A

SYNOPSIS

ON

ONLINE TRADING

AT

HDFC BANK

A Project report submitted to Osmania University

In partial fulfilment for the Award of the Degree of

MASTER OF BUSIUNESS ADMINISTRATION

Submitted by

B.VINOD KUMAR

HT NO: 212119672017

UNDER THE GUIDANCE OF

L. Srinivas Reddy

ARISTOTLE PG COLLEGE

(Affliated To Osmania University,Hyderabad)

Recognized By UGC under section 2(f) of UGC Act 1956

Beside Moinabad Police Station,

Chilkur, Moinabad ,Ranga Reddy District, Telangana.

(2019-2021)
 1. INTRODUCTION TO ONLINE TRADING

“Change is the law of nature”. There were times when man was a wanderer or a
normal. He himself had to go place to place in search of food, water and now everything is
available at your doorstep just at the click of the mouse. The growth of information technology
has affected almost all sectors of life. Internet has enabled us to get every information at our
doorstep. When Internet has affected all sectors he could “stock markets” the most important
player of the economy, has remained far behind. Like all other sectors Internet has set its feet in
the stock markets also.

Internet trading commissions are clearly posted on the websites of the various services,
and are typically a fixed rate charge, depending upon the type of security being traded and the
size of trade. In theory, therefore, an Interest investor always knows what commission he is
being charged on each trade. Internet investors can take as much time as they would like to take
prior to placing a trade order. Similarly the online investor likely does not have to worry that his
broker is making unauthorized trades. Since there is no individual broker making a commission,
the only person who is authorized to trace in the account is the actual investor. Furthermore, the
internet investor can never become a victim of excessive trading (where for the broker) since the
investor maintains total control over the number of transactions which take place in the account

The online trading is simply defined as “dealing securities on net”. In online trading
system, from a single location anywhere, can service investors across the country.
 CHAPTER -2
REVIEW OF LITERATURE

ONLINE TRADING

Before getting in to the online trading we should know some things about the internet, e-
commerce and etc.

1. Internet
Internet is a worldwide, self-governed network connecting several other smaller
networks and millions of computers and persons, to mega sources of information. This
technology shrinks vast distances, accelerating the pace of business reforms and
revolutionizing the way companies are managed. It allows direct, ubiquitous links to anyone
anywhere and anytime to build up interactive relationships.

A combination of time and space, called the Internet promises to bring unprecedented
changes in our lives and business. Internet or net is an inter-connection of computer
communication networks spanning the entire globe, crossing all geographical boundaries. It
has re-defined the methods of communication, work study, education, business, leisure,
health, trade, banking, commerce and what not it is virtually changing every thing and we are
living in dot.com age. Net being an interactive two way medium, through various websites,
enables participation by individuals in business to business and business to consumer
commerce, visit to shopping arcades, games, etc. in cyber space even the information can be
copied, downloaded and retransmitted.
The use of Internet has grown 2000 percent in last decade and is currently growing at 10
percent per month. In India, growth of Internet is of recent times. It is expected to bring
changes in every functional area of business activity including management and financial
services. It offers stock trading at a lower cost. Internet can change the nature and capacity of
stock broking business in India.
2. E-commerce
Electronic commerce is associated with buying and selling over computer communication
networks. It helps conduct traditional commerce through new way of transferring and
processing of information. Information is electronically transferred from computer to
computer in an automated way. E-commerce refers to the paperless exchange of business
information using electronic data inter change, electronic technologies. It not only reduces
manual processes and paper transactions but also helps organization move to a fully
electronic environment and change the way they operated.

PC’s and networking attempts to introduce banks of the tools and technologies required
for electronic commerce. The computers are either workstations of individual office works or
serves where large databases and information reside. Network connects both categories of
computers; the various operating systems are the most basis program within a computer. It
manages the resources of the computer system in a fair and efficient manner.
Now we can enter in to the concept known as online trading.

In the past, investors had no option but to contact their broker to get real time access to
market data. The net brings data to the investor on-line and net broking enables him to trade
on a click of mouse. Now information has become easily accessible to both retail as well as
big investor.
EVOLUTION OF BROKING IN INDIA:

The evolution of a broking in India can be categorized in three phases -

 Stockbrokers will offer on their sites features such as live portfolio manager, live
quotes, market research and news, etc. to attract more investors.
 Brokers will offer online broking and relationship management by providing and
offering analysis and information to investors during broking and non-broking hours
based on their profile and needs, i.e. customized services.
 Brokers (now e-brokers) will offer value management or services like initial public
offering online, on-line asset allocation, portfolio management, financial planning,
tax planning, insurance services, etc. and enables the investors to take better and well
considered decisions.

