Internet Based Trading
INTER.ACES
How Does Internet Stock Trading in India Work?
Chandana Goswami
presents articles focusing on managerial applications of management practices, theories, and concepts.
Executive Summary
KEY WORDS
E-finance Online Trading Online Brokerage SEBI
Internet trading started in India on 1st April 2000 with 79 members seeking permission to do so. Geojit Securities was the first to go online. On 1st .ebruary 2000, the National Stock Exchange (NSE) opened up the internet-based trading system for its members, the first stock exchange in India to do so. However, after two years of trading, only a dozen brokers continue offering online service. The SEBI Committee on Internet-based Securities Trading and Services has allowed the net to be used as an Order Routing System (ORS) through registered stockbrokers on behalf of their clients for execution of transactions. This paper aims at understanding the needs of the customers, comparing it with the offerings of the websites, identifying the gaps, and offering possible solutions for filling up the gaps. It is revealed that: Ø Online traders took buying decisions on their own. A few backed it up by analysts recommendations. Those who took decisions independently claimed to go through the websites, did fundamental and technical analysis, watched the trends, and then finally made a decision. No one solely followed brokers recommendations blindly. Well-educated people in their 30s and 40s, who were highly informed and also knew how to tap sources of information, took decisions on their own and did not depend upon the broker. They were self-directed traders. Ø The major perceived benefit of online system was its convenience. The brokers reliability followed by the execution speed was the key to logging on to a website. Ø An analysis of the Indian sites indicated that they were mainly promotional and provisional in nature. Provisional information about stock quotes, database searches, research reports, etc.
How Does Internet Stock Trading in India Work?
Chandana Goswami
presents articles focusing on managerial applications of management practices, theories, and concepts.
Executive Summary
KEY WORDS
E-finance Online Trading Online Brokerage SEBI
Internet trading started in India on 1st April 2000 with 79 members seeking permission to do so. Geojit Securities was the first to go online. On 1st .ebruary 2000, the National Stock Exchange (NSE) opened up the internet-based trading system for its members, the first stock exchange in India to do so. However, after two years of trading, only a dozen brokers continue offering online service. The SEBI Committee on Internet-based Securities Trading and Services has allowed the net to be used as an Order Routing System (ORS) through registered stockbrokers on behalf of their clients for execution of transactions. This paper aims at understanding the needs of the customers, comparing it with the offerings of the websites, identifying the gaps, and offering possible solutions for filling up the gaps. It is revealed that: Ø Online traders took buying decisions on their own. A few backed it up by analysts recommendations. Those who took decisions independently claimed to go through the websites, did fundamental and technical analysis, watched the trends, and then finally made a decision. No one solely followed brokers recommendations blindly. Well-educated people in their 30s and 40s, who were highly informed and also knew how to tap sources of information, took decisions on their own and did not depend upon the broker. They were self-directed traders. Ø The major perceived benefit of online system was its convenience. The brokers reliability followed by the execution speed was the key to logging on to a website. Ø An analysis of the Indian sites indicated that they were mainly promotional and provisional in nature. Provisional information about stock quotes, database searches, research reports, etc.
References: Agarwala, Kamalesh; Lal, Amit and Agarwala, Daksha (2000). Business on the Net , Macmillan India Limited. Ho, James K (2000). Cyber Tigers, Prentice Hall Inc . Keen, Peter; Balance, Craigg; Chan, Sally and Schrump, Steve (2000). Electronic Commerce Relationships: Trust by Design, Prentice Hall Inc. Mello, Loy de (2000). “Opening the Doors for Worldwide Trading,” CIO Web Business, August. Natarajan, Ganesh (2000). “Bricks to Clicks—The Transformation to an e-enterprise,” CIO Web Businesses, June. Sharma, Maneesh K and Prasad, Bingi (2000). “The Growth of Web-cased Investment,” Information Systems Management, Spring 2000 Venkatraman, N (2000). “Five Steps to a Dot-com Strategy: How to Find Your Footing on the Web,” Sloan Management Review, Vol 41, No 3, Spring. Chandana Goswami is a Reader in the School of Management Sciences at Tezpur University, Assam. A Ph.D. from Gauhati University, her areas of interest are finance and information technology. She attended the .aculty Development Programme at IIM, Ahmedabad during 2000-01. e-mail: chandanagoswami@ rediffmail.com Sources of Ideas I have known songwriters who got inspiration from listening to crowd chants at basketball games, venture capitalists who spotted new opportunities by going to junk yards, educators who got ideas by going to prisons, advertising people who borrowed ideas from biology, and software programmers who were influenced by songwriters. Roger von Oech A Whack on the Side of the Head 98 HOW DOES INTERNET STOCK TRADING IN INDIA WORK?