Chapter 13 - Online Trading : Introduction

Online trading

The equity markets in India have been evolving rapidly in recent times. The Indian Stock Markets have been witness to a gradual shift from the outcry system of trading to a seamless environment wherein stocks are now being transferred from the seller to the buyer in the electronic mode. In the earlier times, Stocks shifted hands through physical delivery of certificates from the seller to the buyer through a registered stock broker. This transfer was authenticated when the seller signed the transfer deeds and passed on to the buyer through the stock broker which in turn was sent by the buyer to the company for registration. Gone are those days of running behind a broker and managing loads of paper work. The capital markets are totally, literally, at your finger tips now.

The shift to the online transfer of securities have been the result of the introduction of depositories into the landscape of the Indian stock markets. The depository participants in India have systems in place to facilitate online transfer of securities. Another important factor to fasten the process of the share trading cult in India is the growth of online broking platforms to facilitate the trading of stocks. The popularity of online trading is evident from the fact that in the year 2000 the average trade on a day at NSE was 23,000 but in 2007 it shot up to 35,18,266 trades per day.