The actual definition of “Online Trading” is as explained below:

“Online trading is a service offered on the internet for purchase and sale of shares.
In the real world you place orders on your stockbroker either verbally (personally or
telephonically) or in a written form (fax).” In online trading, you will access a
stockbroker’s website through your internet enabled PC and place orders through the
broker’s internet based trading engine. These orders are routed to the stock exchange
without manual intervention and executed thereon in a matter of a few seconds.The
net is used as a mode of trading in internet trading. Orders are communicated to the
stock exchange through website.
In India:
Internet trading started in India on 1st April 2000 with 79 members seeking permission for
online trading. The SEBI committees on internet based securities trading services has
allowed the net to be used as an Order Routing System (ORS) through registered stock
brokers on behalf of their clients for execution of transaction. Under the ORS the client
enters his requirements (security, quantity, price buy/sell) on broker’s site.
Objectives:

Internet trading is expected to

 Increase transparency in the markets,
 Enhance market quality through improved liquidity, by increasing quote continuity
and market depth,
 Reduce settlement risks due to open trades, by elimination of mismatches,

 Provide management information system,

 Introduce flexibility in system, so as to handle growing volumes easily and to support
nationwide expansion of market activity.

Besides, through internet trading three fundamental objectives of securities regulation can
be easily achieved, these are:
 Investor protection
 Creation of a fair and efficient market, and
 Reduction of the systematic risks.
Some of the brokers offering net trading include ICICI direct, kotakstreet, etc.

Requirements for net trading:

For investors:

1. Installation of a computer with required specification

2. Installation of a modem
3. Telephone connection
4. Registration for on-line trading with broker5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
The following should be produced to get a demat account and online trading account:

As identity proof & address proof any one of the following:

 Voter ID card
 Driving license
 PAN card( in case of to trade more than 50000)
 Ration card
 Bank pass book
 Telephone bill
Other requirements, which are necessary
 First page of the bank pass book and last 6 months statement.
 Bank manager’s signature along with bank’s seal, manager registration code on
photograph.

For stock brokers:

1. Permission from stock exchange for net trading
2. Net worth of Rs. 50 lac
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website.
 The net is used as a medium of trading in internet trading. Orders are communicated to
the stock exchange through website. Internet trading started in India on 1st April 2000 with
79 members seeking permission for online trading. The SEBI committees on internet based
securities trading services has allowed the net to be used as an Order Routing System (ORS)
through registered stock brokers on behalf of their clients for execution of transaction.
Under the Order Routing System the client enters his requirements (security, quantity, price,
and buy/sell) in broker's site. They are checked electronically against the clients account and
routed electronically to the appropriate exchange for execution by the broker. The client
receives a confirmation on execution of the order. The customer's portfolio and ledger
accounts get updated to reflect the transaction. The user should have the user id and password
to enter into the electronic ring. He should also have demat account and bank account. The
system permits only a registered client to log in using user id and password. Order can be
placed using place order window of the website.
Procedure for net trading

Step 1: Those investors, who are interested in doing the trading over internet system i.e.
NEAT-IXS, should approach the brokers and get them self registered with the Stock Broker.
Step 2: After registration, the broker will provide to them a Login name, Password and
personal identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by using the place order
window as under:
(a) First by entering the symbol and series of stock and other parameters like quantity
and price of the scrip on the place order window.
(b) Second, fill in the symbol, series and the default quantity.
Step 4: It is the process of review. Thus, the investor has to review the order placed by
clicking the review option. He may also re-set to clear the values.
Step 5: After the review has been satisfactory, the order has to be sent by clicking on the
send option.
Step 6: The investor will receive an "Order Confirmation" message along with the order
number and the value of the order.
Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons
 such as invalid price limit, an appropriate message will appear at the bottom of the screen. At
present, a time lag of about 10 seconds is there in executing the trade.
Step 8: It is regarding charging payment, for which there are different mode. Some brokers
will take some advance payment from the investor and will fix their trading limits. When the
trade is executed, the broker will ask the investor for transfer of funds to his account.
Internet trading provides total transparency between a broker and an investor in the
secondary market. In the open outcry system, only the broker knew the actually transacted
price. Screen based trading provides more transparency. With online trading investors can
see themselves the price at which the deal takes place.
The time gap has narrowed in every stage of operation. Confirmation and execution of trade
reaches the investor within the least possible time, mostly within 30 seconds. Instant
feedback is available about the execution. Some of the websites also offer;
 News and research report
 BSE and NSE movements
 Stock analysis
 IPO and mutual fund centers

