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  • Top Five Algo Trading Softwares in India

    Top Five Algo Trading Softwares in India

    In a report published by NIFM, it has been stated that half of the trade orders at NSE and BSE are some kind of algo trade. Surprising, right? However, to surprise you even more, in the developed countries, this ratio is even higher at around 80% to 85% and thus here in India, there is a lot of room for more algo trading. If you are new to algo trading and looking for algo trading software to suit your trading needs, this article is just for you.

    In this article, you will not only read about the top algo trading software in India but also about their intriguing features, how NSE and SEBI encourage and also monitor these trades, and a lot more.

    What Is Algo Trading Software?

    Algo Trading Software is a computer-generated program which is pre-set with certain trading criteria. Algo trading is often referred to as automated trading or block-box trading as well as it is based on the programs set on the computer. Algo trading is gaining momentum in the market due to its promptness. 

    As the stock market is highly volatile and for a human trader, it is not always possible to place/cancel or modify trade orders as a pre-loaded computer-based program can. However, that is just one of the many reasons for using algo trading software.

    These software are loaded with different criteria which when matched in the stock market, triggers order and take necessary actions. One of the major reasons to use algo trading is to reduce market risk rather than maximising profits.

    Top Features of Algo Trading Software

    While every algo trading platform in India is unique and has its features, some of the features are in common and crucial. So, when you pick an algo trading software, you need to be aware of these features, whether they are in the software or not. To help you find the right feature, here is a list of top features of algo trading software in India which you cannot miss –

    • Automation: Traders use algo trading software to ease their trading experiences and thus algo trading platform’s must-have feature is automation. This feature helps accelerate and organise all the tedious work that you otherwise had to do. In turn, this saves a lot of time of yours which you can use elsewhere.
    • Efficient User-Interface: The algo trading platform that you pick must have an efficient user interface and is easy to use, and speed up your trading process. The software must have the capability of processing multiple orders in a second. You need to see whether the algo software is a multi-threaded system or not.
    • Availability of Data: For trading, data about the market and the companies are indispensable. You just need them for everything you do in the stock market and so is your algo trading software. Thus, you need to see whether the algo software you are opting for uses real-time data and prices or not. The software needs to use real-time stock market data and prices to make your trading at par with the market. The system should be such that it can incorporate these data easily either from the inbuilt system or other sources.
    • Backtesting: Algo Trading software is not only for placing orders or monitoring them but also used heavily for developing algorithmic trading strategies using pre-set criteria and data and information. Now, for different trades, you need different strategies usually to maximise the returns or minimise the losses. So, to make sure whether the trading strategy you are opting for a particular trade or instrument is full-proof or not, you need to use algo backtesting feature of the software. Using this software, you can make use of historical prices and check how your algo strategy would have performed in the past in a similar scenario.
    • Allowable Trading Strategies: Some of the Algo Trading software possess limitations on the number of trading strategies you can use. You need to make sure that the software you pick for algo trading doesn’t have such an upper cap or even if it does, the limit is high enough to have multiple trading strategies at work simultaneously. There are subscription plans as well for more trading strategies, you should check those plans and compare them with other software’s plans to make sure which will be more suitable for your trading needs and your pocket.
    • Sourcing Data: The algo trading platform, you pick to use for, must be compatible with the stock exchanges for sourcing market data. You can also source market data from third-party websites which complies with data from different stock exchanges together.

    Here are the Top Five Algo Trading Softwares in India

    1. Algobulls

    If you are looking for an algo trading software that helps you with abundant AI-driven trading strategies which you can also modify to suit your personalised trading agenda, then Algobulls is the one you need to add to your system.

    Best Features of Algobulls Trading Platform:

    • Multi-exchange trading facility – you can trade commodities, derivatives, forex along with equities.
    • Strategies that can help the high net worth investors as well as retail investors.
    • Modification features available for all trading strategies.

    Pros of Algobulls Trading Platform:

    • More than five hundred algo trading strategies are pre-set and along with that over ten million customization and modification options.
    • Backtesting facility available for all the strategies.
    • Paper trading support.
    • More than 150 trading indicators.

    Cons of Algobulls Trading Platform:

    • In the free plan, there are limited features, you can unlock more features with the premium plan.
    • Sometimes the data offered for trading and strategizing are not real-time data, some error or gap remains at times.

    2. Tradetron

    If you want to build new trading strategies for yourself or your clients but you do not know to code, don’t worry, Tradetron got you covered. With this algo trading software, even people with no knowledge of coding can build and automate algo trading strategies.

    Features of Tradetron Trading Platform:

    • Multi-currency software.
    • Trade any asset from any exchange – currency, commodities, derivatives, and equities.
    • Customized alerts for trade execution.
    • Connectivity with another platform via API.

    Pros of Tradetron Trading Platform:

    • Easy yet efficient features that suit beginners as well as pro traders or people creating strategies.
    • Share trading strategies with other traders, or modify the strategies of other traders to suit your needs.
    • Algo strategies are based on different market events and quant methods.

    Cons of Tradetron Trading Platform:

    • The free version allows only one strategy at a time that too with certain limitations.
    • For all the features, you have to pay for the premium version as the free version doesn’t offer them.

    3. uTrade

    If you are looking for an algo trading platform that not only offers algorithms for trading but also risk management solutions, exchange solutions, and multi-asset trading then uTrade is your go-to.

    Features of uTrade Trading Platform:

    • Multi-asset trading facility where you can trade across exchanges be it currency, or commodity or equities or derivatives.
    • You get a real-time market data broadcast facility.
    • Institutional sales trading OMS.

    Pros of uTrade Trading Platform:

    • Suitable for retail traders as well as High net-worth investors.
    • You get direct access to the market using this algo trading software.
    • Multiple trading APIs to enhance your trading experience.
    • Trading Strategies are customizable.

    Cons of uTrade Trading Platform:

    • Most of the features are accessible only with a subscription.
    • Not so suitable for beginners.

    4. Refinitiv

    Refinitiv is shaping the world of algo trading with its unique and innovative approach every day. This is one of the most demanded algo trading software across the globe for its exceptional performance and endless features.

    Features of Refinitiv Trading Platform:

    • Ample trading strategies using spread, equities, forex, and derivatives.
    • Cost analysis.
    • Surveillance.
    • Alerts and notifications.

    Pros of Refinitiv Trading Platform:

    • Offers the best workflow automation in the market.
    • Multi-exchange trading facility.
    • Post-trade tools for settlement, surveillance, and monitoring.
    • Easy and efficient user-interface.

