1

Summer Internship Project

RISK MANAGEMENT IN SHAREKHAN

Submitted in partial fulfillment of PGDM program

2012-14

Submitted by

Sakshi Malik

20/170

Company Mentor Faculty Mentor

Mr. Jaipal Singh Dr. Shalini Vermani

Assistant Manager

Jhandewalan, New Delhi

Apeejay School of Management

New Delhi July 2013

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ACKNOWLEDGEMENT

This project has been as a part of internship required during the completion of PGDM program. I

was involved with SHAREKHAN LIMITED, Jhandewalan, Karol Bagh, for 3 months , and I

come across a lot of people who put in their time and effort toward acclimatizing me to the

workings of their organizations.

I express my thanks to my company guide Mr. Jaipal Singh (Assistant Manager) , Mr. Vijay (

Senior Manager) who motivated me in all my efforts.

I would also like to thank Dr. Shalini Vermani (Professor) Mentor for supporting, guiding and

encouraging me during this project. I record my sincere thanks to her with deep gratitude.

I would also like to thanks Dr. Alok Saklani ( Director of Apeejay School Of Management)

providing me an opportunity to learn outside the class room. It was truly wonderful learning

experience. Last but not least, I express my gratitude to the entire staff of SHAREKHAN

LIMITED.

These past 3 months were of utmost importance as they added value towards my path of

knowledge. I would like to end this acknowledgement by thanking the customers and the people

at large with whom I have interacted during the course of my training.

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EXECUTIVE SUMMARY

This Project named as Risk Management in Broking Firm, is carried out at Sharekhan ltd from

1st April to 31

st June to analyze and understand the risk management of different broking firms. I

have taken four different broking firms namely Sharekhan Limited, Angel Broking , Kotak

Securities and Indian Bulls.

Capital Market in India is an emerging market with a great potential Indian capital market has

got a strong foundation and therefore has gained a confidence of Indian investors as well as

Foreign Institutional Investors. In India there are two Stock Exchanges (National Stock

Exchange and Bombay Stock Exchange) through which securities are traded. Stock

exchange is a body formed for the purpose of assisting, regulating or controlling the

business of buying, selling or dealing in securities. A n in v es to r ha s t o t r ade i n

s to ck m ar ke t t h ro ugh a r eg i s t e r ed s t ock broker. A stock broker is a member of a

recognized stock exchange who is permitted t o do t r ad e s on t he f l oo r o f t h e

ex ch an ge . „ S tu d y o f R i s k M an agem ent i n S t o ck Broking Firm‟ the title, shows that

the project revolves around the risks managed by Stock Brokers while handling their Sub

brokers, branches, franchisees and investors

Risk and uncertainty go together. However, risk and return have a direct relationship, higher the

risk, higher the chances of good return and vice versa. There is a growing competition between

brokerage in a post reform India. For investors is always to decide which brokerage to choose.

Research was carried out to find out how brokerage firms manage their risk in comparison to

other brokerage firms.

Risk can be defined as “Possibility of suffering losses”

“The chance of something happening that will have an impact upon objectives. It is measured in

terms of consequences and likelihood”.

Risk management in a Broking Industry is a new concept in India, since it poses maximum risk

in the financial market, managing it was felt most essential by the regulatory bodies and

exchanges.

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In stock broking industry risks are high due to the volatility of the market. The risk may cause

due to its sub brokers, investor clients, branches etc. there are uncertainties about

payments from clients or from clients to sub brokers and then sub brokers to the

broker. The high volatility of the market may cause the clients or sub brokers not to

make payments in specified time. Thus brokers are always exposed to market risks,

financial risks, credit risks, liquidity risk and operational risks. To cope up with such events

brokers have to collect certain amount of margins and maintain the same with the exchange. To

manage such risks Value at Risk margin, Mark to Market margin an d ex t r em e lo s s

m a r g in i s m ai n t a i ned .

A l s o , t h e b r ok e r s a r e a l l o w ed i n t r ad ay turnover and gross exposure limits.

Brokers have to maintain minimum base capital and additional base capital with the

exchange. Exchanges, SEBI and NSCCL have taken steps like KYC, continuous

s u rv e i l l an c e , m anda t o r y au d i t e t c . T hu s , ev e r y broking firm has Risk

Management department. In all these companies which I have taken there is a

surveillance department to deal with the risk management activities

This study suggests my own experience in Sharekhan Limited which is one of the leading

brokerage firms. Every company has to bear risk at some point of time in the organization so

Sharekhan Limited manages its risk very well. It has its own separate department for risk

management. The analysis is done between four broking firms in order to know how these

companies manage their risk.

Through this report we were also able to understand, what our company‟s (Sharekhan Limited)

positive and negative points the company‟s hierarchy, its vision and mission, the product offer

my Sharekhan Limited. It provide live terminal known as trade tiger for online trading. We also

gave suggest to the company what improvement can be done for the benefits of the customers.

Risk can be defined as “Possibility of suffering losses”

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“The chance of something happening that will have an impact upon objectives. It is measured in

terms of consequences and likelihood”.

Risk management in a Broking Industry is a new concept in India, since it poses maximum risk

in the financial market, managing it was felt most essential by the regulatory bodies and

exchanges.

In stock broking industry risks are high due to the volatility of the market. The risk may cause

due to its sub brokers, investor clients, branches etc. there are uncertainties about

payments from clients or from clients to sub brokers and then sub brokers to the

broker. The high volatility of the market may cause the clients or sub brokers not to

make payments in specified time. Thus brokers are always exposed to market risks,

financial risks, credit risks, liquidity risk and operational risks. To cope up with such events

brokers have to collect certain amount of margins and maintain the same with the exchange. To

manage such risks Value at Risk margin, Mark to Market margin an d ex t r em e lo s s

m a r g in i s m ai n t a i ned .

A l s o , t h e b r ok e r s a r e a l l o w ed i n t r ad ay turnover and gross exposure limits.

Brokers have to maintain minimum base capital and additional base capital with the

exchange. Exchanges, SEBI and NSCCL have taken steps like KYC, continuous

s u rv e i l l an c e , m anda t o r y au d i t e t c . T hu s , ev e r y broking firm has Risk

Management department. In all these companies which I have taken there is a

surveillance department to deal with the risk management activities

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TABLE OF CONTENTS

SR.

NO.

PARTICULARS PAGE NO.

