5
List of Abbreviations
ABC Additional Base Capital
AON All Or None
ATO At the Opening Order
BMC Base Minimum Capital
BSE Bombay Stock Exchange
CDSL Central Depositories Services Ltd.
CM Capital Market
Co. Company
DCA Department of Company Affairs
DEA Department of Economic Affairs
DP Depository Participant
DPG Dominant Promoter Group
DQ Disclosed Quantity
DvP Delivery versus Payment
FI Financial Institution
FII Foreign Institutional Investors
F&O Futures and Options
FTP File Transfer Protocol
GTC Good Till Cancelled
GTD Good Till Days
IOC Immediate or Cancel
IPF Investor Protection Fund
ISIN International Securities Identification Number
LTP Last Trade Price
MBP Market By Price
MTM Mark To Market
MF Minimum Fill
NSE National Stock Exchange
NSCCL National Securities Clearing Corporation Limited
NSDL National Securities Depository Ltd.
OTC Over The Counter
NEAT National Exchange for Automated Trading
NCFM NSE's Certification in Financial Markets
NSCCL National Securities Clearing Corporation Ltd.
RBI Reserve Bank of India
SAT Securities Appellate Tribunal
SBTS Screen Based Trading System
SC(R)A Securities Contracts (Regulation) Act, 1956
SC(R)R Securities Contracts (Regulation) Rules, 1957
SEBI Securities and Exchange Board of India
6
SGF Settlement Guarantee Fund
SRO Self Regulatory Organisation
T+5 Fifth day from the trading day
TM Trading Member
UTI Unit Trust of India
VaR Value at Risk
VSAT Very Small Aperture Terminal
WDM Wholesale Debt Market
References and suggested readings
The readings suggested here are supplementary in nature and would prove to be
helpful for those interested in acquiring advanced knowledge about Capital
Markets.
1. Indian Securities Market: A Review - NSEIL publication
2. NSE Newsletters
3. SC(R)A, 1956 & Rules
4. SEBI Act, 1992, Rules & Regulations
5. Depository Act, 1996 & Rules
6. Rules, Regulations and Byelaws of NSEIL & NSCCL
7. www.nseindia.com
8. www.sebi.gov.in
9. www.rbi.org.in
10. www.finmin.nic.in
7
Chapter 1
Trading
1.1 Introduction
The trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of
trades. This was time consuming and inefficient. This imposed limits on trading
volumes and efficiency. In order to provide efficiency, liquidity and transparency,
NSE introduced a nation-wide on-line fully-automated screen based trading system
(SBTS) where a member can punch into the computer quantities of securities and
the prices at which he likes to transact and the transaction is executed as soon as it
finds a matching sale or buy order from a counter party. SBTS electronically
matches orders on a strict price/time priority and hence cuts down on time, cost
and risk of error, as well as on fraud resulting in improved operational efficiency. It
allows faster incorporation of price sensitive information into prevailing prices,
thus increasing the informational efficiency of markets. It enables market
participants, irrespective of their geographical locations, to trade with one another
simultaneously, improving the depth and liquidity of the market. It provides full
anonymity by accepting orders, big or small, from members without revealing their
identity, thus providing equal access to everybody. It also provides a perfect audit
trail, which helps to resolve disputes by logging in the trade execution process in
entirety. This sucked liquidity from other exchanges and in the very first year of its
operation, NSE became the leading stock exchange in the country, impacting the
fortunes of other exchanges and forcing them to adopt SBTS also. Today India can
boast that almost 100% trading take place through electronic order matching.
Technology was used to carry the trading platform from the trading hall of stock
exchanges to the premises of brokers. NSE carried the trading platform further to
the PCs at the residence of investors through the Internet and to handheld devices
through WAP for convenience of mobile investors. This made a huge difference in
terms of equal access to investors in a geographically vast country like India.
The trading network is depicted in Figure 1.1. NSE has main computer which is
connected through Very Small Aperture Terminal (VSAT) installed at its office.
The main computer runs on a fault tolerant STRATUS mainframe computer at the
Exchange. Brokers have terminals (identified as the PCs in the Figure 1) installed at
their premises which are connected through VSATs/leased lines/modems.
An investor informs a broker to place an order on his behalf. The broker enters the
order through his PC, which runs under Windows NT and sends signal to the
Satellite via VSAT/leased line/modem. The signal is directed to mainframe
8
Figure 1.1: Trading Network
SATELLITE
Mainframe
INSAT - 2B
HUB
ANTENNA
NSE MAINFRAME Broker's premises
computer at NSE via VSAT at NSE's office. A message relating to the order
activity is broadcast to the respective member. The order confirmation message is
immediately displayed on the PC of the broker. This order matches with the
existing passive order(s), otherwise it waits for the active orders to enter the system.
On order matching, a message is broadcast to the respective member.
The trading system operates on a strict price time priority. All orders received on
the system are sorted with the best priced order getting the first priority for
matching i.e., the best buy orders match with the best sell order. Similar priced
orders are sorted on time priority basis, i.e. the one that came in early gets priority
over the later one. Orders are matched automatically by the computer keeping the
system transparent, objective and fair. Where an order does not find a match, it
remains in the system and is displayed to the whole market, till a fresh order comes
in or the earlier order is cancelled or modified. The trading system provides
tremendous flexibility to the users in terms of kinds of orders that can be placed on
the system. Several time-related (good till cancelled, good till day, immediate or
cancel), price-related (buy/sell limit and stop loss orders) or volume related (all or
9
none, minimum fill, etc) conditions can be easily built into an order. The trading
system also provides complete market information on-line. The market screens at
any point of time provide complete information on total order depth in a security,
the five best buys and sells available in the market, the quantity traded during the
day in that security, the high and the low, the last traded price, etc. Investors can
also know the fate of the orders almost as soon as they are placed with the trading
members. Thus the NEAT system provides an Open Electronic Consolidated
Limit Order Book (OECLOB). Limit orders are orders to buy or sell shares at a
stated quantity and stated price. If the price quantity conditions do not match, the
limit order will not be executed. The term .limit order book. refers to the fact that
only limit orders are stored in the book and all market orders are crossed against
the limit orders sitting in the book. Since the order book is visible to all market
participants, it is termed as an .Open Book..
1.2 NEAT System
The NEAT system supports an order driven market, wherein orders match on the
basis of time and price priority. All quantity fields are in units and prices are quoted
in Indian Rupees. The regular lot size and tick size for various securities traded is
notified by the Exchange from time to time.
1.3 Market Types
The Capital Market system has two types of active market, namely Normal Market
and Auction Market.
1.3.1 Normal Market
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. All orders have to be of Regular Lot
size or multiples thereof. For shares which are traded in the compulsory
dematerialised mode, the market lot is one.
1.3.2 Auction Market
In the Auction market, auctions are initiated by the Exchange on behalf of trading
members for settlement related reasons. The main features of this market are
detailed in a separate section (1.13) on auction.
10
1.4 Corporate Hierarchy
The trading member has the facility of defining a hierarchy amongst its users of the
NEAT system. This hierarchy comprises:
Corporate Manager
Branch 1 Branch 2
Dealer 11 Dealer 12 Dealer 21 Dealer 22
The users of the trading system can logon as either of the user type. The
significance of each type is explained below:
Corporate Manager: The corporate manager is a term assigned to a user placed at
the highest level in a trading firm. Such a user receives the End of Day reports for
all branches of the trading member. The facility to set Branch Order Value Limits
and User Order Value Limits is available to the corporate manager.
Branch Manager: The branch manager is a term assigned to a user who is placed
under the corporate manager. The branch manager receives End of Day reports for
all the dealers under that branch. The branch manager can set user order value limit
for each of his branch.
Dealer: Dealers are users at the lower most level of the hierarchy. A dealer can
view and perform order and trade related activities only for oneself and does not
have access to information on other dealers under either the same branch or other
branches.
1.5 Local Database
The Local Database provides faster response time to users. All inquiries made by a
user for own orders/trades are serviced through the local database. If however, a
corporate manager/branch manager makes inquiries for orders of any
dealer/branch manager of the trading firm, then the inquiry is serviced by the host.
The data stored in the local database is namely, system messages, security related
information and order/trade related data of the user.
1.6 Market Phases
The system is normally made available for trading on all days except Saturdays,
Sundays and other holidays. Holidays are declared by the exchange from time to
11
time. A trading day typically consists of a number of discrete stages as explained in
the subsequent section.
1.6.1 Pre-Open Phase
The Pre-Open period is relevant only in the normal market. Order matching takes
place at the end of the session, based on which an opening price is computed and
assigned to all trades of pre-open. The trading member can carry out the following
activities at this stage:
� Set up Market Watch (the securities which the user would like to view on the
screen)
� Inquiries
� Order Entry (in normal market)
� Order Cancellation (quick order cancellation is not allowed)
� Order Modification
At the start of the pre-open phase, a message is displayed indicating that the normal
market is in pre-open phase. Currently, the pre-open phase is not in function in the
normal market.
1.6.2 Opening
In this period, all orders that have been entered in the pre-open phase are matched.
During this phase, the trading member cannot login to the system. A message
"Market status is changing. Cannot logon for sometime." is displayed. If the
member is already logged in, he cannot perform trading activities till market is
opened.
1.6.3 Open Phase
The open period indicates the commencement of trading activity. To signify the
start of trading, a message is sent to all the trader workstations. The market open
time for different markets is notified by the Exchange to all the trading members.
Order entry is allowed when all the securities have been opened. During this phase,
orders are matched on a continuous basis. Trading in all the instruments is allowed
unless they are specifically prohibited by the exchange. The activities that are
allowed at this stage are Inquiry, Order Entry, Order Modification and Order
Cancellation (including quick order cancellation).
1.6.4 Market Close
When the market closes, trading in all instruments for that market comes to an end.
A message to this effect is sent to all trading members. No further orders are
accepted, but the user is permitted to perform activities like inquiries.
12
1.6.5 Surcon
Surveillance and Control (SURCON) is that period after market close during
which, the users have inquiry access only. After the end of SURCON period, the
system processes the data for making the system available for the next trading day.
When the system starts processing data, the interactive connection with the NEAT
system is lost and the message to that effect is displayed at the trader workstation.
1.7 Logging On
On starting NEAT application, the logon screen appears with the following detail:
a) User ID
b) Trading Member ID
c) Password
d) New Password
In order to sign on to the system, the user must specify a valid User ID, Trading
Member ID and the corresponding password. A valid combination of User ID,
Trading Member ID and the password is needed to access the system.
a) User ID
Each trading member can have more than one user. The number of users allowed
for each trading member is notified by the Exchange from time to time. Each user
of a trading member must be registered with the exchange and is assigned an
unique user id.
b) Trading Member ID
The Exchange assigns a trading member id to each trading member. The trading
member id is unique and functions as a reference for all orders/trades of different
users. This id is common for all the users of a particular trading member. The
trading member id and user ids form a unique and valid combination.
It is the responsibility of the trading member to maintain adequate control over the
persons having access to user ids. The trading member should request the
Exchange for changes in user id user names especially when there are changes in
the users who are dealing on behalf of the trading member.
c) Password
When a user logs in for the first time, he has to enter the default password
'NEATCM' provided by the Exchange. On entering this password, the system
requests the user to enter a new password in the `New Password' field. On entering
the new password, the system requests for confirmation of this new password. This
new password is known to the user only.
