Trading System

NSE operates on the 'National Exchange for Automated Trading' (NEAT) system, a fully automated
screen based trading system, which adopts the principle of an order driven market. NSE consciously
opted in favour of an order driven system as opposed to a quote driven system. This has helped reduce
jobbing spreads not only on NSE but in other exchanges as well, thus reducing transaction costs.

Trading System - Market Types

The NEAT system has four types of market. They are:

Normal Market
All orders which are of regular lot size or multiples thereof are traded in the Normal Market. For shares
that are traded in the compulsory dematerialised mode the market lot of these shares is one. Normal
market consists of various book types wherein orders are segregated as Regular lot orders, Special
Term orders, Negotiated Trade Orders and Stop Loss orders depending on their order attributes.

Odd Lot Market

All orders whose order size is less than the regular lot size are traded in the odd-lot market. An order
is called an odd lot order if the order size is less than regular lot size. These orders do not have any
special terms attributes attached to them. In an odd-lot market, both the price and quantity of both
the orders (buy and sell) should exactly match for the trade to take place. Currently the odd lot
market facility is used for the Limited Physical Market as per the SEBI directives.

Auction Market
In the Auction Market, auctions are initiated by the Exchange on behalf of trading members for
settlement related reasons. There are 3 participants in this market.

 Initiator - the party who initiates the auction process is called an initiator
 Competitor - the party who enters orders on the same side as of the initiator
 Solicitor - the party who enters orders on the opposite side as of the initiator

Spot Market
Spot orders are similar to the normal market orders except that spot orders have different settlement
periods vis-à-vis normal market. These orders do not have any special terms attributes attached to
them. Currently the Spot Market is not in use. Trading System - Order Books

The NSE trading system provides complete flexibility to members in the kinds of orders that can be
placed by them. 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.

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.
The Equities segment has following types of books:

Regular Lot Book

The Regular Lot Book contains all regular lot orders that have none of the following attributes attached
to them.
- All or None (AON)
- Minimum Fill (MF)
- Stop Loss (SL)

Special Terms Book

The Special Terms book contains all orders that have either of the following terms attached:
- All or None (AON)
- Minimum Fill (MF)
Note: Currently, special term orders i.e. AON and MF are not available on the system as per the SEBI
directives. 

Negotiated Trade Book

The Negotiated Trade book contains all negotiated order entries captured by the system before they
have been matched against their counterparty trade entries. These entries are matched with identical
counterparty entries only. It is to be noted that these entries contain a counterparty code in addition
to other order details. 

Stop-Loss Book
Stop Loss orders are stored in this book till the trigger price specified in the order is reached or
surpassed. When the trigger price is reached or surpassed, the order is released in the Regular lot
book.
The stop loss condition is met under the following circumstances:
Sell order - A sell order in the Stop Loss book gets triggered when the last traded price in the normal
market reaches or falls below the trigger price of the order.
Buy order - A buy order in the Stop Loss book gets triggered when the last traded price in the normal
market reaches or exceeds the trigger price of the order.

Odd Lot Book

The Odd lot book contains all odd lot orders (orders with quantity less than marketable lot) in the
system. The system attempts to match an active odd lot order against passive orders in the book.
Currently, pursuant to a SEBI directive, the Odd Lot Market is being used for orders that have quantity
less than or equal to 500 viz. the Limited Physical Market. 

Spot Book
The Spot lot book contains all spot orders (orders having only the settlement period different) in the
system. The system attempts to match an active spot lot order against the passive orders in the book.
Currently the Spot Market book type is not in use. 

Auction Book
This book contains orders that are entered for all auctions. The matching process for auction orders in
this book is initiated only at the end of the solicitor period. 
Trading System - Order Matching Rules
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 and all sell orders from the point of view of the
buyers in the market. So, of all buy orders available in the market at any point of time, a seller would
obviously like to sell at the highest possible buy price that is offered. Hence, the best buy order is the
order with the highest price and the best sell order is the order with the lowest price.

Members can proactively enter orders in the system, which will be displayed in the system till the full
quantity is matched by one or more of counter-orders and result into trade(s) or is cancelled by the
member. Alternatively, members may be reactive and put in orders that match with existing orders in
the system. Orders lying unmatched in the system are 'passive' orders and orders that come in to
match the existing orders are called 'active' orders. Orders are always matched at the passive order
price. This ensures that the earlier orders get priority over the orders that come in later. Trading
System - Order Conditions

A Trading Member can enter various types of orders depending upon his/her requirements. These
conditions are broadly classified into three categories:

 time related conditions, price-related conditions and quantity related conditions.

Time Conditions
DAY - A Day order, as the name suggests, 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 - A 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.