1. Acknowledgement 2

2. Executive Summary 3-5

3. Chapter 1 Area of Internship and Insight Gained 7-11

4. Chapter 2 Profile of the Organization 12-31

5. Chapter 3 Job Description and Functional Profile 32-34

6. Chapter 4 Learning Experience and Insight Gained 35-44

7 Data Analysis 45-49

8 Chapter 5 Recommendation and Conclusion 50

9 Bibliography 51

10 Annexure 52

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CHAPTER 1

THE AREA OF INTERNSHIP AND LEARNING OBJECTIVE

I worked as an intern in Sharekhan from 1 April 2013 to 31 June 2012. It was a very good

experience for me. My area of internship comprises of both the fields Finance as well as

Marketing. In finance I was given the theoretical knowledge of Online Trading, and in

Marketing I was said to open Demat Account and do marketing of Share khan. I have learned a

lot there.

learning objective

Knowledge of Stock Market, Trading, NSE (National Stock Exchange), BSE (Bombay

Stock Exchange).

Information of Share khan (History, Products, Brokerage Charges, Mission, Vision)

Ways to minimize the risk of Clients as well as Broking Firms.

Knowledge of Demat Account and the procedure adopted to open Demat Account.

CAPITAL MARKET

A capital market is a market for share, securities; where business enterprises or companies

and governments can raise long-term funds. Through capital market or security market people

who have idle resources can most efficiently transfer those recourses who have productive need

for them. Securities market provides channels for allocation of savings to investment and

thereby decouples these two activities. A Financial/capital market consists of investors (buyers

of securities), and borrowers (sellers of securities), intermediaries and regulatory bodies.

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INDIAN STOCK MARKET OVERVIEW

A stock market or equity market is a public entity for the trading of company stock or shares

and derivatives at an agreed price; these are securities listed on a stock exchange as well as those

only traded privately.

Indian Stock Market consists of more than 20 Stock Exchanges. The Bombay stock exchange

(BSE) and National stock exchange (NSE) are the two primary exchanges in India. BSE and

NSE account for about 80% of the equity volume traded in India.

BOMBAY STOCK EXCHANGE

BOMBAY STOCK EXCHANGE (BSE) (Bombay Share Bazaar) The Stock Exchange, Bombay

is a stock exchange located on Dalal Street , Mumbai and is the oldest stock exchange in Asia .

The equity market capitalization of the companies listed on the BSE was US$1 trillion as of

December 2011, making it the 6th largest stock exchange in Asia and the 14th largest in the

world .

The BSE has the largest number of listed companies in the world. As of March 2012,

there are over 5,133 listed Indian companies and over 8,196 scrips on the stock exchange, the

Bombay Stock Exchange has a significant trading volume.

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NATIONAL STOCK EXCHANGE

NATIONAL STOCK EXCHANGE (NSE) The National Stock Exchange of India was set up

by Government of India on the recommendation of Pherwani Committee in 1991. It was

incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as

a stock exchange under the Securities Contracts (Regulation) Act, 1956. The National Stock

Exchange (NSE) is a stock exchange located at Mumbai, India. It is the 16th largest stock

exchange in the world by market capitalization and largest in India by daily turnover and number

of trades, for both equities and derivative trading.

NSE has a market capitalization of

around US$985 billion and over 1,646 listings as of December 2011.

Though a number of other

exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock

exchanges in India and between them are responsible for the vast majority of share transactions.

The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY an index of fifty major

stocks weighted by market capitalization.

purpose - Stock markets basic role is to provide a platform for the masses of the country to

invest their savings and also as a source of funds for various organizations and institutions. It

provides an opportunity for any person to become a part-owner of the company by buying the

company‟s shares. These shares can be sold and exchanged as well as used as collateral in

certain cases. One can deal in a variety of financial instruments in a stock market such as Equity

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which has already been explained, Future‟s, Retail Debt, Wholesale Debt, Currency Future‟s,

Derivatives, and Bonds etc. Trading can only be performed by a registered broker of the

respective stock one wants to deal in or through a broker.

present scenario

The current conditions of Indian markets have drastically improved. There is absolute

transparency and instant transactions. All Indian Stock markets are now computerized and

Internet Trading has become a common phenomenon. Indian stock markets have also

developed a dynamic nature and can change from a bullish temperament to a bearish slide. Any

small bit of information or even a rumour from any part of the country can affect the market and

is a fairly accurate indicator of the prevalent atmosphere in the region or country. People from

across the country and globe get in touch with minute wise readings on the stock market and gain

a lot of trading aptitude after daily seeing BSE Stock Gainers or BSE top losers list which does

a world of good to their investment portfolio.

stocks

The stock or capital stock of a business entity represents the original capital paid into or invested

in the business by its founders. It serves as the security of the creditors in the business since it

cannot be withdraw to the detriment of the creditors. Stock is distinct from the property and

the assets of a business which may fluctuate in quantity and value. Buying a stock for the long

term means that you want to own part of a company and you think that in the future the company

will be profitable. If you buy stock in a company and the company perform well then the price

of the stock will rise and vice versa.

stock market

A stock market or equity market is a public market (a loose network of economic transactions,

not a physical facility or discrete entity) for the trading of company stock and derivatives at an

agreed price; these are securities listed on a stock exchange as well as those only traded

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privately. The size of the world stock market was estimated at about$36.6 trillion US at the

beginning of October 2008. The largest stock market in the United States, by market cap is the

New York Stock Exchange, NYSE, and while in Canada, it is the Toronto Stock Exchange. The

two main Stock Exchange of India is National Stock Exchange ( NSE) and Bombay Stock

Exchange (BSE).

ONLINE TRADING

The act of placing buy/sell orders for financial securities and/or currencies with the use of a

brokerage‟s internet – based proprietary trading platforms. The use of online trading increased

dramatically in the mid to late 90‟s with the introduction of affordable high speed computers and

internet connections. Stocks , Bonds , Options , Futures and currencies can all be traded online.

The use of online trades has increased the number of discount brokerages because internet

trading allows many brokers to further cut costs and part of the savings can be past on to

customers in the form of lower commissions. Another benefit of online trading is the

improvement in the speed of which transactions can be executed and settled, because there

is no need for paper-based documents to be copied, filed and entered into an electronic

format.

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CHAPTER 2

PROFILE OF THE ORGANISATION

Sharekhan is one of the leading retail brokerage of SSKI Group which was running sucessfully

since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI Group, which

has over eight decades of experience in the stock broking business. Sharekhan offers its

customers a wide range of equity related services including trade execution on BSE, NSE,

Derivatives, depository services, online trading, investment advice etc.

The firm‟s online trading and investment site - www.Sharekhan.com - was launched on

Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers

across the country. Known for its jargon-free, investor friendly language and high quality

research, the site has a registered base of over one lakh customers. The number of trading

members currently stands at over 3 Lacs. While online trading currently accounts for just over 2

per cent of the daily trading in stocks in India, Sharekhan alone accounts for 32 per cent of the

volumes traded online.