The password should contain minimum of six characters and maximum of eight
characters in length. A combination of characters and numbers is allowed in the
password. The password can be changed if the user desires so and a new password
can be entered. The new password must be different from the old password.
13
Password appears in the encrypted form and thus complete secrecy is maintained.
The system ensures the change in password for all users (password expiry period is
parameterised by the Exchange). The user can logon by entering a new password as
per the procedure outlined above. In the event of the user forgetting his password,
the trading member is required to inform the Exchange in writing with a request to
reset the password. The user password is reset to the default password set by the
Exchange. The user can log on, on entering a new password as per the procedure
outlined above.
If three attempts are made by a user to log on with an incorrect password, then that
user is automatically disabled. In case of such an event, the trading member makes
a written request to the exchange for resetting of password. The user password is
reset to the default password set by the Exchange. The user can log on, on by
entering a new password as per the procedure outlined above.
Earlier, it was possible for the members having VSATs at more than one location
to use the allotted user ids interchangeably from either location. This gives rise to
various systems security related problems. To reduce such potential risks associated
with the member.s workstation, the Exchange assigns user id to a specific location.
On account of it, whenever a user attempts to log on to the trader workstation, the
system checks for a valid location for that user id in the database at the host end.
In case there is a mismatch between the user id and corresponding VSAT id, the
message is flashed on the log on screen. "You are trying to sign on from a different
location. Sign on is not allowed". Members connected through leased lines, high
speed dial up modems are also checked for the local address of their trading
terminals and the corresponding user ids. In case of mismatch between the two the
message "You are trying to sign on from a different location. Sign on is not
allowed" is flashed on the log on screen. Members maybe allowed logging in from
different VSAT ids only on specific written requests, which may be verified by the
Exchange with reference to the problem specified.
1.8 Log Off/Exit from the Application
One can exit from the application as and when one desires before the surcon
period. On invoking the log off screen, the following options are displayed to the
user:
a) Permanent sign off,
b) Temporary sign off, and
c) Exit
a) Permanent Sign Off
As the name suggests, a user can log off permanently from the trading system by
selecting this option. The user is logged off and the log on screen appears.
14
b) Temporary Sign Off
Temporary sign off is a useful feature that allows the user to disallow the use of the
trading software without actually logging off. During a temporary sign-off period,
the application continues to receive all market updates in the background.
However, the user cannot enter orders or make inquiries. This allows the user to
leave the trading system temporarily inactive and prevents unauthorized access to
the system. On selecting the temporary sign off option, a password entry screen is
displayed. The use of the NEAT system is enabled on entering the correct
password. The temporary sign off is automatically activated when the user is
inactive for a period of 5 minutes. The user has to enter the password to resume
activities. If three attempts are made to sign on with an incorrect password, the
user is permanently logged off. In this case the user has to log on again.
c) Exit
On selection of this option, the user comes out of sign off screen.
1.9 Major Segments of the NEAT Screen
The following windows are displayed on the Trader Workstation screen:
Title bar: It displays trading system name i.e. NEAT, the date and the current
time.
Ticker Window: The ticker displays information about any trade in the system as
and when it takes place. The user has the option of selecting the securities that
should appear in the ticker. Securities in ticker can be selected for each market type.
On the extreme right hand of the ticker is the on-line index window that displays
the current index value of NSE indices namely S&P CNX Nifty, S&P CNX Defty,
CNX Nifty Junior, S&P CNX500 and CNX Midcap 200. The ticker window will be
displaying securities of both derivatives and capital market segnments. The ticker
selection facility will be confined to the securities of capital segment only. The first
ticker window, by default, will display all the derivatives contracts traded in the
Futures and Options segment.
Tool Bar: The toolbar has functional buttons which can be used with the mouse
for quick access to various functions such as Buy Order Entry, Sell Order Entry,
Market By Price (MBP), Previous Trades (PT), Outstanding Order (OO), Activity
Log (AL), Order Status (OS), Market Watch (MW), Snap Quote (SQ), Market
Movement (MM), Market Inquiry (MI), Auction Inquiry (AI), Order Modification
(OM), Order Cancellation (OCXL), Security List, Net Position, Online Backup,
Supplementary Menu, Index Inquiry, Index Broadcast and Help. All these
functions are also accessible through the keyboard.
Market Watch: The Market Watch window is the main area of focus for a trading
member. This screen allows continuous monitoring of the securities that are of
15
specific interest to the user. It displays trading information for the selected
securities.
Inquiry Window: This screen enables the user to view information such as Market
By Price (MBP), Previous Trades (PT), Outstanding Orders (OO), Activity Log
(AL) and so on. Relevant information for the selected security can be viewed.
Order/Trade Window: This enables the user to enter/modify/cancel orders and
sends the request for trade cancellation and modification.
Message Window: This enables the user to view messages broadcast by the
Exchange such as corporate actions, any market news, auctions related information
etc. and other messages like order confirmation, order modification, order
cancellation, orders which have resulted in quantity freezes/price freezes and the
Exchange action on them, trade confirmation, trade cancellation/modification
requests and Exchange action on them, name and time when the user logs in/logs
off from the system, messages specific to the trading member, etc. These messages
appear as and when the event takes place in a chronological order.
1.10 Invoking an Inquiry Screen
All Inquiry screens have a selection where the security viewed can be selected. The
screen shows the details of the security selected for that inquiry. The details for
each inquiry screens are discussed further in this chapter.
1.10.1 Market Watch
The Market Watch window is the third window from the top of the screen that is
always visible to the user. The Market Watch is the focal area for users. The
purpose of Market Watch is to setup and view trading details of securities that are
of interest to users. For each security in the Market Watch, market information is
dynamically updated.
Market Information Displayed: The one line market information displayed in the
market watch screen is for current best price orders available in the Regular Lot
book. For each security the following information is displayed:
a) the corporate action indicator "Ex/Cum"
b) the total buy order quantity available at best buy price
c) best buy price
d) best sell price
e) total sell order quantity available at best sell price
f) the last traded price
g) the last trade price change indicator and
h) the no delivery period indicator "ND"
If the security is suspended, "SUSPENDED. appears in front of the security. If a
question mark (?) appears on the extreme right hand corner for a security, it
16
indicates that the information being displayed is not the latest and the system will
dynamically update it.
Information Update: In the Market Watch screen, changes in the best price and
quantities are highlighted on a dynamic basis (in all pages of Market Watch). For
example, if the best price changes as a result of a new order in the market, the new
details are immediately displayed. The changed details are highlighted with a change
of colour for a few seconds to signify that a change has occurred. The blue colour
indicates that price/quantities have improved, while the red colour indicates that
the price/quantities have worsened.
If the last traded price is better than the previous last traded price then the
indicator `+' appears or if the last traded price is worse than the previous last
traded price then the indicator `-' appears. If there is no change in the last traded
price, no indicator is displayed.
The list of securities that are available for trading on Capital Market segment is
available in the Security List box. The user has the option to setup securities
directly from the Security List without typing a single character on the market
watch screen. This is a quick facility to setup securities. If the user tries to setup a
security which is already present in the market watch one gets a message that the
security is already setup. The user also has the option to add and delete the security
set up in the market watch screen as many times as one desires. The user can print
the contents of the Market Watch setup by the user. The user can either print the
Market Watch on display or the Full Market Watch.
Market Watch Download: A user has to set up securities after the first download
of the software. After setting up the market watch, it is suggested that the user
should log out normally. This will help the user to save the freshly set up market
watch securities in a file. If at any given time, when the user has freshly set up a few
securities and encounters an abnormal exit, the newly set up securities are not saved
and the user may have to repeat the process of setting up securities. The Market
Watch setup is carried over to subsequent days, thus averting the need to set up the
Market Watch on daily basis. During the logon stage, the relevant Market Watch
details are downloaded from the trading system. The message displayed is `Market
Watch download is in progress'. The time taken for the Market Watch download
depends on the number of securities set up.
Special Features of Market Watch screen
a) One of the best features of this software is that the user has the facility to set
up 500 securities in the market watch. The user can set up a maximum of 30
securities in one page of the market watch screen.
b) The details of the current position in the Market Watch defaults in the order
entry screen and the inquiry selection screen. It is therefore possible to do
quick order entries and inquiries using this feature. The default details can also
be overwritten.
17
c) Market Watch setup can be sorted alphabetically.
d) An indicator for corporate actions for a security is another feature in market
watch. The indicators are as follows:
'XD' - ex-dividend
'XB' - ex-bonus
'XI' - ex-interest
'XR' - ex-rights
'CD' - cum-dividend
'CR' - cum-rights
'CB' - cum-bonus
'CI' - cum-interest
'C*' - in case of more than one of CD, CR, CB, CI
'X*' - in case of more than one of XD, XR, XB, XI
e) The ex indicator in the market watch screen appears till the end of no delivery
period in which the security goes ex benefit. In case, a security goes ex benefit
without having any no delivery period, ex indicator is displayed only on the ex
day.
1.10.2 Security Descriptor
The following information is displayed in the Security Descriptor - Security Name,
Book Closure Start and End Dates, Ex-Date, No-Delivery Start and End Dates,
Tick Size, Rating and Remarks. The label DPR i.e. Daily Price Range displays the
permissible price band for a security for the current trading day.
1.10.3 Market By Price
The purpose of Market By Price (MBP) is to enable the user to view outstanding
orders in the market aggregated at each price and are displayed in order of best
prices.
The fields that are available on the selection screen are Symbol, Series and Book
Type. The detailed MBP screen is split into First Line, Detail Line and Summary
Line. The first line displays Market Type, Symbol, Series, Total Traded Quantity,
Highest Trade Price, Lowest Trade Price, Last Trade Price, % Change in LTP from
Previous Day Close and Average Traded Price. The detail line displays Number of
Buy Orders, Total Buy Order Quantity at that price, Buy Order Price, Sell Order
Price, Total Sell Order Quantity at that price and Number of Sell Orders. The
summary line displays Total Buy Order Quantity and Total Sell Order Quantity.
Gross orders are displayed. For special term orders, the terms are not reflected in
the MBP screen. Buy orders are displayed on the left side of the window and sell
orders on the right. The orders appear in a price/time priority with the "best
priced" order at the top. When any Regular Lot information, currently displayed on
18
the window, is changed (for example as the result of a trade), this information is
automatically reflected in the MBP i.e. dynamic updation of MBP screen is present.
Special Features of MBP
1. Regular lot & special term orders can be viewed in the MBP.
2. The status of a security is indicated in this screen. 'P' indicates that the security is
in the pre-open phase and 'S' indicates that the security is suspended.
3. The percentage change for last trade price with respect to previous day's closing
price and the average trade price of the security in the given market are the
additional fields in the screen.
4. No untriggered stop-loss order will be displayed on the MBP screen.
5. Only orders for the best 5 prices, information is displayed.
1.10.4 Previous Trades
The purpose of this window is to provide security-wise information to users for
own trades. The fields that are available on the selection screen are Symbol, Series,
Market type, Auction No., Trading Member Id, Branch Id, Dealer, Cli/WHS and
Time. If the user selects the option to view Auction Market trade details, the
Auction No. has to be compulsorily entered. The Corporate Manager can view all
the trades for all branches or for a specific branch. Under the specific branch, the
user can view trade details for a specific dealer or for all dealers. Similarly, it is
possible to view all warehousing trades for a particular client or for all clients. The
Branch Manager can view all details under that branch i.e. all previous trades for all
dealers and for all clients or for all dealers or for a specific dealer. The dealer can
view previous trades for own user id only.