    Cons of Refinitiv Trading Platform:

    • Suitable for the professional traders.
    • A limited number of features available with the free plan.

    5. Greeksoft

    If you are looking for high-frequency algo trading software that has very low latency and exceptional features to up your trading experience, then Greeksoft can be the solution.

    Features of Greeksoft Trading Platform:

    • Ample risk management tools for minimising the risk of your trade orders.
    • Multiple levels of algorithms to suit different trading requirements.
    • Entirely automated high-frequency order routing system which has exceptionally low latency level.

    Pros of Greeksoft Trading Platform:

    • Multi-asset trading options covering basic equities to currencies, everything you want to trade using algorithms.
    • A wide number of trading strategies to help you minimise risk and maximise profits from your trades.
    • Exceptional user support.
    • Wide variety of customization options for all strategies, alerts, products symbols, and a lot more.

    Cons of Greeksoft Trading Platform:

    • Not suitable for newbie traders.
    • Not all features and strategies are available with the free plan.

    How Does NSE Encourage Algo Trading In India?

    One of many reasons for Algo Trading becoming popular in India is the support it gets from the National Stock Exchange. While SEBI always keeps a strict eye on algo trading for benefiting the traders especially the retail traders and investors, NSE on the other hand give the required push for adapting algo trading for the benefit of the investors and traders. Here are certain ways in which NSE helps in encouraging algo trading in India –

    • Algo traders and vendors get ample data and information on historical prices of securities from NSE.
    • NSE also helps in researching algo trading tools and software to find out the best one for the traders and investors.
    • The organisation also checks which software has the best strategies and features that can be useful for the traders and vendors.
    • NSE along with other stock market regulators and educators help traders learn about algo trading and also publishes different research papers to help people gain knowledge about the same.

    Benefits of Algo Trading For Intraday Traders

    The rise of algo trading has been incredible and obvious due to its exemplary benefits which include –

    • Cost reduction for the intraday traders who do bulk trading. This is because, with algo trading software, there is no need for having multiple terminal staff as the trades can be automated.
    • Algo-trading software also helps in improving the liquidity of stocks and ensures no leakage of sensitive information which can affect the price of the stock. This helps in buying and selling shares at better prices.
    • Due to pre-set criteria in this algo trading software, they can react to market events and updates faster than a human intraday trader can do usually. This again helps in trading securities at better prices and making the most out of the market events and changes.
    • This software uses multiple metrics like VaR or hedging tools to reduce the risk of the trades all the time and the intraday trader need not stare at the screen all day for the same.

    Frequently Asked Questions

    1. Which Algo Platform Is Best For Trading?

    While all the five algo trading software are excellent, TradeTron can be considered one of the best amongst them as it offers a wide range of facilities.

    2. Is Algo Trading Profitable in India?

    Algo trading has been picking up rapidly in India and at present, out of all the trade orders at both the stock exchange – BSE and NSE, 50% of them are algo trades. This depicts that these trades are profitable enough.

    3. How Does Algo Trading Software Work?

    Algo Trading Software makes use of different pre-set programs and criteria which helps in triggering orders and other actions as per market movements.

    4. Is Algo Trading free in India?

    No, Algo trading is not entirely free. The charges depend on each of the software. While some of the software offer certain free features but most of them are offered when you buy the premium plans.

    5. Is Algo Trading Legal in India?

    Yes, Algo trading is legalised in India. It is controlled and monitored by SEBI and the stock exchanges.

  • Everything you need to know about NSE & BSE

    Everything you need to know about NSE & BSE

    Are you new to the stock market? Are you wondering how stocks are listed or traded and from where you can buy these stocks or other securities? Don’t worry, we have heard you and that’s why this article is going to cover all the important aspects of both the important stock exchanges in India which are – the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

    What is a Stock Exchange?

    Before we dig into NSE and BSE, let us understand what a stock exchange is. So, a stock exchange can be defined as a market where the companies are the vendors and the investors/ traders are the buyers. The companies list their stocks on the stock exchange after they come up with an IPO. 

    Once the IPO is launched by a company, and it is subscribed, approved and allotted, the stocks are listed. Now the investors who purchase stocks in the IPO, they become shareholders of the company. This means they own a portion of the company against which they have purchased stocks.

    Now, stock exchanges play an important role not only in listing the stocks as listing via IPO is the first step but then once the stocks are with investors, they can themselves buy and sell on the exchange with each other. So, the stock exchange facilitates both the companies and the investors.

    Now as you have understood what is a stock exchange, understanding NSE and BSE will be easy. These two are nothing but two of the largest stock exchanges in the economy.

    What is Index?

    An index shows how the stock market is performing overall. With many stocks listed, tracking them one by one can be tough. An index simplifies this by grouping companies based on size, sector, or industry. It gives a clear view of market trends and investor feelings.

    In India, Nifty is the main index for the NSE, consisting of 50 major stocks. Sensex represents the BSE with 30 significant stocks. The index value is calculated using Weighted Average Market Capitalisation. When stock prices rise, the index increases; when prices fall, the index decreases. This reflects market performance.

    What is NSE?

    NSE or National Stock Exchange is the largest stock exchange in India with around 2137 stocks listed on it as per data of March 31st, 2023. The total market capitalization of all these stocks is close to Rs. 2519504.61 crores as per the same data report of NSE. As per market capitalisation, the top ten stocks on NSE include Reliance Industries, TCS, HDFC Bank, ICICI Bank, HUL, Infosys and others. Investors and traders can trade currency derivatives, equity derivatives, debt instruments as well along with stocks.

    What is BSE?

    BSE or Bombay Stock Exchange is older than NSE as well, to be exact, it is the oldest stock exchange in the entire Asia. In the year, 1875, BSE was established but the name of the institution then was Native Share and Stock Brokers’ Association. As per current data, there are 5258 companies listed on BSE and the total market capitalization stands at Rs. 23232910.18 crores.

    How Do These Stock Exchanges Work?

    Both NSE and BSE function in the same manner and their main objective is to facilitate buyers and sellers in the stock market. When an investor places an order, the stock exchange receives the information from the broker of the investor.

    Then the stock exchange starts searching for orders from the opposite side to match this order. Once the order matches, the order gets executed. Now the stock exchange sends information to the broker of both the buyer and seller about the trade and the transaction taking place thereon.

