Secondary Market

Trading and Settlement

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 Trading mechanisms in Indian Capital
Market
STEP 1 : FINDING A BROKER
STEP 2 : OPENING AN ACCOUNT WITH THE
BROKER
STEP 3 : PLACING THE ORDER
STEP 4 : EXECUTING THE ORDER
STEP 5 : PREPRATION OF CONTRACT NOTES
STEP 6 : SETTLEMENT OF CONTRACTS TRADING
PROCEDURES

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Types of accounts required for Trading
1.Trading Account
2.Demat Account
3.Saving Account

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 Trading Account
It is an interface between the bank account
and demat account
Share trading is done through the brokers who
execute the buy/sell orders and the
transactions are facilitated by the trading
account.
It displays account information
instantaneously.

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 Broker is an enrolled member of a stock
exchange who is authorised to the stock
exchange trade and who is registered with
SEBI.
Sub-brokers are affiliated to the members
(brokers) of the stock exchange and registered
with SEBI
(The broker charges a fee, which is between 0.50% and 1% of
the value of transaction, for executing the transaction in the
stock exchanges. Sub-brokers cannot charge commission
more than 1%.)

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 Demat account
Dematerialisation of shares introduced in India in
1998.
It refers to dematerialised account where shares
are held in an electronic form.
Shares purchased and sold are reflected in the
demat account.
Demat services are provided by banks, financial
institutions and stock broking firms.
(Demat account is like a storage facility while a Trading Account is the transacting
medium to buy and sell shares)

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 Savings account
Savings account in a bank enables the transfer
to funds from the bank account at the time of
purchase of securities.
Also, the sale proceeds are deposited in the
bank account at the time of sale of securities.

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 Trading process
1.Trading
2.Clearing
3.Settlement

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 Trading
It basically deals with placing an order and its
execution. The order is converted to trade once
it finds a matching buy/sell order.
Types:
Intraday (Square off)
Delivery based trading (no time limit)

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 Short selling
Short selling is defined as selling a stock which
the seller does not own at the time of trade.
The shares are sold and the proceeds are
credited in your account. And you must
"close" the short by buying back the same
number of shares (called covering).

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 Types of trading orders
Market Orders (MKT)
Market orders are orders to buy or sell a contract
at the current best price, whatever that price may be.
Limit Orders (LMT)
Limit orders are orders to buy or sell a contract at a
specific or better price.
Stop Orders (STP)
Stop orders are similar to market orders, in that
they are orders to buy or sell a contract at the best
available price, but they are only processed if the market
reaches a specific price

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 Clearing
The clearing deals with determination of
obligations in terms of securities.
It ensures that the trade is settled through
exchange of obligations.

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 Settlement
Settlement process begins as soon as members
obligations are determined through the clearing
process.
Once the securities are bought or sold, the trade
has to be settled.(i.e buyer receive shares, seller
receives money).
The process of settlement is handled by the
clearing house of exchanges viz.,
I. Central Depositary services ltd.,(CDSL)
II. National securities depositary ltd.,(NSDL)

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 Settlement (Contd.)

Pay-in day is the day when the broker

makes payment or delivery of
securities to the exchange.
Pay-out day is the day when the
exchange makes payment or delivery
of securities to the broker.

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 Settlement (Contd.)
Rolling settlement the trading period (T) is one day.
From 1 April 2003, obligations have to be settled on the 2nd
working day T + 2.
Every day is a settlement day demat is necessary.

FAILURE
T+2 TO
TRADE SETTLEMENT PAY-IN

Option of Pay-in and

Trading Auction Close out
Early Pay-in Pay out
(T) (T3) (T4)
(T1) (T2)

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 Incase there is a shortage in Pay-in of shares
at the time of settlement on T+2, the Stock
Exchange purchases the requisite quantity in
the Auction Market and gives them to the
buying trading member.
If the shares could not be bought in the
auction i.e. if shares are not offered for sale in
the auction, the transactions are closed out as
per SEBI guidelines

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 INDIAN MARKETS (Trade timings)

Trading on the Indian equities segment takes

place on all weekdays.
There is No trading on Saturday, Sunday and
Published Indian Stock Market Holidays declared
by the Indian Stock Exchange in advance.
Pre open trade session will be from 09:00 - 09:15
hours
The Market Opens at: 09:15 hours and Closes at:
15:30 hours
Block deal session is held between 09:15
hrs and 09:50 hrs
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 Pre-open trade session is a 15 minute trade
session from 9:00AM to 9:15AM on the 50
stocks of NIFTY index .
Only 50 stocks of the NIFTY index can be
traded during this time on both NSE and BSE.
Normal trading for all other stocks will start at
9:15AM till 3:30PM.

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 WHY PRE MARKET SESSION?

In case a major event or announcement comes

overnight before market opens, such events are likely
to bring heavy volatility on the next day when the
market opens.
Special events include merger and acquisition
announcements, open offers, delistings, debt-
restructurings, credit-rating downgrades etc which may
have a deep impact on investors wealth.
In order to stabilize this, pre open call auction is
conducted to discover the right price and to reduce
volatility.