The detailed Previous Trade screen information is split into First Line, Detail Line
and Summary Line. The first line displays Market Type, Symbol, Series, Last Trade
Price, Last Trade Quantity, Last Trade Time and Total Traded Quantity. The detail
line contains Buy/Sell Indicator, Pro/Cli/WHS indicator (where P - PRO, C - CLI
and W - WHS), Order Number, Trade Number, Trade Quantity, Trade Price and
Trade Time. The summary line contains Total Number of Buy Trades, Total Buy
Quantity Traded, Total Buy Traded Value, Average Buy Traded Price, Total
Number of Sell Trades, Total Sell Quantity Traded, Total Sell Traded Value and
Average Sell Traded Price. Previous Trade Screen displays the client account
number also.
Trades are displayed in a reverse chronological order. First all buy trades are
displayed and then sell trades are displayed.
Special Features of Previous Trades
� Trade cancellation can be requested from the Previous Trade screen. This
facility is available only for member.s own trades. The Corporate Manager can
request for trade cancellation for any branch or any dealer. The Branch
19
Manager can request for trade cancellation for any dealer under that branch.
The dealer can request for trade cancellation only for trades under that user id.
� Trade modification can be requested from the Previous Trade screen. The user
can request the Exchange to modify only the trade quantity field. Moreover, the
new quantity requested must be lower than the original trade quantity.
1.10.5 Outstanding Orders
The purpose of Outstanding Orders (OO) is to enable the user to view the
outstanding orders for a security. An outstanding order is an order that has been
entered by the user, but which has not yet been completely traded or cancelled. The
user is permitted to see his own orders.
The fields which are available on the selection screen are Symbol, Series, Book
type, Auction No, Branch Id, Dealer, Pro/Cli/WHS and Time. The options
available in the Book type field are Regular Lot, Negotiated Trade, Stop Loss and
Auction. If the user selects the option to view Auction Market trade details, the
Auction No has to be compulsorily entered.
The corporate manager can view all the OO for all branches or for a specific
branch. Under the specific branch, the user can view OO details for a specific
dealer or for all dealers. Similarly it is possible to view all OO for a particular client
or for all clients under a dealer. The Branch Manager can view all OO details under
that Branch i.e. all OO for all dealers and for all clients or for all dealers or for a
specific dealer. The dealer can view OO for own user id only.
The detailed outstanding orders screen is split into First Line and Detail Line. The
first line contains Symbol, Series, Market Type, Security Status, Label, Current
Time and Current Date. The detail line contains Book Type, User Id, Client A/C
Number, Order Number, Order Quantity Pending and Order Price.
The orders are listed on the basis of price/time priority. The orders are displayed in
order of Regular Lot orders and then Stop Loss orders. Outstanding order screen is
not dynamically updated, but the user has option to refresh the OO screen by
reinvoking the inquiry.
Special Features of Outstanding Orders
a) The user can modify orders from the outstanding orders screen.
b) The user can cancel orders from the outstanding orders screen.
c) The user can view status of a particular order from the outstanding orders
screen.
1.10.6 Activity Log
The Activity Log (AL) shows all the activities that have been performed on any
order belonging to that user. These activities include order
modification/cancellation, partial/full trade, trade modification/cancellation. It
20
displays information of only those orders in which some activity has taken place. It
does not display those orders on which no activity has taken place.
The fields that are available on the selection screen are Symbol, Series, Market
Type, Branch Id, Dealer, PRO/CLI/WHS and Client Account No. The Symbol,
Series and Market Type fields are compulsory. The options available in the Market
Type field are Normal and Auction.
The detailed AL screen is split into first line and detail line. The first line displays
Market Type, Symbol, Series, Current Time and Current Date. The detail line
contains User Id, Order Number, PRO/CLI/WHS indicator (where P-PRO, C-
CLI and W-WHS), Buy/Sell Indicator, Order quantity, Order price, Order
Terms/Trade Number, Disclosed Quantity, MF Indicator, MF Quantity, Activity
Indicator and Activity Time. One line appears for each activity that has taken place
today. For example, if a buy order is traded against three separate sell orders, then
the activity log for the buy order shows three separate lines and the original order
details.
Special terms associated with the order are displayed to help identify the order.
The following activities are displayed:
B For buy orders, this indicates a match.
S For sell orders, this indicates a match.
OC This indicates an order was cancelled.
OM This indicates an order was modified. The details displayed are the order
after it was modified.
TC For both buy and sell orders this indicates that a trade involving this order
was cancelled.
TM For both buy and sell orders this indicates that a trade involving this order
was modified.
The AL gives details of all activities on chronological orders. Within the order
number, the details appear with the oldest activity first and the latest last. The
activity consists only of orders entered by the requesting trading member. This
inquiry option is not available to users in inquiry mode.
1.10.7 Order Status
The purpose of the Order Status (OS) is to look into the status of one of dealer.s
own specific orders. The screen provides the current status of orders and other
order details. The order status screen is not dynamically updated. In case the order
is traded, the trade details are also displayed. In case of multiple trades the display is
scrolled.
To view the status of a particular order, enter the order number for which the
order status is to be viewed in the selection screen of OS. The first part of the
order number (i.e. today's date) is defaulted. The user has to enter the second part
21
of the order number. If the user does not know the order number, then the user
can position the highlight bar on the desired order on the Outstanding Order
screen and then invoke the OS screen. The order number is directly defaulted in
the Order Status selection screen.
The detailed OS screen is divided into three parts. The first part covers order
related information, the second part covers the trade related information if the
order has resulted in a trade and the third part gives summary details.
The first part details are in two lines. The first line gives Book Type, Symbol,
Series, Order Number, Type (Buy/Sell), Total Order Quantity, Order Price,
PRO/CLI/WHS, Client A/C Number and Participant Id. The second line gives
Disclosed Quantity, MF/AON Indicator, MF Quantity, Trigger Price,
Day/GTD/GTC, Indicator 1 (Order Modified - MOD), Indicator 2 (Order
Cancelled - CXL) and Indicator 3 (Order Traded - TRD). The second part details
are Trade Quantity, Trade Price, Trade Time and Trade Number. The third part
details are Quantity Traded Today and Balance Quantity (remaining quantity).
The OS provides the user the current status of the order i.e. whether order has
been modified, order was cancelled, order was traded, order has been partially
traded on the previous day. It shows all the order details. It also shows the trade
details for each trade done against this order. The data is presented in chronological
order. One line appears for each activity that has taken place today. The dealer can
view order status of orders entered under that Dealer Id only. This Inquiry option
is not available to Users in Inquiry mode.
1.10.8 Snap Quote
The Snap Quote is a feature available in the system to get instantaneous market
information on a desired security. This is normally used for a security that is not
setup in the Market Watch window. The information displayed for the set up
security is same as that in Market Watch window i.e. Corporate action indicator
"Ex/Cum", the total buy order quantity, best buy price, best sell price, total sell
order quantity, last traded price, last trade price change indicator and the no
delivery indicator "ND".
The Snap Quote is displayed for the time specified by the Exchange from time to
time. The display position of Snap Quote is reserved and no other information
overlaps it. A user can therefore simultaneously view a regular inquiry (e.g. MBP)
and the Snap Quote display.
1.10.9 Market Movement
The purpose of the Market Movement screen is to provide information to the user
regarding the movement of a security for the current day. This inquiry gives the
snap shot for a particular security for a time interval as parameterised by the
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Exchange. The fields that are available on the selection screen are Symbol, Series
and Market type. The user can select the Market Type as Normal.
The detailed output screen is given in two parts. The first part gives information
regarding the security for the entire day namely Symbol, Series, Market Type, Total
Buy Order Quantity, Total Sell Order Quantity, Total Traded Quantity, High Price,
Low Price, Open Price and Last Traded Price. The second part gives information
for a particular time interval namely Time Interval, Buy Order Quantity, Sell Order
Quantity, Traded Quantity, High Price and Low Price.
The user can save the Market Movement screen by specifying the directory and file
name to save the information. This file can be viewed in MSDOS editor. The
Market Movement screen provides information to the user regarding the
movement of a security for the current day on orders/trades done today. The
information displayed is from the time the market was opened today and in
chronological sequence.
1.10.10 Market Inquiry
The purpose of the Market Inquiry is to enable the user to view the market
statistics, for a particular market, for a security. It also displays the open price and
previous close price for a security.
The fields that are available on the selection screen are Symbol, Series and Market
type. The user can select market type as Normal.
The detailed output screen is given in two parts. The first line displays Symbol,
Series, Security Status, Corporate Actions Indicator 1, Corporate Actions Indicator
2, Corporate Actions Indicator 3, Total Traded Quantity, 52 Week High and 52
Week Low. The second line displays Closing Price, Opening Price, High Price, Low
Price, Last Traded Price and Net change from closing price. The third line displays
Last Traded Quantity, Last Traded Time and Last Traded Date. The fourth
line displays Trader Best Buy indicator, Best Buy Order Quantity, Best Buy Order
Price, Best Sell Order Price, Best Sell Order Quantity and Trader Best Sell
indicator.
This screen is not dynamically updated. It displays the security status of the security
selected. 'S' indicates that the security is suspended, 'P' indicates that the security is
in pre open (only for normal market) and in absence of the above indicators the
security is open for trading.
An indicator for corporate actions for a security is displayed on the screen. The
indicators are as follows:
"CD" = cum-dividend "XD" = ex-dividend
"CR" = cum-rights "XR" = ex-rights
"CB" = cum-bonus "XB" = ex-bonus
"CI" = cum-interest "XI" = ex-interest
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The net change indicator for last trade price with respect to the previous day's
closing price and the net change percentage for the last trade price with respect to
the previous day's closing price are displayed.
The base price of a security for the day is equal to the previous day's closing price
of the security in normal circumstances. Thus, in the market inquiry screen the field
indicating the closing price also gives the base price for the day. If the base price is
manually changed (due to a corporate action) then the market inquiry will not
display the new base price in the closing price field.
1.10.11 Auction Inquiry
The purpose of Auction Inquiry (AI) is to enable the users to view the auction
activities for the current trading day. This window displays information about
auctions currently going on and auctions that have been completed.
The detailed line in the auction inquiry screen displays No. - Serial Number, St. -
Status of the auction security, Type - Buy/Sell auction, Symbol, Series, Best Buy
Qty, Best Buy Price, Best Sell Price, Best Sell Qty, Auction Qty, Auction Price and
Settlement Period.
The following are the different status displayed for an auction security:
S - Auction is in Solicitor Period
M - System is matching the orders
F - Auction is over
X - Auction is deleted
P - Auction is pending and yet to begin.
The user can view the auction details of a security setup in the market watch, by
invoking the auction inquiry screen after highlighting the auction security. To view
the auction details for all the securities, the user should blank out the contents of all
the fields in the auction inquiry selection screen. To view the auctions after a
particular number, the user should blank out the contents in Symbol & Series field
and enter the number in the auction number field on the selection screen. The
auction inquiry screen then displays all auctions from that number onwards.
