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General stock exchange queries


What is a settlement cycle?

A settlement cycle on the Exchange is an account period for the securities traded on the exchange. At the end of this period, the obligations of each client are calculated and the clients settle the respective obligations as per the rules, byelaws and regulations prescribed by the Clearing House.

Normal settlement takes place as under:

What is a Rolling settlement?

In rolling settlement (T+5), trade settles on fifth day. Payin / Payout takes place on the fifth day of the trade.

To what extent can the price of a scrip increase or decrease in a day and during a settlement?

As a measure to curb volatility, SEBI presented the use of price circuits on individual stocks, a few years back. Daily price bands are applicable on the previous day's close price as follows:

Securities have been classified into various price bands depending on the liquidity profile. From July 3, 2000, the SEBI has increased the daily price band of the 200 securities from +/- 12% to +/- 16%.

What are price bands?

The price band refers to the daily price limits within which the price of a security is allowed to rise or fall. Price bands are set by the relevant Exchange.

What are the different order types ?

There are different types of orders that can be routed through the India Infoline.com Securities Pvt. Ltd. trading system based on certain parameters. The different parameters are based on Time, Price and Quantity.

Time Conditions

Day Order. A day order as the name suggests, is an order to buy or sell which if not executed, expires at the end of the trading day on which it is entered. For the next trading session, the order has to be entered again.

Good Till Cancelled ( GTC ). A Good Till Cancelled (GTC) is an order to buy or sell that remain active until it is either executed or cancelled by the client. It is also called Open Order.

Good Till Date ( GTD ). A Good Till Date/Days (GTD) order allows the client to specify, the days/date upto which the order should stay in the system, which if not executed, expires at the end of this period and gets cancelled and flushed out from the system.

Immediate or Cancel Order ( IOC ) or Fill or Kill ( FOK ). An Immediate or Cancel Order by the client requires the buy or sell of the specified security as soon as the order is released into the market, failing which the order shall be cancelled and removed from the market. This type of order is known as IOC in NSE and Fill Or Kill in BSE.

Currently we shall be offering Day Order and Immediate or cancel ( IOC ) only.

Price Conditions

Limit Price Order. This is the price specified by the client while entering the order into the system. The Client specifies a stated price to buy at or below, or to sell at or above that price. The order shall be executed only on satisfying these conditions.

Market Price Order. An order to buy or sell securities at the best price obtainable at the time it is received from the client. These orders get executed at the market price at that time.

Stop Loss Price Order. This allows the client 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. The threshold price is entered by you Quantity Conditions

Disclosed Quantity. An order with a DQ condition/attribute allows the client to disclose only a part of the order quantity to the market. For example, an order to buy 1000 of Satyam Computer Services with a disclosed order condition of 200 shares shall mean that an order for 200 shares is placed on the market and only after it is executed is another order of 200 shares placed. This is repeated till the entire order quantity is satisfied. The Exchange may set a minimum disclosed quantity criteria from time to time.

What is a No Delivery/ Book Closure/ Records Date?

The Exchange sets a no-delivery period for a security in which the company has announced a record date/ book closure. During this period, trading is permitted in that security. However, these trades are settled only after the no-delivery period is over. This is done to ensure that the investor's entitlement for corporate benefits is clearly determined.

Book Closure is a period announced by a company for taking stock of its shareholders prior to an Annual General Meeting. Record Date is the date on which you must be registered as a shareholder of a company in order to receive a corporate benefit.

What is an auction?

The securities are put up for auction by the Exchange on account of non-delivery of securities by the selling trading member to ensure that the buying trading member receives the securities due to him. The non-delivery by the trading member could arise on account of short delivery, bad deliveries not rectified and company objections not rectified by them. The Exchange purchases the requisite quantity in the Auction Market and gives them to the buying trading member. Therefore if the securities brought by the client are not delivered by the delivering member, they may be purchased in auction and may be delivered to you. Therefore there may be a slight delay in receiving the shares after pay out.

What happens if the shares are not bought in the auction?

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 squared up as per SEBI guidelines. As per the guidelines in force, the transaction is squared up at the highest price on the NSE from the relevant trading period till the close-out day or at 20% above the last available trading price on the NSE, whichever is higher. Therefore if the shares purchased are closed out, the money will be received by India Infoline.com Securities Pvt Ltd and passed on to you.

What is day trading?

A day order is an order, which is valid for the day on which it is entered. If the order is not executed during the day, the system cancels the order automatically at the end of the day.

Is day trading legal?

Yes, day trading is legal but risky. Hence it is advisable that only people with high networth, with an ability and willingness to take risks should do day trading.

What is week trading?

The product is focussed towards weekly margin trading. Leverage on margins is provided to the customer to take enhanced exposure during the account period settlement.

What is a delivery based product?

Delivery product offers the customer to take or give delivery of the position taken on the markets. It is targeted towards long term retail investors. What is Spot Sale? This product shall be available for all securities. The client has to deliver complete securities before executing the sale. On execution of trade, the client's account will be credited from the proceeds of the sale, at the end of the day.

For more copies,

Contact :
www.5paisa.com
India Infoline.com Securities Pvt. Ltd.
Building No 24, Nirlon House,
Goregaon (East)
Mumbai - 400063
Tel : +(91 22) 8785000
Fax : +(91 22) 872 4222
Mail : info@5pmail.com