SHCIL plans internet trading

Addressing a press conference, Goud said for high networth individuals and non resident Indians, SHCIL will offer the facility to trade from home, using internet connectivity. Anyone who is willing to invest Rs 14,000 for a smart card reader could trade from home. Smart card reader is meant to overcome the absence of internet payment system in India.

Unlike internet based trading offered by broking houses in the US,SHCIL’s model will be based on a network connecting the clients stock broker, bank and SHCIL. Technically, the trade order is placed on the SHCIL site, which will be cross checked with the bank for cash balance and the order is passed on to the broker concerned for trade execution by SHCIL. The entire process is automated and will take about 10 minutes, Goud said.

The net based trading is an extension of the unique Kiosk model that SHCIL is offering to general investors. The trading will be restricted to dematerialised securities and will be totally cash based. The trade order is executed only after checking with the bank if sufficient cash balance is available in the client’s account.

SHCIL has already signed agreements with seven banks for utilising their network for the kiosk trading. They are Andhra Bank, Corporation Bank, Central Bank of India, State Bank of Patiala, State Bank of Saurashtra and United Bank of India. Many other banks are likely to join the alliance soon, said Goud, who had extensivemeetings with over 30 banks during the last six months on the issue. SHCIL will soon sign an agreement with Oman International Bank for servicing NRI investors based in the middle east. The NRIs will also be able to trade on SHCIL site from abroad with agreement with a local broker and a bank with which SHCIL has entered into payment agreement.

SHCIL has also entered into agreement with two Mumbai-based stock broking firm for connectivity. Other brokers are expected to join up once the system gets off ground. A client will be able trade on SHCIL site only if his broker is connected to SHCIL for the on-line trade execution.

The software for the entire module was developed by SHCIL. The investor can place his buy/sell order on the machine and the rest will be taken care of by the bank, his broker and SHCIL together. The investor first has to start a savings account with the chosen bank and a beneficiary depository participant (DP) account with SHCIL after which he will be given a smart card with a chipattached to it. The investor then has to place his card in the machine and will be given a pin number to be able to operate the system through touch Screen system and a user friendly software. "The orders will be placed through the system and SHCIL will provide them with the rest of the service by combining the investor’s bank, his broker, his stock exchange, his depository and his depository participant,” Goud said.