Stock Exchange

HISTORY OF STOCK EXCHANGE

The origin of stock exchange in India is traceable in later half of 18^th century and early year of 19^th century, by 1830 stock market took a turn with emergence of some corporate stock and development of textiles mills due to American civil war which helped the India business men to recap huge profiles by increasing exports of cotton to America and Europe to exorbitant prices.

Bombay stock exchange, which was established, much earlier was formalized in year 1875 with the establishment of native share and share broker association.

Stock Exchange in India-Background

Stock exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks or other securities. The members may act either as agents for their customers, or as principals for their own accounts. There are currently 18 stock exchanges in India. The oldest one being the Bombay Stock Exchange, which was formed in 1875, while the stock exchanges of Calcutta and Madras were the formed in 1908 and the Delhi Stock Exchange was formed in the year 1947.Out of these 18 Stock Exchanges only two Stock exchanges viz.. National Stock Exchange and the OTCEI have been established by All- India Financial Institutions and all other Stock Exchanges are operating associations.

List of Stock Exchanges in India

National Stock Exchange

Bombay Stock Exchange

Regional Stock Exchange

· Ahmadabad Stock Exchange

· Bangalore Stock Exchange

· Bhubaneswar Stock Exchange

· Calcutta Stock Exchange

· Cochin Stock Exchange

· Coimbatore Stock Exchange

· Delhi Stock Exchange

· Guwahati Stock Exchange

· Hyderabad Stock Exchange

· Jaipur Stock Exchange

· Ludhiana Stock Exchange

· Madhya Pradesh Stock Exchange

· Madras Stock Exchange

· Magadh Stock Exchange

· Mangalore Stock Exchange

· Meerut Stock Exchange

· OTC Exchange of India

· Pune Stock Exchange

· Saurashtra Stock Exchange

· Uttar Pradesh Stock Exchange

· Vadodara Stock Exchange

INTRODUCTION

FINANCIAL MARKET:

A financial market is a place where creation and exchange of financial assets are taken place .One participates in financial market in one-way or other .this chart shows the structure of it . It can further be categorized in to two market .

Primary market: The primary markets deals in a new financial claim or new securities and therefore , they are also known as new issue market .

Secondry market : The secondry market deals in security already issued or existing or outstanding . The secondry market do not contribute directly to supply of additional capital .

MONEY MARKET

The market in which funs are Borrowed or loaned for short period.the money market deals in the short tern claim .Tresury bills market,call money market and commercial bills market are example of money market.

CAPITAL MARKET

The market for stock and long term debt (more than one year) Equity market, debt market, derivative market can be said to the part of capital market.

MARKET PARTICIPANT:

In accordance with the wording of the law, participants in the Indian capital market are supposed to register with SEBI in order to carry out their business these are:-

Stock broker ,sub broker ,share transfer agent, banker to issue ,registrar to issue, underwriter ,portfolio manager ,investment advisor and other such intermediary Who may be associated with security market in any manner.

Venture capital fund and collective investment schemes including mutual fund.

SECURITIES MARKET:

The securities market is the market for equity, debt and derivatives. Structure of this market is as follows-

Securities Market

§ Equity Market

§ Debt Market

§ Derivative Market

§ Govt. Market

§ Money Market

§ Option Market

§ Future Market

Except the derivatives market, each of the above market has two part –

(1) Primary Market

(2) Secondary Market

SECONDARY MARKET AND ITS OPERATION:

The origin of the stock market in India goes back to the end of the eighteen century when long-term negotiable securities were first issued however for all practicable.

Purpose, the real beginning occurred the middle of the nineteenth century after the enactment of the companies act in 1850, which introduced the feature of limited.

Liability and generated investor interest in corporate securities.

An important early event in the development of Stock exchange in India was the Formation of the native share and stock broker Association at Mumbai in 1875, the procurer of the present day BSE .this was followed by the formation of many stock exchanges.

MEANING OF STOCK EXCHANGE

The securities contract (regulation) Act, 1956 defines a stock exchange as follows.

“A body of individuals, whether incorporated or not, constituted for the purpose of assisting or controlling the business of buying, selling or dealing in securities.”

LEGAL AND REGULATORY FRAMEWORK:

The four main legislations governing the securities are:-

(a) The securities contracts regulation Act, 1956, which provides for regulation of transactions in securities through control over stock exchanges.

(b) The companiesAct,1956,which sets out the code of conduct for the corporate sector in relation to the issue ,allotment and Transfer of securities and, disclosure to be made in public issues.

(d) The depoositiriesAct, 1996 which provides for electronic maintenance and transfer of ownership of dematerialized securities.

SEBI’s roll in regulating the working of Stock Exchanges-

The activities of the Stockbrokers are regulated by the Board of Directors of the Stock Exchange. There is an Administrator appointing by the SEBI in every recognized stock Exchange, who controls every activity of the stock exchange and plays a supervisory role for SEBI. Stock Exchange are designed to be self regulatory. At the national level is the SEBI exercising a regulatory role over the functioning of the capital market and the stock exchanges. The purpose and aims of SEBI are:

v Regulating the activities of the stock exchanges and other securities markets.

v Registering and regulating the working among other of stockbrokers,subbrokers and share transfer agents.

v Banning the insider trading in securities.

v Restricting the transactions pertaining to acquisition of shares and takeover of companies.

IMPORTANCE OF STOCK EXCHANGE

The importance of stock exchanges has gained momentum especially since the last deed. They provide a readymade marketability and liquidity to the securities. With this sprit, such markets also help in channel sing the funds

To the most profitable and growth ventures by their price mechanism. It can rightly be said that to ascertain the health of the economy, analyzing the current trends at stock exchange would be the lucrative indicator.

1. Importance to the economy:

Stock Exchange has been described as the heartbeat of the economy. In real terms, it has been regarded as a mirror of economic situation of the country. The importance of such markets can be assured by means of following noteworthy benefits it owes to the economy of any country across the globe.

i. It accelerates the economic development of any country.

ii. Aids in expansion and modernization of capital buiness enterprises.

iii. Promotes industrial development.

2. Importance to the corporate houses/sector:

It has resulted in great value to the business enterprices.As such the listed companies enjoy the following benefits:

i. It facilitates minimized fluctuations and avoids the excessive bullish and bearish tendencies, as a result protecting the situations of speculations, insider trading and also prevents the securities prices from rampant fluctuations by means of maintaining a price band limits.

ii. Diversified market operations as the securities are regularly quated and traded in the markets across the country, within the ease to the large investors by means of making the fairest deal through interest based online trading of securities in such markets.

3. Importance to Investor:

The real benefit of such markets is reaped by the investors, weather large or small:

i. Liquidity of Investments:Thev investors are free to buy and sell securities in these markets during the trading days. Thus, commanding liquidity of investments.

ii. Security to the Investors: By means of SEBI guidelines of investor protection is a ready guide for the stock exchanges so as to ensure the security to the diversified investors.

BOOK BUILDING-GLOSSARY

Bid

A bid is the demand for a security that can be entered by the syndicate/sub-syndicate members in the system. the two main components of a bid are the price and the quantity.

Bidder

The person who has placed a bid in the book building process.

BookRunning Lead Manager :

A lead Merchant Banker who has been appointed by the ISSUER Company as the book runner lead manager. The name of the book runner lead manager in the office document of the issuer Company.

Floor Price

The minimum offer price below which bids cannot be entered .The issuer company in consultation with the book running lead manager fixes the floor price.

Merchant Banker

AN entity registered under the securities and exchange board of India Regulations, 1999

Syndicate Members

Syndicate Members are the intermediaries registered with the Board and permitted to carry on activity as underwriters. The book running lead managers to the issue appoints the Syndicate Members.

Order Book

It is an ‘electronic book’ that shows the demand for the shares of the company at various prices.

Delisting Exchange

Delisting Exchange means the exchange from which the securities of the company are proposed to be delisted in accordance with these guidelines.

Exchange

Exchange means any stock exchange ,which has been granted recognition under section 4 of the Securities Contracts(Regulation)Act,1956.

Promoter

Promoter means a promoter as defined in clause (h) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers)Regulations,1997 and includes a person who is desirous of getting the securities of the company delisted under these Guidelines.

Public Shareholding

Public shareholding means the shareholding in a company held by persons other than the promoter,the acquier or the persons acting in concert with him as defined in regulation 2(1)(j) of the Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers)Regulations,1997 and the term ‘public holders of Securities’ shall be construed accordingly:

Voluntary Delisting

It means delisting of securities of a body corporate vouluntarily by a promoter or an any other than the stock exchange(S).

