SHAREKHAN LIMITED

COMPREHENSIVE PROJECT REPORT

On

CONSUMERS PREFERENCE FOR INVESTMENT IN COMMODITIES

MARKET AT SHAREKHAN LTD

BY

ISHAN. Y. RAJAPURKAR

IN

BARODA INSTITUTE OF MANAGEMENT STUDIES (BIMS)

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION (BBA)

VALIDATED AND AWARDED BY

DR. BABASAHEB AMBEDKER OPEN UNIVERSITY

DATE:

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BARODA INSTITUTE OF MANAGEMENT STUDIES

A PROJECT REPORT ON

CONSUMERS PREFERENCE FOR INVESTMENT IN COMMODITIES

MARKET AT SHAREKHAN LTD

UNDER THE GUIDANCE OF

MR. VISHAL THAKKAR (FACULTY BBA)

SUBMITTED BY

ISHAN.Y.RAJAPURKAR

REGISTRATION NO. 812150919098BBA

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF

BBA

COMPANY GUIDE:

MR. NIMIT SHITOLE

(SHAREKHAN LTD)

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DECLERATION

I Ishan Rajapurkar hereby declare that this Project Report entitled CONSUMERS
PREFERENCE FOR INVESTMENT IN COMMODITIES MARKET AT SHAREKHAN
LTD in SHAREKHAN Ltd. submitted in the partial fulfillment of the requirement of Bachelor
of Business Administration (BBA) of BARODA INSTITUTE OF MANAGEMENT STUDIES,
BARODA is based on primary & secondary data found by me in various departments, books,
magazines and websites & Collected by me in under guidance of NIMIT SHITOLE.

DATE: ISHAN RAJAPURKAR

BBA (FINAL YEAR)

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PREFACE

For a management student training plays an important role during his/her study. Training
provides a corporate or real world platform to learn practically. BBA degree without any training
or corporate world experience is just like life without oxygen. So industrial training provides a
great learning experience about management concepts and its applications.

This training provides us an opportunity to know the current market. To know the
current market situations, prevailing competitions, behavioral environment of different people
etc. It provides us a platform whereby we can apply our theoretical knowledge and we can solve
many practical problems. And hence it can help us to be a successful manager in future.

Thanks to all those who directly or indirectly help me to complete this project within
a short time limit. For preparation of this report I would like to thanks to faculty members of our
college and staff members of SHARE KHAN LTD.

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ACKNOWLEDGEMENT

There is a fact that none of the human being in this world is 100% perfect and in order to
gain some perfectness in itself an individual surely needs a helping hand. The same was with me
with respect to the project that I was undergoing during this session of 2 months. As I too was
illiterate with this research topic that I selected for my research at the initial stages, I got
acquainted with it slowly and steadily through efforts and surely from various intelligent and
helpful personalities. I would like to extend my heartily thanks to all of them through this
acknowledgement.

I am also thankful to MR. NIMIT SHITOLE (Assistant manager) of Sharekhan Ltd.,

Vadodara for giving me an opportunity for getting in valuable experience in such reputed
organization.
I am also thankful to Mr. Navneet Sharma (Regional Manager) who is presently
working with Sharekhan Limited for providing me actual training and the required knowledge
& guidance in completing this training successfully.

Finally, I would like to record my special thanks to my parents, friends, and colleagues
help me directly or indirectly in preparation of project work.

CHAPTER TOPIC PAGE NO.

NO.

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1 COMPANY PROFILE 7
2 COMMODITY MARKET 17
3 COMPETITIVE ANALYSIS 37
4 RESEARCH METHODOLOGIES 47
5 DATA ANALYSIS 54
6 FINDINGS 72
7 SUGGESTIONS 75
8 CONCLUSION 77
BIBLIOGRAPHY 79
QUESTIONNAIRE 81
ANNEXTURE 85
INDEX

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CHAPTER 1

COMPANY
PROFILE

1.1. ABOUT SHAREKHAN LIMITED

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Sharekhan is one of the top retail brokerage houses in India with a strong online trading
platform. The company provides equity based products (research, equities, derivatives,
depository, margin funding, etc.). It has one of the largest networks in the country with
704 share shops in 280 cities and Indias premier online trading portal
www.sharekhan.com. With their research expertise, customer commitment and superior
technology, they provide investors with end-to-end solutions in investments. They
provide trade execution services through multiple channels - an Internet platform,
telephone and retail outlets.

Sharekhan was established by Morakhia family in 1999-2000 and Morakhia family,

continues to remain the largest shareholder. It is the retail broking arm of the Mumbai-
based SSKI [SHANTILAL SHEWANTILAL KANTILAL ISWARNATH LIMITED]
Group.

SSKI which is established in 1930 is the parent company of Sharekhan ltd. With a legacy
of more than 80 years in the stock markets, the SSKI group ventured into institutional
broking and corporate finance over a decade ago. Presently SSKI is one of the leading
players in institutional broking and corporate finance activities.

Sharekhan offers its customers a wide range of equity related services including trade
execution on BSE, NSE, and Derivatives. Depository services, online trading, Investment
advice, Commodities, etc.

Sharekhan Ltd. is a brokerage firm which is established on 8 th February 2000 and now it
is having all the rights of SSKI. The company was awarded the 2005 Most Preferred
Stock Broking Brand by Aawaz Consumer Vote. It is first brokerage Company to go
online. The Company's online trading and investment site - www.Sharekhan.com - was
also launched on Feb 8, 2000.

This site gives access to superior content and transaction facility to retail customers
across the country. Known for its jargon-free, investor friendly language and high quality
research, the content-rich and research oriented portal has stood out among its
contemporaries because of its steadfast dedication to offering customers best-of-breed
technology and superior market information.

Share khan has one of the best states of art web portal providing fundamental and
statistical information across equity, mutual funds and IPOs. One can surf across 5,500
companies for in-depth information, details about more than 1,500 mutual fund schemes
and IPO data. One can also access other market related details such as board meetings,
result announcements, FII transactions, buying/selling by mutual funds and much more.

1.2. THE COMPANY

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Name of the company: Sharekhan ltd.

Year of Establishment: 1925

Headquarter: Sharekhan SSKIA-206 Phoenix House Phoenix Mills Compound Lower

Parel Mumbai - Maharashtra, INDIA- 400013

Nature of Business: Service Provider

Services: Depository Services, Online Services and Technical Research.

Number of Employees: Over 3500

Website: www.sharekhan.com

Slogan: Your Guide to The Financial Jungle.

1.2. 1. Vision
To be the best retail brokering Brand in the retail business of stock market.

1.2.2. Mission
To educate and empower the individual investor to make better investment decisions
through quality advice and superior service.

1.2.3. Sharekhan is in fact-

Among the top 3 branded retail service providers
No. 1 player in online business
Largest network of branded broking outlets in the country serving more than 7, 00,000 clients.

Sharekhan's management team is one of the strongest in the sector and has positioned
Sharekhan to take advantage of the growing consumer demand for financial services
products in India through investments in research, pan-Indian branch network and an
outstanding technology platform. Further, Sharekhan's lineage and relationship with SSKI
Group provide it a unique position to understand and leverage the growth of the financial
services sector.

SSKI Corporate Finance Private Limited (SSKI) is a leading India-based investment bank
with strong research-driven focus. Their team members are widely respected for their
commitment to transactions and their specialized knowledge in their areas of strength.

HIERARCHY IN SHAREKHAN:

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Sales Side Dealing Side

Trainees Junior Dealer

Super Trainees Dealer

Sales Executives Relationship manager

Senior sales executives Senior Relationship manager

Business development Equity advisor

executive

Assistant sales manager Assistant Branch Manager

Deputy manager Branch Manager

Territory manager Cluster Head

Area sales manager/ Cluster Directors

manager

Regional sales manager CEO

Regional Head

Vice president

Directors

CEO
1.3. AWARDS AND ACHIEVEM2ENTS

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SSKI has been voted as the Top Domestic Brokerage House in the research category,
twice by Euro money Survey and four times by Asia money Survey.

Sharekhan Limited won the CNBC AWARD for the year 2004.

The team has completed over US$5 billion worth of deals in the last 5 years - making it
among the most significant players raising equity in the Indian market. SSKI, a veteran
equities solutions company has over 8 decades of experience in the Indian stock markets.

If we experience their language, presentation style, content or for that matter the online
trading facility, we'll find a common thread; one that helps us make informed decisions
and simplifies investing in stocks. The common thread of empowerment is what
Sharekhan's all about!

"Sharekhan has always believed in collaborating with like-minded Corporate into

forming strategic associations for mutual benefit relationships" says Jaideep Arora,
Director - Sharekhan Limited.

Sharekhan is also about focus. Sharekhan does not claim expertise in too many things.
Sharekhan's expertise lies in stocks and that's what he talks about with authority. So when
he says that investing in stocks should not be confused with trading in stocks or a
portfolio-based strategy is better than betting on a single horse, it is something that is
spoken with years of focused learning and experience in the stock markets. And these
beliefs are reflected in everything Sharekhan does for us! Sharekhan is a part of the
SSKI group, an Indian financial services power house, with strong presence in Retail
equities Institutional equities Investment banking.

In Delhi it is having the branches at netaji subash place and Nehru place. We have been
given the centre at netaji subash place.

1.4. Sharekhan provides 4 in 1 account.

- Demat a/c
- Trading a/c: for cash calculation
- Bank a/c: for fund transfer
- Dial and Trade: for query relating trading.

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1.5. PRODUCTS AND SERVICES OF SHAREKHAN LIMITED

(Figure-1)

1.5.1 METHODOLOGY:
The data collection methods include both primary and secondary collection methods.
Primary method: This method includes the data collected from the questionnaires and
personal interaction with authorized members of Sharekhan Securities limited.
Secondary method: The secondary data collection method includes:
The lecturers delivered by the superintendent.
The brochures and material provided by Sharekhan Securities limited.
The data collected from the magazines of the NSE, economic times and from internet.