The content-rich and research oriented portal has stood out among its contemporaries

because of its steadfast dedication to offering customers best-of-breed technology and superior

market information. The objective has been to let customers make informed decisionsand to

simplify the process of investing in stocks.

On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application

that emulates the broker terminals along with host of other information relevant to the Day

Traders. This was for the first time that a net-based trading station of this caliber was offered to

the traders. In the last six months SpeedTrade has become a de facto standard for the Day

Trading community over the net.

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Sharekhan’s ground network includes over 588 centres in 148 cities in India, of which 32

are fully-owned branches.

Sharekhan has always believed in investing in technology to build its business. The

company has used some of the best-known names in the IT industry, like Sun Microsystems,

Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial

Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and content. The

Morakhiya family holds a majority stake in the company. HSBC, Intel & Carlyle are the other

investors.

With a legacy of more than 80 years in the stock markets, the SSKI group ventured into

institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading

players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of

the market in each of these segments. SSKI‟s institutional broking arm accounts for 7% of the

market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional

portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK

and US. Foreign Institutional Investors generate about 65% of the organization‟s revenue, with a

daily turnover of over US$ 2 million. The Corporate Finance section has a list of very prestigious

clients and has many „firsts‟ to its credit, in terms of the size of deal, sector tapped etc. The

group has placed over US$ 1 billion in private equity deals. Some of the clients include BPL

Cellular Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shopper‟s Stop.

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PROFILE OF THE COMPANY

Name of the company: Sharekhan Ltd.

Year of establishment: 1925

Headquarter : Sharekhan SSKI

A-206 Phoenix House

Phoenix Mills Compound

Lower panel

Mumbai- Maharashtra, INDIA- 400013

Nature of Business : Service Provider

Services : Depository services, Online services and

Technical Research

Number of Employees: Over 3500

Website : www.Sharekhan.com

Slogan : Your guide to the financial jungle

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VISION

To be the best retail brokering Brand in the retail business of stock market.

MISSION

To educate and empower the individual investor to make better investment decisions through

quality advice and superior service.

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SSKI GROUP COMPANIES

SSKI Investors Services LTD (Share Khan)

S.S. Kantilal Iswarlal Securities

SSKI corporate Finance

I Dream Production

Palm Springestates Pvt Ltd

Fin flow investement Pvt Ltd

Sharekhan commodities Ltd

Archfund Properties Pvt Ltd

Kalsri Trading & Investment Ltd

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SHAREKHAN CORPORATE STRUCTURE

SSKI – Corpora te St ructure

Owns 56%

of

SSKI INVESTOR SERVICES PVT. LTD.

Retail broking arm of the group

Shareholding pattern:

55.5% Morakhia family (promoters)

18.5% HSBC Private Equity India

Fund Ltd

18.5% First Carlyle Ventures,

Mauritius

7.5% Intel Pacific Inc.

SSKI Securities Pvt. Ltd.

Morakhia Family &

Associates

100%

Owns 50.5%

of

SSKI CORPORATE FINANCE PVT. LTD.

Investment Banking arm of the group

Shareholding pattern:

50.5% SSKI Securities Pvt. Ltd.

49.5 % Morakhia family

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ORGANIZATIONAL STRUCTURE

CVC Group(Citi Venture Capital)

Director CEO Director

(Jaipdeep Arora) (Tarun Shah) (Shankar Valiya)

Online business head

(Kalyanraman)

AVP-Mumbai Online

(Sanjay Batale)

Territory Manager

Assistant Manager

Sales Executive

Trainees

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REASONS TO CHOOSE SHAREKHAN LIMITED

Experience

SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia

Money broker's poll held recently, SSKI won the 'India's best broking house for 2004' award.

Ever since it launched Sharekhan as its retail broking division in February 2000, it has been

providing institutuonal-level research and broking services to individual invcestors.

Technology

With our online trading account you can buy and sell shares in an instant from any PC with an

internet connection. You will get access to our powerful online trading tools that will help you

take complete control over your investment in shares.

Accessibility

Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION servies for investors.

These services are accessible through our centres across the country (Over 588 locations in 148

cities) over the internet (through the website www.Sharekhan.com) as well as over the Voice

Tool.

Knowledge

In a business where the right information at the right time can translate into direct profits, you get

access to a wide range of information on our content-rich portal, Sharekhan. You will also get a

useful set of knowledge-based tools that will empower you to take informed decisions.

Convenience

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You can call our Dial-N-Trade number to get investment advice and execute your transactions.

We have a dedicated call-centre to provide this service via a Toll Free Number 1800-22-7500 &

1800-22-7050 from anywhere in India.

Customer Service

Our customer service team will assist you for any help that you need relating to transactions,

billing, Demat and other queries. Our customer service can be contracted via a toll-free number,

email or live chat on www.Sharekhan.com.

Investment Advice

Sharekhan has dedicated research teams of more than 30 people for fundamental and technical

researchs. Our analysts constantly track the pulse of the market and provide timely investment

advice to you in the form of daily research emails, online chat, printed reports and SMS on your

mobile phone.

Benefits

Free Depository A/c

Secure Order by Voice Tool Dial-n-Trade.

Automated Portfolio to keep track of the value of your actual purchases.

24x7 Voice Tool acess to your trading account.

Personalised Price and Account Alerts delivered instantly to your Cell Phone & E-mail

address.

Special Personal Inbox for order and trade confirmations.

On-line Customer Service via Web Chat.

Anytime Ordering.

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PRODUCTS OF SHAREKHAN LIMITED

Sharekhan offers the following products and services to its customers:

CLASSIC ACCOUNT

This is an User Friendly Product which allows the client to trade through website

www.Sharekhan.com and is suitable for the retail investor who is risk-averse and hence prefers

to invest in stocks or who do not trade too frequently.

Features

Online trading account for investing in Equity and Derivatives via www.Sharekhan.com

Live Terminal and Single terminal for NSE Cash, NSE F&O & BSE.

Integration of On-line trading, Saving Bank and Demat Account.

Instant cash transfer facility against purchase & sale of shares.

Competative transaction charges.

Instant order and trade confirmation by E-mail.

Streaming Quotes (Cash & Derivatives).

Personlized market watch.

Single screen interface for Cash and derivatives and more.

Provision to enter price trigger and view the same online in market watch.

TRADE-TIGER

TRADE-TIGER is an internet-based software application, that enables you to buy and sell in an

instant.