1.10.12 Security/Portfolio List
This is a facility for the user for setting up the securities in the market watch screen.
This screen is also has a new facility of allowing the user to setup his own portfolio.
Security List. The user can select securities based on Symbol, Series, Instrument
Type and Market Type. A blank/partial search for Symbol and Series is also
possible. The Symbol, Series, Market Type and Security Name are displayed based
on the selection criteria. The user can also print the selected securities.
Portfolio List. Once the security is selected, the same can be used for setting up a
portfolio. The user can give a name to the list so selected. The existing portfolio
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can be modified and/or removed. The user can also set-up a particular portfolio in
market watch.
1.10.13 Multiple Index Broadcast and Graph
This screen displays information of NSE indices namely S&P CNX Nifty, S&P
CNX Defty, CNX Nifty Junior, S&P CNX 500 and CNX Midcap 200. The indices
are labeled vertically and the information is displayed against each index
horizontally. The data displayed for each index is as follows:
- Current Index
- High Index
- Low Index
- Open Index
- Close Index
- % change in Current Index (w.r.t. previous close index)
- 52 week High
- 52 week low
- Up Moves
- Down Moves
- Market Capitalisation (in Rs. Lakh)
This information is displayed on-line for S&P CNX Nifty, S&P CNX Defty, CNX
Nifty Junior, S&P CNX 500 and CNX Midcap 200. The values for CNX Nifty
Junior are displayed as of previous trading day. At the end of the current trading
day along with S&P CNX Nifty Close Value, updated CNX Nifty Junior is
disseminated. Index Graph displays all the indices on a real time basis to the
market.
1.10.14 Online Backup
On Line Backup is a facility that the user can invoke to take a backup of all order
and trade related information for the user. The information available is for the
current day only.
The On Line Backup can also be taken without logging into NEATCM. On the
selection screen the user can select the various fields on which the output will be
filtered. The fields that can be filtered are CLI/WHS Account No., Market Type,
Book Type, Symbol, Series, Instrument Type, Date, Time, Order Indicator, Trade
Indicator, Buy/Sell Indicator, Order Numbers and Trade Numbers
The user is provided the option to copy the files to any drive of the computer or
on a floppy diskette. This utility generates two ASCII files namely Order.txt and
Trade.txt. The user can specify any filename for Orders and Trades. This utility will
help the user to generate the Contract Notes. The user is requested to take backup
25
first on the C:\drive and subsequently copy to A:\drive to avoid overloading PC
capacity and abnormal log-off.
1.10.15 Supplementary Functions
This section discusses certain supplementary functions of NEAT such as Branch
Order Value Limit, On-line Backup facility, Security List, Market Movement, Most
Active Securities, Colour Selection, Report Selection and Print System Message.
The supplementary menu list box has the following options:
� Report Selection
� Full Message Display
� Colour Selection
� Print System Message ON/OFF
� Print Order/Trade Confirmation Slips On/Off
� Ticker Selection
� Market Movement
� Most Active Securities
� Index Inquiry
� Offline Order Entry
� Order Limits
� Order Attribute Selection
� Yield Calculator
� Reprint Order/Trade Confirmation Slip
� Branch Order Value Limit
� About
� Net Position
� Back-up
� Online Backup
� One line/Tabular Slips
� User Order Value Limit
� Client Master Maintenance
� Basket Trading
� Index Trading
� Buy Back Trades
1.10.15.1 Report Selection.
Report selection window allows the user (corporate manager and branch
manager) to specify the number of copies to be printed for each report. The
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screen also allows user to request for any of the reports to be printed at the end
of the day. The reports that are available to the trading member are Open Order
Today, Order Log, Trades Done Today and Market Statistics.
The user can update the number of copies for a report. The Report Selection
screen allows the user (Corporate manager and Branch Manager only) to specify
the number of copies to be printed for each report. All the reports are generated at
the end of day. Once the reports are printed, the Report Selection screen shows the
date and the time the reports were printed. The user can request for reprinting any
of the reports.
1.10.15.2 Full Message Display
This option enables the display of all the system messages right from the start of
the Pre-Open Phase. It is also possible to filter the messages depending on the
message code, symbol, series, PRO/CLI/WHS, Client, date and time. The system
messages can be printed, if needed.
The user can filter, print and save messages. In the message filtering screen the
message code by default shows All. The user has the option to select the desired
message code on which the messages can be filtered. The messages can also be
filtered on Symbol, Series, Trading member Code, PRO/CLI/WHS/ALL, Client
A/C No., Date and Time fields.
In case the user desires to filter messages for trading member's own order/trade
related messages, "PRO" has to be specified with the trading member code
defaulting in the "Client Account" field. In case the user desires to filter messages
for a particular client, "CLI" has to be specified with the client account code in the
"Client Account" field. In case the user desires to filter messages for warehouse
transactions, "WHS" has to be specified with the client account code in the "Client
Account" field. In case the user desires to view all messages, "All" has to be
specified and the "Client Account" field should be blank. The message filter
displays "All" by default when the user invokes the full message display screen.
The messages are filtered as per the selection criteria. The message codes on which
the selection can be made are:
Message Code Description of Messages Selected
ALL All messages
AUC Auction order/trade messages
AUI Auction initiation messages
LIS All listing related messages
ORD Order Related messages
OTH Miscellaneous
SPD Security Suspension/De-suspension
SYS System Messages
TRD Trades
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The full message display and filtered messages can be printed by invoking the print
command by ensuring that the printer is online. The user can save messages by
invoking the Save option on the Full Message Display screen and by specifying the
directory and file name in the pop up box. Here an option is available to the user to
both specify the directory and file name to save messages, or to choose the default
directory i.e. nsecm\user directory. This file can be viewed in MS-DOS editor.
1.10.15.3 Colour Selection
The user can customise the colours for various inquiry and other trader
workstation screens as per choice. The background and the foreground colours can
be selected by invoking the Colour Selection option. The following is displayed on
the colour selection listbox:
List of Screens: Lists all the screens in NEAT system. The user has the option of
changing both the foreground and the background colours of any screen.
Display Window: Displays the screen with the changed colours. To change the
colour of a particular screen, the user has to position the highlight bar on the
desired screen and select any one of the sixteen colour buttons. The change in the
colour can be seen in the Display window. The user can reset the colour to default
setting by selecting the Default option. It is to be noted that the user cannot select
the same colour for foreground of an inquiry screen.
1.10.15.4 Print System Messages On/Off
The 'Print System Messages ON/OFF' enables/disables printing of the system
messages as and when they appear in the messages window. By default the option
is set to `OFF'. The user can change the On/Off position by pressing the space
bar. The current mode (On/Off) is displayed for this option on the Supplementary
Menu screen itself.
1.10.15.5 Print Order/Trade Confirmation Slips On/Off
The 'Print Order/Trade Confirmation ON/OFF' enables/disables printing of the
order/trade slips. By default the option is set to `ON'. The user can change the
On/Off position by pressing the space bar. The current mode (On/Off) is
displayed for this option on the Supplementary Menu screen itself.
1.10.15.6 Ticker Selection
The ticker selection screen allows the user to set up the securities that should
appear in the user.s ticker window. All the securities available in the system for a
particular market are displayed. If a security is deleted from the system, it is also
removed from the ticker selection display. The selection of securities can be done
for each market separately. The user can select one or all security type for display.
28
1.10.15.7 Most Active Securities
This screen displays the details of the most active securities based on the total
traded value during the day. The number `N' is parameterised by the Exchange.
The information provided on this screen is not dynamically updated. However, the
user can get the latest information by refreshing the screen by selecting Refresh.
1.10.15.8 Reprint Order/Trade Confirmation Slips
Although the order and trade slips for `confirmation', `modification', 'rejection' and
`cancellation' slips can be printed as and when a particular operation is performed.
However, the user can reprint these slips later during the trading day by using this
option.
The user can select the order or trade and the type of slips i.e. confirmation,
modification, cancellation or rejection. There is facility to select one or more
operations for printing the slips. E.g. one can select `confirmation' as well as
`modification' at a time. After the user specifies the type of slip to be printed, the
start and end order/trade numbers are automatically filled. The user has to specify
the range of order or trade nos. by appropriately selecting the start and the end
order/trade numbers. Initially, the options have such values that all the order
related slips can be printed. The start and the end order nos. contain order nos. that
was entered by the user on the current day. On selecting Print option all the
selected order/trade slips are printed and on selecting the Cancel option, no slips
are printed.
1.10.15.9 Offline Order Entry
A facility ' Offline Order Entry ' has been incorporated in the trading software
where the user can generate order file in a specific format outside the trading
system and upload the file in the system by invoking this facility. The user has to
specify the exact file location that can be a hard disk drive or a floppy drive. The
status of the orders so uploaded is recorded in last two fields of the same file. Once
the order processing is complete, the user can open the same file in MS-DOS
editor. If the system assigns an order number, the same is written against the
record. In case of any error(s), the corresponding error code is written against the
record.
The user has to specify the relevant order file name in the Offline Order Entry
pop-up box and then initiate the upload process. The user can also interrupt the
injection of the orders by using the Stop option. It should be noted that the file has
to be in the format as specified by the Exchange. To avoid potential difficulties
faced by the members while creating an order file, a program has been devised by
NSE in FoxPro for Windows to create order records in the specified format.
29
1.10.15.10 Branch Order Value Limit Setup
The purpose of this screen is to enable corporate manager to setup a limit on order
entry for each branch under the trading member firm. This option in
supplementary menu is available to the user only if the user is a corporate manager.
On selection, the Branch Order Value Limit Setup screen appears. To view the
limit for a particular branch, the user has to select the Branch Id and the details for
the branch i.e. branch name, the limit set and the used up value are displayed. The
values for the branch order limit are displayed in Rs. lakh.
To change the limit for a branch, the user has to select the `Limited. option and
enter the new limit in the .New Limit Value.. The new limits are then updated by
the system.
The corporate manager can also authorize a branch with unlimited order entry by
clicking on .Unlimited.. The user can also print the details of a branch by selecting
the Print option. Viewing and Modification is possible during market hours.
Whenever the corporate manager modifies the branch order limit of any of his
branches, the branch manager receives a message to that effect at his trader
workstation.
Example 1: The branch order value limit set on 15th January for branch A is Rs.110
lakh. A dealer has entered orders worth Rs.80 lakh from branch A, of which Rs.50
lakh got traded. Of the remaining orders, Rs.10 lakh worth are GTC orders. The
dealer has cancelled orders worth Rs.10 lakh which are not GTC orders. What will
be the branch order value limit available on 16th January, the next trading day?
Branch Order Value on 16th Jan. = Branch order value on 15th Jan. - GTC orders
= 110 -10 = Rs. 100 lakh
1.10.15.11 User Order Value Limit
In addition to Branch Order Value Limit functionality User Order Value Limit is
incorporated in the new version. User order value limit is the cumulative value of
orders placed by the user during the day across all securities. This enables the
corporate manager to set up different limits among the users depending upon the
permitted user activity in single/multiple scrips. For a new user the user order value
limit is set as zero by default.
Every order entry will be checked for user order value limit. A user is restricted to
enter orders greater than the order value limit specified by his corporate manager.
In case the user order value limit is exhausted a message .Order
number.........request rejected. Used limit cannot exceed the user order value limit..
is displayed on the message window screen.