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1.5.2. Demat account:

Sharekhan is a depository participant. This means that we can keep the shares in
dematerialized form in Sharekhan. But for this one has to the demat account in
Sharekhan. Dematerialization is the process by which a client can get physical certificates
converted into electronic balances maintained in his account with the DP.

In Sharekhan, under demat account there are two types of terminals.

TYPE OF DEMAT DEPOSIT (Refundable) CHARGES (non-refundable)

ACCOUNT TERMINAL

CLASSIC Rs.5000 Rs.750

Rs.10000 Nil

TRADETIGER Rs.5000 Rs.1000

Rs.10000/25000 Nil

1.5.3. Account opening:

Opening a DP account with Sharekhan-

One can open a Depository Participant (DP) account, either through a Sharekhan branch
or through a Sharekhan Franchisee center.

There is no fee for opening DP accounts with Sharekhan. However a nominal deposit
(refundable) is charged towards services which will be adjusted against all future billings.

All investors have to submit their proof of identity and proof of address along with the
prescribed account opening form.

1.5.4. BROKERAGE STRUCTURE OF SHAREKHAN

BROKERAGE:

INTRADAY DELIVERY
CASH- EQUITIES 0.10% 0.5%
FnO 0.05%
PREPAID SCHEME 0.025% 0.25%

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1.5.5 Sharekhan has tie up with the following banks:

HDFC

Axis Bank

IDBI

Citi Bank

IndusInd Bank

Union Bank

ICICI Bank.

1.5.6 CUSTOMER

Business class people (high class)

High Net worth Individuals

Service class people

Government Employees

Young Adults (19-30 yrs.)

Adults (35-50 yrs.)

HUF (Hindu Undivided Family)

Women (literate and working)

1.5.7 Market Share

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Sharekhan enjoyed about 20 per cent market share in Web business (Internet trading) in stock
markets. Three years ago, Web trading showed lot of promise but with the market witnessing a
downturn, there was not much interest among retail customers.

1.5.8Profits

The share of Web trading constituted 22 per cent of the revenue. As Sharekhan's daily trading
volume was over Rs 200 crore, the share of Web trading at about Rs 40 crore a day was
substantial and a larger part of the volume was coming from day traders

1.6. Its core services are:

- Equities, and Derivatives trading on the National Stock Exchange of India Ltd. (NSE), and
Bombay Stock Exchange Ltd. (BSE),
- Commodities trading on National Commodity and Derivatives Exchange India (NCDEX)
and Multi Commodity Exchange of India Ltd. (MCX),
- Depository services,
- Online trading services,
- IPO Services,
- Dial-n-Trade
- Portfolio management services,
- Fundamental and Technical Research services,
- In addition to this they also provide advisory services and distributions for mutual funds.

- Sharekhan Value guide (a monthly publication with reviews of recommendations, stocks to

watch out for etc.)

- Daily research reports and market review (High Noon & Eagle Eye)

- Pre-market Report

- Daily trading calls based on Technical Analysis

- Cool trading products (Daring Derivatives and Market Strategy)

1.6.1. Sharekhan First Step

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The Sharekhan FirstStep is a brand new program designed especially for those who are
new to investing in shares. All one have to do is open a Sharekhan FirstStep account
and they guide us through the investing process.

1.6.2. Features of Trading With Sharekhan:

2. Freedom from paperwork
3. Instant credit and money transfer
4. Trade from any net enabled PC
5. After hour orders
6. Online orders on the phone
7. Timely advice and-research reports
8. Real-time Portfolio tracking
9. Information and Price alerts.

Useful links about Sharekhan:

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1. Sharekhan Website: http://www.ShareKhan.com

2. Product Demo - Speed Trade: http://www.sharekhan.com/Demos/speedtrade/index.html
3. Product Demo - Classic: http://www.sharekhan.com/Demos/classic/index.html
4. Email: info@sharekhan.com
5. FAQs: http://sharekhan.com/KnowledgeCentre/Sharekhan_FAQ.aspx
6. Phone: 022-66621111
7. Toll Free: 1-800-22-7500

TRADING SESSION:-

Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period.
Monday to Friday is the trading period in all the stock exchanges, and Up to 11:30 PM
for commodity market. SEBI has Stipulated that all the stock exchanges in India must
have same trading

CHAPTER - 2

COMMODITY
MARKET
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2.1. Introduction to Commodity Market

2.1.1 What is Commodity?

Any product that can be used for commerce or an article of commerce which is traded on
an authorized commodity exchange is known as commodity. The article should be
movable of value, something which is bought or sold and which is produced or used as
the subject or barter or sale. In short commodity includes all kinds of goods. Indian
Forward Contracts (Regulation) Act (FCRA), 1952 defines goods as every kind of
movable property other than actionable claims, money and securities.
In current situation, all goods and products of agricultural (including plantation), mineral
and fossil origin are allowed for commodity trading recognized under the FCRA. The
national commodity exchanges, recognized by the Central Government, permits
commodities which include precious (gold and silver) and non-ferrous metals, cereals and
pulses, ginned and un-ginned cotton, oilseeds, oils and oilcakes, raw jute and jute goods,
sugar and gur, potatoes and onions, coffee and tea, rubber and spices. Etc.

2.1.2. What is a commodity exchange?

A commodity exchange is an association or a company or any other body corporate
organizing futures trading in commodities for which license has been granted by
regulating authority.

2.2.1 What is Commodity Futures?

A Commodity futures is an agreement between two parties to buy or sell a specified and
standardized quantity of a commodity at a certain time in future at a price agreed upon at
the time of entering into the contract on the commodity futures exchange.

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The need for a futures market arises mainly due to the hedging function that it can
perform. Commodity markets, like any other financial instrument, involve risk associated
with frequent price volatility. The loss due to price volatility can be attributed to the
following reasons:

2.2.2. Consumer Preferences: -

In the short-term, their influence on price volatility is small since it is a slow process
permitting manufacturers, dealers and wholesalers to adjust their inventory in advance.

2.2.3. Changes in supply: -

They are abrupt and unpredictable bringing about wild fluctuations in prices. This can
especially noticed in agricultural commodities where the weather plays a major role in
affecting the fortunes of people involved in this industry. The futures market has evolved
to neutralize such risks through a mechanism; namely hedging.

2.2.4. The objectives of Commodity futures: -

Hedging with the objective of transferring risk related to the possession of physical assets
through any adverse moments in price. Liquidity and Price discovery to ensure base
minimum volume in trading of a commodity through market information and demand
supply factors that facilitates a regular and authentic price discovery mechanism.

Maintaining buffer stock and better allocation of resources as it augments reduction in

inventory requirement and thus the exposure to risks related with price fluctuation
declines. Resources can thus be diversified for investments.
Price stabilization along with balancing demand and supply position. Futures trading
leads to predictability in assessing the domestic prices, which maintains stability, thus
safeguarding against any short term adverse price movements. Liquidity in Contracts of
the commodities traded also ensures in maintaining the equilibrium between demand and
supply.
Flexibility, certainty and transparency in purchasing commodities facilitate bank
financing. Predictability in prices of commodity would lead to stability, which in turn
would eliminate the risks associated with running the business of trading commodities.
This would make funding easier and less stringent for banks to commodity market
players.

2.2.5. Benefits of Commodity Futures Markets:-

The primary objectives of any futures exchange are authentic price discovery and an
efficient price risk management. The beneficiaries include those who trade in the
commodities being offered in the exchange as well as those who have nothing to do with
futures trading. It is because of price discovery and risk management through the

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existence of futures exchanges that a lot of businesses and services are able to function
smoothly.

1. Price Discovery:-Based on inputs regarding specific market information, the demand

and supply equilibrium, weather forecasts, expert views and comments, inflation rates,
Government policies, market dynamics, hopes and fears, buyers and sellers conduct
trading at futures exchanges. This transforms in to continuous price discovery
mechanism. The execution of trade between buyers and sellers leads to assessment of fair
value of a particular commodity that is immediately disseminated on the trading terminal.

2. Price Risk Management: - Hedging is the most common method of price risk
management. It is strategy of offering price risk that is inherent in spot market by taking
an equal but opposite position in the futures market. Futures markets are used as a mode
by hedgers to protect their business from adverse price change. This could dent the
profitability of their business. Hedging benefits who are involved in trading of
commodities like farmers, processors, merchandisers, manufacturers, exporters, importers
etc.
3. Import- Export competitiveness: - The exporters can hedge their price risk and
improve their competitiveness by making use of futures market. A majority of traders
which are involved in physical trade internationally intend to buy forwards. The
purchases made from the physical market might expose them to the risk of price risk
resulting to losses. The existence of futures market would allow the exporters to hedge
their proposed purchase by temporarily substituting for actual purchase till the time is
ripe to buy in physical market. In the absence of futures market it will be meticulous,
time consuming and costly physical transactions.

4. Predictable Pricing: - The demand for certain commodities is highly price elastic.
The manufacturers have to ensure that the prices should be stable in order to protect their
market share with the free entry of imports. Futures contracts will enable predictability in
domestic prices. The manufacturers can, as a result, smooth out the influence of changes
in their input prices very easily. With no futures market, the manufacturer can be caught
between severe short-term price movements of oils and necessity to maintain price
stability, which could only be possible through sufficient financial reserves that could
otherwise be utilized for making other profitable investments.

5. Benefits for farmers/Agriculturalists: - Price instability has a direct bearing on

farmers in the absence of futures market. There would be no need to have large reserves
to cover against unfavorable price fluctuations. This would reduce the risk premiums
associated with the marketing or processing margins enabling more returns on produce.
Storing more and being more active in the markets. The price information accessible to
the farmers determines the extent to which traders/processors increase price to them.
Since one of the objectives of futures exchange is to make available these prices as far as
possible, it is very likely to benefit the farmers. Also, due to the time lag between
planning and production, the market-determined price information disseminated by
futures exchanges would be crucial for their production decisions.

