os at hedge equities

8/12/2019 OS at Hedge equities

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DECLARATION

I, VISHAL VINCENT PALATTY, Student of Rajagiri College of Social Sciences,Kochi, hereby declare that this report titled Organizational study on Hedge Equities Ltd.

is a bona fide record of the project work done by me at Hedge Equities Ltd, Kochi and

submitted to Mahatma Gandhi University, Kottayam in the partial fulfillment of the award of

Masters in Business Administration.

I further declare that this project has not been submitted to any other university/board for

the award of any degree/diploma.

Place : Kakkanad VISHAL VINCENT PALATTY

Date : Rajagiri College of Social Sciences


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ACKNOWLEDGEMENT

I would like to express my gratitude to, Dr. Joseph I Injodey, Principal, Rajagiri

College of Social Sciences, and his team for providing me the opportunity to be a part of

Rajagiri College of Social Sciences and undertaking this organization study.

I offer my profound gratitude to my guide Prof. Vinod, faculty of Rajagiri College of

Social Sciences in whole heartedly helping me in successfully completing this project.

I really thank Mr. Benil D.A. (Dean of Hedge School of Applied Economics) and

Mrs. Sini Ralph (Manager, Compliance Department), HEDGE EQUITIES PVT LTD. for

their guidance in collecting necessary information and for their support in successfully

completing this project.

I thank my parents, teachers, GOD and all others who have directly or indirectly

assisted me in doing this project and also for the help, support, interest and valuable hints

they have provided.

VISHAL VINCENT PALATTY


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LIST OF CONTENTS

SERIAL NO: TOPIC PAGE NO

TITLE PAGE

DECLARATION

ACKNOLEDGEMENT

EXECUTIVE SUMMARY 01

SECTION: I ORGANIZATION STUDY 02

1.1 INDUSTRY PROFILE 03

1.1.1 STRUCTURE OF INDIAN FINANCIAL SYSTEM 03

1.1.1.1 FINANCIAL INSTITUTIONS 04

1.1.1.2 FINANCIAL INSTRUMENTS 04

1.1.1.3 FINANCIAL SERVICES 04

1.1.1.4 FINANCIAL MARKETS 05

1.1.1.4.1 MONEY MARKET 05

1.1.1.4.2 CAPITAL MARKET 05

1.1.2 STOCK EXCHANGES 05

1.1.2.1 MAJOR STOCK EXCHANGES 05

1.1.2.1.1 NSE 05

1.1.2.1.2 BSE 06

1.1.3 BROKERAGE FIRMS 06

1.1.3.1 CURRENT SCENARIO 07

1.1.3.2 MAJOR INDIAN BROKERAGE FIRMS 07

1.1.3.3 CHALLENGES FACED BY INDIAN FIRMS 08

2.1 COMPANY PROFILE 08

2.1.1 HISTORY AND INCORPORATION 08

2.1.2 HEDGE GROUP 09

2.1.2.1 HEDGE EQUITIES 09

2.1.2.2 HEDGE COMMODITIES 10

2.1.2.3 HEDGE FINANCE 10

2.1.2.4 HEDGE SCHOOL OF APPLIED ECONOMICS 10

2.1.3 PROMOTERS 11

2.1.4 VISION AND MISSION STATEMENTS 12


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2.1.5 PHYSICAL LOCATION 13

2.1.6 ORGANIZATIONAL STRUCTURE 14

2.1.6.1 REGIONAL ORGANIZATOIN STRUCTURE 15

2.1.7 PRODUCTS AND SERVICES OFFERED 152.1.7.1 EQUITIES TRADING 15

2.1.7.2 COMMODITIES TRADING 16

2.1.7.3 CURRENCY TRADING 16

2.1.7.4 MUTUAL FUNDS AND BONDS 16

2.1.7.5 ONLINE TRADING 17

2.1.7.6 INTERNET TRADING 17

2.1.7.7 DEPOSITORY SERVICES 172.1.7.8 DERIVATIVE TRADING 17

2.1.7.9 KNOWLEDGE CENTRE 17

2.1.7.10 EQUITIES RESEARCH 18

2.1.7.11 PORTFOLIO MANAGEMENT SERVICES 18

2.1.8 FUNCTIONAL DEPARTMENTS 18

2.1.9 USP OF HEDGE 24

2.1.10 CORPORATE SOCIAL RESPONSIBILTITY 252.1.11 INNOVATIVE MANAGEMENT PRACTISES 25

2.1.12 SWOT ANALYSIS 26

2.1.13 OBSERVATIONS 26

SECTION: II RESEARCH REPORT 29

BIBILOGRAPHY 38


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EXECUTIVE SUMMARY

We all live in an economy which is affected by inflation. The value of moneydepreciates at a greater pace which puts in dilemma where we have to choose between

various investment options the economy in which we are living has a strong financial

structure and put forward various investment options. Deciding upon an investment option

differs from person to person because of varied risk taking mentality. Investment

opportunities what we have is broad one that includes real estates, equities , capital market

instruments, money market instruments, commodities etc. In India the volume of population

that invests in capital market is very low when comparing it with the investment made in real

estate and gold. Awareness about the product is the initial part in a buying behaviour.

Without awareness various beneficial investments are unseen by the investors.

The organizational study was done at the head office of Hedge Equities Ltd. Hedge

Equities is an established retail and institutional financial services provider in India. Based in

Kochi, Hedge Equities Ltd has a growing pan-India presence with more than 130 retail

outlets India and an overseas office in Dubai. The services folio of hedge equities include

Equity, Mutual Funds, Derivatives, Commodities, Currency, Online trading, DepositoryServices, Clearing Services, Fixed Income, Research and Wealth management services

(WMS).

