Download doc - Final Final Project Amey

Development Credit Bank Ltd.

Revival and Renewal of Smart Trade Online Trading Platform 1

N.L.DALMIA INSTITUTE OF MANAGEMENT STUDIES AND RESEARCHMIRA ROAD (EAST), MUMBAI-401104

Project Report On

Revival And Relaunch of Smart Trade Online Trading Platform

UNDER THE GUIDANCE OFMr.Pankaj Sood

Vice President Head-Retail Liabilities Development Credit Bank

SUBMITTED BYAmey BhonslayPGDM-Finance

ACADEMIC YEAR 2009-11


Acknowledgement

I take this opportunity to express my deep and sincere gratitude to Mr. Pankaj Sood,

Vice President-Retail Liabilities Product DCB for his valuable inspiration and encouragement

in implementing this project. It is because of his support that I could synchronize the efforts in

converting the manifold features of the project.

I would also like to thank Mr. Pradeep Kumar for his constant support and guidance

throughout the making of the project.

I would also like to extend my gratitude to Development Credit Bank Ltd. for assigning

this Project as a Summer Intern.

It helped me to understand the Retail Banking and the Online Trading Industry.

Moreover to understand the DCB’s Online Trading platform (DCB Smart Trade) on a whole

and various features and benefits attach to it.

Date: 29th June 2010



Letter of Transmittal

Dear Sir,

As per your directions, I have completed research on the “Revival And Relaunch of Smart

Trade Online Trading Platform”. The report is based on the careful study and comparison of

the various Online trading platforms and Demat services provided in the industry. The project

was carried from 28th April 2010 to 30th June 2010.The complete methodology and

conclusions derived on the basis of the comparison is described in the report. I believe you

will find the results mentioned in the report to be interesting and certainly useful.

Sincerely,

Amey Bhonslay

NLDIMSR



Executive SummaryThe report gives a brief analysis of the financial services sector of India. It, especially, gives

in-depth analysis of the financial services called demat and online trading facility provided by

DCB along with various financial organizations in India. These include both types of online

trading companies one is the banking online trading companies which are banks having their

own DP and Online platform and the other is non-banking trading organizations providing

these services.

The report starts with giving a brief introduction about the various financial services provided

by various types of financial organizations in India. It also gives some important statistics

about the financial services sector of India, present status in India and reasons for the growth

prospects of the financial services sector in India. The report gives brief introduction about the

requisition for opening both demat and online trading accounts. It also gives information about

the dematerialization, its need, process, benefits and parties involved. It also gives

information about the online securities trading process in India and also about their benefits.

An important mention of the dematerialization parties like depository and the depository

participant is also made. It also gives information about the online stock trading and

settlement of shares done in India.

The report gives an In-depth insight into the various online trading platforms and depository

services provided by DCB’s competitors in the industry on the basis of the Cost Structure,

Current Product Proposition and the Various features and additional services provided by

them vis-à-vis DCB. From the point of view of finance student, the report gives information

about the working of Online trading industry, the different participants of the online trading

industry, how it is being regulated and how online trading is importance and beneficial to retail

customers at large.

Finally, the report gives the list of findings that differentiates DCB’s Smart Trade with Online

trading and DP services provided by its competitors. At the end there are some suggestions

and recommendations made that can be taken into consideration by DCB to make the

relaunch of Smart Trade a success.



Project Justification:

The project undertaken mainly to help DCB revive its Online trading business which will help

them to provide their existing customers with additional services along with other Core

Banking Solutions and to attract new prospects so as to help provide all financial services

under one roof and become the best neighborhood bank in the regions they are operating.

It also helped me to get an overview of growth and development of online trading in India

since its inception in the year 2000. Due to subprime mortgage crisis in year 2008 NASDAQ

and S&P 500, two major stock exchange of the world entered into the bearish market. it also

affected the stock market all over the world including India. Now with investors confidence

slowly returning in capital markets, it is the challenge for firms providing Broking and DP

services to improve on their margins. The project helped me to analyze various firms

providing broking services and help DCB to restructure their online trading business. As per

the title suggest the project report has been prepared with a view to help Development Credit

Bank (DCB) in revival and relaunch of its Online Trading Platform.



Table of Contents

Sr. No.

Particulars Pg. No.

1 Introduction to Stock Market 7

2 Online Stock Trading 11

3 Demat Account 16

4 Depository & Depository Participant (DP) 17

5 About Development Credit Bank 22

6 DCB-A Historical Perspective 23

7 Online Trading Platforms 25

I. HSBC InvestDirect 25

II. ShareKhan 29

III. Geojit BNP Paribas 32

IV. Axis Bank – Online Trading 35

V. Motilal Oswal 36

VI. SBI Online Trading 39

VII. Religare Securities 40

VIII. SMC Securities 42

8 Comparative Analysis 48

9 DCB Smart Trade 65

10 Recommendations & Conclusion 69

11 Bibliography 72



Introduction To Stock Markets and Emergence of Online Trading in India

The emergence of stock market can be traced back to 1830. In Bombay, business passed in

the shares of banks like the commercial bank, the chartered mercantile bank, the chartered

bank, the oriental bank and the old bank of Bombay and shares of cotton presses. In

Calcutta, Englishman reported the quotations of 4%, 5%, and 6% loans of East India

Company as well as the shares of the bank of Bengal in 1836. This list was a further

broadened in 1839 when the Calcutta newspaper printed the quotations of banks like union

bank and Agra bank. It also quoted the prices of business ventures like the Bengal bonded

warehouse, the Docking Company and the storm tug company.

Between 1840 and 1850, only half a dozen brokers existed for the limited business. But

during the share mania of 1860-65, the number of brokers increased considerably. By 1860,

the number of brokers was about 60 and during the exciting period of the American Civil war,

their number increased to about 200 to 250. The end of American Civil war brought

disillusionment and many failures and the brokers decreased in number and prosperity. It was

in those troublesome times between 1868 and 1875 that brokers organized an informal

association and finally as recited in the Indenture constituting the “Articles of Association of

the Exchange”. On or about 9th day of July, 1875, a few native brokers doing brokerage

business in shares and stocks resolved upon forming in Bombay an association for protecting

the character, status and interest of native share and stock brokers and providing a hall or

building for the use of the members of such association.

As a meeting held in the broker’ Hall on the 5th day of February, 1887, it was resolved to

execute a formal deal of association and to constitute the first managing committee and to

appoint the first trustees. Accordingly, the Articles of Association of the Exchange and the

Stock Exchange was formally established in Bombay on 3rd day of December, 1887. The

Association is now known as “The Stock Exchange”.

The entrance fee for new member was Re.1 and there were 318 members on the list, when

the exchange was constituted. The numbers of members increased to 333 in 1896, 362 in



1916and 478 in 1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in 1896,

Rs.2500 in 1916 and Rs. 48,000 in 1920. At present there are 23 recognized stock exchanges

with about 6000 stock brokers. Organization structure of stock exchange varies.

14 stock exchanges are organized as public limited companies, 6 as companies limited by

guarantee and 3 are non-profit voluntary organization. Of the total of 23, only 9 stock

exchanges have been permanent recognition. Others have to seek recognition on annual

basis. These exchange do not work of its own, rather, these are run by some persons and

with the help of some persons and institution. All these are down as functionaries on stock

exchange. These are

1.) Stockbrokers

Stock brokers are the members of stock exchanges. These are the persons who buy, sell or

deal in securities. A certificate of registration from SEBI is mandatory to act as a broker. SEBI

can impose certain conditions while granting certificate of registrations. It is obligatory for the

person to abide by the rules, regulations and the bylaw. Stock brokers are commission broker,

floor broker, arbitrageur etc.

