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Functioning of Stock Market in India

Summer project submitted

In

Partial Fulfilment of the Requirements for the Award of


Post Graduate Diploma in Management
(Recognized by AICTE, Ministry of HRD, Govt. of India)

By

Kumar Bhaskar
PG/09/054

Integrated Academy of Management and Technology

Ghaziabad
May-June, 2010

1
Functioning of Stock Market in India

By
Kumar Bhaskar

Under the guidance of

Prof. Vipin Aggrawal


INMANTEC, Ghaziabad

Integrated Academy of Management and Technology

Ghaziabad
May-June, 2010

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Overview of Indian Capital Market

EVOLUTION:

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago.
The earliest records of security dealings in India are meagre and obscure. The East India
Company was the dominant institution in those days and business in its loan securities used to be
transacted towards the close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in
Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers
recognized by banks and merchants during 1840 and 1850.

The 1850's witnessed a rapid development of commercial enterprise and brokerage business
attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of Europe
was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about
200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began
(for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a
place in a street (now appropriately called as Dalal Street) where they would conveniently
assemble and transact business. In 1887, they formally established in Bombay, the "Native Share
and Stock Brokers' Association" (which is alternatively known as “The Stock Exchange "). In
1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899.
Thus, the Stock Exchange at Bombay was consolidated.

Step by Step---

18th East India Company was the dominant institution and by end of the century,
Century business in its loan securities gained full momentum

1830's Business on corporate stocks and shares in Bank and Cotton presses started in
Bombay. Trading list by the end of 1839 got broader

1840's Recognition from banks and merchants to about half a dozen brokers

1850's Rapid development of commercial enterprise saw brokerage business attracting


more people into the business

1860's The number of brokers increased to 60

1860-61 The American Civil War broke out which caused a stoppage of cotton supply

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from United States of America; marking the beginning of the "Share Mania" in
India

1862-63 The number of brokers increased to about 200 to 250

1865 A disastrous slump began at the end of the American Civil War (as an example,
Bank of Bombay Share which had touched Rs. 2850 could only be sold at Rs. 87)

Pre-Independence Scenario - Establishment of Different Stock Exchanges

1874 With the rapidly developing share trading business, brokers used to gather at a
street (now well known as "Dalal Street") for the purpose of transacting business.

1875 "The Native Share and Stock Brokers' Association" (also known as "The Bombay
Stock Exchange") was established in Bombay

1880's Development of cotton mills industry and set up of many others

1894 Establishment of "The Ahmadabad Share and Stock Brokers' Association"

1880 - Sharp increase in share prices of jute industries in 1870's was followed by a boom
90's in tea stocks and coal

1908 "The Calcutta Stock Exchange Association" was formed

1920 Madras witnessed boom and business at "The Madras Stock Exchange" was
transacted with 100 brokers.

1923 When recession followed, number of brokers came down to 3 and the Exchange
was closed down

1934 Establishment of the Lahore Stock Exchange

1936 Merger of the Lahore Stock Exchange with the Punjab Stock Exchange

1937 Re-organization and set up of the Madras Stock Exchange Limited (Pvt.) Limited
led by improvement in stock market activities in South India with establishment
of new textile mills and plantation companies

1940 Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was
established

1944 Establishment of "The Hyderabad Stock Exchange Limited"

1947 "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and
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Shares Exchange Limited" were established and later on merged into "The Delhi
Stock Exchange Association Limited"

Post Independence Scenario:


The depression witnessed after the Independence led to closure of a lot of exchanges in the
country. Lahore Stock Exchange was closed down after the partition of India, and later on
merged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in
1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state till
1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The
Exchanges that were recognized under the Act were:

1. Bombay
2. Calcutta
3. Madras
4. Ahmadabad
5. Delhi
6. Hyderabad
7. Bangalore

8. Indore
Many more stock exchanges were established during 1980's, namely:

• Cochin Stock Exchange (1980)


• Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)
• Pune Stock Exchange Limited (1982)
• Ludhiana Stock Exchange Association Limited (1983)
• Gauhati Stock Exchange Limited (1984)
• Kanara Stock Exchange Limited (at Mangalore, 1985)
• Magadh Stock Exchange Association (at Patna, 1986)
• Jaipur Stock Exchange Limited (1989)
• Bhubaneswar Stock Exchange Association Limited (1989)
• Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)
• Vadodara Stock Exchange Limited (at Baroda, 1990)
• Coimbatore Stock Exchange

• Meerut Stock Exchange


At present, there are twenty one recognized stock exchanges in India which does not include the
Over the Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India
Limited.

The main two Stock Exchanges are:-

1. BOMBAY STOCK EXCHANGE LIMITED (BSE)

2. NATIONAL STOKE EXCHANGE OF INDIA LTD (NSE)

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BOMBAY STOCK EXCHANGE LIMITED (BSE)

INTRODUCTION:

The Bombay Stock Exchange Limited (BSE) is the oldest stock exchange in Asia and has the
third largest number of listed companies in the world, with 4900 listed as of April 2010. It is

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located at Dalal Street, Mumbai, India. On February 2010, the equity market capitalization of the
companies listed on the BSE was US$ 1.28 trillion, making it the largest stock exchange in South
Asia and the 12th largest in the world.[2]

With over 4900 Indian companies listed & over 7700 scripts on the stock exchange, it has a
significant trading volume. The BSE SENSEX (Sensitive index), also called the "BSE 30", is a
widely used market index in India and Asia. Though many other exchanges exist, BSE and
the National Stock Exchange of India account for most of the trading in shares in India.

BSE is first exchange in India and second in the world to obtain an ISO 9001:2000 certifications.
It is also the first exchange in country and second in world to receive Information Security
Management System Standard BS 7799-2-2002 certification for its BSE online trading system
(BOLT). Presently BSE is ISO 270001:2005 certified, which is a ISO version of BS7799 for
information securities.

LANDMARKS:

• Become first national exchange to launch its website in Guajarati and Hindi and now in
Marathi.

• Purchased Marketplace technologies in 2009 to enhance the in house technology


development capabilities of BSE and allow faster time to time market for new products.

• Launched a reporting platform for corporate bonds christened the ICDM or Indian
Corporate Debt Market.

• Acquired a 15% stake in United stock exchange (USE) to drive the development and
growth of the currency and interest rate derivative market.

• Launched ‘BSE Star MF’- Mutual fund trading platform, which enables exchange
member to use its existing infrastructure for transition in MF schemes.

• BSE now offers AMFI certification for Mutual Fund Advisors through BSE Training
Institute.

