Читать книгу Impact of Artificial Intelligence on Organizational Transformation - Группа авторов - Страница 44

This was the era of big transformation in stock broking. All the systems which used to happen manually were shifted to computers and online trading was started [3]. Online trading replaced ring-based trading and made physical stock exchanges less important in stock trading since it made share trading possible from any place anywhere. Online share trading was initiated in India in the year 2000 by NSE (National Stock Exchange) after getting the sanction from regulatory authority the Securities and Exchange Board of India (SEBI). Online trading was proposed in a committee set up by SEBI on Internet Trading and services and was approved in January 2000. This transformation from manual to computer-based trading gave way for more transparent execution of working of stock exchanges [5]. It also augmented the speed at which trades were executed and completed. It also induced convenience and security in share trading for investors. This simplicity and a sense of security made more and more people to participate in stock broking which led to a tremendous growth in retail participation [6]. There were few major changes that appeared in this age which are as follows:

1 1. Only Two Stock Exchanges Prevailed: We discussed earlier that almost every major city of India had a stock exchange of its own and companies were listed on them. By 1990s, there were 24 stock exchanges in India in all major cities. But when everything shifted online the physical exchanges became just buildings as the broking was consolidated and all the companies listed themselves only on two major exchanges, namely, BSE and NSE. The sensitivity index on stock markets is the barometer of the stocks, low and high cumulative of major stocks listed on that exchanges. BSE has SENSEX with 30 stocks and NSE has NIFTY with 50 stocks. It was in January 1986 that BSE’s sensitivity index SENSEX was launched. It was the first stock market index which came into being. Its base year was set as 1978–1979. The underlying principle for selecting companies that would go in SENSEX or NIFTY are trading frequency, market capitalization, trading history, listing history, and industry representation. In March 1995, BSE ended its 120 years history of floor trading and shifted to computerized trading operations and then began the screen-based trading system nationwide. NSE came into force in November 1992. It was set up to accommodate to medium sized companies. In June 1994, NSE commenced operation in wholesale debt market segment. In November 1994, NSE shifted to screen-based trading format for the first time in India. Sensitivity index of NSE, NIFTY, was created in April 1996. It consists of top 50 scripts with highest market capitalization and it is an indicator of all the major companies in the NSE. NSE also has NIBIS (NSE’s Internet-Based Information System) for online real-time diffusion of trading related information on the Internet.

2 2. Online Trading Software: The biggest challenge in online trading was to make it error free, transparent, and easily accessible. For this purpose, NSE was the primary stock exchange in India which started providing pan India screen-based, order-driven, trading system. The trading system at NSE is known as the National Exchange for Automated Trading (NEAT) system. It is an online, fully computerized, nameless, order-driven system with nationwide presence. Another package offered by NSE is “NEAT Plus”. Neat Plus provides a novel service to the subscribers which makes them trade in more than one stock exchange simultaneously. To ensure that that the system does not collapse due to over burden, NSE undertakes periodic testing and capacity enhancements as soon as its users and trading volume increases. NEAT also provides realtime data sharing on trading volumes and thus traders and investors can factor in the second to second changes in their Trades. BSE also has a system just like NEAT which is called as BOLT. BSE Online Trading (BOLT) is also a computerized, screen-based trading platform which can be used to punch in orders from anywhere, anytime during trading hours. It has a turnover capacity of 8 million orders each day. The BSE has also pioneered a nationalized exchange-based internet order punching system, to facilitate investors from all over the world to trade in scripts listed on BSE.

3 3. Depositories: Two major depositories were made to keep a record of stock holdings and their owners and also to keep a track of buying and selling activities by these depository account holders. NSDL (National Securities Depositories Ltd.) and CDSL (Central Depositories Services Ltd.) were the two biggest depositories which hold the maximum accounts of the nation [7].

4 4. T + 2 Rolling Day Settlement: [8] Rolling settlement is a settlement process where a trade executed in the stock market is settled in trading day plus 2 more working days. In the ring trading system, this process used to take days at minimum 5–6 days, but in online trading with the help of [9] depositories and back accounts and their sync with the stock exchanges, the time to complete the process of transferring shares from the account of seller to buyer and also monetary transaction of money from seller to buy’s account took only 2 days after the day of trading. This increased liquidity to a large extent as the money exchanged hands quickly.

5 5. Investor Registration Norms: The two major parties in stock broking are the investors and the brokers. The registration norms for both parties were made stricter. Brokers could not be registered unless they passed exams from NCFM to show that they have required knowledge of stock broking and its process. The clients could not trade unless they presented documents of their address, identity, and financial standing. These strict norms were not there earlier. These helped in making the stock broking forgery free.

6 6. Order Verification by SEBI: In this stage, a very elaborative order verification system was put in place. The brokers were directed very strictly that they need to get the order slips signed by the clients on a daily basis, and also after the end of each day, they were required to make a call to the clients and tell them the exact order which was executed on behalf of him. Stock exchanges and DPs were also advised to keep sending the order details and statements on a regular basis. All this helped in making the system very transparent and full proof where investors do not feel cheated. This all led to more satisfaction in the clients/investors [10].

7 7. Strict Regulation of Brokers: Brokers were very strictly monitored by the regulatory authority SEBI [11]. Regular audits were conducted by SEBI to see that all norms were followed by the broking firms and also the companies. SEBI also issued regular guidelines for the brokers laying out very clearly the process to be followed by the brokers for client registration and executing their trades and also communication with them. These norms were also updated from time to time if technology or economy changed.

8 8. Investor Protection: [12] determined that norms for investor protection lead to investor confidence and thus helped in boosting investor morale and increase in their participation. Participation over a period of time happened in two ways: direct and indirect mode. Directly was when investors participated in buying and selling from your own account and indirectly was when they invested in mutual funds and other such instruments. Investor protection was taken very seriously by regulators and new act was passed with strict adherence norms to be followed by each and every broker and intermediary.

9 9. Operators/Punters: Though the online system of stock trading is totally nameless, but still there were ways in which stocks could be maneuvered to an extent with lot of money and connections. Operators driven scripts are the type of scripts which are controlled by the people who maneuver the stock price according to their will. These stocks could be found even in the index companies. This was one of the hind sides of this system. It was believed that when stocks do not follow the fundamental analysis, it might be moved by an operator.