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6. Credit accessibility: - The absence of proper risk management tools would attract the
marketing and processing of commodities to high-risk exposure making it risky business
activity to fund. Even a small movement in prices can eat up a huge proportion of capital
owned by traders, at times making it virtually impossible to payback the loan. There is a
high degree of reluctance among banks to fund commodity traders, especially those who
do not manage price risks. If in case they do, the interest rate is likely to be high and
terms and conditions very stringent. This posses a huge obstacle in the smooth
functioning and competition of commodities market. Hedging, which is possible through
futures markets, would cut down the discount rate in commodity lending.

7. Improved product quality: - The existence of warehouses for facilitating delivery

with grading facilities along with other related benefits provides a very strong reason to
upgrade and enhance the quality of the commodity to grade that is acceptable by the
exchange. It ensures uniform standardization of commodity trade, including the terms of
quality standard: the quality certificates that are issued by the exchange-certified
warehouses have the potential to become the norm for physical trade.

2.3. History of Evolution of commodity markets

Commodities future trading was evolved from need of assured continuous supply of
seasonal agricultural crops. The concept of organized trading in commodities evolved in
Chicago, in 1848. But one can trace its roots in Japan. In Japan merchants used to store
Rice in warehouses for future use. To raise cash warehouse holders sold receipts against
the stored rice. These were known as rice tickets. Eventually, these rice tickets become
accepted as a kind of commercial currency. Latter on rules came in to being, to
standardize the trading in rice tickets. In 19th century Chicago in United States had
emerged as a major commercial hub. So that wheat producers from Mid-west attracted
here to sell their produce to dealers & distributors. Due to lack of organized storage
facilities, absence of uniform weighing & grading mechanisms producers often confined
to the mercy of dealers discretion. These situations lead to need of establishing a common
meeting place for farmers and dealers to transact in spot grain to deliver wheat and
receive cash in return.
Gradually sellers & buyers started making commitments to exchange the produce for
cash in future and thus contract for futures trading evolved. Whereby the producer
would agree to sell his produce to the buyer at a future delivery date at an agreed upon
price. In this way producer was aware of what price he would fetch for his produce and
dealer would know about his cost involved, in advance. This kind of agreement proved
beneficial to both of them. As if dealer is not interested in taking delivery of the produce,
he could sell his contract to someone who needs the same. Similarly producer who not
intended to deliver his produce to dealer could pass on the same responsibility to
someone else. The price of such contract would dependent on the price movements in
the wheat market. Latter on by making some modifications these contracts transformed in

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to an instrument to protect involved parties against adverse factors such as unexpected

price movements and unfavorable climatic factors. This promoted traders entry in futures
market, which had no intentions to buy or sell wheat but would purely speculate on price
movements in market to earn profit.
Trading of wheat in futures became very profitable which encouraged the entry of other
commodities in futures market. This created a platform for establishment of a body to
regulate and supervise these contracts. Thats why Chicago Board of Trade (CBOT) was
established in 1848. In 1870 and 1880s the New York Coffee, Cotton and Produce
Exchanges were born. Agricultural commodities were mostly traded but as long as there
are buyers and sellers, any commodity can be traded. In 1872, a group of Manhattan dairy
merchants got together to bring chaotic condition in New York market to a system in
terms of storage, pricing, and transfer of agricultural products. In 1933, during the Great
Depression, the Commodity Exchange, Inc. was established in New York through the
merger of four small exchanges the National Metal Exchange, the Rubber Exchange of
New York, the National Raw Silk Exchange, and the New York Hide Exchange.
The largest commodity exchange in USA is Chicago Board of Trade, The Chicago
Mercantile Exchange, the New York Mercantile Exchange, the New York Commodity
Exchange and New York Coffee, sugar and cocoa Exchange.

2.4. India and the commodity market

2.4.1. History of Commodity Market in India:-

The history of organized commodity derivatives in India goes back to the nineteenth
century when Cotton Trade Association started futures trading in 1875, about a decade
after they started in Chicago. Over the time datives market developed in several
commodities in India. Following Cotton, derivatives trading started in oilseed in Bombay
(1900), raw jute and jute goods in Calcutta (1912), Wheat in Hapur (1913) and Bullion in
Bombay (1920).
However many feared that derivatives fuelled unnecessary speculation and were
detrimental to the healthy functioning of the market for the underlying commodities,
resulting in to banning of commodity options trading and cash settlement of commodities
futures after independence in 1952. The parliament passed the Forward Contracts
(Regulation) Act, 1952, which regulated contracts in Commodities all over the India. The
act prohibited options trading in Goods along with cash settlement of forward trades,
rendering a crushing blow to the commodity derivatives market. Under the act only those
associations/exchanges, which are granted reorganization from the Government, are
allowed to organize forward trading in regulated commodities. The act envisages three
tire regulations: (i) Exchange which organizes forward trading in commodities can
regulate trading on day-to-day basis; (ii) Forward Markets Commission provides
regulatory oversight under the powers delegated to it by the central Government. (iii) The
Central Government- Department of Consumer Affairs, Ministry of Consumer Affairs,
Food and Public Distribution- is the ultimate regulatory authority.

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The commodities future market remained dismantled and remained dormant for about
four decades until the new millennium when the Government, in a complete change in a
policy, started actively encouraging commodity market. After Liberalization and
Globalization in 1990, the Government set up a committee (1993) to examine the role of
futures trading. The Committee (headed by Prof. K.N. Kabra) recommended allowing
futures trading in 17 commodity groups. It also recommended strengthening Forward
Markets Commission, and certain amendments to Forward Contracts (Regulation) Act
1952, particularly allowing option trading in goods and registration of brokers with
Forward Markets Commission. The Government accepted most of these
recommendations and futures trading was permitted in all recommended commodities. It
is timely decision since internationally the commodity cycle is on upswing and the next
decade being touched as the decade of Commodities.
Commodity exchange in India plays an important role where the prices of any
commodity are not fixed, in an organized way. Earlier only the buyer of produce and its
seller in the market judged upon the prices. Others never had a say.
Today, commodity exchanges are purely speculative in nature. Before discovering the
price, they reach to the producers, end-users, and even the retail investors, at a grassroots
level. It brings a price transparency and risk management in the vital market. A big
difference between a typical auction, where a single auctioneer announces the bids and
the Exchange is that people are not only competing to buy but also to sell. By Exchange
rules and by law, no one can bid under a higher bid, and no one can offer to sell higher
than someone elses lower offer. That keeps the market as efficient as possible, and keeps
the traders on their toes to make sure no one gets the purchase or sale before they do.
Since 2002, the commodities future market in India has experienced an unexpected boom
in terms of modern exchanges, number of commodities allowed for derivatives trading as
well as the value of futures trading in commodities, which crossed $ 1 trillion mark in
2006. Since 1952 till 2002 commodity datives market was virtually non- existent, except
some negligible activities on OTC basis.
In India there are 25 recognized future exchanges, of which there are three national level
multi-commodity exchanges. After a gap of almost three decades, Government of India
has allowed forward transactions in commodities through Online Commodity Exchanges,
a modification of traditional business known as Adhat and Vayda Vyapar to facilitate
better risk coverage and delivery of commodities. The three exchanges are: National
Commodity & Derivatives Exchange Limited (NCDEX) Mumbai, Multi Commodity
Exchange of India Limited (MCX) Mumbai and National Multi-Commodity Exchange of
India Limited (NMCEIL) Ahmedabad. There are other regional commodity exchanges
situated in different parts of India.

2.4.2. Legal framework for regulating commodity futures in India:-

The commodity futures traded in commodity exchanges are regulated by the Government
under the Forward Contracts Regulations Act, 1952 and the Rules framed there under.
The regulator for the commodities trading is the Forward Markets Commission, situated

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at Mumbai, which comes under the Ministry of Consumer Affairs Food and Public
Distribution

2.4.3. Forward Markets Commission (FMC):-

It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act, 1952.
Commission consists of minimum two and maximum four members appointed by Central
Govt. Out of these members there is one nominated chairman. All the exchanges have
been set up under overall control of Forward Market Commission (FMC) of Government
of India.

2.5. National Commodities & Derivatives Exchange Limited (NCDEX)

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National Commodities & Derivatives Exchange Limited (NCDEX) promoted by ICICI

Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank of
Agriculture and Rural Development (NABARD) and National Stock Exchange of India
Limited (NSC). Punjab National Bank (PNB), Credit Rating Information Service of India
Limited (CRISIL), Indian Farmers Fertilizer Cooperative Limited (IFFCO), Canara Bank
and Goldman Sachs by subscribing to the equity shares have joined the promoters as a
share holder of exchange. NCDEX is the only Commodity Exchange in the country
promoted by national level institutions.
NCDEX is a public limited company incorporated on 23 April 2003. NCDEX is a
national level technology driven on line Commodity Exchange with an independent
Board of Directors and professionals not having any vested interest in Commodity
Markets.
It is committed to provide a world class commodity exchange platform for market
participants to trade in a wide spectrum of commodity derivatives driven by best global
practices, professionalism and transparency.
NCDEX is regulated by Forward Markets Commission (FMC). NCDEX is also subjected
to the various laws of land like the Companies Act, Stamp Act, Contracts Act, Forward
Contracts Regulation Act and various other legislations.
NCDEX is located in Mumbai and offers facilities to its members in more than 550
centers through out India. NCDEX currently facilitates trading of 57 commodities.

