TRADING MECHANISM OF
SECURITIES- STOCK MARKET
Stock exchange is an entity that provides facility to the broker and trader to trade
on stocks , bonds and derivatives.
Stock - It is a collection of shares indicating an ownership in the companies i.e
voting rights and investment is done for return on investment.
Bond- A fixed income instrument that represents a loan made by investor to a
borrower which contains end date when principal is to be repaid and fixed interest
payments.
Derivatives - They are used to hedge a position , speculate the directional
movement of an underlying asset. Their value comes from fluctuations of the value
of different assets like shares, bonds etc.
For ensuring more transparency in trading system, NSE and BSE introduced
nationwide online fully automated " Screen Based Trading System".
Orders of investors is placed on basis of time and price basis.
Recently, BSE has launched new software for trading i.e BEST "BSE Electronic
Smart Trader". In this investor can enjoy zero transactions charge for 6 months on
cross currency derivatives.
Trading process:
1) Finding a Broker
Broker is an intermediary between investor and stock exchange. Broker transfer
the order of the investor electronically to stock exchange.
Timings for stock exchange is active from 9.15 am to 11.55 pm.
Brokers selection depends upon :
a) Fees for opening an online trading account
b) Ratings of brokers
c) Brokerage charge
d) Margin provided by broker
e) Regular information regarding investment opportunities to investors
2) Opening account with Broker
