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PROJECT REPORT ON ONLINE TRADING AT INDIABULLS SECURITIES LIMITED

IN PARTIAL FULFILLMENT OF THE AWARD OF MASTER OF BUSINESS ADMINISTRATION SUBMITTED TO

DECLARATION

ACKNOWLEDGEMENT:

ABSTRACT:
The present project Online Trading Mechanism comprises of seven units. Unit-I Deals with introduction about the project, objectives of the study, need, scope

and importance of the study.

Unit-II In this unit Research design, data sources, limitations, data collection methods are discussed.

UNIT-III In this unit Industry profile i.e. Industry over view.

UNIT-IV

In this unit, information regarding the project topic, different methods of

Theoretical base to the Study.

UNIT-V In this unit, analysis of data is done and presented.

UNIT-VI

The findings and suggestions of the study are presented in this unit.

UNIT- VII In this unit, conclusions of the study is presented.

CONTENTS

CHAPTER NUMBERS CHAPTER 1

CONTENTS INTRODUCTION OBJECTIVES NEED , SCOPE FOR STUDY

PAGE NO. 8 10 11-12 14 16

CHAPTER 2

METHEODOLOGY LIMITATIONS

CHAPTER 3

ORGANIZATION PROFILE

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CHAPTER 4

INTRODUCTION AND BRIEFING ABOUT PROJECT 33 TOPIC

CHAPTER 5 CHAPTER 6 CHAPTER 7

INTERPRETATION FINDINGS AND SUGGESTION CONCULUSION

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CHAPTER 8

BIBLIOGRAPHY

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CHAPTER 1

INTRODUCTION TO THE STUDY

Stock exchange is an organized market place where securities are traded. These securities are issued by the government, semi-government bodies, public sector undertakings and companies for borrowing funds and raising resources. Securities are defined as any monetary claims (promissory notes or I.O.U) and also include shares, debentures, bonds and etc., if these securities are marketable as in the case of the government stock, they are transferable by endorsement and alike movable property. They are tradeable on the stock exchange. So are the case shares of companies. Under the Securities Contract Regulation Act of 1956, securities trading is regulated by the Central Government and such trading can take place only in stock exchanges recognized by the government under this Act. As referred to earlier there are at present 23 such recognized stock exchanges in India. Of these, major stock exchanges, like Bombay Stock Exchange, National Stock Exchange, Inter-Connected Stock Exchange, Culcutta, Delhi, Chennai, Hyderabad and Bangalore etc. are permanently recognized while a few are temporarily recognized. The above act has also laid down that trading in approved contract should be done through registered members of the exchange. As per the rules made under the above act, trading in securities permitted to be traded would be in the normal trading hours (10 A.M to 3.30 P.M) on working days in the

Trading ring, as spssecified for trading purpose. Contracts approved to be traded are the following: Spot delivery deals are for deliveries of shares on the same day or the next day as the payment is made. Hand deliveries deals for delivering shares within a period of 7 to 14 days from the date of contract. Delivery through clearing for delivering shares with in a period of two months from the date of the contract, which is now reduce to 15 days. (Reduced to 2 days in demat trading)Special Delivery deals for delivering of shares for specified longer periods as may be approved by the governing board of the stock exchange. Except in those deals meant for delivery on spot basis, all the rest are to be put through by the registered brokers of a stock exchange. The securities contracts (Regulation) rules of 1957 laid down the condition for such trading, the trading hours, rules of trading, settlement of disputes, etc. as between the members and of the members with reference to their clients.

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OBJECTIVES

The following are the objectives of the study 1. Reduce the eliminate operational inefficiencies inherent in manual system. 2. Increase trading capacities in the stock exchange. 3. Improve market transparency, eliminate unmatched trades and delayed reporting. 4. Provide on-line and off-line monitoring control and surveillance of the market. 5. Smooth market operation using technology while retaining the flexibility of conventional trading practices. 6. Consolidate the trades data and interface with clearing settlement.

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NEED OF THE STUDY

Stock exchange integral part of capital market it is the most perfect type market for securities whether government or semi-government bodies or other public bodies also for shares and debenture issued by join stock enterprises.

Stock exchange provides liquidity to the listed company they give quotation to listed companies and help in trading and raising funds from the market. Stock exchange provides ready marketability and unequaled facilities of ownership of stocks, shares and securities. Stock market in India is more than a century old and has been functioning effectively through the medium of recognized stock exchange the stock market which is an integral part of the capital market has been major impact on the functioning opf the economy. In turn, the agriculture industries growth and performance of corporate sector in particular, reflecting the fundamentals in the economy would be influence the tone of capital and stock markets, and since the capital market is playing major role in Indian Economy from the past several years. There is need to study the capital market in India.

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SCOPE OF THE STUDY The scope of the study is limited to ON-LINE trading mechanism of stock broking firm in particular, Indiabulls, Hi-tech. City branch. IMPORTANCE OF ON-LINE TRADING In the present scenario to compete and survive the regional stock exchange would require sound infrastructure and trading system as per international standards, due to the following reasons. With the introduction of on-line trading liquidity will improve considerably which is very much essential for attracting small companies to the exchange.Before the introduction of the on-line trading, outcry system was prevalent. Here the

member or the broker would stand at specified spot in trading hall. He is required to shut out the name of the company, number of shares he has and the price of shares. Ultimately a deal would be made between the buyer and seller and the transfer of shares take place. With the use of online trading, surveillance became easy as there is very less scope for speculation. The investor is provided with best offer. Also transparency is observed in transactions. .

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CHAPTER-2

RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY
Research design: - Research design is some statement or specification of procedure for collecting and analyzing the information required for the solution of some specific problem. Here, the exploratory research is used to execute the study.

Data source: - The data source utilized to undertake the project is both primary and secondary data. The data collection methods include both primary and secondary collection methods.

Primary data: This method includes the data collected from the personal interaction with authorized members of Indiabulls Securities Limited.

Secondary data: The secondary data collection method includes: The lecturers delivered by the superintendents of respective departments. The brochures and material provided by Indiabulls Securities Limited. The data collected from the magazines of the NSE, BSE & Economic Times, etc.

16 Various books relating to the investments, capital market and other related topics.

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LIMITATIONS OF THE STUDY:

1. The study is confined to online trading procedure only. 2. Problems of listing are not covered due to limited time and to keep the study in manageable limits. 3. The study confined to the past 2-3 years and present system of the trading procedure in the INDIABULLS SECURITIES LIMITED and the study is confined to the coverage of all the related issues in brief. 4. The data is collected from the primary and secondary sources and thus is subject to slight variation than what the study includes in reality.

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CHAPTER 3

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INDUSTRY PROFILE

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INDUSTRY PROFILE
The following diagram gives the structure of Indian financial system:

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FINANCIAL MARKET:

Financial markets are helpful to provide liquidity in the system and for smooth functioning of the system. These markets are the centers that provide facilities for buying and selling of financial claims and services. The financial markets match the demands of investment with the supply of capital from various sources.