The report includes a detailed study on the organization, the industry in which it

operates, the market scenario, the product and services offered and a SWOT analysis, with

respect to the organization. These details can be used in order to further improve the

organization and its business.


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SECTION: I

ORGANIZATION

STUDY


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1.1 INDUSTRY PROFILE

The economic development of any country depends upon the existence of a well

organized financial system. It is the financial system which supplies necessary financial

output for the production of the goods and service which in turn promote the well being and

standard of living of the people of a country. The responsibility of a financial system is to

mobilize the savings in form of money and monitory assets and invest them into productive

ventures.

In finance, the financial system is the system that allows the transfer of money

between savers and borrowers. It comprises a set of complex and closely interconnected

financial institutions, markets, instruments, services, practices, and transactions. Financialsystems are crucial to the allocation of resources in a modern economy. They channel

household savings to the corporate sector and allocate investment funds among firms; they

allow inter-temporal smoothing of consumption by households and expenditures by firms;

and they enable households and firms to share risks.

The financial services industry includes companies whose sales come from the

management of money for individuals and institutions. It consist of credit unions, banks,

credit card companies, insurance companies, consumer finance companies, stock brokerages,

investment funds and some government sponsored enterprises.

A brokerage firm, is a financial institution that facilitates the buying and selling of

financial securities between a buyer and seller. Brokerage firms provide services to different

groups of customers and assist them in buying public stocks and securities via their agent

stockbrokers. Brokerage firms based service provided can be classified into 2 groups:

Full service brokers Discount brokers

Full service brokers:

Provides continuous stock reports and in most cases does buying and selling of

shares on behalf of client. They provide more services than any of discount brokers.


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Discount brokers:

A discount broker or an online broker is a firm that charges relatively small commission by

having its clients perform trades via automated, computerized trading system rather than by

having an actual stockbroker assist with trade.

1.1.1 STRUCTURE OF INDIAN FINANCIAL SYSTEM

The financial system consists of financial institutions, financial markets, financial

instruments and financial services which are regulated by regulators like Ministry of Finance,

the Company Law Board, Reserve Bank of India, Securities and Exchange Board of India,

Insurance Regulatory and Development Authority, Department of Economic Affairs,

Department of company Affairs, etc.,

Fig 1.1 Structure of Indian Financial System

1.1.1.1 FINANCIAL INSTITUTIONS

Financial Institutions are the business organizations that act as mobilizes of savings,

and as purveyors of credit and finance. They also provide various financial services to the

community. These financial business organizations deal in financial assets such as deposits,

loans, securities, and so on. These are further divided into banking and non-banking

institutions.

Indian Financial System

FinancialInstitutions

Banking Non -Banking

FinancialInstruments

FinancialMarkets

MoneyMarket

CapitalMarket

FinancialServices


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1.1.1.1.1 BANKING FINANCIAL INSTITUTIONS

Banking institutions are those institutions which participate in the economy's

payments system, i.e., they provide truncation services. Some of the major banking

institutions in India include, SBI, UBI, Canara Bank, Yes Bank etc.

1.1.1.1.2 NON-BANKING FINANCIAL INSTITUTIONS

Non-banking financial institutions are those institutions which act as mere purveyors

of credit and they will not create credit. Some examples of Indian non-banking financial

institutions include, LIC, UTI, IDBI, etc.

1.1.1.2 FINANCIAL INSTRUMENTS

Financial instruments are those instruments which are used for raising resources for

corporate entities. The financial instruments may be capital market instruments or money

market instruments. The ones that are used for raising capital through the capital market are

known as capital market instruments. The financial instruments which are commonly used in

India include Government securities, bonds, preference shares, equities etc.

1.1.1.3 FINANCIAL SERVICES

Financial services are an important component of a financial system. Financial

services cater to the needs of financial institutions, financial markets and financial

instruments. The functioning of the financial system very much depend on the range of

financial services provided by the providers, and their efficiency.


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1.1.1.4 FINANCIAL MARKETS

Generally speaking there is no place or location to indicate a financial market.

Wherever a financial transaction take place, it is deemed to have taken place in the financial

markets. Financial markets can be referred to as those centres and arrangement which

facilitate buying and selling of financial assets, claims and services. Financial markets could

be further divided into money market and capital market.

1.1.1.4.1 MONEY MARKET

The money market is a market for short-term funds, which deals in financial assets

whose period of maturity is up to one year. Some of the major financial assets traded in the

Indian money market include, call money, treasury bill, commercial paper, certificate of

deposit and trade bill.

1.1.1.4.2 CAPITAL MARKET

Capital Market may be defined as a market dealing in medium and long-term funds. It

is an institutional arrangement for borrowing medium and long-term funds and which

provides facilities for marketing and trading of securities. It could be further divided into

primary market and secondary markets.

1.2 STOCK EXCHANGES

Stock exchange is the term commonly used for a secondary market, which provide a

place where different types of existing securities. There are 20 exchanges in India which

deals with cash market instruments and seven exchanges which deals with derivative

instruments. Some of the largest exchanges in terms of volume of trade could be National

Stock Exchange, Bombay Stock Exchange, Multi Commodity Exchange of India Ltd. etc.