• Co-location facilities for Algorithm trading

• BSE also successfully launched the BSE IPO index and PSU website

• Launched “BSE SENSEX MOBILE STREAMER”

Hours of Operations:

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Session Timing

Beginning of the Day Session 8:00 - 9:00

Trading Session 9:00 - 15:30

Position Transfer Session 15:30 - 15:50

Closing Session 15:50 - 16:05

Option Exercise Session 16:05 - 16:35

Margin Session 16:35 - 16:50

Query Session 16:50 - 17:35

End of Day Session 17:30

History:

The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the
1850s, when 4 Gujarati and 1 Parsi stockbroker would gather under banyan trees in front of
Mumbai's Town Hall. The location of these meetings changed many times, as the number of
brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875
became an official organization known as 'The Native Share & Stock Brokers Association'. In
1956, the BSE became the first stock exchange to be recognized by the Indian Government under
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the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE
Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In
2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts.
The development of Sensex options along with equity derivatives followed in 2001 and 2002,
expanding the BSE's trading platform. Historically an open-cry floor trading exchange, the
Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange
only fifty days to make this transition.

Time line:

1830's Business on corporate stocks and shares in Bank and Cotton presses started in Bombay.

1860-1865 Cotton price bubble as a result of the American Civil War

1870 - 90's Sharp increase in share prices of jute industries followed by a boom in tea stocks and
coal

1978-79 Base year of Sensex, defined to be 100.

1986 Sensex first compiled using a market Capitalization-Weighted methodology for 30


component stocks representing well-established companies across key sectors.

30 October 2006 The Sensex on October 30, 2006 crossed the magical figure of 13,000 and
closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to move
from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.

5 December 2006 The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028
points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.

6 July 2007 The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005
points in afternoon trade. It took seven months for the Sensex to move from 14,000 to 15,000
points.

19 September 2007 The Sensex scaled yet another milestone during early morning trade on
September 19, 2007. Within minutes after trading began, the Sensex crossed 16,000, rising by
450 points from the previous close. The 30-share Bombay Stock Exchange's sensitive index took
53 days to reach 16,000 from 15,000. Nifty also touched a new high at 4659, up 113 points.

The Sensex finally ended with a gain of 654 points at 16,323. The NSE Nifty gained 186 points
to close at 4,732.

26 September 2007 The Sensex scaled yet another height during early morning trade on
September 26, 2007. Within minutes after trading began, the Sensex crossed the 17,000-mark.

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Some profit taking towards the end, saw the index slip into red to 16,887 - down 187 points from
the day's high. The Sensex ended with a gain of 22 points at 16,921.

9 October 2007 The BSE Sensex crossed the 18,000-mark on October 9, 2007. It took just 8
days to cross 18,000 points from the 17,000 mark. The index zoomed to a new all-time intra-day
high of 18,327. It finally gained 789 points to close at an all-time high of 18,280. The market set
several new records including the biggest single day gain of 789 points at close, as well as the
largest intra-day gains of 993 points in absolute term backed by frenzied buying after the news of
the UPA and Left meeting on October 22 put an end to the worries of an impending election.

15 October 2007 The Sensex crossed the 19,000-mark backed by revival of funds-based buying
in blue chip stocks in metal, capital goods and refinery sectors. The index gained the last 1,000
points in just four trading days. The index touched a fresh all-time intra-day high of 19,096, and
finally ended with a smart gain of 640 points at 19,059.The Nifty gained 242 points to close at
5,670.

29 October 2007 The Sensex crossed the 20,000 mark on the back of aggressive buying by funds
ahead of the US Federal Reserve meeting. The index took only 10 trading days to gain 1,000
points after the index crossed the 19,000-mark on October 15. The major drivers of today's rally
were index heavyweights Larsen and Toubro, Reliance Industries, ICICI Bank, HDFC Bank and
SBI among others. The 30-share index spurted in the last five minutes of trade to fly-past the
crucial level and scaled a new intra-day peak at 20,024.87 points before ending at its fresh
closing high of 19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record high 5,922.50
points before ending at 5,905.90, showing a hefty gain of 203.60 points.

8 January 2008 The sensex peaks. It crossed the 21,000 mark in intra-day trading after 49
trading sessions. This was backed by high market confidence of increased FII investment and
strong corporate results for the third quarter. However, it later fell back due to profit booking.

13 June 2008 The sensex closed below 15,200 mark, Indian market suffer with major downfall
from January 21, 2008

25 June 2008 The sensex touched an intraday low of 13,731 during the early trades, then pulled
back and ended up at 14,220 amidst a negative sentiment generated on the Reserve Bank of India
hiking CRR by 50 bps. FII outflow continued in this week.

2 July 2008 The sensex hit an intraday low of 12,822.70 on July 2, 2008. This is the lowest that it
has ever been in the past year. Six months ago, on January 10, 2008, the market had hit an all
time high of 21206.70. This is a bad time for the Indian markets, although Reliance and Infosys

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continue to lead the way with mostly positive results. Bloomberg lists them as the top two gainers
for the Sensex, closely followed by ICICI Bank and ITC Ltd.

6 October 2008 The sensex closed at 11801.70 hitting the lowest in the past 2 years.

10 October 2008 The Sensex today closed at 10527,800.51 points down from the previous day
having seen an intraday fall of as large as 1063 points. Thus, this week turned out to be the week
with largest percentage fall in the SenseX

18 May 2009 After the result of 15th Indian general election Sensex gained 2110.79 points from
the previous close of 12173.42, a record one-day gain. In the opening trade itself the Sensex
evinced a 15% gain over the previous close which led to a two-hour suspension in trading. After
trading resumed, the Sensex surged again, leading to a full day suspension of trading.

BSE Indices:

For the premier stock exchange that pioneered the securities transaction business in India, over a
century of experience is a proud achievement. A lot has changed since 1875 when 318 persons by
paying a then princely amount of Re. 1, became members of what today is called Bombay Stock
Exchange Limited (BSE).

Over the decades, the stock market in the country has passed through good and bad periods. The
journey in the 20th century has not been an easy one. Till the decade of eighties, there was no
measure or scale that could precisely measure the various ups and downs in the Indian stock
market. BSE, in 1986, came out with a Stock Index-SENSEX- that subsequently became the
barometer of the Indian stock market.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE
National Index (Base: 1983-84 = 100). It comprised 100 stocks listed at five major stock
exchanges in India - Mumbai, Calcutta, Delhi, Ahmadabad and Madras. The BSE National Index
was renamed BSE-100 Index from October 14, 1996 and since then, it is being calculated taking
into consideration only the prices of stocks listed at BSE. BSE launched the dollar-linked version
of BSE-100 index on May 22, 2006.