2.) Sub-broker

A sub-broker acts as agent of stock broker. He is not a member of a stock exchange. He

assists the investors in buying, selling or dealing in securities through stockbroker. The broker

and sub-broker should enter into an agreement in which obligations of both should be

specified. Sub-broker must be registered SEBI for a dealing in securities. For getting

registered with SEBI, he must fulfill certain rules and regulation.

3.) Market Makers

Market maker is a designated specialist in the specified securities. They make both bid and

offer at the same time. A market maker has to abide by bye-laws, rules regulations of the

concerned stock exchange. He is exempt from the margin requirements. As per the listing

requirements, a company where the paid-up capital is Rs. 3 crore but not more than Rs. 5

crore and having a commercial operation for less than 2 years should appoint a market maker

at the time of issue of securities.



4.) Portfolio consultants

A combination of securities such as stocks, bonds and money market instruments is

collectively called as portfolio. Whereas the portfolio consultants are the persons, firms or

companies who advise, direct or undertake the management or administration of securities or

funds on behalf of their clients.

As the complexities and the Volume and Value of trade increased a need was felt to automate

the entire process of stock market trading. This led to emergence of online exchanges,

NASDAQ being the first completely online automated exchange to start operation in 1971.

The emergence of online exchanges has facilitated faster transactions by providing online

trading portals and brokerage houses ease and flexibility. The Internet has indeed opened up

new opportunities for conducting the business. The worldwide stock exchanges has made a

major shift from the traditional method of trading and now conduct a bulk of its business

online through its brokers and partners.

In the developed countries majorly all the exchange transactions are conducted online. The

trend took off slowly in India and the National Stock Exchange (NSE) and the Bombay Stock

Exchange (BSE) two of the largest exchanges in India have been conducting online trade

successfully for some time. The Indian exchanges and brokering houses have been very slow

in moving their transactions online and the major reason has been the lot government

regulations. The initial delay was due to laying down the specifications for creating Closed

User Groups (CUGs). This issue was resolved between the Department of

Telecommunications (DoT) and the Finance Ministry around 1998.

The NSE and BSE are among the largest exchanges in the country handling very large daily

trading volumes, support large amounts of data traffic, and have a very large nationwide

network. The trading volume in year 2000 was huge with the average daily turnover in the

capital markets segment at NSE is around Rs 2300 crore and in the derivatives segment,

around Rs 1300 crore. The average daily traffic volume was around one million trades per day

in the capital markets segment and around 50,000 trades per day in the derivatives segment

and there were around 13,000 registered users in both segments and an average of around

9500 users is logged in at a time. At BSE the average daily turnover in 2001-2002 (April-



March) was Rs 1244.10 crore and the number of average daily trades was Rs 5.17 lakh. The

Average daily turnover in the cash markets alone on BSE and NSE together stood at Rs

22,038 crores in 2009 and the Average daily F&O turnover at the NSE was 2,104,045

contracts in 2009.

Today the central computer located at the Exchange is connected to the workstations of the

Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders placed at the

Brokers' workstations reach the central computer and are matched by the computer based on

price and time priority. Both the exchanges have switched over from the open outcry trading

system to a fully automated computerized mode of trading known as BOLT (BSE On Line

Trading) and NEAT (National Exchange Automated Trading) System. It facilitates more

efficient processing, automatic order matching, faster execution of trades and transparency.

Any online exchange should always be-on, safe, secure, redundant and should have

adequate backup & recovery processes. The Vice President of NSE-IT G.M Shenoy tells that

the basic design objective of NSE was to provide fair, equal and transparent access across all

NSE nationwide locations and to provide connectivity to the trading members as soon as

possible.

However, even now Online trading has not still grasped the market, but has done a very

important amount of progress in the past years and the future of online trading is bright. That

is why many new companies are coming into this form of business structure and the existing

companies are changing to this new format besides offline and other traditional forms of

business. With only a mere share of 10% online trading there is a much greater scope for

online trading.

There are two broad models in play in the online brokerage space-

Bank-backed firms

Entrepreneur-floated firms.

Bank-backed brokerages such as ICICIdirect and HDFC Securities have expanded on the

basis of their brand name and the trust of investors in them. The integrated 3-in-1 accounts

offered by these bank-backed brokerages help their parent bank by giving it accounts along

with float income. In second case i.e. Entrepreneur-backed companies like Investsmart,



Indiabulls, Sharekhan, Religare and IndiaInfoline have expanded by offering customers a mix

of online and offline accounts, higher margin finance amounts and lower brokerage rates.

Though the bank based has performed better but the latter have not lagged too far behind.

The steep increase in trading at the stock markets is one reason why online trading has

developed over conventional offline brokerage firms. Conventional method struggled with

unfavorable economies. Staff cost is just one example of it. As the markets opens for 335

minutes a day one dealer can at best execute 500 trades in a day while online company like

ICICI direct executes 150,000-200,000 trades a day on the National Stock Exchange alone

accounting for 3-4% of NSE trades of 5 million a day. It would require a large amount of

dealers to service this demand. Besides the salary costs it would also demand huge

expenses in real estate and support systems.

The offline model has got a downfall in the form of lower bandwidth and IT costs and the cost

of bandwidth has fallen to one-eighth of what it was in 2000 giving online broking an

advantage especially in the case of lower-volume retail investors. In 2004, 30% of volumes on

the NSE comes from this and it gone up to 50% in year 2008-2009 providing explosive growth

for online broking in India.

Online Stock Trading (OST):

Online Stock Market Trading is an internet based stock trading facility. Investor can

trade shares through a website without any manual intervention from the stock broker.

In the case of OST, these online stock trading companies are stock brokers for the

investor. They are registered with one or more stock exchanges. Mostly

Online trading websites in India trades in BSE and NSE.

Online stock trading is very old concept for big institutions who trade through private

networks owned by Reuter's Instinet and a system called Posit since 1969.

Online trading is a technology which integrates trading account with client’s depository

account and bank account to bring you the comfort of hassle free trading. It provides a wealth

of information, analysis and tools that enable anyone to take more informed decisions. There

no paper work involve as all transaction records are online and statements available in digital



form. One can invest anytime and from anywhere as per convenience even at night after the

market is closed.

Online trading allows one to invest across different asset classes like equity shares, mutual

funds and IPO’s. It provides an up-to-date information and analysis in an investor friendly

format, from some of the best information providers in their respective field. An individual

using the online facility can place their equity order and receive order conformation during

peak hours. Also a dedicated customer care cell is provided to online trading account

customers so that their queries and problems are solved.

With the help of online trading account client can do trading by the process of buying and

selling of shares. Depending on broker may result in delay of buying and selling of shares

which may in turn result in huge loss or less profit. Online share trading helps account holder

to execute their own trades at any time because they are observing every movements of

share market right in front of your computer screen. With the help of internet client can aware

of government news, company’s announcements and corporate declaration etc. During

markets hours which is not practical for to the broker to provide.

Problems occur during online share trading is disconnection of internet connection or

connection may get slow, computer problem, electricity disconnection or other problem which

are beyond control. This may result in disconnection from share market.

