Ncfm Training - Cm Chapter 3

Trading Membership Trading Membership •Individuals / Partnerships / Institutions / Corporate / p / / p •Should not be Bankrupt •Should not have been convicted for fraud (provides wrong     audited accounts) •Should not have been expelled / declared a defaulter by any          other Stock Exchange (showing misleading returns Market  other Stock Exchange (showing misleading returns,  Market manipulation) •Should not have been debarred by SEBI, RBI etc.(disobedience  of rules and regulations of SEBI) •Should be graduates. •Should have experience of at least 2 yrs in Stock broking sector. Sh ld h i f tl t2 i St k b ki t

Market Segments Market Segments • Capital Market Capital Market • Wholesale Debt Market (WDM) Derivatives (F&O) • Derivatives (F&O)

Eligibility Criteria Eligibility Criteria

Additional Base Capital Additional Base Capital • Cash Cash  • Bank Guarantee FD Receipts • FD Receipts

Broker – Client Relations Broker  Client Relations • KYC KYC (Know Your Client) (Know Your Client) • Unique Client Code (PAN Compulsory) Contract Note (issued within 24 hours) to be signed • Contract Note (issued within 24 hours) to be signed  by Authorised Signatory • CN to have Reg. Office address and Dealing office  CN to have Reg. Office address and Dealing office address • ECN • Brokerage (max. 2.5% of traded value) Sub‐broker broker (max. 1.5% of traded value) (max. 1.5% of traded value) • Sub

Contract note

Dispute, Arbitration Dispute, Arbitration • • • • • •

Investor Grievance Cell Investor Grievance Cell Arbitration (Mumbai, Delhi, Chennai, Calcutta) Within Six months of Dispute Within Six months of Dispute 1 Arbitrator if claim amount < Rs. 25 lacs 3 Arbitrators if claim amount > Rs 25 lacs 3 Arbitrators if claim amount > Rs. 25 lacs If claim amount < Rs. 25,000, no need to hold  meeting

Benefits of Trading Membership g p 1 Access 1. Access to nation wide trading facility for equities , derivatives  to nation wide trading facility for equities derivatives and    debt. 2. Ability  to provide  a fair, efficient and  transparent  securities mkt. to investors. iti kt t i t 3. Use of state‐of –the‐art trading systems and technology. 4. Dealing with an organization which follows strict standards  for trading and settlement. 5. A demutualised exchange which is managed by experienced  and independent professionals and independent professionals 6. Dealing with an organization which is constantly  striving to  move towards a global mkt.

Questions • If a client buys shares worth Rs. 1,25,000 and sells shares worth Rs.75,000 

through a sub‐broker, then the maximum brokerage payable to him is [ 2 Marks ]  or [ 3 Marks ] Solution: [125000 + 75000 ] * 1.5% = 3000

Traded Value

• If a client buys shares worth Rs. 90,000 and sells shares worth Rs. 1,10,000  through a stock‐broker, then the maximum brokerage payable is. [ 2 Marks ] or   [ 3 Marks ] Solution: [ 90000 + 110000 ] * 2.5% 2 5% = 5000

Traded Value

•If a client buys 1000 shares at the price of 90 per share through a sub-broker, then the maximum brokerage payable to him is [ 2 Marks ] or [ 3 Marks ] Solution: [1000 *90 ] * 1.5% = 1350

Traded Value