Auction

An auction is a mechanism utilized by the exchange to fulfill its obligation to a counter party member when a member fails to deliver good securities or make the payment. Through auction, the exchange arranges to buy good securities and deliver them to the buying broker or arranges to realize the cash and pay it to the selling broker.

Bad Delivery Cell

When a delivery of shares turns out to be bad because of company objection etc. the investor can approach the bad delivery cell of the stock exchange through his broker for correction or replacement with good delivery.

Brokerage

Brokerage is the commission charged by the broker for purchase/sale transaction through him.

BWS(Broker Work Station)

BWS is the computer through this computer registered the client order as well as checks the transaction are settled or not.

Clearing

It is a mechanism by which Exchanges temporally suspend the trading in a security when its prices are volatile and tend to breach the price bend.

Remat(Rematerialization)
The process of converting your Electronic holding back to physical holding of securities termed as Rematerialiazation.

INTRODUCTION TO NSE

The National Stock Exchange of India Limited has genesis in the report of the high powered study group on establishment of new Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions(FIs) to provide access to investor from all the across the country on the equal footing . Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the government of India and was incorporated in November 1992 as a tax –paying company unlike other stock exchanges in the country.The daily turnover is 15000-25000 Cr.

Objectives

NSE’aims is setting the agenda for change in the security market in India .The NSE was set-up with the main objectives of:

§ Establishing a nation wide trading facility for equities’ , debt instruments and hybrids

§ Ensuring equal access to investors all over the country through an appropriate communication networks.

§ Meeting the current international standards of securities markets.

TheBSE(CorporationandDemutualization)Scheme,2005

Bombay stock exchange limited is the oldest stock exchange in Asia with a rich heritage .Popularly known as “BSE”,it was established as “The Native Share & stock Brokers Association” in 1875.It is the 1^st Stock exchange in the country to obtain permanent recognition in 1956 from the government t of India under the securities contract(Regulation)Act,1956.The Exchange’s pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, Sensex , is tracked worldwide. Earlier an Association of Persons(AOP),the exchange is now a demutalised and corporatised entity incorporated under the provisions of companies Act,1956, pursuant to the BSE Scheme,2005 notified by the securities and Exchange Board of India(SEBI).BSE limited received its Certificate of incorporation on 8^th August,2005 & Commencement of Buissness on 12^th August, 2005.The ‘due date’ for taking over the business and opertions of the BSE by the exchange was fixed for 19^th august,2005 under the scheme .The exchange has succeeded the business and operations of BSE on going concern basis and its recognition a an exchange has been continued by SEBI.

With demutualization, the trading rights and ownership rights have de-linked effectively addressing concerns regarding perceived and real conflicts of interest .The exchange is professionally managed under the overall direction of the Board of directors The Board comprises eminent professionals, representatives of Trading members and the Managing director of the Exchange. The board is inclusive and is designed to benefit from the participation of market intermediaries.The daily turnover 5000-9000Cr.

In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the board are board-based. The day-to-day operation of the Exchange is managed by the Managing Director &CEO and a management team of professionals.

Uttar Pradesh Stock Exchange Association Limited

THE UPSE

The U.P.Stock Exchange Association Ltd,Kanpur is situated at a very important place .it holds a very important position among other existing stock exchange in india .The Exchange was inau gurated on 27^th August 1982 by the finance minister Shri Pranab Mukerjee. From the very 1^st day it has been playing very important role in development of capital market of north India. The UPSE has also a subsidiary this is UPse Securities Limited. In UPSE, there are 71 employees including UPSE securitity limited.In UPSe 5 crore rs. In General excess fund and 8 crore rs. In base minimum capital.there are 200 member where as active member are only more than 100.The turn over of UPSE & UPSE Security limited 15-12 crore /daily.

THE PROFILE

Recognition Date: 3^rd june , 1982

Established By: Mr.G.H.Singhania

No. of Listed Companies : 683

No. of Members: 243(Active members-70-80)

No. of Employees: 71

Address Padam Tower

14/113,civil lines

Kanpur,(U.P.)

GOVERNMENT BOARD:

CHAIRMAN : Mr. K.D.Gupta

(Appointed by SEBI u/s 11 of SCRA)

NAME OF THE DIRECTORS

Shri. K.L.Kamboj : Public Interest Director

Shri. T.K. Das : Public Interest Director

Shri. B.K. Nadhani : Executive Director

Shr. Shushil K. Kanodla : Trading Member Director

Shr. Rajesh Agrawal : Trading Member Director

Shri. Ghanshyam Dwivedi : Trading Member Director

Shri. Ashok Sharma : Shareholder Director

Shri. Nukul Tandon : Shareholder Director

Shri. R.K. Agrawal : Shareholder Director

General Manager : Mr.B.P.Gupta

MAIN OBJECTS OF U.P.S.E.

(1)-To organize and carry on the stock exchange and regulate that business of exchange and stock and shares , debentures and debenture stocks.Goverments securities ,bonds and equities of any description and with a view to establish and conduct S.E. in Kanpur.

(1) To acquire the membership of any other recognized exchange in India and abroad including membership of OTCEI ,broad base the operations of the stock exchange for the benefit of general public and investor.

(2) To promote one or more subsidiary whether wholly or partly owned, with object to promote and trade in shares and stocks , debenture bonds and other securities of any description issued by companies,statutory corporation ,government of state or union

(3) government ,Financial intuition.

MANAGEMENT STRUCTURE OF UPSE

ADMINISTRATOR

BOARD OF DIRECTOR

EXECUTIVE DIRECTOR

GENERAL MANAGER

ASSISTANT GENERAL MANAGER

MANAGER OF RESPECTIVE DEPARTMENT

ASSISTMENT MANAGER

OFFICERS

OTHER SUB-ORDINATES

EXISTING DEPARTMENT AT THE EXCHANGE &

NAME OF THE INCHARGE

· Chairman : Mr. K.D. Gupta

· Excutive Director : Mr. B.K. Nadhani

· Surveillance Department : Mr.Atul Agrawal

· Secretarial Department : Mr. Chandra Babu PR

· Margin Department : Mr.J.K. Dixit

· Accounts, Finance & : Mr Satish Chand Kapoor.

Establishment Department

· Computer EDP Department : Mr.Rajeev Rastogi

· Membership&

Listing Department : Mr. B.P.Gupta

· Clearing Department : Mr.L.S.Pandey

· Library R&D Department : Mr.Rajendra Verma(Incharge)

· Legal Department : Mr.Jitendra Nath Shukla(Incharge)

v Libraary , research & development ,investor service Department

v Computer EDP Department

v Accounts,finance&establishment Department

v Trade operation & clearing house Department

v Legal Department

v Listing Department

v Membership Department

v Margin Department

v Surveillance Department

v Secretariat Department

LIBRARY, R&D &INVESTOR SERVICE DEPARTMENT

There are three main function of this department

To render investor services

To maintain library

To conduct research &development

Research & development wing of UTTAR PRADESH STOCK Exchange ASSOCIATION LTD.has been functioning eve since 1992 under SEBI Directions and providing valuable services to the investors. The wing presently named as ‘INVESTOR SERVICE CENTER’ has a well maintained, Library comprising of books,journals,periodicals& newspapers on financial market ,annual reports of companies, prime directory etc.

All the above facilities are provided free of cost to one and all and any query is immediately attended by the help desk situated in the Investor Service Center, headed by a responsible official of the exchanges.

COMPUTER EDP DEPARTMENT

All the working of stock exchange is computerized & each member of the exchange is provided with the thermals and all such terminals are connected to the common server .Thus, looking after the maintenance of the server and related matter are done in the computer dept.This deptt is also responsible matters are done in the computer deptt.

This deptt is also responsible for all the back office work of the stock exchange after the trading hours are over. This involves the generations of reports, statement regarding the total trading done by total no. of order placed and executed.

ACCOUNTES, FINANCE AND ESTABLISHMENT DEPARTMENT

The main function of this dept is to record and maintain financial records of the U.P.S.E and do all other incidental and ancillary works such as

§ Maintain financial records on daily basis

§ Prepare balance sheet& profit & loss of U.P.S.E

§ Assist in audit of U.P.S.E.

§ Assist in preparation of annual report etc.

Main source of revenue of U.P.S.E. are annual membership fee & annual listing fee. Main expenditure of U.P.S.E. is salary & maintenance.

U.P.S.E. is anon profit making organization and hence its profits are reinvested and accounts deptt is given the responsibility of reinvesting its profits.