    Let’s understand this with an example, suppose there are 4 buyers for Stock A and 5 sellers for the same stocks. The bids placed by them are as follows –

    No. Buyers Sellers
    1. 100 120
    2. 102 116
    3. 103 112
    4. 105 109
    5. – 105

    Now as you can see in the above table, the highest bid placed for buying stock A is Rs. 105 per share, by buyer no. 4, while seller no. 5 has placed the lowest bid for selling the same stock at Rs. 105. Now, suppose, this trade is taking place on NSE, so, the stock exchange will match buyer 4 with seller 5, and the trade will get executed at Rs. 105.

    Apart from matching trades, these stock exchanges also do much crucial work and one such is building and maintaining the stock indices such as Nifty or BSE Sensex.

    These indices act as standards for investors and traders and help them understand whether the return generated by their investment portfolio or stocks or any other securities they have invested in are as per market or not.

    How to Trade on NSE and BSE?

    Whether you want to trade on NSE or BSE, the steps are the same and those are:

    • Firstly, you need to open a Demat account and a trading account. You can open these accounts with Findoc for a hassle-free paperless account opening process.
    • Then you need to submit the documents for KYC verification. Once the KYC is verified, the account will be operable.
    • Now, you need to download the trading platforms you want to trade from. Whether it is a mobile trading place like StockZ or a trading terminal.
    • Then set it up with the stocks and other assets you want to track and trade.
    • You can now place orders for the securities you want.
    • However, before you start trading or investing on NSE or BSE, make sure, you learn about the transaction charges and other charges to make a correct estimate of your earnings.

    Benefits of Getting Listed on BSE and NSE

    Listing on the BSE and NSE has several advantages for companies, including raising capital and building credibility. It also provides safer and more transparent opportunities for investors.

    • Better fundraising: Once a company lists its shares, its financials are in the public domain, fostering investor confidence and enabling it to raise funds more easily. Both exchanges offer a readily available market with numerous buyers, allowing companies to raise money with ease.
    • Strict regulatory governance: SEBI regulates listed companies to adhere to guidelines that are revised from time to time to avoid fraud and misrepresentation. Compliance reduces investors’ risks and builds the company’s reputation.
    • Clear information dissemination: Companies are required to disclose information such as revenue, dividends, reinvestment schemes, and bonus issues, allowing investors to make decisions accordingly.
    • Access to loans using shares: Listed shares can be used as collateral with banks or financial institutions, helping companies and investors secure funding for new ventures.

    Similarities in the BSE and NSE

    While BSE and NSE differ in size and trading activity, they share several important features that make them equally important for India’s financial markets:

    • Both are recognised stock exchanges regulated by the Securities and Exchange Board of India (SEBI).
    • They provide a platform for companies to raise capital by listing shares and securities.
    • Both exchanges allow trading in equities, derivatives, debt instruments, ETFs, and mutual funds.
    • They operate on a fully electronic trading system, ensuring transparency and efficiency in transactions.
    • Both have a pre-open session prior to the regular market hours for prices to stabilise.
    • Both have benchmark indices—Sensex for BSE and NSE has Nifty, which indicates the overall market trend.
    • They also play an important role in price discovery and liquidity, facilitating buyers and sellers to trade smoothly.
    • Investors can use both exchanges with the same trading and Demat accounts.

    Which Exchange is Better: NSE or BSE

    Both NSE and BSE serve different types of investors. The right choice depends on your trading style, goals, and the kind of companies you want to invest in.

    • NSE is preferable if, as a trader, for most active traders, NSE would be the preferred option. It has greater liquidity, quicker execution, and a strong derivatives market. Institutional investors, day traders, and those trading in futures and options often prefer NSE because of its efficiency and its ability to handle large trading volumes.
    • BSE is better if you want a variety of companies. As a long-term investor seeking a diverse selection, BSE could be the best choice. It has the largest number of listings in India, with numerous mid-cap and small-cap companies listed. Retail investors looking for diversification, heritage businesses, and stable equity investments tend to prefer BSE for the creation of a diversified portfolio.

    Which Exchange Should Investors Transact In, Nse Vs Bse?

    NSE or BSE is your choice, and it would be based on your investment goals and preferences. If you like active trading, derivatives, and high liquidity, NSE is likely to be more appropriate due to faster execution and higher volumes. If you prefer long-term holdings, wider listings, and exposure to a large number of mid-cap and small-cap companies, BSE is the preferred choice. Both exchanges are safe, regulated, and accessible via the same trading account.

    Difference Between NSE and BSE

    The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are India’s leading stock exchanges, each with distinct characteristics in history, size, trading volumes, and investor preference.

    Conclusion

    Both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are an integral part of the stock market in India and in traders’ and investors’ life. While NSE has become the largest stock exchange in the country, BSE is the oldest in the continent offering the best of the services to the investors and traders to up the stock market game in the economy.

    Frequently Asked Questions

    NSE trading means purchasing and selling stocks, derivatives, and other securities on the National Stock Exchange. It is India’s largest and highly liquid stock exchange with sophisticated electronic systems.

    Trade on NSE by opening a Demat and trading account with a broker, doing KYC, using the broker’s platform, and entering buy or sell orders electronically.

    Yes, if the stock is listed on both exchanges. Selling on the BSE and buying on the NSE is no problem at all, since settlements are processed centrally through your Demat account.

    NSE is used for active trading and derivatives, and BSE is better for long-term investors who have more companies listed. Both are safe, regulated, and accessible from the same trading account.

    BSE is an acronym for Bombay Stock Exchange, formed in 1875 as Asia’s oldest stock exchange. NSE is an acronym for National Stock Exchange, established in 1992 with fully electronic trading mechanisms.

  • Initial Public Offering (IPO): A Comprehensive Guide

    Initial Public Offering (IPO): A Comprehensive Guide

    India is touching new heights in terms of business growth, and it is quite evident with the number of IPOs launched in the previous few years. If you are considering investing in upcoming IPO in India, then you must want to know how the IPOs are performing in the recent past, isn’t it? So, out of 119 IPOs launched between 2020 and 2022, only 1 IPO couldn’t make it, which indicates the huge success of new-age companies’ IPOs. This also showcases the new Indian approach towards businesses and why investing in IPOs can be a wise choice for investors.

    Until 2023, there have already been close to 60 IPOs launched, and many upcoming IPO launches in India are under the pipeline this year. However, before you dig into the individual IPOs to find the best IPO for yourself using the IPO screener, let’s understand what is ipo and how does it work?

    What is an IPO?

    IPO or Initial Public Offering can be described as making a private company public by selling its shares to the general public in the country. Businesses opt for IPO primarily for two reasons. One is to raise funds to grow the business, and the second is to become a public enterprise with more recognition.