ADVANTAGES OF ONLINE TRADING

Internet trading commissions are clearly posted on the websites of the various services, and

are typically a fixed rate charge, depending upon the type of security being traded and the

size of trade. In theory, therefore, an Interest investor always knows what commission he is

being charged on each trade. Internet investors can take as much time as they would like to

take prior to placing a trade order. Similarly the online investor likely does not have to worry

that his broker is making unauthorized trades. Since there is no individual broker making a

commission, the only person who is authorized to trace in a the account is the actual investor.

Furthermore, the Internet investor can never become a victim of excessive trading (where for

the broker) since the investor maintains total control over the number of transactions which

take place in the account.



They can also check the status of their orders either through e-mail or through the interface

that it cannot be accessed by a third party. Some options are usually given to users such as

to link their bank account, Demat accounts and brokerage accounts into a single interface. A

single window is also there for all exchanges and a single screen is there for the complete

order routing mechanism.

1. Provides with the Freedom of Information

The Internet provides a new sense of controlling our financial future as the amount of

investment information available online is truly outstanding. An investor can-

Know the price of any stock he desires at any point time on the internet.

An investor can review the price history of any stock in chart format online

An investor can follow in-depth the events happening in the market

Helps an investor in receiving a wealth of free commentary and analysis about

stock markets in the global economy

Helps an investor to conduct an extensive financial research of any company he

desires

He may also consult with other investors online present around the world

Some online stock broking companies provide real-time stock quotes, daily

roundups of the stock market, expert commentary, and a deep community of

fellow investors.

2. Provides Control to Investors Money

When an investor wants to buy or sell stock he no longer need to call his broker on the phone

thus helping in the execution of the order instantly on the internet.

3. Provides access to the market

Through the sophisticated information streams, dedicated trading platforms and Sophisticated

tools the investor can access the markets which provide more agility in buying and selling

stocks.



4. Ensures the best price for investors

Some companies like Investsmart (IL&FS)specialize in the techniques which offers the best

price deals for the buy and sell orders of the investors and traders providing the high level of

transparency by displaying of information relating to the specific stocks and company profiles

which helps in getting the best quote for the orders.

5. Online trading offers greater transparency

Online trading offers the investors with greater transparency by providing with an audit trail.

The process involves a complete integrated electronic chain starting from order placement, to

clearing and settlement and finally ending with a credit into the depository account of the

investor. All these stages are inspected which brings the transparency into the system.

6. Provides hassle free trading

Online trading provides an integration of the bank account, trading account and demat

accounts, which leads to easy and paperless trading for the client.

7. Online trading allows instant trade execution

Online transactions helps in the quick execution of the entire trading transaction right from

logging to the traders site and to the settlement of the bank account in a very short period of

time.

8. It provides a level playing field

Trading online gives even the smallest retail investor access to information which was earlier

available only to the big traders. It has provided with a level playing field for all investors in the

securities market.

9. Online trading reduces the settlement risk

This method of trading reduces the settlement risk for the investor as when a short sell order

is played the orders are squared off at the specified cut-off time and are not allowed to be

carried forward.



10. Provides live financial news & analysis

The online sites also provide live terminals which provide streaming news to give investor the

latest financial information as it occurs.

11. Online help desk

Some companies provide online help desk an investor cancan contact the Tele Trading

Executives from the Tele Trading team during and after market hours and can clarify

questions.

12. Instant order trade confirmations

Through online trading every trade is confirmed immediately and investor receives an on-

screen confirmation following every trade with full details for the investors records which

avoids costly errors that would have been discovered when it is too late.

13. Keeps Information Secure

As per the guideline provided by SEBI every effort has to be made to keep the investors

account and personal information secure by use of encryption technology and updated

security technology to advanced fraud prevention measures.

DISADVANTAGES OF ONLINE TRADING

In online terminal, investor can’t get customized expert advice, whereas in

offline the broker gives suggestions according to investors strategy (i.e. short

term or long-term)

Brokerage is high compared to offline.

Privacy is less due to hacking scandals

Transactional errors due to technical problems

To use the online trading services an investor has to register with an online trading portal like

Investsmart.in, ICICIdirect.com, Religare, motilaloswal.com and sharekhan.com and many

companies like that and investor gets into an agreement with the firm to trade in different

securities according to the terms and conditions given on the agreement. As the servers of

the online trading portal are connected all the time to the stock exchanges and designated



banks the order processing is done in real time and investors can also have updates on the

trading. The various players are offering their customers different facilities and have adopted

different strategies to attract and retain investors.

Basically when a firm gives facilities to its customers to trade Online in financial and

commodities markets, it involves synchronizing that individual customers 3 accounts.

1) Saving Bank Account.

2) Demat Account.

3) Trading Account.

The basic requirement for trading Online is having a bank Saving account in ones name. The

customer has a choice of choosing with whom he has to open his Demat and/or Trading

account. He can open it with separate service providers or with the same service providers.

Demat Account

Demat refers to a dematerialised 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 name of the depository

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

application.

It is, however desirable that you hold securities in demat form as physical securities carry the

risk of being fake, forged or stolen.

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 your demat 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.

Every financial institution providing the demat-cum-trading facilities should have a Depository

Participant (DP) unit. Every financial institution providing the demat-cum-trading facilities

should be recognized by the following government organizations:

Bombay Stock Exchange (BSE)

National Stock Exchange (NSE)

Securities and Exchange Board of India (SEBI)

Central Depository Services (India) Limited (CDSL)

National securities depository limited (NSDL)

What is a depository?

The depository is provided by the depository system.

A depository is a facility for holding securities, which enables securities transactions to

be processed by book entry.

To achieve the above mentioned purpose, the depository may immobilize the securities

or dematerialize them (so that they exist only as electronic records).

India has chosen the dematerialization route. In India, a depository is an

organization, which holds the beneficial owner's securities in electronic form, through a

registered Depository Participant (DP).

A depository functions somewhat similar to a commercial bank.

To avail of the services offered by a depository, the investor has to open an

account with it through a registered DP.

For performing the above tasks, two depositories viz., National Securities

Depository Limited (NSDL) & Central Depository Services Limited (CDSL) have come

up.

National Securities Depository Limited (NSDL):

It is a joint venture of:

1. IDBI (Industrial Development Bank of India Limited);

2. NSE (National Stock Exchange); and



3. UTI (Unit Trust of India).

NSDL is the first depository to be set up in India.

It was registered by SEBI on June 7, 1996.

NSDL has established a national infrastructure of international standards that

handles most of the securities held and settled in dematerialized form in the Indian

capital market, since its inception.

NSDL aims at ensuring the safety and soundness of Indian marketplaces by

developing settlement solutions that increase efficiency, minimize risk and reduce total

operating costs.

As on May 23’ 2009, NSDL has about 9.2 million investor accounts in India.

As on May 23, 2009, these accounts are serviced by NSDL through Depository

Participants which provide services from more than 9,200 offices/locations in 914

towns/cities in India.

As on May 23’ 2009, NSDL has custody of securities worth USD 870 Billion.

Central Depository Services Limited (CDSL)

CDSL has been promoted by Bombay Stock Exchange (BSE) and Bank of India (BoI),

State Bank of India (SBI), Bank of Baroda (BoB), HDFC Bank, Standard Chartered

Bank, Union Bank of India (UBI), and Centurion Bank.

It was formed in February, 1999.

