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Trading System in Stock Exchange

The document discusses the Indian stock market and how it operates. It outlines the key functions and organizations that make up India's secondary market, including the Securities and Exchange Board of India (SEBI) which regulates trading and provides a legal framework. Various types of orders that can be placed on the market are also described, such as market orders, limit orders, and special order types. Short selling and margin trading practices are explained as well.

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Mohan Kumar
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120 views19 pages

Trading System in Stock Exchange

The document discusses the Indian stock market and how it operates. It outlines the key functions and organizations that make up India's secondary market, including the Securities and Exchange Board of India (SEBI) which regulates trading and provides a legal framework. Various types of orders that can be placed on the market are also described, such as market orders, limit orders, and special order types. Short selling and margin trading practices are explained as well.

Uploaded by

Mohan Kumar
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
Download as pptx, pdf, or txt
Download as pptx, pdf, or txt
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BY M.

VINOTH Anna University,Chennai

Secondary market Buy and sell Major deal Growth of primary market

Maintains active trading Fixation of prices Ensures safe and fair dealing Aids in financing the industry Dissemination of information Performance inducer Self regulating organisation

Legal framework provided by SCR act Three tire system Ministry of finance SEBI Governing board

Function time Members Brokers Broker and Investor

Orders Short selling Buying on the margin Institutional trading

instructions from investors to brokers Buy/sell orders Size of orders Round lot orders Odd lot orders Price limit of orders Market orders Limit orders Time limit of orders Day orders Week orders & month orders Open orders Special types of orders Stop orders Stop limit orders Discretionary orders Order execution

sale of borrowed stock profit from belief that stock price is too high will fall soon how?

borrow stock through broker sell stock buy and return later

short selling could further destabilize falling prices

tick test rules on exchange

short sales allowed if

uptick or zero uptick in price for previous trades: $20.75, $21 (uptick) $20.75, $20.75 (zero uptick) $20.75, $20 (downtick)

Securities purchase can be paid for in cash or a mix of cash & borrowed funds Regulation T of the federal Reserve Board Margin(%)=customer`s equity/market value securities

institutional trades are larger special execution over 50% of NYSE share volume

Listed shares Three categories of share groups


1. 2.

3.

Group A shares Group B shares Group B1 shares

Fixed settlement system


1.
2. 3. 4.

Existed in stock exchange period varied from exchange to exchange BSE settlement cycle Monday to Friday NSE settlement cycle Wednesday to Tuesday

Rolling settlement system


1. 2.

Settlement take place n days Transaction completed quickly

1.

2.

It is noted by T +n SEBI made RS compulsory for trading in 10 securities

Activities on T +1 Activities on T +2

Trade comparison are made through the facility of clearing process that receives report of each transactions participating in the transaction. National security clearing corporation National security deposit limited Central depositary security limited

Internet trading started in India on 1st April 2000 with 79 members Order Routing System (ORS) Transparency between broker and investor in the secondary market Time gap Feedback is available about the execution. Some of the websites also offer; www.icicidirect.com www.5paise.com www.sharekhan.com

It is developed by regulator and stock exchanges Some measures undertaken are given below
1.

2.
3. 4. 5.

Capital adequacy Maintain adequate Placing limit Online position To assure counter party risk

1. 2. 3. 4.

Categorization of stock for imposition of margins VaR based margin Mark to market margin Margin based on turnover and exposure limit Intra day turnover limit Gross exposure limit Violation charges Price bands

1. 2. 3.

It was practiced earlier in stock exchanges Settlement can be done in 3 ways Delivery against payment Squaring up of the transaction Carrying over the settlement to the next settlement period

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