According to functional basis financial markets are classified into two types. They are: Money markets (short-term) Capital markets (long-term) According to institutional basis again classified in to two types. They are Organized financial market Non-organized financial market.

The organized market comprises of official market represented by recognized institutions, bank and government (SEBI) registered/controlled activities and intermediaries. The unorganized market is composed of indigenous bankers, moneylenders, individual professional and non-professionals.

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MONEY MARKET:
Money market is a place where we can raise short-term capital.

Again the money market is classified in to Inter bank call money market Bill market and Bank loan market Etc. E.g.; treasury bills, commercial papers, CD's etc.

CAPITAL MARKET:
Capital market is a place where we can raise long-term capital. Again the capital market is classified in to two types and they are Primary market and Secondary market. E.g.: Shares, Debentures, and Loans etc.

PRIMARY MARKET:

Primary market is generally referred to the market of new issues or market for mobilization of resources by the companies and government undertakings, for new projects as also for expansion, modernization, addition, diversification and up gradation. Primary market is also referred to as New Issue Market. Primary market operations include new issues of shares by new and existing companies, further and

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SECONDARY MARKET

The primary market deals with the new issues of securities. Outstanding securities are traded in the secondary market, which is commonly known as stock market or stock exchange. The secondary market is a market where scrips are traded. It is a market place, which provides liquidity to the scrips issued in the primary market. Thus, the growth of secondary market depends on the primary market. More the number of companies entering the primary market, the greater are the volume of trade at the secondary market. Trading activities in the secondary market are done through the recognized stock exchanges which are 23 in number including Over The Counter Exchange of India (OTCE), National Stock Exchange of India and Interconnected Stock Exchange of India. Secondary market operations involve buying and selling of securities on the stock exchange through its members. The companies hitting the primary market are mandatory to list their shares on one or more stock exchanges in India. Listing of scrips provides liquidity and offers an opportunity to the investors to buy or sell the scrips.

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STOCK MARKETS IN INDIA:

Stock exchanges are the perfect type of market for securities whether of government and semi-govt bodies or other public bodies as also for shares and debentures issued by the joint-stock companies. In the stock market, purchases and sales of shares are affected in conditions of free competition. Government securities are traded outside the trading ring in the form of over the counter sales or purchase. The bargains that are struck in the trading ring by the members of the stock exchanges are at the fairest prices determined by the basic laws of supply and demand.

Definition of a stock exchange:

Stock exchange means any body or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. The securities include: Shares of public company. Government securities. Bonds

History of Stock Exchanges:

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The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profitmarking associations of brokers to regulate and protect their interests. Before the control on securities under the constitution in 1950, it was a state subject and the Bombay securities contracts (control) act of 1925 used to regulate trading in securities. Under this act, the Mumbai stock exchange was recognized in 1927 and Ahmedabad in 1937. During the war boom, a number of stock exchanges were organized. Soon after it became a central subject, central legislation was proposed and a committee headed by A.D.Gorwala went into the bill for securities regulation. On the basis of the committees recommendations and public discussion, the securities contract (regulation) act became law in 1956.

Functions of Stock Exchanges:

Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed companies, they help trading and raise funds from the market. Over the hundred and twenty years during which the stock exchanges have existed in this country and through their medium, the central and state government have raised crores of rupees by floating public loans. Municipal corporations, trust and local bodies have obtained from the public their financial requirements, and industry, trade and commerce- the backbone of the countrys economy-have secured capital of crores or rupees through the issue of stocks, shares and debentures for financing their day-to-day activities, organizing new ventures and completing projects of expansion, diversification and modernization. By

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obtaining the listing and trading facilities, public investment is increased and companies were able to raise more funds. The quoted companies with wide public interest have enjoyed some benefits and assets valuation has become easier for tax and other purposes.

The Major Stock Exchanges in India are:

NSE The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to 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 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 NSE's mission is setting the agenda for change in the securities markets in India. The NSE was set-up with the main objectives of:

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Establishing a nation-wide trading facility for equities and debt instruments. Ensuring equal access to investors all over the country through an appropriate communication network.

Providing a fair, efficient and transparent securities market to investors using electronic trading systems.

Enabling shorter settlement cycles and book entry settlements systems, and Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology, have become industry benchmarks and are being emulated by other market participants. NSE is more than a mere market facilitator. It's that force which is guiding the industry towards new horizons and greater opportunities.

BSE The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt.

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of India under the Securities Contracts (Regulation) Act 1956.The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redresses of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education programmers and making available to them necessary informative inputs. A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.

The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange and the Chief Operating Officer and other Heads of Department assist him. The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to constitution of the Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting of three elected directors, three SEBI nominees or public representatives, Executive Director & CEO and Chief Operating Officer has been constituted. The Committee considers judicial & quasi matters in which the Governing Board has powers as an Appellate Authority, matters regarding annulment of transactions, admission, continuance and suspension of member-brokers, declaration of a member-broker as defaulter, norms, procedures and other matters relating to arbitration, fees, deposits, margins and other monies payable by the member-brokers to the Exchange, etc.

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REGULATORY FRAME WORK OF STOCK EXCHANGE

A comprehensive legal framework was provided by the Securities Contract Regulation Act, 1956 and Securities Exchange Board of India 1952. Three tier regulatory structure comprising Ministry of finance The Securities And Exchange Board of India Governing body

Members of the stock exchange:

The securities contract regulation act 1956 has provided uniform regulation for the admission of members in the stock exchanges. The qualifications for becoming a member of a recognized stock exchange are given below:

The minimum age prescribed for the members is 21 years. He should be an Indian citizen. He should be neither a bankrupt nor compound with the creditors. He should not be convicted for fraud or dishonesty. He should not be engaged in any other business connected with a company. He should not be a defaulter of any other stock exchange. The minimum required education is a pass in 12th standard examination.

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SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

The securities and exchange board of India was constituted in 1988 under a resolution of government of India. It was later made statutory body by the SEBI act 1992.according to this act, the SEBI shall constitute of a chairman and four other members appointed by the central government. With the coming into effect of the securities and exchange board of India act, 1992 some of the powers and functions exercised by the central government, in respect of the regulation of stock exchange were transferred to the SEBI.