With a view to provide a better representation of the increasing number of listed companies,
larger market capitalization and the new industry sectors, BSE launched on 27th May, 1994 two
new index series viz., the 'BSE-200' and the 'DOLLEX-200'. Since then, BSE has come a long
way in attuning itself to the varied needs of investors and market participants. In order to fulfill
the need for still broader, segment-specific and sector-specific indices, BSE has continuously
been increasing the range of its indices. BSE-500 Index and 5 sectoral indices were launched in
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1999. In 2001, BSE launched BSE-PSU Index, DOLLEX-30 and the country's first free-float
based index - the BSE TECk Index. Over the years, BSE shifted all its indices to the free-float
methodology (except BSE-PSU index).

BSE disseminates information on the Price-Earnings Ratio, the Price to Book Value Ratio and
the Dividend Yield Percentage on day-to-day basis of all its major indices.

The values of all BSE indices are updated on real time basis during market hours and displayed
through the BOLT system, BSE website and news wire agencies.

All BSE Indices are reviewed periodically by the BSE Index Committee. This Committee which
comprises eminent independent finance professionals frames the broad policy guidelines for the
development and maintenance of all BSE indices. The BSE Index Cell carries out the day-to-day
maintenance of all indices and conducts research on development of new indices.

BSE 100 Index:


As BSE Sensex has only 30 scrips, a need was felt for a more broad-based index, which could
also reflect the movement of stock prices on a national scale. In 1989, Bombay Stock Exchange
Limited, started compilation and publication of an index series called "BSE National Index". The
BSE National Index is now known as BSE 100 and since April 5, 2004 it is calculated on the
basis of free-float market capitalization methodology.

BSE 200 Index:


BSE 200 Index was constructed and launched on 27th May 1994. The number of companies
listed on the Bombay Stock Exchange registered a phenomenal increase from 992 in the year
1980 to about 3,200 companies by the end of March 1994.

BSE 500 Index:


On August 9, 1999, Bombay Stock Exchange constructed a new index, namely, BSE-500,
consisting of 500 scrips in its basket. BSE-500 index represents nearly 93% of the total market
capitalisation on Bombay Stock Exchange Limited.

BSE Bankex:
Banking sector reforms such as fall in interest rates, and enactment of Securitization Bill have
given a major fillip to Indian banking industry.

BSE PSU Index:


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BSE - Public Sector Undertaking (PSU) Index is a stock index that tracks the performance of the
listed PSU stocks on the Exchange.

BSE TECk Index:


The BSE-TECk is a stock index constituted of companies in the Information Technology, Media
and Telecom sectors.

NATIONAL STOKE EXCHANGE OF INDIA LTD (NSE)

The Organization:

The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges. It recommended promotion of a
National Stock Exchange by financial institutions (FIs) to provide access to investors from all
across the country on an equal footing. Based on the recommendations, NSE was promoted by
leading Financial Institutions at the behest of the Government of India and was incorporated in
November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in
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April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994. The Capital Market (Equities) segment commenced operations in November 1994 and
operations in derivatives segment commenced in June 2000.

The following years witnessed rapid development of Indian capital market with introduction of
internet trading, Exchange traded funds (ETF), stock derivatives and the first volatility index –
IndiaVIX in April 2008, by NSE.

August 2008 saw introduction of Currency derivatives in India with the launch of Currency
Futures in USD INR by NSE. Interest Rate Futures was introduced for the first time in India by
NSE on 31st August 2009, exactly after one year of the launch of Currency Futures.

With this, now both the retail and institutional investors can participate in equities, equity
derivatives, currency and interest rate derivatives, giving them wide range of products to take
care of their evolving needs.

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Group of NSE( Associate/Affiliate Companies):

NCCL NSETECH
NSCCL

DotEx Intl. Ltd.


NSE.IT
IISL

NSE Milestones:

November 1992 Incorporation


April 1993 Recognition as a stock exchange
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May 1993 Formulation of business plan
June 1994 Wholesale Debt Market segment goes live
November 1994 Capital Market (Equities) segment goes live
March 1995 Establishment of Investor Grievance Cell
April 1995 Establishment of NSCCL, the first Clearing Corporation
June 1995 Introduction of centralized insurance cover for all trading members
July 1995 Establishment of Investor Protection Fund
October 1995 Became largest stock exchange in the country
April 1996 Commencement of clearing and settlement by NSCCL
April 1996 Launch of S&P CNX Nifty
June 1996 Establishment of Settlement Guarantee Fund
Setting up of National Securities Depository Limited, first depository in
November 1996
India, co-promoted by NSE
November 1996 Best IT Usage award by Computer Society of India
December 1996 Commencement of trading/settlement in dematerialised securities
December 1996 Dataquest award for Top IT User
December 1996 Launch of CNX Nifty Junior
February 1997 Regional clearing facility goes live
November 1997 Best IT Usage award by Computer Society of India
Promotion of joint venture, India Index Services & Products Limited
May 1998
(IISL)
May 1998 Launch of NSE's Web-site: www.nse.co.in
July 1998 Launch of NSE's Certification Programme in Financial Market
August 1998 CYBER CORPORATE OF THE YEAR 1998 award
February 1999 Launch of Automated Lending and Borrowing Mechanism
April 1999 CHIP Web Award by CHIP magazine
October 1999 Setting up of NSE.IT
January 2000 Launch of NSE Research Initiative
February 2000 Commencement of Internet Trading
June 2000 Commencement of Derivatives Trading (Index Futures)
September 2000 Launch of 'Zero Coupon Yield Curve'
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Launch of Broker Plaza by Dotex International, a joint venture between
November 2000
NSE.IT Ltd. and i-flex Solutions Ltd.
December 2000 Commencement of WAP trading
June 2001 Commencement of trading in Index Options
July 2001 Commencement of trading in Options on Individual Securities
November 2001 Commencement of trading in Futures on Individual Securities
December 2001 Launch of NSE VaR for Government Securities
January 2002 Launch of Exchange Traded Funds (ETFs)
NSE wins the Wharton-Infosys Business Transformation Award in the
May 2002
Organization-wide Transformation category
October 2002 Launch of NSE Government Securities Index
January 2003 Commencement of trading in Retail Debt Market
June 2003 Launch of Interest Rate Futures
August 2003 Launch of Futures & options in CNXIT Index
June 2004 Launch of STP Interoperability
August 2004 Launch of NSE’s electronic interface for listed companies
March 2005 ‘India Innovation Award’ by EMPI Business School, New Delhi
June 2005 Launch of Futures & options in BANK Nifty Index
December 2006 'Derivative Exchange of the Year', by Asia Risk magazine
January 2007 Launch of NSE – CNBC TV 18 media centre
March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com
June 2007 NSE launches derivatives on Nifty Junior & CNX 100
October 2007 NSE launches derivatives on Nifty Midcap 50
January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008
March 2008 Introduction of long term option contracts on S&P CNX Nifty Index
April 2008 Launch of India VIX
April 2008 Launch of Securities Lending & Borrowing Scheme
August 2008 Launch of Currency Derivatives
August 2009 Launch of Interest Rate Futures
November 2009 Launch of Mutual Fund Service System
December 2009 Commencement of settlement of corporate bonds
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February 2010 Launch of Currency Futures on additional currency pairs
March 2010 NSE- CME Group & NSE - SGX product cross listing agreement
April 2010 Financial Derivative Exchange of the Year Award' by Asian Banker