Step by step procedure in online trading:

Following steps explain the step by step approach to on-line trading:

 Log on to the stock broker's website
 Register as client/investor
 Fill the application form and client broker agreement form on the requisite value stamp
paper
 Obtain user ID and pass word
 Log on to the broker's site using secure user ID and password
 Market watch page will show real time on-line market data
 Trade shares directly by entering the symbol or number of the security
 Brokers server will check your limit in the on-line account and demat account for the
number of shares and execute the trade
  Order is executed instantly (10-30 seconds) and confirmation can be obtained.
 Confirmation is e-mailed to investor by broker
 Contract note is printed and mailed in 24 hours
 Settlement will take place automatically on the settlement day
ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS:

 Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this
leeway facility since one need to hold a price.
 Market orders: orders can be filled at unexpected prices, but this type is much more
risky, since you have to buy stock at the given price.
 Cash account: where funds have to be available prior to placing the order.
 Margin account: where orders can be placed against stocks, to increase Purchasing
power.

ADVANTAGES OF ONLINE TRADING:

 Online trading has made it possible for anyone to have easy and efficient access to more
reports and charts than it was previously possible if one went to any brokers' office. Thus
we have access to a lot more information online.
 Online trading has let room for smaller organizations to compete with multinational
organizations since it is no longer a leg it issue. Being online does not identify the size of
any particular organization, therefore, this additional power to the underdogs.
 Online trading has allowed companies to locate themselves where they want as physical
location is not an issue anymore. Companies can establish themselves according to their
gains and losses, for instance where tax (sales and value added taxes) is best suited to
them.

 Online trading gives control to individuals and they can exercise it over accounts thus
comprehend what is going on when they trade. It is like going back to school and re-
educating oneself on how to trade online.
 Individuals’ benefit by saving comparatively a lot more when trading online as the cost
per trade is less.
 Individuals can invest in a variety of products, unlike earlier when people bought bonds,
mutual funds, and stock for long-term basis and sat on them. Now they can invest in
stocks, stock and index options mutual funds, government, and even insurance.
INVESTORS REASONS TO TRADE ONLINE:

 They have control over their accounts, can make their own decisions and don’t have to
give reasons for their actions. They are independent.
 They have a reason to participate in the market and learn about it.
 It is interesting, cheap, easy, fast, and convenient.
 A lot of information is online so they can keep up-to-date with what is happening in the
trading world.
 It will give investors a greater choice and better realization.
 The immediate impact will be competition and benefits will accrue to the investors.
 It will lead to brokerage commissions going down and brokers striving to increase
business afloat.
 Investors will now go to place, which have better trading conditions and also members to
offer them better facilities.
 They have access to numerous tools to invest, and can create their own portfolio.
HERE ARE THE POSSIBLE DISADVANTAGES:s

 When network crashes, there will be problems and delays due to a large influx of rapid
online trading criteria.
 Individuals are restricted to first-hand financial guidance. This simply means that the
individual is himself / herself alone to.
 A tax (sales tax and value added tax) evaluation becomes an issue, especially when you
are trading internationally.
 One has no idea with whom he is dealing with on the other end.
 According to a study conducted by Mary Rowland, careful investor: is online trading bad
for your portfolio, the more one trades the less returns one gets, meaning that an addicted
trader gets, carried away online and begins to trade for too much which causes losses for
him / her.
 Individuals think that they are trading with the market directly and know what they are
doing, but the truth is that even though technology has taken over, the basic rules of
trading are the same. It seems that the middleman has been removed, but that is not so.
When the individuals click on the mouse, his trade goes through a broker. The
commissions online pertain to the intermediary.
 There is a need for more effective communication links over the Internet and the ability
of the server to deal with a large volume of visitors.

STOCK EXCHANGES 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:

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-profit-marking
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 committee’s 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 country’s 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 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.

Various Stock Exchanges in India:

At present there are 23 stock exchanges recognized under the securities contracts
(regulation), Act, 1956. Those are:

Ahmedabad Stock Exchange Association Ltd.

Bangalore Stock Exchange

Bhubaneshwar Stock Exchange Association

Calcutta Stock Exchange

Cochin Stock Exchange Ltd.