It is ideal for active traders and jobbers who transact frequently during day‟s session to capitalise

on intra-day price movement.

Features

Instant order Execution and Confirmation.

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Single screen trading terminal for NSE Cash, NSE F&O & BSE.

Technical Studies.

Multiple Charting.

Real-time streaming quotes, tic-by-tic charts.

Market summary (Cost traded scrip, highest calue etc.)

Hot keys similar to broakers terminal.

Alerts and reminders.

Back-up facility to place trades on Direct Phone lines.

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DIAL-N-TRADE

Along with enabling access for your trade online, the CLASSIC and TRADE-TIGER

ACCOUNT also gives you our Dial-ntrade serives. With this service, all you have to do is dial

our dedicated phone lines 1-800-22-7500, 3970-7500.

PORTFOLIO MANAGEMENT SERVICES

1. ProPrime: - Research & Fundamental Analysis.

2. ProTech: - Technical Analysis.

-Thrifty Nifty

-Beta Portfolio

3. ProArbitrage: - Exploit price analysis

IPO ON-LINE

You can apply all the forthcoming ipo online hasselfree, paperless and time saving work.

CHARGE STRUCTURE

Structrue for Post Paid - Account Individuals: -

Charge Classic Account TRADE-TIGER Account

Account Opening

Brokerage

Rs. 750*/- with 5000 margin

Intra-day-0.10 % & Delivery-0

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.50 %

(*750 is Adjuested as

brokegare for 6 month)

Monthly

Commitment

Rs. NIL

Second Slab

Brokerage

Rs.15000 as margin money

& A\C opening free

0.05% for Intra Day & 0.25%

for Delivery

Third Slab

Brokeragae

Rs.25000 as margin money

& A/C opening free

0.05% for Intra Day & 0.25%

for Delivery

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HOW TO OPEN ACCOUNT WITH SHAREKHAN

For online trading with Sharekhan, investor has to open an account. Following are the ways to

open an account with Sharekhan:

Call them at phone number provided below and ask that you want to open an account

with them.

1) Call on toll free number 1-800-22-7500 to speak to a customer service executive

2) If you are in Mumbai call on 022-66621111

3) Visit one of their branches. Sharekhan has a huge network all over India. Click on

http://Sharekhan.com/locateus.aspx link to find out your nearest branch. Just select the

place near you and you will find a manager to assist you there.

4) You can send them an email on info@Sharekhan.com to know about their products and

services.

5) If you wish to chat with customer service representative, you can join the chat session

Documents Required

As per KYC guidelines there needs to be photo identity and address proof of the

customer. The required documents are mentioned below:-

Identity proof Residence/ Address Proof

Passport Passport

Pan card Voter‟s ID

Driving License Driving License(valid)

Voter‟s ID Bank statement(latest)

MAPIN UIN Card Telephone Bill(latest)

Electricity Bill(latest)

Ration Card

Flat Maintenance Bill(latest)

Insurance Policy(latest)

Leave-License/Purchase

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Agreement(latest)

2 Photographs

A copy of Pan Card

Two cheques drawn in favour of Sharekhan Limited, one for the account opening fees

and the other for the margin money( the minimum margin money is RS 5000/-)

A cancelled cheque should be given by the client if he provides Saving Bank Statement

as a proof for correspondence address.

Charge structure

Fee structure for general individual:-

CHARGE CLASSIC ACCOUNT SPEED TRADE

ACCOUNT

Account opening Rs 750/- Rs 1000/-

Brokerage Intraday- 0.10%

Delivery- 0.50%

Intraday- 0.10%

Delivery-0.50%

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COMPETITIVE ANALYSIS

Follower:

The followers are those who just blindly follows other players who are leaders and

chalengers.

The players like 5 Paisa, Motilal Oswal, HDFC securities, Kotak street are the followers.

Leaders:

ICICI Direct is a leader in the online account which is having 1,24,000 accounts in the

country.

While in offline account Sharekhanis leading with 64000 offline accounts.

Nicher:

ICICI Direct.com and Kotakstreet.com are the two stock brocking houses which are

focusing only on online investors.

Chalenger:

Sharekhan, Kotakstreet and India bulls come under this head.

Sharekhan challenges competitors by providing quality services and research based

advice.

Indiabulls is also challenging with low brokerage rates and class one services.

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SWOT ANALYSIS

STRENGHTS

First brokerage firm to go online

Products

Customer Service

Good Experience

Online Fund Transfer

Research Report

Clients ( An average of 15000 clients

per year)

Reccomendations from Clients

Strong Communication Network

Low Annual Maintenance Charge

Accessibility

WEAKNESS

High Employee Turnover

Localized presence

High Brokearge charges but now they

have overcome this by a new prepaid

scheme in which brokerage is reduced

to half.

Lack of awareness among customers.

Lesser emphasis on customer retention.

OPPORTUNITIES

Huge Market emerging with the

booming of capital market.

It can easily tap the retail investors with

small saving through promotional

Channels like print media, electronic

media , etc.

As interest on fixed deposits with post

office and banks are all time low, more

and more small investors are entering

into stock market.

THREATS

Aggressive promotional strategies of

competitors.

Lack of sufficient branch offices for

speedy delivery of services.

Other players are providing margin

funds to investors on easy terms where

as there is no such facility in share

khan.

More and more players are venturing

into this domain which can further

reduce the earnings of Share Khan.

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RESEARCH SECTION IN SHAREKHAN LIMITED

Sharekhan limited has its own in house Research Organization which is known as value line. It

comprises a team of experts who constantly keep a eye on the share market and do research on

the various aspects of the share market. Generally the research is based on the Fundamentals and

Technical analysis of different companies and also taking into account various factors relating to

the economy.

As a customer of sharekan limited one receives daily 5-6 Research Reports on their emails which

they can use as tips for investing in the market. These reports are named as Punter Report, Eagle

Report, Investor Eye Report and Highnoon Report.

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CURRENT CHALLENGES OF SHAREKHAN

Sharekhan faced lots of challenges. Some of the challenge that it face are

Retaining its customers is a big challenge of Sharekhan.

Updating its Online Trade Software TRADE TIGER and make sure that it always work is

another challenge.

As the broking firms are increasing number of competitors of Sharekhan are also rising.

Facing competitions from all these firms and maintaining its position is another challenge

of Sharekhan. Some of the main competitors of Sharekhan are Angel Broking , Religare,

Kotak Securities , India Bulls, Reliance Money , HDFC Securities, ICICIdirect.com ,

Bajaj Capital , Motilal Oswal , India Infoline.

FINANCIAL POSITION OF SHAREKHAN

The Equity Share Capital of Sharekhan is Rs 10.33 crores.