Following are the main features of user order value limit functionality:
a) Only a corporate manager is allowed to set up branch order value limit and user
order value limit. A branch manager can also set up user order value limit for the
users under his branch. View access is provided to the branch manager to view the
30
user set limit and used limit for users under his branch. The corporate manager can
also query for order used limit of any branch under the trading member firm.
b) User order value limits are dependent on branch order value limit. It is not
possible for a corporate manager to set only branch order value limit and not assign
any user order value limit. It is mandatory for the corporate manager to configure
user order value limit. The branch manager may also set up the user order value
limit for users under his branch.
c) If a corporate manager sets the branch order value limit as unlimited then the
user order value limit can either be set unlimited or a specified limit. The
cumulative value of user order value limit should not exceed the corresponding
branch order value limit. Also, user order value limit cannot be set as unlimited if
branch order value limit is set as specific value. In case the corporate manager tries
to revise the branch order value limit to a value less than the user order value limit
a message .Cumulative user limit exceeded the branch limit. is displayed on the
branch order value limit screen.
d) When the corporate manager sets up the user order value limit as
specified/unlimited, a message "User order value limit for user no. ..... has been set
to Rs. ...... lakh/unlimited" is displayed on the message window screen of the
corporate manager, respective Branch Manager and the concerned user.
e) The user order value limit can be revised during trading hours.
Example 2: M/s. Agre Financial Services, a trading member on the NSE, has a
branch order value of Rs. 700 lakh for his Chennai branch and Rs. 650 lakh for
Calcutta branch. Chennai branch has two users 'X' and 'Y' with user order value
limits of Rs. 250 lakh and Rs. 300 lakh respectively. Kolkata branch has one user 'Z'
with user order value limit of Rs. 350 lakh. The member applies for a new user at
Chennai. What is the maximum user order value that can be set for the new user?
The maximum User Order Value limit for Chennai is
= Rs. 700 - (Rs. 250 + Rs. 300) = Rs.150 lakh
1.10.15.12 Order Limits
Order limits is a facility to enable the user to specify maximum value per order and
maximum quantity per order that can be entered from the trader workstation. At
the time of order entry and order modification this limit is checked by the system.
Order limits are set by individual users and are provided as safety measure against
any inadvertent error during data entry while entering orders.
For a user logging in for the first time, order limits are specified as unlimited by
default. In case specific value/quantity is to be specified, data has to be entered in
the respective input fields namely .Order Value (in lakh). & .Order Quantity.. In
case unlimited is to be specified, the checkbox allows the user to set .Unlimited. as
his limit.
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The order limits can be modified during market hours. When the user modifies
these limits, a message .Max. Value/Qty for one order has been set to
Rs.......Lakh/....... is displayed on the message window screen. When the user sets
the limit as unlimited, a message .Max. Value/Qty for one order has been set to
unlimited. is displayed on the message window screen. While modifying the values
if either of the input fields is left blank, the dealer gets an error message, either
.Quantity Limit not Entered. or .Value Limit not Entered. respectively. In case the
user tries to modify without entering any new values, a message .Values not
changed. is displayed.
Whenever the user places an order, the order values are validated against these
values to confine the checking to the trader workstation. In case the user enters an
order that exceeds the specified quantity limit, a message .Order quantity entered
exceeds the order limit quantity. is displayed. In case the user enters an order which
exceeds specified order value (order price x order quantity) a message .Order value
exceeds order value limit. is displayed. The quantity check is always done prior to
order value check. Only if both values are not exceeded, the order is sent to the
system for further processing. In case of a market order if the order quantity
exceeds the order quantity limit, the checking is done at the trader workstation
itself as in the case of priced orders. However, for order value check, the check is
performed by the Host.
1.10.15.13 Index Inquiry
Index Inquiry gives information on Previous Close, Open, High, Low and Current
Index values of S&P CNX Nifty at the time of invoking this inquiry screen. This
screen displays information of S&P CNX Nifty as of the time the screen was
invoked on the current trading day. The data displayed is as follows:
- 52 week High
- 52 week Low
- Closing Index
- Opening Index
- High Index
- Low Index
- Current Index
- Net Change
- % Change
At the end of day after market closure the Previous Close field will display current
day's closing index value. The user requires to refresh the details of the screen by
re-invoking the screen.
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1.10.15.14 Order Attribute Selection
The order attribute selection enables user to set default parameters for two fields .
PRO/CLI/WHS and Custodial Participant id fields in the order entry screens. The
selection screen provides a facility whereby users can select or deselect required
options. The PRO/CLI/WHS and custodial participant id options as selected by
the user is available in the order entry screen. In case the user deselects all options
for PRO/CLI/WHS the following error message is returned "Either PRO or CLI
or WHS must be selected.. If a member sets the default option in the
PRO/CLI/WHS field as .PRO., then each time the order entry screen is invoked,
.PRO. will be displayed and .CLI. and .WHS. will not be available to the user for
order entry. If a member selects .PRO. and .CLI., then each time the order entry
screen is invoked, .PRO. and .CLI. will be available and .WHS. will not be available
to the user for order entry. Similarly, if a member selects .NCIT. in the custodial
participant field, only .NCIT. will be displayed on invoking the order entry screen.
If a member selects broker id as default option in the custodial participant field,
then only the broker id will be displayed in the order entry screen.
By default this screen has all the options marked for display in the order entry
screen. Options can be changed during trading hours. However, if a user exits the
NEAT application and logs in again, the required parameters will have to be
selected again for order entry.
1.10.15.15 About
The 'About' window displays the software related version number details and
copyright information.
1.10.15.16 Net Position
An additional functionality is provided to enable user to interactively view his net
position across the securities. The Net Position screen displays Symbol, Series, Buy
Qty, Buy Value, Sell Qty, Sell Value, Gross Value, Net Qty and Net Value. It also
displays mark to market value scrip-wise and total net mark to market value.
1.10.15.17 Client Master Maintenance
This facility allows the user to have a drop down list of client codes at the account
field. The user can add, modify, upload or delete clients.
1.10.15.18 Basket Trading
The purpose of Basket Trading is to provide NEAT users with a facility to create
offline order entry file for a selected portfolio. On inputting the value, the orders
are created for the selected portfolio of securities according to the ratios of their
market capitalisations.
33
An icon has been provided in the Toolbar which can be selected by the mouse to
invoke the functionality.
In the Basket Trading functionality, the User First Selects a Portfolio from combo
box. The Portfolio in the combo box is user defined portfolios (which can be
created or edited from the Security List screen which is an existing functionality).
All Users defined Portfolios are automatically loaded in to the combo box. The
User then allocates an amount to the portfolio by mentioning the amount in the
'Amount' edit box. The amount entered is in lakh and must be less than or equal to
Rs. 3000 lakh. If the amount entered is not sufficient to buy/ sell a complete
basket, a message "Insufficient amount for creating the basket" is displayed. Then,
the User mentions whether he wants to buy or sell the Portfolio by selecting a
choice from BUY/SELL combo box. The User has to mention the name of offline
order file which would be generated. The Output Offline order file is always
generated in the Basket directory of the current selected login drive. If a file with
the given name already exists then it asks for overwriting the old file. A Reverse
File with the same name is also generated in 'R_Basket' directory of the current
login drive. The Reverse File contains reverse order (if user has selected buy then it
contains sell orders and vice-versa). The user can mention order.s duration (IOC or
day) by selecting from a check box. The User can also specify Pro/Cli/Whs orders
by selecting from the combo box. In case of CLI & WHS orders it is compulsory
to mention the account no. in the edit box.
The Participant name can be mentioned. If mentioned it is verified whether it is a
valid participant or not.
The amount mentioned in the 'Amount Edit' Box is divided among the securities
of the portfolio, depending on their current market capitalisation, and the amount
allocated per security is used to calculate the no. of shares to be bought / sold for
that security which is reflected in the offline order file. The no. of shares is
rounded off to the nearest integer. If the basket contains any security whose regular
lot is not one, then the file will need to be corrected by the user to accommodate
shares in tradable lots.
If the portfolio contains a security which is suspended/not eligible in the chosen
market then an error message is displayed on the screen.
All the orders generated through the offline order file are priced at the available
market price.
Qunatity of shares of a particular security in portfolio are calculated as under:
No of Shares of a = Amount * Issued Capital for the security
security in portfolio Current Portfolio Capitalisation
where
Current Portfolio Capitalisation = Summation [Last Traded Price (Previous close
if not traded) * No. of Issued shares]
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In case at the time of generating the basket if any of the constituents are not traded,
the weightage of the security in the basket is determined using the previous close
price. This price may become irrelevant if there has been a corporate action in the
security for the day and the same has not yet been traded before generation of the
file. Similarly, basket facility will not be available for a new listed security till the
time it is traded.
1.10.15.19 Index Trading
The purpose of Index Trading is to provide NEAT users with a facility of buying
and selling of Indexes, in terms of securities that comprises the Index. Currently,
the facility is only for NIFTY securities. The users have to specify the amount, and
other inputs which are sent to the host, and the host generates the orders.
Index trading screen can be invoked from Supplementary menu. The Index
Trading provides users with the choice of gaining with the rise/decline in Index
values either by buying or selling them. The buying and selling of Indices are
simulated by entering orders in securities in proportion to the composition of the
chosen index.
Quantity of shares of a particular security of NIFTY is calculated as under:
No. of Shares of a = Amount * Issued Capital for the security
security in index Current Market Capitalisation of the Index
where
Current Market Capitalisation = Summation [Last Traded Price (Previous close if
of the Index not traded) * No. of Issued Shares]
1.10.15.20 Buy Back Trades
The purpose of Buy Back Trade functionality is to give information to the market
about the buy back trades so far occurred in the securities whose buyback period is
currently on. It provides information about Symbol, Series, Day's high price, Day's
Low Price, Day.s Weighted Average Price, Day.s Volume, Total Volume,
Highest/Lowest/Weighted Average Prices till previous day, Buy Back Start & End
date.
The Buyback Trade functionality provides users with the information about the
buyback trades going in various securities. The front screen shows Symbol, Series,
Low price (Today), High price (Today), Weightage. Average price, Volume
(Today), and Previous day Volume.
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1.11 Order Management
Order Management consists of entering orders, order modification, order
cancellation and order matching.
1.11.1 Entering Orders
The trading member can enter orders in the normal market and auction market. A
user can place orders in any of the above mentioned markets by invoking the
respective order entry screens. After doing so, the system automatically picks up
information from the last invoked screen (e.g. Market Watch/MBP/OO/SQ and
Security List). When the user invokes the order entry screen, the fields that get
defaulted are Symbol, Series and Book Type.
In case of other fields, the system takes the following defaults:
Qty : Regular lot quantity available at best price on counter side
Price : Price of best counter order
Pro : Trading member ID of the user
Order Duration : Day
Disclosed quantity : Fully Disclosed
Participant ID : Trading member ID of the user
Order Condition Matrix: The following attribute combinations can be specified
jointly in the order entry screen:
DQ MF AON SL IOC DAY GTC GTD
DQ N/A Y N N N Y Y Y
MF Y N/A N Y Y Y Y Y
AON N N N/A Y Y Y Y Y
SL N Y Y N/A Y Y Y Y
IOC N Y Y Y N/A N/A N/A N/A
DAY Y Y Y Y N/A N/A N N
GTC Y Y Y Y N/A N N/A N
GTD Y Y Y Y N/A N N N/A
where Y = Valid Combination
N = Invalid Combination
N/A = Not Applicable
Active & Passive Orders: When any order enters the trading system, it is an active
order. It tries to find a match on the other side of the books. If it finds a match, a
trade is generated. If it does not find a match, the order becomes a passive order
and goes and sits in the order book.