ABOUT INDIABULLS
Indiabulls is Indias leading Financial Services and Real Estate company having over 640 branches all over India. Indiabulls serves the financial needs of more than 4,50,000 customers with its wide range of financial services and products from securities, derivatives trading, depositary services, research & advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. With around 4000 Relationship Managers, Indiabulls helps its clients to satisfy their customized financial goals. Indiabulls through its group companies has entered Indian Real Estate business in 2005. It is currently evaluating several large-scale projects worth several hundred million dollars. Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay Stock Exchange and Luxembourg Stock Exchange. The market capitalization of Indiabulls is around USD 3,330 million (30th September 2007). Consolidated net worth of the group is around USD 950 million (30th September 2007). Indiabulls and its group companies have attracted more than USD 800 million of equity capital in Foreign Direct

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Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital. Business of the company has grown in leaps and bounds since its inception. Revenue of the company grew at a CAGR of 159% from FY03 to FY07. During the same period, profits of the company grew at a CAGR of 184%. Indiabulls became the first company to bring FDI in Indian Real Estate through a JV with Farallon Capital Management LLC, a respected US based investment firm. Indiabulls has demonstrated deep understanding and commitment to Indian Real Estate market by winning competitive bids for landmark properties in Mumbai and Delhi.

GROWTH STORY Indiabulls has emerged as one of the leading and fastest growing financial company in less than two year, since its initial public offering in September 2004. It has a market capitalization of around 3,330 million (30th September 2007) and consolidated net worth of the group is around USD 950 million.

2000-01: Indiabulls Financial Services Ltd. established Indias one of the first trading platforms with the development of an in house team. 2001-03: Indiabulls expands its service offerings to include Equity, F&O, Wholesale Debt, Mutual fund, IPO distribution and Equity Research.

31 2003-04: Indiabulls ventured into Insurance distribution and commodities trading. Company focused on brand building and franchise model. 2004-05: Indiabulls came out with its initial public offer (IPO) in September 2004. Indiabulls started its consumer finance business. 2005-06:

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Indiabulls has acquired over 115 acres of land in Sonepat for residential home site development. Merrill Lynch and Goldman sac, one of the renowned investment banks in the world have increased their shareholding in Indiabulls. Indiabulls is a market leader in securities brokerage industry, With around 31% share in online trading, 2006-07: Indiabulls entered in a 50/50 joint venture with DLF, Kenneth Builders & Developers (KBD). KBD has acquired 35.8 acres of land from Delhi Development Authority through a competitive bidding process for Rs 450 crore to develop residential apartments.

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CHAPTER 4

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HISTORY OF ONLINE TRADING

TRADING DEFINITION

The act of buying or selling of goods, services, securities or commodities

ONLINE TRADING The number of online do-it-yourself investor has grown at a remarkable rate since the first electronic brokerage opened with virtual doors in 1994. this brokerage have attracted over 6 million investors in less than have years. Now accounting for over 33% of retail stock trades. While the numbering of online trading accounts represents just 12.5% of all accounts, that proportion is expected to increase to 33.2% by the end of 2005 as reported Fortune magazine on (October 2005) the number of e-brokerages has also grown from 123 in 1994 to more than 200 in 2004.

With increased competition, commission per trade has fallen dramatically, roping an average of 60 percent in 2002 and leveling off 2004. These developments are

commonly attributed to the efficiently of fraction free electronic market that lower transaction information processing cost by reducing human intermediation. But how efficient electronic markets, really? Rating of e-brokerage typically evaluates ease of use quality of research, reliability, commission rates, customer service and reporting. These studies however, have given insufficient attention to some less obvious factors, including

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timeless of transaction execution and the ability of investors to obtain the best prices these factors heavily influence investors total transaction costs.

A closer analysis of the online trading process reveals that, in many cases the only thing that has changed as for as investment concerned is the interface, which now involves web-based interaction. Despite proposed change in the securities trading

process and introduction of electronic trading system such as OptiMark, other process determining market efficiency order flow, price discovery and order execution remain virtually unchanged. In order to evaluate the true cost of on-line transaction we must separate the efficiency, perceived by investors from the real efficiency of the transaction and patterns of information flow beyond the interface itself. To understanding the difference between perceived and real efficiency we have examined how the trade process structured (often invisible to the investor).

Perceived efficiency determine largely by information provided by e-brokerage that customer can verify, such as commission rates, and research, and is tempered by investors attitude about risk and the degree to which they trust online brokerages. In contrast, real efficiency influenced by market structure and related transactional arrangement. For example, overall cost structure for the investors can differ depending on how intermediaries co-ordinates among themselves. Global scenario:

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35 Online Trading has become very popular in the last couple of years

because of the conveniences of ease and use. The numerous companies have gone existed for as long as we can remember and talk about it. We are referring to the trade gin the financial dealings, in current context trading buying and selling of financial services including security through www.

Online Trading has basically replaces a phone call with Internet. Instead of interacting with the brokers over the phones the customer is clicking the mouse though Online Trading. INVESTORS REASON S TO TRADE ONLINE They have control over their accounts. Can make the own decision for there. Actions, there are independent. It interesting cheap and easy, fast and convenience. A lot of information is online so they can keep up-to date. It will give greater choice and better realization. Increase the business afloat It will lead brokerage commission It will help to reduce the fraudulent rather than manually It helps to increase the efficiency of the operation.

36 To easy to buy or sells the share through Online Trading Transaction makes very quickly (T+2) Easy transferable etc.

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ONLINE TRADING IN INDIA India ranks amongst the top 10 companies in terms of the market capitalization of its stock market. India is gradually opening its stock market to foreign investors. A beginning was made on 27 January 2000. when the chairman of securities and exchange board of India (SEBI) authorized stock exchanges to provide Internet based trading services to investors and also announced that foreign companies and individuals could now trade on Indian aced against stocks to increase purchasing power. TRADING METHODOLOGY Trading in an interconnected the market would permit members of one exchange to trade directly with the member of another participating exchange. This trading would be in any form described as, exclusive regional trading, exclusive national market. Hybrid trading system and the members would able to trade from his trade work station by switching from one screen to another screen which deals with local trading to another screen which deals with inter-market trades would be communicated from the member terminal via. The VAST to the central system to Bombay where they would match.

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With the introduction of on-line trading liquidity will improve considerably which is very much essential for attracting small companies to the exchange.

The Bombay Stock Exchange on-line security trading come in to existence in the year 2000 the terminals in the members offices connected to the main server by telephone lines and one operated through modems. Before the introduction of the on-line trading outcry system was prevalent. Here the member or the broker would stand at specified spot in trading hall. He is required to shut out the name of the company, number of shares he has and the price of shares. Ultimately a deal would be made between the buyer and seller and the transfer of shares take place by the present system of on-line trading.

DISADVANTAGES OF MANUAL SYSTEM The scope for manipulation and speculation and malpractices were more. The time gap in many of the trading operations used to be more and liquidity requirements could not meet quickly and early. The audibility was another demerits of outcry system.

