Indian securities market

Submitted in partial fulfillment of the requirement for Master of Management Studies (MMS)

Name of the Faculty Guide:

Name of the Company Guide: Mr.Arvind Jain

Name of Student: Abhishek Jain Roll No.:105 B Batch: 2010-12

NCRDS
STERLING INSTITUTE OF MANAGEMENT STUDIES

COLLEGE CERTIFICATE

This is to certify that ___________ (Name) a student of_____(discipline)_______from______(Institute/University) has done/is doing his/her semester project at _________ from ___________to_____________ under my guidance. The project work entitled _____________________ embodies the original work done by__________during his/her above full semester project training period. Date:

Prof.Mayur Malviya Signatory

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CERTIFICATE OF ORIGINALITY
I_____________________________________ Roll No __________________of 2010, a full time bonafide student of first year of Master of Management Studies (MMS) Programme of Sterling Institute of Management Studies, Nerul, Navi Mumbai, affiliated to University of Mumbai. I hereby certify that this project work carried out by me at _________________________________________________ the report submitted in partial fulfillment of the requirements of the programme is an original work of mine under the guidance of the industry mentor ____________________________________________ __________________________________________________________________ _________ and faculty mentor_______________________________________________________and is not based or reproduced from any existing work of any other person or on any earlier work undertaken at any other time or for any other purpose, and has not been submitted anywhere else at any time.

(Faculty Mentor's Signature)

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ACKNOWLEDGEMENT
This is to express my earnest gratitude and extreme joy at being bestowed with an opportunity to get an opportunity to get an interesting and informative project. It is impossible to thank all the people who have helped me in completion of project, but I would avail this opportunity to express my profound gratitude and indebtness to the following people. I am extremely grateful to my project guide and co-coordinator PROF.

Mayur Malviya who has given an opportunity to work on such an

interesting project. He proved to be a constant source of inspiration to me and provided constructive comments on how to make this report better. Credit also goes to Mr.Arvind Jain (India Infoline Pvt.Ltd.) whose constant encouragement kept me in good stead. Lastly without fail I would thank all my faculties for providing all explicit and implicit support to me during the course of my project.

Name: ABHISHEK JAIN Roll no: 105

SR. NO. CHAPTER 1

TOPIC EXECUTIVE SUMMARY

PAGE NO.

CHAPTER 2

INDUSTRY OVERVIEW

CHAPTER 3

COMPANY PROFILE

CHAPTER 4

RESEARCH TOPIC

Chapter 5

LITERATURE REVIEW

CHAPTER 6

RESEARCH OBJECTIVES

CHAPTER 7

RESEARCH METHODOLOGY

CHAPTER 8

DATA ANALYSIS AND FINDINGS

CHAPTER 9

CONCLUSION AND RECOMMENDATIONS

CHAPTER 10.

LIMITATIONS OF THE STUDY

BIBLIOGRAPHY/REFERENCES
CHAPTER 11.

LIST OF ABBREVIATIONS
AIFIs AMC AMFI ASC BIFR BIS BLESS BSE CC CH CCIL CDSL CFM CISs CM CM CP CRAs CRISIL All India Financial Institutions Asset Management Company Association of Mutual Funds in India Accounting Standards Committee Board for Industrial and Financial Reconstruction Bank for International Settlement Borrowing and Lending Securities Scheme The Stock Exchange, Mumbai Clearing Corporation Clearing House Clearing Corporation of India Limited Central Depository Services (India) Limited Carry Forward Margin Collective Investment Schemes Clearing Member CapitalMarketSegmentofNSE Custodial Participant Credit Rating Agencies The Credit Rating Information Services of India Limited CSD DCA DEA DIP DPs EPS ETFs F&O FCDs Collateral Security Deposit Department of Company Affairs Department of Economic Affairs Disclosure and Investor Protection Depository Participants Earning Per Share Exchange Traded Funds Futures and Options Fully Convertible Debentures

FDI FDs FII FIIs FIs FPOs GDP GDRs GOI G-Sec IEPF IFSD IPF IPOs ISIN MFs MoF MTM NAV NCDs NCFM NEAT NIBIS NSCCL NSDL NSE OLTL OPMS ORS OTC PAN

Foreign Direct Investment Fixed Deposits Foreign Institutional Investment Foreign Institutional Investors Financial Institutions Further Public Offerings Gross Domestic Product Gross Domestic Savings Government of India Government Securities Investors Education and Protection Fund Interest Free Security Deposit Investor Protection Fund Initial Public Offers International Securities Identification Number Mutual Funds Ministry of Finance Mark-To-Market Net Asset Value Non-convertible Debentures NSEs Certification in Financial Markets National Exchange for Automated Trading NSEs Internet-based Information System National Securities Clearing Corporation of India Limited National Securities Depository Limited National Stock Exchange of India Limited On-line Trade Loading On-line Position Monitoring System Order Routing System Over the Counter Permanent Account Number

PCDs PCM PSUs PV RBI ROCs SAT SBTS SAT SC(R)A SEBI

Partly Convertible Debentures Professional Clearing Member Public Sector Undertakings Present Value Reserve Bank of India Registrar of Companies Securities Appellate Tribunal Screen Based Trading System Securities Appellate Tribunal Securities Contracts (Regulation) Act, 1956 Securities and Exchange Board of India

SLB SSS STA STP T-Bills TM VaR VSAT WAN WDM XB XD XI XR

Securities Lending and Borrowing Securities Settlement System Share Transfer Agent Straight Through Processing Treasury Bills Trading Member Value at Risk Very Small Aperture Terminal Wide Area Network Wholesale Debt Market Segment EX-Bonus EX-Dividend EX-Interest EX-Rights

EXECUTIVE SUMMARY INTRODUCTION:

Indian securities markets have undergone many changes during the last decade. Exponential growth in trading volumes is pushing existing trading systems and processes to capacity and increasing settlement risk. With Indian market moving to a T+2 rolling settlement cycle in line with global markets, SEBI is continuing its efforts to increase the efficiency and transparency in Indian markets. This would result in lowering of trade costs and make Indian markets a more attractive destination for global investors. Indeed it has been SEBI endeavor to make the Indian markets, one of the most competitive and efficient markets of the world.