All leading stock exchanges like the National Stock Exchange (NSE), Calcutta

Stock Exchange (CSE), Delhi Stock Exchange (DSE), Ahmedabad Stock Exchange

(ASE), 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 CDSL system.

The balances in the investors account recorded and maintained with CDSL can

be obtained through the DP.

CDSL offers an efficient and instantaneous transfer of securities

Both depositories have a network of Depository participants (DPs) which are further

electronically connected to their clients.



The DP’s act as a link between the depositories and the clients.

The Depository system to some extent works like the banking system.

There is a central bank and the rules and regulations related to the working of all the

commercial, foreign, co-operative and other types of banks are framed by the central

bank.

In order to do the daily transactions, the investors open an account with the

associate banks, and not with the central one.

Like an investor can have a bank account with more than one bank, similarly one can

have more than one demat account.

What is a Depository Participant (DP)?

The depository has agents called as depository participants (DPs).

A Depository Participant (DP) is the representative (agent) in the depository system to

the customers, providing the link between the demat-cum-trading facilities providing

company and the customers through the depository.

The Depository Participant (DP) works similar to the brokers, who trade on behalf of

the customers in and outside the Stock Exchange.

The Depository Participant (DP) will maintain the securities, and the account balances

of the customers, along with intimating to the customers about the status of their

holding from time to time.

According to SEBI guidelines, Financial Institutions like banks, custodians,

stockbrokers etc. can become participants in the depository.

A Depository Participant (DP) is one with whom the customers have to open a demat

account to deal in securities in electronic form.

While the depository can be compared to a bank, the Depository Participant (DP) is

like a branch of bank with whom the customer can have a demat account.

As a broker represents their investors, and can trade on their behalf either on the stock

exchange or off-market. Similarly, a Depository Participant (DP) is the representative

(agent) of the investor in the depository system providing the link between the

Company and the client through the Depository.

The client’s Depository Participant (DP) will maintain his securities account balances

and intimate the status of the holding from time to time.



DP is one with whom a client needs to open an account to deal in electronic form.

While the Depository can be compared to a Bank, DP is like a branch of a bank with

which one can have an account. Therefore, DPs are authorized to maintain accounts

of dematerialized shares.

They help in instantaneous electronic transfer of shares held in Demat form through

electronic book entry system.

Recommendation Of SEBI

The SEBI has also played an important role in the issue of the guidelines regarding online

trading so that the chances of fraud and misrepresentation are minimized. The stock brokers

which are being registered with Securities Exchange Board of India (SEBI) will have to apply

to stock exchanges for a formal permission. The following conditions must be fulfilled-

The online trading company must have a minimum net worth of Rs 50 lakh

The encryption technology should be there in the system used by the brokers to

ensure the provision for confidentiality, security, justifiability and reliability of data .The

user id, first level and second level password, automatic expiry of passwords at the

end of a reasonable period.

The brokers must maintain adequate back-up systems and data storage capacity

which must be checked by the stock exchanges.

SEBI has recently announced that to reduce the fraud cases each and every broking

house has to give back the full amount of customer after each three month, they will

have to show the zero balance of every customer’s account at the end of every 3

month

The minimum qualification must be laid down by the stock exchange to ensure that the

Persons hired by the brokers must have the proper qualification regarding trading so as

to guide the clients and he can communicate regarding trading instructions.

To ensure the authenticity and accuracy of data a certification agency must be

appointed using the certification technologies when notified by the government or the

SEBI.

The better client and the broker relationship to be maintained.

To determine the risk associated with the clients the brokers must have the have



sufficient verifiable information about clients and the stock exchange must ensure it.

The clients must be taken into an agreement stating about all the obligations and rights

including the minimum service standards to be maintained by the service provider

broker for services specified by SEBI/exchanges for Internet-based trading from time to

time.

The web site of the broker providing the online trading facility should contain

information rules and regulations affecting client broker relationship, arbitration rules,

investor protection rules, etc meant for investor protection. It should also provide and

display prominently hyper link to the web site/page on the web site of the relevant

stock exchange(s) displaying rules/ regulations/circulars. Ticker/quote/order book

displayed on the web site of the broker should display the time stamp as well as the

source of such information.

An e-mail should be sent to he investor for the confirmation of his Order or trade.

The limits of trading and exposure provided to the client must be set on system-based

control and brokers and exchanges must ensure it. The limits must be predefined by

the broker on the exposure and turnover of each client. The system of broker should

be such that it is capable of assessing the risk of the client as soon as the order comes

in. The system should inform the clients client the reports on margin requirements,

payment and delivery obligations etc.

As per the regulations the Contract Notes must be issued to clients within 24 hours of

the trade execution.

Cross trades of the clients will not be allowed with each other to the brokers using

Internet based systems for routing client order and all orders must be offered to the

market for matching.

A separate working group has been set up to look into the surveillance and

enforcement-related issues arising due to Internet-based securities trading. However, general

anti-fraud provisions (SEBI Fraudulent and Unfair Trade Practices Regulations, 1995) will

apply to all transactions involving securities or financial services, regardless of the medium.



Development Credit Bank

About DCB

A new generation private sector bank, Development Credit Bank (DCB) is the preferred

banking services provider across 80 state-of-the-art branches across 10 states and two union

territories. The Bank has recently launched several value added initiatives and intends to

become one of the country’s preferred and profitable private sector banks, providing a

comprehensive suite of “best in class” products for customers in Retail, SME and Corporate

Banking market segments in chosen geographies.

DCB has deep roots in India since its inception in the 1930’s. Its promoter the Aga Khan Fund

for Economic Development (AKFED) holds over 23% stake. AKFED is an international

development agency dedicated to promoting entrepreneurship and building economically

sound enterprises in the developing world. It had co-promoted HDFC in India in the late

seventies. AKFED operates as a network of affiliates comprising 90 separate project

companies. Employing over 30,000 people, it reported annual revenues in excess of US$1.5

billion. The Fund is active in 16 countries in the developing world.

Vision

Our vision is to be the most innovative and responsive neighbourhood community bank in

India serving entrepreneurs, individuals and businesses.

Values

Treat Everyone with Dignity – Respect

Do What is Right – Ethical

Be Open & Transparent – Fair

Sense of Urgency, Passion & Energy – Dynamic

Go the Extra Mile & Find Solutions – Stretch

Improve Continuously – Excellence

Play as a Team, To Win – Teamwork

Support the Society - Contribute



DCB - A Historical Perspective

Built on over 78 years of trust, tradition and togetherness, DCB was converted into a

Scheduled Commercial Bank on May 31, 1995, in the wake of India’s economic liberalization.

It was the only co-operative bank, which successfully crossed over and thrived in the face of

change. The Bank has a network of 80 state-of-the-art, customer friendly, and conveniently

located branches across the states of Maharashtra, Gujarat, Andhra Pradesh, Karnataka,

Delhi/ NCR, Rajasthan, Goa, Tamil Nadu, Haryana, West Bengal and the Union Territories of

Daman & Diu and Dadra & Nagar Haveli.

Spreading wings, with the wind beneath

Under the able guidance of an experienced Board of Directors and the leadership of a

dynamic senior management team DCB strategically aims to enhance its reach and spread,

while introducing exciting new banking products for its customers.

Seamless, flawless and timely service

To adhere to its vision of becoming the gold standard in customer service in Indian banking,

intensive training and service quality programs have been initiated with customer delight

becoming the key focus of the Bank. This will become the lifeblood of DCB and act as its key

differentiator.