Coimbatore Stock Exchange

Delhi Stock Exchange Association

Guwahati Stock Exchange Ltd

Hyderabad Stock Exchange Ltd.(Presently not working)

Jaipur Stock Exchange Ltd

Kanara Stock Exchange Ltd

Ludhiana Stock Exchange Association Ltd

Madras Stock Exchange

Madhya Pradesh Stock Exchange Ltd.

Magadh Stock Exchange Limited

Meerut Stock Exchange Ltd.

Mumbai Stock Exchange

National Stock Exchange of India

OTC Exchange of India

Pune Stock Exchange Ltd.

Saurashtra Kutch Stock Exchange Ltd.

Uttar Pradesh Stock Exchange Association

Vadodara Stock Exchange Ltd.

Out of these major stock exchanges were:

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 (FI’s) 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:

 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. 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.

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.

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.

OBJECTIVES AND FUNCTIONS OF SEBI

 To protect the interest of investors in securities.

 Regulating the business in stock exchanges and any other securities market.
 Registering and regulating the working of intermediaries associated with securities
market as well as working of mutual funds.
  Promoting and regulating self-regulatory organizations.
 Prohibiting insider trading in securities.
 Regulating substantial acquisition of shares and take over of companies.
 Performing such functions and exercising such powers under the provisions of capital
issues (control) act, 1947and the securities to it by the central government.

SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES):

 Board of Directors of Stock Exchange has to be reconstituted so as to include non-

members, public representatives and government representatives to the extent of 50% of
total number of members.
 Capital adequacy norms have been laid down for the members of various stock
exchanges depending upon their turnover of trade and other factors.
 All recognized stock exchanges will have to inform about transactions within 24 hrs.

TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the investors. The orders
are of different types.
Limit orders: Orders are limited by a fixed price. E.g. ‘buy Reliance Petroleum at
Rs.50.’Here, the order has clearly indicated the price at which it has to be bought and the
investor is not willing to give more than Rs.50.
Best rate order: Here, the buyer or seller gives the freedom to the broker to execute the
order at the best possible rate quoted on the particular date for buying. It may be lowest rate
for buying and highest rate for selling.
Discretionary order: The investor gives the range of price for purchase and sale. The broker
can use his discretion to buy within the specified limit. Generally the approximation price is
fixed. The order stands as this “buy BRC 100 shares around Rs.40”.

Buying and selling shares: To buy and sell the shares the investor has to locate register
broker or sub broker who render prompt and efficient service to him. The order to buy or sell
specifying the number of shares of the company of investors’ choice is placed with the
broker. The order may be of any type. After receiving the order the broker tries to execute the
order in his computer terminal. Once matching order is found, the order is executed. The
broker then delivers the contract note to the investor. It gives the details regarding the name
of the company, number of shares bought, price, brokerage, and the date of delivery of share.
In this physical trading form, once the broker gets the share certificate through the clearing
houses he delivers the share certificate along with transfer deed to the investor. The investor
has to fill the transfer deed and stamp it. The stamp duty is one of the percentage
considerations, the investor should lodge the share certificate and transfer deed to the register
or transfer agent of the company. If it is bought in the DEMAT form, the broker has to give a
matching instruction to his depository participant to transfer shares bought to the investors
account. The investor should be account holder in any of the depository participant. In the
case of sale of shares on receiving payment from the purchasing broker, the broker effects the
payment to the investor.
Share groups: The scrips traded on the BSE have been classified into ‘A’,’B1’,’B2’,’C’,’F’
and ‘Z’ groups. The ‘A’ group represents those, which are in the carry forward system. The
‘F’ group represents the debt market segment (fixed income securities). The Z group scrips
are of the blacklisted companies. The ‘C’ group covers the odd lot securities in ‘A’,
‘B1’&’B2’ groups.

ROLLING SETTLEMENT SYSTEM:

Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or 5days)
after the trading day. The shares bought and sold are paid in for n days after the trading day
of the particular transaction. Share settlement is likely to be completed much sooner after the
transaction than under the fixed settlement system.
The rolling settlement system is noted by T+N i.e. the settlement period is n days after the
trading day. A rolling period which offers a large number of days negates the advantages of
the system. Generally longer settlement periods are shortened gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis of the criteria
that they were in compulsory demat list and had daily turnover of about Rs.1 crore or more.
Then it was extended to “A” stocks in Modified Carry Forward Scheme, Automated Lending
and Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme (BELSS)
with effect from Dec 31, 2001.
SEBI has introduced T+5 rolling settlement in equity market from July 2001 and
subsequently shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement
experience it was further reduced to T+2 to reduce the risk in the market and to protect the
interest of the investors from 1st April 2003.
Activities on T+1: conformation of the institutional trades by the custodian is sent to the
stock exchange by 11.00 am. A provision of an exception window would be available for late
confirmation. The time limit and the additional changes for the exception window are
dedicated by the exchange.
The exchanges/clearing house/ clearing corporation would process and download the
obligation files to the broker’s terminals late by 1.30 p.m on T+1. Depository participants
accept the instructions for pay in securities by investors in physical form upto 4 p.m and in
electronic form upto 6 p.m. the depositories accept from other DPs till 8p.m for same day
processing.
Activities on T+2: The depository permits the download of the paying in files of securities
and funds till 10.30 a.m on T+2 from the brokers’ pool accounts. The depository processes
the pay in requests and transfers the consolidated pay in files to clearing House/clearing
Corporation by 11.00am/on T+2. The exchange/clearing house/clearing corporation executes
the pay-out of securities and funds latest by 1.30 p.m on T+2 to the depositories and clearing
banks. In the demat mode net basis settlement is allowed. The buy and sale positions in the
same scrip can be settled and net quantity has to be settled.
1.3 METHODOLOGY OF THE STUDY:

The data collection methods include both primary and secondary

Collection methods.

Primary method: This method includes the data collected from the personal interaction with
authorized members of HDFC Bank limited.

Secondary method: The secondary data collection method includes:

 The lecturers delivered by the superintendents of respective departments.
 The brochures and material provided by HDFC BankSecurities limited.
 The data collected from the magazines of the NSE, economic times, etc.
 Various books relating to the investments, capital market and other related topics.

1.4 LIMITATIONS OF THE STUDY:

The study confines to the past 2-3 years and present system of the trading procedure in theand the
HDFC Bank study is confined to the coverage of all the related issues in brief. The data is collected
from the primary and secondary sources and thus is subject to slight variation than what the study
includes in reality.

The study is confined to online trading procedure only. Problems of listing are not
covered due to limited time and to keep the study in manageable limits.

1 NEED FOR THE STUDY:

The present study to review the online trading procedure a case study of Online Trading at
HDFC Bank., as the exchange has changed it’s trading from it and there is need to assess the
performance of the capital market.
1.2 OBJECTIVES OF THE STUDY:
 It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system.
 It is to study the functions of HDFC Bank through various departments.
 To know the online screen based trading system adopted by HDFC Bank and about
its communication facilities. The appropriate configuration to set the network, which
would link the HDFC Bank to individual / members.
 To know about the latest and future development in the stock exchange trading
system.

SCOPE OF THE STUDY

 It provides a complete knowledge of various fundamental concepts of share market and

online trading.
 It will help in analyzing the behaviour of consumers and help in knowing the parameters
of investment on which they would like to invest.
 creating a word of mouth publicity of my organization by offering the best

 services to the clients so that more and more potential customer will come and stick to
my organization.

LIMITATIONS OF THE STUDY:

The study confines to the past 2-3 years and present system of the trading procedure in theand the
HDFC Bank study is confined to the coverage of all the related issues in brief. The data is collected
from the primary and secondary sources and thus is subject to slight variation than what the study
includes in reality.
 The study is confined to online trading procedure only. Problems of listing are not covered due to limited

time and to keep the study in manageable limits.

STATISTICAL TOOLS
: Account with sophisticated trading tools, low commissions and priority access to R.M.
3. COMPANY PROFILE

HDFC BankLtd,

HDFC Bank Ltd, a trusted financial services intermediary is a subsidiary of India's

respected private sector Bank -HDFC Bank. A leading stock broking company having completed
10 years in operation, serves a diverse customer  base of retail and institutional
investors.‡Discerning investors experience a robust platform to trade in Equities, derivatives,
currency futures and mutual funds through both NSE & BSE and other investment options like
IPO's, bonds, corporate fixed deposits, insurance etc. Investors are also provided with niche
-Equity Investment advice and execution platform with superior technology aid and unbiased
research across sectors, economy and scrips. HDFC Securitas is designed to meet the
requirements of everyone from a beginner to a savvy and well-informed trader with highest
service standards, convenience and hassle-free trading tools. The Web portal aims to provide a
one stop window for all financial needs with seamlessness and customer centric services