The move from a 5 day settlement period to a two day period requires firms to streamline trading processes by way of a foolproof, faster, cost effective and universally acceptable mode of communication among market participants. With changes happening in rapid succession, derivatives markets looking to expand, the settlement risk are increasing and this is pushing the need for Straight Through Processing (STP) and making it a pre-requisite for success of smooth functioning of securities market with a settlement period of T + 2 or less The Indian securities market, considered one of the most promising emerging markets, is among the top eight markets of the world. The stock exchange, Mumbai, which was established in 1875 as The native share and stockholders association, has evolved over the years into its present status as the premier Stock exchange in the country. At the present 24 stock exchanges provide facilities for trading securities, securities markets provide a common platform for transfer of the fund from the person who has excess funds to those who need them. Securities market is regulated by the securities & exchange board of India (SEBI).

INDUSTRY REVIEW Securities Market in India: Introduction

The last decade (2000-2010) has been the most eventful period for the Indian securities market during which it took major strides to carve a niche for itself in the global securities markets. The major developments which hastened this incredible journey can broadly be observed under three categories, viz. improved market microstructure, introduction of new products and progressive changes in the regulatory framework. Issues and Developments in the past decade (2000-2010) Improved Market Microstructure: To reduce transaction time and bolster liquidity, various reforms were undertaken during this decade (2000-2010), such as introduction of automated trading system, reduction in the settlement cycle, dematerialization etc. Further, the stock exchanges were allowed to provide a separate trading window for block deals in November 2005 to facilitate execution of large trades without impacting the market. With the advent of new technology, greater sophistication was brought to the Indian securities markets by introducing world class facilities like Direct Market Access (DMA), algorithmic trading, smart order routing system and co-location service. The facility of DMA was introduced for institutional investors in the year 2008 which provided them direct access to the exchange trading system through the brokers infrastructure without manual intervention by the broker. Currently, around 25-30% of FII trades are routed through DMA and it is expected to increase to 40-45% by end-20111. DMA ensured direct control over orders by institutional investors, faster order placement and execution, more arbitrage opportunities, improved liquidity, greater transparency and lower impact cost for large order. Algorithmic trading refers to orders that are automatically placed in the market by software programmes, built on certain mathematical models. Smart Order Routing enables the brokers trading engines to systematically choose the execution destination from out of trading platforms of different stock exchanges based on factors such as price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order. Finally, global exchanges introduced co-location services

to support high frequency trading using Algorithmic trading and DMA. The details of the colocation facility at NSE have been discussed later in the chapter. On the clearing and settlement front, in July 2001, the Indian securities market made a paradigm shift from the century old account period settlement to a T+5 rolling settlement. Keeping abreast with the dynamics of the securities market and to integrate with the world markets, in April 2002, the Indian capital markets joined the league of developed markets in the world by the introduction of the T+3 rolling settlement cycle and further to T+2 in April 2003. Dematerialisation which was introduced in 1998 achieved 100% demat trading at NSE in June 2002.

Securities Market in India:

In the primary markets, SEBI made IPO grading compulsory for companies coming out with the IPOs of equity shares in May 2007. An IPO Grade provides an additional input to investors in arriving at an investment decision based on independent and objective analysis. In addition, SEBI introduced the process of Application Supported by Blocked. Amount (ASBA) which ensured that the application money does not move out of the account of applicant but is only blocked and debited to the extent of allotment. ASBA helped to overcome the earlier refund related concerns upon allotment and enabled investors to earn interest on the blocked amount. Besides these improvements in market microstructure, introduction of a variety of new products provided the much needed dynamism and impetus to the growth of the Indian securities market.

Introduction of New Products

In the last decade, various new products were introduced in different market segments of the securities markets. Among them, the equity derivative products met with tremendous success, making India stand out in the global securities markets arena. India began trading derivatives with underlying such as indices and individual stocks and later extended to other asset classes like interest rate and currency. Currency futures on USDINR were introduced for trading and subsequently the Indian rupee was allowed to trade against other currencies such as euro, pound sterling and the Japanese yen. To enhance retail participation and market liquidity in equity derivative segment, mini derivative contracts on Nifty and Sensex were introduced in 2008 having a minimum contract size of ` 1 lakh. SEBI also allowed trading on option contracts on Nifty and Sensex with tenure of up to five years to provide liquidity at the longer end of the

market. In addition to derivatives products, a host of other products such as mutual funds, index funds, index and gold based ETFs and ETFs on international indices2 were introduced on the Indian stock exchanges during the last decade. Appropriate and timely changes were made to the regulatory framework to facilitate the introduction of these new products and their success in due course.

Regulatory Framework The regulatory framework has been strengthened. The corporation and demutualization of stock exchanges was mandated through amendments in SCRA 1956 in the year 20043. In the same year, amendment to SCRA was also made to provide for clearing and settlement by a clearing corporation. It provided that an exchange with the approval of SEBI could transfer the duties and functions of a clearing house to a recognized clearing corporation. In addition to the introduction of new products, an endeavour was made to strengthen the existing products which had not gained momentum. Notable among them were the corporate bonds and interest rate futures. Simplification of corporate bond issuance norms and introduction of repos in corporate bonds were some of the measures taken to resurrect this market segments.

Indian exchanges are entering into cross border agreements with overseas exchanges for introducing their products on their trading platform. By providing an opportunity to the investors to diversify their portfolios internationally, this could add another dimension to the Indian securities markets. For example: in March 2010, NSE and Chicago Mercantile Exchange (CME) had announced cross-listing arrangements. Under the cross-listing arrangements, the S&P CNX Nifty Index (Nifty 50), the leading Indian benchmark index representing 22 sectors of the Indian economy, has been made available to CME for the creation and listing of U.S. dollar denominated Nifty futures contracts for trading on CME. Keeping in view the increased integration of global markets, the market regulator also allowed Indian stock exchanges to extend their trade timings from 9:55 a.m.-3:30 p.m. to 9:00 a.m.-5:00 p.m. The securities market is endeavouring to make equity finance available for small and medium enterprises. In May 2010, SEBI has permitted setting up of a stock exchange or trading platform for SMEs by stock exchanges having nationwide trading terminals.

