Unit-4 - Trading, Clearing and Settlement
Unit-4 - Trading, Clearing and Settlement
Unit-4 - Trading, Clearing and Settlement
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Trading
To “trade” means to buy and sell in the jargon of
the financial markets
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Objectives of NSECL
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Trading member
Trading Member is one who has rights to trade on his own account as well as
on account of its clients. However has no right to clear and settle such trades
itself.
There are two types of members- Self clearing member (SCM) and Trading
member ( T M )
The applicant should submit the duly filled Membership Application Form
along with the required documents and applicable fees /deposits and
registered with SEBI and should pay membership deposit of Rs 10 lakhs
Net worth –Rs Net worth –Rs Net worth –Rs Net worth –
30 lakhs 30 lakhs 100 lakhs Rs 50 lakhs
Trading in one Segment Rs 2.50 lakhs, 2 segments- Rs 3.50 lakhs, 3 segments- Rs 4.50 lakhs
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NEAT System
National Exchange for Automated Trading' (NEAT) system is a
fully automated screen based trading system, which adopts the
principle of an order driven market.
Odd lot Market- All orders whose order size is less than the
regular lot size are traded in the odd-lot market.
Yet, at the end of the day, the markets work out all the
trades and get ready for the next day.
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Steps in Stock trading- on exchange floor
Investors inform the broker to buy 100 shares of a company at
market who in turn informs the brokers order department
The floor clerk alerts one of the firm’s floor traders who finds
another floor trader willing to sell 100 shares of Ltd.
The notification process goes back up the line and your broker
calls you back with the final price.
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Trade Order management System
For Example
When you place your order for 1,000 shares of XYZ Corp.,
the Broker can go to a Jobber who keeps an inventory of
XYZ stock, and buy the shares there.
The sell price will be slightly higher which is the profit for
the jobbers.
Internet Broking / e Broking
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Speculative dealings
Option Dealings,
Margin Trading,
Arbitrage,
Wash Sales,
Blank Transfer,
Carry Over or Budla Transactions,
Cornering,
Rigging the Market
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Transaction cycle- Settlement
NSCCL for NSE is the and BOI Share Holding for BSE and are
responsible for the post-trade activities .
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