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1.2.1 MAJOR STOCK EXCHANGES IN INDIA

1.2.1.1 NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges, which recommended

promotion of a National Stock Exchange by financial institutions (FIs) to provide access to

investors from all across the country on an equal footing. Based on the recommendations,

NSE was promoted by leading Financial Institutions at the behest of the Government of India

and was incorporated in November 1992 as a tax-paying company unlike other stock

exchanges in the country. On its recognition as a stock exchange under the SecuritiesContracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the

Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities)

segment commenced operations in November 1994 and operations in Derivatives segment

commenced in June 2000 NSEs mission is setting the agenda for change in the securities

markets in India. The NSE was set-up with the main objectives of: Establishing a nation-wide

trading facility for equities and debt instruments. NSE Ensures equal access to investors all

over the country through an appropriate communication network and provides a fair, efficient

and transparent securities market to investors using electronic trading system.

1.2.2BOMBAY STOCK EXCHANGE (BSE)

Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share

and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock

Exchange, which was established in 1878. It is a voluntary non-profit making Association of

Persons (AOP) and is currently engaged in the process of converting itself into demutualised

and corporate entity. It has evolved over the years into its present status as the premier Stock

Exchange in the country. It is the first Stock Exchange in the Country to have obtained

permanent recognition in 1956 from the Govt. of India under the Securities Contracts

(Regulation) Act 1956.The Exchange, while providing an efficient and transparent market for

trading in securities, debt and derivatives upholds the interests of the investors and ensures

redresses of their grievances whether against the companies or its own member-brokers. It

also strives to educate and enlighten the investors by conducting investor education

programmers and making available to them necessary informative inputs.


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1.3 BROKERAGE FIRMS

The Indian brokerage companies are those that primarily act as agents for the buying

and selling of securities (e.g. stocks, shares, and similar financial instruments) on a

commission or transaction fee basis. The basic function of a brokerage firm is to execute buy

and sell orders for clients. Traditionally these firms have offered the investigation of the

quality and the possibilities of investing in a variety of investment products. It is still

accustomed for brokerage firms to offer information about possible investments free of

charge.

1.3.1 CURRENT SCENARIO

According to the details provided by SEBI there are 1,376 brokers registered with

BSE and 1,423 brokers registered with NSE. According to NSDL and CDSL there are about

2.4 million investor in the country and among them around 7.5 lakh are very active. The

market structure here is perfect competition as there are many players and the products

offered are more or less the same. The revenue of top brokers remained same as that in the

previous year, which is about 105 billion Indian rupees. However the cost was reduced by 7

to 8 percentage leading to a better cost income ratio.

1.3.2 MAJOR INDIAN BROKERAGE FIRMS

Motilal Oswal Securities

ICICI Securities Ltd

Kotak Securities Ltd

Indiabulls Financial Services Ltd

www.sharekhan.com

Fortis Securities (Religare)

Karvy securities

Geojit BNP Paribas

HDFC Securities


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make informed decision and to simplify the process of investing in stocks. Hedge equities

have always believed in investing in technology to build its business.

2.1.1 HISTORY AND INCORPORATION

Hedge equities was incorporated under the Companies Act,1956 as Hedge Equities

Private Limited on 17th December 2007. In May 2008 it started its full fledged operations.

Initially it started its service from the head office at Kaloor, Ernakulum. Later it extended its

services to derivatives also. Recently it also received the permission to start a Non- Banking

Financial Company. The aim of the promoters was to establish financial supermarket which

will provide solution to all kinds of financial problems and they are in the process of

achieving it. Founder & Managing Director of HEDGE GROUP is Mr. Alex K Babu, Mr.

Bhuvendran is CEO and Bobby J Arakunnel is COO. The Board members comprises of

veterans from six power houses in their respective fields: FedEx Securities, Baby Marine

Exports, Thakker Developers, Smart Financial, S.M. Hedge(CFO Videocon Industries) and

Padmashree Mohanlal

2.1.2 HEDGE GROUP

Hedge equities Ltd comes under the umbrella of Hedge Group. The other entities

which comes under hedge group include, Hedge commodities, Hedge finance, Hedge school

of applied economics. The hedge group have the same patrons running all its entities. The

structure of hedge group can be given as follows.


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Fig 2.1 Hedge Group Structure

2.1.2.1 HEDGE EQUITIES

Hedge equities one major entity under the hedge group. It is one of initiators

of share trading culture in Kerala. It is the first entity formed under the hedge group It has

35,000 satisfied customers who are reaping the benefits of professionally managed portfolios .

It provides services like online trading in NSE &BSE stocks, investment advises for its

customers, research based reports to assist investors in their decisions, it also provides wealth

management services. It publishes a financial monthly 'Ohari' to educate the investors. It alsoconducts 'yuva' program which intends to educate youth about the industry.

2.1.2.2 HEDGE COMMODITY

Hedge Commodities Ltd, formed in 2008 as a fully owned subsidiary of Hedge

Equities, cater to its clients in Commodities market segment. The move to promotecommodities was a carefully taken step by the management, identifying its growth potential

Hedge Group

HedgeEquities

Hedge Yuva &Ohari

Publications

HedgeCommoidities

HedgeFinance

Hedge Schoolof AppliedEconomics


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and the opportunity commodities provides for the market participants. With membership in

all major national level exchanges, Hedge Commodities provides service to varied set of

clients, which includes investors, Hedgers, Arbitragers and Traders/Speculators. Hedge have

clientele from different segments of the market, be it producers, manufacturers or end users,

with exposure to international, non agri commodities and agricultural commodities.

2.1.2.3 HEDGE FINANCE

One of newest member of hedge group, hedge finance marks the entry of

group into the booming NBFC industry. The company adheres strictly to the RBIregulations and primarily focuses on the Loan Against Security sector. Hedge Finance will

primarily be focusing in an under tapped segment Securities. The company will look at

providing loans to customers against financial instruments like equities, bonds and

debentures. With LAS (Loan Against Securities model) Hedge Finance looks at unleashing

the potential of a growing segment in the Indian Financial landscape. With many firsts and a

rich history of achievements under its belt Hedge Equities adds sheen to this endeavour.