Some facts & figures:

CAPITAL MARKET (EQUITIES) SEGMENT


1 Settlement Guarantee Fund 31-MAR-2009 Rs.4,843.50 crores
2 Investor Protection Fund 30-APR-2010 Rs.307.02 crores
3 Number of securities available for trading 30-APR-2010 1,872
4 Record number of trades 19-MAY-2009 11260392
5 Record daily turnover (quantity) 19-MAY-2009 19225.95 lakhs
6 Record daily turnover (value) 19-MAY-2009 Rs.40151.91 crores
7 Record market capitalisation 07-JAN-2008 Rs.67,45,724 crores
8 Record value of S&P CNX Nifty Index 08-JAN-2008 6357.1
9 Record value of CNX Nifty Junior Index 04-JAN-2008 13209.35

CLEARING & SETTLEMENT


1 Record Pay-in/Pay-out (Rolling Settlement):
Funds Pay-in/Pay-out (N2007200) 23-OCT-2007* Rs.4,567.70 crores
Securities Pay-in/Pay-out (Value) (N2009088) 21-MAY-2009* Rs.9,523.33 crores
Securities Pay-in/Pay-out (Quantity) (N2009088) 21-MAY-2009* 4,385.75 lakhs
*Settlement Date

DERIVATIVES (F&O) SEGMENT


1 Settlement Guarantee Fund 31-MAR-2009 Rs.23,655.86 crores
2 Investor Protection Fund 30-APR-2010 Rs.54.53 crores
3 Record daily turnover (value) 28-JAN-2010 Rs.166,193.03 crores

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4 Record number of trades 07-JAN-2009 1874697

CURRENCY DERIVATIVES SEGMENT


1 Record daily turnover (value) 20-APR-2010 Rs.21,903.34 crores
2 Record number of trades 11-JAN-2010 78935
3 Record number of contracts 20-APR-2010 4884935
4 Investor Protection Fund 30-APR-2010 Rs.0.01 crores

WHOLESALE DEBT SEGMENT


1 Number of securities available for trading 30-APR-2010 4,157
2 Record daily turnover (value) 25-AUG-2003 Rs. 13,911.57 crores

Technology:

Across the globe, developments in information, communication and network technologies have
created paradigm shifts in the securities market operations. Technology has enabled organizations
to build new sources of competitive advantage, bring about innovations in products and services,
and to provide for new business opportunities. Stock exchanges all over the world have realized
the potential of IT and have moved over to electronic trading systems, which are cheaper, have
wider reach and provide a better mechanism for trade and post trade execution.

NSE believes that technology will continue to provide the necessary impetus for the organization
to retain its competitive edge and ensure timeliness and satisfaction in customer service. In
recognition of the fact that technology will continue to redefine the shape of the securities
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industry, NSE stresses on innovation and sustained investment in technology to remain ahead of
competition. NSE's IT set-up is the largest by any company in India. It uses satellite
communication technology to energies participation from around 200 cities spread all over the
country. In the recent past, capacity enhancement measures were taken up in regard to the trading
systems so as to effectively meet the requirements of increased users and associated trading
loads. With up gradation of trading hardware, NSE today can handle up to 15 million trades per
day in Capital Market segment. In order to capitalize on in-house expertise in technology, NSE
set up a separate company, NSE Technology Services Ltd. which is expected to provide a
platform for taking up all IT related assignments of NSE.

NEAT is a state-of-the-art client server based application. At the server end, all trading
information is stored in an in-memory database to achieve minimum response time and
maximum system availability for users. The trading server software runs on a fault tolerant
STRATUS main frame computer while the client software runs under Windows on PCs.

The telecommunications network which was using X.25 protocol and is the backbone of the
automated trading system is being upgraded to use the more popular and modern IP Protocol.
This is a major project involving use of X.25 and IP in parallel and ensuring smooth transition to
IP. Each trading member trades on the NSE with other members through a PC located in the
trading member's office, anywhere in India. The trading members on the various market
segments such as CM / F&O, WDM are linked to the central computer at the NSE through
dedicated leased lines and VSAT terminals. The Exchange uses powerful RISC -based UNIX
servers, procured from HP for the back office processing. The latest software platforms like
ORACLE 10g RDBMS, SQL/ORACLE FORMS Front - Ends, etc. have been used for the
Exchange applications. The Exchange currently manages its data centre operations, system and
database administration, design and development of in-house systems and design and
implementation of telecommunication solutions.

NSE is one of the largest interactive VSAT based stock exchanges in the world. Today it
supports more than 2000 VSATs and 3000 leased lines across the country. The NSE- network is
the largest private wide area network in the country and the first extended C- Band VSAT
network in the world. Currently more than 9000 users are trading on the real time-online NSE
application. There are over 15 large computer systems which include non-stop fault-tolerant
computers and high end UNIX servers, operational under one roof to support the NSE
applications. This coupled with the nationwide VSAT network makes NSE the country’s largest
Information Technology user.

In an ongoing effort to improve NSE's infrastructure, a corporate network has been


implemented, connecting all the offices at Mumbai, Delhi, Calcutta and Chennai. This corporate
network enables speedy inter-office communications and data and voice connectivity between
offices.

In keeping with the current trend, NSE has gone online on the Internet. Apart from having
multiple internet links and our own domain for internal browsing and e-mail purposes, we have
also set up our own Web site. Currently, NSE is displaying its live stock quotes on the web site
(www.nseindia.com) which are updated online.

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NSE today allows members to provide internet trading facility to their clients through the use of
NOW (NSE on web), a shared web infrastructure.

DEPOSITORY OF INDIAN STOCK MARKET

About Depository:

A depository can be compared to a bank. A depository holds securities of investors in


electronic form.

Depositories in India:

1. NATIONAL SECURITIES DEPOSITORY LIMITED

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NATIONAL SECURITIES DEPOSITORY LIMITED [NSDL] is a depository
promoted by National Stock Exchange of India Limited, IDBI, UTI, SBI and other
financial institutions. NSDL commenced operation in November 1996.

2. CENTRAL DEPOSITORY SERVICE [INDIA] LIMITED

CENTRAL DEPOSITORY SERVICE (INDIA) LIMITED [CDSL] is a depository


promoted by The Stock Exchange, Mumbai jointly with SBI, Bank Of India, HDFC Bank
and other financial institutions. CDSL commenced its operations in July 15th 1999.