Not just a Bank, a Financial Supermarket

DCB intends to offer an extensive range of products across its branches. Suitable variants of

the basic products like savings and current accounts as well as innovative products such as

the ‘DCB Trio’ and ‘Easy Business,’ keep DCB ahead of the pack. Demat Account and a

range of investment products like mutual funds, insurance and bonds make the product

offering complete.

Close to its roots, yet flying high

Since its inception, DCB has always taken an active interest in developing low-cost customer

deposit products and providing for the needs of small and medium businesses in select

regions. It continues to fulfill every consumer need with great enthusiasm. The Bank is also

suitably equipped with the latest versions of Finacle from Infosys and Oracle to provide

seamless service to its customers.



A Bank for its people

The pan-India employee teleconferences and introduction of performance-based incentives

have already charged the existing work force. Given its reputation for being a non-hierarchical

and dynamic organization, DCB is one of the chosen destinations for aspiring banking

professionals.

A grip on the future

The Bank has an active and robust treasury, managing its interest rate risks and liquidity by

providing an uninterrupted flow of funds, positioning the Bank for future growth.

Latest Offering:

DCB is planning to relaunch Smart Trade an Online trading platform so as to better cater to

the investment needs of its existing and prospective customers.

Basically when a firm gives facilities to its customers to trade Online in financial and

commodities markets, it involves synchronizing that individual customers 3 accounts.

1) Saving Bank Account.

2) Demat Account.

3) Trading Account.

The basic requirement for trading Online is having a bank Saving account in ones name. The

customer has a choice of choosing with whom he has to open his Demat and/or Trading

account. He can open it with separate service providers or with the same service providers.

Today most of the banks provide online trading services to its customers as a part of its effort

to provide customers all financial services under one roof. DCB’s foray into online trading

with Smart Trade Online trading platform (A Tie-Up with IIFL) shows the banks intention to

towards becoming a one stop spot for all financial products.



The part below gives a detail study of different organizations providing Demat and Trading

facilities and the services they offer.

Online trading platforms

HSBC InvestDirect (Earlier ILFS Investmart)

HSBC InvestDirect (India) Limited (HIL) is one of the India's leading financial services

organizations providing varied range of services through its subsidiaries to Individual and

Corporate customers. HIL is listed on the Bombay Stock Exchange Limited (BSE) and

National Stock Exchange Limited (NSE). HSBC InvestDirect offers various services that

include equity broking, wealth management, IPO distribution and portfolio management

services.A unique integrated account, which integrates banking, broking, and demat accounts

and Is facilitating the three type of trading product to its retail customer:

SmartSTART

SmartInvest is a browser-based system designed for customers who transact occasionally. It

is ideal for investors who believe in the Buy and Hold approach towards investment in

equities. A comprehensive trading service, which allows you to invest in equities and

derivatives. SmartStart trading platform allows the flexibility of trading on any internet capable

system, with access to both the NSE and BSE. SmartInvest sophisticated yet easy to use

point and click order entry interface allows to react more quickly to the markets and make

better decisions.

FEATURES

Trade on NSE & BSE

Simple order entry for Equity & Derivatives

Fully Customizable display



User friendly Get Quote screen

Integrated Accounts (Bank. Demat & Trading)

Live order status

Track your orders real-time

Dynamic buying power

Works behind a Proxy

Back office access

Smart Invest:

SmartInvest is a browser-based system designed for customers who transact occasionally. It

is ideal for investors who believe in the Buy and Hold approach towards investment in

equities. SmartInvest's capability as a browser-based trading platform gives the benefit of

real-time streaming data with the flexibility of trading on any Internet capable system. With

access to both the NSE & BSE, the user is in the driver's seat when routing his order to the

price on either of the exchanges. SmartInvest sophisticated yet easy to use point and click



order entry interface allows you to react more quickly and make better decisions.

Features

Instant loading

Works behind a proxy

Live Streaming Quotes

Multiple watch lists

Single order form for Cash and FnO

Point and Click order entry

Hot Key functions

Market Depth window

Back Office access



SmartTRADE:

SmartTrade is an EXE based desktop software designed for active traders who transact

frequently to capture favorable short-term price movements. It is designed and built from the

ground up to address the needs of active traders. SmartTrade makes the most of state-of the-

art technology to deliver power, speed and reliability. Through an easy-to-use interface, users

are provided with the same tools and advantages that the professionals enjoy.

Features


Dynamic Charts with Indicators

EOD Charts

Advanced Alert capabilities

Track your orders real time

Real time position updates

Dynamic buying power



Lock terminal option

ShareKhan

Sharekhan is online stock trading company of SSKI group, provider of India-based investment

banking and corporate finance service. Sharekhan is one of the largest stock broking houses

in the country. S.S. Kantilal Ishwarlal Securities limited (SSKI) has been among India’s

leading broking houses for more than a century. Sharekhan's equity related services include

trade execution on BSE, NSE, derivatives, commodities, depository services, online trading

and investment advice. Trading is available in BSE and NSE. Along with sharekhan.com

website, Sharekhan has around 510 offices (share shops) in 170 cities around the country.

Share khan has one of the best state of art web portal providing fundamental and statistical

information across equity, mutual funds and IPO’s. You can surf across 5,500 companies for

in-depth information, details about more than 1,500 mutual fund schemes and IPO data. You

can also access other market related details such as board meetings, result announcements,

FII transactions, buying/selling by mutual funds and much more.

Sharekhan Classic account

Allows investors to buy and sell stocks online along with the following features like multiple

watch lists, Integrated Banking, demat and digital contracts, Real-time portfolio tracking with

price alerts and Instant credit & transfer.

Online trading account for investing in Equities and Derivatives

Free trading through Phone (Dial-n-Trade)

Two dedicated numbers for placing your orders with your cellphone

or landline.

Automatic funds transfer with phone banking (for Citibank and

HDFC bank customers)



Simple and Secure Interactive Voice Response based system for

authentication

Get the trusted, professional advice of our telebrokers

After hours order placement facility between 8.00 am and 9.30 am

Integration of: Online trading + Bank + Demat account

Instant cash transfer facility against purchase & sale of shares

Investments and trade confirmations by e-mail

Single screen interface for cash and derivatives

ShareKhan Trade Tiger

This accounts for active traders who trade frequently during the day's trading session.

Following are few popular features of SpeedTrade account.

Single screen interface for cash and derivatives

Real-time streaming quotes with Instant order Execution & Confirmation

Hot keys similar to a traditional broker terminal



Alerts and reminders

Back-up facility to place trades on Direct Phone lines

Features

Freedom from paperwork

Instant credit and money transfer

Trade from any net enabled PC

After hour orders

Online orders on the phone

Timely advice and research reports

Real-time Portfolio tracking

Share khan has also started providing its customers the service of Buying Selling mutual fund

NAV including the facilities of Switch In and Switch Out. This Facility is available to customers

using either of its Two platforms (Trade Tiger and Classic Account).



Geojit BNP Paribas

Geojit BNP Paribas today is a leading retail financial services company in India with a growing

presence in the Middle East. The company rides on its rich experience in the capital market to

offer its clients a wide portfolio of savings and investment solutions. The gamut of value-

added products and services offered ranges from equities and derivatives to Mutual Funds,

Life & General Insurance and third party Fixed Deposits. The needs of over 495,000 clients

are met via multichannel services - a countrywide network of over 500 offices, phone service,

dedicated Customer Care centre and the Internet. Geojit BNP Paribas has membership in,

and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

In 2007, global banking major BNP Paribas joined the company’s other major shareholders

and took a stake to become the single largest shareholder.

