MBA (6) WEEKS INTERNSHIP

1) Name of the student: Ramandeep Kaur Registration No.: 7450070076 Section: A17B2 Class: B.Tech (H)-MBA [CSE] Roll No.: RA17B2A14

2) Name and address of the organization Name of the organization: Indiainfoline Ltd. Address: Indiainfoline Ltd, Sec-34A Chandigarh. (160022) Phone no.: 0172-4614855/4002283 E-mail: Sandeep.bedi@indiainfoline.com Date of Joining: 01-06-201 Period of training: From 01-06-2011 to 15-07-2011

Project Topic:- A study of understanding of the mechanism of derivatives Location: Chandigarh 3) Name and designation of the project-in-charge in the organization Name and designation: Mr. Harmeet Singh Mobile No.:9915130645 E-mail: Harmeet.singh1@indiainfoline.com Ramandeep Kaur (09592598620 Ramandeepghangas@gmail.com

Introduction to the Company

The IIFL (India Infoline) group, comprising the holding company, India Infoline Ltd and its subsidiaries, is one of the leading players in the Indian financial services space. IIFL offers advice and execution platform for the entire range of financial services covering products ranging from Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, GoI bonds and other small savings instruments. IIFL recently received an in-principle approval for Securities Trading and Clearing memberships from Singapore Exchange (SGX) paving the way for IIFL to become the first Indian brokerage to get a membership of the SGX. IIFL also received membership of the Colombo Stock Exchange becoming the first foreign broker to enter Sri Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of Indias leading online destinations for personal finance, stock markets, economy and business. IIFL has been awarded the Best Broker, India by Finance Asia and the Most improved brokerage, India in the Asia Money polls. India Infoline was also adjudged as Fastest Growing Equity Broking House - Large firms by Dun & Bradstreet. A forerunner in the field of equity research, IIFLs research is acknowledged by none other than Forbes as Best of the Web and a must read for investors in Asia. Our research is available not just over the Internet but also on international wire services like Bloomberg, Thomson First Call and Internet Securities where it is amongst one of the most read Indian brokers. A network of over 2,500 business locations spread over more than 500 cities and towns across India facilitates the smooth acquisition and servicing of a large customer base. All our offices are connected with the corporate office in Mumbai with cutting edge networking technology. The group caters to a customer base of about a million customers, over a variety of mediums viz. online, over the phone and at our branches.

IIFL was founded in 1995 by Mr. Nirmal Jain (Chairman and Managing Director) as an independent business research and information provider. It gradually evolved into a financial services solution provider. IIFL has a network of 2,500 business locations spread over more than 500 cities and towns across India.

Management Team

Mr. Nirmal Jain : Chairman & Managing Director, India Infoline Ltd. He is the founder and Chairman of India Infoline Ltd. He is a PGDM (Post Graduate Diploma in Management) from IIM (Indian Institute of Management) Ahmedabad, a Chartered Accountant and a rank-holder Cost Accountant. He founded Probity Research and Services Pvt. Ltd. (later re-christened India Infoline) in 1995. Mr. R. Venkataraman : Executive Director, India Infoline Ltd. He is Co-Promoter and Executive Director of India Infoline Ltd, is a B.Tech (electronics and electrical communications engineering, IIT Kharagpur) and an MBA (IIM Bangalore). He joined the India Infoline Board in July 1999. Mr. Nilesh Vikamsey : Independent Director, India Infoline Ltd. Mr. Nilesh Vikamsey Board Member since February 2005 - is a practicing Chartered Accountant for 25 years and Senior Partner at M/s Khimji Kunverji & Co., Chartered Accountants, a member firm of HLB International. Mr. Sat Pal Khattar : Non Executive Director, India Infoline Ltd. Mr. Sat Pal Khattar is a Member of the Presidential Council of Minority Rights, Chairman of the Board of Trustees of Singapore Business Federation and is also a life trustee of SINDA, a nonprofit body, helping the under-privileged Indians in Singapore. He joined the India Infoline Board in April 2001.

History of Company India Infoline Ltd. was originally incorporated on October 18, 1995 as Probity Research and Services Private Limited at Mumbai under the Companies Act, 1956 with Registration No. 11 93797. They commenced their operations as an independent provider of information, analysis & research covering Indian businesses, financial markets & economy, to institutional customers. They became a public limited Comp. on April 28, 2000 & the name of Comp. was changed to Probity Research & Services Limited. The name of Comp. was changed to India Infoline.com Limited on May 23, 2000 & later to India Infoline Limited on March 23, 2001. In 1999, we identified the potential of Internet to cater to a mass retail segment & transformed our business model from providing information services to institutional customers to retail customers. Hence they launched their Internet portal, www.indiainfoline.com in May 1999 & started providing news & market information, independent research, interviews with business leaders & other specialized features. In May 2000, the name of the Comp. was changed to India Infoline.com Limited to reflect the transformation of their business. Over a period of time, they have emerged as one of leading business & financial information services provider in India. In the year 2000, they leveraged their position as a provider of financial information & analysis by diversifying into transactional services, primarily for online trading in shares & securities & online as well as offline distribution of personal financial products, like mutual funds & RBI Bonds. These activities were carried on by their wholly owned subsidiaries.

