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What are the Licences required in India for - Online Trading ?

What are the Licences required in India for - Online Trading ?

Postby luki14 » Tue Feb 26, 2013 1:10 pm

Stock Trading
Traditionally stock trading is done through stock brokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading.

Online Stock Market Trading is an internet based stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker.

In this case these Online Stock Trading companies are stock broker for the investor . They are registered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades in BSE and NSE.

There are two different type of trading environments available for online equity trading.

Installable software based Stock Trading Terminals

These trading environment requires software to be installed on investors computer. These software are provided by the stock broker. These softwares require high speed internet connection. This kind of trading terminals are used by high volume intra day equity traders.

Orders directly send to stock exchanges rather then stock broker. This makes order execution very fast.
It provides almost each and every information which is required to a trader on a single screen including stock market charts, live data, alerts, stock market news etc.

Location constrain - You cannot trade if you are not on the computer where you have installed trading terminal software.
It requires high speed internet connection.
These trading terminals are not easily available for low volumn share traders.

Web (Internet) based trading application

These kind of trading environment doesn't require any additional software installation. They are like other internet websites which investor can access from around the world through normal internet connection.

Below are few advantages and disadvantages of Online Stock Market Trading :-

Advantages of Online Stock Trading (Website based):
Real time stock trading without calling or visiting broker's office.
Display real time market watch, historical datas, graphs etc.
Investment in IPOs, Mutual Funds and Bonds.
Check the trading history; demat account balance and bank account balance at any time.
Provide online tools like market watch, graphs and recommendations to do analysis of stocks.
Place offline orders for buying or selling stocks.
Set alert to inform you certain activity on the stock through email or sms.
Customer service through Email or Chat.
Secure transactions.

Disadvantages of Online Stock Trading (Website based):
Website performance - sometime the website is too slow or not enough user friendly.
Little long learning curve especially for people who doesn't know much about computer and internet.
Brokerages are little high.
hings to do before opening Online Share Trading Account

Ask for Demo: Contact the broker who provide online trading service and ask him to give you a demo of product.
Check if the broker trades in multiple stock exchanges. Usually most of the Online Trading Websites trade in NSE and BSE in India.
Check the integration of Brokerage account, Demat account and Bank account.
Compare brokerages with other peer companies.

Standard document require to open an Online Trading Account

Proof of residence (Address proof)
Driving license
Voter's ID
Photo credit card
Photo ration card
Utility Bill (Telephone, Electricity etc)
Bank Statement
Proof of identity
Driving license
Voter's ID
Photo ration card
PAN Card
Two photographs
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Joined: Mon Jun 25, 2012 11:48 am

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