    With the digitalisation of investments, nowadays, it is not difficult to find retail investors in IPO, which earlier was. Suppose you want to invest in IPOs launched in the coming months. In that case, you can easily find the information online or contact ipo consultants in India for better suggestions regarding which IPO will suit your investment profile.

    How does IPO work?

    The entire process of IPO involves–

    • The company wants to issue the shares by contacting an Underwriter and preparing the Draft Red Herring Prospectus (DRHP). This document will have all the information related to the company, its financial structure, business methods, objective for the issue, purpose of the issue, number of shares to be issued, share price, price range or bands, and everything that an investor must know about the company before investing in their upcoming IPO.
    • Once the DRHP is created, it is submitted to SEBI for evaluation; if SEBI approves it, the company publishes the final Red Herring Prospectus (RHP) for prospective investors.
    • You will now know the issue date, price range, and issue type. Once the IPO opens, it usually stays for around five days, but the timeline can vary from 3 to 21 days.
    • At this time, the investors must bid for the stocks via their brokers or banks.
    • After the IPO closes, the company evaluates the application received for the IPO and then allots shares accordingly.

    IPOs are usually of two types, and the company mentions the same in its RHP. These are –

    • Fixed Price Offering: As the name suggests, when the company issuing the shares fix a price for each share, it is known as a Fixed Price Offering or Fixed Price Issue. In this case, the share demand is known after the IPO is closed and not in between. Investors investing in a fixed-price offering must pay the entire amount to apply for the number of shares they want to purchase.
    • Book Building Offering: On the other hand, under the book-building method of IPO, the price of the issue is determined after the IPO is closed. The issuing company provides a price band of around 20%, and the investors looking to invest can bid any price within this range. The demand for the shares under this method can be known daily as the IPO progresses towards closing, and this helps the company determine the issue price. Once the IPO is closed, the share price will be determined per the demand for the same and analysing the investor bids.

    How can you invest in an upcoming IPO in India?

    If you are thinking about investing in any of the upcoming IPO in India, then here is the method of how you can invest in one with ease –

    • First, you will need to open a demat account, bank account, and trading account if you wish to trade the shares after getting the allotment or invest via the UPI route.
    • Now you can apply through the UPI route or ASBA route. Investing in IPO has become easier with the UPI route, initiated with digitalising the investment space.

    UPI Route

    • To apply for upcoming IPOs, you have to log into your trading account, or you can easily invest using your Findoc Account via the UPI route.
    • Enter the number of shares or lots you want to purchase.
    • Enter the price you want to purchase the shares if it is a book-building offering.
    • Enter the details in your IPO application form.
    • Enter your UPI ID.
    • You will receive a message for blocking the funds for the amount you want to invest in the IPO. Click on the approve button, and your application will be submitted.

    ASBA Route

    • Under this method, you must determine the bank participating in the IPO.
    • You can find a suitable IPO for your investment portfolio with the IPO screener.
    • Click on the ‘Apply’ button to apply for the IPO.
    • The application form will open, which you will have to fill in with the details like name, address, PAN details, bank details, and others as required.

    Then submit the form, and you will be asked to confirm the amount to be blocked for the IPO investment; once you confirm, your application will be submitted.

  • Join, Retain, and Partner with the Best Trading Firms and Grow as a Professional Trader

    Join, Retain, and Partner with the Best Trading Firms and Grow as a Professional Trader

    The global economy is going through a significant paradigm shift, and people are starting to invest in the stock market more than ever before. Be it the uncertain economic environment or a vision for financial stability, the number of professional traders is rising exponentially. As per the latest data, over 9.6 million active traders exist online, which accounts for 1 in every 780 people.

    For anyone who aspired to start trading, getting associated with a trading firm is advantageous. They let you trade in stocks by providing tailored investment advice based on specific risk levels and goals. Let us dig deeper and explore how these firms can be the ladder to your success in the stock market.

    How do Stock Trading Firms Assist Professional Brokers?

    Trading firms provide education, resources, trading tools, and other crucial services that make trading easier. Big-shot trading firms such as Findoc utilize the Algo trading software to facilitate HFTs (High-Frequency Trading), allowing for more efficient market making and risk management.

    The present-day trading firms offer training, mentoring, and networking opportunities, giving you access to the traders’ community for collective growth. They support multi-market and multi-asset investments, which broadens the investment possibilities. Besides, trading firms capitalize on robust, high-tech automated systems to enrich the trader’s experience and expertise.

    Why is Algo Trading an Important Aspect While Choosing the Stock Trading Firm?

    Since technology is at the forefront of stock market investments, it is no wonder why Algo trading is gaining much traction. It ensures that each trade is executed at the best possible price for the trader and in accordance with his strategy. From trade automation to risk mitigation, Algo trading is a pioneer for beginner and professional traders. The market size for Algo trading is estimated to reach from $2.19 billion in 2023 to a whopping $3.56 billion by 2030.

    Algo trading helps you test the waters despite having zero or little knowledge regarding the investments. Thus, trading firms leveraging the power of Algo trading can skyrocket your trading career through tech-enabled tools, hassle-free automation, and expert guidance.

    What Are the Features a Stock Trading Firm Should Have?

    There are numerous trading firms in the stock market, making it challenging for professional traders to narrow down their choices. There are many things to consider, from front-end trading interface to analytics tools and risk mitigation to order management system. The following are a few innovative features offered by the best trading firms, like Findoc, to help restructure and simplify trading.

    • Customized OSM: Findoc’s order management system is a computerized one that manages the trade execution through Algo trading. It lets professional traders fill orders for diversified securities, assess their progress, and ensure regulatory compliance. One can also monitor the real-time situation of trades, their prices, and demand & supply in the market.
    • Trade Management and Execution Support: With custom trading Algo and AI-backed systems of Findoc, professional traders can conduct portfolio analysis to reap higher returns as per current trends or historical data sets alongside other factors. It provides a systematic and disciplined approach for investments involving a certain risk factor. In addition, Findoc also offers mentorship and excellent support 24/7, with trading veterans and connoisseurs curating the strategies for you.
    • Robust and Efficient APIs: APIs are vital for applying automated strategies for trading. With Findoc, you can utilize third-party applications necessitating access through APIs. Likewise, professional traders can also develop their own systems to garner real-time data and place orders on the go using a single button click. Findoc’s API interfaces are tailored and developed by experts who are well-familiar with APIs’ capabilities.
    • In-House Development & Support: Algo trading requires understanding quantitative analysis, like programming skills and various algorithms you want to utilize. A successful professional trader needs comprehensive expertise concerning currency movements, and Findoc’s guidance plays a vital role here. Thus, you can apply strategies derived from mathematical equations for investments having the potential to generate good returns when tested by dynamic variables. With Findoc’s valuable training, you can become an expert at risk assessment of your trades based on certain factors.
    • Excellent 24/7 Support: Professional traders can contact Findoc’s Algo development & support team before placing their trades to ensure things are done right. Suppose you are a beginner and lack abilities to trade smartly in the market. In that case, the financial experts of Findoc will offer support as per your trade requirements and financial goals.