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ADVANTAGES OF ON-LINE TRADING

Surveillance is easy as there is very less scope for speculation. The investor is provided with best offer Transparency in transaction If enables arbitrate trading for members who one having NSE terminal also. Easier transaction processing

PROCEDURES FOLLOWED IN ONLINE TRADING Individual / Sole Proprietorship: Assets held in an individual account are owned and may be used by only one person: You. A sole proprietorship is closely related in the sense that the account is registered to a business with a single owner who is, in effect, the business and therefore controls all of the assets in the account. If the individual or sole proprietor dies, the account assets pass to his or her personal estate. This is the most popular account type at XPRESSTRADE.

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Joint: If youd like to trade with a spouse or friend, a joint account is your best bet. However, theres an important distinction between a tenancy-in-common account and a right of survivorship account. As tenants-in-common, if one of the account owners dies, interest and control of that persons share of the assets passes to his or her estate. Thus, if something were to happen to you, your share of the account would pass to the person or persons youve specified in your will. With right of survivorship, if one of the account holders dies, total interest and control of his or her share of the assets passes immediately to the surviving account holder. Corporation: This account is owned and registered in the name of a chartered corporation. To open a corporate account, the organization will need to submit a corporate resolution (we provide the appropriate form in our account application) that approves the opening of the account and designates those officers, directors, or employees authorized to act on behalf of the company. The corporate secretary, as well as one other officer/director, must sign the application. Limited Liability Company: This account is owned and registered in the name of a Limited Liability Company, a specialized form of company created pursuant to the laws of individual states with the U.S. This account is not available for use by non-U.S. companies. The company will need to designate those managing members, members, or other persons authorized to act on behalf of the company. Partnership: This account type can be used when a formal partnership (with a partnership agreement and federal taxpayer ID number) or an informal group of individuals wishes to open a trading account. In either case, the XPRESSTRADE

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account would be registered in the name of the partnership itself. To open this type of account, the formal partnership must submit a copy of its partnership agreement, and only the general partner(s) need sign the account application. By contrast, in the case of the informal group of people trading together, every individual participating in the account must sign the application. Trust: Trusts are separate, distinct legal entities, created by a formal trust instrument, under which the trustee(s) holds legal title to assets for the benefit of others, known as beneficiaries. To open a trust account at XPRESSTRADE, you must furnish the agreement creating the trust, along with a completed trust account application.

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Information is the investors best tool when it comes to investing wisely. But accurate information about micro stops. the low price stock receive by smallest of the companies. May be difficult to find many micro cap companies do not find any financial reports with SEC. So it is hard for investors to get the fact about the companies When reliable information is scares.

management, products, services and finance.

Frauds can easily false information about the micro cap companies. Making profits while creating losses for unsuspecting in the battle against micro cap fraud.

What is Micro Cap stock trades? In the term of micro cap stock applies to the companies with low or micro capitalization. The total value of the company stock. Micro Cap Company typically have limited assets. For Example in case were the SEC suspended trading in micro cap stocks, the average company had only $6 Million in net tangible assets and nearly less than $1.2 Million Micro Cap stock tend to be low priced and trading in low volumes.

Where do micro cap stocks trade? Many micro stocks trade in the Over the counter (OTC) market and are quoted on OTC systems, such as the OTC Bulletin Board (OTCBB) or the Pink Sheets.

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OTC Bulletin Board: The OTCBB is an electronic quotation system that displays real time quotes. Last sale price and volume information for many OTC Securities that are not listed on the NASIDAQ stock market or a national securities exchange. Brokers who subscribers to the system can use the OTCBB to look up price to enter quotes for OTC securities. Although the NASD oversees to OTCBB, the OTCBB is not part of the NASDA2W. Stock Market. Fraudsters often claim that an OCTBB company is a NASDAQ company to mislead investors in to thinking that the company is bigger than it is. The pink sheets named for the color of paper on which the have historically been printed are listing of price quotes for companies that trade in the OTC market.

How are micro cap stocks different from other stocks: Lack of public information: the biggest difference between a micro cap stock and other stocks is the amount of reliable, publicly available information above the company. Large public companies file reports with the SEC that any investors can get for free from the SECs website. The professional stock analysts regularly and write about large public companies. And its easy to find stock price in the newspapers. In contract information about micro cap companies can be extremely difficult to find, making them more vulnerable to investment fraud scheme. No minimum listing standards companies that their stocks on major exchange and in the NASDAQ stock market must meet minimum listing standards. For example. They must have minimum amount of net assets and minimum numbers of shareholders of

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shareholdes. In contrast, companies on the OTTCBB or the pink sheets do not have to meet any minimum standards.

Risk: While all investments involve risk. Micro cap companies tend to be new and have no prevent track record. Some of these companies have no assets or operation. Others have products and services that are still in development or have yet to be tested in the market. Another risk pertain to micro cap stocks involves the low volumes of trades. Because micro cap stocks trade in low volumes, any size of trade can be have large percentage impact on the price of the stock.

Which Companies file report with the SEC? In general the federal laws required all about the smallest of public companies to file reports with the SEC. A company can become a public in one of two ways by issuing securities in an offering or transaction thats registered with SEC.

How to open online trading account for individual Applying Electronically: If you decide to apply to establish a Trading Account with GCI Financial Ltd (GCI), you agree to receive a Risk disclosure Statement, Trader Agreement, Trader Account Letter, and Off Exchange Transaction Disclosure Electronically.

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44 Electronic Communications: Risk Disclosure Statement, Trader Agreement, Trader

Account Letter and Off Exchange Transaction Disclosure and any notices, instructions, agreements or any other communications regarding Transactions and your Account (all of which are referred to herein as the Communications) may be presented, delivered, stored, retrieved and transmitted electronically.

Executing Transactions Electronically: The Agreement and Transactions will be executed using electronic records and electronic signatures.

Consenting to Do Business Electronically: The decision whether to do business electronically is yours and you should consider whether you have the necessary hardware and software capabilities. Your consent to do business electronically and our agreement to do so, only applies to the establishment and maintenance of your Account and the execution of Transactions in connection with your Account.

Withdrawal of Consent: You have the right to withdraw your consent to doing business electronically at any time. However, if you withdraw such consent, any Communications or Transactions between us during the period after your consent to doing business electronically and before your withdrawal of such consent, will be valid and binding on all parties.

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45 Changes to your Contact Information: You should keep us informed of any change

in your electronic or mailing address or other contact information.

Printing: You may print this document by selecting Print from the File menu.

Your Ability to Access Communications: When you select the I Agree button below, you acknowledge that you have the capability to access the Communications.

Consent to Electronic Communications: When you select the I Agree button below, you consent to having all Communications provided or made available to you in electronic form.

Consent to Executing Transactions Electronically: When you select the I Agree button below, you consent to executing the Agreement and Transactions by electronic record and / or electronic signature.

Risk Disclosure Statement:

This brief statement (even though not required for OTC Trading) does not disclose all of the risks and other significant aspects of trading in leveraged investments. In light of the risks, you should undertake such transactions only if you understand the nature of

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the contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other circumstances.