TRADE OPERATION AND CLEARING HOUSE DEPARTMENT

Pay-in & pay-out of money and securities for settlement of the transaction on the on-line trading system of the exchange as per norms provided by SEBIas well as the exchange from time to time.

Presently Rolling Settlement:T+2 is applicable in the exchange

Every Settlement take place as under:-

Days	Activity	Time
T	Trading Day	9.55a.m.-3.30p.m.
T+2	Pay in& Pay out of securities&funds	11.00a.m.-1.30p.m.
T+2	Auction for short deliveries	1.30p.m.-2.30p.m.
T+3	Auction pay in & pay out close out of shares not received in auction	11.00a.m.-1.30p.m.

Trading day (T)-

On this day brokers/client traded in different scripts by sale an purchase on the market price.At the end of the trading session as per their outstanding position brokers/client delivered their shares (in case of sale) and pay amount of said deliveries (in case of purchase) to the exchange.

T+1 Day (Delivery or Fund departure day)-

On this day brokers/clients deposited their sold deliveries in the stock exchsnge (Depository) which is prescribed by the concerned exchsnge & thes brokers/clients who purchased shares they make payment of said shares in that clearing bank which is prescribed by the exchange.

T+2day (Pay in & pay out of securities & funds)-

On this day clering house firstly completd the pay in of fund & securities ,then delivered the shares to the concerned members(purchaser)& releases the payment .

For this clearing house give a list of shares delivered by brokers to their depository .After receiving list,depository informed clearing house that

there is any shortage or not .if there is no shortage then clearing house pay out the shares &thereb is any shortage then that shortage will be completed by on –line auction on same day between 1.30p.m.to 2.30p.m. in auction,Defaulter broker can not participate.A defaulter for script can not enter offers for that script.

(a) Total offer quantity can not exceed the auction quantity.

(b) At the end of the auction session computer pick the lowest amount bid & if securities are not available Iin the on-olineauction on T+2 day within the prescribed price limit i.e.25% of the current market price then the transactionsare closed out at as per the standardized procedures specified by SEBI.and the script is received by the auction then the pay out of said auction shares on T+3 day .

T+3 Day (Action pay in &pay out )-

On this day clearing house conducted the pay out of those securities which were short at the time of pay in (on T+ day &received through on –line auction).

A brief note on auctions and closeout carried out of the exchange.

If the securities are not available in the on line auction on T+2 day within the prescribed price limit (20% of the current market rate),than the transaction is closed out at as per the standard procedure by SEBI.

The closed out price will be highest price recorded in that scrip on the exchange in the settlement in which the contract was entered into up to the date of auctions/closed out.

LEGAL DEPARTMENT

As the name imolies, this deptt is to handle legal matters .The main fuction of this deptt are –

(1)-To Handle Court Case:-

Legal deptt.handels court cases where stock exchange is made a party to the dispute .beside if a case in a court & it has or may have an effect on stock exchange ,legal deptt take care of that care also.case by or against stock exchange may be due to any reason , some of which are as foolows-

§ Appealed filed against the award of the Arbitration Committee.

§ Case filled by a member .who is declared as defaulter by U.P.S.E.?

§ Any person misappropriating the property of stock exchange etc.

(1) Implement law:-

If any amendment come in any law, or any order is passed by SEBI which has the effect on working of stock exchange, legal deptt analses such amendment & takes steps to implement such amendments.

LISTING DEPARTMENT

This deptt deals with all the work relating to listing of securities.the company which is not listed on the stock exchange should adopt a request letter of application for the enlistment of its securities therein.The company must apply for listing of the share in the prescribed application form within 10 days of the filling of prospectus with the registrar ofb companies along with certain documents,i.e.

Memorandum and articales of associtation

Debenture Trust deed

Prospectus\

Underwriting aggrement

Particulars of dividend,arrer of dividend

Director report,balance sheet of last 10 years

Short history of the companies, etc.

The company desirous of ;listing has to execute with the exchange a detaildn agreement in the prescribed form. The listed company which need further issue .Does applies on other prescribed letter of application & supporting document, there are 4 steps in the listing procedure.

1:- Applicant company communicates to the stock exchange.

2:- Preparation & printing of formal application .

3:- Investigation of committee of the board of directors .

The companies intending to the list at the stock exchange have to pay 2 types of fees.

1:- Initial listing fee Rs.10,500

2:- Annual listing fee

(a) Companies with paid up shares or debenture capital of Rs.1crore Rs.6000

(b) Above Rs.1crore& upto 5crore Rs.9000

(d)Above Rs.10crore& upto 20crore Rs.28000

Companies which have a paid up capital of more than Rs.20crore will pay additional listing fee of Rs.6000/- for every increases of Rs.20crore or part there of in the paid up share/debenture capital.

MEMBERSHIP DEPARTMENT

This deptt mainly deals with Member’s /membership admission /transfer /conversion /registration /surrenderof certificate of registration of SEBI.

All the members of U.P.S.E. shall be bound by the memorandum & articles of association of securities contract(regulation)act,bylaws&regulation of U.P.S.E. orders & notification of SEBI issued in this regard from time to time.

ADMISSIONOF MEMBER:-

Membership in U.P.S.E. is of 2 types:-

1:- Individual Membership

2:-corporate membership

Individual membership has 2 types

(a) Proprietorship

(b) Partnership

Corporate Membership has also 2 type

(a) Private Co.

(b) Public Co.

INDIVIDUAL MEMBERSHIP,PRECONDITION:-

1-At least 21years of age

2-Educational qualification should be min. intermediate or equivalent however.

These two conditions can be waived by the board when an individual succeeds to established business of deceased or a retiring member or in other deserving case.

3-He is an indian citizen.

4-And he satisfies such other conditions as may be prescribed in the articles.

CORPORATE MEMBERSHIP,PRECONDITION:-

Following are the precondition of the corporate membership-

I. Entity must have been incorporated under the companies Act,1956

II. It should comply with sec. 12 of the companies act,1956

III. It has min paid UP capital of 20 lakhs as on date.

IV. It must at all times maintains the requisite net worth.

V. And it satisfies such other conditions as may be prescribed in the articles.

Conversion-individual to corporate:

If individual member converts himself into corporate bodies it will have to furnish its memorandum,articles,rules and bylaws.

1. It should also comply with the conditions laid down in the articals 19(1)(2)(3).

2. board resolution to be corporate member of the U.P.S.E. and to appoint reprentative to act on behalf of the company .

Multiple Membership:

Multiple membership is also permitted

Basic Requirement:

1. Applicant satisfies the conditions of that other Stock Exchange.

2. Must have minimum 3 year experience in similar field.

Termination of membership:

Any member may cease to be member in the following circumstances:

o By resignations

o By default

o By death

o By expulsion in accordance with the provisions of the bylaws and regulations.

o Insolvency in the case of corporate member

RE-ADMISSION OF DEFAULTERS:

The board may readmit a defaulter as a member subject to the provisions of articles. Presently in UPSE on 15^th may 2007 8 brokers are decleared as defaulter. And 1 defaulter is readmit as a member on 11^th jan 2008 subject to the provisions of articles.

GRIEVANCE,COMPLANINTS AND ARBITRATION:

Membership department also deals with grievances and arbitration cases.

COMPLAINTS:

Complaints are usally received from the investors,broker. Intermediary etc. these complaints can be received against.

o UP based company

o Non UP based company

In case of Non UP based companies UPSE acts as a post office and simply forward the complaints to the respective regional Stock Exchanges.

Complaints from investor,broker-

Fom Investor-

1. Non receipt of allotment of share/refund orders.

2. Non receipt of share after transfer.

3. non receipt of dividend/interest.

From Broker-

1. non receipt of brokerage at the time of public issue .

2. Non receipt of underwriting commission.

Complaints against Member/broker-

1. Non receipt of securities.

2. delay in receipt of shares.

3. rate difference.

Grievance:

There is a grievance committee which deals with grievance cases. Appeal against these order lies to arbitration committee.

MARGIN DEPARTMENT

The main fuction of this deptt is to maintain or record the margin requirement of each of the member registered in the stock exchange. In this respect following criteriais taken care of:

1- Basic Minimum Capital

2- Additional Capital

OLD BASIC MINIMUM CAPITAL:

Basic minimum capital is the minimum capital to have trading rights. In U.P.S.E BMC is 4b lacks which is collected in the following manner.