2.1.2.4 HEDGE SCHOOL OF APPLIED ECONOMICS

It's a place were present and potential stock brokers are molded to international

standards under the guidance of veteran financial experts. Live trading sessions and world

class academic amenities are the highlights of the Hedge School. HSAE is the first ever

educational venture dedicated to creating a class of high-end investment professionals inKerala. It aims at fulfilling the following goals, serve the ever increasing need for credential

manpower in the financial services sector globally and help students to nurture and grow

their own investment portfolios. The programs are designed for financial professionals and

investors who would be advocates of smart investments. It provides courses which are mainly

divided according to the target group as, courses for beginning investors, for existing

investors and for graduates for carrier guidance.


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2.1.3 PROMOTERS

The promoters of hedge group are, FedEx Securities, Baby Marine Exports, Thakker

Developers, Smart financial, SM Hegde and Padmashree Lt.Col Mohan Lal.

FEDEX SECURITIES

Managed by a team of ex-bankers, Fedex is a SEBI registered category 1 merchant

banker. The company concentrates on non fund based activities like structuring, tie up of

project financing, financial restructuring, investment banking, corporate and advisoryservices. The core management team consists of bankers with rich experience of decades

and exposure to volatile situations in commercial and investment banking. With offices at

Nariman Point and Vile Parle East, Mumbai, FedEx Securities envisages a phenomenal

growth in this sector for its clients.

BABY MARINE EXPORTS

Baby Marine Group, started its operations in 1977 from Kozhikode and through

innovation and hard work has grown into three units and related industries spanning both

the west and east coast of Indian. Baby Marine Exports, B.M products, and Baby Marine

(Eastern) Exports are efficiently aided by pre processing units, ice factories, and a fleet of

insulated and refrigerated trucks for sea food transportation. Due to constant upgrading of

machinery, better links with raw material suppliers, and an established network of

purchasers have obviously made Baby Marine Group a leading Exporter of processed

marine Products to various international markets.

SMART FINANCIAL

Smart Financial entered the financial market only in 1992 but over this brief span

has covered a niche for itself by becoming leading financial service provider. The company


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offers guidance to investors as to equities, commodities, mutual funds, portfolio

management services and insurance. It offers complete range of financial solutions that

encompasses every sphere of the life. aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa

THAKKER GROUP

Starting off as a land developer and builder in 1962, Thakkers group diversified into

commercial production of agricultural and horticultural products, housing real estate

marketing, plantations.etc. They have provided shelter to more than 40000 families by

offering residential plots and premises. Thakker developer is the flagship company of thegroup. It was established as private limited in 1987 and later went on to become the only

public limited company in North Maharashtra engaged in housing, commercial construction

and land development.

S.M.HEGDE

Mr. S.M Hegde, a chartered accountant by profession is the Chief Finance Officer of

the Indian Multinational Videocon International and has been at the helm of affairs for the

last 20 years.

PADMASHREE LT.COL BHARAT MOHANLAL

Mohanlal, the south Indian movie superstar has become a legend, a brand, and

cultural ambassador owing to various factors. Versatility and a natural flair for donning

complex characters have won him numerous accolades not to speak of some unforgettable

films contributed by him. A multifaceted personality, he has some business ventures also

which include Vismaya Max Film Post Production Studio, College for Dubbing Artists at

the Kinfra film and Video Park, Thiruvanathapuram. He is also the director of Uni Royal

Marine Exports; a Kozhikode based major Seafood Export Company.


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2.1.4 VISION/MISSION STATEMENTS

VISION

Hedge Equities, endeavour to become a well reputed financial services super -mart

catering to the evolving needs and unique requirements of our clientele, and partnering with

them to Build, Manage, and grow the customers Wealth.

MISSION

To create an ethical and sustainable financial services platform for our customers and

partner them to build business, to provide employees with meaningful work, self-

development and progression, and to achieve a consistent and competitive growth in profit

and earnings for our shareholders and staff.

The hedge equities ltd wishes to help their customer to increase their wealth. They

have done many actions in this direction, most of which are aimed at customer education they

include, starting of the hedge school of applied economics, the television program 'market

watch', the monthly magazine 'Ohari' etc. They also tries to develop their employees by

giving them exposure to the newest advancements in the market. They have successfully

completed five years in action and they are getting nearer to achieving their mission and

focuses on their mission in every step that they make.


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2.1.5 PHYSICAL LOCATIONS

HEAD OFFICE

Hedge Equities

Hedge House

Palarivattom, Cochin - 682025

Kerala, India.

REGIONAL OFFICE

Office No.202

2nd floor, Raghuveer,

Chamunda Circle,

S.V.P Road,

Borivali (West), Mumbai 4000092

It has 54 branches and 52 franchises spread across the four southern states (Kerala,

Tamil Nadu, Karnataka and Andhra Pradesh) of India. In addition to this it has one branch in

Dubai in U.A.E to cater to the needs of Indians over there.

2.1.6 ORGANIZATIONAL STRUCTURE

The organizational structure in hedge equities can be given as follows, it follows amatrix structure as it uses group of employees to do multiple of its functions.


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Fig 2.2 Organization Structure

Front Office House

Keeping

HR

RMS

Dealing

IT

Franchise

Admin

Accounts

Compliance

Research

Overseas Op

SD

HSAE

WMS

SIP

Marketing

OnlineVP

BDG

Reg. Mang.