SPEED
 State-of-the art technology enabling seamless trading experience on both the exchanges
BSE and NSE..
 Clients could adopt to trade with us either online, or on the phone, or relationship
managers from the convenience of their home or office.
 The 4-in-1 Advantage account enables clients to seamlessly move funds and securities
across your bank, demat and trading account.‡Clients get to enjoy limits across
exchanges to trade.
 No need to issue cheques or delivery instructions.
 Place IPO / NCD applications via few clicks using the trading account or by the
phone. No standing in queues or filling application forms.
 ASBA application facility.‡Customer care centre to address all queries and grievances
HDFC Bankhas a strong unified call centre catering to clients across India and overseas aiding
clients who wish to have their orders placed by a tele-agent. 7 Regional language call centre
facility is available for clients. Over 128 exclusive branches across India also service clients
locally by dedicated relationship managers.
TRANSPARENCY
With our trusted pedigree, a client can be assured of best services in a transparent manner and is
in total control of their funds and stocks.

EXPERTISE
With a decade of experience and a rating of A1+1, HDFC Bankhave an admired lineage
of providing financial services to customers in a transparent and trusted manner. We have a
dedicated, motivated and experienced team of professionals to provide you top class service.
TIMELYANDR ELEVANTINFOR MATION
We realize the importance of making information available to clients as it happens.
Empowered with the latest news, developments and unbiased research, enables a client to take
informed decisions.
YOUR INTEREST
For HDFC securities, client's interest comes first. We endeavor to provide high quality
investment services, in a simple, direct and cost-effective manner to help you achieve your
financial goals.
Resident Account Opening
To Open An Account

Step 1:
 Fill the Online application form or you may call us on our toll-free number at 1800-209-
9700 or on 91-22-61411700

Step: 2
 Keep the minimum essential documents ready and our representative will contact you and
come over to collect these, and complete the application formalities.‡

Step3:
 Within two weeks of submitting the form you shall receive your online trading login and
password and can start trading online right away.
HDFC Bank
The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in
the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered
office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank
in January 1995.

HDFC is India's premier housing finance company and enjoys an impeccable track record
in India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and also
has a large corporate client base for its housing related credit facilities. With its experience in the
financial markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank's risk appetite. The bank is committed to maintain the
highest level of ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank's business philosophy is based on four core values - Operational
Excellence, Customer Focus, Product Leadership and People.

Capital Structure:-

As on 31st March, 2012 the authorized share capital of the Bank is Rs. 550 crore. The paid-up
capital as on the said date is Rs. 469,33,76,540 (234,66,88,270 equity shares of Rs. 2/- each).
The HDFC Group holds 23.15% of the Bank's equity and about 17.29 % of the equity is held by
the ADS / GDR Depositories (in respect of the bank's American Depository Shares (ADS) and
Global Depository Receipts (GDR) Issues). 30.68 % of the equity is held by Foreign Institutional
Investors (FIIs) and the Bank has 4,47,924 shareholders

The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange
of India Limited. The Bank's American Depository Shares (ADS) are listed on the New York
Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts
(GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002.
FINANCIAL RESULTS:

Profit & Loss Account: Quarter ended June 30, 2012

The Bank’s total income for the quarter ended June 30, 2012, was ` 9,536.9 crores as against `
7,098.0 crores for the quarter ended June 30, 2011. Net revenues (net interest income plus other
income) were at ` 5,013.5 crores for the quarter ended June 30, 2012, an increase of 26.3% over `
3,968.0 crores for the corresponding quarter of the previous year. Net interest income (interest
earned less interest expended) for the quarter ended June 30, 2012, grew by 22.3% to ` 3,484.1
crores. This was driven by loan growth of 21.5% and a net interest margin for the quarter of
4.3%. Other income (non-interest revenue) for the quarter ended June 30, 2012, was ` 1,529.5
crores, up 36.6% over that in the corresponding quarter ended June 30, 2011. The main
contributor to other income for the quarter was fees & commissions of ` 1,143.3 crores, up by
23.9% over ` 922.7 crores in the corresponding quarter ended June 30, 2011. The two other
components of other income were foreign exchange & derivatives revenue of ` 314.8 crores (`
230.1 crores for the corresponding quarter of the previous year) and profit on revaluation / sale
of investments of ` 66.5 crores (loss of ` 41.3 crores for the quarter ended June 30, 2011)
Business:-
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with
effect from 6th July 2010. Mr. Vasudev has been a Director of the Bank since October
2006. A retired IAS officer, Mr. Vasudev has had an illustrious career in the civil
services and has held several key positions in India and overseas, including Finance Secretary,
Government of India, Executive Director, World Bank and Government nominee on the Boards
of many companies in the financial sector.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and
before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience
in public policy, administration, industry and commercial banking. Senior executives
representing HDFC are also on the Board.  Senior banking professionals with substantial
experience in India and abroad head various businesses and functions and report to the Managing
Director. Given the professional expertise of the management team and the overall focus on
recruiting and retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength. 