12.5%. in cash Rs.50,000

12.5% in fixed deposit receipt Rs.50,000

75% in shares (15% hair cut )bank guarantee Rs.300000

OLD ADDITIONAL CAPITAL:

When a member brings BMC he is allowed certain limit within which only he an trade .Now if he wants to exceed that limit he can bring additional capital in the form of a additional capital in the following manner:-

50% in C ash 50/100*amt

50% in shares 50/100*amt

NEW BASIC MINIMUM CAPITAL

12.5%. in cash Rs.50,000

37.5% in fixed deposit receipt Rs.150,000

50% in shares (Demat form,VAR%as per current status) Rs.200000

NEW ADDITIONAL CAPITAL

50% in Cash/FD

50% in shares

TRADING AND EXPOSURE LIMIT

U.P.S.E. impose limits on turnover & exposure in relation to the deposit available with the exchange.

The member are subject to limits on trading volumes in a day as well as expososure at any point of time .Intra day turnover (Buy+Sell) limits of a member shall not exceed 20 times of BMC+AC.

Similarly Gross Exposoure limit shall not exceed 10 times of BNC+AC

Following table illusttates it-

Intra Day Limit 20 times of(BMC+AC)

Gross Exposure Limit 10 times of(BMC+AC)

EXPOSURE LIMIT VOILATION :-

Member exceeding any of above limit are not allowed to trade with immediate effect until the member bring additional base capital.

TYPES OF MARGIN :

There are four type of margin:

1-Mark to Market Margin(MTM)

2-Value At Risk Margin(VAR)

3-Extreme loss Margin(ELM)

4-Special Margin

Mark to Market Margin(MTM):

This margin is the amount of national loss which a member incurs on trading activities.For example Mr. X purchased a share at Rs.100/-and sold it aat 90/- then MTM is10/-

Value At Risk Margin(VAR):-

In case of liability of shares special margin is imposed the rate of whicg is supplied by BSE .99% of risk covered by value at risk margin.

Extreme loss Margin(ELM):

This margin to cover the expected loss in situation that lie outside the coverage of the VAR Margin.

Special Margin:

In case of loyalty of shares margin is imposed the rate of which is supplied by BSE.

SURVEILLANCE DEPARTMENT

This deptt was established in 1995 under the requirement of SEBI . The main objective of the survelliance function of the exchange is to manage risk by taking necessary action timely .the entire instrument traded in the market come under the survelliance umbrella of U.P.S.E..

Poupose of survalliance:

Purpose of survalliance is to prevent risk which may arise due to_

v Carry forward Trade

v Trade away from market price

v Price manipulation

v Insider trading

v Circular trading

v Creation false marketed

In order to detect abnormal behavior/movement,it is neccessaryb to know the normal market behavior.the necessary actions are initiated like imposition of special margin ,suspensions,deactivation of terminals,etc.To control abnormal market behavior. The deptt carries out investigation,if Necessary ,based on the preliminary examination/analysis & suitable actions are taken against members involved based on the investigation.the detailed explanation of the various surveillance activities are as follows:

On-line surveillance

One of the most important tools of the surveillance is the on-line real time surveillance system with main objectives of detecting potential market abuses at a necessary stage to reduce the ability of the market participants.to unduly influence the price & volume of the scripts traded at the exchange , improve the risk mgt system & strengthen the self regulatory mechanism at the exchange the system has a facility to generate the alerts on-line based on

certain preset parameters like price & volume variations in scripts, member crossing intra day limit or gross exposure limit.

Off-line surveillance:

The off-line surveillance system comprises of the various reports based on different parmeters & security thereof

High/low difference in price

% change in prices over a week /fortnight/month

Top scripts by turnover

Scripts hitting new high/low,etc,

The surveillanceb actions or investigations are initiatedf in the scripts identified from the above –stated reports.

SECRETARIAL DEPARTMENT

Governing board

According to the article of association of the exchange governing board comprises of

1- six director elected under the provisions of the article of association of the exchange

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

3- Four people from public as public representative nominated by the governing board of the exchange subject to SEBI approval.

4- One executive director appointed by the governing board subject to prior approval of SEBI.

However w.e.f.12-07-2002 SEBI has suspended the governing board of the exchange & appointed an administrator to perform the power & fuctions of the governing board, under section 11 of SCRA,1956.

Statutory committees:

After annual general meeting every year the governing board appoint the following committee

1)-Arbitration committee

2)-default committee

3)-Disciplinary committee

Beside there are some more committee

2- Surveillance committee

3- Ethics committee

4-Computer breakdown committee

5-Compulsory delisting committee

6-Screening committee

The secretarial department is involved not only in correspondence with

SEBI/MINISTRY/INCOME TAX but also handle these works.

forwarding and compiling pre-inspection report

1. Coordinate with other deptt. To implement SEBI circular

2. Forwarding monthly report to SEBI.

3. Forwarding the compliance report on the SEBI inspection report.

Similar work for UP SECURITIIES LTD. is also handled by secretarial department

UPSE SECURITIES LIMITED

(Commonly refered in as subsidiary company)

UPSE securities ltd., a wholly owned subsidiary of U.P.Stock exchange Association Limited was incorporated on 19-apr-2000 with the object to obtain membership of larger Exchanges such as BSE/CSE and provide trading facilities on these exchanges to the member of U.P. Stock Exchange as its sub-brokers as per the policy/guidelines issued by SEBI. Accordingly the company acquired the membership of BSE and commenced on-line trading on BOLT with effect from 26-01-2001.

The ATF-Lucknow is the 1^st additional trading floor in India setup by UPSE. It was setup to increase further business and to facilitate the on-line trading facility to lucknow based members. The on-line trading at the ATF-lucknow was successfully commenced from 24^th march 1999.

UPSE Securities ltd., a wholly owned subsidiary of U.P. Stock Exchange Association ltd. Acquired the membership of BSE and commenced on-line trading in Bolt with effect 20-01-2001 and doing well.Thus, scope of UPSE is indeed very wide and in future periods it will surely further expand the levels of business leading to the lucrative gains to the corporate, investors and finally its members

.DEMETERIALIZATION

One of the method for preventing all the problem that occur with physical securities is through dematerialization (demat).India has adopted the demat route in which the book entry is made electronically against the securities that are cancelled The share certificate are shrededded and acorresponding credit entry of the no. of securities is made in the account opened with the depositotory participant(DP).

Dematerialization or "Demat" is a process whereby your securities like shares, debentures etc, are converted into electronic data and stored in computers by a Depository.
Demat has resulted in the elimination of possible mutilated certificates, lost certificates, postal delays and counterfeit shares. Now it is safe, secure and convenient buying, selling and transacting stocks without suffering endless paperwork and delays. You can convert your securities to electronic format with a Demat Account.

Securities registered in your name are surrendered to depository participant (DP) and these are sent to the respective companies who will cancel them after "Dematerialization" and credit your depository account with the DP. The securities on Dematerialization appear as balances in your depository account. These balances are transferable like physical shares. If at a later date, you wish to have these "demat" securities converted back into paper certificates, the Depository helps you to do this.

In economics, dematerialization refers to the absolute or relative reduction in the quantity of materials required to serve economic functions in society. In common terms, dematerialization means doing more with less. This concept is similar to ephemeralization as proposed by Buckminster Fuller.

Dematerialization is the counterargument to the idea that economics is only about 'more is better.' The idea that more is better, a common activist argument which likens economic logic to the logic of a cancer cell, ignores the differences between inputs and outputs, and it ignores the ratio of inputs to outputs.

OBJECTIVE OF DEMATERIALISATION

1. To cover the risk these are:

2. Delay in transfer of share .

3. 3.Possibility of forgery on various documents leading to bed deliveries ,legal disputes etc.

4. Possibility of theft of share certificates .

5. Prevalence of fake certificate in the market.

6. Mutilation or loss of share certificates in transit.

a. To reduce the time in settalment of share

b. Provide the better facalities in the terms of trading

WHY DEMAT?

The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses

ORGIN OF DEMATLERIALISATION

Before the introduction of the Depositories Act 1996, everyone hold shares in the physical form. There were many risks associated with holding physical certificates. They could get torn, mutilated, duplicated or even stolen. More over, transfer of shares from one person to another was not only a very long process but would also attract a lot of charges. The introduction of the Depositories Act 1996 revolutionized the entire capital market.

The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include

to protect the interests of the investors in securities

to promote the development of securities markets and to regulate the securities markets

The scope and functioning of the SEBI has greatly expanded with the rapid growth of securities markets in India in the last fifteen years. Following the recommendations of the High Powered Study Group on Establishment of New Stock Exchanges, the National Stock Exchange of India (NSE) was promoted by financial institutions with an aim to provide access to investors all over the country. NSE was incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities Contracts (Regulations) Act 1956 in Apr 1993.