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.

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.

Price Conditions
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.
A sell order in the Stop Loss book gets triggered when the last traded price in the normal market
reaches or falls below the trigger price of the order. A buy order in the Stop Loss book gets triggered
when the last traded price in the normal market reaches or exceeds the trigger price of the order.

E.g. If for stop loss buy order, the trigger is 93.00, the limit price is 95.00 and the market (last
traded) price is 90.00, then this order is released into the system once the market price reaches or
exceeds 93.00. This order is added to the regular lot book with time of triggering as the time stamp,
as a limit order of 95.00

Quantity Conditions
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. 

MF - Minimum Fill (MF) orders allow the Trading Member to specify the minimum quantity by which an
order should be filled. For example, an order of 1000 units with minimum fill 200 will require that each
trade be for at least 200 units. In other words there will be a maximum of 5 trades of 200 each or a
single trade of 1000. The Exchange may lay down norms of MF from time to time.

AON - All or None orders allow a Trading Member to impose the condition that only the full order
should be matched against. This may be by way of multiple trades. If the full order is not matched it
will stay in the books till matched or cancelled.

Clearing & Settlement (Equities)

NSCCL carries out clearing and settlement functions as per the settlement cycles provided in the
settlement schedule.

The clearing function of the clearing corporation is designed to work out a) what members are due to
deliver and b) what members are due to receive on the settlement date. Settlement is a two way
process which involves transfer of funds and securities on the settlement date.

NSCCL has also devised mechanism to handle various exceptional situations like security shortages,
bad delivery, company objections, auction settlement etc.

Clearing & Settlement (Derivatives)

National Securities Clearing Corporation Limited (NSCCL) is the clearing and settlement agency for all
deals executed on the Derivatives (Futures & Options) segment. NSCCL acts as legal counter-party to
all deals on NSE's F&O segment and guarantees settlement.
A Clearing Member (CM) of NSCCL has the responsibility of clearing and settlement of all deals
executed by Trading Members (TM) on NSE, who clear and settle such deals through them.

Clearing & Settlement (Interest Rate Futures)

National Securities Clearing Corporation Limited (NSCCL) is the clearing and settlement agency for all
deals executed in Interest Rate Futures. NSCCL acts as legal counter-party to all deals on Interest
Rate Futures contract and guarantees settlement.

A Clearing Member (CM) of NSCCL has the responsibility of clearing and settlement of all deals
executed by Trading Members (TM) on NSE, who clear and settle such deals through them. 
Clearing & Settlement (Corporate Bonds)

NSCCL provides a facility for settlement of deals in corporate bonds. 

Settlement of Corporate Bond Transactions

 All trades in corporate bonds available in demat form which are reported on any of the
following platforms provided viz., FIMMDA, NSE-WDM and NSE web site shall be eligible for
settlement through NSCCL.

 In order to facilitate settlement of corporate bond trades through NSCCL, both buy and sell
participants shall be required to explicitly express their intention to settle the corporate bond
trades through NSCCL. 

 The trades will be settled at participant level on DVP I basis i.e., on gross basis for securities
and funds. The settlements shall be carried out through the bank and DP accounts specified by
the participants.

 On the settlement date, during the pay-in, participants shall be required to transfer the
securities to the Depository account specified by NSCCL and transfer the funds to the bank
account specified by NSCCL within the stipulated cut-off time.

 On successful completion of pay-in of both securities and funds, the securities / funds shall be
transferred by NSCCL to the depository / bank account of the counter-party.

Custodian Trades

 The participants desirous of clearing and settling the trade through a custodian may do so by
specifying the custodian details.

 Custodian may be specified either for a participant wherein all the trades for such participant
shall be eligible for settlement by custodian or for a trade wherein only that trade shall be
eligible for settlement by custodian.

 In order to facilitate settlement of trades identified for settlement by custodian, through

NSCCL, the custodian shall be required to explicitly express its intention to settle such trades
through NSCCL. The settlement of trade in such case shall take place through the custodian’s
bank and DP account as specified by the custodian.

Failure of Settlement Obligation of Corporate Bond Transactions

If either of the participants / custodians fails to honor their pay-in obligation, either fully or partially,
by stipulated time then the transaction shall be cancelled and shall not be considered for settlement.
Further the securities / funds received towards the pay-in obligation shall be returned back to the
respective participants / custodians.

