ABSTRACT The economy of recent world greatly depends on technology.

The primary assumption about stock market lies in a physical place where traders meet and negotiates, now with the change of era technology also advanced with great extent. The stock market has now developed with modern technology like Electronic Trading System. The stock market of Bangladesh has also introduced online trading services. The service facilitates an investor to trade online rather his presence in a trading place. Modern trading technology clashes with the traditional organization of a stock exchange. The modern facility is no longer a place. Rather, it is a computer system over which transactions are entered, routed, executed and cleared electronically with little or no human intervention. The role of the brokers and dealers has changed, and the need for a physical meeting place has become of little importance. The report greatly concern about to introduce electronic trading system of stock market based on Chittagong Stock Exchange (CSE). Bangladesh is newly digitalizing its every sector and its one of the beginning step which makes our stock market to step ahead with the international trading system. The service will save the time of investor as well it will keep investors update about his current status in market, which will certainly add them a extra advantage to make useful decision to employ their money best way. The report hopefully proved beneficial to its users through introducing them the new version of trading facility.

CHAPTER 1 [Link] The stock market is a ground where time is one of the important concerns for any investor. To employ the money in right time in right stock is a vital role for an investor. The recent stock market of Bangladesh is experiencing a high volatility where maximum number of individual investor invest execute their negotiation on the basis of information they got rather being update by any fundamental analysis, this certainly increase the risk of invested money. The newly introduce electronic trading or online trading service allow them to stay connected with the market and also to aware about the stock they are going to buy, the online system clearly show them how much investors are demanding a particular stock and how many of them are trying to sell them, this little understanding will save both the time and money of the investor. The report is devoted to clarify the electronic trading system based on Chittagong stock exchange and to introduce the procedure of this system to users of this report. [Link] of the study The stock market is one of vital ground of national economy; any change regarding this place should be well informed by its market participants and also the student of finance. Traditional trading facility now about to obsolete, new trading facility should be welcomed and its need to learn to get habitual with the new system. [Link] of the study This report is prepared on the basis of CSE. Through the report investors will be able to know about the electronic trading system and learn the procedure of this system. To illustrate the system I used CSE IT manual from CSE website. The report mainly prepared by concerning the investors of CSE.

[Link] of the Study The primary objective of the study is to know electronic trading system of CSE Specific Objective: To know about CSE. To know the prospects of Electronic Trading System in Bangladesh. To know the procedure of Electronic Trading System of CSE. To know the advantage and disadvantage of E-trading system.

[Link] of the Study All the information provided in this report has been collected through 2 stages. The 2 stages are as follows: 1. Problem formulation 2. Data collection 1 Problem Formulation In this stage the report objective and the preliminary idea about the report topic is selected for the study. Literature Survey and Experience surveys have been conducted in this stage. In order to do literature survey books, journals, and periodicals is followed to get idea about the research topic and to know about the problem and how to do a research. It helps to set the research objective. Before starting the final research, I consult with experience persons have been conducted to get information about the problem and gather experience about the problem. The objective has been selected after completing the Experience Survey. 2 Data Collection The overall source of data of this report is secondary. Data can be collected directly from the CSE and from the books related to the topic and CSE website.

[Link] of the study The study has experienced following limitations The concept is new for Bangladesh stock market so, the information regarding the study is limited. The study could not illustrate instant impact of the system because of less involvement of investors. The information used is fully secondary, primary data could add more practical value. The time of the study is limited to add more content related to the study.

LITERATURE REVIEW Review of Literature:

Kalakota and Robinson (1999) observe that the term e-trading in stock stands for trading in the equity or debt instruments on the stock exchanges through an electronic communication Network (ECN). Although on-line trading strictly refers to the electronic execution of trade, an eco-system of e-stock trading has three dimensions: Electronic execution of the trade, Payment of the transaction through a payment gateway, and Transfer of shares in electronic form. Current developments are, essentially, converting off-line practices to an online equivalent. The world is going even further. The stock trading is moving towards wireless, and it is taking the markets with it. Wireless trading is more than just calling in an order with cell phone. It involves moving the entire trading experience news, analysis, order entry, advice, and alerts account statement to a wireless medium. While the final evolution of wireless trading certainly is a few years away, many of the steps of trading can be completed without wire. Study undertaken in Malaysia by National Information Technology Council (NITC) revealed that despite all the wonderful numbers, the increase in Internet subscribers will have little impact on the growth of online trading if the level of trust does not improve. The study also depicted that Malaysians have a general tendency to distrust the Internet and that is a good thing from the security point of view. While this is true, the same natural tendency to distrust the internet also spells major obstacles for e-trading proponents to convince the public that it is safe enough to buy and sell stocks online. (P Shukor Rahman, 2006). Using electronic platform to trade stocks has been in application in the US and Europe as a method to participate in the fast-growing asset class. In Asia however, it has yet to catch on. Celent (2007) predicts that in the period between 2009 and 2010, 75% of the daily turnover would be conducted electronically. Specialists agree that Asia is behind the US and Europe when it comes to trading currencies online, but it is believed that the region will quickly catch up and the next era for stock market as well as electronic trading, will be centered in Asia, Africa, and the Middle East. (Daniel Inman, 2007)