It commenced operations in wholesale debt segment in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock Exchange brought to Indian capital markets several innovations and modern practices and procedures such as nationwide trading network, electronic trading, greater transparency in price discovery and process driven operations that had significant bearing on further growth of the stock markets in India. Faster and efficient securities settlement system is an important ingredient of a successful stock market. To speed the securities settlement process, The Depositories Act 1996 was passed that allowed for dematerialisation (and rematerialisation) of securities in depositories and the transfer of securities through electronic book entry.

DEPOSITORY

What is depository?

1) A depository is an organization where the securities of an investor are held in electronic form, at the request of the investor through the medium of a Depository Participant.

2) If an investor wants to utilize the services offered by a depository, he has to open an account with the depository through its Depository Participant.

Depository fuctions like a securities bank, where the dematerialized physical securities are traded and held in custody .this facilitates faster,risk free and low cost settlement.depositry is much like a bank and perform many activities that are similer to a bank .Following table compare the two.

BANK	DEPOSITORY
Holds fund in accounts	Holds securities in accounts
Tranfers funds between accounts	Tranfers securities between accounts
Transfer without handling money	Transfer without handling securities
Safekeeping of money	Safekeeping of securities

Depository Participant

a)A Depository Participant(DP) is an agent of the depository and is authorized to offer depository services to investors.

b)According to SEBI guidelines, financial institutions, banks, custodians, stock brokers etc can become DP with a Depository.

Depositories in Indian Context

1)National Securities Depository Limited(NSDL):- NSDL is the the 1^st indian depository ,it was inaugurated in November 1996.NSDL was set up with an initial capital of US$28mn,promoted by industial development bank of India(IDBI),Unit Trust of India(UTI)& National Stock Exchange of India Ltd .(NSEIL).Later ,State Bank Of India(SBI)also become a share holder.

2)Central Depository Services(India) Limited (CDSL):- The depository is central Depository service .it is still in the process of linking with the stock exchanges. It has registerted around 20 DPs and has signed up with 40 companies. It had received a certificate of commencement of business from SEBI on February 8, 1999.

These depositories have appointed different Depository participants(DP) for them. An investor can open an account with any of the depositories’s Dp. But tranfers arising out of trades on the stock exchanges can take place only amongst account-holders with NSDL’s Dps. This is because only NSDL is linked to the Stock Exchange(nine of them including the main onces-National Stock Exchange and Bombay Stock Exchange).

In order to facilitate transfers between investors having accounts in the two existing depositories in the country the securities and exchange Board of India has asked all stock exchanges to link up with the depositories .SEBI has also directed the companies registrar and transfer agents to effect change of registered ownership in its books within 2 hours of receiving a transfer take place smoothly . it also involves the two depositories connecting with each other . the NSDL& CDSL have signed an agreement for agreement for inter-depositories connectivity..

WHAT IS DP?

NSDL carries out its activites through fuctionaries called business partner who include Depository Participants(DPs),issuing coroperate and their Registrars and transfer agents clering coroperation /clearing houses etc. NSDL is electronically linked to each of these business partners via asatelite link through Very Small Aperture terminals(VSATs). The entire integrated system (including the VSAT linkup and the software at NSDL and each business parten’s end) has been named as “NEST”(National Electronic Settelment & Transfer) system.

The investor interacts with the depository through a depository participant of NSDL.A DP can be bank , financial insituion ,a custodian or a broker just as one opens a bank account in order to avail of the services of a bank, an investor opens a depository account with a depository participants in order to avail of depository facilities.

Securities that can be dematerlised

The entire depository system in India is governed by the rules made by the market regulator –SEBI According to the Sebi (Depositories and Participants) Regulations,1996, the following securities are eligible for holding in dematerilased form.

1. Shares,scrips,stocks,bonds,debentures,debenture stock or other marketable securities of similar nature of any incorporated company or other body corporate,including underlying shares of ADRs andGDRs.

2. Units of mutual funds, right under collective investment schemes and venture capital funds.commercial paper,certificate of deposit,securitized debt,money market instruments,government securities,national saving certificates,kisan vikas patra and unlisted securities.

A list of securities available for demat in NDSL depository is made known to all DPs by way of circulars sent through e-mail .The information is also put up on NSDL’s Website –www.nsdl.co.in and in the monthly information bulletin,NEST update.

Physical form of securities can be converted into book entry form in NSDL depository system only if the company which has issued the securities ,has entered into an agreement with NSDL to offer demat facility.

Process of conversion of securities into the demat form

Securities specified as being eligible for dematerialization by the depository in its bye laws and as under the SEBI (Depositories and Participants) Regulations, 1996 (the Regulations) can be converted or issued in a dematerialized form. The process of conversion of securities into a dematerialized form or the issuance of the same in a dematerialized form can be explained thus:

1. Firstly, the issuer company, whose securities are eligible for dematerialization, has to enter into an agreement with a depository for dematerialization of securities already issued, or proposed to be issued to the public or existing shareholders .

2. The investor is given an option to hold the securities in a dematerialized form and it is his prerogative to exercise the option to hold the securities in that manner.

3. The depository enters into an agreement with the participants who are the agents of the depository and co-functionaries in the process of dematerialization of securities .

4. Any person can then enter into an agreement, through the participant, with the depository for availing the services provided by the depository.

5. Upon the entering into such agreement with the depository, the person has to surrender the certificate pertaining to the securities sought to be dematerialized to the issuer. This surrender is effected in the following manner:
(i) The person (beneficial owner) who has entered into an agreement with the participant for dematerialization of the securities has to inform the participant about the details of the certificate of such securities.
(ii) The beneficial owner has to then surrender the said certificate to the participant.
(iii) The participant informs the depository about the particulars of the securities to be dematerialized and the agreement entered into between him and the beneficial owner.
(iv) The participant then transfers the certificate pertaining to the said securities to the issuer along with the details and particulars of the securities.
(v) These certificates are mutilated upon receipt by the issuer and substituted in the records against the name of the depository, who is the registered owner of the said securities. A certificate to this effect is sent to the depository and all stock exchanges where the security is listed.
(vi) Subsequent to this, the depository enters the name of the person who has surrendered the certificate of security as the beneficial owner of the dematerialized securities.
(vii) The depository also enters the name of the participant through whom the process has been carried out and sends an intimation of the same to the said participant.

6. Once the aforesaid process of dematerialization is carried out, the depository has the responsibility to maintain all the records pertaining to the securities that have been dematerialized.

A list of securities available for demat in NSDL depository is made known to all DPs by way of circulars sent through e-mail .The information is also put up on NSDL’s website –www.nsdl.co.in and in the monthly information bulletin ,NEST update.

Physically form of securities can be converted in to book entry form in NSDL depository system only if the company which has issued the securities , has entered into agreement with NSDL to offer demat facility .

The Demat Process

A older of eligible securities in the depository system may get his physical holdings converted into electronics form by making a request form by making a request through the DP with whom he has his beneficiary account.

Figure 17 – Annexure D of NDSL Bussiness Rules

Participant’s Name, Address & DP Id

(pre-printed)

DEMATERIALISATION REQUEST FORM

DRN

(to be filled-in by the DP)

Serial No. (Pre Printed) Date :

I/We request you to dematerialize the enclosed certificates into my /our assount as per the details given below :

Client Id

Sole/First Holder Name

Second Holder Name

Third Holder Name

Company Name

Type Of Security

Equity/Others(Please Specify)

Quantity to be Dematerialised

(in Figure)

(in words)

Face Value

ISIN (To be filled in by the DP)

Details Of Securities :

□ Free Securities □ Locked-in Securities
Folio No.	Certificate Nos.	Distinctive Nos.	Quantity

No. of Certificates:

Details of Locked-in Securities:

Lock-in reason
Lock-in release date

(In case the space is found to be sufficient, an annexure containing the certificate details in the same format may be attached. Please use separate form for free securities and locked-in securities)

Declaration

I/We herby declare that the above mentioned securities are registered in my/our name. The original certificates are herby surrended by me/us for dematerialization. I/We also herby declare hat the securities surrended by me/us for dematerialisation are free form any lien or change or encumbrance and represents the bonafide securities of the company to the best of my/our knowledge and brief.

Holder(s)	Signature(s)
Sole/First holder
Second Holder
Third Holder

Participant Authorisation

We have received the above- mentioned securities for dematerialisation. The application form is verified with the cetificates surrendered for dematerialization and we certify that the application form is in accordance with the details mentioned in the enclosed certificates. It is also certified that the holders of the securities have beneficiary account with us in the same name(s).