Dispatch

MD CEO COO

PCG

KYC


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2.1.6.1 REGIONAL ORGANIZATION STRUCTURE

2.1.8 FUNCTIONAL DEPARTMENTS

Hedge Equities consists of fourteen major departments. Each of the department is

headed by a Department Head and has adequate number of Asst. Managers and executives to

support in the operations. At times trainees and interns are also placed under various

departments. Each of the employees should report to the corresponding department head and

to the HR manager, via the department head.

The departmental chart of Hedge Equities can be given as:

REGIONALMANAGER

BRANCHMANAGER

SUPPORTSTAFFS

DEALERCOMMODITY

EQUITYADVISOR

RELATIONSHIPMANAGER


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ACCOUNTS DEPARTMENT

The financial activities of a firm are often under the direct control of the board of

directors. The CFO is the key person as far as this department is concerned. Chartered

Accountants and other highly qualified professionals work hand in hand to generate error free

accounts for the firm. Lower level employees delegate the other routine activities in this

department.

ADMINISTRATION

The department of administration is mainly responsible for ensuring the day to day

activities of the firm. This department performs various tasks and functions such as branch

support, bill payments and requests, branch expense regulation, complaints & rectification,

shop & commercial establishment registration, record on office inventory, co-ordination of

advertisement related works, renewal of rent agreement, branch closure rent termination,

etc.

HUMAN RESOURCES DEPARTMENT

Even at this age of advanced automation & mechanization, Human resource is often

considered as the back bone of an organization. Since virtual organizations are not very much

popular in our part of the world, it is very important for any organization to have a HR

department.

Human resource management is defined as asset of practices, policies and

programmes designed to maximize both personal and organizational goals. The presence of

an excellent HR department increases the efficiency of Hedge Equities considerably.Some of the major functions of the HR Department are:

a) Training & Induction

The selected employees will undergo three days continuous induction. During this

period, he will undergo training with all the department of Hedge Equities. There will also be

classroom induction within three months.


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b) Wages and Salary Administration

The wages and salaries of the employees are fixed and granted by the HR

department with the proper consent of the finance department

c) Performance Appraisal

It is the Human Resources department which makes up the report suggesting

promotions to employees, making transfers and taking disciplinary actions if needed

d) Grievance Handling

The grievances of the employees are received only through proper channels i.e.,

through the particular department heads. The HR department will try to figure out solutions

to the complaints as per the rules and regulations of the company, in line with the judiciary of

the country.

SYSTEMS DEPARTMENT

The systems department plays a vital role in the day to day operations of the

company. It is through the systems department that the clients can avail the facilities of

Internet trading. Optic fiber cables and high bandwidth connections from the Hedge

Equities office to the ISP, a dedicated server and back-up ISDN connections are maintained

directly by the systems department. For the purpose of trading they have made use numerous

software systems, the prime one being ODIN (Open Dealers Integrated Network).

SOFTWARE DEVELOPMENT DEPARTMENT

The Software development department is involved in developing indigenous software

systems for the company. This department is filled with technocrats who are engaged in the

design and development of both simple and sophisticated software tools. This department

ensures the cross platform independency of the software systems in the company. Many of

the so developed systems provide Hedge Equities a better competitive edge over its

competitors


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DEPOSITORY/ CLEARING AND SETTLEMENT DEPARTMENT

Delivery becomes crucial for those shares that are bought on a particular day and not

sold on that day itself. For holding these shares for an appreciation in the value of the security

and to trade it on a future date the shares need to be transferred to ones depository. Deliver

Instruction Slip, which is a slip the client should fill and give to the dealer, is vital in buying

the shares and delivering it to a depository.

Hedge Equities offers depository services from both NSDL and CSDL. The Delivery

& Depository Department is mainly responsible with the day to day operations with the

depository services utilized by the clients.

SYSTEMATIC INVESTMENT PLAN

The department of SIP provides with a common platform in the form of Monthly

Investment Plan. It helps one to invest systematically without huge amount. It is often

considered a stepping stone to build ones future.

The SIP department offers different options in Account Opening (Gold, Silver,

Direct- Equity, Debt Market, and Mutual Fund). Some of the various other functions include

Code Change -operations, SIP Renewal Clients, Branches Follow up, Bank follow up for auto

debit or ECS, Form filling, Pay in, Payout, etc

RESEARCH DEPARTMENT

The function of the department is to study the details regarding the share or security

and to make predictions regarding the future performance of the company.

Hedge equities constantly strive to deliver insightful research to enable pro-active

investment decisions. The research department is broadly divided into two divisions-

Fundamental Analysis Group (FAG) and Technical Analysis Group (TAG).


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The fundamental analysts are continuously scanning the entire economy for

discovering what they call the hidden gems in stock market terminology and present it to our

clients for profitable investments. A good fundamental analysis team has the capability to

identify emerging businesses before such businesses become the talk of the street and Hedge

Equities can be proud of processing one such fundamental analysis team.

Timing the market has always been the most difficult task for all analysts and The

Hedge Technical Analysis Group has merged to predict the market movements well in

advance using complex analytical methods. The department is equipped with cutting-edge

technologies for technical charting which assist the technical analysts to predict both upside

and downside movements efficiently for the benefit of the clients.

WEALTH MANAGEMENT SERVICES

Hedge Equities Ltd provides a comprehensive and unique wealth management service

to help their clients build, manage and grow their wealth. Hedge Equities is a SEBI registered

portfolio manager with a high caliber to analyze in detail the needs of individual clients and

come up with tailored portfolio solutions to meet clients risk appetite and evolving needs. Inaddition to deducting appropriate conclusions out of the research data, WMS shares valuable

insights with the client through various communication channels, both traditional and

modern, as well.