2.5.1. Commodities Traded at NCDEX:-

Bullion:-
Gold KG, Silver, Brent
Minerals:-
Electrolytic Copper Cathode, Aluminum Ingot, Nickel,Cathode,
Zinc Metal Ingot, Mild steel Ingots
Oil and Oil seeds:-
Cotton seed, Oil cake, Crude Palm Oil, Groundnut (in shell), Groundnut expeller
Oil, Cotton, Mentha oil, RBD Pamolein, RM seed oil cake, Refined soya oil,
Rape seeds, Mustard seeds,Caster seed, Yellow soybean, Meal
Pulses:-
Urad, Yellow peas, Chana, Tur, Masoor,
Grain:-
Wheat, Indian Pusa Basmati Rice, Indian parboiled Rice (IR-36/IR-64), Indian
raw Rice (ParmalPR-106), Barley, Yellow red maize.
Spices:-
Jeera, Turmeric, Pepper
Plantation:-
Cashew, Coffee Arabica, Coffee Robusta
Fibers and other:-
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Guar Gum, Guar seeds, Guar, Jute sacking bags, Indian 28 mm cotton, Indian
31mm cotton, Lemon, Grain Bold, Medium Staple, Mulberry, Green Cottons, , ,
Potato, Raw Jute, Mulberry raw Silk, V-797 Kapas, Sugar, Chilli LCA334
Energy:-
Crude Oil, Furnace oil

2.6. Multi Commodity Exchange of India Limited (MCX)

Multi Commodity Exchange of India Limited (MCX) is an independent and de-
mutulized exchange with permanent reorganization from Government of India, having
Head Quarter in Mumbai. Key share holders of MCX are Financial Technologies (India)
Limited, State Bank of India, Union Bank of India, Corporation Bank of India, Bank of
India and Cnnara Bank. MCX facilitates online trading, clearing and settlement
operations for commodity futures market across the country.
MCX started of trade in Nov 2003 and has built strategic alliance with Bombay Bullion
Association, Bombay Metal Exchange, Solvent Extractors Association of India, pulses
Importers Association and Shetkari Sanghatana.

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MCX deals wit about 100 commodities.

2.6.1. Commodities Traded at MCX:-

Bullion:-
Gold, Silver, Silver Coins,
Minerals:-
Aluminum, Copper, Nickel, Iron/steel, Tin, Zinc, Lead
Oil and Oil seeds:-
Castor oil/castor seeds, Crude Palm oil/ RBD Pamolein, Groundnut oil,
Mustard/ Rapeseed oil, Soy seeds/Soy meal/Refined Soy Oil, Coconut Oil
Cake, Copra, Sunflower oil, Sunflower Oil cake, Tamarind seed oil,
Pulses:-
Chana, Masur, Tur, Urad, Yellow peas
Grains:-
Rice/ Basmati Rice, Wheat, Maize, Bajara, Barley,
Spices:-
Pepper, Red Chili, Jeera, Cardamom, Cinnamon, Clove, Ginger,
Plantation:-
Cashew Kernel, Rubber, Areca nut, Betel nuts, Coconut, Coffee,
Fiber and others:-
Kapas, Kapas Khalli, Cotton (long staple, medium staple, short staple),
Cotton Cloth, Cotton Yarn, Gaur seed and Guargum, Gur and Sugar,
Khandsari, Mentha Oil, Potato, Art Silk Yarn, Chara or Berseem, Raw Jute,
Jute Goods, Jute Sacking,
Petrochemicals:-
High Density Polyethylene (HDPE), Polypropylene (PP), Poly Vinyl Chloride
(PVC)
Energy:-
Brent Crude Oil, Crude Oil, Furnace Oil, Middle East Sour Crude Oil, Natural
Gas

National Multi Commodity Exchange of India Limited (NMCEIL)

National Multi Commodity Exchange of India Limited (NMCEIL) is the first
de-mutualised Electronic Multi Commodity Exchange in India.
On 25th July 2001 it was granted approval by Government to organize trading
in edible oil complex.
It is being supported by Central warehousing Corporation Limited, Gujarat
State Agricultural Marketing Board and Neptune Overseas Limited.

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It got reorganization in Oct 2002. NMCEIL Head Quarter is at Ahmedabad.

2.7. How Commodity market works?

There are two kinds of trades in commodities. The first is the spot trade, in which one
pays cash and carries away the goods. The second is futures trade. The underpinning
for futures is the warehouse receipt. A person deposits certain amount of say, good X
in a ware house and gets a warehouse receipt. This allows him to ask for physical
delivery of the good from the warehouse. But someone trading in commodity futures
need not necessarily posses such a receipt to strike a deal. A person can buy or sale a
commodity future on an exchange based on his expectation of where the price will go.
Futures have something called an expiry date, by when the buyer or seller either
closes (square off) his account or give/take delivery of the commodity. The broker
maintains an account of all dealing parties in which the daily profit or loss due to
changes in the futures price is recorded. Squiring off is done by taking an opposite
contract so that the net outstanding is nil.
For commodity futures to work, the seller should be able to deposit the commodity at
warehouse nearest to him and collect the warehouse receipt. The buyer should be able
to take physical delivery at a location of his choice on presenting the warehouse
receipt. But at present in India very few warehouses provide delivery for specific
commodities.

Following diagram gives a fair idea about working of the Commodity market.

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Today Commodity trading system is fully computerized. Traders need not visit a
commodity market to speculate. With online commodity trading they could sit in the
confines of their home or office and call the shots.
The commodity trading system consists of certain prescribed steps or stages as follows:

I. Trading: - At this stage the following is the system implemented-

- Order receiving
- Execution
- Matching
- Reporting
- Surveillance
- Price limits
- Position limits

II. Clearing: - This stage has following system in place-

- Matching
- Registration
- Clearing
- Clearing limits
- Notation
- Margining
- Price limits

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- Position limits
- Clearing house.

III. Settlement: - This stage has following system followed as follows-

- Marking to market
- Receipts and payments
- Reporting
- Delivery upon expiration or maturity.

2.8. How to invest in a Commodity Market?

2.8.1. With whom investor can transact a business?

- An investor can transact a business with the approved clearing member of previously
mentioned Commodity Exchanges. The investor can ask for the details from the
Commodity Exchanges about the list of approved members.

2.8.2. What is Identity Proof?

- When investor approaches Clearing Member, the member will ask for identity proof. For
which Xerox copy of any one of the following can be given
a) PAN card Number
b) Driving License
c) Vote ID
d) Passport

2.8.3. What statements should be given for Bank Proof?

- The front page of Bank Pass Book and a canceled cheque of a concerned bank. Otherwise
the Bank Statement containing details can be given.

2.8.4. What are the particulars to be given for address proof?

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- In order to ascertain the address of investor, the clearing member will insist on Xerox
copy of Ration card or the Pass Book/ Bank Statement where the address of investor is
given.

2.8.5. What are the other forms to be signed by the investor?

- The clearing member will ask the client to sign
a) Know your client form
b) Risk Discloser Document
- The above things are only procedure in character and the risk involved and only after
understanding the business, he wants to transact business.

2.8.6. What aspects should be considered while selecting a commodity

broker?
- While selecting a commodity broker investor should ideally keep certain aspects in mind
to ensure that they are not being missed in any which way. These factors include
Net worth of the broker of brokerage firm.
The clientele.
The number of franchises/branches.
The market credibility.
The references.
The kind of service provided- back office functioning being most important.
Credit facility.
The research team.
2.8.7. Broker:-
- The Broker is essentially a person of firm that liaisons between individual traders and
the commodity exchange. In other words the Commodity Broker is the member of
Commodity Exchange, having direct connection with the exchange to carry out all
trades legally. He is also known as the authorized dealer.

2.8.8. How to become a Commodity Trader/Broker of Commodity

Exchange?
- To become a commodity trader one needs to complete certain legal and binding
obligations. There is routine process followed, which is stated by a unit of Government
that lays down the laws and acts with regards to commodity trading. A broker of
Commodities is also required to meet certain obligations to gain such a membership in
exchange.
- To become a member of Commodity Exchange the broker of brokerage firm should
have net worth amounting to Rs. 50 Lakh. This sum has been determined by Multi
Commodity Exchange.

2.8.9. How to become a Member of Commodity Exchange?

- To become member of Commodity Exchange the person should comply with the
following Eligibility Criteria.

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1. He should be Citizen of India.

2. He should have completed 21 years of his age.
3. He should be Graduate or having equivalent qualification.
4. He should not be bankrupt.
5. He has not been debarred from trading in Commodities by statutory/regulatory authority,
There are following three types of Memberships of Commodity Exchanges.

2.8.10. Trading-cum-Clearing Member (TCM):-

- A TCM is entitled to trade on his own account as well as on account of his clients, and
clear and settle trades himself. A sole proprietor, Partnership firm, a joint Hindu
Undivided Family (HUF), a corporate entity, a cooperative society, a public sector
organization or any other Government or non-Government entity can become a TCM.
- There are two types of TCM, TCM-1 and TCM-2. TCM-1 refers to transferable non-
deposit based membership and TCM-2 refers to non-transferable deposit based
membership.
- A person desired to register as TCM is required to submit an application as per the format
prescribed under the business rules, along with all enclosures, fee and other documents
specified therein. He is required to go through interview by Membership Admission
Committee and committee is also empowered to frame rules or criteria relating to
selection or rejection of a member.

2.8.11. Institutional Trading-cum-clearing Member (ITCM):-

Only an Institution/ Corporate can be admitted by the Exchange as a member, conferring
upon them the right to trade and clear through the clearing house of exchange as an
Institutional Trading-cum-clearing Member (ITCM). The member may be allowed to
make deals for himself as well as on behalf of his clients and clear and settle such deals.
ITCMs can also appoint sub-brokers, authorized persons and Trading Members who
would be registered as trading members.

2.8.12. Professional Clearing Member (PCM):-

A PCM entitled to clear and settle trades executed by other members of the exchange. A
corporate entity and an institution only can apply for PCM. The member would be
allowed to clear and settle trades of such members of the Exchange who choose to clear
and settle their trades through such PCM.