The Operating Income of Sharekhan has increased from 55.93 (in crores) (March 2008)

to 153.97 (in crores) (March 2012).

The Operating Profit of Sharekhan has increased from 1.45 (in crores) (March 2008) to

8.43 (in crores) (March 2012).

Its Retained Earning has also increased from 2.46 (in crores) (March 2008) to 5.42 (in

crores) (March 2012) but in March 2010 its Retained Earnings went into negative –0.36.

Sharekhan has paid total taxes worth Rs 1.73 (in crores) in March 2012.

Sharekhan has total worth Assests of Rs 44.53 crores which have increased to 53.03 in

March 2012.

Its Reserve and Surplus has also increased from 34.20 crores (March 2008) to 38.71

crores (March 2013)

Net profit of Sharekhan is 3.41 crores (March 2008) which has increased to 7.77 ( March

2012).

AWARDS AND ACHIEVEMENTS

32

A rated among the top 20 wired companies along with Reliance, HUJI, Infosys etc. by

„Business Today” January 2004 edition.

Awarded “Top Domestic Brokerage House” four times by Euro Money and Asai Money.

Pioneers of online trading in India amongst the top 3 online trading websites from India.

Most preferred financial destination amongst online broking customers.

India‟s mot preferred brokers within 5 yrs “ Awaaz Customers Award 2005”

The team has completed over US$5 billion worth of deals in the last 5 years -

making it among the most significant players raising equity in the Indian

market.

SSKI, a veteran equities solutions company has over 8 decades of experience in

the Indian stock markets. If we experience their language, presentation style,

content or for that matter the online trading facility, we'll find a common

thread; one that helps us make informed decisions and simplifies investing in

stocks.

FUTURE PLAN

200000 plus retail customers being serviced through centralized call centers / web

solutions.

Branches / Semi branches servicing affluent / aggressive traders through high skills

financial advisor.

250 independent investment managers / franchisee servicing 50000 highly valued clients.

New initiatives Portfolio Management Services and commodities trading.

33

CHAPTER -3

JOB DESCRIPTION AND FUNTIONAL PROFILE

Had training for 3 months. In this training we were told about Sharekhan, organizational

structure, history of Sharekhan, products, Sharekhan research reports, trading techniques, clients,

demat account, online trading accounts, learned how to buy and sell shares through these online

terminals, sales technique, Sharekhan brokerage.

As my Job Profile was both in the field of Marketing and Finance, I have been handling the

following responsibilities:-

In Marketing I was asked to bring Demat Account of customers.

I also do the marketing of Sharekhan through surveys, filling questionnaire, distributing

pamphlets.

I used to visit in public and office area like Noida, Gurgaon and persuade people to open their

Demat Account in Sharekhan by giving full information. Selling so what I had to do is to identify

the prospective client and then try to convince them.

As we have given good amount of knowledge about stock market, trading. We were asked to

open a Demat Account so that we could have practical knowledge about what we have learned.

and do trading on it. We used to trade through live terminal known as Trade Tiger. Trade Tiger is

software of Sharekhan which is given to customers for trading. It enables its user

Online trading in equity and derivatives

Dial-n- Trade

Cash transfer

Order and trade confirmation

Live Terminal

34

The next step is to place the order of buying and selling of the shares. The orders are placed by

me after analyzing the share market. The orders may take any form such as at best order, limit

order, cancel order and stop loss order.

DAY TO DAY ACTIVITIES

Reach Sharekhan Limited Office at 9 a.m.

Do online trading on Trade Tiger Software.

On some days we also used to go outside to find the prospective customers and do the

marketing of Sharekhan.

In between the trading we used to do the calling to various prospective customers and

persuade them to open the Demat Account in Sharekhan.

Visit the client place to take the cheque and complete all the formalities which are

required to open the Demat Account.

WORK ENVIRONMENT

It was a 3months experience as a summer trainee. It was a learning experience in

corporate world. We were able to understand the working of share market and the trading

procedure to deal with.

The managerial staff was highly supportive in allotted work. The colleagues were very

motivating and they use to guide us on how to analyze the stock market trend.

They guide us with the knowledge of hedging tools to manage the risk in share market

and minimize our loss and how we can maximize our profit.

AREA ASSIGNED

I covered areas in Delhi , Sector 18 Noida , Udyog Vihar Gurgaon .

35

REPORTING RELATIONSHIP

Reporting Time : 9 a.m

Reporting to : Mr. Jaipal Singh

( Assistant Manager)

NICE EXPERIENCE

I had a very good experience in Sharekhan. It is a good place for freshers to begin their carrier

especially for those who want to go in broking industry in future. All the employees of

Sharekhan Limited, Jhandewalan were very supportive. They guide us a lot in doing trading. The

working environment was also very good. They all were very friendly. I have gained a huge

amount of knowledge about trading, shares, Capital market in these three years. I have also

learned that selling service is a very challenging tasks. Overall it was a nice experience for me.

JOB CHALLENGES

Whatever we do we always face some challenge in every field. Likewise I have also faced some

challenges in this organization but the good thing is with my hardwork and sincerity I have faced

all this challenges. The challenges which I have faced are;

Knowing about the organization and completing assignments on time, making the best

presentations among all my colleagues as allotted by our mentor was a challenge for me.

Understanding the Share market and learning how to do the trading was also one of the

challenge which I have faced in Sharekhan. As I was totally new to this field I didn‟t had any

knowledge about the shares market. Learning things like how to place order? How to sell the

order? How to place the bid? When to place the bid? On what amount I had to sell and buy the

currency, equities?

36

Making profit in trading was another challenge for me and learning how to minimize the loss by

knowing the concept of hedging, stoploss.

Fulfilling the target which was assigned to us 3 accounts was really very challenging. As most of

the people had a fear of sharemarket as they think that in sharemarket people always had to bear

loss. Finding the prospective client and persuading them is really very challenging.

37

CHAPTER 4

LEARNING EXPERIENCE AND THE INSIGHTS GAINED

The type of training which I got in my internship was On the Job Training. On the Job Training

means learning practical and implementing it in the day to day work of the organisation.

During my SIP in the company I learned and implemented many things.

I with my 16 collegemates were given training of 2 weeks about the Share Market , about the

Share Khan practices and services. We were taught by power point presentations and we were

asked questions about what was taught to us..The above statement is not out of any prejudice but

is based on the study undertaken by me and is testified by the research findings

Meanwhile we were suppose to bring documents to open our Demat Account . After the training

of about the company and the the industry, we were given theoritical knowledge of how to trade

in currency(futures), equity, derivatives( futures and options)

We were also taught how to calculate brokerage of different transactions.

