trading mechanism

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INTRODUCTION

 The trading on stock exchange in INDIA used to take

place through open outcry method without use of 

information technology for immediate matching or

recording of trades. This was time consuming and inefficient. This imposed

limits on trading volumes and efficiency. In order to

provide efficiency, liquidity, and transparency NSE and

BSE introduced nation wide online fully automated

“SCREEN BASED TRADING SYSTEM”

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SCREEN BASED TRADING

NSE’s screen based trading is known as NEAT-

National exchange for automated trading.

 BSE’S screen based trading is known as BOLT-Bombay online trading.

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Ticker window

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MECHANISM OF ONLINE

 TRADING

NSE has main computer which is connected

through “VERY SMALL APERTURE

 TERMINAL”(VSAT) installed at its office. 

 THE main computer runs on a fault tolerant

“STRATUS” mainframe computer at the

exchange. Brokers have terminals installed at

their premises which are connected through VSATS.

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HOW TO PLACE ORDER 

 An investor informs broker to place an order on

his behalf. The broker enters the order through

his PC, which runs under windows NT and

sends signal to the satellite via VSAT. The signal

is directed to mainframe computer at NSE via

 VSAT at NSE’s office. A message relating to the

order activity is broad casted to respectivemember.

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To enter a buy order 

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BASIS OF OPERATION

 The online trading operates on the strict basis of 

PRICE PRIORITY and TIME PRIORITY 

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HOW TO ENTER SELL ORDER 

Same as the process involved in the placing of thebuy order.

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To enter a Sell order 

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LOGGING ON

On starting NEAT application, the logon screen

appears with the following details.

USER ID

TRADING MEMBER ID

PASSWORD

NEW PASSWORD

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 TERMINOLOGIES OF ONLINE

 TRADING

Snap quote:- feature available to getinstantaneous market information on a desiredsecurity.

Active and Passive orders:- when any orderenters the trading system, it is an active order. Ittries to find a match on the other side of books.If it finds a match trade is generated, if does notfinds match it turns to passive order which isstored in order book.

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Circuit breakers:- Started

implementing 

compulsorily from July 

02, 2001. The circuitbreakers will be operated

at the three stages of 

INDEX movement,

either way viz at 10%,15%, 20%.

MOVEMENT TIME FREEZED

10% PRIOR 1pm

 AFTER 1pm

1 HOUR 

½ HOUR 

15% PRIOR 1pm

 AFTER 1pm-

2pm

 AFTER 2pm

2 hours

1 hour

Freezed for the day 

20% ANY TIME FREEZED FOR 

 THE DAY 

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Market By Price

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Order Book

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Trade Book

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BY 

LAKSHMEESH MR 

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 Thank You