2.8.13. Membership Details for NCDEX:-1

Trading-cum-clearing Member: - TCM

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Sr. No. Particulars NCDEX: TCM

1 Interest Free Cash Security Deposit 15.00 Lakhs

2 Collateral Security Deposit 15.00 Lakhs

3 Admission Fee 5.00 Lakhs

4 Annual Membership Fees 0.50 Lakhs

5 Advance Minimum Transaction Charges 0.50 Lakhs

6 Net worth Requirement 50.00 Lakhs

Professional Clearing Membership: - PCM

Sr. No. Particulars NCDEX: PCM

1 Interest Free Cash Security Deposit 25.00 Lakhs

Collateral Security Deposit

2 25.00 Lakhs

3 Annual Subscription Charges 1.00 Lakhs

4 Advance Minimum Transaction Charges 1.00 Lakhs

5 Net worth Requirement 5000.00 Lakhs

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Membership Details for MCX:-2

Initial Net worth Criteria

Admission Annual
Category Security
Fees Subscription
Deposit Corporate Partnership Individual

Rs. 10 Rs. 15 Rs 50 Rs. 50

TCM-1 Rs 50,000 Rs. 50 Lakhs
Lakhs Lakhs Lakhs Lakhs

Rs. 5 Rs. 50 Rs. 50 Rs. 50

TCM-2 Rs 50,000 Rs. 50 Lakhs
Lakhs Lakhs Lakhs Lakhs

Rs. 10 Rs. 50 Rs. 50

ITCM Rs 50,000 N.A. N.A.
Lakhs Lakhs Lakhs

Rs. 50
PCM Nil Rs 1,00,000 Rs. 5Crores N.A. N.A.
Lakhs

2.9. Current Scenario in Indian Commodity Market.

2.9.1. Need of Commodity Derivatives for India:-

India is among top 5 producers of most of the Commodities, in addition to being a major
consumer of bullion and energy products. Agriculture contributes about 22% GDP of
Indian economy. It employees around 57% of the labor force on total of 163 million
hectors of land Agriculture sector is an important factor in achieving a GDP growth of 8-
10%. All this indicates that India can be promoted as a major centre for trading of
commodity derivatives.

2.9.2. Trends in volume contribution on the three National Exchanges:-

Pattern on Multi Commodity Exchange (MCX):-

- MCX is currently largest commodity exchange in the country in terms of trade volumes,
further it has even become the third largest in bullion and second largest in silver future
trading in the world.
- Coming to trade pattern, though there are about 100 commodities traded on MCX, only 3
or 4 commodities contribute for more than 80 percent of total trade volume. As per recent
data the largely traded commodities are Gold, Silver, Energy and base Metals.

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Incidentally the futures trends of these commodities are mainly driven by international
futures prices rather than the changes in domestic demand-supply and hence, the price
signals largely reflect international scenario.
- Among Agricultural commodities major volume contributors include Gur, Urad, Mentha
Oil etc. Whose market sizes are considerably small making then vulnerable to
manipulations.

Pattern on National Commodity & Derivatives Exchange (NCDEX):

- NCDEX is the second largest commodity exchange in the country after MCX. However
the major volume contributors on NCDEX are agricultural commodities. But, most of
them have common inherent problem of small market size, which is making them
vulnerable to market manipulations and over speculation. About 60 percent trade on
NCDEX comes from guar seed, chana and Urad (narrow commodities as specified by
FMC).

Pattern on National Multi Commodity Exchange (NMCE):-

- NMCE is third national level futures exchange that has been largely trading in
Agricultural Commodities. Trade on NMCE had considerable proportion of commodities
with big market size as jute rubber etc. But, in subsequent period, the pattern has changed
and slowly moved towards commodities with small market size or narrow commodities.

2.9.3. Analysis of volume contributions on three major national commodity

exchanges reveled the following pattern,

Major volume contributors: -

- Majority of trade has been concentrated in few commodities that are
- Non Agricultural Commodities (bullion, metals and energy)
- Agricultural commodities with small market size (or narrow commodities) like guar,
Urad, Mentha etc.

Trade strategy:-
- It appears that speculators or operators choose commodities or contracts where the
market could be influenced and extreme speculations possible.
- In view of extreme volatilities, the FMC directs the exchanges to impose restrictions on
positions and raise margins on those commodities. Consequently, the
operators/speculators chose another commodity and start operating in a similar pattern.
When FMC brings restrictions on those commodities, the operators once again move to
the other commodities. Likewise, the speculators are moving from one commodity to
other (from methane to Urad to guar etc) where the market could be influenced either
individually or with a group.

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Beneficiaries: -
- So far the beneficiaries from the current nature of trading are
- Exchangers: - making profit from mounting volumes
- Arbitragers
- Operators

o In order to understand the extent of progress the trading the trading in

Commodity Derivatives has made towards its specified objectives (price
discovery and price risk management), the current trends are juxtaposed
against the specification

Specified and actual pattern of futures trade:-

Process Aught to be Actual

Commodities There should be large Largely Traded are
demand for and supply of
the commodity- no Bullion, Metals and
individual or a group of Commodities with small
persons acting in concert market size (or narrow
should be in a position to Commodities) like guar,
influence the demand or Burmese Urad, Mentha etc.
supply, and consequently
the price substantially
Towards this, the major
Produced or consumed
Commodities in the
Country such as wheat,
rice, jute etc. and India is the
top first or second
producer of these
Commodities.

Trade Hedging together with Over speculation and

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Strategy Moderate speculation to Manipulation leading to wide

Smoothen the price Fluctuations.
Fluctuations.
Beneficiaries Farmers/producers,, So far exchangers, arbitrageurs,
Consumers and traders Operators etc.,
Either through direct Further there were instances of
Participation or through Wrong price signals accruing losses to
Price signals. farmers in case of menthe, and to traders
in case
Of imported pulses.
Price Discovery Pure replication of
International trends not
Taking in account of
Domestic D-S in case of
Non-agril. Commodities
Wide fluctuations from
Objectives Over speculation and
Manipulation in case of
Largely traded agril.
commodities
Risk Management No such evidences and contrarily, the
extreme volatilities in certain
commodities are making futures

CHAPTER - 3

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COMPETITIVE
ANALYSIS

THE MAJOR PLAYERS IN ONLINE TRADING

1) SHAREKHAN.COM
2) 5PAISA.COM
3) KOTAKSTREET.COM
4) INDIABULLS.COM
5) ICICIDIRECT.COM
6) HDFCSEC.COM

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3.1. HDFC SECURITIES

Company Background:
- HDFC Securities Ltd is promoted by the HDFC Bank, HDFC and Chase Capital Partners
and their associates. Pioneers in setting up Dial-a-share service with the Largest team of
Tele-brokers.

Online Account Type:

- HDFC Online Trading A/c: Plain Vanilla Account with focus on 3 in 1 Advantage.

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Pricing of HDFC Account

- Account Opening: Rs 750
- Demat: NIL, 1st year charges included in Account Opening
- Initial Margin : Rs 5000/- for non HDFC Bank Customers (AQB)

Brokerage:
- Trading 0.15%* each side + ST
- Delivery 0.50%** each side + ST
- Rs 25 Min Brokerage per transaction
- Rs 8 Min Brokerage per transaction

3.2. ICICI DIRECT:

Account Opening: Rs 750

Schemes: For short periods Rs 750 is refundable against brokerage generated In a

quarter these schemes are introduced 3-4 times a year.

Demat: NIL, 1st year charges included in Account Opening Plus a facility to open
Additional 4 DPs without 1st yr AMC. Only Rs 100 as linking charges per DP

Initial Margin : Nil

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Brokerage: ICICIs brokerage rates are inclusive of Stamp duty (0.002%) for Trading
and 0.010% for delivery while service tax (10.2%) on BROKERAGE land Turnover tax
is EXTRA.

Delivery Vol per QTR Brokerage Square Vol P.M. Brokerage

- < 10 lakhs 0.75% < 50 lakhs .10% Both Sides

- 10 25 lakhs 0.70% 50 lakhs 2 Cr .08% Both Sides
- 25 50 lakhs 0.55% 2Cr-5Cr .05% Both Sides
- 50 lakhs - 1 Cr 0.45% 5Cr- 10 Cr .04% Both Sides
- 1 Cr 2 Cr 0.35% 10Cr -20 Cr .035% Both Sides
- 2 Cr 5 Cr 0.30% > 20 Cr .03% Both Sides
- 5 Cr 0.25% -------- ----------

3.3. INDIABULLS:
Company Background:
- India Bulls is a retail financial services company present in 70 locations covering 62
Cities. It offers a full range of financial services and products ranging from Equities To
Insurance. 450 + Relationship Managers who act as personal financial advisors.

Online Account Type:

- Signature Account: Plain Vanilla Account with focus on Equity Analysis. The Equity
analysis is a paid service even for A/c holders.
- Power India bulls: Account with sophisticated trading tools, low commissions And
priority access to R.M.

Pricing and type of Accounts:

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Signature Account Power India Bulls

- Account Opening: Rs 250 * Account Opening: Rs 750
- Demat: Rs 200 if POA is signed, ,
- No AMC for this DP No AMC for this DP
- Initial Margin: NIL
- Brokerage: Negotiable

Power India Bulls

- Account Opening: Rs 750

- Demat: Rs 200 if POA is signed,
- No AMC for this DP
- Initial Margin: NIL
- Brokerage: Negotiable

3.4. KOTAK SECURITIES:

Company Background:
- Kotakstreet is the retail arm of Kotak Securities. Kotak Securities limited is a joint
Venture between Kotak Mahindra Bank and Goldman Sachs.

Online Account Type

- Twin Advantage / Green Channel : 2 DPs, Limit against shares
- Free Way: Flat Rs 999 Cover Charge p.m, 0.03% per transaction
- High Trader : 6 Times Exposure Cash & Derivatives, Auto sq off 2:55
- Cash Expressway : Spot payment, additional 0.5% charges For Kotak Fast Lane / Keat
Lite / Keat Desktop are trading interfaces. Keat Desktop with advanced tools comes at a
charge of Rs 500 p.m, Non-Refundable.