    How Algo Trading Software Are Beneficial for A Professional Trader?

    Leading trading firms such as Findoc offer a gamut of Algo Trading Software that helps professional traders make better investment decisions. Likewise, they can utilize features such as financial advice & tools, automated risk management, backtesting, portfolio management, and more. Let us explore in-depth and learn how Algo trading software benefits professional traders at a scale.

    • Automated Trading: Algo trading software allows traders to automate their trades and invariably run them. This helps them save time, reduce the risk of making mistakes, and avoid getting overwhelmed by the market.
    • Automated Backtesting: It permits traders to test out strategies before they are actually deployed on the market. Automated backtesting gives them a chance to see which strategies work best for them before they get into real trades with real money on the line.
    • Real-Time Data and Market Information: The Algo trading software provides real-time data, which helps in making accurate decisions. Besides, professional traders also get access to algo trading strategies and advice on what mistakes to avoid. The software can provide alerts about market conditions, which is helpful for those who want to be on top of their game regarding trading.

    Algo Trading Software Variants that Help Simplify and Streamline Your Stock Trading Goals

    The objective of Algo trading software, backed by artificial intelligence and machine learning, is to make your trading journey seamless. Trade software is indispensable for prudent investments, from third-party trade simulations to live backtesting. These are the top nine trading software platforms that top trading firms like Findoc deploy to facilitate sub-brokers and professional traders.

    Softwares Prime Features
    Algobulls Customizable trading algorithms for bespoke investment strategies powered by artificial intelligence.
    Tradetron Assists in automating quant strategies and building scalable algorithms minus any single code, which can be traded for monetization.
    uTrade Best suited for financial enterprises and their end customers, it offers multi-asset trading and single-digit microsecond latency.
    Refinitiv With robust technology, open software solutions & critical data, and expertise, it helps mitigate risk concerning your stock market investments.
    GreekSoft A multitasker software providing comprehensive solutions with the swiftest trading speed powered by a 10G Ethernet network and HFT support.
    Algobaba It is a trade execution platform utilizing its proprietary system STOXXO to offer features like live trading, a trade simulator, and tailor-made investment strategies.
    Multi Trade Extensively scalable software that enables trades of sizable volumes and comprises a user-oriented and straightforward UI design.
    XTS (Symphony) It is an advanced sell-side trading software preferred for its multi-asset and market compatibility and for streamlining enterprise trading.
    Robomatic It blends finance, innovation, and technology into the trading segment and lets you filter and select varied stocks.

    The Ball Is in Your Court Now

    Every professional trader needs a customer-centric, tech-enabled trading platform to begin their investment voyage in the market. While pumping your money into the stocks, a reliable trading firm like Findoc would be a turning point in making your investments profitable. It helps beginners and professional traders to learn the know-how of trading, test and execute trades through varied algorithms.

  • How Does Sub-Broker Franchise Work?

    How Does Sub-Broker Franchise Work?

    A stock market sub-broker franchise is a business opportunity that allows one to invest in the stock market and earn passive income. The stock market is a way of investing in companies. The more shares you own; the more dividends you will receive. Stock market sub-brokers are brokers who trade stocks on behalf of their clients. They can also provide research and other financial services such as portfolio management and tax planning.

    A stock market sub broker franchise is an investment-based business model requiring no upfront capital or inventory but a significant time commitment from the owner/operator. This blog will teach you about the sub-broker franchise cost, operations, and benefits.

    The Functions of a Sub-Broker Franchise

    It is a business model where the franchisee pays a fee to the franchisor to use its brand, and then they operate independently.

    A sub-broker is an individual who works for a stock brokerage firm and acts as an intermediary between clients and the firm. They are responsible for buying or selling shares on behalf of their clients, executing trades, and acting as an intermediary between clients and brokers.

    The primary function of this type of business is to provide stock market services to the public and make money off the spread between the bid and ask price.

    Since many types of businesses can be run as a franchise, there are many different functions that can be included with this type of business. Some standard functions include educational services, trading platforms, and research tools.

    The functions of a stock market sub-broker franchise are not just limited to the company’s business operations. It also includes the following:

    • Providing services such as in-depth research, stock recommendations, and personalized investment advice.
    • Marketing and advertising products and services related to stocks.
    • Creating an online platform for investors to buy stocks with ease.
    • Offering educational programs on investing and financial literacy.
    • Creating a community for investors who want to share their knowledge with others in their network.
    • Selling investment products like mutual funds or ETFs through the website or other channels like telemarketing or print ads.

    Advantages of a Sub-Broker Franchise

    From low sub broker franchise costs to flexible working hours, the advantages of having a franchise are pretty generous. One can also earn a passive income stream from fees generated from investments managed by the franchisee. Below mentioned are the prime benefits of acquiring one.

    • High Income Potential: The sub-broker is entitled to get a higher percentage generated from client brokerage. On the contrary, the franchiser retains a comparatively less brokerage percentage.
    • Pocket-Friendly Investment: The minimum sub broker franchise cost is Rs. 50,000 as an investment expense. Besides, a security deposit has to be incurred by the franchiser to cover the expenditures. However, in some instances, the franchiser does not even ask for a minimum sum for the deposit.
    • Comprehensive Assistance: With an investment in a stock market franchise, you can expect support from marketing and training and access to their database of investors who want to share their experiences with others looking for information on investing in stocks.
    • Excellent Advisory Support: The program provides you with the support that you need to succeed in the stock market business, including training, mentorship, and marketing assistance. It allows people to have an expert who will help them make their investments more profitable without dealing with all the stress and anxiety that comes with it.

    The Final Words

    Work flexibility, lucrative career prospects, and lower sub-broker franchise cost are some of the factors which are contributing to this business’s popularity. This type of franchise is more cost-effective for individuals who are just starting out in the business. It also allows for greater flexibility regarding location and hours of operation.

    A sub-broker franchise can be an excellent opportunity for those who want to work for themselves or are looking for a new career path. To become a successful stock market franchise owner, it is crucial to understand what it takes and what you need to succeed and the risks involved with this type of business venture.