Structure and Developments of the Indian Securities Markets during 2010-11 Key strengths of the Indian securities markets
The securities markets in India have made enormous progress in developing sophisticated instruments and modern market mechanisms. The key strengths of the Indian capital market include a fully automated trading system on all stock exchanges, a wide range of products, an integrated platform for trading in both cash and derivatives, and a nationwide network of trading through over 4,6184 corporate brokers. A significant feature of the Indian securities market is the quality of regulation. The market regulator, Securities and Exchange Board of India (SEBI) is an independent and effective regulator. It has put in place sound regulations in respect of intermediaries, trading mechanism, settlement cycles, risk management, derivative trading and takeover of companies. There is a well designed disclosure based regulatory system. Information technology is extensively used in the securities market. The stock exchanges in India have the most advanced and scientific risk management systems. The growing number of market participants, the growth in volume of securities transactions, the reduction in transaction costs, the significant improvements in efficiency, transparency and safety, and the level of compliance with internationalstandards have earned for the Indian securities market a new respect in the world.

Market Segments
The securities market has two interdependent and inseparable segments, the new issues (primary) market and the stock (secondary) market. The primary market provides the channel for creation and sale of new securities, while the secondary market deals in securities previously issued. The securities issued in the primary market are issued by public limited companies or by government undertakings. The resources in this kind of market are mobilized either through the public issue or through private placement route. It is a public issue if anyone can subscribe it, whereas if the issue is made available to a selected group of persons it is termed as private placement. There are two major types of issuers of securities, the corporate entities who issue mainly debt and equity instruments and the government (central as well

as state) who issue debt securities (dated securities and treasury bills). The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risks and returns. Once the new securities are issued in the primary market they are traded in the stock (secondary) market. The secondary market operates through two mediums, namely, the over-the-counter (OTC) market and the exchange-traded market. OTC markets are informal markets where trades are negotiated. Most of the trades in the government securities are in the OTC market. All the spot trades where securities are traded for immediate delivery and payment take place in the OTC market. The other option is to trade using the infrastructure provided by the stock exchanges. The exchanges in India follow a systematic settlement period. All the trades taking place over a trading day (day=T) are settled together after a certain time (T+2 day). The trades executed on exchanges are cleared and settled by a clearing corporation. The clearing corporation acts as a counterparty and guarantees settlement. A variant of the secondary market is the forward market, where securities are traded for future delivery and payment. A variant of the forward market is Futures and Options market. Currently only two exchanges viz., National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange (BSE) provide trading in the equity futures & options in India.

Market Participants In every economic system, some units, individuals or institutions, are surplus units who are called savers, while others are deficit units, called spenders. Households are surplus units and corporate and Government are deficit units. Through the platform of securities markets, the savings units place their surplus funds in financial claims or securities at the disposal of the spending community and in turn get benefits like interest, dividend, capital appreciation, bonus etc. These investors and issuers of financial securities constitute two important elements of the securities markets. The third critical element of markets is the intermediaries who act as conduits between the investors and issuers.

Securities Market in India: An Overview Regulatry bodies, which regulate the functioning of the securities markets, constitute another significant element of securities markets. The process of mobilisation of resources is carried out under the supervision and overview of the regulators. The

regulators develop fair market practices and regulate the conduct of issuers of securities and the intermediaries. They are also in charge of protecting the interests of the investors. The regulator ensures a high service standard from theintermediaries and supply of quality securities and non manipulated demand for them in the market. The four important elements of securities markets are the investors, the issuers, the intermediaries and regulators. Investors An investor is the backbone of the capital market of any economy as he is the one lending his surplus resources for funding the setting up or expansion of companies, in return for financial gain.

Issuers Primary markets An aggregate of ` 10,075,102 million (US $ 223,197 million) were raised by the government and corporate sector during 2009-10 as against `6,588,920 million (US $ 129,321 million) in 200809, an increase of 52.91%. Private placement accounted for 93.07% of the domestic total resource mobilisation by the Corporate Sector. Resource mobilisation through euro issues escalated significantly by 233.48% to `159,670 million (US $ 3,537 million) in 2009-10.

Intermediaries The term market intermediary refers to those who are in the business of managing individual portfolios, executing orders, dealing in or distributing securities and providing information relevant to the trading of securities. The market mediators play an important role in the stock exchanges; they put together the demands of the buyers with the offers of the security sellers. A large variety and number of intermediaries provide intermediation services in the Indian securities markets. The market intermediary has a close relationship with the investor with whose protection the regulator is primarily tasked. As a consequence a large portion of the regulation of a securities industry is directed towards the market intermediary. Regulations address entry criteria, capital and prudential requirements, ongoing supervision and discipline of entrants, and the consequences of default and failure. One of the issue concerning brokers is the need to encourage them to corporatize. Currently, 46.10%5 of the brokers are corporates. Corporatisation

of their business would help them compete with global players in capital markets at home and abroad. Corporatisation brings better standards of governance and better transparency hence increasing the confidence level of customers.

Regulators The absence of conditions of perfect competition in the securities market makes the role of regulator extremely important. The regulator ensures that the market participants behave in a desired manner so that securities markets continue to be a major source of finance for corporate and government and the interest of investors are protected. The responsibility for regulating the securities market is shared by Department of Economic Affairs (DEA), Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI) and SEBI. The orders of SEBI under the securities laws are appealable before a Securities Appellate Tribunal (SAT). Most of the powers under the SCRA are exercisable by DEA while a few others by SEBI. The powers of the DEA under the SCRA are also concurrently exercised by SEBI. The powers in respect of the contracts for sale and purchase of securities, gold related securities, money market securities and securities derived from these securities and ready forward contracts in debt securities are exercised concurrently by RBI. The SEBI Act and the Depositories Act are mostly administered by SEBI. The rules under the securities laws are framed by government and regulations by SEBI. All these rules are administered by SEBI. The powers under the Companies Act relating to issue and transfer of securities and non-payment of dividend are administered by SEBI in case of listed companies and companies proposing to get their securities listed. The SROs ensure compliance with their own rules as well as with the rules relevant for them under the securities laws.

Regulatory Framework At present, the five main Acts governing the securities markets are (a) the SEBI Act, 1992; (b) the Companies Act, 1956, which sets the code of conduct for the corporate sector in relation to issuance, allotment and transfer of securities, and disclosures to be made in public issues; (c) the Securities Contracts (Regulation) Act, 1956, which provides for regulation of transactions in securities through control over stock exchanges (d) the Depositories Act, 1996 which provides for electronic maintenance and transfer of ownership of demat shares and (e) Prevention of Money Laundering Act, 2002.