RISK MANAGEMENT SURVEILLANCE

The department of Risk Management Surveillance has two basic functions which

can be given as; To reduce the risk of various investments by channeling the investment

decisions properly through the research department and to reduce the risk involved for the

company in making the investor invest in a particular financial product, which the company

regards harmful. This department is key in making out various checklists and other such

mechanisms which ensure smooth operations of the company.


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KNOW YOUR CLIENT /ACCOUNT OPENING

The KYC department assists the client or customer to open an account in Hedge

Equities securities. This department is also responsible for the various front office activities.

A client has to sometimes open two types of accounts to trade and own securities in the NSE

& BSE. It should also be noted that a separate commodity account should be opened by a

client in order to trade in commodities, even though he/she has a valid trading account. The

KYC department helps and assists the clients in completing the various processes and

formalities that is associated with the same.

COMPLIANCE

The compliance department is a very important department in each and every

organization because it is this department that ensures that each and every department,

individual, activities and processes are in line with the rules and regulations of the company,

industry and judiciary of the country. This department is also responsible to ensure that the

various activities, processes and procedures of the company strictly coincides with the

objective of the firm.

BUSINESS DEVELOPMENT GROUP

Some of the various functions of the BDG department can be given as:

a) Business associate development: the Department is responsible for marketing activities atthe various branches. It also ensures that an efficient marketing arena exists at all branches.

The company encourages better relations with its branches and promotes development and

formulation of various marketing strategies.

b) Brand promotion: Another important function of BDG department is to promote the brand

of the company. Hedge Equities does it through the different promotional activities including

advertisements and various campaigns. This department is vital in ensuring that the Hedge

Equities brand as a stock broking firm is made known to the outside world.


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c) Investment promotion: The main clients of Hedge Equities are its investors. Hence the

marketing department tries to capture as many investors as possible to encourage them to

invest.

d) Delivery Promotion: Intraday trading is not always profitable and might involve a lot of

risk hence Hedge Equities promotes for delivery, where the shares are kept to be sold for a

later date after analyzing the profitability factors.

PRIORITY CLIENT GROUP

As the name suggest this department mainly deals with the clients with high priority,

often with a higher investment, or highly influential personalities. This department also deals

with the trading related activities of the company. Trading refers to buying and selling of

shares. This department is the most important part of the organization. There are two types of

trading. They are:

A) Online Trading:

These are the prime trading terminals of the organization. Each computer of the

department with the terminal software and connectivity is termed as the trading terminal.

Each terminal is assigned with NCFM certified dealers, who is in charge of each portal and

will do the trade according to the client request. The terminal is managed by either NEAT

(National Exchange for Automated Trading) software or ODIN (Open Dealers Integrated

Network) software. The client can also place his through written request or through the

telephone.

B) Internet trading:

It is a facility provided by the company in order to trade the securities from

convenient place like his office, home etc. The order will be placed by the client itself, and

he/she can make changes before the trade is done. ie, changing the price, cancellation of the

order, etc.


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2.1.7 PRODUCT AND SERVICE OFFERED

2.1.7.1 EQUITY TRADING

In finance, equity trading is the buying and selling of company stock shares. Equity

Market, at present, is a rewarding field for the investors and investing in Indian stocks are

profitable for not only the long and medium-term investors, but also the position traders,

short-term swing traders and also very short term intra-day traders. Fundamentally, stock

market is an avenue for business people to meet shareholders. Other than bank loans, they

now have another option to finance their businesses. This is possible by offering the

company's equities in exchange of shareholders cash. The company is never required to repay

the capital, but the new shareholders have a right to future profits distributed by the company.

For shareholders, they have alternatives to where they should put their money into. In the

same time, they get the opportunity to participate in capital intensive businesses at an

affordable price. Equity is an investment area which can capitalize on with proper assistance

regardless of the market circumstances. Hedge Equities opens the door to this highly lucrative

investment opportunity that could provide a feasible solution to all your financial queries.

2.1.7.2 COMMODITY TRADING

In economics, a commodity is a marketable item produced to satisfy wants or needs.

Economic commodities comprise goods and services. The more specific meaning of the term

commodity is applied to goods only. It is used to describe a class of goods for which there

exist a demand, but which is supplied without qualitative differentiation across a market. In

case of commodity, the market treats its instances as equivalent or nearly so with no regard to

who produced them. At Hedge Equities one can trade in futures like gold, silver, crude oil,

rubber etc and take advantage of the extended trading hours (10 am to 11 pm) in commodities

trading.


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2.1.7.3 CURRENCY TRADING

Currency derivatives can be described as contracts between the sellers and buyers,

whose values are to be derived from the underlying assets, the currency amounts. These are

basically risk management tools in force and money markets used for hedging risks and act as

insurance against unforeseen and unpredictable currency and interest rate movements.

Any individual or corporate expecting to receive or pay certain amounts in foreign currencies

at future date can use these products to opt for a fixed rate- at which the currencies can

exchanged now itself. Currency derivatives serve the purpose of financial risk management

encompassing various market risks. An upfront premium is payable for buying a derivative.

Currency futures will bring in more transparency and efficiency in price discovery, eliminate

counterparty credit risk, provide access to all types of market participants, offer standardized products and provide transparent trading platform.

2.1.7.4 MUTUAL FUNDS, BONDS ETC

A mutual fund is nothing more than a collection of stocks and/or bonds. You can

think of a mutual fund as a company that brings together a group of people and invests their

money in stocks, bonds, and other securities. Each investor owns shares, which represent a

portion of the holdings of the fund. It is often measured in terms of NAV.