Name of the Executive :

Signature : Participant’s Stamp & Date

Acknowledgement

Serial No. (pre printed)

We herby acknowledge the receipt of _________________shares/units/bonds/debentures

of______________ __________________________surrendered for dematerialization by Mr/Ms/M/s___________ having cliend id _____________________

Date : Participant’s Stamp & Signature

Prerequisties for Dematerialisation Request

The registered holder of the securities should make the request.

Securities to be dematerialised must be recognized by NSDL as eligible. In other words only those securities whose ISIN has been activated by NSDL, can be demaerialised in the NSDL system.
The company/ issuer should have establish connectivity with NSDL. Only after such connectivity is establish, the security of that company/ issuer are recognized to be “available for dematerialization” in the NSDL system.

4. The holder of securities should have a beneficiary account in the same name as it appears on the security certificate to be dematerialised.

5 .The request should be made in the prescribed dematerialization request form.

STEPS:-

1-Client / investor submits the DRF(demat request form) and physical certificate to DP,DP checks whether the securities are available for Demat . client defaces the certificate by stamping ‘surrendered for dematerialisation’.DP punches two holes on the name of the company and draws two parallel across the face of certificate.

2-DP enters thye demat request form in his system to be sent to NSDL.

3-DP despatches the physical certificates along with the DRF to the R&t agent.

4-NSDL record the details of the electronic request in the system and forwards the request to the R&T agent .

BENEFICIAL OWNER 1) Signature:_____________

Name: _______________

Address:______________

Date:__________________

2) Signature:_____________

Name: _______________

Address:______________

Date:__________________

Signature of two witnesses

Name and Address Signature with date

INSTRUCTION;

1.The nomination can be made only by individual holding beneficiary owner accounts on their own behalf singly or jointly. Non-individual including society, trust ,body corporate, partnership,karta of hindu undivided family.if the account is held jointly all holders will sign the nomination form.

2.a minor can nominated.in event , the name and address of the guardian of the minor nominee shall be provided by the beneficial owner .

3.transfer of securities in favour of nominee shall be valid discharge by the depository against the legal heir .

4. nomination in respect of beneficiary owner accounts stands rescinded upon closure of the bneficialy owner account .

Investor holding securities in dematerialized from have the option of nominating persons who would be entitled to receive securities outstanding in the event of their death Shareholders have the option of holding securities in the joint names without nomination or in single name with nomination. Nomination is requested at the time of opening the depository accounts itself. There is a separate prescribed from for nomination under depository segment .Investor can appoint a nominee at the time of opening a depository account itself. Nominees can be changed at will by resubmitting the nomination details in the prescribed form. The DP has to enter and update the nominee details submitted by the account holder. If the account holder is dead, The securities lying to the credit to the account holder may be transmitted to the nominees account after the DP verifies the identity of the nominee.

Advantages&Disadvantages of Dematerialization

Advantages of Dematerialization

The advantages of dematerialization of securities can be summarized as
follows:
A. Share certificates, on dematerialization, are cancelled and the same will not be sent back to the investor. The shares, represented by dematerialized share certificates are fungible and, therefore, certificate numbers and distinctive numbers are cancelled and become non-operative. The depository system and dematerialized securities offer paperless trading and transfer of shares through the use of technology.
B. It enables processing of share trading and transfers electronically without involving share certificates and transfer deeds, thus eliminating the paper work involved in scrip-based trading and share transfer system.
C. Transfer of dematerialized securities is immediate and unlike in the case of physical transfer where the change of ownership has to be informed to the company in order to be registered as such, in case of transfer in

dematerialized form, beneficial ownership will be transferred as soon as the shares are transferred from one account to another.
D. The investor is also relieved of problems like bad delivery, fake certificates, shares under litigation, signature difference of
transferor and the like.
E. There is no need to fill a transfer form for transfer of shares and affix share transfer stamps.
F. There is saving in time and cost on account of elimination of posting of certificates.
G. The threat of loss of certificates or fraudulent interception of certificates in transit that causes anxiety to the investors, are
eliminated.

Disadvantages of Dematerialization

The disadvantages of dematerialization of securities can be summarized as follows:
A. Trading in securities may become uncontrolled in case of dematerialized securities.
B. It is incumbent upon the capital market regulator to keep a close watch on the trading in dematerialized securities and see to it that trading does not act as a detriment to investors. The role of key market players in case of dematerialized securities, such as stock-brokers, needs to be supervised as they have the capability of manipulating the market.
C. Multiple regulatory frameworks have to be confirmed to, including the Depositories Act, Regulations and the various Bye Laws of various depositories. Additionally, agreements are entered at various levels in the process of dematerialization. These may cause anxiety to the investor desirous of simplicity in terms of transactions in dematerialized securities.

However, the advantages of dematerialization outweigh its disadvantages and the changes ushered in by SEBI and the Central Government in terms of compulsory dematerialization of securities are important for developing the securities market to a degree of advancement. Freely traded securities are an essential component of such an advanced market and dematerialization addresses such issues and is a step towards the advancement of the market.

SAVINGS

Trading in dematerialized shares results in substantial savings for investors .

Following table gives an idea about these savings.

Savings for a person who buy shares for long investment(on a purchase of rs.10000)

Item	Physical(Rs.)	Depository(Rs.)	Savings(Rs.)
Brokerage	75-100	50-75	25-50
*stamp duty	50	-	50
Postal Charges	10-30	-	10-30
Company objection(courier etc.)	10-30	-	10-30
Settelmentcharges	-	5-10	-(5-10)
#Custody (5 years)	-	10-50	-(10-50)
Total			35-100

*Stamp duty of 0.5%

#Custody charge of 0.05%-0.1%

How to open a bank account with a DP

Opening a depository account is as simple as opening a bank account . You can open a depository account with any DP convenient to you.

To open an account you have to:

Fill up the account opening form,which is available with DP. Sign the DP-client agreement ,which defines the rights and duties of the DP and the person wishing to open the account.

Receive your client account number(client ID)

This client ID along with your DP ID gives you a unique identification in the depository system.

This is no restriction on the number of depository accounts a person can open. However,if your existing physical shares are in joint names,you have to open the account in the same order of names before you submit your share certificates for demat .A share holder of the share certificates cannot add more names as joint holders at the time of dematerializing his share certificates.

However, if the investor wants to tansfer the ownership from his individual name to a joint name, he should 1^st open an account as the sole holder(accountA) and dematerilise the share certificates .he should the open another depository account(accont B) in which he is the 1^st holder and the other person is the 2^nd holder and make an off market of the shares from the account A to accountB . the investor will incur a charge on this transaction .alternatively, the certificates can be tranfered to the joint ownership and then sent for Dematerlisation.

Right now,as per the companies act,there is no nomination facility for shares .The nomination facility for shares can be availed of only when the relevant provisions in the Companies Act are amended .NSDL captures the details of the nominee when the account is opened so as to offer the facility as soon as the relevant amendments are effected in the law.

A client can choose to open more than one account with same DP. In addition to this, he has a choice of opening accounts with more than one DP. However a broker can open just one Clearing Member Account per card/stock exchange for clearing purpose, but he can still open multiple beneficiary accounts .Beneficiary is the personal account wherein broker can keep their personl holdings.

A broker has only one pool account. It is open per card /stock exchange to settle trades in the dematerlised form The clearing Corporation / House just deals with one designated account for pay-in and pay-out and the broker’s clients know to which account they have to deliver and receive securites form.

A clearing member cannot hold his personal holdings in his clearing member account.A broker may deal in the depository system as a clearing member only through a special , known as the clearing member account .This account can be used only for clearing purpose and not for holding his own securities in it.

There is no compulsion for the client to open his account with the same DP as that of his broker.

How to choose a DP

Following are the few aspects that you should consider before choosing a DP

BRANCH-LEVEL SERVICE

Most DPs offer depository services from the main branch as well as through other branches and franchisees.higher the number of branches your DP has greater will be the geographical convenience you will have.

Recently Department of telecommunication has allowed the DPs(only bank DPs At present)to connect their entire internal network to NSDL .the NSDL is making changes in its software for DPs to the DOT conditions. After it is done DPs will be able to execute your inllstruction directly at the branch level thus saving time and improving efficiency .So check before opening g an account whether your DP intends to interconnect its branch network with the NSDL.

BACKUP FACILITIES

Having an adequate backup system is extremely necessary for a DP. In case of a system failyre all the data could be lost if backup facilities are not present .Allthough depositories too have the data with them but a strong system with your DP ensure no risk and hassies.