Legislations SEBI Act, 1992: The SEBI Act, 1992 was enacted to empower SEBI with statutory powers for (a) protecting the interests of investors in securities, (b) promoting the development of the securities market, and (c) regulating the securities market. Its regulatory jurisdiction extends over corporates in the issuance of capital and transfer of securities, in addition to all intermediaries and persons associated with securities market. It can conduct enquiries, audits and inspection of all concerned and adjudicate offences under the Act. It has powers to register and regulate all market intermediaries and also to penalise them in case of violations of the provisions of the Act, Rules and Regulations made thereunder. SEBI has full autonomy and authority to regulate and develop an orderly securities market.

Securities Contracts (Regulation) Act, 1956: It provides for direct and indirect control of virtually all aspects of securities trading and the running of stock exchanges and aims to prevent undesirable transactions in securities. It gives Central Government regulatory jurisdiction over (a) stock exchanges through a process of recognition and continued supervision, (b) contracts in securities, and (c) listing of securities on stock exchanges. As a condition of recognition, a stock exchange complies with conditions prescribed by Central Government. Organised trading activity in securities takes place on a specified recognised stock exchange. The stock exchanges determine their own listing regulations which have to conform to the minimum listing criteria set out in the Rules.

Depositories Act, 1996: The Depositories Act, 1996 provides for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed, accuracy and security by (a) making securities of public limited companies freely transferable subject to certain exceptions; (b) dematerialising the securities in the depository mode; and (c) providing for maintenance of ownership records in a book entry form. In order to streamline the settlement process, the Act envisages transfer of ownership of securities electronically by book entry without making the securities move from person to person. The Act has made the securities of all public limited companies freely transferable, restricting the companys right to use discretion in effecting the transfer of securities, and the transfer deed

and other procedural requirements under the Companies Act have been dispensed with. Companies Act, 1956: It deals with issue, allotment and transfer of securities and various aspects relating to company management. It provides for standard of disclosure in public issues of capital, particularly in the fields of company management and projects, information about other listed companies under the same management, and management perception of risk factors. It also regulates underwriting, the use of premium and discounts on issues, rights and bonus issues, payment of interest and dividends, supply of annual report and other information.

Secondary Market Exchanges in the country offer screen based trading system. There were 9,772 trading members registered with SEBI as at end March 2010. The market capitalization has grown over the period indicating more companies using the trading platform of the stock exchange. The All-India market capitalization was around ` 61,704,205 million (US $ 1,366,952 million) at the end of March 2010. The market capitalization ratio is defined as market capitalisation of stocks divided by GDP. It is used as a measure to denote the importance of equity markets relative to the GDP. It is of economic significance since market is positively correlated with the ability to mobilize capital and diversify risk. The All- India market capitalisation ratio increased to 94.20% in 2009-10 from 55.40% in 2008-09 At end of March 2010, NSE Market Capitalisation ratio fell to 76.28% during 2009-10 while BSE Market Capitalisation ratio was 78.26%.

Cash Market During 2009-10, the trading volumes on the equity segment of Exchanges increased significantly by 43.26% y-o-y to ` 55,184,700 million (US $ 1,222,523 million) from `38,520,970 million (US $ 756,054 million) in 2008-09. The turnover during April 2010 September 2010 in the equity markets was ` 23,547,240 crore US $ 522,807 million.

Government Securities The aggregate trading volumes in central and state government dated securities on SGL was ` 9,018,385 crore in 2009-10 as compared with ` 6,645,488 crore in 2008-09. (Table 1-4)

Derivatives Market The number of instruments available in derivatives market has gone up over the years. To begin with, SEBI had onlyn approved trading in index futures contracts based on Nifty 50 Index and BSE-30 (Sensex) Index. This was followed by approval for trading in options based on these indices and options on individual securities. In 2008, the currency futures on USD-INR were introduced for trading and in year 2010, currency options on USD-INR were allowed for trading. The total exchange traded equity derivatives in Indian stock markets witnessed a turnover of ` 176,638,990 million (US $ 39,21,825 million) during 2009-10 as against ` 110,227,501 million (US $ 3,335,698million) during the precedingfiscal year. Trading in currency futures increased from ` 1,622,724 million (US $ 31,849 million) in 2008-09 to ` 17,826,080 million (US $ 394,907 million) in 2009-10. Institutional Investments During the last decade, foreign institutional investment flows grew multifold and by the year 2009-10, the net investments by FIIs rose to ` 1,42,658 million (US $ 30,253 million) while the net investments by mutual funds rose to ` 1,700,760 million (US $ 37,677 million).

COMPANY REVIEW
The IIFL (India Infoline) group, comprising the holding company, India Infoline Ltd (NSE: INDIAINFO, BSE: 532636) and its subsidiaries, is one of the leading players in the Indian financial services space. IIFL offers advice and execution platform for the entire range of financial services covering products ranging from Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, GoI bonds and other small savings instruments. IIFL recently received an in-principle approval for Securities Trading and Clearing memberships from Singapore Exchange (SGX) paving the way for IIFL to become the first Indian brokerage to get a membership of the SGX. IIFL also received membership of the Colombo Stock Exchange becoming the first foreign broker to enter Sri Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of Indias leading online destinations for personal finance, stock markets, economy and business. IIFL has been awarded the Best Broker, India by FinanceAsia and the Most improved brokerage, India in the AsiaMoney polls. India Infoline was also adjudged as Fastest Growing Equity Broking House - Large firms by Dun & Bradstreet. A forerunner in the field of equity research, IIFLs research is acknowledged by none other than Forbes as Best of the Web and a must read for investors in Asia. Its research is available not just over the Internet but also on international wire services like Bloomberg, Thomson First Call and Internet Securities where it is amongst one of the most read Indian brokers. A network of over 2,500 business locations spread over more than 500 cities and towns across India facilitates the smooth acquisition and servicing of a large customer base. All our offices are connected with the corporate office in Mumbai with cutting edge networking technology. The group caters to a customer base of about a million customers, over a variety of mediums viz. online, over the phone and at our branches.