A debenture or bond is like a certificate of loan or a loan bond evidencing the fact that

the company is liable to pay a specified amount with interest and although the money raised

by the debentures becomes a part of the company's capital structure, it does not become share

capital. In some countries the term is used interchangeably with bond, loan stock or note.

Hedge equities also offer Mutual funds and bonds. One can select from a wide range ofMutual funds and bonds available in the market today.

2.1.7.5 O NLINE TRADING

Hedge equities have a large network of branches with online terminals of NSE and BSE

in the capital market and Derivative segments. The clients are assured of prompt order

execution through dedicated phones and expert dealers at our offices.


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2.1.7.6 INTERNET TRADING

Hedge equities offer internet trading through their site. One can trade through the internet

from the comforts of your office or home, anywhere in the world. The dedicated IT systems

ensure service up time and speed, making internet broking through Hedge equities hassle-

free.

Using the easiest facility provided by NSDL, the clients can transfer the shares sold by

them online without delivery instruction slips. Additionally, digitally signed contract notes

can be sent to clients through E-mail.

2.1.7.7 DEPOSITORY SERVICES

Hedge equities is a member of Central Depository Services Ltd.(CDSL), offer

depository services with minimum annual maintenance charges and transaction charges

Account holders can view their holding position through the internet. It also offer the

easiest facility provided by CDSL through which clients can give delivery instructions via

the internet.

2.1.7.8. DERIVATIVE TRADING

Hedge offers trading in the futures and options segment of the National Stock

Exchange (NSE). Through the present derivative trading an investor can take a short term

view on the market for up to a three months perspective by paying a small margin on the

futures segment and a small premium in the options segment. In the case of options, if the

trade goes in the opposite direction the maximum loss will be limited to the premium paid.

2.1.7.9 KNOWLEDGE CENTRE

Knowledge centre activities are intended to provide systematic and structured

services mainly to new investors and also to young aspirant aiming for a career in financial

markets. The centre has three functional areas: the publication division, the training centre,


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2.1.9 THE USPS OF THE HEDGE:

SEBI registered portfolio manager Expert team of research analysts Execution excellence, transparency, and visibility Trust and goodwill of over 35000 satisfied customers Strong risk management practices Customer Oriented Wealth Management Services desk. Members of BSE, NSE, MCX, MCXSX, NMC and depository participant in CDSL. Rated as the top brand by the investor community of asianet channel A global outlook blended with a local flavour.

2.1.10 CORPORATE SOCIAL RESPONSIBILTY

Being a Responsible Corporate Citizen, Hedge Equities has initiated a Non Profit

movement HEDGE YUVA which focuses on educating the masses about Stock Market. The

movement has also formulated various scholarship programs for young and dynamic youth.

The Hedge School of Applied Economics also provides various courses, workshops

and projects to create a better pool or market educated citizens and thus contributes its part

towards the Indian Economy.

The Human Resource Department has initiated several steps in the cause of nature. It

frequently circulates messages reminding the employees about the need for conservation of

mother earth. One small but a giant leap is the movement to reduce the number of emails that

are being printed and thus to reduce the usage of paper and other resources.

2.1.11 INNOVATIVE MARKETING PRACTICES

Hedge Equities follows a innovative marketing concept called the family tree concept

in which an individual is made to plot down his family tree. The roots of the family tree are

dug deeper and deeper and proves to be virtually infinite in nature. A software called as the

Free Mind is used in this regard. The power of relations is exploited here in order to bring


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in more business for the company. This marketing strategy has proven to be one of the best in

the world. Since there exists a stronger bonding among the relations the firm will get more

loyal and trustworthy client base. This marketing practice can help each and every business

model to bring in more bossiness and thus is an example for every marketing organization.

Fig 2.4 Free Mind Screen Shot

2.1.12 SWOT ANALYSIS

STRENGTH

catering to the beginnersin the stock market.

Efficient DBMS: customer data usage and retrieval

WEAKNESS

OPPORTUNITIES market


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investments and thus assist in their investment decision making process. This is in

turn used as a strategic tool in order to reduce the risk of the company also.

Power is basically centralized among the top level management and almost all tactical

and operational strategies are also directed directly from the top level management.

The organization is also very good at incorporating new technologies and practices at

a very fast pace and thus always tries to gain a competitive advantage.

Hedge Equities Ltd. also invests a lot and depends heavily on the research department

for its day to day operational activities.

This organization is also very keen about developing and bringing in new and unique

products and services like SIP in Equities.


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SECTION II:

RESEARCH REPORT

LEGAL AND COMPLIANCE

STATEMENTS WITH RESPECT TO

HEDGE EQUITIES


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PURPOSE OF THE STUDY

The purpose of the study is to know whether the departments of HEDGE EQUITIES

properly complied with the various rules, byelaws and various circulars of the Exchange. Ifnot, what are the reasons for the non-compliance and also implications for the non-compliance of various rules, byelaws and various circulars of the Exchange?

OBJECTIVE

To study whether the functions of every department are strictly in accordance with therules, bye-laws and circulars of the exchange.

To study the reasons for deviations.

To find the implications or consequences for the non-compliance of the rules, byelaws, and various circulars of the exchange.

METHODOLOGY

The methodology of preparing ANNUAL COMPLIANCE REPORT includes Studying thevarious rules, bye-laws and circulars as specified by Exchange. It includes making a detailedstudy of the previous years ANNUAL COMPLIANCE REPORT in order to know how to

prepare ANNUAL COMPLIANCE REPORT.