So before opening an account get detailes from your DP about its computer system’s technical specifications and backup facilities.

SAFE PROCEDURES

Your securities can get debited only if you submit to your DP a duly filled and signed ‘delivery instruction’from that authorizes the DP to debit your account. You will execute this form only when you have sold shares. But you could have worries that some one else can forget your signature on such a form ,which your DP will not be able to detect, and your account will get debited. To get rid of these worries you should check that delivery instruction from book that you get from your DP must be serial-numbered with numbers unique to your account and recorded in the DP’s system.

TRADING AT THE STOCK EXCHANGE

To purchase or sell securitiesn on a stock exchange the following procedure has to be followed:

#A non-member is not allowed to transact business at the stock exchange,it can only be done through a member of the stock exchange.

#After the client selects a broker , he has to give an order to purchase/sell his particular security.

The order may be placed in any of below mentioned forms:

1.Fixed price order

The client specifies the price at which the broker is to execute the order .Eg. Buy 100 reliance at240.

2.Lmit order

Client specifies the upper and lower limit of the price.eg. buy 100 relience under 240 or sell at more than 240.

3.At best or Market Price

Order must be execute at the best possible price prevailing in the market.Eg. . Buy 100 reliance at the best .

4.Immediate or cancel order

The instruction of the client are required to be executed are required tobe executed immediately .

5.Open order

Client does not specify any time limit within which the order must be executed.

6.Stop loss order

Such an order is placed to safeguard against the heavy fluctuation in the prices of securities.

7.Discretionary order

Where the broker is given liberty to buy or sell a particular security at his discretion.

# After receiving the order the broker will contact other broker/member of the stock exchange.

# Contract note will be prepared after the days business is over . The contract note mainly include the :-

-Number and price of securities purchased or sold .

-Names of the parties.

-Brokerage charged .

-Total amount to be paid by/ to the client

The contract note is signed by the broker and is sent to the client.

The last step of trading procedure is settlement .Its mode depends upon the nature of the contract.

-Ready Delivery Contract- such contract are setteled on the same day or within the time fixed by the stock exchange.

-forward Delivery Contract- forward delivery transactions are setteled on the day fixed by the stock exchange authorities.

TRADING

Trading is dematerialized securities is quite similar to trading in physical securities .The major difference is that at the time ofsettelment ,instead of delivery receipt of securities in the physical form,it is done through account transfer.

An investor cannot trade in dematerialized securities through his DP.Trading at the stock exchanges can be done only through a registered trading member of the stock exchange irrespective of whether the security are held in physical or dematerialized form.DPs roll will only be to facilitate settlement of trade in the dematerialized form,by transferring securities from and to the account of the investor, for selling and buying respectively.

Trading in dematerialized securities is presently available at NSE,BSE,CSE,DSE,BSE,LSE,MSE,ISE,OTCEI & UPSE. These exchanges have a segment exclusive for trading in dematerialized securities and a segment where trade could be setteled either in physical or in dematerialized form as per the choice of the delivering client. In unified (erstwhile-physical) segment securities can be delivered either in physical or in dematerialized form as per the choice of the delivering of the delivering party.

However , securities that have to be mandatorily setteled in demat form (both by institutional investors & all category of investor)cannot be setteled in physical form. Also for securities that have be mandatorily setteled in demat form by all categories of investors the concept of market lot is eliminated ie. The tradable lot is one share from the date they become compulsory.

Since January 4,1999,all category of investors can deliver only in dematerialized from with respect to a select list of securities .for these scrips,from the date they become compulsory ,the concept of market lot is eliminated ie the tradable lot for these scrips is one share.This will be applicable only at those exchanges that have joined the depository.

Also,from January 15,1998, select category of investors can deliver only

However ,at DSE dematerialized securities can be presently traded only in the exclusive demat segment. At LSE,dematerialized securities can be delivered only in the unified segment.

Any investor who buys securities from any of the stock exchanges where dematerialized securities are available , may receive his delivery in the dematerialized form as dematerialized shares can be delivered in the physical segment at the option of the seller.

Therefore those investors who buy securities from these exchanges should necessarily open a depository account to take delivery of these shares.

SQUARING OFF

It is possible to square off trades in dematerialized securities. In the exclusive demat segment , the trades can be squared off within the same day as this segment follows a rolling settlement cycle.in the physical segment the trades can be squared off within the trading period specified for the stock exchange .this is presently five working days , between Wednesday to Tuesday at NSE, Monday to Friday at BSE and Thursday to Wednesday at CSE. At CSE for some of the shares the trading period is 14 days.

If an investor squares off his position within the trading period,he does not need to open a depository account .depository account is required for taking delivery or giving delivery of dematerialized securities in case of buy or sell respectively .in caseb the investor squares off his trade ,and hence , does not have to take or give delivery of dematerialized securities, the depository account5 is not used.

As in the physical segment , an investor can go long or short in the demat segment also.

HOW TO ACCESS A SCRIP

Trading at CSE:

Trading in dematerialized securities is quite similar to trading in physical securities and is done through the same “C-Star” terminals of trading members.

Trading at DSE:

Trading in dematerialized securities is quite similar to trading in physical securities and is done through the same “DOTS” terminals of trading members.Presently not all securities are available for trading at DSE .only a selected list of dematerialized scrips can be presently traded at DSE only in the exclusive demat segment.

Trading at BSE:

Trading in dematerialized securities is quite similar to trading in physical securities and is done through the same “BEST” terminals of trading members.

BE & BO are segments available for trading exclusively in dematerialized securities.

Trading at LSE:

Trading in dematerialized securities is quite similar to trading in physical securities and is done through the same “VECTOR” terminals of trading members.

Trading at OTCEI:

Trading in dematerialized securities is quite similar to trading in physical securities and is done through the same “OASIS” terminals of trading members.

At NSE, the AE and BE segments can be accessed by selecting the scrip you want to trade in and typing AE or Be in place of Eq.

Trading at NSE:

Trading in dematerialized securities is quite similar to trading in physical securities and is done through the same “NEAT” terminals of trading members.

Exclusive Demat Segments:

OnNse, three separate segments;viz AE,BE&BT segments are available for trading only in dematerialized securities. The difference between the segments being that , in BE segment the concept of market lot is eliminated ie. The minimum tradable quantity is one share. However, securities that have to be mandatorily setted in demat form by all class of investors cannot be traded in the AE segment.

Trades in AE& BE segments follow rolling settlement of T+5 working days cycle and are cleared & settled through NSCCL, the clearing corporation (CC) of NSE .Trades settled in the AE segment on Wednesday follow rolling settlement cycle of T+3 working days. Trades in BT segment are not settled through NSCCL< but are settled bilaterally by the trading members.

SETTLEMENT

The settlement of trades in the stock exchanges is undertaken by the clearing corporation (CC)clearing house (CH) of the corresponding stock exchanges. While the settlement of dematerialized securities is effected through depository, the funds settlement is effected through the clearing banks. The physical securities are settled by the clearing members directly with the CC/CH.

Exclusive demat segment follows rolling settlement (T+5) cycle and unified segment follows account period settlement cycle. In case of rolling settlement cycle,the account period is reduced to one day.

In case of settlement of trades done in exclusive demat segments, the pay-in and pay-out of funds and securities are effected on the same day afternoon and evening (same day) thus reducing the blockage of funds and limiting exposure to the clearing corporation.

Settlement of funds is effected through the clearing banks and depository plays no rule in this.

Settlement of securities is effected through NSDL depository system.

Clearing and settlement of the regular market trades is effected through the clearing member of the clearing houses of respective stock exchanges. All trading members of the stock exchanges are clearing members of clearing houses. In addition, for settlement of institutional trades , custodians are also allowed to act as clearing members.

If there is any short delivery at the time of pay-in of securities , these short positions are auctioned in the demat segment as done in the Unified (erstwhile-physical) segment.

Rolling settlement(T+5)

In this case, the trading period(T) is one day. For the trading period comprising one day, settlement of trades on the basis of netted obligation is on the 5^th working day from the trade ie on T+5 basis. At NSE ,for trades executed on Wednesday in the AE segment ,settlement on the basis of net obligation is on the 3^rd working ie on T+3 basis.

The deadline time for pay-in & pay-out of securities to the clearing corporation/clearing house is effected till 4:00 p.m. for NSE and 1:30 p.m. for BSE,CSE &DSE on settlement day varies from exchange to exchange. Pay-in and pay-out of funds to the clearing bank is also on the same day-settlement day.

