1. Investment Management
UNIT-2
SECURITIES MARKETS

2. The trading system
11/26/2017
The OTCEI dealer’s screen has a left and right half for the sell and buy counters.
The sell counter gives the rate, the no. of shares offered and the name of the market maker.
It is always in ascending order with the lowest buy quotes given at first.
The sell quotes are displayed in descending order and the seller can decide to unload at the highest price displayed.
V.Prabakaran, AP/MBA - Securities Market

3. 11/26/2017
Once the deal is struck, it is entered into computer. To confirm the transaction on line message appears on screen.
The confirmation slip or trading document is generated through the computer in duplicate.
One copy is retained and other is sent to the OTCEI counter. This is known as counter receipt.
V.Prabakaran, AP/MBA - Securities Market

4. The counter receipt gives the following details: Transaction number
11/26/2017
The counter receipt gives the following details:
Transaction number
Names of previous holder and the new holder
Date and time of transaction
Price and value of transaction
The name of the dealer, brokerage charged and distinctive no. of scrips.
The counter receipts are used for further transactions.
V.Prabakaran, AP/MBA - Securities Market

5. Settlement system
11/26/2017
At present the settlement procedure has five days trading cycle. Forward trading is not permitted on OTCEI. Short sales and squaring up have to be done within the trading cycle and certificate to the investor must be delivered within a fortnight from the date of purchase.
Thus it avoids speculation.
V.Prabakaran, AP/MBA - Securities Market

6. Operational Features of Stock Exchange
11/26/2017
Market Timing
Automated Trading System (National Exchange Automated Trading systems & BSE On-Line Trading System)
V.Prabakaran, AP/MBA - Securities Market

7. Order Management in Automated Trading System
11/26/2017
Orders are first numbered and time-stamped on receipt and then immediately processed for potential match.
Every order has a distinctive order number and a unique time stamp on it. If a match is not found, then the orders are stored in different 'books'.
Orders are stored in price-time priority in various books in the following sequence: Best Price, Within Price, by time priority
V.Prabakaran, AP/MBA - Securities Market

8. Cont…
11/26/2017
Price priority means that if two orders are entered into the system, the order having the best price gets the higher priority. Time priority means if two orders having the same price are entered, the order that is entered first gets the higher priority.
V.Prabakaran, AP/MBA - Securities Market

9. Order Matching Rules in Automated trading system
11/26/2017
The best buy order is matched with the best sell order. An order may match partially with another order resulting in multiple trades.
For order matching, the best buy order is the one with the highest price and the best sell order is the one with the lowest price.
This is because the system views all buy orders available from the point of view of a seller
V.Prabakaran, AP/MBA - Securities Market

10. Order Conditions in Automated Trading System
11/26/2017
Time Related Condition
Price Related Condition
Quantity Related Condition
V.Prabakaran, AP/MBA - Securities Market

11. Time Order
11/26/2017
Day Order: is an order which is valid for the day on which it is entered. If the order is not matched during the day, the order gets cancelled automatically at the end of the trading day.
GTC Order - Good Till Cancelled (GTC) order is an order that remains in the system until it is cancelled by the Trading Member. It will therefore be able to span trading days if it does not get matched. The maximum number of days a GTC order can remain in the system is notified by the Exchange from time to time.
V.Prabakaran, AP/MBA - Securities Market

12. Cont…
11/26/2017
GTD - A Good Till Days/Date (GTD) order allows the Trading Member to specify the days/date up to which the order should stay in the system. At the end of this period the order will get flushed from the system. Each day/date counted is a calendar day and inclusive of holidays. The days/date counted are inclusive of the day/date on which the order is placed. The maximum number of days a GTD order can remain in the system is notified by the Exchange from time to time.
V.Prabakaran, AP/MBA - Securities Market

13. Cont…
11/26/2017
IOC - An Immediate or Cancel (IOC) order allows a Trading Member to buy or sell a security as soon as the order is released into the market, failing which the order will be removed from the market. Partial match is possible for the order, and the unmatched portion of the order is cancelled immediately.
V.Prabakaran, AP/MBA - Securities Market

14. Price Condition
11/26/2017
Limit Price/Order – An order that allows the price to be specified while entering the order into the system.
Market Price/Order – An order to buy or sell securities at the best price obtainable at the time of entering the order.
Stop Loss (SL) Price/Order – The one that allows the Trading Member to place an order which gets activated only when the market price of the relevant security reaches or crosses a threshold price. Until then the order does not enter the market.
V.Prabakaran, AP/MBA - Securities Market

15. Quantity Conditions
11/26/2017
Disclosed Quantity (DQ)- An order with a DQ condition allows the Trading Member to disclose only a part of the order quantity to the market. For example, an order of 1000 with a disclosed quantity condition of 200 will mean that 200 is displayed to the market at a time. After this is traded, another 200 is automatically released and so on till the full order is executed. The Exchange may set a minimum disclosed quantity criteria from time to time.
V.Prabakaran, AP/MBA - Securities Market

16. Market Wide Circuit Breakers
11/26/2017
In order to contain large market movements, SEBI has mandated that the Market Wide Circuit Breakers (MWCB) which at % of the movements in either BSE Sensex or NSE Nifty whichever is breached earlier would be applicable.
V.Prabakaran, AP/MBA - Securities Market

17. Cont…
11/26/2017
In case of a 10% movement of either index, there would be a 1-hour market halt if the movement takes place before 1:00 p.m.
In case the movement takes place at or after 1 p.m. but before 2:30 p.m. there will be a trading halt for 1/2 hour.
In case the movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and the market will continue trading.
V.Prabakaran, AP/MBA - Securities Market

18. Cont…
11/26/2017
In case of a 15% movement of either index, there will be a 2-hour market halt if the movement takes place before 1:00 p.m.
If the 15% trigger is reached on or after 1:00 p.m. but before 2 p.m., there will be 1-hour halt.
If the 15% trigger is reached on or after 2:00 p.m. the trading will halt for the remainder of the day.
V.Prabakaran, AP/MBA - Securities Market

19. Cont…
11/26/2017
In case of a 20% movement of the either index, the trading will halt for the remainder of the day.
V.Prabakaran, AP/MBA - Securities Market

20. 11/26/2017
Thanks…
V.Prabakaran, AP/MBA - Securities Market