Trading Highlights 
No. of Scrips Listed=18735
This data was last updated on Monday, October 04, 2010
Rolling (Groups)
Traded "BSE 
"A" "B" "Z" "F" "G" "T"
Indo next  "
No.Of Scrips 3141 204 1959 492 7 47 0 432
No.Of Trades 2454510 906984 1252364 264268 138 1435 0 29321
Total No. of Shares (crore) 48.89 10.67 31.04 5.09 0.01 0.02 0.00 2.06
Total Turnover(Rs. crore) 5,441.90 2,475.66 2,262.46 626.14 0.10 26.22 0.00 51.32
% of Total Turnover - 45.49 41.57 11.51 0 0.48 0 0.94
Average Daily Turnover 5711.09 2,566.81 2,530.40 544.52 0.08 16.93 0.00 52.35

Previous Closing Today October 4, 2010 Change w.r.t. Previous Closing

BSE Index 10/1/2010  Opening High Low Closing Points %
SENSEX 20,445.04 20501.21 20706.74 20437.36 20,475.73 30.69 0.15
MIDCAP 8,213.67 8248.64 8302.24 8241.2 8,270.06 56.39 0.69
SMLCAP 10,403.65 10451.53 10518.52 10427.18 10,438.00 34.35 0.33
BSE-100 10,837.96 10921.07 10976.12 10856.45 10,876.40 38.44 0.35
BSE-200 2,579.38 2597.52 2612.28 2585.59 2,590.74 11.36 0.44
BSE-500 8,135.23 8190.11 8235.06 8153.47 8,169.76 34.53 0.42
BSE IPO 2,257.16 2272.17 2277.31 2233.02 2,238.46 -18.70 -0.83
BSE Sectoral Indices
AUTO 9,756.96 9838.19 9947.62 9804.43 9,818.75 61.79 0.63
BANKEX 14,252.13 14369.52 14456.18 14333.25 14,365.29 113.16 0.79
CD 6,434.92 6454.62 6572.83 6454.62 6,529.42 94.50 1.47
CG 16,426.34 16503.48 16582.02 16349.41 16,384.03 -42.31 -0.26
FMCG 3,743.55 3756.26 3793.93 3711.44 3,716.85 -26.70 -0.71
HC 6,107.59 6124.21 6221.95 6124.21 6,210.92 103.33 1.69
IT 6,100.07 6149.86 6198.89 6059.42 6,077.24 -22.83 -0.37
METAL 17,517.09 17716 17791.52 17555.9 17,623.99 106.90 0.61
OIL & GAS 10,603.34 10694.67 10780.37 10634.82 10,661.24 57.90 0.55
POWER 3,299.90 3317.21 3339.83 3302.04 3,307.81 7.91 0.24
PSU 10,471.06 10554.31 10610.57 10495.59 10,525.58 54.52 0.52
REALTY 3,876.93 3914.21 3951.64 3883.69 3,894.42 17.49 0.45
TECk 3,787.21 3815.42 3842.01 3767.17 3,775.03 -12.18 -0.32
BSE Dollex Indices
DOLLEX-30 3,766.49 3806.81 3837.62 3761.13 3,767.91 1.42 0.04
DOLLEX-100 2,515.84 2541.69 2563.44 2518.47 2,521.94 6.10 0.24
DOLLEX-200 963.62 972.91 981.86 965.43 966.78 3.16 0.33

Value at Risk (VaR) Margin & Extreme Loss Margin

 (ELM) 

Margin rates for 05 Oct 2010

ELM Latest VaR +
VaR Margin %
Scrip % ELM (%)
Company
Code
BOD I II III IV

530027 Aadi Inds 25.98 5.00 30.98

522201 Aakar Engr 100.00 0.00 100.00

523511 Aankit Gran 100.00 0.00 100.00

524412 Aarey Drugs 25.98 5.00 30.98

524348 Aarti Drugs 7.50 5.00 12.50

524208 Aarti Inds 9.94 5.00 14.94

946034 AARTI-13%-14-09-2015-PVT 10.00 0.00 10.00

514274 Aarvee Denims 25.98 5.00 30.98

531514 Aasheesh Sec 43.30 5.00 48.30

512038 Aaswa Trading 100.00 0.00 100.00

508987 Abacus Comp 100.00 0.00 100.00

 
Trading, Settlement and Risk Management

Trading
SLB, Short Selling & Institutional Margining 
 Timing

 Groups

 Listed Securities

 Permitted Securities

 Tick Size

 Computation of Closing Price Of Scrips

 Basket Trading System

Settlement 

 Compulsory Rolling Segment (CRS)

 Pay-in and Pay-out for 'A', 'B', 'T', 'S', 'TS', 'C', "F", "G" & 'Z' Group Of Securities