Electronic trading is growing with such speed in the United States that both the big boards the New York Stock Exchange and NASDAQ, as well as securities regulators, admit they can barely keep up. Online trading has already clipped between 20% and 35% from NASDAQs trading volumes with similar erosions on the NYSE, prompting the two traditional exchanges to look at extending their trading hours and even go public to raise capital to compete. (Peter Morton, 2006) Turkey is at the beginning of the road in e-trade compared to developed countries. The attraction of e-trade is gradually increasing in Turkey. Out of approximately 25 million Internet users in Turkey, 2.5 million conduct e-trade. The figure will rise further with the increase of trust in the virtual world and the enabling of credit card security (Anonymous, 2009). The system of e-commerce has a long way to go before it becomes a reliable means of buying products and services in India. Another study done by the Rajah (2008) on potential trade on the Internet and e-commerce websites had showed that 73 per cent of them allowed several modes of payment, only 7 per cent offered guarantee for products sold and 60 per cent had no mechanism to register complaints. There were very few redress mechanisms, and even their implementation was not enforced. The number of cases (e-fraud) that the Central Bureau of Investigation had registered was less than 50, and only one had reached the prosecution stage. The lack of experience of cyber forensic specialists compounded the problem (Rajah, 2008). Using personal computers and, increasingly, mobile phones with Internet connections, South Korean e-traders can buy and sell stocks anywhere. They trade from home, from cars stuck on Seouls congested streets, and from special PC rooms. Many of South Koreas cyber-investors sneak in a little online investing at the office, one reason is the Korean stock market recently decided to stay open through the lunch hour. Investors are attracted by the cost of online trading. The commission on online trades can be as low as .03%, at least a third lower than commissions on off-line trades. E-traders also like seeing their buy and sell orders has been carried out near instantaneously instead of having to wait two or three days for paperwork to clear. One can buy and pay for stocks right away (Paul Wiseman, 2007). One interesting phenomena is found in Japan. Just 14% of Japanese institutional investors trade bonds electronically, compared with about half of investors in the US, Europe and the rest of Asia, according to Greenwich Associates 2007 Japanese Fixed-Income Investors study. While the portion of bond investors trading electronically in all of Asia jumped to 47% in 2007 from

17% in 2006, Japanese traders arent headed in the same direction. Just 5% say they are even considering experimenting with electronic trading. There is no lack of access to e-trading systems in Japan, nor is there a shortage in liquidity in Japanese government bonds, which comprise 85% of the local market. Japanese investors offer valid reasons for declining e-trades, including a preference for personal relationships with fixed-income dealers, and very real concerns about potential losses of liquidity and essential market information from e-trading, the study found. (Drew Carter, 2008). However, the studys authors suggest Japanese traders try e trading as simply an additional tool.