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Pricing of kotak
- Account Opening : Rs 500
- Demat: Rs 22.5 p.m
- Initial Margin : Rs 5000(Compulsory)
- Min Margin Retainable : Rs 1000
- Brokerage Slab wise: Higher the volume, lower the brokerage. Even older customers (on
0.25% & 0.40%) have been moved to the slab wise Structure w.e.f 1/4/2004

Slab structure of Kotak

Delivery Vol p/m Brokerage * Square Vol P.M. Brokerage
- < 1 lakhs 0.65% < 10 lakhs 0.10% Both Sides
- 1 lakhs 5 lakhs 0.60% 10 lakhs 25 lakhs 0.08% Both Sides
- 5 lakhs 10 lakhs 0.50% 25 lakhs - 2 Cr 0.05% Both Sides
- 10 lakhs - 20 lakhs 0.40% 2 Cr - 5 Cr 0.04% Both Sides
- 20 lakhs 60 lakhs 0.30% > 5 Cr 0.035% Both Sides
- 60 lakhs - 2 Cr 0.25% ---do--- 0.03% Both Sides
- 2 0.20% ---- --------
- Brokerage is inclusive of All Taxes * Brokerage is inclusive of All Taxes
- Min Brokerage of Rs 0.05 per share * Min Brokerage of Rs 0.01 per share

Derivatives
- Vol off p/m Brokerage
- < 2 Cr 0.07% Both Sides
- 2 Cr - 5.5 Cr 0.05% Both Sides
- 5.5 Cr 10 Cr 0.04% Both Sides
- > 10 Cr 0.03% Both Sides

3.5. 5PAISA

Company Background
- Indiainfoline was founded in 1995 and was positioned as a research firm In 2000 e-
broking was started under the brand name of 5paisa.com. Apart from offering online
trading in stock market the company offers Mutual funds online.
- It also acts as a distributor of various financial services i.e. Company Fixed Deposits,
Insurance.
- Limited ground network, present in 20 cities

Online Account Types

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- Investor Terminal : Investors / Students

- Trader Terminal : Day Traders / HNIs

PRICING FOR RETAIL CLIENTS

Investor Terminal
- Account Opening : Rs 500
- Demat 1st Yr : Rs 250
- Initial Margin : Rs 2500 (Compulsory)
- Min Margin Retainable : Rs 1000

Brokerage:
- Trading 0.10% each side + ST
- Delivery 0.50% each side + ST

PRICING FOR HNI CLIENTS

Trader Terminal
- Account Opening : Rs 500
- Demat 1st Yr : Rs 250
- Initial Margin : Rs 5000(Compulsory)
- Min Margin Retainable : Rs 1000

Brokerage:
- Trading 0.10% each side + ST
- Delivery 0.50% each side + ST
(Negotiable to 0.05% each side & 0.25%)

SHAREKHAN

Company Background
- Sharekhan is the retail broking arm of SSKI Securities Pvt Ltd. SSKI owns 56%
- In Sharekhan, balance ownership is HSBC, First Caryle, and Intel Pacific Into broking
since 80 years
- Focused on providing equity solutions to every segment
- Largest ground network of 210 Branded Share shops in 90 cities

Online Account Types

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- Classis Account: Investor in equities

- Speed Trade: Trader in equities & derivatives

PRICING FOR HNI CLIENT

Speed Trade
- Account Opening : Rs 1000 ( Refundable against brokerage in Month + 1)
- Demat 1st Yr : Rs 0 in Account Opening
- Initial Margin : Nil
- Min Margin Retainable : NIL

Brokerage:
- Trading 0.10% each side + All Taxes
- Delivery 0.50% each side + All Taxes
(Negotiable based on volume)

Account Access Charges

- Monthly Rs 500, adjustable qtrly against brokerage of Rs 9000/- for qtr.
- No access charges for gold customers (Above 1 lac brokerage p.a)

Pricing for Retail Customers

Classic:
- Account Opening : Rs 750
- Demat 1st Yr : NIL
- Initial Margin : NIL
- Min Margin Retainable : NIL

Brokerage:
- Trading 0.10 paisa each side + All Taxes
- Delivery 0.50 paisa each side + All Taxes

Sharekhan online Trading Interfaces

- The customer can choose the online trading interface that meets his requirement Based on
his trading habits and preferences

DIAL-N-TRADE Toll Free

- The DNT is a value added services meant for all customers who Want to transact but are
not online.

DNT TOLL FREE FERTURES

- Dedicated Toll Free number for Order placements
- Automatic fund transfer with phone banking*
- Simple and secure IVR based system for authentication

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- No wait time, on entry of Phone Id & TPIN, the call is transferred

- Trusted, professional advice of Tel-brokers who offer undiluted Sharekhan
Research Inputs
- After-hours order placement facility
- Transfer of money using phone banking is available with Citibank only
- Between 9 a.m to 9.55 am and 3.30p.m to 6 p.m

CLASSIC/WEBSITE FEATURES

- Facility to integrate choice of 4 Banks/DP/Trading Account

- Instant credit for shares sold from DP
- Automatic pick-up of shares from linked DP for pay in
- Automatic deposit of shares into linked DP after pay-out
- 4 Times leverage on Margin Trades
- Margin Trading available for entire marker session
- Slab wise brokerage structure for delivery and margin trades, shortly
- Free calls for order placement on Toll-Free
- Trusted, Professional advice of Tele-brokers
- Facility to enter After Market Orders online & via Phone

CLASSIC/WEBSITE FEATURES

- Daily Research newsletter (Investor Eye) Via e-mail

- Access to new IPO without any paperwork
- Advanced portfolio monitoring Tools
- Integrated DP account with trading account
- Option of linking additional 4 DP accounts to trading account
- Choice of linking 4 banks to trading a/c for online payments
- Cash and Derivatives trading in a single account
- E-mail confirmations for all transactions
- Choice of electronic/Physical contracts

SPEEDTRADE EXECUTION FEATURES

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- Real time streaming quotes using 2 Marker Watches

- Trade Execution in 2-3 seconds
- Instant Order/trade confirmations in the same window
- Hot keys similar to a Brokers Terminal
- MULTIPLE Tic-by-Tic Intra-day charts with multiple indicators
- Availability of 2 ISP & 6 Servers ensuring maximum uptime
- Customized alerts based on multiple parameters
- Cancel All/Square Off All Facility
- Window for Top Gainers, Top Losers, and Most Active updated Live

CHAPTER 4
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RESEARCH
METHODOLOGIES

RESEARCH METHODOLOGY:

Research design - -Descriptive research

Statistical tools - -Percentage method
Research instrument - -Questionnaire
Questionnaire - -Open ended and close ended
Contact method - -Survey Personal, interview, Online interview
Method of data Collection - Primary data and Secondary data
Sampling method- - Non-probability sampling
Sampling type- - Area sampling
Sampling unit- - Consumers

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Sampling size - - 70

Research Design

There are three types of research design. They are

- Descriptive

- Exploratory

- Explanatory

In this research the research design adopted is Descriptive research design.

Descriptive Research Design

- It is designed to describe something, such as demographic characteristics of consumers
who use the products. It deals with determining frequency with something occurs or how
two variables vary together. This study is also guided by an initial Hypothesis.

Importance of Descriptive Study

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- During the analysis of characteristics of certain groups, for e.g. users of a product with
different age, sex, education etc.

- To forecast the future trends, e.g. sales of a companys product in each of next five years.

- To study whether certain variables are associated, e.g. income and usage of a product.

Questionnaire Design

Designing and implementing the questionnaire is one of the most interesting and
challenging tasks of conducting research. Questionnaire designing also becomes
important and necessary when he/she observes that unless the data discussion or
otherwise is noted down, is basic form will be distorted. The questionnaire is the
backbone for obtaining data during a personal interview, telephone survey, and mail
survey.
Meaning of Questionnaire
- A questionnaire is a form prepared and distributed to secure response to certain question.
The term questionnaire refers to a self administration process here by the respondent
himself/herself reads the questionnaire and records his/her answer assistance of an
interviewer.
Purpose of questionnaire is two fold
- To collect information from the respondent who are scattered in a vast area.

- To achieve success in collecting reliable and dependable data.

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Determining Type of Question

- After specifying the required data, the researcher must decide the type of question
required to be asked from the respondents to collect this data. He/she must understand
various existing types of question and decide which of these would suit the most of
his/her project situation. There are different types of questions they are as follows:
Direct question Direct question are just what their name indicates e.g. Have you ever
purchased brand?
Indirect question Indirect refers to those whose responses are used to indicate or
suggest date about respondents other than the actual facts given in the answer. For e.g.
why you think most other people buy prefer SHAREKHAN ?
Open ended question Sometimes these question are called free answer questions the
respondent answer in his/her words, for e.g. and open ended question on a study on
Orange squashes can be asked as what suggestion do you make for improving orange
squashes? In this case no answer choice is given to the respondent and he/she may give
any answer he/she thinks.

Close ended question Such guests are also called fixed alternative questions. The
alternative questionnaire may take the form of dichotomous question multiple choice
question checklist and rating scales, such as ordinal scale nominal scale etc.

Question method of data collection is quite popular and consists of question printed or
typed in a form or set of forms. Care was taken in the main aspect as general form.
Question sequence, question formulation and wording, the study was associated with
both the question i.e., closed ended and open ended questions. Free responses were
invited from the respondents.

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Types of Questionnaire
- The study conducted by using structural and undisguised questionnaire. It comprises of
both open and closed ended questions. Questions are rather framed for the customer
attitude including the multiple choice and dichotomous questions.
- The following are the contact method generally user for survey.
1. Mail survey

2. Telephone interview

3. Personal interview

Method of Data Collection

- The task of collecting data being after a research problem has been defined and plan is
chalked and plan is chalked out. This study pertains to collect data from primary sources
primary data and from secondary sources secondary data.

Primary data

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- Primary data are that information which is collected, fresh and fir the first time thus
happens to be original in character primary data can be collected in marketing by three
basic methods, viz., survey, observation and experiments.

Secondary data
- On the other hand are those, which have already been passed through the statistical
process.
- The secondary data are that information which is collected from internal sources as well
as external sources, Wizs from the company own the records and documents.
- Secondary data was collected from the registers, manuals, information bulletins
maintained by the personnel department and other records, information collected in this
manner was immediately complied processed manually and a statistical structure was
given to the data to help interpretation of the statistical data.

Sampling Procedures
- Sampling can be carried out fewer than two important methods, in order to obtain a
respective of the sample they are classified as:

1. Probability sampling
2. Non-probability sampling

Sampling Size
- 70 consumers are taken as samples.

Sampling Procedures
- Selected for this study in area sampling /cluster sampling.