1. Effect of Leverage or Gearing Transactions in OTC accounts carry a high degree of risk. The amount of initial margin is small relative to the value of the OTC contract so that transactions are leveraged or geared. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit; this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss.

2. Risk-reducing orders or strategies The placing of certain orders (e.g. Stop-loss order, where permitted under local law, or Stop-limit orders), which are intended to limit losses to certain amounts, may not be effective because market conditions may make it impossible to execute such

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orders. Strategies using combinations of positions, such spread and straddle positions may be as risky as taking simple long or short positions.

3. Terms and conditions of contracts You should ask the firm with which you deal about the terms and conditions of the specific currencies which you are trading and associated obligations (e.g. the circumstances under which you may become obligated to make or take delivery of the full currency value).

4. Suspension or restriction of trading and pricing relationships Market conditions (E.g. ill liquidity) and /or the operation of the rules of certain markets (e.g. suspension of trading in any currency because of price limits, government intervention or circuit breakers) may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions.

5. Deposited cash and property You should familiarize yourself with the protections accorded money or other property you deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property, which had been specifically identifiable as your own, will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.

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6. Commission and other charges Before you begin to trade, you should obtain a clear explanation of all commission, fees, markups, markdowns, rollovers, interest rate differential and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.

7. Transactions in other jurisdictions Transactions on currencies of other countries in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such markets may be subject to regulation, which may offer different or diminished investor protection. Before you trade you should inquire about any rules relevant to your particular transactions. Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should ask the firm with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

8. Currency risks The profit and loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by

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fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

9. Trading facilities OTC business is not traded on a regulated market and therefore does not require open-outcry. Even though quotations or prices are afforded by many computer-based component systems, the quotations and prices may very due to market liquidity. Many electronic trading facilities are supported by computer-based component systems for the order-routing, execution or matching of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses maybe subject to limits on liability imposed by the system provider, the market, the bank and/or financial institution. Such limits may very; you should ask the firm with which you deal for details in this respect. GCI offers trading in CFDs on shares, market indices, and futures; not trading in the underlying instruments themselves. CFD trading with GCI therefore does not entitle the Trader to dividends, delivery, or possibly certain other characteristics of buying or selling the underlying instrument. Furthermore, CFD and Foreign Exchange trading with GCI is not conducted on any futures or stock exchange and is not subject to the rules of any futures or stock exchange.

10. Electronic trading Trading on an electronic trading system may differ not only from trading in the inter bank market but also from trading on other electronic trading systems. If you

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undertake transactions on an electronic trading system, you will be exposed to risks associated with the system including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to your instructions or is not executed at all.

Disclaimers: Internet and System failures: Since GCI does not control signal power, its reception or routing via Internet, configuration of your equipment or reliability of its connection, we cannot be responsible for communication failures, distortions, delays when you trade on-line (via Internet). Furthermore, any losses or foregone profits in Traders account are the responsibility of the Trader and not GCI, even if software, hardware, or other system failures or errors contributed to such losses or foregone profits.

Market risks and on-line trading: Trading currencies involves substantial risk that is not being suitable for everyone. See Trader Agreement for more detailed description of risks. Trading on-line, no matter how convenient or efficient, does not necessarily reduce risks associated with currency trading.

Password protection: The Trader is obligated to keep passwords secret and ensure that third parties do not obtain access to the trading facilities. The Trader will be liable to GCI for traders executed by means of the Traders password even if such use may be wrongful.

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Quoting errors: Should quoting errors occur due to a dealers mistype of a quote, errors in an automatic price feed, or an erroneous price quote from a dealer, such as but not limited to a wrong big figure quote, GCI will not be liable for the resulting errors in account balances. GCI reserves the right to make the necessary corrections or adjustments on the account involved. Any dispute arising from such quoting errors will be resolved on a basis of a fair market value of a currency or CFD at the time such an error occurred.

11. Off-exchange transactions In OTCFX, firms are not restricted to effect off-exchange transactions. The firm with which you deal may be acting as your counterparts to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subjected to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.

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CHAPTER 5 Interpretation

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NSE INDEX

Index S&P CNX NIFTY S&P CNX DEFTY S&P CNX 500 NIFTY MIDCAP 50 CNX NIFTY JUNIOR CNX MIDCAP CNX IT CNX 100 BANK NIFTY

Prev Close 5202.00 4546.00 4343.55 2731.10 9743.00 7051.40 3921.60 5062.75 9125.20

Open 5202.85 4549.05 4274.40 2702.15 9600.90 7008.00 3877.40 4993.25 9059.20

High 5315.40 4646.00 4441.15 2809.30 9946.70 7223.00 3969.50 5171.65 9403.70

Low 5104.75 4463.05 4274.40 2676.85 9540.40 6972.85 3857.75 4974.90 8951.10

Last 5302.90 4636.55 4432.60 2801.20 9927.20 7216.25 3956.60 5160.60 9380.05

% Change 1.94 1.99 2.05 2.57 1.89 2.34 0.89 1.93 2.79

54 WORLD MARKET

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Index Japan Nikkei 225 Europe DJ Stoxx Canada CDNX Hong Kong Hang Seng As on February 15, 2008

Change -3.89 -70.19 +11.98 +126.75

% Change -0.03% 2.17% +0.47% +0.53%

Level 13,622.56 3,167.64 2,584.99 24,148.43

BASIC STEPS FOR INVESTMENT

Becoming A Customer:

How do I become an Indiabulls customer?

You can open an Indiabulls e-Invest account by filling a single application form. This form will help you open an Indiabulls Brokerage Account along with a Bank Account and one or more Demat accounts as required.

How do I request a form?

You can request our representative to visit you by registering online through our website. You could also visit any of the Centres, where our trained personnel help you in becoming Indiabulls e-Invest customer.

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I have sent in my application, what happens next?

Your application will be processed and you will be informed once your application is accepted and all the required accounts are set up. In case your application is not processed because of lack of some details, you will be contacted by our representative or by mail.

How do I know my application has been accepted?

As soon as your application is accepted, we will inform you by e-mail and mail.. In case, you login and your application has been accepted, you will be prompted to change your password.

Existing Indiabulls Customers:

If I already have a Scheduled Bank account and Indiabulls Demat account, can I use these accounts for online investing?

Yes, you just need to tell us the account details and we shall link up your existing accounts with Indiabulls e-Invest account for online investing. You can link up only an existing Bank account or only one or more Demat account(s) or both the existing Bank

56 account and Demat Account(s). However, at present, your Scheduled Bank account on which you have opted for Quantum Optima cannot be linked. Anyway, you can always opt to open a new Demat and Bank account with your Indiabulls e-Invest account.

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Bank Account/Demat Account:

What type of Bank Account can I use with my e-invest account?