CHAPTER 2

Chittagong Stock Exchange

The history of the Dhaka Stock Exchange (DSE) dates back to 1952 when the local government deemed it necessary to establish a stock exchange because Pakistani shares and securities were prohibited from being bought or sold on the Calcutta Stock Exchange (CSE). Up until this point, Pakistan had been trading quite profitably on the CSE and had no need to establish their own stock exchange department. In response to the prohibition the Provincial Industrial Advisory Council made the decision to establish a stock exchange in Eastern Pakistan. Initially it was suggested that instead of creating an independent stock exchange, a branch of the Karachi Stock Exchange be opened at Dhaka. However this proposal was very unpopular with representatives from East Pakistan who felt that it was necessary to create a completely new stock exchange in Dhaka. This is what eventually happened with different members of the stock exchange purchasing membership cards at the price of RS.2000. There were two proposed locations for the stock exchange Dhaka and Chittagong but in the end it was decided that Dhaka was the most suitable location. An organizing committee was established to further set up the DSE and invitations were sent out to determine what sort of interest there would be in the proposed stock exchange. The response was overwhelming and on the 7th of July 1953 a meeting was held with roughly 100 interested persons attending. Of these, eight men were selected to promote the stock exchange the DSE was officially formed shortly afterwards. The DSE was moved to its current location in 1959. Currently the main functions of the Dhaka Stock Exchange are the listing of companies, the settlement of trading, the providing of a screen based automated trading of listed securities, market administration, market surveillance, market control, the production of a monthly review publication, the granting of approval to transactions, the monitoring of activities of listed companies to ensure that they stay in line with listing regulations, the investigation of grievances, the announcement of information about listed companies and the maintenance and use of the investors protection fund.

DSE & CSE: as we know two stock exchanges are in operation in our country Dhaka Stock Exchange and Chittagong Stock Exchange. The first stock market in this region was incorporated on 28th April 1954 with an authorized share capital of TK.5.00 lac and paid up capital of TK 3.90 lac only. At that time it was East Pakistan Stock Exchange Association Limited. Thereafter on 20th June 1962 it was renamed as east Pakistan Stock Exchange Limited. After two years the name of this bourse has further been changed to Dhaka Stock Exchange Limited. In the year 1971 there were 196 listed securities in DSE. The trading activates of DSE were suspended between independence war and massive nationalization of all industries, banks and insurance companies till 1975. However activities were resumed once again in 1976 by the Government with changed economic outlook. At that time only 9 companies were listed with market capital of TK.14.67 lac. At present the numbers of listed companies in DSE are 282. After four decades of establishment of DSE. Chittagong Stock Exchange was established in the year 1995 with 33 listed companies. At present the numbers of listed securities in CSE are 236. 2.2 CSE INDEX CSE involve 3 indexes those are as follows: CASPI = CSE All Share Price Index CSE-30 = Index of 30 selected company CSCX = CSE Selective Categories Index The CSE Index should involve: Scientific calculation formulas with clear adjustment procedure. Logical scrip selection criteria. Distinct base date. Meaningful base value The only index the CSE has been maintaining since 10th October 1995 is an ALL SHARE PRICE INDEX using Chained paschal method. It faces question of clarity. This index was subject to unusual ups and downs and without a distinct base value. Therefore in need of a clean slate CSE finds the date 1 January 2000 is the best date to start new indices. An all share price index with new formula and base date 30th December 1999 (the day of the year) and new base index of thousand (to mark the millennium) well replace the existing one

and A completely new selective Index incorporating 30 scraps with base date 30th December 1999 and base index 1000. 2.3 CSE AT A GLANCE Types of Organization: - Public limited Company by guarantee having share capital -Non-profit organization. Authorized Capital: Tk 20111.56 No. of Members: 135 No. of Listed Securities: 236 No. of listed Company: 204 No. of listed M. Funds: 26 No. of listed Debenture: 02 Settlement System: Daily Netting for A, B and Z category scripts T+0 (pay in) & T+0 (pay-out) for Z category scripts T+9 (pay-in) & T+0 (pay-out). Cost of Trade: Commission 0.025% of the transacted value from both buyer and seller. Contract charge Tk 3 from both buyer and sellers. The trading system of Chittagong Stock Exchange is a fully automated screen based trading system which was implemented in June 1998. This system is price and time priority. Orders are matched with existing opposite type of orders which have the best price. Chittagong Stock Exchange now offering Internet Trading Service facility. Anyone can trade now from outside the country through a Stock broker.

2.4 CSE THE MARKET 1. Listed Securities: 236 2. Company: 204 3. Mutual Fund: 26 4. Debenture: 02 5. Total issued capital : Tk 253439.33 6. CSE all share index: 12937.650 7. CSE-30 index: 15267.146 2.5 SELECTION CRITERIA of CSE-30 INDEX 2.5.1 BASIC CRITERIA 1. Must be listed with the Chittagong Stock Exchange. 2. Have public shareholding of minimum 15% in the paid up capital. 3. In case of IPO/NEW issue this should be on listing either with DSE or production for the minimum same period prior to its listing. 4. Companies that did not hold their Annual General Meeting regularly will not be considered. 5. Minimum market capitalization must be Tk. 200 million. 6. Must have positive revenue reserve/retained earnings. 7. Must be traded for at least 10% days in trading. 8. Paid dividend in any of the last 2 years. 9. Company having negative Earning per Share (EPS) for last two consecutive years will not be considered. 10. At least one company from each sector will be taken in the index if the scrip satisfies above criteria. On being qualified on the basis of the Basic Criteria the companies are required to meet the following further Selection Criteria to have the final in CSE-30 Index.