After the theoritical knowledge was over, our accounts were opened and we were given practical

knowlege of the trading online in the Share Market.

We were also given targets to open Demat accounts. So I took a survey of about 100 people and

filled the questionaire. And after the anaysis of the findings. I found 20 people who were

interested to open accounts . But they were not ready to open their accounts now. So i couldnot

open a single account.

The rest of the tenure of my SIP , I did trading in all the possible markets and gained knowledge

of how the market fluctuate and its ups and down.

Inshort I have the following things

Importance of information technology in the field of stock broking is immense.

38

The terminal through which the brokers buy and sell shares is software that completely

depends on the internet. For sharekhan this terminal has been designed by the software

company. Buying and selling through internet is fast. As soon as the prices of the shares

goes up or comes down then they can be sold or purchased instantly within seconds.

In Sharekhan limited. I have learned a lot relating to the finance, learned the meaning of

words that are mostly used in the share market.

Learned about various product of Sharekhan limited, learned various aspects regarding

share market.

Learned how to use online trading terminal

Learned about various product used in the share market especially Demat account.

Got the practical knowledge of the market

Learned some marketing techniques also by convincing people to open a Demat account.

INSIGHT GAINED

Information plays a vital role in share market

It was also observed that many broking houses offering internet trading allow clients to

use their conventional system as well just to ensure that they do not lose them.

The no of players is increasing at a steady rate and today there are over a dozen of

brokerage houses who have opted to offer not trading to their customers and prominent

among them as Sharekhan.

Many people are also getting aware about the share market so they are started investing

in share market which include equity, commodity and currency market.

39

RISK MANAGEMENT AND STOCK BROKING FIRM

What is risk management?

Risk management is the structured approach towards managing the uncertainties. Risk

management involves risk identification and risk assessment. Further to avoid the unpredictable

outcomes arising out of risk, the risk can be avoided, reduced or transferred. However, best

possible solution has to be chosen to tackle the risk.

The objective of the Risk management function is to ensure that all risks, which threaten the

business of Stock and Share Markets, are recognized, controlled and reduced to an acceptable

level while all applicable regulatory requirements of the various regulatory authorities are

complied with.

To manage risks like value at risk margin, mark to market margin and extreme loss margin is

maintained. Also the brokers are allowed intraday turnover and gross exposure limits. Brokers

have to maintain minimum base capital and additional base capital with the exchange. Exchanges

like SEBI and NSCCL have taken steps like know your client, continuous surveillance,

mandatory audit etc. Thus every risk broking firm has risk management department.

40

RESEARCH METHODOLOGY

During this project the necessary inputs taken were primary as well as secondary. The primary

data collection and secondary data collection form an integral part of the study. This is explained

below.

primary data

Primary research consists of a collection of original primary data. It is often undertaken after the

researcher has gained some insight into the issue by reviewing secondary research or by

analyzing previously collected primary data. It can be accomplished through various methods,

including questionnaires and telephone interviews in market research, or experiments and

direct observations in the physical sciences, amongst others.

For this report the primary data is collected from the following source

Discussion with surveillance department officers

Discussion with managers

Discussion with sub brokers

Discussion with employees of the organizations

secondary data

Secondary data, is data collected by someone other than the user. Common sources of secondary

data for social science include censuses, organizational records and data collected through

qualitative methodologies or qualitative research. For this study the data is collected from the

following sources

Books related to risk management and capital market

Magazines related to the stock market

Website related to risk management and stock market

41

RMS stands for Risk Management System

The RMS Department shall be responsible for controlling risk and ensuring that proper

mechanisms/systems are in place to check/monitor Client/Branche/sub broker turnovers and

gross exposure positions. They shall monitor and optimize the Capital adequacy with Exchanges

for ensuring smooth flow of operations. No Operation activities shall be undertaken by the RMT

& Department and the RMTD shall focus solely on controlling risk activities

To manage the risk of the company/client from the volatility of the market.

RMS works on the following concepts:

Cash: The clear balance available in the customer‟s ledger account in our books.

Margin: The underlying stake provided by the customer in the form of cash, and/or stock

Stock qualifying for margin in cash segment transactions: Securities in the approved list of

Stock

Exchange as per SEBI guidelines.

Total Deposit: The aggregate of client deposit available with us in the form of cash, Shares

(After Applicable Hair Cut)

Setting up client's exposure limit:

In Cash segment, we may provide a exposure limit to a client which would be a multiple of the

clear ledger balance in the account of the client plus value of paid up collaterals computed after

appropriate haircut. The value of the “multiple” and the “haircut” shall be decided by the

company based on Market

Volatility and quality of collateralsIt is not compulsory to collect upfront margin from clients for

Cash segment. Generally the client is allowed to trade up to certain limit, at our discretion,

42

depending on various factors like financial credibility of the client, request from sub broker

regarding setting client's exposure limit etc.

In Futures & Options segment, exposure limit of each client is set, based on Margin money given

by the client, as per the Exchange Regulations. Upfront margin is collected from client.Share

Broking companies shall have the prerogative to allow differential purchase limits and sell limits

varying from client to client, depending upon credit worthiness, integrity and past conduct of

each client.

Right to sell client's securities or close client's position, without giving notice to the client on

account of nonpayment of dues:

If the client fails to pay his pay-in settlement obligation of funds on or before the Exchange Pay

in day, the relationship manager will give a call to the client , (in case of a direct client) or to

related branch manager/authorized person, who in turn will follow up with the client. If the fund

is not received within 5 trading days from the Pay in day, the shares of the client bought by him

will be sold out in the Exchange. If there is a loss in such sale transaction then the loss will be

borne by the client.

In case of any such sale the client will not be given any notice.

Shortages in obligations arising out of internal netting of trades:

In case of shortages in obligations arising out of internal netting of trades, short shares are

bought in the market at market rate in the defaulter client code. Shares are delivered to the Buyer

client on payout day. The ledger of the client who failed to deliver shares is debited for such

market purchase

Conditions under which a client may not be allowed to take further position

Under the following conditions a client may not be allowed to take further position,

1. The client has a due / debit balance – Such clients are allowed to close out his open position

but is not allowed to take any new position

2. The client has not able to meet his pay-in obligation in cash by the schedule date of pay-in

43

3. The client has not met Market to Market loss in cash.

4. The “open” positions in a contract exceed or are close to market wide cut-off limits.

5. The client‟s position is close to client-wise permissible “open” positions

6. The client had defaulted in meeting cash or securities obligation leading to compulsory close

out of the position.