Credit Rating:

The Bank has its deposit programs rated by two rating agencies - Credit Analysis &
Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit
programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents
instruments considered to be "of the best quality, carrying negligible investment risk". CARE has
also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior
capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd.
(100% subsidiary of Fitch Inc.) has assigned the "AAA (ind)" rating to the Bank's deposit
programme, with the outlook on the rating as "stable". This rating indicates "highest credit
quality" where "protection factors are very high". The Bank also has its long term unsecured,
subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier
I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned
the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt.
Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has
also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond
issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme
and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were
the highest assigned by the rating agency for those instruments?
Corporate Governance Rating:
 The bank was one of the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating
Information Services of India Limited (CRISIL). The rating provides an independent assessment
of an entity's current performance and an expectation on its "balanced value creation and
corporate governance practices" in future. The bank has been assigned a 'CRISIL GVC Level 1'
rating which indicates that the bank's capability with respect to wealth creation for all its
stakeholders while adopting sound corporate governance practices is the highest.

On May 23, 2009, the amalgamation of Centurion Bank of Punjab with HDFC Bank was
formally approved by Reserve Bank of India to complete the statutory and regulatory approval
process. As per the scheme of amalgamation, shareholders of CBoP received 1 share of HDFC
Bank for every 29 shares of CBoP.

The merged entity will have a strong deposit base of around Rs. 1,22,000 crores and net
advances of around Rs. 89,000 crores. The balance sheet size of the combined entity would be
over Rs. 1,63,000 crores. The amalgamation added significant value to HDFC Bank in terms of
increased branch network, geographic reach, and customer base, and a bigger pool of skilled
manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited (another
new private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with
HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private banks in
the New Generation Private Sector Banks. As per the scheme of amalgamation approved by the
shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received
1 share of HDFC Bank for every 5.75 shares of Times Bank.

  HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a commercial bank of India,

incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector
banks. The Bank was promoted by the Housing Development Finance Corporation, a premier
housing finance company (set up in 1977) of India. HDFC Bank has 1,412 branches and over
3,295 ATMs, in 528 cities in India, and all branches of the bank are linked on an online real-time
basis. As of September 30, 2010 the bank had total assets of INR 1006.82 billion. For the fiscal
year 2013-14, the bank has reported net profit of Rs.2,244.9 crore, up 41% from the previous
fiscal. Total annual earnings of the bank increased by 58% reaching at Rs.19,622.8 crore in
2013-14.
Business Focus:

HDFC Bank deals with three key business segments – Wholesale Banking Services, Retail
Banking Services, and Treasury. It has entered the banking consortia of over 50 corporate for
providing working capital finance, trade services, corporate finance and merchant banking. It is
also providing sophisticated product structures in area of foreign exchange and derivatives,
money markets and debt trading and equity research.

Wholesale Banking Services:

The Bank's target m inroads into the banking consortia of a number of leading Indian
corporate including multinationals, companies from the domestic business houses and prime
public sector companies. It is recognized as a leading provider of cash management and
transactional banking solutions to corporate customers, mutual funds, stock exchange members
and banks.

Retail Banking Services:

The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all his/her
banking requirements. The products are backed by world-class service and delivered to
customers through the growing branch network, as well as through alternative delivery channels
like ATM, Phone Banking, Net Banking and Mobile Banking.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the Master card Maestro debit card as well.
The Bank launched its credit card business in late 2001. By March 2012, the bank had a total
card base (debit and credit cards) of over 13 million. The Bank is also one of the leading players
in the “merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit /
credit cards acceptance at merchant establishments.
Distribution Network:

HDFC Bank is headquartered in Mumbai. The Bank has a network of 1,725 branches
spread in 771 cities across India. All branches are linked on an online real-time basis. Customers
in over 500 locations are also serviced through Telephone Banking. The Bank has a presence in
all major industrial and commercial centers across the country. Being a clearing/settlement bank
to various leading stock exchanges, the Bank has branches in the centre where the NSE/BSE has
a strong and active member base.