2.5.2 OTHERS SELECTION CRITERIA Higher Net Assets Value (NAV) per share. Larger number of shareholders. Higher rate of dividend. Higher rate of public Holdings in equity. Higher rate of Earning per Share. Higher liquidity in terms of trading day. Higher percentage of market cap in terms of Paid up Capital. Longer duration of continuous remaining in the CSE-30 Index. Regular payment of listing fees.

CONDITIONS TO BE FOLLOWED WHILE FORMING THE SELECTIVE INDEX Only the active scripts will be considered for calculating the index. Mutual Funds and Debt securities will not be considered in this Index. Only normal public market trades will be considered. Selective index will be refreshed after 3 minutes time interval during online trade. At the time of update the selective index will consider the weighted average price for each constituent stock. No change in number of shares will be allowed during the business sessions. Index committee will review the index- its criteria, performance and calculation method after every six month. Index Base Date is 30th December 1999. Base Day index is set to be 1000.

OPERATIONAL EVALUATION OF CSE Operation of any organization needs more concentrated effort. Here an evaluation of CSE in done in the form of SWOT analysis. 2.6.1 STRENGTHS 1. Country wide computer network. 2. Most advanced trading system. 3. Walking with the advancement of information technology. 4. Efficient management. 5. CSE always keen to take the initiatives. 6. Corporate governance. 7. Strong financial position.

2.6.2 WEAKNESSES 1. Small number of listed companies. 2. Most of the members/dealers are not active. 3. Lack of professionalism of members. 4. Relatively new. 5. Regional image. 6. Dhaka based member. 7. Low trade volume.

2.6.3 OPPORTUNITIES 1. The no. of internet users is increasing. 2. The government policy is changing. Govt. is keen to take BD to a free market economy. 3. Commercial Banks reluctance to provide long-term loans. 4. Relationship with international counterparts. Like, SAFE (South Asian Federation of Exchange).

2.6.4 THREATS 1. Regulatory bodys SEC regulation. 2. BTTBs monopolistic attitude. 3. Bargaining power of listed companies. 4. The lion share of DSE.

CHAPTER 3

Electronic Trading System in Bangladesh

Introduction: Due to many requests from investors, many brokerage houses have incorporated new ways of online trading which has become a huge trend in current technological era to have online trading option right off the web site, an option that is called fingertips trading. Bangladesh Stock Market Inc. has been spending many years monitoring and reporting data daily in equity, mutual funds, and the bond market, analyzing stocks with a fundamental basis and charting for the Bangladesh stock market. A few of DSEs core objectives, is to focus on creating integrity, prudential credibility and provide professional market information to the local, global accredited investors, online traders, joint venture investors as well securities professionals ([Link]). In the past, a few brokerage companies approached DSE to connect online with DSE using their links but it was determined that they were not up to the standards due to lack of information and instability in the market place as well as the fact that DSE did not want to be limited to just a few individual firms. DSE strongly believes in giving opportunities to as many credible firms as we can to create an effective and competitive market place. DSE is announcing its online trading facility to Brokerage firms who are committed to maintaining trust, fair practices, respect to stock market regulation and high standards of services to investors. Brokerage houses have initiated moves to facilitate their web sites by linking and implementing online trading option on the web. A continuous increased traffic on DSE online will create trading that would be effective, convenient, and attractive to the investors. Obviously, it will attract more and more foreign, NRB investors into the capital market. DSE wants to work with the high standard brokerage houses and companies who are maintaining the highest standards of integrity, diligence in the market place and giving unparalleled services to retail investors and institutional investors. DSE advised the brokerage houses that one would have direct contact one on one with investors for screening security, verifying account information and completing the buying and selling stocks. At present online trading facility exists in a form that clients are to communicate their respective broker houses and broker houses perform the transaction. Some of the broker houses are currently taking initiative so that clients can perform true online stock trading sitting at home. Dhaka and Chittagong stock exchanges do not have a universal e-trading platform