Strengths
Original research Integrated technology platform One Stop shop Pan - India distribution network India Infoline.com and 5paisa.com have developed into branch .

Weaknesses
Lack of a banking arm to complete the bank-broker-depository chain Insignificant presence in institutional Segment

Opportunities
Changing demographics with higher disposable income and increasingly complex financial instruments will drive demand for investment advisory services Rapid penetration of Internet and computers means that technology enabled financial services will gain market share

Threats
Economic slowdown Volatile movement in indices and events like May 17, 2004 Stock markets falls will have a cascading effect on our mutual fund mobilization Increase/decrease in interest rates can affect our debt/ income fund mobilizations Future changes in personal taxation rules can impact insurance sales Increasing competition from large and particularly foreign players

TRADING DEPARTMENT: India infoline is one of the broker who is acting as wholesalers and as a broker, it is the duty of it to provide service of collecting funds and securities from the retail investorsand send it to clearing house and vice versa. According to SEBI investor has to open trading account for trading in shares. Client can open an account in any depository.
Trading department is divided into three parts: Pre-trading (A/c opening, Deposits, ect.)

Trading (Dealing room, Sauda punching, conformation) Post-trading (Payout process, Bills, Pay-in-process,Contract note) MARKETING DEPARTMENT: The main aim of marketing activities at India infoline is that the customer should get enough guidance to join the company and how he can get the best service than any other stockbroker. Marketing Mix: Products: Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, GoI bonds and other small savings instruments. Price: it dependson the type of product like in equity INDIA INFOLINE is one broking firm which charges one of the cheapest brokerage charge in the industry. Promotion: INDIA INFOLINE LTD uses all form of promotional activities like print, media, door to door promotional activities.

RESEARCH TOPIC: SCREEN BASED TRADING SYSTEM (SBTS). Introduction:

Technology has been the backbone of the Exchange. Providing the services to the investor community and the market participants using technology at the cheapest possible cost has been its main thrust. NSE chose to harness technology in creating a new market design. It believes that technology provides 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 industry, NSE stresses on innovation and sustained investment in technology to remain ahead of competition. NSE is the first exchange in the world to use satellite communication technology for trading.. Its trading system, called National Exchange for Automated Trading (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.

Technology has been used to carry the trading platform from the trading hall of stock exchanges to the premises of brokers. NSE carried the trading platform further to the PCs at the residence of investors through the Internet. This made a huge difference in terms of equal access to investors in a geographically vast country like India. NSE has a main computer which is connected through Very Small Aperture Terminal (VSAT) installed at NSE office. The main computer runs on a fault tolerant STRATUS mainframe computer at the Exchange. Brokers have terminals installed at their premises which are connected through VSATs/leased lines/modems.

Advantages of the Screen-Based Trading System (SBTS) It electronically matches orders on a strict price/time priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets. It enables market participants, irrespective of their geographical locations, to trade with one another simultaneously, improving the depth and liquidity of the market. It provides full anonymity by accepting orders, big or small, from members without revealing their identity, thus providing equal access to everybody. It also provides a perfect audit trail, which helps to resolve disputes by logging in the trade execution process in entirety.

Trading Network An investor informs a broker to place an order on his behalf. The broker enters the order through his personal computer, which runs under Windows NT and sends signal to the Satellite via VSAT/leased line/modem. The signal is directed to a mainframe computer at NSE via VSAT at

NSE's office. A message relating to the order activity is broadcast to the respective member. The order confirmation message is immediately displayed on the PC of the broker. This order matches with the existing passive order(s), otherwise it waits for the active orders to enter the system. On order matching, a message is broadcast to the respective member. The trading system operates on a strict price time priority. All orders received on the system are sorted with the best priced order getting the first priority for matching i.e., the best buy orders match with the best sell order. Similar priced orders are sorted on time priority basis, i.e. the one that came in early gets priority over the later one. Orders are matched automatically by the computer keeping the system transparent, objective and fair. Where an order does not find a match, it remains in the system and is displayed to the whole market, till a fresh order comes in or the earlier order is cancelled or modified. The trading system provides tremendous flexibility to the users in terms of kinds of orders that can be placed on the system. Several time-related (immediate or cancel), price-related (buy/sell limit and stop loss orders) or volume related (disclosed quantity) conditions can be easily built into an order. The trading system also provides complete market information on-line. The market screen at any point of time provides complete information on total order depth in a security, the five best buys and sells available in the market, the quantity traded during the day in that security, the high and the low, the last traded price etc. Investors can also know the fate of the orders almost as soon as they are placed with the trading members. Thus, the National Exchange for Automated Trading (NEAT) system provides an Open Electronic Consolidated Limit Order Book (OECLOB). Limit orders are orders to buy or sell shares at a stated quantity and price. If the price-quantity conditions do not match, the limit order will not be executed. The term limit order book refers to the fact that only limit orders are stored in the book and all market orders are crossed against the limit orders sitting in the book. Since the order book is visible to all market participants, it is termed as an Open Book.

NEAT System NSE is the first exchange in the world to use satellite communication technology for trading. Its trading system, called National Exchange for Automated Trading (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. It has uptime record of 99.7%. For all trades entered into NEAT system, there is uniform

response time of less than one second. The NEAT system supports an order driven market, wherein orders match on the basis of time and price priority. All quantity fields are in units and prices are quoted in Indian Rupees. The regular lot size and tick size for various securities traded is notified by the Exchange from time to time.