A strong brand identity and extensive industry knowledge coupled with BNP Paribas’

international expertise gives Geojit BNP Paribas a competitive advantage. Their Online

platforms are:

'FLIP' (Financial Investment Platform), an enhanced Online Investment Platform that

comes with a plethora of new features, products and services. FLIP is an Advanced

Investment Platform that comes with multiple conveniences and flexibilities.

Enhanced Buying Power (in Cash Segment for delivery and intra-day trading) against

demat holdings, and unsettled shares purchased in previous settlement.

Pledge shares with Geojit BNPP or with NSCCL

Place your order through the channel of your convenience i.e. Internet or at your

Branch or via the Call Center.



FLIP Lite

FLIP Lite is a browser based version and will help to trade even if you have a low bandwidth connection.

Key Features of Lite:

Light

Speed

Easy

FLIP Lite is designed to work on mobile devices

FLIP Gold Platform

FLIP Gold Platform is also a browser based version that can be accessed from around the

world. This Platform is offered absolutely FREE to all online customers. FLIP Gold Platform is

ideal for those who travel often and hence cannot access their own computer for trading.



Key Features of Gold Platform:

Real-time configurable Market Watch with auto save functionality

Live top gainers, top losers and most active scrips

Tick by Tick Intraday Charting

Advanced charting with 60 technical studies

Live exchange-broadcasting messages

Analyze multiple Market Depth view

Optimized to work on low bandwidth

Works behind proxy & firewall

Real-time Research & Trade Execution notification via pop-up

Online fund transfer facility

After market hours, orders can also be placed in both the Exchanges

Online investment of Mutual Funds and IPO’s

Facility to convert Intraday, Delivery and open positions.

Platinum Platform :

Platinum platform is a virtual dealer terminal. It is best suited for active traders, who take advantage of minor movements in the price. This EXE program can be downloaded on the client’s computer. This platform is FREE if brokerage criteria is met else clients can opt for the refundable fee option.

Key Features

All the features of Gold are available in Platinum

Platinum is similar to a dealer terminal

Flexibility to customize screen layout and setting

Professional, Classic, Customized Market Watches

Fast trade execution with instant trade confirmation through pop-up

View Cash, F&O and Currency quote in a single market watch screen

Real-time updation of Index & Tick by Tick updation of index chart

Online Fund transfer facility



Place orders in the Post-Close session of the Exchanges

After market hours orders can also be placed in both the Exchanges

Online investment of Mutual Funds and IPO’s

Intraday & EOD Sophisticated studies such as Technical indicators can be performed by using appropriate parameters

FLIP Platinum users have access to the Gold Platform also.

Axis Bank – Online Trading

Axis Bank in alliance with Geojit Financial Services offers an online trading account with

facilities to trade from the comfort of your home or office either through the internet or the

phone. This service provides you with an integrated savings bank account, demat account

and an online trading account to give you a convenient and paper free trading experience.

As an axis bank online trading customer you would also have the flexibility to get an insight to

a complete range of corporate information, reuters news and research tools which would help

you to take timely investment decisions.



Motilal Oswal

Motilal Oswal securities ltd. through its online MyBroker platform gives an opportunity to be

your own broker with complete research support from most which helps you to make right

decision at right time. You can choose your trading a/c which suits your trading habit’s &

preference and trade anywhere, anytime. Buying and selling is as easy as click of a button.

MyBroker - Motilal Oswal’s online trading terminal has been designed to provide an

investment experience like never before. Comprehensive range of financial products will cater

to almost every financial need of yours. A brief description of our product features have been

mentioned below:

Equities/derivatives

Advanced online platform replete with top class features to help you place trades at the

click of a few buttons. Seamless execution of trades is made possible since our 3-in-1

account links your trading, demat and bank account.

View NSE/BSE live streaming quotes on a single screen.

Choice of transferring funds online through multiple banks.

Entirely customizable multiple market watch facility to help you track stocks on a

regular basis.

Instant order/trade confirmation facility to give you a similar trading experience as

exchange trading terminal.

Simplified net position screens to squareoff all your open positions.

Access to latest research reports like daily market diary, derivative diary, and pivot

points on your screen.

Get stock recommendations during live market hours on your trading screen.

128-bit SSL encryption technology to ensure the highest security of your online

transactions.



Initial Public Offerings (IPO’s)

Apply for ipo’s online without filling up physical forms or writing out cheques

Check your ipo order status details.

Modify/cancel your bids online.

Transfer funds online to your IPO account.

Access the latest information and news relating to ipo’s

Mutual funds

Apply online in the best of schemes with minimum effort

Check your mf order status and also modify or cancel your orders

View your mf holdings with details of nav and percentage wise composition of your

portfolio.

Transfer funds online to your mf account

Get the latest news and information in the world of mutual funds

Avail of top class research on various mutual funds

Products offered

Looking at the needs of the customers Motilal Oswal has categorized its products into three

categories:

MyBroker Exe – Active Trader

MyBroker Spectrum – Active Investors

MyBroker Easy Trade – Retail Investors



MyBroker EXE is a product specially made for the clients who are active into the market or

daily trader this product is exe base and need to be installed. This product gives you a

complete feel of broker terminal. Looking at the needs of active trader all the features are

been incorporated.

MyBroker Spectrum is the product for active investors. A comprehensive account with live

streaming quotes and top class features to help you make instant transactions. This product

is java based product so can be operated from any internet connected pc having sun java

installed.

MyBroker Easy Trade enables you to trade online on the NSE & BSE, NSE F&O, invest in

IPO and Mutual Funds and access to all the research and transaction reports through our

website.



SBI Online Trading

SBI has a Tie-Up with Motilal Oswal to provide Online trading services to its customers

Benefits of Online trading

Integrated 3 in 1 account

'Block' funds real time

Speed and Safety

Solution for all capital market needs

Reuter news

Phone



Religare Securities (Indusind Bank has a Tie-Up With Religare)

Religare Securities ltd is a Ranbaxy promoter group company, is one of India’s largest and

fastest growing integrated financial services institutions. The company offers a large and

diverse bouquet of services ranging from equities, commodities, insurance broking, to wealth

advisory, portfolio management services, personal finance services, investment banking and

institutional broking services.

Religare’s Retail network spreads across the length and breadth of the country with its

presence through more than 900 locations across more than 300 cities and towns. Having

spread itself fairly well across the country and with the promise of not resting on its laurels, it

has also aggressively started eyeing global geographies.

Unique features and benefits of trading through religare:

Trade Reward: Trade rewards is a unique offering from religare that gives you dual

benefits of hassle free investment experience online and an opportunity to earn while

you invest with us.

Zero Brokerage: “Break the Shackles”. Get freedom from brokerage and avail ZERO

Brokerage on trades.

Exposure Up To 20 Times On Your Margin: Allowing you the freedom to trade without

hassles throughout the day without having to worry about your cash margin. You can

get exposure (on cash segment) as high as 20 times for intraday trades. Of course

conditions apply on above two.

Interest on Cash Margin: Even while you are waiting to make your next trade or online

investment, your unutilized cash does not lie idle with us. You earn interest on your

unutilized cash margin.