You will need an ordinary savings account with Scheduled Bank Ltd for your e-Invest account. You can specify the account in the form and it will be linked with your e-Invest account. In case you do not have a Scheduled Bank account, an online banking savings account can be opened with an e-Invest account.

How frequently will I be able to know the status of my accounts?

The status of your Bank, Demat and e-Invest account shall be available to you completely online 24 hours a day through the Internet. You will be able to access all details regarding your orders and trades on the website. You will be able to see the results of your trade reflected in your Bank and Demat account on the very day of the settlement, without waiting for the statements from the DP and the Bank

57 New Indiabulls e-invest Customers:

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I want to buy some shares. I do not have any money in my Bank Account. What do I do?

Please deposit a cheque/cash in your Bank Account by filling the pay-in slip. In case of a cheque, the money should come into your Bank account as soon as the cheque is cleared. Once you have funds in your bank account, you need to allocate the required amount for trading. Alternatively you can sell some shares from your Demat Account in the Cash Segment and use the money to purchase the shares you want to buy. The amount of money required before placing a buy order or a margin sell order would depend on the value of the order.

Can I withdraw the amount allocated for trading?

The way you can allocate funds for trading, you can always reduce the amount allocated by you for trading to the extent that the amount allocated has not been blocked on account of orders placed by you. Once any amount is deallocated, it can be withdrawn from the bank.

Can I borrow or get a line of credit against my Demat Account?

Currently, we are not offering this service. But, we are evaluating ways to add to our

58 product range. We would appreciate if you could give us feedback on the facility you want

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Online Investing:

On which exchanges will I be able to buy and sell shares? Indiabulls offers its customers execution capability on the National Stock Exchange of India Ltd. (NSE) and Stock Exchange of Mumbai (BSE).

What kind of orders can I place? You can place both market and limit orders. Limit Order is an order to buy or sell securities in which you specify the maximum price per unit in case of a Buy order and the minimum price per unit in case of a Sell order. The actual transaction can be at a price more favourable than the price specified. Market Orders have different interpretations for both NSE and BSE. Market Orders in NSE: This is an order to buy or sell securities at the best price obtainable in the market at the time it is matched by the exchange. Therefore, chances of its getting executed are better. In case of market orders for NSE, all market orders placed, which are not executed, become limit orders at the last traded price. Where a market order is not executed fully, it becomes a limit order for the balance quantity at the last traded price.

59 Market orders can be placed only during market hours (i.e. when the Exchange is open for trading)

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Which shares will I be able to buy and sell? You will be able to buy and sell all shares in the Cash Segment that are traded in the compulsory dematerialised form on the exchanges. As of date, there are more than 850 such shares. These shares are the most heavily traded shares on the exchanges and account for over 90% of the market capitalisation. More and more shares are being added to this category every month by the regulatory authorities. Of these shares, you may place orders for select shares in the Margin Segment.

Can I modify my order? Yes, you can modify an order any time before execution. You can do this by accessing the Order Book page and clicking on the hyperlink for 'Modify' against the order which you wish to modify. However, you cannot modify your order while it is queued with the exchange, i.e., confirmation is awaited from the exchange for the acceptance of the placement of any order or any modification/cancellation request. In case the order is already partly executed, only the unexecuted portion of the order can be modified.

Can I cancel my order into the system? Yes, you can cancel an order any time before execution. You can do this by accessing the Order Book page and clicking on the hyperlink for 'Cancel against the order which you

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wish to cancel. In case the order is already partly executed, only the unexecuted portion of the order can be cancelled.

Settlement Of Trades:

If I have purchased a share, do I have to take delivery? Rolling Segment : You can choose to sell the share before the end of settlement cycle. However once the settlement cycle is over you have to take delivery by paying for it. TT Segment : Settlement of securities will be done without any netting off of positions. If you have purchased shares, you will have to mandatorily take delivery. You will not be permitted to sell the same in the same settlement. The Segment to which the stock belongs can be seen from the 'Stock List'.

I buy a share, how will the payment be made and how will I get the shares? The payment will be made on the Pay-In day which depends on the settlement cycle and the exchange. The shares received from the exchange will be automatically transferred to your Demat Account. The money required for purchase will be transferred from your Bank account. A similar process takes place when you sell the share.

What is a short delivery? Short delivery refers to a situation where a client, who has sold certain shares during a settlement cycle, fails to deliver the shares to the member either fully or partly.

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What is an auction? An auction is a mechanism utilized by the exchange to fulfill its obligation towards the buying trading members. Thus, in case for a settlement, the selling trading members have delivered short, their deliveries are bad or they have not rectified the company objection reported against them, the exchange purchases the requisite quantity from the market and gives them to the original buying member. Auctions are generally held on Friday.

What factors give rise to an auction? There are three factors, which primarily give rise to an auction: 1. Short deliveries 2. Un-rectified Bad Deliveries - this is relevant only in respect of shares in physical form 3. Un-rectified Company Objections

What happens if the shares are not bought in the auction? If the shares could not be bought in the auction i.e. if the shares were not offered for sale in the auction, the Exchange squares up the transaction as per SEBI guidelines. The guideline in force stipulates that the transaction is squared up at the highest price on the NSE from the relevant trading period till the auction day or at 20% above the last available closing price on the NSE on the auction day, whichever is higher. The pay-in and payout of funds for Auction Square up is held along with the pay-out for the relevant auction.

62 Taxation for Resident Indians:

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Adequate efforts have been taken to ensure that material contained in this website is error free. The material is not intended to be advice on any particular matter. Visitors to the site should cross check all the facts, law and contents with the text of the prevailing statutes or seek appropriate professional advice before acting on the basis of any information contained herein. INDIABULLS Web Trade Ltd expressly disclaims any liability to any person, in respect of anything done or omitted to be done by any such person by placing reliance upon the contents of this write-up. The below mentioned FAQs are restricted to the tax implications for the resident investors only.

What is a capital asset? Capital asset means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include 1. Stock-in-trade 2. Personal effects such as jewellery, furniture, motorcar held for personal use. 3. 61\2 % Gold Bonds, 1977. 4. 7% Gold Bonds, 1980. 5. National Defence Gold Bonds, 1980. 6. Special bearer Bonds 1991 7. Gold deposit Bonds under the gold deposit scheme, 1999 notified by the central government.

What is a short-term asset? Capital asset is divided as long term and short term with reference to the period of holding of the asset by you. The period of holding is computed from the date of acquisition to the date immediately preceding its sale. If the shares, units of specified mutual fund u/s 10(23D) or any other listed security are held by you for less than 12

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months then such shares/units or listed security would be treated as short term assets. In all other cases, the asset is required to be held for 36 months so as to qualify for longterm capital gain.