The Bank also has 3,898 networked ATMs across these cities. Moreover, HDFC Bank's
ATM network can be accessed by all domestic and international Visa/MasterCard, Visa
Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.

Housing Development Finance Corporation Limited or HDFC (BSE: 500010), founded

1977 by Ravi Maurya and Hasmukhbhai Parekh, is an Indian NBFC, focusing on home
mortgages. HDFC's distribution network spans 243 outlets that include 49 offices of HDFC's
distribution company, HDFC Sales Private Limited. In addition, HDFC covers over 90 locations
through its outreach programmes. HDFC's marketing efforts continue to be concentrated on
developing a stronger distribution network. Home loans are also Sharked through HDFC Sales,
HDFC Bank Limited and other third party Direct Selling Agents (DSA).

To cater to non-resident Indians, HDFC has an office in London and Dubai and service
associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi, Al Khobar, Jeddah and Riyadh in Saudi
Arabia.

Awards and Achievements - Banking Services:-

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian
Bank". We realized that only a single-minded focus on product quality and service excellence
would help us get there. Today, we are proud to say that we are well on our way towards that
goal.
It is extremely gratifying that our efforts towards providing customer convenience have been
appreciated both nationally and internationally.

2012
Financial Express Best Bank - Best in Strength and Soundness 
Survey 2012-13 - 2nd Best in the Private Sector
IDRBT Banking Technology - Best Bank in 'IT for Operational Effectiveness'
CNBC TV18's Best Bank & - Best Bank
Excellence Awards 2013-14 category
Financial Institution Awards - Mr. Aditya Puri, Outstanding Finance
Asia Money 2012 - Best Domestic Bank in India
Professional
India's Top 500 Companies - Best Bank in India
Dun & Bradstreet Banking - Best Private Sector Bank - SME Financing
Dun & Bradstreet Corporate
Awards 2011
Awards
ISACA 2011 award for IT - Best practices in IT Governance and IT Security
Governance
IBA Productivity Excellence - New Channel Adopter (Private Sector)
Awards 2011
DSCI (Data Security Council - Security in Bank
of India) Excellence Awards
2011
Euromoney Awards for - Best Bank in India
Excellence 2011
FINANCE ASIA Country - BEST BANK
Awards 2011: India - BEST CASH MANAGEMENT BANK
- BEST TRADE FINANCE BANK
Asian Banker - Strongest Bank in Asia Pacific
BloombergUTV's Financial - Best Bank
Leadership Awards 2011
IBA Banking Technology - Winner -
Awards 2010 1) Technology Bank of the Year
2) Best Online Bank
3) Best Customer Initiative
4) Best Use of Business Intelligence
5) Best Risk Management System
Runners Up - 
Best Financial Inclusion
IDC FIIA Awards 2011 - Excellence in Customer Experience
2011

2010

Outlook Money 2010 - Best Bank

AWARDS
Businessworld Best Bank - Best Bank (Large)
Awards 2010
Teacher's Achievement - Mr. Aditya Puri
Awards 2010 (Business)
The Banker and PWM 2010 - Best Private Bank in India
Global Private Banking
Awards
Economic Times Awards for - Business Leader of the Year - Mr. Aditya Puri
Corporate Excellence 2010
Forbes Asia - Fab 50 Companies - 5th year in a row
NDTV Business Leadership - Best Private Sector Bank
Awards 2010
The Banker Magazine - World's Top 1000 Banks
MIS Asia IT Excellence - BEST BOTTOM-LINE I.T. Category
Award 2010
Dun & Bradstreet Banking
Awards 2010  Overall Best Bank
 Best Private Sector Bank
 Best Private Sector Bank in SME Financing
Institutional Investor HDFC Bank MD, Mr. Aditya Puri among "Asian
Magazine Poll Captains of Finance 2010"
IDRBT Technology 2009 - Winner - 1) IT Infrastructure 2) Use of IT
Awards within the Bank 
Runners-up - IT Governance (Large Banks)
ACI Excellence Awards 2010 - Highly Commended - Asia Pacific HDFC Bank
FE-EVI Green Business - Best performer in the Banking category
Leadership Award
Celent's 2010 Banking - Model Bank Award
Innovation Award
Avaya Global Connect 2010 - Customer Responsiveness Award - Banking &
Financial Services category
Forbes Top 2000 Companies - Our Bank at 632nd position and among 130
Global High Performers