Market Phases:

The trading system is normally made available for trading on all days except Saturdays, Sundays and other holidays. Holidays are declared by the Exchange from time to time. A trading day typically consists of a number of discrete stages as below: (i) Opening: The trading memb er can carry out the following activities after login to the NEAT system and before the market opens for trading: (a) Set up Market Watch (the securities which the user would like to view on the screen) (b) View Inquiry screens At the point of time when the market is opening for trading, the trading member cannot login to the system. A message Market status is changing. Cannot logon for sometime is displayed. If the member is already logged in, he cannot perform trading activities till market is opened. (ii) Pre-open: The pre-open session is for a duration of 15 minutes i.e. from 9:00 am to 9:15am. The pre-open session is comprised of Order collection period and order matching period.The order collection period of 8* minutes shall be provided for order entry, modification and cancellation. (*- System driven random closure between 7th and 8th minute). During this period orders can be entered, modified and cancelled. The information like Indicative equilibrium / opening price of scrip, total buy and sell quantity of the scrip is disseminated on the NEAT Terminal to the members on real time basis. Indicative NIFTY Index value & % change of indicative equilibrium price to previous close price are computed based on the orders in order book and are disseminated during pre-open session. Order matching period starts immediately after completion of order collection period.Orders are matched at a single (equilibrium) price which will be open price. The order matching happens in the following sequence: Eligible limit orders are matched with eligible limit orders

 Residual eligible limit orders are matched with market orders Market orders are matched with market order

During order matching period order modification, order cancellation, trade modification and trade cancellation is not allowed. The trade confirmations are disseminated to respective members on their trading terminals before the start of normal market. After completion of order matching there is a silent period to facilitate the transition from pre-open session to the normal market. All outstanding orders are moved to the normal market retaining the original time stamp. Limit orders are at limit price and market orders are at the discovered equilibrium price. In a situation where no equilibrium price is discovered in the pre-open session, all market orders are moved to normal market at previous days close price or adjusted close price / base price following price time priority. Accordingly, Normal Market / Odd lot Market and Retail Debt Market opens for trading after closure of pre-open session i.e. 9:15 am. Block Trading session is available for the next 35 minutes from the open of Normal Market. The opening price is determined based on the principle of demand supply mechanism. The equilibrium price is the price at which the maximum volume is executable. In case more than one price meets the said criteria, the equilibrium price is the price at which there is minimum unmatched order quantity. In case more than one price has same minimum order unmatched quantity, the equilibrium price is the price closest to the previous days closing price. In case the previous days closing price is the mid-value of pair of prices which are closest to it, then the previous days closing price itself

will be taken as the equilibrium price. In case of corporate action, previous days closing price is adjusted to the closing price or the base price. Both limit and market orders are reckoned for computation of equilibrium price. The equilibrium price determined in pre-open session is considered as open price for the day. In case if only market orders exists both in the buy and sell side, then order is matched at previous days close price or adjusted close price / base price. Previous days close or adjusted close pric e / base price is the opening price. In case if no price is discovered in pre-open session, the price of first trade in the normal market is the open price. (iii) Normal Market Open Phase: The open period indicates the commencement of trading activity. To signify the start of trading, a message is sent to all the trader workstations. The market open time for different markets is notified by the Exchange to all the trading members. Order entry is allowed when all the securities have been opened. During this phase, orders are matched on a continuous basis. Trading in all the instruments is allowed unless they are specifically prohibited by the Exchange. The activities that are allowed at this stage are Inquiry, Order Entry, Order Modification, Order Cancellation (including quick order cancellation), Order Matching and Trade Cancellation. (iv) Market Close: When the market closes, trading in all instruments for that market comes to an end. A message to this effect is sent to all trading members. No further orders are accepted, but the user is permitted to perform activities like inquiries and trade cancellation. (v) Post-Close Market: This closing session is available only in Normal Market Segment. Its timings are from 3.50 PM to 4.00 PM. Only market price orders are allowed. Special Terms, Stop Loss and Disclosed Quantity Orders, Index Orders are not allowed. The trades are considered as Normal Market trades. Securities not traded in the normal market session are not allowed to participate in the Closing Session. (vi) Surcon: Surveillance and Control (SURCON) is that period after market close during which, the users have inquiry access only. After the end of SURCON period, the system processes the data for making the system available for the next trading day. When the system starts processing data, the interactive connection with the NEAT system is lost and the message to that effect is displayed at the trader workstation.

NEAT Screen The trader workstation screen of the trading member is divided into the following windows: (i) Title bar: It displays trading system name i.e. NEAT, the trading member name the user id, user type, the date and the current time. (ii) Ticker Window: The ticker displays information of all trades in the system as and when it takes place. The user has the option of selecting the securities that should appear in the ticker. Securities in ticker can be selected for each market type. On the extreme right hand of the ticker is the on-line index window that displays the current index value of NSE indices namely S&P CNX Nifty, S&P CNX Defty, CNX Nifty Junior, S&P CNX500, CNX Midcap, CNX IT, Bank Nifty, CNX 100 and Nifty Midcap 50, CNX Realty, CNX MNC, CNX FMCG, CNX Energy, CNX Infra, CNX Pharma, CNX PSU Bank, CNX PSE and CNX Service and India VIX. The user can scroll within these indices and view the index values respectively. Index point change with reference to the previous close is displayed along with the current index value. The difference between the previous close index value and the current index value becomes zero

when the Nifty closing index is computed for the day. The ticker window displays securities capital market segments. The ticker selection facility is confined to the securities of capital market segment only. The first ticker window, by default, displays all the derivatives contracts traded in the Futures and Options segment. (iii) Tool Bar: The toolbar has functional buttons which can be used with the mouse for quick access to various functions such as Buy Order Entry, Sell Order Entry, Market By Price (MBP), Previous Trades (PT), Outstanding Order (OO), Activity Log (AL), Order Status (OS), Market Watch (MW), Snap Quote (SQ), Market Movement (MM), Market Inquiry (MI), Auction Inquiry (AI), Order Modification (OM), Order Cancellation (OCXL), Security List, Net Position, Online Backup, Supplementary Menu, Index Inquiry, Index Broadcast and Help. All these functions are also accessible through the keyboard. (iv) Market Watch Window: The Market Watch window is the main area of focus for a trading member. This screen allows continuous monitoring of the securities that are of specific interest to the user. It displays trading informatio n for the selected securities. (v) Inquiry Window: This screen enables the user to view information such as Market by Order (MBO), Market By Price (MBP), Previous Trades (PT), Outstanding Orders (OO), Activity Log (AL), Order Status (OS), Market Movement (MM), Market Inquiry (MI), Net Position, Online Backup, Index Inquiry, Indices Broadcast, Most Active Securities and so on. Relevant information for the selected security can be viewed. (vi) Snap Quote: The snap quote feature allows a trading member to get instantaneous market information on any desired security. This is normally used for securities that are not already set in the Market Watch window. The information presented is the same as that of the Marker Watch window. (vii) Order/Trade Window: This window enables the user to enter/modify/cancel orders and to send request for trade cancellation and modification. (viii) Message Window: This enables the user to view messages broadcast by the exchange such as corporate actions, any market news, auctions related information etc. and other messages like order confirmation, order modification, order cancellation, orders which have resulted in quantity freezes/price freezes and the exchange action on them, trade confirmation, trade cancellation/modification requests and exchange action on them, name and time when the user logs in/logs off from the system, messages specific to the trading member, etc. These messages

appear as and when the event takes place in a chronological order. Invoking an Inquiry Screen All Inquiry screens have a selection where the security viewed can be selected. The screen shows the details of the security selected for that inquiry. The details for each inquiry screen are discussed below: Market Watch The Market Watch window is the third window from the top of the screen that is always visible to the user. The Market Watch is the focal area for users. The purpose of Market Watch is to setup and view trading details of securities that are of interest to users. For each security in the Market Watch, market information is dynamically updated.