  • Sub Broker Franchise without Deposit

    Sub Broker Franchise without Deposit

    As a protocol, a stock broker requires an initial investment deposit from the sub broker to launch a sub broking business, per the sub broker agreement between the two. Every stock broker requests a deposit of some kind from the sub broker they are forming a relationship with.

    In this blog, we will attempt to cover the fundamentals of the security deposit, its characteristics, the advantages of starting a sub broker franchise with a security deposit, and ultimately, instances of sub brokers without a deposit.

    Initial Security Deposit

    One of the essential items addressed in the sub broker contract is the initial investment or security deposit. Generally speaking, the stock broker clarifies what the security deposit is taken and for which specific business model.

    While some stockbrokers mention a variety of security deposits, others only mention the minimum amount.

    1. The typical security deposit ranges from 1,00,000 to 3,00, 000. It can be a bit low or high in this range, but this is a standard range. Any sum between these ranges may be deposited.
    2. With this security deposit, a sub-broker is granted the authority to launch a joint venture under the stock broker’s name. Additionally, they are granted permission to access the broker’s technology, trading platform, and research reports.

    Important Pointers About Security Deposit

    The following are some crucial aspects of the security deposit and the associated procedures:

    • The stock brokers take the security deposit as insurance if future payments are not made as agreed.
    • Almost all stock brokers indicate in the agreement that the security deposit is refundable and will be returned to you at the termination or closure of the deal.
    • Cash or stock can be used as the security deposit, whichever is preferred.
    • The security deposit amount partially determines the sub-revenue broker’s sharing portion. The percentage of revenue will also be significant if the security deposit is on the higher side.
    • A partner may open a trading or Demat account with the broker for formal transactions by depositing the security money with the stockbroker.
    • In general, it is seen that new brokers offer their partners ZERO investment or sub broker without deposit to grow their business.

    Understanding the Zero Deposit Sub Broker Franchise

    The big question is: Can anyone be a sub broker without a deposit?

    Some stock brokers offer opportunities to people looking to launch their businesses without requiring an upfront payment or security deposit.

    In today’s market, there is the fierce rivalry. Stock brokers are using a variety of tactics to entice more business partners for company growth.

    Lowering or eliminating the requirements for an initial payment to launch a partnership business is the first step. Some stock brokers reduce the initial deposit required, while others abolish it altogether, and it relies on the stock broker’s strategic requirements.

    Other aspects, such as the sub-reputation brokers and clientele, are also considered when determining the security deposit. There is a considerable probability that your initial payment may be wiped off, or at the very least substantially reduced, if a partner can commit to a minimum amount of trading per month.

    Now it’s your turn to consider why certain brokers require a security deposit for sub broker franchise and others do not. If you wish to launch a partnership in the broking industry without posting a security deposit, you should consider your long-term advantage first.

    Since it is frequently observed that brokers with weak brand equity and networks attempt to provide you with a free partnership, however, their long-term advantages are relatively few.

    Final Thoughts

    There are numerous choices available to those who want to start a sub broker business and pursue a career in the broking industry.

    Due to the intense competition among stock brokers, it is common to see them employ offers like sub broker franchise without deposit or zero initial investment to draw clients and expand their clientele.

    Let us help you get started if you want to become a sub broker or any other kind of partner in the stock market sector.

  • How to Become a Sub-Broker?

    How to Become a Sub-Broker?

    A stock market sub broker is a financial professional who facilitates the trading process. They are responsible for managing their clients’ risks and the risks associated with their own trades.

    A sub broker in the stock market trades in stocks on behalf of another brokerage firm. He or she is an agent having an association with a stock exchange’s trading member. To become a sub-broker, you should get registered with the Securities and Exchange Board of India (SEBI) alongside any of the local stock exchanges as well.

    Sub-brokers provide liquidity to the market and help investors who want to trade shares. This means that they are in charge of managing a portfolio of securities, arranging for the purchase or sale of those securities, and handling any complaints about the securities. This position typically requires strong math skills, analytical thinking, and experience working in the stock market. A successful applicant will also have knowledge of how to trade stocks and bonds.

    They are intermediaries that offer services to the brokerage firm that employs them. The role of the sub-broker in the stock market is to buy and sell securities on behalf of the brokerage firm, often at prices different from those offered by other brokers. This can be done either over the counter or on an exchange, but most often, it takes place over the counter. If you wonder how to become a sub-broker, here is all you need to know!

    Process of Becoming a Sub-Broker

    Most aspiring candidates are unaware of how to become a sub-broker regarding examination and registration. However, the process is relatively swift and hassle-less. Here are the steps you need to carry out:

    1. Apply for a certification exam by the National Institute of Securities Markets (NISM) consisting of modules on mutual funds, equities, derivatives, and commodities.
    2. Register yourself online with the Securities and Exchange Board of India (SEBI).
    3. Upload the essential documents on SEBI’s official website and complete the process by paying the registration fee with the amount for the initial deposit.
    4. Register with any local stock exchange.
    5. You will have to apply at a well-established and leading brokerage company to become a sub-broker to get access to training, study material, tech-enabled tools, and valuable assistance.

    Necessary Credentials for a Sub-Broker

    Before starting off your journey on how to become a sub-broker, you must fulfill the below-mentioned eligibility criteria:

    • A Secondary School Graduation Certification
    • He/she should be 21 years old
    • Having comprehensive familiarity with financial services
    • Must have passed the NSIM certification exam

    What Are the Functions of a Stock Market Sub Broker?

    • The primary function of a sub-broker in the stock market is to act as a conduit for large orders from one broker’s clients into another broker’s order book and vice versa, without allowing any direct trading between clients or brokers themselves.
    • Stock market sub-brokers help traders manage risks by providing them with advice, trading strategies, and risk management tools. They also provide information about different markets and trends so traders can make informed decisions.
    • Their job is to manage the risks of their clients, manage their own trades, provide information about different markets and trends, and provide advice on trading strategies. The sub-broker in the stock market is usually compensated by transaction fees and commissions on the securities they buy and sell.

    Significance of a Stock Market Sub-Broker

    The role of a sub-broker in the stock market is to provide liquidity to the market by buying and selling securities. The job is mainly done through the use of an automated trading system.

    There are three main types of stock market sub-brokers:

    1. Full-service brokers who offer a wide range of services, including research, portfolio management, trading on behalf of clients, and investment advice;
    2. Market makers who buy and sell securities to provide liquidity;
    3. Central counterparty clearing houses that work with banks and other financial institutions to settle transactions.