What is a long-term asset? If the shares, units of specified mutual fund u/s 10(23D) or any other listed security are held by you for more than 12 months then such shares/units or listed security would be treated as long term assets. To illustrate, if you have purchased and sold shares on the following dates, they would be treated as short term or long-term capital asset as below.

Date of Purchase Date of sale Period of holding Type of asset 1.4.2007 1.4.2007 11.5.2006 18.6.2006 14.2.2005 3.8.2007 4 months 2 days Short term asset Short term asset Long term asset Long term asset 31.10.2007 7 months 31.10.2007 17 months 1.4.2007 18.6.2007 2 years 4 months

9 months 12 days Short term asset

The period of holding for the above purpose could be different from the actual period of holding in certain situations: In case the shares or securities are held in a company in liquidation, the period subsequent to the date on which the company goes into liquidation shall be excluded.

64 In case the shares or securities have been acquired as gift or under will, the

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period of holding shall include the period for which the previous owner held the asset. In case the shares or securities held in an amalgamating company, the period of holding will include the period for which the shares have been held by the assess in the amalgamating company. In case of shares subscribed to by the person to whom such a right issue is offered or who has acquired the right from another person, the period of holding of the shares for the first person shall be reckoned from the date of allotment of such shares. In case a person has renounced his right to subscribe to certain shares in favour of another person, then the period of holding of such rights for the first person shall be reckoned from the date of offer of such right by the company or institution. In case of shares or securities have been acquired as a bonus issue, then the period of holding these bonus shares shall be reckoned from the date of allotment of such shares.

Corporate Benefits:

What is a 'No Delivery' period? Whenever, a book closure or a record date is announced by a company, the exchange sets up a 'No Delivery' period for that security. During this period, trading is permitted in the

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security. However, these trades are settled only after the No-Delivery period is over. The start of No-Delivery period is the ex-date of the settlement. The settlement is clubbed with the settlement of the week whose pay-out date falls just after the end of the nodelivery period. This is done to ensure that investor's entitlement for the corporate benefits is clearly determined. No-delivery period generally extends to all weekly cycles touched from 15 days prior to the record date and 4 days subsequent to the record date (both inclusive).

What is an ex-date? The first day of the 'No Delivery' period is the ex-date viz., if there is any corporate benefit such as rights, bonus, dividend etc. announced for which book closure/record date is fixed, the buyer of the shares on or after the ex-date will not be eligible for the benefits while the seller would be eligible for the same.

Password:

How do I get my Logon ID and PASSWORD for the first time? In order to ensure that you get secure Logon Id and Password, we request you to set your own LOGON ID AND PASSWORD when you fill a form. While getting the Logon Id and Password you will be given an Account Reference Number(ARN). Please ensure that the ARN is written on your application form. This ARN will be used for tracking the customer registration request. We will inform you when your application is processed and your account is set up. Once your account is set up, we will inform you by e-mail and

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you will be prompted to change your Password, the fist time you login after your account is set up.

If you have filled up the application forms for E-invest account directly without registering on the site, We would dispatch your LOGON-id and password by normal post in a sealed envelope. Your account shall be activated for trading only after we receive your confirmation of you having received the same in a sealed condition.

Security:

How secure are my transactions? Indiabulls brings you the highest standards of security, which are commercially available on the net. Millions of customers are dealing in shares on the net. We bring you the same level of security standards, which are used by leading international trading sites.

We use two level of securities on our web site : Secure Socket Layers (SSL) and 128 bit encryption technology to provide you the higher commercial available security standard on our web site. This is a worldwide standard of security adopted by all international online trading sites. SSL is a method of sending private documents through the internet by using a private key to secure messages. Data encryption methods are used to achieve data security.

IMPLICATION OF ONLINE TRADING

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67 Online trading also engenders some changes in the traditional investing scenario.

First, the wide range of variation in investor knowledge of the stock market and of trading in crucial in the online setting. The cost of investors of bad judgment are likely to borne by new entrants to the world of individual investing, these investors are pleased with the simplicity of the interactive user - friendly formats of e-brokerage but are seldom proficient in the\mechanisms and arrangements beyond the interface, experienced investors can better identify the benefits and cost of choosing specifics e-brokerage.

Second, the frequency of online investors trading deserves special attention. . Many market analysis suggest that the growing U.S economy and the low commission charged by e-brokerages influence investors to trade more often. For example, an average Merill Lynch (full service broker) customer makes four to five trades per year while the core investors in an -brokerage such as E* trade group include. Make an average of 5.6 trades per quarter. Frequent trading is generally contrary to recommendations of financial theory. Ultimately, it is possible for an e-brokerage to allow investor trade frequently at very low or even zero costs per trade while earning large profits on the fraction of increasingly large bid-ask spread that is pushed back by investors or market maker. At the same time, the investors may be unaware of the indirect costs incurred with each trade. Third the evaluation of electronic trading may increase market fragmentation in the short run. E-brokerage may increasingly channel trades away from the exchanges and towards market makers to compensate for lost revenue resulting from low direct commission. Market fragmentation may have negative impact on prices, increasing the

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bid-ask spread and potential for arbitrage opportunities (e.g., buy low in one market and sell high in another market with in short term period of time). This is contrary to the belief that electronic markets may force centralization and increase liquidity (that is ability to buy and sell securities quickly).

THE INDIAN PROBLEM Some other structural aspects need to be kept in mind while analyzing the e-broking scenario in India. The breath of participation in the stock market in India is significantly lowers was compare to western market with only 12.5 Million equity owing household and 4 Million depositors accounts. The brokerage rate sin India are significantly lower than US rates, with Indian broker has charging commission of 0.87% to 12.7% per trade. For INDIABULLS direct, the pricing strategy for e-broking for the retail\segment is as follows: for the cash segment, the brokerage charged varies from 0.40% to 0.85% based

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on the volume of trade done per quarter while for the margin segment, the brokerage charge varies from 0.10% to 0.15% based on the volume trade done per quarter. The above charges are inclusive of depository charges and all other statutory charges. For Motilal Oswal, the charges for online service are 0.15% of value and offline is 0.75%.

The scope for expansion of the market through reduction in brokerage is thus lower than the USA. Adds annup Baghcim, chief operating officer,ICICI-direct.com, "a reason for the popularity of online trading in the USA was that t lot of people took day training. In India, speculative trading is already rampant and it is estimated that delivery is taken for only 15% of the total trade volume. Hence, the surge in volume due to day trading may not be of the same magnitude." Internet based on trading typically takes place through bank account with an online bank. Here the number of banks and foreign banks. Both have lesser reach wing to a smaller network in the country. The relatives inability of large public sector banks to offer to facilitate for internet banking is barrier in the record. Besides Internet penetration in India still very low concern about security and also tend to be predominate. In market like the US online brokerage are advertised very heavily. Online trading in India has so for not seen similar levels of aggressive advertising, with exception of ICICI direct and home trade besides, only scrip's that have been compulsorily dematerialized can be traded on the NSE and BSE.