Following are the key features of Market Watch Screen:

(i) Market Information Displayed: The one line market information displayed in the market watch screen is for current best price orders available in the Regular Lot book. For each security the following information is displayed:

(a) the corporate action indicator "Ex/Cum" (b) the total buy order quantity available at best buy price ( c ) best buy price (d) best sell price (e) total sell order quantity available at best sell price (f) the last traded price (g) the last trade price change indicator and (h) the no delivery period indicator "ND" (i) the Percentage change from previous days closing price If the security is suspended, 'SUSPENDED appears in front of the security. If a question mark (?) appears on the extreme right hand corner for a security, it indicates that the information being displayed is not the latest and the system will dynamically update it.

(ii) Information Update: In the Market Watch screen, changes in the best price and quantities are highlighted on a dynamic basis (in all pages of Market Watch). For example, if the best price changes as a result of a new order in the market, the new details are immediately displayed. The changed details are highlighted with a change of colour for a few seconds to signify that a change has occurred. The blue colour indicates that price/quantities have increased, while the red colour indicates that the price/quantities have decreased.

If the last traded price is higher than the previous last traded price then the indicator + appears or if the last traded price is lower than the previous last traded price then the indicator - appears. If there is no change in the last traded price, no indicator is displayed.

The list of securities that are available for trading on Capital Market segment is available in the Security List box. The user has the option to setup securities directly from the Security List without typing a single character on the market watch screen. This is a quick facility to setup securities. If the user tries to setup a security which is already present in the market watch one gets a message that the security is already setup. The user also has the option to add and delete the security set up in the market watch screen as many times as one desires. The user can print the contents of the Market Watch setup by the user. The user can either print the Market Watch on display or the Full Market Watch.

(iii) Market Watch Download: A user has to set up securities after the first download of the software. After setting up the market watch, it is suggested that the user should log out normally. This will help the user to save the freshly set up market watch securities in a file. If at any given time, when the user has freshly set up a few securities and encounters an abnormal exit, the newly set up securities are not saved and the user may have to repeat the process of setting up securities. The Market Watch setup is carried over to subsequent days, thus averting the need to set

up the Market Watch on daily basis. During the logon stage, the relevant Market Watch details are downloaded from the trading system. The message displayed is `Market Watch download is in progress'. The time taken for the Market Watch download depends on the number of securities set up. (iv) Setting up Securities: One of the best features of this software is that the user has the facility to set up 500 securities in the market watch. The user can view up to 30 securities in one page of the market watch screen. (v) Easy Navigation: The details of the current position in the Market Watch defaults in the order entry screen and the inquiry selection screen. It is therefore possible to do quick order entries and inquiries using this feature. The default details can also be overwritten. (vi) Corporate Actions Indication: An indicator for corporate actions for a security is another feature in market watch. The indicators are as follows: 'XD' - ex-dividend 'XB' - ex-bonus 'XI' - ex-interest 'XR' - ex-rights 'CD' - c u m-dividend 'CR' - c u m-rights 'CB' - cum-bonus 'CI' - c u m-interest 'C*' - in case of more than one of CD, CR, CB, CI 'X*' - in case of more than one of XD, XR, XB, XI.

Literature review:
During my stint with INDIA INFOLINE LTD as a intern gave me a lot of knowledge about stock market like, what is nifty? What is BSE? How trading takes place on stock

exchange?. It also gave me brief knowledge that how securities market are important for any economy. How securities market help corporate world, pulic as well as private enter prises raise funds through securities market. Also during my internshiop period i went through the history of our stock market and how it got transformed after NSE came into existence in the year 1993. According to me the most significant and the turning point in indian securities market was the introduction of screen based trading system in the year 1994 by national stock exchange . which resulted in increased retail participation, increased market capitalizationand a complete overhaul of indian securities market. For my research topic SBTS. I reffered various books, interacted with experts and surfed various internet sites.

Research objectives:
Objective behind a broad research on SCREEN BASED TRADING SYSTEM was to get a brief knowledge about the technology which brought a revolution in Indian securities market. Because prior to introduction of SBTS trading in securities use to take place on open outcry system. Under the system, brokers assemble at a central location usually the exchange trading ring, and trade with each other. This was time consuming, inefficient and imposed limits on trading volumes and trading hours. Screen based trading system was readily accepted by market participants and in the very first year of its operation, NSE became the leading stock exchange in the country. Research on SBTS made me realize that how application of technology can change a slow and sluggish market into one of the fastest and widely accepted market in the world. Because of SBTS and many other fundamental changes in Indian securities market NSE is ranked 8th largest stock market in the world today. I researched on this topic to understand the system so that I could apply this knowledge of SBTS to gain competitive advantage in my career.

RESEARCH METHODOLOGY:
Research is a procedure of logical and systematic application of the fundamentals of science to the general and overall questions of a study and scientific technique by which provide precise tools, specific procedures andtechnical, rather than philosophical means for getting and ordering the data prior to their logical analysis and manipulations. Different type of research design is available depending upon the nature of research project, availability of able manpower and circumstances. The study about ANALYSIS OF SCREEN BASED TRADING SYSTEM is exploratory as well as descriptive in nature .Discussion with experts, internet, surfing, and

journals were studied to explore more about the concerned objective and better understanding of the topic.

