Pratibhuti

23 Feb 2012 | 02:22 AM

   Trading into Indian Markets

   Introduction to Indian Exchanges

   Commencing Trade Activities

   Trading Notes for NRIs

TRADING INTO INDIAN EQUITY MARKETS

Trading of the Indian equity is generally transacted on two major Indian bourses, National Stock Exchange of India Ltd. (NSE) and The Stock Exchange, Mumbai (BSE).

The primary trading is characterized in the equity segment with average daily turnover exceeding Rs. 6536 crores daily. The derivative segment on the underlying equities are gaining prominence with turnover of Rs. 5300- 6000 Crs. The other market consist of debt market - which is currently dominated by primary dealers, banks and wholesale investors .

EQUITIES

All trading on the Indian bourses are carried out in dematerialized form. Shares held in physical form remain illiquid and cannot be sold in the market by any investor since there is no liquidity for physical stocks. Furthermore, SEBI has mandated that securities can be sold only in dematerialized form in the T+2 rolling settlement system. SEBI has also mandated that all IPOs will be traded compulsorily in the dematerialized form .

ADRs / GDRs

These are receipts for shares of an Indian company listed on the any of the stock exchanges outside India entitling the shareholder to all dividends and capital gains. Foreign investors (except OCB’s) are allowed to buy Indian equity for the purpose of converting the equity into ADR / GDR.

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AN INTRODUCTION TO INDIAN EXCHANGES SETTLEMENTS AND SYSTEM

Exchanges	National Stock Exchange of India Limited (NSE)	The Stock Exchange,Mumbai(BSE)
Major Indices	S&P CNX Nifty–Comprising of 50 Scrips	Sensex-Comprising of 32 Scrips
Trading Hours IST	0955 hours – 1530 hours Monday to Friday. The schedule may change due to external factors like sun-outage, etc., increasing the market time by 00:30 hours.
Contract Size	Minimum 1 Share	Minimum 1 Share
Min contract commitment	Pratibhuti charges a minimum of Rs. 100 for executing a single contract on either exchange in order to maintain its service standards.
Securities Traded	Securities held in electronic mode are only bought and sold through the Exchanges. Physical/Paper securities are not recognized for delivery/trading.
Settlement Type	T+2. Rolling Settlement. The trades are settled on the third day after the contract date. That is, the funds or shares are required to be transferred to the broker well before the T+2 date, to complete the settlement.
Margin System	All non-institutional trades in the cash market are compulsorily subject to margins
Settlement Basis	Cash settlement
Depositories	There are two depositories through which an investor can receive/deliver his securities on either Exchanges. These are the NSDL and CDSL. The depositories work on ISO Standard 6166, using ISIN Numbering System.
Securities Borrowing & Lending	Facility for borrowing stocks against short-sell positions possible. Requirements: Subject to availability of stock, Collateral Required, Agreement on Costs.
Settlement Guarantee Fund	Available	Available

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COMMENCING TRADING ACTIVITIES

1.Client Form

Executing the common client account opening form. Please fill in all details such as name, address, contact numbers, bank account details, depository account details and identity proof.

2.Allotment of Unique Client Code.

The client will be allotted a Unique Client Code. Please quote this number whenever placing an order with us or whenever corresponding with us.

3.Placing of Margins

Please keep adequate margins with us before commencing your trading activity. Please contact our offices for accessing the margin requirement.

4.Settlement

For Purchase Transactions, the payments will have to be settled before the settlement date, which is generally settled on T+2 basis. Similarly, for sales, you will have to transfer the shares sold to our account before the settlement date.

5.DP Details

For NSE sales, please transfer stock to:

CMBP ID:IN501725

CM NAME:Pratibhuti Viniyog Ltd.

MARKET TYPE:Normal

SETTLEMENT NO:

Variable field. Please confirm with us before entering.

EXECUTION DATE:

Variable field. Please confirm with us before entering.

For BSE sales, please transfer stock to:

CMBP ID:IN602526

CM NAME:Pratibhuti Viniyog Ltd.

MARKET TYPE:Rolling Mkt.Lot

SETTLEMENT NO:

Variable field. Please confirm with us before entering.

EXECUTION DATE:

Variable field. Please confirm with us before entering.

6.Payout

Purchases: Upon receipt of clear balances, shares purchased will be transferred to client account.
Sales: Upon receipt of securities into our designated account, corresponding credit will be posted to client’s ledger account or cheque issued.

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TRADING NOTES FOR NRIs

Trading	The trading mechanism remains same for the NRIs as highlighted above. However, the difference is in banking as explained under.
RBI Permission	The NRI is suggested to take necessary RBI Permission to buy/sell shares on the secondary market. For purchasing shares on the primary (new issue) market, RBI Permission is not required. The RBI Permission can be taken from any one designated bank where the NRI maintains his/her NRE/NRO Accounts.
Type of Permissions	The RBI Permission granted is both on Repatriable as well as Non-Repatriable basis.
Reporting of Transactions	The buy/sell transactions are required to be reported to the designated bank. The bank in turn reports the transactions to the Reserve Bank of India.
RBI Approval & Demat Accounts	A copy of the RBI Approval is required to be submitted to the depository participant where the NRI is having his/her demat account, for receiving purchased shares. The DP may accept shares purchased on the secondary market only after the availability of the RBI Approval.
Banking Accounts	The NRI can fund the purchase of shares through any of his accounts maintained. However, if the purchases are to be made on repatriable basis, then the purchase should be funded through the NRE Account.
Transaction Details	Please preserve carefully all details regarding your transactions. The purchase payments, contract notes, allotment advices should all be preserved. Your banker will require these details from time to time as and when you sell the shares.
Receiving Payments	Pratibhuti will prepare the entire cheque as per contract value. The cheque is forwarded to the client/client’s bank for realization of the cheque. NRE Account: When depositing the cheque into this account, all bank insist on calling for the purchase details and appropriately deduct long/short term capital gains tax & finally credit the proceeds into the client account. NRO Account: Accounting standards differ amongst different banks for accepting payments into NRO Accounts. While some banks insist on calling for the purchase details, the banks do not generally deduct tax on NRO receipts. However, please check with your bank’s practices .

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NSEIL: INB230645534 / INF230645534 | PSE: INB110645539 | BSE: INB010645530

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