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 Block Deals
Member broker has to make a disclosure on
daily basis through DUS (Data Upload
Software), with respect to all deals that have
been executed by them on behalf of their
'client; or 'own' account in Block Deal window.
A trade, with a minimum quantity of 5,00,000
shares or minimum value of Rs. 5 crores
executed through a single transaction on this
window, will be qualified as Block Deal.

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 Block Deals
Deal Type
Deal Date Scrip Code Company Client Name * Quantity Trade Price

SANDEEP
PRAVINBHAI
532830 Astral Poly ENGINEER B 1258834 172

NIMISH GIRISH
532830 Astral Poly DALAL S 1258834 172

TATA SONS
500470 Tata Steel LIMITED B 1250000 400

TATA CHEMICALS
500470 Tata Steel LIMITED S 1250000 400

* B - Buy,
S - Sell

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 Bulk Deals
Member-broker has to make a disclosure on
daily basis up to 5.00 p.m. through DUS (Data
Upload software), with respect to all
transaction in a scrip for a client where total
quantity bought/sold is more than 0.5% of no.
of equity shares of the company listed on the
exchange.
All transactions stated above are clarified as
under:

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 Single Trade:
Immediately upon the execution of the order where
the traded quantity either buy or sell on account of
any trade is more than 0.5% of the number of equity
shares of the company listed on the stock exchange.
Cumulative Trades for the Day:
Within one hour from the closure of the trading
hours, where the cumulative quantity traded under
any single client code on that day either purchase or
sale is more than 0.5% of the number of equity
shares of the company listed on the stock exchange.

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 Bulk Deals
scrip Code:532301 Company Name:Tata Coffee For the period:21-Sep-2016 to 21-Nov-2016
Deal Date Scrip Code Scrip Name Client Name Deal Type * Quantity Price

A K G SECURITIES AND
532301 Tata Coffee CONSULTANCY LTD B 126481 921.17

A K G SECURITIES AND
532301 Tata Coffee CONSULTANCY LTD S 126481 921.34

CROSSEAS CAPITAL
SERVICES PRIVATE
532301 Tata Coffee LIMITED B 109554 877.19

A K G SECURITIES AND
532301 Tata Coffee CONSULTANCY LTD B 281422 887.21

CROSSEAS CAPITAL
SERVICES PRIVATE
532301 Tata Coffee LIMITED S 109554 879.6

A K G SECURITIES AND
532301 Tata Coffee CONSULTANCY LTD S 281422 887.36

* B - Buy, S -
Sell
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 Participants In The Securities
Market
Regulators
Stock exchanges
Listed securities
Depositaries
Brokers
FIIs
Merchant bankers

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 Primary dealers
Mutual funds
Bankers to an issues
Registrars
Underwriters
Venture capital funds
Credit rating agencies.

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 Participants In The Securities
Market
Regulators: The key agencies that have a
significant regulatory influence , direct or
indirect, over the securities market such as
SEBI, RBI, CLB, etc.

Stock Exchanges: A stock exchange is

an institution where securities that have
already been issued are bought and sold.
Presently there are 25 stock exchanges in
India, the most important ones being BSE
and NSE.

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 Listed Securities: Securities that are
listed on various stock exchanges and
hence eligible for being traded there are
called listed securities.

Depositories: A depository is an
institution which dematerialize physical
certificates and effects transfer of
ownership by electronic book entries.
Presently there are two depositories in
India, viz. NSDL and CDSL.

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 Brokers: Brokers are registered
members of the stock exchanges
though whom investors transact.

Foreign Institutional Investors:

Institutional investors from abroad who
are registered with SEBI to operate in
the Indian Capital market are called
foreign institutional investors (FIIs).

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 Merchant Bankers: Firms that specialize
in managing the issue of securities are
called merchant bankers. They have to be
registered with SEBI.

Primary Dealers: Appointed by the RBI,

primary dealers serve as underwriters in
the primary market and as market makers
in the secondary market for governmental
securities.

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 Mutual Funds: A mutual fund is a
vehicle for collective investment. It
pools and manages the funds of
investors.
Bankers to an issue: The bankers to
an issue collect money on behalf of the
company from the applicants.

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 Registrars: Also known as a transfer
agent, a registrar is employed by a
company or a mutual fund to handle all
investor-related services.

Underwriters: An underwriter agrees to

subscribe to a given number of shares (or
any other security) in the event the public
subscription is inadequate. The
underwriter, in essence, stands guarantee
for public subscription.
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 Venture Capital Funds: A venture capital
fund is a pool of capital which is
essentially invested in equity shares or
equity-linked instruments of unlisted
companies.

Credit Rating Agencies: A credit rating

agency assigns ratings primarily to debt
securities. In India there are two main
credit rating agencies; Credit Rating
Investment Services of India Limited
(CRISIL) and Investment Information and
Credit Rating Agency (ICRA).
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