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explain the trading procedures of stock exchange

The procedure for purchase and sale of securities in a stock exchange involves the
following steps:
1. Selection of broker
The first step is to select a broker who will buy/sell securities on behalf of the
investor. This is necessary because trading of securities can only be done through
SEBI registered brokers who are the members of a stock exchange. Brokers may
be individual, partnership firms or corporate books.
The broker charges brokerage / commission for his services.
2. Opening demat account
The next step is to open a demat account. Demat (Dematerialised) account refers
to an account which an Indian citizen must open with the depository participant
(banks, stock, brokers) to trade in listed securities in electronic form.
The securities are held in the electronic form by a depository. At present, there
are two depositories in India NSDL (National Securities Depository Ltd.) and
CDSL (Central Depository Services Ltd.)
Depository interacts with the investors through depository participants. Your
Depository Participant will maintain your securities account balances and
intimate to you the status of your holding from time to time.
3. Placing the order
The next step is to place the order with the broker. The order can be
communicated to the broker either personally or through telephone, cell phone,
e-mail etc.
The instructions should specify the securities to be bought or sold and the price
range within which the order is to be executed. Only the securities of listed
companies can be traded on the stock exchange.
4. Executing the order
According to the instructions of the investor, the broker buys or sells securities.
The broker then issues a contract note. A copy of the contract note is sent to the
client. The contract note contains the name and the price of the securities, names
of the parties, brokerage charged. It is signed by the broker.
5. Settlement
This is the last stage in the trading of securities done by the brokers on behalf of
their clients. The mode of settlement depends upon the nature of the contract.
Equity spot market follow a T+2 rolling settlement. This means that any trade
taking place on Monday, gets settled by Wednesday. All trading on stock
exchanges takes place between 9:55 am and 3:30 pm. Indian Standard Time,
Monday to Friday. Delivery of shares must be made in dematerialized form, and
each exchange has its own clearing house, which assumes all settlement risk.

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i need explanation of these points

(i) selection of a broker

(ii) opening demat a/c with depository

(iii) placing the order 

(iv) executing the order and

(v) settlement

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  1. Choice of broker:  Brokers are members of a stock exchange through whom trading of securities is done. First of all, a buyer or seller of securities has to select a broker.
  2. Placing order: Once the broker agrees to trade on behalf of the buyer/seller, order is placed. The order must specify the names of the company, number of shares to be traded and the approximate price.
  3. Transaction by broker: The broker logis into his computer and observes the price movements in concernd security, Once the desired price is observed, he buys/sells the security with some other member of the stick exchange. He then informs the client about the deal.
  4. Settlement: All transactions made during a particular period are settled on the settlement day. The buyer makes payment and the securities are transfered from the demat account to the buyers demat account

Dematarerialized account : The demat account refers to the account that indian citizen must have with depositary participant to trade in listed securities in electronic form... 

Hav feeling that i should hv learnt typewriting.. Tough time with typing answers...:(
Cheers.



 

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Answer that our teacher gave is what i hv given....
We feel that this answer is easier than what is given in the supplement material..
Choose which is comfortable to you...
Cheers.

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 thanks shadab and karthik

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 karthik i dont have a supplimentary reader my whole class came to know about this after u told me

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 @ shadab superb answer i m sure the expert will certify it if they see this answer

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thanks kavya

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hii kavya any question of (business) put economices

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Trading on stock exchange begins at 9.15 a.m not at 9.55 a.m.  This is the time given by the CBSE in its answer of Sample Paper. 

NIKHIL LAMBA

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