    Conclusion

    Sub-brokers are the key to the success of a stock market. They are the ones who make sure that investors get the best deals, and they can also provide them with recommendations on what to buy and sell. Sub-broker can earn commissions by trading in stocks that they own themselves. If you want to know how to become a sub broker, the information mentioned above will help you move ahead with this lucrative and flexible career option.

  • What are Flexi-Cap Funds? How is it different from Multi-Cap Funds?

    What are Flexi-Cap Funds? How is it different from Multi-Cap Funds?

    The Asset Under Management (AUM) of the Indian MF Industry has grown from ? 6.80 trillion as on April 30, 2012, to ?38.04 trillion as on April 30, 2022, more than 5.5-fold increase in a span of 10 years. Along with this, the mutual fund industry has crossed a milestone of 10 crore folios during the month of May 2021. The industry comprises various Asset Management Companies (AMCs) that offer a variety of schemes to the investors like equity-oriented, debt-oriented, hybrid, gilt, money market, etc. One such type of scheme that has been recently introduced in India is called flexi-cap funds. In this article, we will try to understand such schemes and how they are beneficial for investment.

    What Is Flexi-Cap Fund?

    Flexi-Cap Fund is an open-ended, dynamic equity scheme. It invests across companies of any market capitalizations i.e., large-caps, mid-caps, and small-caps companies. Such type of funds allows the investors to diversify their portfolio and alongside mitigate risk, reduce volatility and generate good returns. Unlike other funds like large-cap, mid-cap or small-cap funds which need to invest in companies restricted to their specific market capitalization size, flexi-cap funds offer the fund manager to be flexible and pick any stock from the benchmark to be included in the portfolio.

    Flexi-Cap Funds vs Multi-Cap Funds

    • As per regulation, a Multi-cap Fund has to invest at least 75% of its total assets in equities and in case of a Flexi-cap Fund, it has to invest a minimum of 65% of its assets in equity and equity-related instruments.
    • For a Multi-cap fund, the investment has to be minimum 25% in large-cap, minimum 25% in mid-cap and minimum 25% in small-cap companies. But in case of a Flexi-cap Fund, there are no minimum threshold for investments in large, mid and small cap.
    • A Multi-cap Fund is required to maintain the equity allocation regardless of the market conditions whereas a Flexi-cap Fund provides its fund manager better flexibility to explore investment opportunities and churn the portfolio whenever they want.

    Advantages of Flexi-Cap Funds

    • It can grab opportunities across the entire market spectrum like market capitalization, sector, style of investing, etc.
    • There is always a battle between risk and returns in the markets. Flexi-cap funds have a unique approach to balance the risk and returns in the market to ensure that the invested capital stays safe and fetches good growth.
    • Flexi-cap funds can be referred to as ‘all weather investing’ because there is complete freedom given the fund manager and based on the market cycles and swings, the AUM can be allocated accordingly to avoid any downsides and volatility.
    • It is one of the best equity investment avenues for investors who have a moderate to high risk profile with a long-term approach for investing.
    • Another big advantage is that they are dynamic in nature. If a particular theme or style of investing seems no longer profitable, the fund manager can modify or change the style that seems to fit in the current market environment.

    Top 3 best Flexi cap Funds based on the past Returns:

    flexi-cap-fund

  • How Large Cap Equity Funds can be your master stroke in Investment

    We all have dreams that we aspire to achieve in our lives. Rano’s story is similar to many of us. She wanted to pursue higher studies in management, but her family couldn’t afford the hefty fees. This is a common challenge; like Rano, many children are unable to continue their education due to financial constraints.

    However, Rano’s story takes a different turn. One day, during her first year of college, she came across a newspaper advertisement that said, “Equity Funds are subject to market risk.” Curious, she began searching for more information about this phrase. While browsing the internet, she eventually found a comprehensive article on Equity Mutual Funds, specifically focusing on large-cap equity funds.

    The article explained: Large-cap Equity Mutual Funds invest the pooled corpus of money into shares of well-established, financially stable companies with a large market capitalization. These funds are known for their relative stability and are considered less risky compared to mid-cap and small-cap funds. In simple terms, large-cap equity funds invest in shares of large companies on your behalf. Although she found it difficult to understand at first, she continued reading.

    The article further explained that at least 65% of the portfolio must comprise investments in equity and equity-related instruments, with a significant portion typically allocated to large-cap stocks. The remainder can be invested in money market instruments or debt securities, depending on the investment objective of the scheme. Compared to other types of mutual funds, equity fund investments, especially large-cap funds, are associated with a moderate level of risk but are also expected to generate stable returns over the long term.

    top-8-large-cap-funds

    The mention of stable returns caught her attention, and she eagerly read the next line, which stated, “Furthermore, there is no such thing as a ‘one-size-fits-all’ equity fund. There are many different types of equity funds based on investment strategy, market capitalization, and taxation benefits, each with its own investment objective that must be matched to your risk profile. However, large-cap equity funds are often recommended for investors seeking steady growth with lower risk.”

    After giving some thought to what she had read, Rano began to wonder if she could ask her father to invest in a large-cap equity mutual fund.

    She approached her dad and explained everything. She also mentioned that a key advantage of investing in large-cap equity mutual funds is their ability to provide inflation-beating returns while offering relative stability. This means that, despite rising inflation and market fluctuations, the returns should be sufficient to offset these effects. Investing in large-cap equity mutual funds also enables the investor to have a diversified portfolio, as the money is spread across several large, established companies.

    Moreover, losses in one large-cap stock can be offset by gains in others, minimizing overall risk. Additionally, these mutual funds are managed by professionals, making it easier to invest. Rano suggested, “Dad, why don’t we start investing in large-cap mutual funds together? My internship earnings and your savings could help cover the fees for my MBA program. Maybe we could also consult with professional analysts to understand large-cap equity mutual funds in-depth?”

    Her dad agreed to consult a professional, and they dialed a number with the tagline, “We can help you invest with ease.” The analyst answered the call, and Rano’s dad began by saying, “My daughter wants to study for an MBA, but we might not be able to save enough for her education. Can you help us understand how mutual funds, particularly large-cap funds, could help us save this amount over the next 3-4 years?” The analyst listened to their concerns and began explaining the different types of investment caps.

    He explained, “There are three types of caps: Large, Mid, and Small. However, it’s important to consider the factors that affect equity mutual funds before investing. When it comes to risk, large-cap equity mutual funds are comparatively less risky than mid-cap and small-cap funds because large companies tend to be more stable and less affected by market fluctuations. Small-cap and Mid-cap funds have a higher risk profile but also offer significantly higher growth potential.