connecting investment banks and the exchanges as the government wants to prevent an unauthorized influx of banking capital into the stock market. The platform, which allows stock exchanges or investment banks to perform market aggregation, smart order routing, real-time pricing and market surveillance, was also chosen by international customers for investing in the stock market. (Jeff Pao, 2008) There are a number of obstacles that restrict the spread of e-trading in Bangladesh. Among others one is the law: The more complications there are, the more difficult it is to develop the electronic market. Countries that are particularly challenging are ones where the central banks are very strong. It is important to be in position when the markets deregulate and, in the meantime, work within the pre-existing regulations. Another problem is the level of technology the internet might not be a problem in techno-savvy countries like; but in less wired countries, such as India, Indonesia, or Bangladesh it can be more of an issue, the network might not be able to cope with the magnitude of e-trading. (Celent, 2007)

The benefit of E-Trading system:

Users benefit
1. Lower transaction costs: Typical brokerage-rates in Bangladesh are in the range of 0.5% to 1.5%, whereas the rates for e-broking are as low as 0.1 %. In the U.S. brokerage costs, before e trading was introduced were as high as 7%, and have now come down to about 1%. E-broking, in addition, not only brings down the cost of the execution of the transaction but also speeds up the electronic transfer of securities. 2. Transparency: E-broking empowers the customers to transact directly on the stock exchange and delayers the whole process thereby improving transparency. The user does not need to rely on the brokers word-of-mouth or transaction slips for confirmation of the price at which his trade was conducted, (Lucas, 1999). 3. Convenience: Online share trading is available merely at the click of a button, in the comfort of home/office, thus, making it much more convenient for the customers to trade anytime. Also, with limit-based orders being allowed, customers can place their orders even during the non trading hours, which are executed at the earliest trading possibility. 4. Procedural benefits: Unlike the earlier scenario, where the customers had to physically go to the broker to complete the formalities of trade, under the e-trading paradigm, these procedures

are done away with. As Chan (et al., 2001) concludes that the entire cycle-of-trade (like placing the order, transfer of funds, transfer of securities, etc.) is done electronically, and it speeds up the whole process.

Traders benefit
1. Easier risk management: Under the online mechanism, the system would first check the status of funds available with the client in his bank account and only then allow the trade to take place. This process, thus, substantially reduces the exposure of the broker to client-related credit and payment risks. 2. Greater business potential: The new paradigm of e-broking, which allows simple, convenient, and transparent transactions, may encourage more participants to trade. It is expected that the introduction of e-broking will expand the market horizon, thus, resulting in better business for brokers in the long-term. 3. Lower staff costs: Automation of the broking processes results in reduced manpower requirements, flexibility of time, less infrastructure cost, etc. offering significant cost-savings to the broker. The major problem with e-stock trading is that it increases the temptation on the part of influential speculators and stockbrokers to indulge in short-term speculation rather than long term investment.

CHAPTER 4 E-Trading procedure of Chittagong Stock Exchange (CSE) Introduction: Despite we do not have true e-trading system in operation; some leading technology companies have already developed online transaction processing and straight-through processing applications that allow real-time transaction execution. Whiteley (2000) suggests Straight through processing technology permits financial software products to directly interact with the stock exchange system by communicating with the exchange market structures. This is achieved by developing application programming interfaces (APIs) that talk to the exchange server. It must be noted that from a technical perspective, there are three key success factors for e-trading. They are briefly described below. Scalability and robustness of the trading system: It becomes imperative for any Net-based application to have a proven capability for scalability and robustness of a trading system that ensures the ability to handle and process requests from multiple users at any given point in time. Bandwidth optimization: The application software should demonstrate intelligence in optimizing the available bandwidth by deploying advanced technologies like streaming. Integration with third-party systems: On the Net, with information feeds available from multiple points; it is prudent to deploy applications that are built on open architecture methodology for interfacing with third party systems. For any e-trading system to be successful, it should provide security, reliability and confidentiality of data (Chan, et al., 2001). This can be achieved through the use of encryption technology before the online trading begins. The exchange must ensure that records maintained in electronic form by the broker are not susceptible to manipulation, and adequate back-ups and storage are available. The security features demanded by regulatory authorities include: Unique user identification and Passwords that can be renewed from time to time to prevent hacking by outsiders.

