Professional Documents
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Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares.
What is full form of SENSEX? The Sensex is a "securities index". What is an index? An index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE.
What is share / stock trading? Trading is buying and selling of shares or securities What is normal trading? A normal trading is nothing but trading in permitted lots (bunch) What is odd lot trading? Odd lot is a securities trade in which fewer trading units exchange hands when compared to the "normal" amount for that particular security. In stock trading, an odd lot is an order for anything less than 100 shares (which is called a "round lot"). However, thinly traded stocks sometimes trade in 10-share increments. This concept is not invogue in our country at present
Short selling. The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller Long position The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.
Mechanics of Trading
Trading on stock exchanges takes place either on the basis of the Auction system or Trading floor or Hybrid Trading Floor Trading The floor where trading activities are conducted Trading floors are found in the buildings of various exchanges This may be a Open outcry or Online Trading system BSE has moved from Outcry to BOLT in the year 1995
Membership
The trading platform of the exchange is accessible to the investors only through the members The members are admitted or terminated as per the SCRA(1956) Corporate Structure Paidup capital Rs. 30 lakh Net Worth Rs. 200 lakh Interest free security deposit Rs.150 lakh Collateral Security Deposit Rs. 25 lakh Annual Subscription Rs.1 lakh Capital Adequacy Track Record Education Experience
Benefits
Access to the market Wide trading facilities Equities, Debt, Derivatives State of the art technology Standards of trading Demutualised Exchanges
Depository
National Securities Depository Limited (NSDL) Central Depository Services Limited (CDSL) Depository Participant Depository Participants Pool account Settlement Account of Clearing Agency
What is an IPO? What is FPO? What is a Rights Issue? What is a Bonus Issue? What is a Mutual Fund? What is FDI? What is FII? What is Market Capitalisation? What is Dalal Street?
Auction trading
In the Auction Market Auctions are initiated by the Exchange on behalf of trading members This is an order driven trading system where customers buy and sell orders are matched at a central point This system allows the buyer and the seller to find a mutually agreeable price with no intervention of broker dealers In India except BSE all other exchanges are auction based
Hybrid Trading
Hybrid trading system is an auction type of trading with bids and offers being made by open outcry and at the same time it is quote driven system too
Transaction Cycle
A Seller / Buyer A Broker Through an exchange Order to Trade Settlement Schedule Funds Settlement
Rest tomorrow
Corporate Hierarchy
The trading member has the facility of defining a hierarchy amongst its users of the NEAT system. Corporate Manager
BRANCH 1 BRANCH 2
DEALER 1
DEALER 2
DEALER 3
DEALER 4
Market Makers
Dealers who are responsible for creating and maintaining market in a security market is called Market Makers A broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the market maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds
Market Phase
Bull Phase Bear Phase Open Close
Bull
An investor who thinks the market, a specific security or an industry will rise Bulls are optimistic investors who are presently predicting good things for the market, and are attempting to profit from this upward movement. For example if you are bullish on the S&P 500 you will attempt to profit from a rise in the index by going long on it.
Bear
An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.
Open
An unexecuted order that is still valid. The start of trading on a securities exchange Orders that are entered by investors but not yet transacted are deemed to be open until they expire or are filled.
Close
The end of a trading session. The closing price is quoted in the newspaper
Trading Mechanism
It was open outcry Replaced with Screen Based Trading System (SBTS) Punching of orders through a remote computer Price Time priority Wireless application Protocol (WAP) helps in bringing equal access to all the investors across the country The data is transmitted through VSAT / Leased Line / Modem It is transparent , objective and fair Complete Market Information On-line
Trading
Basket Trading Index Trading Buyback Trading
Index Trading
The purpose of Index Trading is to provide a facility to NEAT user with a facility of buying and selling of Indices , in terms of securities that comprises of Index Currently it available only for NIFTY securities The index trade provides user with the choice of gaining with the rise / decline of the index values either by buying / selling