The data collected for this research (SCREEN BASED TRADING SYSTEM) includes both Primary as well as Secondary data. Primary data: It icludes those data which are collected by interacting with experts of the research fields, practical experience of your research topic like interacting with people and finding it out their perception, knowledge and thinking about the research topic. In this research topic I have collected primary data by regularly interacting with my company guide MR. Arvind Jain and also regular interaction with clients of our branch. Secondary data: It includes those data which are collected by reading journals in magzines, news papers etc. It also includes data collected through regular monitoring of web sites related to research topic, reading books written by experts on research topic.

Data analysis and interpretation: Key performance indicators of securities market (2000-2010) Parameters Compound Annual Growth Rate (2000-01 to 2009-10)
Resource Mobilisation in Primary Markets All-India Market Capitalisation All-India Equity Market Turnover* All-India Equity derivatives turnover 17.15% 23.15% 19.94% 132.19%

Net Investments by Foreign Institutional Investors Returns on Nifty 50

30.53% 13.13%

Interpretation of the above data:

As we could see from the first chart that the resource mobilised in primary market in last decade (2000-01 to 2009-10). Both from corporate securities as well as government securities increased dramatically due to series of changes in rules and regulation , amendments in various act regulating securities market. From the first chart we could see that the total resource mobilised in the year 2000-01 was some were near US $ 50000 MN and it reached US $ 225000 MN. In second chart we could analyze that the equity market turnover and the ratio of market capitalization has increased tremendously due to increased FIIS and Retail participation also disinvestment of many profit making public sector unit has contributed towards this increase. In the year 2001-02 the market cap and equity turnover was US $ 200000 MN which got increased to US $ 1400000 MN. The third chart represent the growth of equity derivative which was introduced by NSE in the year 2000. This segment of equity derivative trading has achieved enormous amount of success in last 10 years. This could be seen from the above data the total turnover which was US $ 861 MN in the year 2000-01 increased upto US $ 4000000 MN . As said by MR. Warren buffet that smart investor invest in derivative segment. The forth chart shows the participation of FIIS and mutual fund units in Indian securities market. Both the FIIS and the Mutual fund has shown tremendous interest in indian markets apart from the year 2008-09 when investment by FIIS went into negative zone of some were near US $ 10000MN. The fifth chart shows the movement of NIFTY (National stock exchange) over the last decade. It shows that NIFTY was some near 1800 points in the year 2000-01 but it has continously moved upward in last 10 years which shows the confidence of investors in Idian securities market. Except in the year 2008-09 when the world economy was in receesion and

it affected the Indian market also which dragged the nifty near 2500 points. But due to strong fundamentals of indain market it again reached to 6000 points in the year 2009-10.

Recommendation & Suggestions:

Though SCREEN BASED TRADING SYSTEM opened the market for retail investors for direct participation but still as per the recent survey of forbes magzines 70 percent of the retail investors in india still trade through intermediaries like brokers instead of using screen based trading system. There may be various reasons for this but the major reason stated in forbes magzines article was lack of knowledge about how to use the screen based trading system.

So my suggestions would be that NSE should start a week or say a 15 day course which teaches the participants about how to use the screen based trading system practically. I suggested practically because a theoritical study of how to use Screen based trading systems is already provided in the course offered by NSE in its NCFM course of capital dealers module but a practical course would prepare a investors more efficiently than a theoritical study.

Conclusion:
Indian securities market is very huge and it has a strong fundamentals which attracts investor from all over the world which we have already studied in this topic with the data of last decade. This growth is a result of strong rules & regulators like RBI, SEBI, MCA( ministry of corporate affairs), Department of economics affairs. Laws like Depository act 1996, SEBI act 1992, Securities contract (regulation) act 1956 are some laws which have transformed the securities market from an underperformer to a starperformer. These rules & regulators have created a sense of responsibility in issuers,intermediaries and investors towards the indian securities market. Also introduction of SCREEN BASED TRADING SYSTEM (SBTS) has played its part in making indian market one of the most attactive and fastest growing market in the world. Due to this system now a days even FIIS ( foreign institutional investors) have DMA( direct market access) to indain securities market which makes it possible for them to regularly monitor their investmnet. So all an all we could say that indian markets have transformed itself very well in last decade and there is still a lot of scope availablle to improve indian securities market which can help it to become the most preffered destination of the investors around the world.

Limitations of the study:

SBTS is a broad and a very complicated software. Over the years NSE has tried its level best to make it users friendly. In my study i have tried to place emphasis on how to use NEAT (national excahnge for automated trading) efficiently. But still apart from trying to learn how to use this software conviniently and how SBTS software can increase the market participation of retail investors. My study and its information are broadly based on the urban data were the availability of broadband is not a big issue . but when we compare it with the unavailaibility of broadband, company services like portfolio management services provided by companies in rural areas, lack of knowledge about how to use SBTS totally changes the scenario which i have presented in my study.

IMPLICATIONS OF THE PROJECT FOR THE COMPANY:

In this project the research topic places an emphasis and light on how SCREEN BASED TRADING SYSTEM brought a revolution in indian securities market. But still many retail investors lack knowledge of how to use SBTS. Many new and old investors are willing to change there brokers on the basis of better services. So the company (INDIA INFOLINE LTD.) can create its own knowledge building training based on screen based trading system which would attract a lot of traditional investors in its client based folds. The company can also use this report as a basis to train the new participants or the employees to increase there basic knowledge about SCREEN BASED TRADING SYSTEM

Scope for the future study:

There is a huge scope for future study given SBTS regularly goes through changes which would make it more user friendly and it is avialable in urban as well as rural through constant innovation. Like when we talk about MARKET WATCH WINDOW which allows a user to view its specific listed security can also be divided into more than one part were one could see future &option seprately, equity trading seprately, gold & silver ETFS seprately.etc. This is just an example there is an enormous scope avialable in SBTS which would make it an interesting topic for study in future.

BIBLIOGRAPHY/REFERENCES:
www.nseindia.com www.sebi.gov.in o THE TIMES OF INDIA ECONOMICS TIMES BUSINESS STANDARDS NCFM CAPITAL MARKET (DEALORS) MODULE FINANCIAL SERVICES IN INDIA. PAGE:403 ELECTRONIC EXCHANGES: THE GLOBAL TRANSFORMATION FROM PITS TO BITS PAGE:231