The major security requirements of e-trading are: (a) Trusted means of authentication over open networks, (b) Confidentiality of the transaction, Means to ensure integrity of data in-transit, and (d) Means to ensure non-repudiation of payment or its receipt. Various security models are adopted to ensure safe and reliable e-trading transactions.

Procedure of E-Trading system (IT Manual) in CSE 1. Logon Screen: The investor has to put the Investor ID and Password. Then click Logon button.

2. After login user will see the following screen. Users can get Top 10 Gainer/ Loser, Indices, Market news & Other Financial informations from this home page.

3. Market watch / BBO: Step1: Go to Markets -> Market Watch. Step2: Go to add symbol and add scrip.

Then user has to verify the password again for authentication in the Transaction Authentication box.

4. to Put BUY / SELL Order: Select Scrip > Press F2 for Buy & F3 for Sell OR clicks the desired symbol and select buy/sell from the popup menu.

5. To Get Market Dept or BBO Depth: Select Scrip > double click or click the desired symbol and select Quote from the popup menu.

From the BBO depth user can see the 10th level BBO depth, various script informations and volume graph.

6. To See Pending Orders: Step1: Go to Equities -> Order Book.

Step2: To modify any order Click M Button on the right side of a pending order. Then the following window will be visible.

After modifying the order click Submit button.

7. To See Executed Orders: Go to Equities -> Trade Book.

8. To See Cash/Stock Statements: Go to Accounts and select the desired submenu.

9. To See The Trade Confirmation: Click on Confirmation menu and a new window will come and show all trade confirmation.

Order & Trade confirmations are also visible in the message center at the bottom of the page.

10. ODD Lot Book: Step1: Go To Markets -> Odd lot Book.

*Source: CSE IT Manual ([Link])

CHAPTER 5

Electronic Trading Vs Floor Trading

Stock trading includes the execution of both buying and selling activities. It is not a one-side process. Instead it requires a buyer of a stock and a seller who should offer the particular stock. It can be said that financial markets' existence will be almost impossible without the availability of the sophisticated technologies. This statement is supported by the fact that without the sophisticated systems in place the billions of shares that are traded each day would hardly take place. Financial markets are flooded with many technical terms. You don't have to be an expert in all of them. However, you should have a basic understanding of the functions and processes of the financial markets in order to become a proficient investor or trader. Ways to Execute a Trade Stock exchanges implement one of the following ways in order to execute a trade: 1. Electronic trading 2. On the exchange trading floor The trend is toward the transference of trade execution to the networks. However, as with every new thing, resistance on the part of some investors is met, who prefer the traditional on the trading floor way. Electronic Stock Trading Electronic trading is a method of trading securities (such as stocks, and bonds), foreign exchange or financial derivatives electronically. Information technology is used to bring together buyers and sellers through electronic trading platform and networks to create a virtual market place.

Impact of E-Trading:

Reduced cost of transactions By automating as much of the process as possible (often referred to as "straight-through processing" or STP), costs are brought down. The goal is to reduce the incremental cost of trades as close to zero as possible, so that increased trading volumes don't lead to significantly increased costs. This has translated to lower costs for investors. Greater liquidity electronic systems make it easier to allow different companies to trade with one another, no matter where they are located. This leads to greater liquidity (i.e. there are more buyers and sellers) which increases the efficiency of the markets. Greater competition While electronic trading hasn't necessarily lowered the cost of entry to the financial services industry, it has removed barriers within the industry and had a globalization-style competition effect. For example, a trader can trade futures on Eurex, Globex or LIFFE at the click of a button he or she doesn't need to go through a broker or pass orders to a trader on the exchange floor. Increased transparency Electronic trading has meant that the markets are less opaque. It's easier to find out the price of securities when that information is flowing around the world electronically. Tighter spreads The "spread" on an instrument is the difference between the best buying and selling prices being quoted; it represents the profit being made by the market makers. The increased liquidity, competition and transparency means that spread have tightened, especially for commoditized, exchange-traded instruments.

For retail investors, financial services on the web offer great benefits. The primary benefit is the reduced cost of transactions for all concerned as well as the ease and the convenience. Webdriven financial transactions bypass traditional hurdles such as logistics.