    “On the other hand, large-cap funds, which I think would be perfect for your daughter’s education fund, provide good returns while significantly reducing investment risks. This will help you save enough money for her education. Therefore, depending on your risk appetite, you can choose the type of equity fund that suits you best.

    Frequently Asked Questions

    1. What are Large Cap funds?

    Large-cap funds are those funds that invest a big or larger proportion of their corpus in the top 100 companies by market capitalization, as defined by SEBI.

    2. Are they risky?

    Market risk exists but is comparatively lower from small cap and mid cap funds due to the financial health of the companies. Investors should be prepared for possible moderate losses.

    3. What are the usual returns?

    Usually provide stable and more predictable returns, but lesser growth potential due to the size of the companies.

    4. What about the time horizon?

    Generally, have a time horizon of 3-5 years because the companies are mature and can provide capital appreciation over this period.

    5. Are they safe investments?

    The funds are known as safer form. They can easily withstand the bear market. Also, they can deliver stable returns when compared to the middle and the small cap funds.

    6. Why should I invest in large cap funds?

    Well, those companies which have a market capitalization of more than Rs. 20,000 crore come under large cap funds. These companies have a good track record which is also backed by good governance practices. So, you can develop your trust since they abide by the healthy corporate ethics.

    7. Who should invest in large cap funds?

    Since these funds are less volatile in nature relative to other funds and their performance is generally stable, it makes investors less vulnerable to the equity market. If someone is looking to diversify their portfolio, large cap funds are more suitable. If you don’t want to take high risks and want to stick with pretty returns, then you must think of investing in it.

    8. Are there any factors that an investor should consider here?

    Yes, you can look for: What is investment purpose or objective?, What has been the past performance of large cap funds, How much experience does the fund manager have?, What is the expense or cost ratio and how will it impact? This will help you understand if large-caps funds are your preference? I believe, if you have 3-4 years and you want to get a stable yet good return that is not volatile as well, then large-cap funds are the most suitable ones for your daughter’s education. The analyst said. He also added that the fundamental goal of investing in equities mutual funds is to increase your wealth at a faster rate than inflation. Equity fund returns are significantly higher than those of other mutual fund types. Also, for people searching for a short-term investment, equities investments are not the best option, so at least 3-4 years investment is the best. After listening to the analysts, Rano and her dad agreed to invest in Equity Mutual Funds with a large-cap.

    They couldn’t believe that the analyst was right. They had a genuine amount of deposit in their bank account after 4 years of investment with a large cap. And they now had enough money to pay for Rano’s MBA program fee. Now, this was an emotional moment for both Rano and her dad. Afterall why not? All thanks to Rano’s curiosity to know and courage to take the risk.

    One more important lesson to learn here. Most of us give up on our dreams due to lack of money, but money is not an intrinsic value; it can be generated through timely investment. And Rano proved it through Equity Mutual Funds.

  • Everything You Should Know About Sovereign Gold Bonds (SGBs)

    Everything You Should Know About Sovereign Gold Bonds (SGBs)

    If you buy Gold Coins and Gold Bars as Investment, you are wasting a golden Opportunity to earn some great returns. SBI Gold Bonds are RBI mandated Certificates issued against grams of Gold, allowing the Individuals to invest in Sovereign Gold Bonds (SGBs) without the strain of safekeeping their physical Assets. SGB act as a secure Investment tool among Individuals as the Gold prices are less sensitive to Market fluctuations.

    A SGB is dominated in grams of Gold. One can get multiples of Grams (1gm*X). So, the minimum Investment is 1 Gram. The maximum Gold one can buy through these Gold Bonds is 4 Kgs and a Trust can buy is upto 20 Kgs. Moreover, Nomination facility is also available.

    Why Should One Buy Sgb Rather than Physical Gold?

    The quantity of gold for which the investor pays is protected, since he receives the ongoing Market Price at the time of redemption/ premature redemption. The SGB offers a superior substitute to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest.

    Who Is Eligible to Invest in The Sg Bs?

    Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

    Whether Joint Holding Will Be Allowed?

    Yes, joint holding is allowed.

    Can a Minor Invest in SGB?

    Yes. The application on behalf of the minor must be made by his/her guardian.

    What is the rate of interest and how will the interest be paid?

    The Gold Bond interest rate is 2.50% per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

    When will the customers be issued Holding Certificate?

    The customers will be issued Certificate of Holding on the date of issuance of the SGB.

    At what price the bonds are sold?

    The nominal value of Gold Bonds shall be in Indian Rupees fixed based on simple average of closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Limited, for the last 3 business days of the week preceding the subscription period.

    Can I encash the bond anytime I want? Is premature redemption allowed?

    Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. On the other hand, in the case of online buying of SGBs, one doesn’t have to wait for 5 years for redemption. An online buyer can redeem it on the same day of the issuance of Bonds.

    What are the Tax implications on Interest as well as on Capital Gain?

    Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted.

    Features of Sovereign Gold Bonds

    • SGBs are Government securities denominated in grams of gold (1 unit = 1 gram).
    • A minimum investment equivalent to the price of 1 gram of gold must be made, while the maximum limit is equal to the value of 4kg of gold for individuals.
    • Issued by the Reserve Bank of India on behalf of the Government of India.
    • Gold bonds are issued for a period of 8 years, with premature withdrawal permissible from the 5th year.
    • Individuals willing to cash-in their investment can do so after a mandatory holding period of 5 years.
    • Investors will earn returns linked to gold price.
    • Additionally, fixed interest of 2.75% per annum is associated with the sovereign gold bond scheme, which is disbursed half-yearly to investors.
    • The Sovereign gold bond scheme 2020 can be traded in the secondary market after 14 days from an initial subscription date, subject to a notice published by the RBI.

    Advantages of Investing in SGB

    • The principal aim of such treasury bonds was to reduce the hassles concerned with gold investments, as bullions and other physical forms of investments required proper and secure storage.
    • These Gold Bonds are backed by the Government, as chances of defaults on repayment is zero.
    • Gold prices demonstrate extensive capital appreciation. Rates of growth of such assets are considerably higher than the prevailing inflation rates a country, crucial as an investment avenue.
    • RBI will announce the price before the issue date which will be fixed on the previous week’s simple average of closing price of gold of 999 purity published by India Bullion and Jewelers Association Ltd (IBJA).
    • The tenure of Bond is 8 years with an option to redeem from 5th year onwards on the date on which Interest is payable.
    • SGB can be used as collateral for loans Up to 75% of the market value of such bonds can be availed as a loan from any scheduled financial institution, as stipulated by the RBI’s LTV regulations.