However technology bottlenecks are responsible for online trading laving not to taken off the ground. The usual suspect -poor band with figures prominently as one of the main reason why online trading hasn't taken off. Though players like Reliance and Bharathi

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have announced broadband services, till the mile problem is solves online broking will suffer from the band with problem. The three main technology obstacles which have prevented internet broking from taking off lack of internet 'penetration, band with infrastructure and poor quality of ISP infrastructure. Mr. ShukIa, says mostly investors are sure of executing the online trading.

ONLINE INVESTMENT FRAUD New Medium, Same Old scam:

The type of investment fraud has seen online mirror. The frauds perpetrated over the phone through the mail. Remember that fraudsters can use variety of Internet tools to spread false information. Including bulletin boards. Online newsletters, Spam, or chat (including internet rely chat or web page chat). They can also build a glitzy sophisticated web page. All of these cost tools very little money and can be fraud at the fingertips of fraudsters. Consider all offers with skepticism, investment frauds usually fit one of the following categories:

The pump And Dump" Scam: It's command to see the message posted online that urge readers to buy a stock quickly or tell to sell before the price goes down. Often the writers will claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. In reality there may be

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insiders or paid promoters who stand to gain by selling their shares after the stock priced is pumped up by. Gullible investors. Once these fraudsters sell their shares and stop hyping the stock. The price typically falls and investors lose their money fraudsters frequently use this poly with small, thinly traded companies because it's easier to manipulate a stock when there's little or information available about the company.

The pyramid: Be wary of message that read: How to make large money from your home computers. Online promoters claimed that investors could "turn $5 in to $60,000 in just three to six weeks. In reality this program was nothing more than products touted do not even exists -they are merely scams. Be cautious of opportunity that promise speculator profits or "guaranteed" returns. If the deal sounds to good to be true.

Offshore Frauds: At one time offshore schemes targeting U.S. investors cost a great deal of money and were difficult to carry out. Conflicting time zones differing currencies, and the high cost of international telephone calls and overnight mailing made it difficult for fraudsters to prey on U.S. law enforcement agencies to investigate and prosecute foreign frauds.

The SEC Is Trucking Fraud: The SEC actively investigates allegations of Internet investment fraud and in many cases in which the SEC took action to fight Internet fraud.

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CASE STUDIES ABOUT THE INTERNET INVESTMENT FRAUD 1.Fruncis A.trihble and -sloune Fitzgerald, send more than six million unsolicited e-mails through built bogus web sites, and distributed an online newsletter over a ten month period to promote to small thinly traded "micro cap" companies. Because they failed to tell investors those - companies they were touting had agreed to pay them in cash and securities. The SEC sued both the fribble and sloane to stop them from violating the law again and imposed a $15\900 penalty on fribble. Their massive shaming campaign triggered the largest number of complaints to the SEC's online enforcement complaint center.

2. IVT Systems solicited investments to finance the construction of an ethanol plant in the dominant republic. The Internet solicitation promised a return of 50% or more with no reasonable basis for the prediction. Their literature contained lies about contracts with well-known companies and omitted other important information for investors. After (lie SEC filed a complaint they agreed to stop breaking the law.

3. Gene Block and Renute Hugg were caught offering "prime bank" securities, a type of security that doesn't even exist. They collected over $3.5 million by promising to double investors money in our month's. The SEC has frozen their assets and stopped them from continuing their fraud.

ONLINE TRADING WITH GCI

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73 It allows, "mini share trading" account allows to trade popular shares and indices

online, with minimal margin requirement. It welcomes all online traders to try a free demo account. Which allows 30 days of "test trading" on our industry leading software. Contract size are 100 shares per lot, allowing clients to efficiently trade shares on 1% margin and $2 commission per lot-al with instant execution on the industry's leading trading software. Traders can view prices and execute trade-in real time. Mini share products include;

Mini share products: 1) Stock market indices 2) S&P500 3) NASDAQ100 4) Dow Jones average 5) Dux30 6) CAC40 7) FTSE100 8) Nikkei225 9) SPI200 (S&PASX200) 10) Hang Sang Foreign Exchange 1) BUR/USD 2) USD/JPY 3) GBP/USD

74 4) USD/CAD 5) AUD/USD Individual shares a) Microsoft b) Vodafone c) Barclays d) I.B.M e) Nokia f) eBay g) Siemens AG h) Deutsche. Bank i) France Telecom j) Unilever k) And many North American and European shares 1) Commodities m) Crude oil n) Gold o) Silver All mini share products are traded as "lots", 1 lot is equal to 100 shares. Mini share trading account details: Account opening minimum:$500 Lot size: 100 shares

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75 Margin requirement: $50 per lot Spreads: Same as Standard share Trading Commissions: $ 2 per lot (is equal to 2 cent per share)

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CHAPTER - 6

FINDINGS & SUGGESTIONS

The exchange authorities should educate the investors about their rights and duties.

Genuine investors are not at all interested in the speculative gain as their investments is based on the future profits, therefore the authorities of the

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77 exchange should be more vigilant in imposing heavy margin to curb the speculative of securities. Information plays a vital role in the secondary market. There are more speculators than investors. Previously rolling settlement is T+5 days, now it changed to T+2 days and further it will be changed to T+1 day. The number of players is increasing at a steady rate and today there are over a dozen of brokerage houses who have opted to offer net trading to their customers and prominent among them are INDIABULLS, Share Khan, kotakstreet, ICICI direct and geojit. With the computerization of the trading activity, the number of transaction and the volume of trading have increased to a great extent in India Bulls. Bank account for instant transfer was not available earlier, but today, INDIABULLS is providing the facility of giving instant bank account. The Depository system has reduced the time lag in delivering and settlement of securities and also supported the cause of providing more liquidity to the security holder. The need for setting up of a depository, paper less trading through online trading system and settlement became in evitable and unavoidable for the smooth and efficient functioning of the capital market.

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CHAPTER - 7

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CONCLUSION From beginning onwards Indiabulls is in to online trading system. So that transactions are performed efficiently. Things are better with the Indiabulls having online trading. New and advanced technologies have breached geographical and cultural barriers, and have brought the countries the countrywide market doorstep. Tips are available for online trading and invest wisely. So the investors can avoid the fraud. Due to invention of online trading there has been greater benefit to the investors as they could sell or buy shares as and when required that can easily transferable,

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"Online Trading has the potential to turbo-charge the time you spend in front of your computer. There is nothing more exhilarating, more daring, and more conceivably rewarding than making the right trades at the right time."

BIBLIOGRAPHY

Indian Capital marketSanjiv agarwal Investment managementV.A. Avadhani Investors guide literature www.google.com www.expresstrade.com www.gci.com www.bseindia.com www.nseindia.com

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