NSDL: NATIONAL SECURITIES DEPOSITORY LTD.

Although India had a vibrant capital market which is more than a century old, the paper-based
settlement of trades caused substantial problems like bad delivery and delayed transfer of title till
recently. The enactment of Depositories Act in August 1996 paved the way for establishment of
NSDL, the first depository in India. This depository promoted by institutions of national stature
responsible for economic development of the country has since established a national
infrastructure of international standards that handles most of the securities held and settled in
dematerialized form in the Indian capital market.

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Using innovative and flexible technology systems, NSDL works to support the investors and
brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of
Indian marketplaces by developing settlement solutions that increase efficiency, minimize risk
and reduce costs. At NSDL, we play a quiet but central role in developing products and services
that will continue to nurture the growing needs of the financial services industry.

In the depository system, securities are held in depository accounts, which is more or less similar
to holding funds in bank accounts. Transfer of ownership of securities is done through simple
account transfers. This method does away with all the risks and hassles normally associated with
paperwork. Consequently, the cost of transacting in a depository environment is considerably
lower as compared to transacting in certificates.

Promoters & Share holders:


NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest
development bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and
National Stock Exchange of India Limited (NSE) - the largest stock exchange in India. Some of
the prominent banks in the country have taken a stake in NSDL.

Promoters:
• Industrial Development Bank of India Limited (Now, IDBI Bank Limited)
• Unit Trust of India (Now, Administrator of the Specified Undertaking of the Unit Trust of
India)
• National Stock Exchange of India Limited

Other Shareholders:

• State Bank of India


• Oriental Bank of Commerce
• Citibank NA
• Standard Chartered Bank
• HDFC Bank Limited
• The Hongkong and Shanghai Banking Corporation Limited
• Deutsche Bank
• Dena Bank

• Canara Bank
• Union Bank of India

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Milestones

August 2009 Demat Accounts cross one crore


Launch of Central Recordkeeping Agency (for New Pension
August 2008
System)
NSDL and Japan Securities Depository Center sign
May 2008
Information Sharing and Collaboration Pact
NSDL and National Depository Center (Russia) sign
April 2008
Information Sharing and Collaboration Pact
NSDL and Euroclear (Belgium) sign Information Sharing and
February 2008
Collaboration Pact
Value of securities held in dematerialised form at NSDL
September 2007
crosses US$ 1 trillion
September 2007 Launch of SMS alert facility for investors
NSDL and DTCC (US Depository) sign Information Sharing
June 2007
and Collaboration Pact
NSDL and TDCC (Taiwan Depository) sign Information
January 2007
Sharing and Collaboration Pact
November 2006 NSDL completes a decade of depository operations
January 2006 Launch of National Skills Registry by NDML
July 2005 Launch of Tax Information Network - PAN Ledger
January 2005 Launch of online upload of Central Excise challan data
October 2004 Intraday production shifting to Disaster Recovery Site
Incorporation of NSDL Database Management Limited
June 2004
(NDML) - wholly owned subsidiary company of NSDL
June 2004 Launch of Online Tax Accounting System (OLTAS)
June 2004 Launch of PAN card services
January 2004 Launch of Tax Information Network (TIN)
January 2004 Launch of IDeAS
November 2003 Introduction of demat of Warehouse Receipts
Launch of Market Participants and Investors Database
November 2003
(MAPIN)
October 2003 Demat Accounts cross 6 million
April 2003 Introduction of T+2 Rolling Settlement
December 2002 Demat Accounts cross 5 million
November 2002 Launch of STEADY - An STP initiative by NSDL
April 2002 Introduction of T+3 Rolling Settlement
September 2001 NSDL launches SPEED-e 24

Introduction of T+5 Rolling Settlement and Uniform


July 2001
Settlement Cycle
June 2000 98% settlement in demat form
Depository System - Business Partners

NSDL carries out its activities through various functionaries called "Business Partners" who
include Depository Participants (DPs), Issuing companies and their Registrars and Share Transfer
Agents, Clearing corporations/ Clearing Houses of Stock Exchanges. NSDL is electronically
linked to each of these business partners via a satellite link through Very Small Aperture
Terminals (VSATs) or through Leased land lines. The entire integrated system (including the
electronic links and the software at NSDL and each business partner's end) is called
the "NEST" [National Electronic Settlement & Transfer] system.

Depository Participant (DP) :


The investor obtains Depository Services through a DP of NSDL. A DP can be a bank, financial
institution, a custodian, a broker, or any entity eligible as per SEBI (Depositories and
Participants) Regulations, 1996. The SEBI regulations and NSDL bye laws also lay down the
criteria for any of these categories to become a DP.

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 DP in order to avail of depository facilities. Though NSDL
commenced operations with just three DPs, Depository Participant Services are now available in
most of the major cities and towns across the country.

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Issuing Companies/ their Registrar & Transfer Agents :
Securities issued by issuers who have entered into an agreement with NSDL can be
dematerialised in the NSDL depository. As per this agreement, issuer agrees to verify the
certificates submitted for dematerialisation before they are dematerialised and to maintain
electronic connectivity with NSDL. Electronic connectivity facilitates dematerialisation,
rematerialisation, daily reconciliation and corporate actions.

Clearing Corporation / House:


The clearing corporations/houses of stock exchanges also have to be electronically linked to the
depository in order to facilitate the settlement of the trades done on the stock exchanges for
dematerialised shares. At present, all the major clearing corporations/houses of stock exchanges
are electronically connected to NSDL.

The following stock exchanges have linked up with NSDL to facilitate trading and settlement of
dematerialised securities:

• Madras Stock Exchange Ltd. (MSE)


• National Stock Exchange of India Ltd. (NSE)
• Inter-connected Stock Exchange of India Ltd. (ISE)
• OTC Exchange of India (OTCEI)
• The Calcutta Stock Exchange Association Ltd. (CSE)
• The Delhi Stock Exchange Association Ltd. (DSE)
• The Stock Exchange, Mumbai (BSE)
• The Stock Exchange, Ahmedabad (ASE)

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Benefits of Depository System
In the depository system, the ownership and transfer of securities takes place by means of electronic book
entries. At the outset, this system rids the capital market of the dangers related to handling of paper.
NSDL provides numerous direct and indirect benefits like:

• Elimination of bad deliveries In the depository environment, once holdings of an investor are
dematerialized, the question of bad delivery does not arise i.e. they cannot be held "under
objection". In the physical environment, buyer was required to take the risk of transfer and face
uncertainty of the quality of assets purchased. In a depository environment good money certainly
begets good quality of assets.
• Elimination of all risks associated with physical certificates- Dealing in physical securities
have associated security risks of theft of stocks, mutilation of certificates, loss of certificates
during movements through and from the registrars, thus exposing the investor to the cost of
obtaining duplicate certificates etc. This problem does not arise in the depository environment.
• No stamp duty for transfer of any kind of securities in the depository. This waiver extends to
equity shares, debt instruments and units of mutual funds.
• Immediate transfer and registration of securities - In the depository environment, once the
securities are credited to the investors account on pay out, he becomes the legal owner of the
securities. There is no further need to send it to the company's registrar for registration. Having
purchased securities in the physical environment, the investor has to send it to the company's
registrar so that the change of ownership can be registered. This process usually takes around
three to four months and is rarely completed within the statutory framework of two months thus
exposing the investor to opportunity cost of delay in transfer and to risk of loss in transit. To
overcome this, the normally accepted practice is to hold the securities in street names i.e. not to
register the change of ownership. However, if the investors miss a book closure the securities are
not good for delivery and the investor would also stand to lose his corporate entitlements.
• Faster settlement cycle - The settlement cycle follow rolling settlement on T+2 basis i.e. the
settlement of trades will be on the 2nd working day from the trade day. This will enable faster
turnover of stock and more liquidity with the investor.
• Faster disbursement of non cash corporate benefits like rights, bonus, etc. - NSDL provides
for direct credit of non cash corporate entitlements to an investors account, thereby ensuring
faster disbursement and avoiding risk of loss of certificates in transit.
• Reduction in brokerage by many brokers for trading in dematerialized securities Brokers
provide this benefit to investors as dealing in dematerialized securities reduces their back office
cost of handling paper and also eliminates the risk of being the introducing broker.
• Reduction in handling of huge volumes of paper
• Periodic status reports to investors on their holdings and transactions, leading to better controls.
• Elimination of problems related to change of address of investor - In case of change of
address, investors are saved from undergoing the entire change procedure with each company or
registrar. Investors have to only inform their DP with all relevant documents and the required
changes are effected in the database of all the companies, where the investor is a registered holder
of securities.
• Elimination of problems related to transmission of demat shares - In case of dematerialized
holdings, the process of transmission is more convenient as the transmission formalities for all
securities held in a demat account can be completed by submitting documents to the DP whereas,
in case of physical securities the surviving joint holder(s)/legal heirs/nominee has to correspond
independently with each company in which shares are held.
• Elimination of problems related to selling securities on behalf of a minor - A natural guardian
is not required to take court approval for selling demat securities on behalf of a minor.
• Ease in portfolio monitoring since 27 statement of account gives a consolidated position of
investments in all instruments.

Safety
CDSL: Central Depository Services (India) Limited

A Depository facilitates holding of securities in the electronic form and enables securities
transactions to be processed by book entry by a Depository Participant (DP), who as an agent of
the depository, offers depository services to investors. According to SEBI guidelines, financial
institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is
known as beneficial owner (BO) has to open a demat account through any DP for
dematerialization of his holdings and transferring securities.

The balances in the investors account recorded and maintained with CDSL can be obtained
through the DP. The DP is required to provide the investor, at regular intervals, a statement of
account which gives the details of the securities holdings and transactions. The depository system
has effectively eliminated paper-based certificates which were prone to be fake, forged,
counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of
securities.

CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading banks such
as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank,
Union Bank of India and Centurion Bank.

CDSL was set up with the objective of providing convenient, dependable and secure depository
services at affordable cost to all market participants. Some of the important milestones of CDSL
system are:

• CDSL received the certificate of commencement of business from SEBI in February,


1999.
• Honorable Union Finance Minister, Shri Yashwant Sinha flagged off the operations of
CDSL on July 15, 1999.

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• Settlement of trades in the demat mode through BOI Shareholding Limited, the
clearing house of BSE, started in July 1999.

• All leading stock exchanges like the National Stock Exchange, Calcutta Stock
Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmedabad, etc have
established connectivity with CDSL.
• As at the end of Dec 2007, over 5000 issuers have admitted their securities (equities,

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bonds, debentures, and commercial papers), units of mutual funds, certificate of
deposits etc. into the CDSL system.

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CDSL was promoted by BSE in association with Bank of India, Bank of Baroda, State Bank
of India and HDFC Bank. BSE has been involved with this venture right from the inception
and has contributed overwhelmingly to the fruition of the project. The initial capital of the
company is Rs.104.50 crores. The list of shareholders with effect from 5th April, 2010 is as
under.

Sr. Name of shareholders Value of holding % terms to


No. (in Rupees Lacs) total equity

1 Bombay Stock Exchange Limited 4,025.46 38.52


2 Bank of India 1,000.00 9.57
3 Bank of Baroda 1,000.00 9.57
4 State Bank of India 1,000.00 9.57
5 HDFC Bank Limited 1,500.00 14.36
6 Standard Chartered Bank 750.00 7.18
7 Canara Bank 674.46 6.45
8 Union Bank of India 200.00 1.91
9 Bank of Maharashtra 200.00 1.91
10 The Calcutta Stock Exchange Association 100.00 0.96
Limited
11 Others 0.08 --
TOTAL 10,450.00 100.00

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Wide DP Network:

CDSL
Dormant hasAccount
a wideMonitoring:
network ofCDSL
DPs, has
operating
in placefrom over 6000
a mechanism sites, acrossdormant
for monitoring the country, offering
convenience
accounts. for an investor to select a DP based on his location.
On-line DP DPs
Helpdesk:: Services:
and investors can obtain clarifications and guidance from CDSL's prompt and
courteous helpline facility
The DPs are directly connected to CDSL thereby providing on-line and efficient depository service to
investors.

Wide Spectrum of Securities Available for Demat:

The equity shares of almost all A, B1 & B2 group companies are available for dematerialization on
CDSL, consisting of Public (listed & unlisted) Limited and Private Limited companies. These securities
include equities, bonds, units of mutual funds, Govt. securities, Commercial papers, Certificate of
deposits; etc. Thus, an investor can hold almost all his securities in one account with CDSL. A BO can
also hold warehouse receipts pertaining to commodities, in a demat account. However, a separate
account should be opened for holding warehouse receipts.

Competitive Fees Structure:

CDSL has kept its tariffs very competitive to provide affordable depository services to investors.
Internet Access:

A DP, which registers itself with CDSL for Internet access, can in turn provide demat accountt holders
with access to their account on the Internet.

Dependability:

On-line Information to Users: CDSL's system is built on centralized database architecture and tus
enables DPs to provide on-line depository services with the latest status of the investor's account.

Convenient to DPs: The entire database of investors is stored centrally at CDSL. If there is any system-
related issues at DPs end, the investor is not affected, as the entire data is available at CDSL.


Contingency Arrangements:CDSL has made provisions for contingency terminals, which enables a DP
to update transactions, in case of any system related problems at the DP's office.

