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Security Analysis and Portfolio Management

Notes dealer makes profit on the large numbers of odd-lots by buying and selling at different
prices.
6. Budiwalas: Budiwalas are functionally same as arbitrageurs. They specialize in buying
and selling simultaneously in different markets. The difference between the buying price
in another market constitutes their profit. However, they can transact such business only
if a security is traded on more than one stock exchange and if exchanged telephonically or
ax-linked. In India, arbitraging has become a growing business. Arbitraging requires
prior application to the governing body "in order to avoid "the evil of "joint account" with
members of other stock exchanges and consequent involvement of one exchange in the
difficulties of another.
7. Security Dealer: This dealer specializes in trading in government securities. He/she mainly
acts as a jobber and takes the risks inherent in ready purchase and sale of securities. The
government securities are over the counter and not on the floor. They maintain daily
contacts with the Reserve Bank of India and common banks and other financial institutions.
As a result of their activities, government securities are quoted finely.
Members are permitted to deal only in listed securities. However, with the approval of the
governing body they can deal in listed securities of other exchanges. There are three types of
contracts permitted by the stock exchanges, members can transact for delivery. i.e., for delivery
as well as payment on the same day as the date of contract or at the most the next day; for
hand-delivery, i.e., delivery and payment within the time and dates stipulated at the time of
entering into bank which time shall not exceed 14 days following the date of contract; for special
delivery i.e., for delivery of the and payment for it within anytime exceeding 14 days from the
date of contract when entering into a bargain permitted by the governing body or the president.

Trading settlement system

All transactions in all groups of securities in the Equity segment and Fixed Income securities
listed on BSE are required to be settled on T+2 basis (w.e.f. from April 1, 2003). The settlement
calendar, which indicates the dates of the various settlement related activities, is drawn by BSE
in advance and is circulated among the market participants.

Under rolling settlements, the trades done on a particular day are settled after a given number
of business days. A T+2 settlement cycle means that the final settlement of transactions done on
T, i.e., trade day by exchange of monies and securities between the buyers and sellers respectively
takes place on second business day (excluding Saturdays, Sundays, bank and Exchange trading
holidays) after the trade day.
The transactions in securities of companies which have made arrangements for dematerialization
of their securities are settled only in demat mode on T+2 on net basis, i.e., buy and sell positions
of a member-broker in the same scrip are netted and the net quantity and value is required to be
settled. However, transactions in securities of companies, which are in “Z” group or have been
placed under “trade-to-trade” by BSE as a surveillance measure (“T” group) , are settled only on
a gross basis and the facility of netting of buy and sell transactions in such scrips is not available.

The transactions in ‘F’ group securities representing “Fixed Income Securities” and “ G” group
representing Government Securities for retail investors are also settled at BSE on T+2 basis. In
case of Rolling Settlements, pay-in and pay-out of both funds and securities is completed on the
same day. Members are required to make payment for securities sold and/ or deliver securities
purchased to their clients within one working day (excluding Saturday, Sunday, bank & BSE
trading holidays) after the pay-out of the funds and securities for the concerned settlement is
completed by BSE. This is the timeframe permitted to the Members to settle their funds/ securities
obligations with their clients as per the Byelaws of BSE.

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