006-07 -- 2164.10

2007-08 -- 3124.08

ROFIT / LOSS OF THE COMPANY

YEARS PROFIT/LOSS AMT IN Rs

2000-01 LOSS 3,99,241.91

2001-02 LOSS 10,67,493.51

2002-03 PROFIT 7,84,000

2003-04 PROFIT 18,20,000

2004-05 PROFIT 12,93,000

2005-06 PROFIT 7,98,0002006-07 PROFIT 6,36,000

2007-08 LOSS 21,964

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Thus , the scope of UPSEC is indeed very wide and in future periods it will surely

further expand the levels of business leading to the lucrative gains to the corporate

,investors and finally its members.

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Research Methodology

Problem Definition

The problem that this study focuses on is to find out the reson about non better

performance of utter Pradesh stock exchange in the stock market due to the there bad

function and activities .

The problem can be defined under the following heads:

Unit of Analysis

Keeping the objectives of the study in view, and since the study was conducted at

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This project is based on a partially descriptive and a partially exploratory design. The

reason for using two different designs is that firstly, since we want to find out the

employees views about the training programs, the descriptive design has been used.

Secondly, since the objective of the project is also to find out the effectiveness of thetraining programs and which methodology is better, the exploratory design has also been

used.

The descriptive design technique that is used is the cross-sectional technique. This is a

one-shot research study at a given point of time, and consists of a sample of the

population of interest. The reason for using this technique is that it gives a good overall

picture of the position at a given time. It can cover many variables of interest, and is not

affected by the movement of elements in the sample.

Data Requirement

We have used both primary and secondary data in our survey. Primary data provides

first hand, reliable and current information as compared to secondary data. It involves

collecting information specifically for the study on hand, from actual sources, in this

case the source are the candidates visiting UPSE and the department heads we

personally interviewed. Secondary data has been collected through management books,

newspapers, journals and the internet.

Sample SizeA sample size of 50 respondents has been taken as directed by our project guide.

Sampling Technique

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There are two main types of sampling techniques Probability and Non-Probability.

The technique used for this project is convenience sampling, which is a non-probability

technique. This technique was selected for the survey since it involves picking any

available set of respondents convenient for the researcher to use.

Data Collection Tool and Method

The data collection tool used is personal interviews. This tools have been used since it

e