Meeting User's Requirements: Continuous updation


32 of procedures and processes in tune with evolving
market practices is another hallmark of CDSL's services.
Security:

Computer Systems: All data held at CDSL and is automatically mirrored at the Disaster Recovery
site and is also backed up and stored in fireproof cabinets at the main and disaster recovery site.

Unique BO Account Number:: Every BO in CDSL is allotted a unique account number, which
prevents any erroneous entry or transfer of securities. If the transferor's account number is wrongly
entered, the transaction will not go through the CDSL system, unless corrected.

Data Security: All data and communications between CDSL and its users is encrypted to ensure its
security and integrity.

Claims on DP: If any DP of CDSL goes into liquidation, the creditors of the DP will have no access
to the holdings of the BO.

Insurance Cover: CDSL has an insurance cover in the unlikely event of loss to a BO due to the
negligence of CDSL or its DPs.

Technology:

Software
The software is developed and supported by CMC Ltd., who have also developed the BOLT
system for BSE and Indian Railway Reservation System. The software is a modified version of
the banking software-TC4 developed by a subsidiary of CMC Ltd. (in USA), which is currently
being used by several banks worldwide. The software has been customized to suit the
requirement of CDSL.

Hardware
The server infra structure is procured from Hewlett Packard Company. HP 9000 (64 Bit RISC
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architecture) Enterprise server system Model is powered by mission critical HP UNIX operating
system. Which is proven for Reliability, Scalability and High Availability These systems are
highly scalable and provide main frame class Reliability and Robustness.
This system is connected to one of the most robust and secure storage systems in the world from
EMC, the world leader in products, services, and solutions for information storage and
management. CDSL has invested in an end-to-end fiber architecture storage system, which
combines sixth-generation Fiber Channel 2Gb connectivity, non-disruptive capacity and
performance scalability, multiple 2GHz processors, resulting in faster performance, continuous
data availability and data integrity. The EMC systems also provide the most advanced software
capabilities, including full and incremental replication and anytime/any distance mirroring for
business continuity protection.

Database Architecture
CDSL has gone in for a centralized database system. This centralized architecture provides
distinct advantages to the users. The initial set-up cost for Issuer Companies/their RTAs and
Depository Participants is low. Information on investor's holdings is available to the Depository
Participant and the Issuer or its RTA immediately.

Disaster Recovery Site (DRS)


From the business continuity angle, CDSL has in place, a robust system with multiple back-up
levels including a redundant fail-over cluster and a DRS, which has achieved "disaster-ready
connectivity" status. Consequently, in the event of a disaster at the main site, users connected to
the CDSL connectivity network viz. Depository Participants (DPs), Clearing Corporations and
Registrar & Transfer Agents (RTAs) can electronically connect to the DRS for carrying on day-
to-day operations.

DEPOSITORY PARTICIPENT (DP)

In India, a Depository Participant (DP) is described as an agent of the depository. They are the
intermediaries between the depository and the investors. The relationship between the DPs and
the depository is governed by an agreement made between the two under the Depositories Act. In
a strictly legal sense, a DP is an entity who is registered as such with SEBI under the provisions
of the SEBI Act. As per the provisions of this Act, a DP can offer depository-related services
only after obtaining a certificate of registration from SEBI.

SEBI (D&P) Regulations, 1996 prescribe a minimum net worth of Rs. 50 lakh for stockbrokers,
R&T agents and non-banking finance companies (NBFC), for granting them a certificate of
34
registration to act as DPs. If a stockbroker seeks to act as a DP in more than one depository, he
should comply with the specified net worth criterion separately for each such depository. No
minimum net worth criterion has been prescribed for other categories of DPs; however,
depositories can fix a higher net worth criterion for their DPs.

Basics of Depository participant:

Depository is an institution or a kind of organization which holds securities with it, in which
trading is done among shares, debentures, mutual funds, derivatives, F&O and commodities. The
intermediatories perform its actions in various kinds of securities at Depository on the behalf of
its clients. And this intermediatories are called Depository’s Participants. There are basically two
kinds of depositories in India one is National Securities Depository Limited (NSDL) and Central
Depository Service Limited (CDSL). Every Depository Participant (DP) needs to be registered
under this Depository before starting operation or trade in the market.

Benefits of Depository:

 Bad delivery eliminated


 Immediate transfer of shares
 No stamp duty on such transfers
 Elimination of risks those are normally associated in dealing with Physical certificates -
loss / theft / mutilation due to careless handling / forgery / etc.
 Reduced transaction cost

How Depository works:

• Depository interacts with its clients / investors through its agents, called Depository
Participants normally known as DPs.

• For any investor / client, to avail the services provided by the Depository, has to open
Depository account, known as Demat A/c, with any of the DPs.

Demat Account Opening:

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A demat account is opened on the same lines as that of a Bank Account. Prescribed Account
opening forms are available with the DP, needs to be filled in. Standard Agreements are to be
signed by the Client and the DP, which details the rights and obligations of both parties. Along
with the form the client requires to attach Photographs of Account holder, attested copies of proof
of residence and proof of identity needs to be submitted along with the account opening form.

In case of corporate clients, additional attachments required are - true copy of the resolution for
Demat a/c opening along with signatories to operate the account and true copy of the
Memorandum and Articles of Association is to be attached.

Services Provided by Depository:

 Dematerialization (usually known as demat) is converting physical certificates to


electronic form
 Rematerialization, known as remat, is reverse of demat, i.e. getting physical certificates
from the electronic securities
 Transfer of securities, change of beneficial ownership
 Settlement of trades done on exchange connected to the Depository

Number of Depository in the Country:

1. National Securities Depository Ltd. - NSDL - Having 95 Cr. Demat A/c as on 31-
03-2010 - 300 DPs in India
2. Central Depository Services Ltd. - CDSL - Having 65 laks Demat A/c as on 31-
03-2010 - 500 DPs in India

Some Depository participant working in India:

1. India Infoline Ltd.

2. India bulls

3. ICICI direct.com

4. Share Khan

5. Religar
36
6. Reliance Money

7. Bajaj Capital

8. Kotak Securities Ltd.

9. Infnity.com

10. Angel Broking

A brief Introduction of India Infoline

37
Vision Statement:

To be the most respected company in the financial services space.