Sorting the whole data according to various departments is the next step in the preparation ofAnnual Compliance Report. Followed by going to each department and enquiring withdepartment head whether the department is properly compiled with rules, bye-laws andcirculars as specified by the Stock Exchange.

The next step is that if the functions of the departments in not properly compiled with rules, bye-laws and circulars of the Exchange stating the reasons for the same. After receiving allthe information from all departments, preparing a detailed report including all the collectedinformation from the depart


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After preparing a detailed report taking signature from each department head to ensure thatthe report is clear and accurate. Finally updating the information in the website of Exchangeand submitting the report.

FINDINGS

Major findings are:

I. Almost all departments are performing as per the rules and regulations ofexchange.

II. In the case of non- compliance, proper reasons are given by HEDGEEQUITIES.

III. Penalties for non- compliance are payed.

SUMMARY OF FINDINGS

Byelawno

Circularno

Specification Complied(yes/no)

If yes(how)

If no(why)

Implications

a 1,2,3 Sauda book Yes ProperlymaintainingSauda book

- -

a 3,2,4,5 Exchange wiseclient ledgers

Yes Properlymaintainingexchangewise clientledgers

- -

a 5,2 General ledger Yes Properlymaintaininggeneralledger

- -

a 5,2 Journals Yes Properlymaintaining

journals

- -

a 5,2 Cash book Yes Properly - -


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maintainingcash book

a 5,2 Bank pass book Yes Properlymaintaining

bank pass

book

- -

a 5,2,3 Register oftransactions

Yes Properlymaintainingregister oftransactions

- -

a 5 Bank book Yes Properlymaintaining

bank book

- -

a 5,3 Margin deposit book

Yes Properlymaintainingmargindeposit

book

- -

a 5,3 Trade log Yes Properlymaintainingtrade log

- -

a 5,3 Order log Yes Properlymaintainingorder log

- -

a 6 Evidence ofclient placing

order

Yes Properlymaintaining

evidence ofclient placingorder

- -

a 5,3 Register ofcommodities

No - No physicaldelivery

i

a,b 5 Records ofDeliveriesreceived

No - No physicaldelivery

i

a 5 Records in

respect of premium

No - No

physicaldelivery

i

a 5 Records inrespect of

brokerage

Yes Records inrespect of

brokerage properlymaintained

- -

a 5 Records inrespect ofservice tax

Yes Records inrespect ofservice tax

properlymaintained

- -


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- 2,7,8 Obtained KYCapplicationforms

Yes KYCapplicationforms

properlymaintained

- -

- 9,10,11 Not placedorders of theclients whosemobile numbersand email id isnot uploaded

Yes Placingonly thoseorders ofthe clientswhosemobile noand emailid isuploaded

- -

- 12,13,14 Not placedorders in inactiveclients accounts

Yes Not placingany ordersin inactiveclientsaccounts

- -

- 15,16,17,2 PAN details ofall clientsobtained anduploaded to theExchange

Yes PAN detailsof allclients isobtainedandsubsequently uploaded

to theExchange

- -

c,d 2,7 Issued to allclients UniformRisk DisclosureDocuments

Yes UniformRiskDisclosureDocumentsis issued toall clients

- -

e 5,2,18,19,4

Collection ofinitial marginfrom clients

beforeentertaining anyorder from them

Yes Beforeentertainingany order,

initialmargin iscollectedfrom clients

- -

- 20 Pre-fundedinstruments (payorders anddemanddraft)/Electronicfund transfer

Yes Pre-fundedinstruments/Electronicfundtransfer aremaintained

- -

f 21,22,23,24,25

Allotment ofunique clientcodes to clients

Yes Allottingclients withunique

- -


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client codes- 22,23,2,26 Not allotted

multiple clientcodes to thesame client

Yes Multipleclient codesis notallotted to

the sameclient

- -

DESCRIPTION OF THE FINDINGS

1 MCX/012/2006 dated 5/1/20062 MCX/COMP/113/2010 dated 5/4/20103 MCX/357/2006 dated 2/9/20064 MCX/358/2011 dated 11/10/20115 MCX/012/2006 dated 10/1/20066 MCX/399/2009 dated 30/9/20117 MCX/COMP/469/2011 dated 22/12/2011

8 MCX/COMP/089/2012 dated 14/3/20129 MCX/T&S/413/2012 dated 11/12/201210 MCX/T&S/434/2012 dated 27/12/201211 MCX/T&S/050/2013 dated 14/2/201312 MCX/T&S/149/2008 dated 23/4/200813 MCX/COMP/513/2009 dated 15/12/200914 MCX/COMP/298/2010 dated 21/8/201015 MCX/T&S/155/2007 dated 26/4/200716 MCX/COMP/206/2008 dated 16/6/200817 MCX/COMP/029/2009 dated 19/1/200918 MCX/COMP/429/2010 dated 4/12/201019 MCX/C&S/214/2011 dated 9/6/201120 MCX/COMP/348/2011 dated 4/10/201121 MCX/342/2006 dated 24/8/200622 MCX/COMP/088/2008 dated 4/3/200823 MCX/COMP/317/2008 dated 7/10/200824 MCX/T&S/405/2008 dated 20/12/200825 MCX/T&S/355/2011 dated 10/10/201126 MCX/T&S/074/2011 dated 4/3/2011a 11.5

b 4.8

c 14.1.1d 14.1.2


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BIBLIOGRAPHY

Indian Financial System, By D. K. Murthy, Dr. D.K. Murthy

SEBI Hand Book 2012 www.rbi.org.in www.investopedia. www.wikipedia.com www.sebi.gov.in
http://www.investopedia/http://www.investopedia/