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CHAPTER 5
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DATA ANALYSIS

Q.1 Do you have investment in any of the following market?

Table 5.1
Sr. No. Type of Markets No. of People Percentage
A Equity Market 10 14%
B Derivative Market 5 7%
C Commodity Market 50 72%
D Forex Market 5 7%

Figure 5.1

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Investment

7% 14% Equity Market

Derivative Market
7%
Commodity Market
Forex Market

72%

Interpretation:

- From the above data we can say that 14% people invest in equity market, 7%
people invest in derivative market, 7% people invest in forex market and
72% people invest in Commodity markets.

Q.2 How frequently you invest in commodity market?

Table 5.2
Sr. No. Frequency No. of People Percentage
A 6 Monthly 5 10%
B 2 Monthly 10 20%
C Monthly 5 10%
D Weekly 10 20%
E Daily 20 40%

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Figure 5.2

Frequency

10% 6 Monthly
2 Monthly
Monthly
40% 20%
Weekly
Daily
10%

20%

Interpretation:

- From the above data we can say that 10% people invest 6 Monthly, 10%
people invest Monthly, 20% people invest 2 monthly, 20% people invest
Weekly and 40% people invest daily.

Q.3. From where do you come to know about Sharekhan?

Table 5.3
Sr. No. Source No. of people Percentage
A Share brokers 15 30%
B Friends 15 30%
C Bankers 10 20%
D Advertisements 10 20%

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Figure 5.3

Source

20% Share brokers

30% Friends
Bankers
Advertisements
20%

30%

Interpretation:

- From the above data we can say that, 30% people came to know about
sharekhan from share brokers, 30% people came to know from friends, 20%
people came to know from bankers and 20% people came to know from
advertisements.

Q.4.Are you satisfied with the services provided by sharekhan?

Table 5.4
Sr. No. Services No. of people Percentage
A Yes 40 80%
B No 10 20%

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Figure 5.4

Services

20%
Yes
No

80%

Interpretation:

- From the above data we can say that, 80% people are satisfied by the
services provided by sharekhan and 20% people are dissatisfied with the
same.

Q.5. Are you satisfied with the brokerage charged by sharekhan?

Table 5.5
Sr. No. Brokerage No. of people Percentage
A Yes 40 80%
B No 10 20%

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Figure 5.5

Brokerage

20%
Yes
No

80%

Interpretation:

- From the above data we can say that, 80% people are satisfied by the
brokerage charged by sharekhan and 20% people are dissatisfied with the
same.

Q.6. In which Commodity do you like to trade more frequently?

Table 5.6
Sr. No. Commodity No. of people Percentage
A Bullion 15 30%
B Agriculture 15 30%

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C Metals 10 20%
D Fossils/Energy 10 20%

Figure 5.6

Commodity

20% Bullion
30% Agriculture
Metals
Fossils/Energy
20%

30%

Interpretation:

- From the above data we can say that, 30% people trade in Bullions, 30%
people trade in Agriculture, 20% people trade in Metals and 20% people
trade in Fossils/Energy.

Q.7. What is your perception about Commodity market?

Table 5.7
Sr. No. Risk Factor No. of people Percentage
A Less Risky 10 20%

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B Risky 15 30%
C Very Risky 25 50%

Figure 5.7

Risk Factor

20% Less Risky

Risky
Very Risky
50%

30%

Interpretation:

- From the above data we can say that, 50% people think that Commodity
market is very risky, 30% people think that it is risky and 20% people think
that Commodity market is less risky.

Q.8. Which Commodity exchange you will prefer for investment?

Table 5.8
Sr. No. Commodity Exchange No. of people Percentage

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A MCX 25 50%
B NCDEX 10 20%
C NMCE 10 20%
D Cant Say 5 10%

Figure 5.8

Commodity Exchange

10% MCX
NCDEX
20% NMCE
50% Cant Say

20%

Interpretation:

- From the above data we can say that, 50% people prefer MCX to invest,
10% people prefer NCDEX, 10% people prefer NMCI to invest and 5%
people are not able to decide any of the three exchanges.

Q.9. What do you think, Commodity market advertisements (hoardings,

flyers, etc.) are explanatory enough to give needed useful information?

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Table 5.9
Sr. No. Information No. of people Percentage
A Yes 20 40%
B No 30 60%

Figure 5.9

Information

Yes
40% No

60%

Interpretation:

- From the above data we can say that, 60% people think that advertisement
are not useful to get needed information and 40% people think that
advertisements are useful.

Q.10. What do you think about tips provided by Sharekhan about Commodity
market?

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Table 5.10
Sr. No. Tips No. of people Percentage
A Satisfactory 30 60%
B Dissatisfactory 10 20%
C Never depend on tips 10 20%

Figure 5.10

Tips

20% Satisfactory
Dissatisfactory
Never depend on tips

20% 60%

Interpretation:

- From the above data we can say that, 60% people are satisfied by tips
provided by Sharekhan, 20% people are dissatisfied by tips of Sharekhan
and 20% people never depend on tips of Sharekhan.

Q.11. Have you ever attended the seminar held by Sharekhan?

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Table 5.11
Sr. No. Seminar No. of people Percentage
A Yes 30 60%
B No 20 40%

Figure 5.11

Seminar

Yes
40% No

60%

Interpretation:

- From the above data we can say that, 60% people have attended the
seminars of Sharekhan and 40% people have not attended seminars
conducted by Sharekhan.

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Q.12. Do you think that the return earned form Commodity market is better
than which of the following instruments?

Table 5.12
Sr. No. Instruments No. of people Percentage
A Bank Interest 15 30%
B Post Office 25 50%
C Equity Market 5 10%
D Mutual Fund 5 10%

Figure 5.12

Instruments

10% Bank Interest

10% 30% Post Office
Equity Market
Mutual Fund

50%

Interpretation:

- From the above data we can say that, 50% people earn more than Post
office, 30% people earn more than bank interest, 10% people earn more than
equity market and 10% people earn more than mutual funds.

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Q.13. What kind of Trading do you prefer?

Table 5.13
Sr. No. Trading No. of people Percentage
A Delivery Basis 10 20%
B Renewal of Contract 30 60%
C Depends on Commodities 10 20%

Figure 5.13

Trading

20% 20% Delivery Basis

Renewal of Contract
Depends on
Commodities

60%

Interpretation:

- From the above data we can say that, 60% people prefer to trade on renewal
of contract, 20% people prefer to trade on delivery basis, 20% people trade
as per the different Commodities.

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Q.14. Do you prefer to invest in future commodity market?

Table 5.14
Sr. No. Future Commodity Market No. of people Percentage
A Yes 40 80%
B No 10 20%

Figure 5.14

Future Commodity Market

20%
Yes
No

80%

Interpretation:

- From the above data we can say that, 80% people prefer to invest in
Commodity future markets and 20% people do not invest in Commodity
future markets.

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Q.15. Are you hedging in the Commodities available in Commodity market?

Table 5.15
Sr. No. Hedging No. of people Percentage
A Yes 25 50%
B No 15 30%
C Cant Say 10 20%

Figure 5.15

Hedging

20% Yes
No
Cant Say
50%

30%

Interpretation:

- From the above data we can say that, 50% people prefer to do hedging in the
Commodities available in Commodities market, 30% people donot prefer to
do hedging and 20% people cant say about hedging.

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Q.16. Which medium do you prefer for trading among some provided by
Sharekhan?

Table 5.16
Sr. No. Medium No. of people Percentage
A Trade Tiger 25 50%
B Share mobile 10 20%
C Relationship Manager 15 30%

Figure 5.16

Medium

Trade Tiger
30%
Share mobile
Relationship Manager
50%

20%

Interpretation:

- From the above data we can say that, 50% people prefer to trade by using
trade tiger software, 20% people trade by using Share mobile application
and 30% people trade offline by calling Relationship Manager.

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Q.17. What do you think about Share mobile application and Trade tiger
software provided by Sharekhan?

Table 5.17
Sr. No. Usage No. of people Percentage
A User Friendly 30 60%
B Difficult to use 10 20%
C Cant Say 10 20%

Figure 5.17

Usage

20% User Friendly

Difficult to use
Cant Say

20% 60%

Interpretation:

- From the above data we can say that, 60% people found Trade tiger software
and Share mobile application User-friendly, 20% people are finding difficult
to use the same and 20% people cant say about it.

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CHAPTER 6

FINDINGS

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FINDINGS

In the prevailing competitive environment existing in the investment industry, the overall
market potential and promotional strategy is changing from time to time. So there is a
need to analyze the overall market efficiency and promotional strategy prevailing in the
market for the development of SHAREKHAN.
It is found from the study customer awareness toward SHAREKHAN in different aspects
are as follows:
1) The study says that, 14% people invest in equity market, 7% people invest in
derivative market, 7% people invest in forex market and 72% people invest in
Commodity markets.
2) The study says that, 10% people invest 6 Monthly, 10% people invest Monthly,
20% people invest 2 monthly, 20% people invest Weekly and 40% people invest
daily.
3) The study says that, 30% people came to know about sharekhan from share
brokers, 30% people came to know from friends, 20% people came to know from
bankers and 20% people came to know from advertisements.
4) The study says that, 80% people are satisfied by the services provided by
sharekhan and 20% people are dissatisfied with the same.
5) The study says that, 80% people are satisfied by the brokerage charged by
sharekhan and 20% people are dissatisfied with the same.
6) The study says that, 30% people trade in Bullions, 30% people trade in
Agriculture, 20% people trade in Metals and 20% people trade in Fossils/Energy.
7) The study says that, 50% people think that Commodity market is very risky, 30%
people think that it is risky and 20% people think that Commodity market is less
risky.
8) The study says that, 50% people prefer MCX to invest, 10% people prefer
NCDEX, 10% people prefer NMCI to invest and 5% people are not able to decide
any of the three exchanges.