Platforms

R-Ace (Basic):

No software installation required, easily accessible on browser

NSE Cash segment, NSE F&O and BSE on single platform

R-Ace Lite (Advanced) :

No software installation required, easily accessible on browser


Real-Time streaming quotes

Hot Key functions for faster trading

R-Ace Pro (Professional):

Traders terminal on your desktop


Real-Time streaming quotes

Technical charting (Intraday and EOD)

Multiple watch list

Advanced Hot-Key functions for faster trading

Derivative chains

Futures & Options calculator

Brokerage details



SMC: (PNB Has a Tie-Up with SMC to Provide Online Trading Account)

SMC online is One Stop Financial Investment portal for all financial needs. Customers can

trade online in equities, derivatives, currency futures, commodities, apply online for IPOs, and

invest online in mutual funds. At SMC, client services always come first & thus, SMC always

endeavor to offer latest online products, with State Of The Art technology, to serve better.

SMC, gives its customers financial freedom backed by sound in-house research & excellent

advisory capabilities.

SMC online has a range of online investment products. Customers can access their account

from anywhere using call-n-trade services. To provide clients better trading experience, SMC

has designed trading products according to varying needs of customer as at SMC we

understand that different people have different trading habits and preferences in capital

markets.

SMC Online Trading Edge

Trade in equity, derivatives & commodities

After market order (amo) facility available

Live quotes

Multiple payment gateways with reputed banks

Online IPO

Online mutual funds

Excellent research support

Competitive brokerages & charges

Research reports on mail

Stocks recommendations through sms

Dedicated relationship manager



Secured and user friendly website

Online back office reports

Dedicated customer care & support

Use of latest technology for the best trading experience

Access to quality information, research & statistics on the website

Transparency

SMC Select

This trading platform is ideal for those investors who are new to securities trading. This

platform is simple to use & is most suited to retail investors who are not frequent traders. It is

most economical and convenient product for online trading and does not require any software

installation.

Features

No software installation required

Easily accessible on browser

Trade on different exchanges on a single platform

Online transfer of funds through multiple banks

Online back office to track your investments

Technical SMS alerts facility

Latest news, market information and research reports on mail

SMC Exclusive

This account is ideal for active traders who transact frequently during day’s trading session to

capitalize on Intra-day price movements. In this product, real time streaming quotes facility is

available on browser interface.

Features

Easily accessible on browser

No software installation required

Live streaming quotes

Trade on different exchanges on a single platform



Multiple market watch facility

Hot key functions for faster trading

Online transfer of funds through multiple banks Online back office

Online IPO & Mutual Fund

Technical sms alerts facility available

Latest news, market information and research reports on the website

SMC Privilege

This account is an application based privileged online trading product, which is meant for

clients who are actively involved in the stock market and do the bulk trading. It offers

comprehensive facilities on a single screen, similar to that of a broker’s terminal, thus

providing greater ease and time advantage, to the investors.

Features

Trading terminal on your desktop

Real time streaming quotes

Intraday charting

Different exchanges on a single screen

Fully customizable market watch

Track multiple stocks on single screen

Hot key functions for faster trading

Security lock for better safety

Online transfer of funds through multiple banks

Online IPO & mutual fund

Online back office

Technical SMS alerts facility available

Latest news, market information and research reports on mail



After a thorough study of different online trading platforms it can concluded that most of the

firms provide 3 different platforms to meet the different needs of the customers.

A basic one for investors who transact occasionally and believe in holding securities

The basic platform with add on features to investors who are likely to take their own

investment decision and are likely be knowledgeable of the market and would like to

study it before investing.

EXE based desktop software designed for active traders who transact frequently to

capture favorable short-term price movements.

Some of the common features provided by all or most of these platforms are:

Basic platform

Access to both the NSE and BSE

Simple order entry for equity & derivatives

Fully customizable user friendly display

View NSE/BSE live streaming quotes on a single screen.

Integrated accounts (bank. Demat & trading)

Live order status

Real time order tracking

Instant automatic funds transfer with phone banking

Easy to use

Apply online for IPO

Apply and keep track of mutual fund investment

Most of the broking houses also provide their customers investments.



Advance platform

Product for active investors

Instant loading

Customized multiple watch lists

Hot key functions

Market depth window

Real-time configurable market watch with auto save functionality

Tick by tick intraday charting

Real-time research & trade execution notification

Instant trade confirmation


After market hours, orders can also be placed in both the exchanges

Access to latest research reports

Professional platform

EXE based desktop software designed for active traders

Tools and advantages that the professionals enjoy

Fully customizable display

Dynamic charts with indicators

EOD charts

Advanced alert capabilities

Single screen interface


Similar to a dealer terminal



The next part deals with Pricing Strategy adopted by different competitors in the markets.

Different firms adopt different pricing strategies for Delivery, Inter-Day and F&O. While some

firms have a flat pricing strategy i.e. they levy brokerage as a certain percentage of the

trading amount or they may charge customers at a different rates based on certain slabs

where the percentage charged as brokerage reduces as the trading increases.

Apart from the pricing strategies for Delivery, Inter-Day and F&O firms have adopted different

strategies for Opening and Maintenance of Demat and Trading accounts like No Maintenance

charge for first year, No account Opening charges, No Margin Money etc. so as to retain

existing customers and attracting new ones.

The firms also provide prepaid services to certain clients. This also shows the importance of

pricing in online trading industries and is also a major reason for customers being confused

as to whom to approach for opening trading and Demat accounts.



































DCB Smart Trade



Development credit bank in alliance with India Infoline Financial Services now offers an online

trading account. DCB smart trade will give its customers an opportunity to be their own broker

with complete research support from IIFL which will helps them to make right decision at right

time. Buying and selling is as easy as click of a button. The platform will allow customers to

Trade from the comfort of their home or office either through the internet or the phone. Smart

Trade DCB's online trading terminal has been designed to provide customers with an

investment experience like never before.

Requirements for the Customers:

1.) Saving Account/Current Account (Individual/Proprietorship CA)

Documentation as per rules and norms laid by RBI.

2.) DEMAT Account

Documentation as per norms laid down by SEBI and concerned

Depository.

3.) Online Trading Account

PAN Card

Address Proof

Photo Identity Proof

Bank and Demat Account Proof

Photographs and Initial self signed cheque

Schedule of Charges:

Business Model:


Life Time SchemeOne-time registration fee Rs.555Minimum Initial Margin Rs.5000Trading brokerage (Cash) 0.05%Delivery brokerage 0.50%Futures brokerage 0.05%Options brokerage (on premium) 0.05% or Rs.100 whichever is higherMinimum Per Share (Trading) 5 PaisaMinimum Per Share (Delivery) 5 Paisa


As per proposed business model the client will have a saving account with DCB, while his

demat and trading account would be opened and maintained by India Infoline. The client will

have to use the Trading Terminal advance software or browser based platform for trading

which will be provided by India Infoline but will be customized for DCB clients.

Once the client has opened all of the three accounts he will have to access his savings

account at DCB and transfer money as per his requirement to the trading account with India

Infoline so as to trade online.

The client can then start trading online and his Demat account is updated by India Infoline as

per transactions made by him. Suppose that the client has sold some securities then in that

case his Demat account will be debited for the said scrip to that extent and the shares will to

transfer to the pool maintained by India Infoline while his trading account will be credit to the

extent of the selling price of the said securities.