Their broking services was launched under the brand name of 5paisa.com through their subsidiary, India Infoline Securities Private Limited and www.5paisa.com, the e-broking portal, was launched for online trading in July 2000. It combined competitive brokerage rates & research, supported by Internet technology Besides investment advice from an experienced team of research analysts, they also offer real time stock quotes, market news & price charts with multiple tools for technical analysis. Acquisition of Agri Marketing Services Limited In March 2000, they acquired 100% of equity shares of Agri Marketing Services Limited, from their owners in exchange for issuance of 508,482 of their equity shares. Agri was a direct selling agent of personal financial products including mutual funds, fixed deposits, corporate bonds & post-office instruments. At the time of their acquisition, Agri operated 32 branches in South & West India serving more than 30,000 customers with a staff of, approximately 180 employees. After the acquisition, we changed the Comp. name to India Infoline.com Distribution Comp. Limited. Facilities Their main offices are located in approximately 4,000 square feet of office space located in Mumbai, India. Our India Infoline Branches collectively occupy an additional 10,000 square feet of office space located throughout India, As on March 31, 2005, we have 73 branches across 36 locations in India.

Introduction of project A study of understanding of the mechanism of derivatives is the project I m involved in. Derivatives are defined as financial instruments whose value derived from the prices of one or more other assets such as equity securities, fixed-income securities, foreign currencies, or commodities. Derivatives are also a kind of contract between two counter parties to exchange payments linked to the prices of underlying assets. Derivative can also be defined as a financial instrument that does not constitute ownership, but a promise to convey ownership. Examples are options and futures. The simplest example is a call option on a stock. In the case of a call option, the risk is that the person who writes the call (sells it and assumes the risk) may not be in business to live up to their promise when the time comes. In standardized options sold through the Options Clearing House, there are supposed to be sufficient safeguards for the small investor against this. The most common types of derivatives that ordinary investors are likely to come across are futures, options, warrants and convertible bonds. Beyond this, the derivatives range is only limited by the imagination of investment banks. It is likely that any person who has funds invested an insurance policy or a pension fund that they are investing in, and exposed to, derivatives-wittingly

or unwittingly.

Objectives of Derivates:y y Understanding about Derivatives To study how to reduce the risk

Brief History Of Derivatives 1630s Rice One of the first examples of futures trading was in the Yodoya Rice Market in Osaka in Japan. Landlords, who had collected a share of the rice harvest as rent, found weather and other conditions too unpredictable. So the landlords, who needed cash shipped the rice for storage in city warehouses. They then sold warehouse receipts. Rice tickets which gave the holder the right to receive a certain amount of rice, of a certain quality at a future date at an agreed price, the landlord received a steady income and merchants had a steady supply of rice plus an opportunity to profit by selling the tickets. In an effort to predict prices, a successful merchant and money lender from the Honma family named Munehishais popularly recorded as having invented the candle stick method of plotting price movement- the birth of charting or technical analysis.

Early 1800s Puts and Calls The history of modern futures trading can be traced to the middle of the nineteenth century and the development of the grain trade in Chicago. In 1848 the Chicago Board of Trade (CBOT) was formed to provide a place where buyers and sellers could exchange commodities, originally trading was spot and then to arrive these were the contracts where the delivery of the commodities was at a specified rate and a future date .The earliest recorded CBOT forwards contracts was made on 13th march 1851 for 3000bushels of corn to be delivered in June. The problems with these early cash forward contracts were that they had no standard conditions nor were the can always fulfilled. In1865 CBOT formalized grain trading by introducing agreements called futures contracts which standardized :

The quality of grain The quantity of grain The time and location of grain delivery

The price of the futures contracts was open to negotiation on the exchange floor. It is these early grain futures contracts which have formed the basis of the financial and commodities futures used today. The American Civil War provided an opportunity for the rockets scientists of the day to create a derivative to meet the needs of the day. The Confederate states of America issued a dual currency optionable bond which allowed the southern states to borrow money in sterling with an option to pay back the loan in French francs. But the holder of the bond had the option to convert the repayment into cotton. Options were traded on commodities and shares on US exchanges by the 1860s and the put and call brokers and dealers association was established in the early 1900s. 1970s Financial futures After a long period during which futures and options trading was variously regulated and banned by different governments worldwide, the International Monetary Market (IMM), a division of the Chicago Mercantile Exchange (CME), was established in 1972. This was the first exchange to trade financial futures contracts currency futures. During the same year CBOT was refused permission to start trading futures on shares and in response created the Chicago Board Options Exchange (CBOE) for options trading in 1973. This was also the year that Fisher Black and Myron Scholes published their options pricing formulae.

1980s on Swaps and OTC Derivatives Exchange trading involves open outcry where the traders shout their orders to each other on an exchange floor. In contrast privately negotiated derivatives contracts can be conducted face to face or using the phone, telex, etc. these contracts are known as the Over-The-Counter (OTC) Although privately negotiated OTC forwards and options contracts had been in existence for a long time. The 1980s was the period when swaps first became important. Some of the first swaps involved swapping interest rate repayments on loans in which one party exchange its fixed rate of interest with the other party having variable interest rate payments.

In this brief history a number of exchanges have been mentioned. To complete this section see the timeline which illustrates many of the world wide exchanges now trading derivatives and the dates when they were established.