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9) The study says that, 60% people think that advertisement are not useful to get
needed information and 40% people think that advertisements are useful.
10) The study says that, 60% people are satisfied by tips provided by Sharekhan,
20% people are dissatisfied by tips of Sharekhan and 20% people never depend
on tips of Sharekhan.
11) The study says that, 60% people have attended the seminars of Sharekhan and
40% people have not attended seminars conducted by Sharekhan.
12) The study says that, 50% people earn more than Post office, 30% people earn
more than bank interest, 10% people earn more than equity market and 10%
people earn more than mutual funds.
13) The study says that, 60% people prefer to trade on renewal of contract, 20%
people prefer to trade on delivery basis, 20% people trade as per the different
Commodities.
14) The study says that, 80% people prefer to invest in Commodity future markets
and 20% people donot invest in Commodity future markets.
15) The study says that, 50% people prefer to do hedging in the Commodities
available in Commodities market, 30% people donot prefer to do hedging and
20% people cant say about hedging.
16) The study says that, 50% people prefer to trade by using trade tiger software,
20% people trade by using Share mobile application and 30% people trade
offline by calling Relationship Manager.
17) The study says that, 60% people found Trade tiger software and Share mobile
application User-friendly, 20% people are finding difficult to use the same and
20% people cant say about it.

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CHAPTER 7

SUGGESTIONS

SUGGESTION

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1) Clients should be suggested in trading 2 months contracts, because majority of

commodities are having 2 months contracts in which most of the other people are
trading such as Bullions, gold, silver, etc.
2) More awareness about Sharekhan and its products and services is to be done via more
and more advertisements, seminars, news and media, etc.
3) Most of the people are having problems with brokerage charged by sharekhan, so it is
suggested to look out for this matter and negotiate it if possible.
4) As study says that, majority of people are investing in bullions and agriculture, so the
people should be encouraged by the company to trade in metals and fossils/energy.
5) People are advised to put a stop loss on every trade to minimize the risk factor.
6) According to the study, most of the people are not getting the full information about
commodity market from advertisements, flyers, etc. So it is recommended that the sales
executive of the company should give information to the clients about commodity market
personally.
7) As per the study 80% people are ready to invest in future commodity market, but if
anyone is ready to trade in future markets, then it is beneficial and get more profit and
return as compared to CMP (Current Market Price).
8) Awareness of hedging in the commodities is to be increased by the company and give the
required knowledge about hedging to those people who are unaware about it and it will
increase revenue.

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CHAPTER 8

CONCLUSION

CONCLUSION

From the survey: -

It was found that many people are investing in commodities market as compared to past
data and survey. Many people got awareness about commodity market through seminars
held by Sharekhan, some trade fairs arranged by Sharekhan, etc.

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It was also found that many people are only interested in trading in commodities on basis
of renewal of 2-3 months Contracts, very few trade on delivery basis.

It was also found that many people who deal with gold and silver are also doing hedging
in the same commodities, as it is giving more return.

There is an unfavorable feedback from the customers about brokerage charges as per
transactions. The company should take necessary steps to concentrate on the Brokerage
charges according to competitors.

Commodity market is another diversified avenue for the investment and earning a good
return. Many of the customers are not aware of trade tiger software. This usefulness
should be explained to them.

Customers with money to invest may be living in isolated areas with no proper telephone
or computer facility, the company may think of deputing relationship managers to help
the customers through proper guidance and by passing on relevant information.

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BIBLIOGRAPHY

BIBLIOGRAPHY

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www.sharekhan.
com
www.moneycontrol.com
www.mcxindia.com
www.ncedxindia.com
www.sebi.gov.in
www.investors.com
www.mcx-sx.com
www.xe.com
www.imeinventory.com
www.forexfactory.com
Previous project reports
News Papers
Sharekhans brochures
Sharekhans value Guide

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QUESTIONNAIRE

QUESTIONNAIRE

Q.1 Do you have investment in any of the following market?

a) Equity market
b) Commodity market
c) Currency market
d) Forex market

Q.2 How frequently you invest in commodity market?

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a) 6 Monthly
b) 2 Monthly
c) Monthly
d) Weekly
e) Daily

Q.3. From where do you come to know about Sharekhan?

a) Share brokers
b) Friends
c) Bankers
d) Advertisements

Q.4.Are you satisfied with the services provided by sharekhan?

a) Yes
b) No

Q.5. Are you satisfied with the brokerage charged by sharekhan?

a) Yes
b) No

Q.6. What is your perception about Commodity market?

a) Less Risky
b) Risky
c) Very Risky
Q.7. In which Commodity do you like to trade more frequently?
a) Bullion
b) Agriculture
c) Metals
d) Fossils/Energy

Q.8. Which Commodity exchange you will prefer for investment?

a) MCX
b) NCDEX
c) NMCE
d) Cant Say

Q.9. What do you think, Commodity market advertisements (hoardings,

flyers, etc.) are explanatory enough to give needed useful information?
a) Yes

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b) No

Q.10. What do you think about tips provided by Sharekhan about Commodity
market?
a) Satisfactory
b) Dissatisfactory
c) Never depend on tips

Q.11. Have you ever attended the seminar held by Sharekhan?

a) Yes
b) No

Q.12. Do you think that the return earned form Commodity market is better
than which of the following instruments?
a) Bank interest
b) Post office
c) Equity market
d) Mutual Fund
Q.13. What kind of Trading do you prefer?
a) Delivery Basis
b) Renewal of Contract
c) Depend on Commodities

Q.14. Do you prefer to invest in future commodity market?

a) Yes
b) No

Q.15. Are you hedging in the Commodities available in Commodity market?

a) Yes
b) No
c) Cant Say

Q.16. Which medium do you prefer for trading among some provided by
Sharekhan?
a) Trade Tiger
b) Share Mobile
c) Relationship Manager

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Q.17. What do you think about Share mobile application and Trade tiger
software provided by Sharekhan?
a) User Friendly
b) Difficult to Use
c) Cant Say

ANNEXTURE

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INTERNATIONAL COMMODITY EXCHANGES

Futures trading is a result of solution to a problem related to the maintenance of a year

round supply of commodities/ products that are seasonal as is the case of agricultural
produce. The United States, Japan, United Kingdom, Brazil, Australia, Singapore homes
to leading commodity futures exchanges in the world.

The New York Mercantile Exchange (NYMEX):-

- The New York Mercantile Exchange is the worlds biggest exchange for trading in
physical commodity futures. It is a primary trading forum for energy products and
precious metals. The exchange is in existence since last 132 years and performs trades
trough two divisions, the NYMEX division, which deals in energy and platinum and the
COMEX division, which trades in all the other metals.

Commodities traded: - Light sweet crude oil, Natural Gas, Heating Oil, Gasoline,
RBOB Gasoline, Electricity Propane, Gold, Silver, Copper, Aluminum, Platinum,
Palladium, etc.

London Metal Exchange:-

- The London Metal Exchange (LME) is the worlds premier non-ferrous market, with
highly liquid contracts. The exchange was formed in 1877 as a direct consequence of the
industrial revolution witnessed in the 19th century.

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- The primary focus of LME is in providing a market for participants from non-ferrous
based metals related industry to safeguard against risk due to movement in base metal
prices and also arrive at a price that sets the benchmark globally.
- The exchange trades 24 hours a day through an inter office telephone market and also
through a electronic trading platform. It is famous for its open-outcry trading between
ring dealing members that takes place on the market floor.

Commodities traded:- Aluminum, Copper, Nickel, Lead, Tin, Zinc, Aluminum

Alloy, North American Special Aluminum Alloy (NASAAC), Polypropylene, Linear Low
Density Polyethylene, etc.

The Chicago Board of Trade:-

- The first commodity exchange established in the world was the Chicago Board of Trade
(CBOT) during 1848 by group of Chicago merchants who were keen to establish a
central market place for trade.
- Presently, the Chicago Board of Trade is one of the leading exchanges in the world for
trading futures and options. More than 50 contracts on futures and options are being
offered by CBOT currently through open outcry and/or electronically.
- CBOT initially dealt only in Agricultural commodities like corn, wheat, non storable
agricultural commodities and non-agricultural products like gold and silver.

Commodities Traded: - Corn, Soybean, Oil, Soybean meal, Wheat, Oats, Ethanol,
Rough Rice, Gold, Silver etc.

Tokyo Commodity Exchange (TOCOM):-

- The Tokyo Commodity Exchange (TOCOM) is the second largest commodity futures
exchange in the world. It trades in to metals and energy contracts. It has made rapid
advancement in commodity trading globally since its inception 20 years back.
- One of the biggest reasons for that is the initiative TOCOM took towards establishing
Asia as the benchmark for price discovery and risk management in commodities like the
Middle East Crude Oil.
- TOCOMs recent tie up with the MCX to explore cooperation and business opportunities
is seen as one of the steps towards providing platform for futures price discovery in Asia
for Asian players in Crude Oil since the demand-supply situation in U.S. that drives
NYMEX is different from demand-supply situation in Asia.
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- In Jan 2003, in a major overhaul of its computerized trading system, TOCOM fortified its
clearing system in June by being first commodity exchange in Japan to introduce an in-
house clearing system. TOCOM launched options on gold futures, the first option
contract in Japanese market, in May 2004.

Commodities traded: - Gasoline, Kerosene, Crude Oil, Gold, Silver, Platinum,

Aluminum, Rubber, etc.

Chicago Mercantile Exchange:-

- The Chicago Mercantile Exchange (CME) is the largest futures exchange in the US and
the largest futures clearing house in the world for futures and options trading.
- Formed in 1898 primarily to trade in Agricultural commodities, the CME introduced the
worlds first financial futures more than 30 years ago.
- Today it trades heavily in interest rates futures, stock indices and foreign exchange
futures.
- Its products often serves as a financial benchmark and witnesses the largest open interest
in futures profile of CME consists of livestock, dairy and forest products and enables
small family farms to large Agri-business to manage their price risks. Trading in CME
can be done either through pit trading or electronically.

Commodities Traded: - Butter milk, Diammonium phosphate, Feeder cattle, frozen

pork bellies, Lean Hogs, Live cattle, Non-fat Dry Milk, Urea, Urea Ammonium Nitrate,
etc

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