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1.11.1.1 Order Books
As and when valid orders are entered or received by the trading system, they are
first numbered, time stamped and then scanned for a potential match. This means
that each 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 the books as per the price/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 is entered, the order that is entered first gets the
higher priority. Best price for a sell order is the lowest price and for a buy order, it
is the highest price.
The different order books in the Capital Market segment are as detailed below:
(a) Regular Lot Book: An order that has no special condition associated with it is a
Regular Lot order. When a dealer places this order, the system looks for a
corresponding Regular Lot or Special Term order existing in that market
(Passive orders). If it does not find a match at the time it enters the system, the
order is stacked in the Regular Lot book as a passive order. By default, the
Regular Lot book appears in the order entry screen in the normal market.
(b) Special Terms Book: Orders which have a special term attribute attached to it are
known as special terms orders. When a special term order enters the system, it
scans the orders existing in the Regular Lot book as well as Special Terms
Book.
(c) Stop Loss Book: Stop Loss orders are released into the market when the last
traded price for that security in the normal market reaches or surpasses the
trigger price. Before triggering, the order does not participate in matching and
the order cannot get traded. Untriggered stop loss orders are stacked in the
stop loss book. The stop loss orders can be either a market order or a limit
price order. For buy SL orders, the trigger price has to be less than or equal to
the limit price. Similarly, for sell SL orders, the trigger price has to be greater
than or equal to the limit price.
(d) Negotiated Trade Book: Two trading members can negotiate a trade outside the
Exchange. To regularise the trade each trading member has to enter the
respective order in the system. To enter Negotiated Trade order details, select
book type as NT. It is mandatory for the trading member to enter the
counterparty trading member id. When both parties to a trade enter orders,
then the request goes to the Exchange for approval. The Exchange can either
approve the request or reject it. Further, the Exchange has the discretion to
send either of the two orders or both the orders to the Regular Lot book so
that the orders are available to the entire market.
(e) Auction Order Book: Auction order book stores orders entered by the trading
members to participate in the Exchange initiated auctions. Auction orders can
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be initiator orders, competitor orders and solicitor orders. For further details
kindly refer to section on 'Auction'.
1.11.1.2 Symbol & Series
Securities can be defaulted to the order entry screen from any of the inquiry screens
such as MBP, OO, PT, AL, MI and SQ. In case the security is not set up in the
Market Watch screen, the Security List can also be used to default the codes.
Order entry in a security is not possible if that security is suspended from trading.
E.g. If a security is suspended in the normal market a message .Security is
suspended in the normal market. is displayed on the order entry screen. The label
.Suspended. is also displayed in the market watch screen for the setup security.
Order entry is also not possible in case the security is not eligible to trade in a
particular market. E.g. If a security is not eligible to trade in the normal market a
message .Security is not allowed to trade in normal market. is displayed on the
order entry screen. In case the user types the symbol series incorrectly a message
.Invalid symbol series. is displayed on the screen.
1.11.1.3 Quantity
When the buy/sell order entry screen is invoked, the regular lot size available at the
best price on the counter side gets defaulted in the order entry screen. In case of
negotiated trade or auction book is selected for display, the quantity has to be
specifically mentioned by the user. Quantity mentioned should be in multiples of
regular lot size for that security.
1.11.1.4 Price
A user has the option to either enter the order at the default price or overwrite it
with any other desired price. If a user mentions a price, it should be in multiples of
the tick size for that particular security and within the day.s minimum/maximum
price range, otherwise the order is not accepted by the system and an order
rejection message/confirmation slip is generated. If a price outside the Operational
Range is entered, the order results in a price freeze and is not accepted as a valid
order till the time the Exchange approves it. All negotiated trade orders and auction
orders require the user to mention a price.
In case the user enters an order with a .Market. price the order takes the last traded
price in the respective market as the market price, provided no passive order exists
on the same side or the counter side in that security and in that market. However, if
suitable orders exist on the counter side, then the order takes the price of the
counter order and a trade is generated. If an order exists on the same side but no
orders exists on the counter side, then the order takes the price of the best order on
that side and is stacked immediately below it. If the security has never been traded,
38
then the market order takes the value of the base price and sits in the books as a
passive order.
Another option provided in the pre-open phase of the normal market is .ATO. or
the .At Open Price. concept. .Market. orders entered in the pre-open are termed as
.ATO.. Based on the opening algorithm, the system computes a potential opening
price. Once the market is open for trading, the ATO orders take these prices.
In case of stop loss orders, a user has the flexibility of specifying a limit price along
with the trigger price. This limit price can be selected as equal to the trigger price in
the price field so as to leave it with the word .Price.. Alternatively, a user can
specify a limit price as .Market. price.
1.11.1.5 Order Types and Conditions
The system allows the trading members to enter orders with various conditions
attached to them as per their requirements. These conditions are broadly divided
into Time Conditions, Quantity Conditions, Price Conditions and Other
Conditions. Several combinations of the above are allowed thereby providing
enormous flexibility to the users. The order types and conditions are summarised
below:
a) Time Conditions.
DAY: A DAY order, as the name suggests is an order that 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.
GTC: A Good Till Cancelled (GTC) order remains in the system until it is
cancelled by the user. Consequently, it spans trading days, if not traded on the
day the order is entered. The maximum number of days an order can remain in
the system is notified by the Exchange from time to time after which the order
is automatically cancelled by the system. Each day counted is a calendar day
inclusive of holidays. The days counted are inclusive of the day on which the
order is placed and the order is cancelled from the system at the end of the day
of the expiry period.
Example 3: A trading member placed a GTC buy order of 1000 shares of
TISCO at Rs.150 on 1st of January (Tuesday) when the shares were being
traded at Rs.160. On January 3rd (Thursday), the prices moved between a high-
low of Rs.150 and Rs.145. Can the trade take place on Thursday?
No trade can take place on Thursday since the GTC order would have been
purged on Tuesday itself, due to Tuesday being the end of the trading cycle.
GTD: A Good Till Days (GTD) order allows the user to specify the number of
days/date till which the order should stay in the system if not executed. The
maximum days allowed by the system are same as in GTC order. At the end of
these days/date, the order is cancelled from the system. Each day/date counted
is a calendar day and inclusive of holidays. The days/date counted are inclusive
39
of the day/date on which the order is placed and the order is cancelled from
system at the end of the day/date of the expiry period.
Example 4: A member has placed a buy GTD order on Wednesday, 8th January
in scrip Nirwah Ltd. at a price of Rs.350 for 200 shares, with GTD condition of
6 days. When will the order be unavailable for trading? (Assume that order does
not get traded, cancelled or modified by member. Friday, Saturday and Sunday
are trading holidays).
The order will be available till Monday, 13th January and be unavailable from
14th January.
Example 5: A trading member places a GTD sell order of 1000 shares of ABC
Ltd. at Rs. 150 at the end of the trading session on 1st May (Tuesday). He
wants the order to be valid till 3rd May. The closing price of ABC Ltd. on 1st
May was Rs. 140. Whether the trade will take place?
The trade will not take place because the GTD order will be purged on
Tuesday itself, since it is the end of the trading cycle.
IOC: An Immediate or Cancel (IOC) order allows the user to buy or sell a
security as soon as the order is released into the system, failing which the order
is cancelled from the system. Partial match is possible for the order, and the
unmatched portion of the order is cancelled immediately.
b) Quantity Conditions
DQ: An order with a Disclosed Quantity (DQ) allows the user to disclose only
a portion of the order quantity to the market. For e.g. if the order quantity is
10,000 and the disclosed quantity is 2,000, then only 2,000 is disclosed to the
market. After this quantity is fully matched, a subsequent quantity of 2,000 is
disclosed. Thus, totally five disclosures with the same order number are shown
one after the other in the market.
MF: The Minimum Fill (MF) orders allow the user to specify the minimum
quantity for which an order should be traded. The quantity of trade involving
such an order condition should be at least this minimum quantity specified. E.g.
for a buy order of 10,000 units with a MF of 2,000 units maximum 5 trades is
possible with 2,000 units each or a minimum one trade of 10,000 units. If the
unmatched portion of an order is less than MF specified, the new MF quantity
is the remaining unmatched portion of the order. The minimum fill orders are
kept in special terms book in the system.
AON: All or None (AON) order allows the user to attach condition that the
full order quantity should be traded against. This may be by way of multiple
trades. If the full order is not completely traded, the order becomes a passive
order and is stored in the special terms book until traded or cancelled. E.g.
suppose a buy order of 10,000 shares with an AON condition is released in the
market, and then the trade has to take place for 10,000 shares, all at one time.
40
c) Price Conditions
Market: Market orders are orders for which price is specified as 'MKT' at the
time the order is entered. For such orders, the system determines the price.
Stop-Loss: This facility allows the user to release an order into the system, after
the market price of the security reaches or crosses a threshold price called
trigger price.
Example 6: If for stop loss buy order, the trigger is Rs.93.00, the limit price is
Rs.95.00 and the market (last traded) price is Rs.90.00, then this order is
released into the system once the market price reaches or exceeds Rs.93.00.
This order is added to the regular lot book with time of triggering as the time
stamp, as a limit order of Rs.95.00.
All stop loss orders are kept in a separate book (stop loss book) in the system
until they are triggered.
Trigger Price: Price at which an order gets triggered from the stop loss book.
Limit Price: Price of the orders after triggering from stop loss book.
At Opening Price (ATO): ATO price is the price arrived at by the system at the
end of pre-open phase.
Price Freeze: Since no price bands are applicable in respect of securities on which
derivative products are available or securities included in indices on which
derivative products are available, in order to prevent members from entering
orders at non-genuine prices in such securities, the exchange has decided to
introduce operating range of 20% for such securities. Any order above or
below 20% over the base price shall come to the exchange as a price freeze.
d) Other Conditions
PRO/CLI/WHS: A user can enter orders on his own account or on behalf of
clients or warehouse order on behalf of institutional clients. By default, the
system assumes that the user is entering orders on the trading member.s own
account.
The client account field is an alphanumeric field. It is not mandatory to enter
the client account number in the field provided. The system will assign a code
.Cli. to such an order. The user cannot specify the trading member code in the
client account field. Warehouse orders may be entered only in NM for book
type RL. In case a member tries to enter a warehouse order in other segments,
an error message .Invalid series for warehouse order. is displayed. To enter a
warehouse order with client account, in the Pro field select WHS and enter the
client account in the client account field. The client account field is an
alphanumeric field and does not accept client code same as trading member
code. In such a case an error message .Broker code not allowed as A/C No.
for WHS orders. is displayed.
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Counterparty ID: In case a negotiated trade order is entered, the system
requests the user to enter the counterparty trading member id which is to be
obtained by the user from the counter party itself.
Participant Code: By default, the system displays the trading member id of the
user in the participant field. Thus, all trades resulting from an order are to be
settled by that trading member. NCIT orders can be marked by the user at the
order entry level itself. Only a valid participant code can be entered. In case the
participant is suspended a message to this effect is displayed to the user on the
order entry screen.