7. If the exchange is not allowing any further position in that script.

8. Based on happening of the event company has the risk perception that further trading in the

securities/ contracts may not be interest of its clients and/or the market.

.

Risk Management

Risk containment measures include capital adequacy requirements, margin requirements,

position limits based on capital, online monitoring of client positions etc. The main concepts of a

Risk Management System are listed below:

• There should be a clear balance available in the client‟s ledger account in the broker‟s books.

44

• The clients are required to provide margins upfront before putting in trade requests

with the brokers.

• The aggregate exposure of the client‟s obligations should commensurate with the

capital and networth of the broker.

• The clients must settle the debits, if any, arising out of MTM settlements.

• In futures and options segment, the positions are allowed based on the margin

available to satisfy initial margin requirements of the Exchange. The clients are expected to pay

the MTM margin as and when required failing which the client or the

broker may square off the trade.

Risk Management & Surveillance

Any transaction or behavior, whether it is buying, selling or instigating in a manner to

Willfully produce an abnormal effect on prices and / or volumes, goes against the very

fundamental objective of the securities markets. Here the risk management system plays a crucial

role.

An efficient risk management system is integral to an efficient settlement system.

The goal of a risk management system is to measure and manage a firm's exposure to various

risks identified as central to its operations. For each risk category, the firm must employ

procedures to measure and manage firm-level exposure. These are:

1) Establish Standards and Reports;

Every broker has a set of standards which they adhere to, and these are the standards against

which a client is measured. In general and not only among brokers, certain standards must be met

before rating a company or a client. These must be reported to the management for their perusal

and action.

2) Impose Position Limits and Rules;

45

A key element of financial risk management is deciding which risks to bear and to what degree.

A firm needs to impose limits to cover exposures, and overall position concentrations relative to

systematic risks. SEBI and exchanges prescribe from time to time open Position Limit for

various categories of investors in the Equity and Currency Derivative segments.

3) Set Investment Guidelines and Strategies;

A firm should outline investment guidelines and strategies for risk taking in the immediate

future in terms of commitments to a particular market area, extent of asset-liability mismatching,

or the need to hedge against systematic risk at a particular time. Risk management involves

determining what risks a firm‟s financial activities generate and avoiding unprofitable risk

positions. The board‟s role is usually described as setting the risk appetite of the organization;

however this is not possible if risks are understated or ill defined.

Guidelines can advise on the appropriate level of active management, given the state of the

market and senior management's willingness to absorb the risks implied by the aggregate

portfolio.

Types of Risk

Operational risk

Operational risk is the risk of monetary loss resulting from inadequate or failed internal

processes, and systems or external events. For the stock broker, operations risk is client/s, trading

errors, and sudden closure of banks where funds are deposited.

MARKET RISK

Market risk is usually affected by economic developments, political destabilization, rising fiscal

gap, and national debt, terrorism, energy price shocks, increase in interest rates, all resulting in a

drop in equity prices. It is mandatory for the brokers to collect adequate margin from its clients

who trade in Equity Derivative or Currency Derivative segment.

REGULATORY RISK

46

Regulatory risk occurs when the rules governing the securities industry are changed, giving rise

to potential loss. For example, the „customer first‟ policy makes it difficult to trade house

accounts and therefore a broker may not be able to liquidate a position immediately, leading to

potential or actual loss. Regulatory requirement of brokers who need to maintain a higher net

capital may be hard to meet.

A stock broking firm must identify factors that can trigger operational, market, credit and

regulatory risks. It needs to establish procedures so that risk management begins at the point

nearest to the assumption of risks. This means adapting trade-entry procedures, customer

documentation, client engagement methods, trading limits, and other normal activities to

maintain management control, generate consistent data, and eliminate needless exposure to risk.

A sound risk management system is integral to an efficient clearing and settlement system. The

system must ensure that brokers / trading member‟s obligations are commensurate with their net

worth Risk containment measures include capital adequacy requirements, margin requirements,

position limits based on capital, online monitoring of client positions etc

The main concepts of a Risk Management System are listed below:

• There should be a clear balance available in the client‟s ledger account in the broker‟s books.

• The clients are required to provide margins upfront before putting in trade requests with the

brokers.

• The aggregate exposure of the client‟s obligations should commensurate with the capital and

net worth of the broker.

• The clients must settle the debits, if any, arising out of MTM settlements.

• In futures and options segment, the positions are allowed based on the margin available to

satisfy initial margin requirements of the Exchange. The clients are expected to pay the MTM

margin as and when required failing which the client or the broker may square off the trade.

Capital Adequacy Requirements

47

Credit risks are inevitable in financial markets, and managing them is a crucial part of market

functioning. In the equities and derivatives market, brokers' capital adequacy is one of the two

critical components of credit risk management, the other being daily margins. The Capital

Adequacy Requirements consists of two components i.e. the Base Minimum Capital and the

Additional or Optional Capital related to volume of the Business.

Base minimum capital/ Additional Base Capital

Base Minimum capital is the deposit a stock broker has to make with the stock exchange to get

trading rights on the exchange. Even then, the broker may take positions (the sum of his and his

clients') only up to a pre-specified multiple of this deposit amount. As per the SEBI (Stock

Brokers and Sub-Brokers) Regulations, an absolute minimum of Rs. 5 lakh as a deposit with the

Exchange shall be maintained by member brokers of the Bombay. This requirement is

irrespective of the volume of business of an individual broker.

The additional or optional capital

The additional or optional capital required of a member shall at any point be such that together

with the base minimum capital it is not less than 8%of the gross outstanding business in the

Exchange. The gross outstanding business would mean aggregate of up to date sales and

purchases by a member broker in all securities put together at any point of time during the

current settlement. Exchanges are free to stipulate a higher base capital.

Internal client account control

The stock broker shall segregate client funds from its own funds. Stock broker shall keep the

client‟s money in a separate bank account designated as client account and their own money in a

separate bank account. There are only certain circumstances in which the stock broker shall

transfer funds from own account to the clients‟ accounts and vice versa. The stock broker shall

also not transfer funds from one client‟s account to another. The stock broker shall not use

clients‟ funds for the purpose of self trading or other clients trading. All payments made

to/received from the client shall be through account payee cheques or demand drafts.

48

The stock broker is also required to maintain records in respect of dividends received on shares

held on behalf of the clients. This is to distinguish between the dividends received on own

account and clients account. The transfer of such dividends to clients account should be carried

out within appropriate time. Balances lying in client‟s bank account if it contains, a portion

representing brokerage, stock broker may transfer such brokerage to own bank account. Stock

brokers are not supposed to incur any expenses from client bank account directly out of such

amount.