 Demat Pay-in

 Auto Delivery Facility

 Pay-in of Securities in Physical Form

 Funds Pay-in

 Securities Pay-out
 Funds Payout

 Penalty Norms

Shortages 

Auctions

 Self-Auction

 Close-out

Rectification of Bad Deliveries 

 Patawat Objections

 Company Objections

Bulk Deals

Block Deals

Risk Management

Total Liquid Assets

 Base Minimum Capital

 Additional Capital

 Other Liquid Assets

Margins 

 Computation of Margins
 Collection and Release of Margins

 Exemption from Payment of Margins

 Early pay-in Facility

Capital Cushion Requirements 

Monitoring Business of Brokers 

BOLT Deactivation 

Brokers' Contingency Fund 

Trade Guarantee Fund (TGF) 

Trading 

Timing

Trading on the BOLT System is conducted from Monday to Friday between 9:00 a.m. and 3:30 p.m. normally.

Groups

The scrips traded on BSE have been classified into various groups.

BSE has, for the guidance and benefit of the investors, classified the scrips in the Equity Segment into 'A', ‘B’,'T', ‘S', ‘TS'
and 'Z' groups on certain qualitative and quantitative parameters. 

The "F" Group represents the Fixed Income Securities.

The "T" Group represents scrips which are settled on a trade-to-trade basis as a surveillance measure.

The "S" Group represents scrips forming part of the "BSE-Indonext" segment. 

The "TS" Group consists of scrips in the "BSE-Indonext" segment, which are settled on a trade-to- trade basis as a
surveillance measure.

Trading in Government Securities by the retail investors is done under the "G" group.

The 'Z' group was introduced by BSE in July 1999 and includes companies which have failed to comply with its listing
requirements and/or have failed to resolve investor complaints and/or have not made the required arrangements with both
the depositories, viz., Central Depository Services (I) Ltd. (CDSL) and National Securities Depository Ltd. (NSDL) for
dematerialization of their securities.

BSE also provides a facility to the market participants for on-line trading of odd-lot securities in physical form in 'A', 'B', 'T',
'S', 'TS' and 'Z' groups and in rights renunciations in all groups of scrips in the Equity Segment.

With effect from December 31, 2001, trading in all securities listed in the Equity segment takes place in one market segm
viz., Compulsory Rolling Settlement Segment (CRS).

The scrips of companies which are in demat can be traded in market lot of 1. However, the securities of companies which
are still in the physical form are traded in the market lot of generally either 50 or 100. Investors having quantities of securi
 4. Liquidity through Market Making: The sponsor-member is required to give two-
way quotes(buy and sell) for the scrip for 18 months from commencement of
trading. Besides the compulsory market maker, there is an additional market maker
giving two way quotes for the scrip. The idea is to create an environment of
competition among market makers to produce efficient pricing and narrow spreads
between buy and sell quotations.
5. Listing of Small and Medium-sized Companies: Many small and medium-sized
companies were not able to enter capital market due to the listing requirement of
Securities Contracts (Regulation) Act, 1956 regarding the minimum issued equity of
Rs.10 crores in case of the Mumbai stock Exchange and Rs.3 crores in case of other
stock exchanges. The OTCEI provides an opportunity to these companies to enter the
capital market as companies with issued capital of Rs.30 lacks onwards can raise
finance from the capital market through OTCEI.
6. Technology: OTCEI uses computers and telecommunications to bring
members/dealers together electronically, enabling them to trade with one another
over the computer rather than on a trading floor in a single location.
7. Nation-wide Listing: OTCEI network is spread all over India through members,
dealers and representative office counters. The company and its securities get
nation-wide exposure and investors all over India can start trading in that scrip.
8. Bought-out Deals: Through the concept of a bought-out deal, OTCEI allows
companies to place its equity with the sponsor-member at a mutually agreed price.
This ensures swifter availability of funds to companies for timely completion of
projects and a listed status at a later date.

Benefits of getting OTCEI Listing for Companies.

The OTCEI offers facilities to the companies having a issued equity capital of more than Rs.
30 lakhs. The benefits of listing at the OTCEI are:

 Small and medium closely-held companies can go public.

 The OTCEI encourages entrepreneurship.
 Companies can get the money before the issue in cases of Bought-out-deals.
 It is more cost-effective to come with an issue of OTCEI.
 Small companies can get listing benefits.
 Easy issue marketing by using the nation-wide OTCEI dealer network.
 Nation-wide trading by listing at just one exchange.
Benefits of Trading on OTCEI for Investors :

 The OTCEI trading counters are easily accessible by any investors.

 The OTCEI provides greater confidence to investors because of complete
transparency in deals.
 At the OTCEl, the transactions are fast and are completed quickly.
 The OTCEI ensures security, liquidity by offering two-way quotes.
 The OTCEI is an investor friendly exchange with Single Window Clearance for all
investor requests.