The user can also mark his orders at the order entry screen to disclose his open
or close orders. In the participant field, .O. has to be typed, for .Open. orders
and .C. has to be typed for .Close. orders. Warehousing is permitted where
registered custodian is involved for delivery/receipt of securities. The user has
to therefore enter a valid participant code other than .O., .C., .NCIT. and
broker code in the participant code field. In case of incorrect participant code a
message .This participant code is not valid for warehouse orders. is displayed.
All pending warehousing orders get purged at the end of the day processing.
Example 7: A trading member has placed a sell order of 700 shares in SBIN,
with 'O' in participant code field, on behalf of client A without having physical
possession of shares or squaring up of an earlier purchase. Afterwards on the
same trading day, he buys 700 shares in SBIN for client B without an intention
of taking delivery. He buys 700 shares for client C with an intention of taking
delivery. Now he wants to buy the same number of shares for client A to offset
client A's open position. What does the member have to enter in the participant
code field in the buy order entry screen?
C for 'Close'
Remarks: The remarks field is a description field within the order entry screen
provided to incorporate any remarks to be specified by the user at the time of
order entry.
Branch Order Value Limit Check: In addition to the checks performed for the
fields explained above, every order entry is checked for the branch order value
limit. In case the set order value limit is exhausted the subsequent order is
rejected by the system.
1.11.2 Order Modification
All orders can be modified in the system till the time they do not get fully traded
and only during market hours. Once an order is modified, the branch order value
limit for the branch gets adjusted automatically.
Following is the corporate hierarchy for performing order modification
functionality: -
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� A dealer can modify only the orders entered by him.
� A branch manager can modify his own orders or orders of any dealer under his
branch.
� A corporate manager can modify his own orders or orders of all dealers and
branch managers of the trading member firm.
However, the corporate manager/branch manager cannot modify order details
such that it exceeds the branch order value limit set for the day. Order modification
cannot be performed by/for a trading member who is suspended or de-activated
by the Exchange for any reason.
Quantity Modification: If a security is not allowed to trade in a particular market then
the orders existing under all the securities within that market type are not allowed
to be modified. If MF/AON condition is (are) not allowed for a security, then the
user cannot modify orders in that security so as to attach the MF/AON condition.
A user cannot modify an order to a quantity less than the specified Regular Lot and
multiples of regular lot.
In case the order is modified to a very high quantity, the modification may result in
a quantity freeze and the order may not be accepted as a valid order unless the
Exchange approves. Orders cannot be modified to a quantity greater than the
issued capital for the security.
Disclosed quantity orders cannot be modified to such a quantity where the DQ is
greater than the order quantity. Further, a DQ order with a value less than one
regular lot or a value other than multiples of regular lot is not permitted.
MF orders cannot be modified to a MF quantity greater than the order quantity. If
the order also has a DQ condition attached, then the user cannot modify the MF
quantity to a value greater than DQ. Additionally, the MF quantity cannot be
modified to a value less than one regular lot or non-multiples of regular lot.
1.11.3 Order Cancellation
Order cancellation functionality can be performed only for orders which have not
been fully or partially traded (for the untraded part of partially traded orders only)
and only during market hours.
1.11.3.1 Single Order Cancellation
Single order cancellation can be done during trading hours either by selecting the
order from the outstanding order screen or from the function key provided. Order
cancellation functionality is available for all book types. But the user is not allowed
to cancel auction initiation and competitor orders in auction market. Order
cancellation is also not allowed for those negotiated trade orders that have not
resulted as an alert.
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1.11.3.2 Quick Order Cancellation
Quick Order Cancellation (Cancel All) is an extension of Single Order Cancellation
enabling a user to cancel multiple outstanding orders in various trading books in
the following manner subject to the corporate hierarchy. The different filters
available for cancelling orders by using quick order cancellation facility are symbol,
series, book type, branch, user, PRO/CLI/WHS, client account number and
buy/sell. Quick order cancellation can be performed by invoking the function key
provided and cannot be done from the outstanding orders screen. If the criteria are
not found to be correct by a trading member then an error message is displayed
and the focus is set on the incorrect field to enable the user to correct it. If the
selection criteria are correct then a message appears on the quick order cancellation
screen stating the number of buy and sell orders to be cancelled. Quick order
cancellation can be done only during market hours.
1.11.3.3 Order Cancellation for Disabled Member
The Exchange disables a member from trading due to various reasons. In case a
member is disabled from trading by the Exchange, all pending orders in all books
except for Negotiated Trade orders of the member are immediately cancelled by
the system. A message:
.Order Number .......... cancelled due to suspension.
is displayed at the message window screen at the trader workstation. Inquiry
screens such as MBO, MBP, Market Watch and trader specific screens such as
Outstanding Orders, Activity Log etc. get updated accordingly.
1.11.4 Order Matching
The buy and sell orders are matched on Book Type, Symbol, Series, Quantity and
Price.
1.11.4.1 Matching Priority
The best sell order is the order with the lowest price and a best buy order is the
order with the highest price. The unmatched orders are queued in the system by
the following priority:
(a) By Price: A buy order with a higher price gets a higher priority and similarly, a
sell order with a lower price gets a higher priority. E.g. Consider the following buy
orders:
1) 100 shares @ Rs. 35 at time 9:30 a.m.
2) 500 shares @ Rs. 35.05 at time 9:43 a.m.
The second order price is greater than the first order price and therefore is the best
buy order.
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(b) By Time: If there is more than one order at the same price, the order entered
earlier gets a higher priority. E.g. Consider the following sell orders:
1) 200 shares @ Rs. 72.75 at time 9:30 a.m.
2) 300 shares @ Rs. 72.75 at time 9:35 a.m.
Both orders have the same price but they were entered in the system at different
time. The first order was entered before the second order and therefore is the best
sell order.
As and when valid orders are entered or received by the system, they are first
numbered, time stamped and then scanned for a potential match. This means that
each 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 the books as per the price/time priority.
An active buy order matches with the best passive sell order if the price of the
passive sell order is less than or equal to the price of the active buy order. Similarly,
an active sell order matches with the best passive buy order if the price of the
passive buy order is greater than or equal to the price of the active sell order.
1.11.4.2 Open Phase Matching
During this phase, orders are matched on a continuous basis in all book types. The
orders are arranged in the price/time priority. If there are more than one order of
the same security on the opposite side of the market, the order matches with best
order on the opposite side if the best buy price is greater than or equal to the best
sell price. Whenever a trade takes place, it takes place at the passive order price.
1.11.4.3 Regular Lot Matching
If the combined quantity of one or more matching orders on the opposite side of
the regular lot book is equal to or more than the quantity of active order, the active
order is completely traded.
If the combined quantity of one or more matching orders on the opposite side of
the regular lot book is equal to or less than the quantity of active order, the active
order is partially traded.
If after trading any quantity is left untraded, the order is added to the regular lot
book in the price/time priority.
The orders with the IOC attribute try to match maximum possible quantity after
they are entered. Any remaining quantity is cancelled.
The orders with DQ attribute disclose only a part of the total order quantity to the
market.
An active order with disclosed condition tries to maximise the quantity as possible
regardless of the disclosed quantity i.e. a single trade takes place for a quantity more
than the disclosed quantity.
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If an active order with the disclosed quantity cannot trade its total quantity, it is
added to the regular lot book in the price/time priority. The disclosed order
quantity is determined as follows:
a) If the remaining order quantity is less than or equal to the original disclosed
quantity, the disclosed order quantity is set as equal to remaining order quantity.
b) If the remaining order quantity is more than the original disclosed quantity, the
disclosed order quantity is set to the original disclosed quantity.
Once an order with the disclosed quantity has become a passive order, it trades
only in units of disclosed quantity or less. However, if there is no other competing
order with the same price, a single trade of as much quantity as possible takes place
between the two orders.
When the entire disclosed order quantity is fully traded the disclosed quantity gets
replenished and this continues till the entire order quantity is fully traded. Each
time the disclosed quantity is replenished, the order is re-time stamped and added
to the regular order book as fresh order.
1.11.4.4 Special Terms Matching
(a) Minimum Fill (MF). An active special term order with MF attribute may match
with one or more passive orders so long as each match is for quantity equal to or
greater than the MF quantity. The order quantity retains its MF attribute and is
added to the special terms book. If the remaining order quantity is less than the
MF quantity, the order is added to the special terms book with MF quantity as the
remaining quantity.
A passive special terms order with MF attribute matches with an active order for as
much quantity as possible such that the quantity is equal to or greater the MF
quantity. If the remaining order quantity is less than the MF quantity, the order is
placed with MF quantity as the remaining quantity.
For special terms order that has both MF and DQ attribute, the MF should be less
than the DQ. An active order with DQ and MF attribute tries to maximise the
trade quantity as much as possible as long as each trade quantity is greater than or
equal to the MF quantity regardless of the disclosed quantity.
A passive order is added to the special terms book while retaining both its DQ and
MF attribute i.e. this order is shown in the special terms book as an order with a
quantity equal to the disclosed quantity having the MF attribute.
The disclosed quantity of a passive order is replenished when the remaining
disclosed quantity becomes less than the MF quantity. Each time the disclosed
quantity is replenished, the order is removed from its current position and re-time
stamped.
(b) All Or None (AON). These orders need to be completely filled in one
transaction or they do not match at all. An active AON order may trade with one
or more than one regular lot order resulting in multiple trades. However a passive
46
AON order has to be completely filled by one incoming active order for a trade to
take place.
After completely scanning the regular lot book for matches, if an active AON order
cannot match fully in the regular lot book, it is sent to the special terms book. The
active special term order matches with the passive orders in the special terms book
if matching of special terms orders with other special terms orders.
1.11.4.5 Stop Loss Matching
All stop loss orders entered into the system are stored in the stop loss book. These
orders can contain two prices.
Trigger Price. It is the price at which the order gets triggered from the stop loss book.
Limit Price. It is the price for orders after the orders get triggered from the stop loss
book.
If the limit price is not specified, the trigger price is taken as the limit price for the
order. The stop loss orders are prioritised in the stop loss book with the most likely
order to trigger first and the least likely to trigger last. The priority is same as that of
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.
When a stop loss order with IOC condition enters the system, the order is released
in the market after it is triggered. Once triggered, the order scans the counter order
book for a suitable match to result in a trade or else is cancelled by the system.
1.11.4.6 Negotiated Trade Matching
The negotiated trade entries are matched on the basis of the counterparty trading
member id entered at the time of the order entry. If the counter side entry of the
negotiated trade is not entered on the same day, then this trade entry is cancelled.
All the terms attached to a negotiated trade entry must be identical to the
corresponding entry made by the counterparty. The orders in the NT book can be
modified/cancelled till the time such alert is not created. All negotiated trades
require Exchange approval.
1.11.4.9 Auction Matching
All auction orders are entered into the auction order book. The rules for matching
of auctions are similar to that of the regular lot book except for the following
points:-
a) Auction order matching takes place at the end of the solicitor period for the
auction.
47
b) Auction matching takes place only across orders belonging to the same auction.
c) All auction trades take place at the auction price.
1.11.4.10 Validation Checks
While matching orders, the system performs following validation checks:
a) If the turnover limit of any trading member has already exceeded, a trade does
not take place.
b) If the participant of any of the orders is 'Suspended', the trade does not go
through.