Margin Requirements –

One of the critical components of risk management for the futures and options segment is the

margining system. Extreme loss margin in the equities segment and initial margin and MTM

margin in case of futures and options segment.

The daily margin is calculated based on Value at Risk (VAR). The broker needs to maintain

upfront capital with the exchange to cover his daily margin at the time of order placement. To

ensure this, the broker collects upfront margin by way of funds/ shares from the client and

deposits the same with the exchange.

Mark-to-Market Margin

Mark to market is calculated by marking each transaction in security to the closing price of The

security at the end of trading. In case the security has not been traded on a particular day, the

latest available closing price is considered as the closing price. In case the net outstanding

position in any security is nil, the difference between the buy and sell value be is considered as

crystallized loss for the purpose of calculating the mark to market margin payable. The mark to

market margin (MTM) is collected from the member before the start of the trading of the next

day. The MTM margin is collected/adjusted from/against the cash/cash equivalent component of

the liquid net worth deposited with the Exchange.

KYC

49

Other thing that can manage risk of sharekhan is adopting a strategy known as KYC. KYC is an

acronym for “Know your Client”, a term commonly used for Customer Identification Process.

SEBI has prescribed certain requirements relating to KYC normsfor Financial Institutions and

Financial Intermediaries including Mutual Funds and Stock Brokers to „know‟ their clients. This

entails verification of identity and address, financial status, occupation and such other personal

information as may be prescribed by guidelines, rules and regulation. The broker must ensure

that the clients fill-up the KYC form and submit it to them. There are separate forms for

individuals and non-individuals.

DATA ANALYSIS

Q1. Do you use risk management system in your organization?

o YES

o NO

50

Interpretation

All the organization (Sharekhan Limited, India Bulls, Kotak Securities , Angel Broking)

says yes they have risk management system in their organization.

Q.2 Is there any separate risk management department in your organization?

o Yes

o No

Interpretation

All the companies ( Sharekhan Limited, India Bulls, Kotak Securities , Angel

Broking) says yes they have separate risk management department in their

organization.

Q.3 For which purpose the organization use their risk management system?

o Cash

o Margin

o Stock qualify for margin

o Total deposit

51

Interpretation

This Pie Chart shows that two companies Sharekhan Limited and Kotak Securities prefer Cash

whereas Angel Broking prefers margin and India bulls says stock qualify for margin.

Q.4 In which segment you allow risk management system?

o Future

o Option

o Both

Purpose

Cash

Margin

Stock qualify for margin

total deposit

52

Interpretation

This Pie Chart shows that two companies Sharekhan Limited and Angel Broking allow risk

management system in both Option and Future whereas Kotak Securities prefers Future and

India bulls prefers Option.

Future

Option

Both

53

Q5. What is the nature of customer transaction?

o Intraday

o Delivery trade

o Sell against Buying

Interpretation

This Pie Chart shows the nature of customer transaction in the broking firm. In this we can see

that in two companies Kotak Securities and Sharekhan most people prefer Delivery trade

whereas in India Bulls customer prefer their transaction in Intraday and in Angel broking they

prefer Sell against buying.

Intraday

Delivery Trade

Sell against Buying

54

Q6. For what purpose you use your risk management policy?

o To manage risks of the clients by implementing risk management system

o To square of the position

o To monitor the exposures of clients/ branches/ authorized person on real time

based

Interpretation

This Pie Chart shows the purpose at which broking firm use risk management policy. In this we

can see that in three companies Sharekhan Limited , Kotak Securities, Angel Broking use risk

management policy as to manage risks of the clients by implementing risk management system

whereas India Bulls prefer risk management policy in order to square of the position

To manage risk

To square the position

To monitor the exposure

55

CHAPTER-5

RECOMMENDATION AND CONCLUSION

Through this project I came to a conclusion that Sharekhan is one of the best broking houses

among all the other firms existing in India

Things have changed for the better with the sharekhan going in-line coupled with endeavor to

stream line the whole trading system, things have changed dramatically over 3 to 4 years. New

and advanced technologies have barriers and have brought the countrywide market to doorsteps.

The introduction of on-line trading would influence the investors resulting in an increase in the

business of the exchange. It has helped the brokers handling a vast amount of transactions and

this can be an efficient trading delivering, settlement system with adequate protection to

investors.

Due to investors of online trading there has been greater benefit to the investors as they could

sell/buy shares as and when required and that to with online trading.

The broker‟s has a greater scope than compared to the earlier times because of invention of

online trading.

The concept of business has change today, this is a service oriented industry hence the survival

would require them to provide the possible service to the clients.

I recommended the exchange authorities to take steps to educate investors about their rights and

duties. I suggest to the exchange authorities to increase the investor‟s confidence.

I recommended the exchange authorities to be vigilant to curb wide fluctuations of price.

56

SUGGESTIONS

MORE BRANCHES –

Need to open more branches to be a topper in market Because it has alow distribution network.

LESS TIME –

They should try to make some arrangements to reduce account openingtime by verifying

documents at branch it selves.

. LINK-BANK A/Cs –

Linked as many accounts as client wants to its online account.

NEW BANKS IN THE KITTY –

Need to tie up with major banks like SBI, Allahabad Bank, Bank of Baroda etc.

CUSTOMER SATISFACTION –

The company should focus on the customer satisfaction not on just taking money

OTHER SUGGESTION

Some promotional activities are required for the awareness of the customers. People at young

age should be encouraged to invest in the stock market. Seminars should be held for providing

57

information to prospective and present customers. Necessary steps should be taken by the

exchange to deal with the situations due to break down in online trading.

58

BIBLIOGRAPHY

Websites:

www.sharekhan.com

www.indiabulls.com

www.anglebroking.com

www.economictimes.com

www.bseindia.com

www.nseindia.com

www.investopedia.com

www.sebi.gov.in

www.wikipedia.com

Newspapers:

The Times of India

The economic times

Business Standard

59

ANNEXURE

QUESTIONNAIRE

Name of the organization-

Q.1 Do you use risk management system in your organization?

o YES

o NO

Q.2 Is there any separate risk management department in your organization?

o Yes

o No

Q.3 For which purpose the organization use their risk management system?

o Cash

o Margin

o Stock qualify for margin

o Total deposit

Q.4 In which segment you allow risk management system?

o Future

o Option

Q.5 What is the nature of customer transaction?

o Intraday

o Delivery trade

o Sell against Buying

60

Q.6 For what purpose you use your risk management policy?

o To manage risks of the clients by implementing risk management system

o To square of the position

o To monitor the exposures of clients/ branches/ authorized person on real time

based