As in the physical segment,cumulative obligation statement for daily trades is downloaded by clearing corporation/clearing house at the end of the day. The final/net obligation statement is downloaded by clearing corporation/clearing house on the 2^nd working day from the trade day.In case of CSE, the final/net obligation statement is downloaded by clearing corporation/clearing house on the next working day from trade day.

Short,deliveries,if any is auctioned on the 6^th working day from the trade ie one day after the settlement day. In case of NSE ,auction trade is on the 7^th working day from the trade day. The time for acution trade is

announced by the exchanges and may vary from one exchange to another. Settlement of the auction trades is on the 2^nd working day from the auction trade day. The procedure for settlement of auction trades is similar to settlement of market trades.

For trades executed on Wednesday (T day):

Final/Net obligation statement download-Friday (T+2^nd working day)

QESTIONNAIRE

What is depository?

A depository is a provider for holding and transacting securities and electronic form. a depository function some what similar to a commercial bank.

Who is a depository participant?

A depository participant (DP) is a agent of the depository and provide depository service to investors.

Who is a benificial owner (BO) ?

Beneficial owner is a person in whose name a demat account is opened with CDSL for the purpose of holding securities in the electronic form and whose is recorded with CDSL

What is dematlization?

Dematlization is a process of converting physical certificates into electronic form

What is transposition?

Change in the the order of names in which certificate are issued is termd as transposition.

what is a demat account?

Demat refers to a dematerialised account.Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, 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

tell me about dmate account

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. Lets say

what is an demat accounthow to buy and sell a share?

. In other words, a Demat account holds the electronic listing of your shares....Demat account is an account wherein you can hold shares of various companies in the dematerialised electronic form.You can open a demat account with a share brokerage or a bank. You should necessarily have a PAN card for opening such a account. You can operate your account by giving the filled in delivery instruction slips provided

what is meant by d mat account? is it different from saving account?

in the investment market....To start dealing in securities in electronic form, one needs to open a demat account with a DP of his choice. An investor already having shares in physical form should ensure that he gets.You can open a demat account with a share brokerage or a bank. You should necessarily have a PAN card for opening such a account. You can operate your account by giving the filled in delivery instruction

what is index bond and what is dmat acc. and how to open it

. It will be entered in your demat account. It is easy to buy or sell shares through demat account. More the 95 of the transactions are being done through demat account. You may open it in nationalised bank, private banks, private financial institutions, etc. In all cases, the account will be kept at NSDL or CDSL safely....Demat refers to a dematerialised account.Just as you have to open an account with a bank...

What is NSC/KVP in demat form and what are the Salient features of this facility?

in their existing demat accounts in NSDL or NSDL will, through its Service Provider SP arrange to open a limited purpose demat account and credit the balances in that account. However, this limited purpose demat is incorrect, a limited purpose demat account will be opened and credit will be given in that account.6. SP will send Transaction Statements to the investors/clients directly at the address mentioned

What is Demat account ?

The demat account can be defined as-Demat refers to a dematerialised account.Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, you need to open, to open your demat account.Lets say your portfolio has 100 of Satyam, 200 of IBM and 120 of TCS shares. All these will show in your demat account. So you dont have to possess any physical certificates

what is meant by d mat account?is it different from saving account?

, 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. A savings account is used for personal savings with any bank for deposits and withdrawals as per

what is demat account and its benefit?

.Procedure1.Fill demat request form DRF obtained from a depository participant or DP with whom your depository account is opened.2.Deface the share certificates you want to dematerialise by writing across/split/consolidation/merg er etc.- Holding investments in equity and debt instruments in a single account.Required DocumentsThe extent of documentation required to open a demat account may vary according to your relationship

What is Deemat Account?

certificate in your hand previously this was follwed instead it will be kept in electronic form. You are still the owner of the shares....Demat refers to a dematerialised account.Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, 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

I want to open a share trading account can anyone tell me which are the good share trading account providers ?

, so there is single place of accountability...visit ICICI direct and open an saving account first then demat account with a nominal fees of Rs 750 a year,they are the best rt now...From my experience Fund investments. Usually one receives the PAN card within 15-21 days of application. See the details for PAN Applications, here https://tin.tin.nsdl.com/pan/i ndex.html2. Open a trading account

Please suggest bank to open Saving Account with criteria :High Interest Rate, Demat Trading capability with low rates and easy operability,Low Service Charge

-SBIits very good...For saving Account go for SBI/HDFC/HSBC, For Demat go for RELIANCEMoney....SBI...your open saving account in P.N.B bank...Well,If you want really good facilities including all these things to private sector...AXIS Bank Best...saving account you may open with either hdfc or icici,but demat and trading account can be opened with reliance money....yar i think sbi is the best...HDFC Bank...kotak Mahindra

What is Deemat Account ? How to start it and how to operate it ? Please tell me in detail ?

to the depository lapsed on January 2007.Procedure1.Fill demat request form DRF obtained from a depository participant or DP with whom your depository account is opened.2.Deface the share certificates you wantJust as you have to open an account with a bank if you want to save your money, make cheque payments etc, you need to open a demat account if you want to buy or sell stocks. So it is just like a bank account

my doubt is if i have a demat account then can i open two trading accounts.which one is best trading account.

Yes you can,

is it legal to open more than one Demat account for share trading in different broking houses and in different cities?

yet.. it is legal......Yes it is very legal as you are opening the account in different trading houses and not many in one of the houses which is illegal....No; its Legal to have more than one Demat account but with different DPs. Demat account is very similar to your personal bank account in Banks; Personal Bank account act as bank for money while Demat act as a bank for equities. One can open demat

What are the benefits of opening a CDSL demat account?

The benefits of opening a CDSL demat account are given below-A demat account has become a necessity for all categories of investors for the following :a SEBI has made it compulsory for trades in all-http://www.cdsli ndia.com/faq/accopen.htm...The benefits of opening a CDSL demat account are given below-A demat account has become a necessity for all categories of investors for the following :a SEBI has made

What is the need of demat account in share. ho does it really working.

, if you buy shares, no physical certificates are issued nowadays, it will reflect in your DMAT account. Same process is for selling. Pan card is mandatory for opening of DMAT account....demate account/c. It just like ur bank account where u can save ur money....Demat refers to a dematerialised account.Just as you have to open an account with a bank if you want to save your money, make cheque payments etc

what is a different beetween "Demat account" & "online trading account" ?

account is online trading account, and if you do trading through broker it is no more online trading. but both ways you are charged brokrage. you can open demat account but you have to pay even if you dont trade a nominal fee. as you are new to this you can open demat account with ICICibank and buy shares onlineOnline trading has no physical shares it is electronic purchasethru broker it is physical

Is a PAN needed to open a Demat Account? What are the other facilities does he need to enjoy with the Demat Account?

Yah PAN card is necessary for that...Yes pan card is needed to open your account.By demat account you can trade online by purchasing and selling the shares on intraday,short term and long term basis

I want to open a DEMAT Account. Which bank would be the best for it? How much minimum balance does a DEMAT account need to have?

amount....For opening of Demat account you can choose IndiaBulls.Religare,Sharekhan and India Infoline as they are the best service providers.As far as minimum balance is concerned you need to put atleast....There are may private banks and also private sectors who opened Demat Account and give good service. Every company and sector has their different rules and ragulation and charges. Minimum its starts from Rs.500

CONCLUSION

In India , the stock exchanges are still far from providing liquidity and continous market in securities. Therefore, Indian stock exchanges have to make effort for tailoring out a suitable mechanism to ensure price continuity and easy liquidity to scrip on the promise of which investor can enter the market in large numbers.

However SEBI is trying to regulate and develop the market.

It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses

Hence through Dematerialization Stock market are growing rapidely.

Fact & Finding

*India has the second largest share holding population, with around 1.5 crore shareholders.

*The Indian figure looks impressive, but actually it constitutes only1.5% of the total population.

*The country also has a larger number of debenture holders around 5 million.

* Bombay cotton trade associated ltd. Set up in 1875, was the 1^st organized future market.

* Volume of commodities market is 20% more than stock market.

* The day of 22^nd may 2006 is known as ‘BLACK MONDEY’.

*Warren Buffet was the world’s biggest investor.

BIBLIOGRAPHY

www.upse.india.com

www.sebi.gov.com

www.googal.com

www.images.googal.co.in

Magzines-Dalal street

Newspaper-Economics Times

Comments

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Look at this project on Functional report of stock exchange It includes all introduction,aims and objectives and conclusions

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