Banking Account

Client

Depository

Broking

DCB India Infoline


However since the trading and the depository account would be maintained by India Infoline,

any realization or profits made by the client will not be directly reflected in the clients Saving

Account. The client will have to transfer such amount to his saving account if he wishes to

and he would have to place a request of fund payout with India Infoline.

Looking at the needs of the customers we have categorized Smart Trade platform into Two

different models to suit their preference. The said models would be aimed to meet the needs

of both,

– Retail Investors

– Active Investors

Smart Trade offers a browser-based system designed for customers who are Active investors.

A comprehensive account with live streaming quotes and top class features to help you make

instant transactions.

It is also designed for customers who transact occasionally. It is ideal for investors who

believe in the Buy and Hold approach towards investment in equities. A comprehensive

trading service, which allows you to invest in equities and derivatives. Smart Trade trading

platform allows the flexibility of trading on any Internet capable system, with access to both

the NSE and BSE. Smart Trade sophisticated yet easy to use point and click order entry

interface allows reacting more quickly to the markets and making better decisions.

Some Basic Features of Smart Trade:

Access to both the NSE and BSE on a single screen

Simple order entry for Equity & Derivatives

Fully Customizable User friendly display

Real time order tracking

Instant Automatic funds transfer with phone banking

Apply online for IPO

Apply and Keep Track of Mutual fund investment

Instant Loading



Customized Multiple Watch lists

Hot Key Functions

Market Depth Window

Real-time configurable Market Watch with auto save functionality

Tick by Tick Intraday Charting

Real-time Research & Trade Execution notification

Instant trade confirmation


After market hours, orders can also be placed in both the Exchanges

Access to latest research reports

SmartTrade also provides an EXE based desktop software designed for active traders who

transact frequently to capture favorable short-term price movements. The EXE platform is a

virtual dealer terminal and this program can be downloaded on the client’s computer. The

platform offers active traders the tools they need to make critical decisions with confidence.

SmartTrade is designed and built from the ground up to address the needs of active traders.

SmartTrade makes the most of state-of the-art technology to deliver power, speed and

reliability. Through an easy-to-use interface, users are provided with the same tools and

advantages that the professionals enjoy.

Some Basic Features of Smart Trade EXE platform:

EXE based desktop software designed for active traders

Tools and advantages that the professionals enjoy


Dynamic Charts with Indicators

EOD Charts

Advanced Alert capabilities

Single screen Interface


Similar to a dealer terminal.



Recommendations & Conclusion

Some of Additional features which can be used so as to give DCB SmartTrade an edge over

competition and used as its USP’s:

The Margin trading may be modified so as to show SmartTrade to be a NO MARGIN

account. For this either the margin can be changed and decreased or we can instead

ask the customers to maintain a bank balance to the extent of the margin required.

Bonus or Reward points can be given to customers for the amount lying in Trading

account as the money would be lying idle and neither would the customers be earning

any interest on that amount.

If delivery transactions are squared off within the same day, Intraday Brokerage can be

charged on the same.

Facility to convert Intraday, Delivery and open positions

Free trading through Phone (Dial-n-Trade): Customers can have few free Call-n-Trade

for each month

Have a software designed to work on mobile devices, (BNP Paribas, ICICI has one)

Have differential brokerage slabs instead of charging customers a flat rate.

1.) Apart from the product development and pricing another area that has to be looked at

after launching Smart Trade will be the product delivery and people who would be

directly or indirectly related to it. To begin with, DCB will only maintain Saving account

of the customer while the Demat and Trading account will be opened and maintained

with India Infoline.

The first step will be to customize account opening form for DCB customers. For this

purpose the old form may be used which can also be clubbed with the Demat account

form so as to have one combined form for opening both the accounts. Product

demonstration can be given across branches so as to attract and familiarize the

customers to the product.



2.) Opening Smart Trade account option must also be given to new customers who open

Savings accounts with DCB or atleast he should be made aware of the product.

Separate welcome Kit and Boucher to be used for customers even though the Demat

and Trading account would be opened and maintained by IIFL.

Pamphlets and/or Posters should be made available in each branch so as to increase

product visibility.

3.) The process of lead generation should be undertaken by RM’s and they should be

given separate targets with respect to SmartTrade. Further efforts can be undertaken

by Branch Manager’s (BM) by making sure the SmartTrade brochure, pamphlets are

readily available at branch level and the branch staff is well aware of the product.

Special attention should be given by branch in case of HNI clients of the bank.

4.) For the convenience of customers there should be a dedicated helpdesk for DCB

smart trade users so as to quickly address and resolve their issues. But the problem

with keeping the separate helpdesk with IIFL is that their RM’s may manipulate DCB

SmartTrade customers and it also cannot be kept with DCB alone as DCB RM’s will

not be able to access much of the information as Trading and Demat account would be

maintained by IIFL.

So a solution should be worked out so as to have dedicated helpdesk which will be

manned by IIFL but a window should be given to DCB to overlook them. This will also

reduce any chances of IIFL RM’s poaching DCB Smart Trade customers.

5.) Since both the Demat and Trading account would be opened with IIFL, DCB’s

dependence on IIFL would increase in terms of Manpower and Knowledge Capital and

any error on their part would affect DCB’s goodwill and creditability directly.

6.) As far as operation is concerned, a centralized account opening and tracking system

must be put in place which will help to keep track of the forms filled at any place and

also have an update on its status. There is no provision for the same at present. And

the account opening is done at Chennai. The bank must also embark resources on

‘Brand Building”. The bank has the potential to grow with E-broking and should



advertise its offerings aggressively. As the bank does not cover all regions in India, it

can opt for advertising channels like Web Hosting and advertise on Social Networking

websites like Tweeter, LinkedIN, Facebook and Orkut amongst others to increase

Brand visibility.

The core benefit of letting IIFL maintain both Trading and Demat account would be mitigation

of risk as upkeep of the accounts would have to be done by IIFL. This will also help save

manpower and capital expenditure for DCB along with reducing any Operational and Audit

related issues. This will also allow DCB to use their resources only for generating new leads

and addressing customer grievances.

Inclusion of additional features like IPO subscription will help to increase customer

engagement.

Exclusive and Dedicated business sourcing channel with IIFL will increase sales and better

business focus with targets at both ends.



Bibliography

Websites:

Development Credit Bank: www.dcbl.com

India Infoline: www.indiainfoline.com, www.5paisa.com

ShareKhan: www.sharekhan.com

HsbcInvestDirect: www.hsbcinvestdirect.co.in

Geojit BNP Paribas: www.geojitbnpparibas.com

Axis Online Trading: www.axisbank.com

Motilal Oswal: www.motilaloswal.com

SBI Online Trading: www.sbicapsec.com

Religare Securities: www.religaresecurities.com

SMC: www.smcindiaonline.com

Books:

Esme Faerber. “All About Stocks-The Easy way to get started”

Reports:

India’s Leading Equity Broking Houses 2009 (Dun and Bradstreet)

ICRA: Equity Brokerage Industry Update.


http://www.smcindiaonline.com/

http://www.religaresecurities.com/

http://www.sbicapsec.com/

http://www.motilaloswal.com/

http://www.axisbank.com/

http://www.geojitbnpparibas.com/

http://www.hsbcinvestdirect.co.in/

http://www.sharekhan.com/

http://www.5paisa.com/

http://www.indiainfoline.com/

http://www.dcbl.com/