Floor Trading Generally, people picture stock exchange as a big place, which with the beginning of the trading day is filled with brokers who shout over one another different numbers and words accompanied by gestures. The atmosphere is further enhanced by the various technologies, such as monitors, complex graphs, terminals and phones ringing from every direction. First of all, the investor instructs his/her broker to purchase a certain amount of shares of a particular company. After receiving the order, the order department of the broker transfers the order to the floor clerk, who is on the exchange. The floor clerk in turn contacts one of the firm's floor traders. The latter finds another floor trader who is willing and able to sell the shares the investor has ordered. The process is simple since floor traders are familiar with the floor traders that make markets for the specific stocks. A negotiation follows between the two regarding the price of the shares. After they reach an agreement the trade is completed. The notification turns back the same channel until it reaches the investor's broker, who in turn notifies him/her about the final price. The whole process takes up to few minutes. It all depends on the stock the investor has selected and the market itself. A confirmation notice is received in several days, which verifies the executed trade. No matter which way of stock trading any one choose but it is good to know how it works in case something wrong happens. In this way an investor will have the knowledge on where to search for the obstacle. To be a successful investor any one need the right trading platform. A professional-grade, awardwinning platform that offers low cost trades like Option House. The low cost trades will allow investor to preserve more of their wealth and save money, which they can reinvest instead of paying brokerage commissions.

The advantage and disadvantage of E-Trading system are as follows: Advantages of Electronic Trading: Flexibility: Electronic trading is nearly instantaneous, providing you the freedom to trade at your leisure from anywhere, anytime. No needs to makes a call, travel to your brokers office, or even get dressed. This flexibility means you have the freedom of watching the market and making quick trades if needed. You dont have to wait on anyone other than yourself. Expenses: For the most part, transaction costs are usually lower for on line trades than traditional brokerage firms. E-Trade offers trades starting at Tk6.99, Scot trade at Tk7, and TD Ameritrade at Tk10. One reason for this is because overhead is obviously lower for on line firms. Another reason for this however, leads us to one of the disadvantages of on line trading which is no advice. Disadvantages of Electronic Trading: No Advice: Traditional brokerage firms that may offer investment advice specifically for any situation, investors wont find that on line. Therefore, it might pay for inexperienced investors to meet with an investment advisor while still new to the game. Investors also wont have guidance as to what price they should buy and sell with an on line firm. Expenses: While these can be an advantage because of low cost, many investors become trading happy and begin to make excessive daily trades which can not only lead to higher transaction costs, but possibly lower returns as well.

CONCLUSION

For any e-trading system to be successful, one should provide for foolproof security, reliability and confidentiality of data. The key success factors, various security models that are adopted by the successful market in e-trading are to be taken into consideration carefully since just a copy of the advanced world might not work properly because indigenous factors play a very instrumental role in the process of successful implementation. Information in their respective markets, Ebroking is an evolving industry in Bangladesh with great prospect and the survivors are likely to be those brokers who offer integrated / consolidated services and are financially resilient. The future of the e-broking industry, thus, largely depends on the extent of the penetration of the Internet in the near future. For any organization to thrive in todays dynamic business environment, it must learn to deal effectively with intense global competition, and cope with an increasingly rapid pace of change. Sometimes, a fundamental change in the manner in which business is done is the only way to succeed or even to survive. Paperless environments, virtual organizations, mass customizations, and Internet-based customer services are some of the challenging hallmarks of organizations in the new millennium. These days, it is very difficult to imagine any organization that does not strive to use the innovative tools of information technology to increase its competitiveness, and to capitalize on opportunities that contribute to its success.

References: Black, Fischer, 1971, toward a fully automated exchange, Financial Analysts Journal, Part I, (July/August), Part II, (November/December). Demsetz, Harold, 1968, The cost of transacting, Quarterly Journal of Economics, 82, 33 53. Anonymous (2009), e-trade's potential for growth, Turkish advancement. (National ed.). Ankara: Aug 26, 2009: 66-78. Celent (2007), E-trading way forward in Asia, Journal of Business and Commerce, A1 Publication Ltd, Bangkok: Jun 18, 2005: 23-37 Chan H., Lee R., Dillon, T. and Chang E. (2001) E-Commerce: Fundamentals and Applications, England, John Wiley & Sons, Ltd. Kalakota, R. and Robinson, M. (1999) E-business: Roadmap of Success, Reading, MA, Addison-Weseley. [Link] (IT Manuals). Md. Abdul Aziz, 2010, Price volatility of stock market- a study on CSE, Chapter 2, [Link]