India Infoline Group:

The India Infoline group, comprising the holding company, IndiaIinfoline limited and its wholly-
owned subsidiaries, straddle the entire financial services space with offerings ranging from equity
research, equities and derivatives trading, commodities trading, portfolio management services,
mutual funds, life insurance, fixed deposits, GOI bonds and other small savings instruments to
loan products and investment banking.
IndiaInfoline also owns and manages the websites www.indiainfoline.com and
www.5paisa.com. The company has a network of over 2100 business locations (branches and
sub-brokers) spread across more than 450 cities and towns. The group caters to approximately a
million customers.
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India Infoline Group subsidiaries:

• India Infoline Media and Research Services Limited


• India Infoline Commodities Limited
• India Infoline Marketing & Services
• India Infoline Investment Services Limited
• IIFL (Asia) Pte Limited

History:

India Infoline was founded in 1995 by Mr. Nirmal Jain (Chairman and Managing Director) as
an independent business research and information provider. India Infoline gradually evolved into
a one-stop financial services solutions provider. Its strong management team comprises
competent and dedicated professionals

India Infoline is a pan-India financial services organization across 1,361 business locations and a
presence in 428 cities. Its global footprint extends across geographies with offices in New York,
Singapore and Dubai. It is listed on the Bombay Stock Exchange (BSE) and the National Stock
Exchange (NSE).

India Infoline offer a wide range of services and products comprising broking (retail and
institutional equities and commodities), wealth management, credit and finance, insurance, asset
management and investment banking.

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India Infoline is registered with the BSE and the NSE for securities trading, MCX, NCDEX and
DGCX for commodities trading, CDSL and NSDL as depository participants. It is registered as a
Category I merchant banker and are a SEBI registered portfolio manager. It also received the FII
license in IIFL Inc. IIFL Securities Pte Ltd received approval from the Monetary Authority of
Singapore to carry out corporate advisory and dealing in securities operations. Two subsidiaries
– India Infoline Investment Services and Moneyline Credit Limited – are registered with RBI
as non-deposit taking non-banking financial services companies. India infoline Housing
Finance Ltd, the housing finance arm, is registered with the National Housing Bank.

Milestones:

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1. 1995:

Incorporated as an equity research and consulting firm with a client base that included
leading FIIs, banks, consulting firms and corporate.

2. 1999

Restructured the business model to embrace the internet; launched


archives.indiainfoline.com mobilized capital from reputed private equity investors.

3. 2000

Commenced the distribution of personal financial products; launched online equity trading;
entered life insurance distribution as a corporate agent. Acknowledged by Forbes as ‘Best of
the Web’ and ‘...must read for investors’.

4. 2004

Acquired commodities broking license; launched Portfolio Management Service.

5. 2005

Listed on the Indian stock markets.

6. 2006

Acquired membership of DGCX; launched investment banking services.

7. 2007

Launched a proprietary trading platform; inducted an institutional equities team; formed a


Singapore subsidiary; raised over USD 300 mn in the group; launched consumer finance
business under the ‘Moneyline’ brand.

8. 2008

Launched wealth management services under the ‘IIFL Wealth’ brand; set up India Infoline
Private Equity fund; received the Insurance broking license from IRDA; received the venture
capital license; received in principle approval to sponsor a mutual fund; received ‘Best
broker- India’ award from FinanceAsia; ‘Most Improved Brokerage- India’ award from Asia
money.
41
9. 2009

Received registration for a housing finance company from the National Housing Bank;
received ‘Fastest growing Equity Broking House - Large firms’ in India by Dun &
Bradstreet.

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Structure:

India Infoline Media and Research Services Limited.

The content services represent a strong support that drives the broking, commodities, mutual
fund and portfolio management services businesses. Revenue generation is through the sale of
content to financial and media houses, Indian as well as global.

It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the
Web' and '…a must read for investors in Asia'. India Infoline's research is available not just over
the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First
Call and Internet Securities where India Infoline is amongst the most read Indian brokers.

India Infoline Commodities Limited.

India Infoline Commodities Pvt Limited is engaged in the business of commodities broking.
Our experience in securities broking empowered us with the requisite skills and technologies to
allow us offer commodities broking as a contra-cyclical alternative to equities broking. We
enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges,
and recently acquired membership of DGCX. We have a multi-channel delivery model, making
it among the select few to offer online as well as offline trading facilities.

India Infoline Marketing & Services

India Infoline Marketing and Services Limited is the holding company of India Infoline
Insurance Services Limited and India Infoline Insurance Brokers Limited.
43
(a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance
Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI
Prudential Life Insurance Co Limited, which is India's largest private Life Insurance Company.
India Infoline was the first corporate agent to get licensed by IRDA in early 2001.

(b) India Infoline Insurance Brokers Limited is a newly formed subsidiary which will carry out
the business of Insurance broking. We have applied to IRDA for the insurance broking licence
and the clearance for the same is awaited. Post the grant of license, we propose to also
commence the general insurance distribution business.

India Infoline Investment Services Limited

Consolidated shareholdings of all the subsidiary companies engaged in loans and financing
activities under one subsidiary. Recently, Orient Global, a Singapore-based investment
institution invested USD 76.7 million for a 22.5% stake in India Infoline Investment Services.
This will help focused expansion and capital raising in the said subsidiaries for various lending
businesses like loans against securities, SME financing, distribution of retail loan products,
consumer finance business and housing finance business. India Infoline Investment Services
Private Limited consists of the following step-down subsidiaries.

(a) India Infoline Distribution Company Limited (distribution of retail loan products)

(b) Moneyline Credit Limited (consumer finance)

(c) India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Pte Limited

IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in Singapore
to pursue financial sector activities in other Asian markets. Further to obtaining the necessary
regulatory approvals, the company has been initially capitalized at 1 million Singapore dollars.

IIFL Trader Terminal

Trader Terminal is almost a substitute for NSE NEAT terminal and VSAT. In fact, it has many
more powerful features that only a premium trader can appreciate. Target customer segments are

• It is for dedicated day traders, who churn their portfolio on minor movements in the
market, sometimes several times a day. Their rapid and high volume trading requires a
powerful interface for lightening fast order execution.
• High Net worth Individuals with large and active equities portfolio who need to monitor
and action swiftly.

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• Large corporate or trusts who have dedicated staff to monitor, analyze and shuffle their
portfolios

Trader Terminal features

• Trade execution in a fraction of a second!


• Live streaming quotes. Price watch on any number of scrips.
• Intraday charts, updated live, tick-by-tick.
• Live margin, position, marked to market profit & loss report.
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• Set any number of price alerts on any number of scrips.
• Flexibility to customize screen layout and setting.
• Facility to customize any number of portfolios & watchlists.
• Facility to cancel all pending orders at one click.
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• Top Gainers, Top Losers, Most Active, updated live.
• Index information; index chart, index stock information live.
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• Online access to both accounts and DP.
• Live updated Order and Trade Book.
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• Online access to Customer Service.
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• Facility to place orders on the phone in all major cities.
• Facility to place after market orders
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• India Infoline's world - acclaimed news service and research.
• Lots more… Last but not the least, ideas that help you make money!

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IIFL Trader Terminal Interface:

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