1.12 Trade Management
A trade is an activity in which a buy and a sell order match with each other.
Matching of two orders is done automatically by the system. Whenever a trade
takes place, the system sends a trade confirmation message to each of the users
involved in the trade. The trade confirmation slip gets printed at the trader
workstation of the user with a unique trade number. The system also broadcasts a
message to the entire market through the ticker window displaying the details of
the trade.
This section describes trade-related activities like viewing the trades, trade
modification/cancellation, etc. Before the trade is effected, the system performs
checks with respect to the following parameters: -
a) The security in which the trade is to be effected is not suspended from
operations.
b) Trading members involved in the potential trade are not suspended from
operations.
c) Turnover limits for the trading members involved are not exceeded.
1.12.1 Trade Modification
The user can use trade modification facility to request for modifying trades done
during the day. The user can request the Exchange to modify only the trade
quantity field. Moreover, the new quantity requested must be lower than the
original trade quantity.
If the user is a Corporate Manager of a trading member firm, he can request for
trade modification for the trades of any dealer of the trading members firm and if
he is a Branch Manager of a branch, then he can request for trade modification for
any dealer of the branch of the trading member firm.
The user can request for trade modification either from the previous trades screen
or by using the function key provided in the workstation. Trade Modification
Request is sent to the Exchange for approval and message to that effect is
displayed in the message window. The counterparty to the trade also receives this
48
message. The counterparty then has to make a similar request for the same
modified quantity on the same trading day. Once both the parties to trade send
their respective trade modification requests, the Exchange either approves or
rejects it. The message to that effect is displayed in the message window.
In case a request for trade modification is approved by the Exchange, the parties to
trade receive a system message confirming the trade modification and the trade
modification slip is printed at their respective trader workstations. If the Exchange
rejects the trade modification request, the trade modification rejection slip will be
printed at their respective trader workstations.
1.12.2 Trade Cancellation
The user can use trade cancellation screen for cancelling trades done during the
day. If the user is a corporate manager of a trading member firm, he can request for
trade cancellation for the trades of any dealer of the trading members firm and if he
is a branch manager of a branch, then he can request for trade cancellation for the
trades for any dealer of the branch of the trading member firm.
The user can request for trade cancellation either from the previous trades screen
or by using the function key provided in the workstation. The trade cancellation
request is sent to the Exchange for approval and message to that effect is displayed
in the message window. The counterparty to the trade also receives the message.
The counterparty then has to make similar request on the same trading day. Once
both the parties to trade send the trade cancellation request, the Exchange either
approves or rejects it. The message to that effect is displayed in the message
window.
When a request for the trade cancellation is approved by the Exchange, the parties
to trade receive a system message confirming the trade cancellation and the trade
cancellation slip is printed at their respective trader workstations. If the Exchange
rejects the trade cancellation request, the trade cancellation rejection slip is printed
at their respective trader workstations.
1.13 Auction
Auctions are initiated by the Exchange on behalf of trading members for
settlement related reasons. The main reasons are Shortages, Bad Deliveries and
Objections. There are three types of participants in the auction market.
(a) Initiator: The party who initiates the auction process is called an initiator.
(b) Competitor: The party who enters on the same side as of the initiator is called
a competitor.
(c) Solicitor: The party who enters on the opposite side as of the initiator is called
a solicitor.
49
The trading members can participate in the Exchange initiated auctions by entering
orders as a solicitor. E.g. If the Exchange conducts a Buy-In auction, the trading
members entering sell orders are called solicitors.
When the auction starts, the competitor period for that auction also starts.
Competitor period is the period during which competitor order entries are allowed.
Competitor orders are the orders which compete with the initiator.s order i.e. if the
initiator.s order is a buy order, then all the buy orders for that auction other than
the initiator.s order are competitor orders. And if the initiator order is a sell order
then all the sell orders for that auction other than the initiators order are
competitor orders.
After the competitor period ends, the solicitor period for that auction starts.
Solicitor period is the period during which solicitor order entries are allowed.
Solicitor orders are the orders which are opposite to the initiator order i.e. if the
initiator order is a buy order, then all the sell orders for that auction are solicitor
orders and if the initiator order is a sell order, then all the buy orders for that
auction are solicitor orders.
After the solicitor period, order matching takes place. The system calculates trading
price for the auction and all possible trades for the auction are generated at the
calculated trading price. After this the auction is said to be complete. Competitor
period and solicitor period for any auction are set by the Exchange.
1.13.1 Entering Auction Orders
Auction order entry allows the user to enter orders into auctions that are currently
running. To view the information about currently running auctions invoke .Auction
Inquiry. screen. The user can also view order information related to any auction by
invoking .MBO. for that auction.
Further one can view one's own outstanding orders for any auction by invoking
.Outstanding Order Inquiry. for auction market. Refer to .MBO. and .Outstanding
Order Inquiry. sections for more details. All auction orders are valid for the trading
day only.
The user can do auction order entry by entering .AU. in the book type of the order
entry screen. Symbol and Series that is currently selected in any of the market
information windows (i.e. MBO, MW) provides the defaults in the auction order
entry screen. If Auction OO or Auction MBO is up for an auction that is either in
a competitor or solicitor period, then the auction number has to be entered. All
fields in the auction order entry screen except auction number and settlement days
are same as normal market order entry screen. The screen also displays competitor
period and solicitor period.
The defaults that are provided on the auction inquiry screen are symbol, series,
auction number, settlement days and quantity (available for auction). The user can
edit the default values if required. The fields in the auction order entry screen that
50
has to be entered are PRO/CLI selection, account number (not mandatory),
participant and remarks.
Solicitor period for an auction starts as soon as the auction starts. The duration of
the solicitor period is set by the Exchange. The system accepts the solicitor orders
in any currently running auction only if the solicitor period for that auction is in
progress. Presently the trading members cannot initiate auctions in any security.
They can only participate as solicitors in auctions initiated by the Exchange. In
Exchange initiated auctions, the competitor period is set to zero and therefore only
solicitor period is available.
Entering Solicitor Order: To enter a solicitor order invoke auction order entry
screen and enter the auction number or symbol series in AUC NO. field. The AUC
No. and symbol series combination is validated and if an error is encountered then
an appropriate error message is displayed in the message window and the focus is
set on the AUC No. When the order details are found to be correct, the system
assigns a unique order number to the order and sends an order confirmation
message to the trader workstation. If the solicitor period for that auction is over,
the order is not accepted. Auction number for each security is displayed in the
Auction Inquiry screen.
Validation of Auction Orders: Following validation checks are performed, in
addition to the routine order entry validation checks, to verify initiator orders.
� If the auction market is not open for trading, the user is not allowed to enter an
auction order.
� If a trading member or a participant is suspended, then no auctions can be
entered for the trading member or for the participant.
� If the security is not allowed to trade in the auction market or if the security is
suspended, the orders for that security are not allowed.
� If the quantity entered exceeds Warning Quantity Percentage, the system asks
the user for confirmation of the order.
� Any order with a price outside the Day Min/Max range is not allowed.
Following validation checks are performed to verify the competitor and the
solicitor orders: -
� If a competitor order is entered, then a check is made if the auction in which
order entry is desired is in the competitor period.
� If a solicitor order is entered, then a check is made if the auction in which order
entry is desired is either in competitor period or solicitor period.
� Auction order entry in auctions which are yet in a pending state or which are
cancelled is prohibited.
1.13.2 Auction Order Modification
The user is not allowed to modify any auction orders.
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1.13.3 Auction Order Cancellation
The user can cancel any solicitor order placed by him in any auction provided the
solicitor period for that auction is not over. The order cancellation procedure is
similar to that of normal market. The user can also use quick order cancellation key
to cancel his outstanding auction orders.
1.13.4 Auction Order Matching
When the solicitor period for an auction is over, auction order matching starts for
that auction. During this process, the system calculates the trading price for the
auction based on the initiator order and the orders entered during the competitor
and the solicitor period. At present for Exchange initiated auctions, the matching
takes place at the respective solicitor order prices.
Example 8: Member A places a buy order for 1000 shares of ABC Ltd. in the
NEAT system at 11:22:01 for Rs.155 per share. Member B places a sell order for
2000 shares of ABC Ltd. at 11:22:02 for Rs.150 per share. Assume that no other
orders were available in the system during this time. Whether the trade will take
place and if yes, at what price?
Yes, 1000 shares will get traded at Rs.155 per share (the passive price).
Example 8: Auction is held in TISCO for 5,000 shares.
a) The closing price of TISCO on that day was Rs.155.00
b) The last traded price of TISCO on that day was Rs.150.00
c) The price of TISCO last Friday was Rs.151.00
d) The previous days' close price of TISCO was Rs.160.00
What is the maximum allowable price at which the member can put a sell order in
the auction for TISCO? (assuming that the price band applicable for auction
market is +/-15%)
Max price applicable in auction = Previous days' close price * Price band
=Rs.160*1.15 =Rs.184.00
1.14 Trading Information downloaded to Trading Members
The Exchange downloads certain trading related reports and files to the trading
member on a regular basis. Following is the list of reports and files downloaded to
the members.
On-line Backup: The files are Trade.txt and Order.txt or file with user defined
name. Member can take on-line backup of orders and trades for the current trading
day only. The backup can be taken during market hours and till approximately 1
hour after the market close time. Refer to section trading for on-line backup screen.
Trader messages in Full message display: Full message area contains
member's own order and trade information across all securities. It is available for
52
current trading day only. An option to save as a text file is also provided. The
trading members are required to keep copy of full message area for a period as per
NSE regulations. Refer to section Full Message Display screen.
Bhav copy: Bhav copy is downloaded in \nsecmtdr\reports directory on a daily
basis. It is downloaded approximately 1 hour after the market close time. Users are
advised to check for message to this effect. The files downloaded are
ddmmxxxx.ms and ddmmxxxx.md where xxxx is the user id. The ms extension file
is formatted txt file whereas the md extension file has bhav copy records in CSV
(comma separated value) format. Only the last seven bhavcopy files are stored in
the reports directory. When bhav copy is broadcast, the system checks for the
number of bhav copy files. If it is seven the system deletes the earliest received file
and stores the current day.s file.
Security Information: The nttdrldb.exe file containing security information is
available to the member on the intranet in the common\ntneat directory. Members
should check for date and size of the file to ensure receipt of latest file. It contains
the updated security list and the latest data on corporate actions in securities. This
file should be inflated by member using nttdrldb -d -o command from the root
directory i.e. c:\. The new nttdrldb.exe file overwrites the previous file.
Circulars: Circulars as and when issued by NSE, are available to members on the
intranet in their respective trading member directory identified by their trading
member id. A message is flashed on the screen when the circular is downloaded.
The circular file is ********.wri where ******** is the department and Circular No.
Order/Trade slips: The order/trade slips are Confirmation/Modification/
Cancellation/Rejection slips. The trade and order slips are generated on-line. E.g.
The trade confirmation is generated when a trade is executed and order slip when a
member places an order. The option at the supplementary menu .Print Trade and
Order confirmation. should be set .ON.. Members can also take print of
confirmation slips at the end of the day from the reprint option in the
supplementary menu. The trading members are required to keep copy of the trade
confirmation slip for a period as per NSE regulations.
Reports: Once the market closes, the details of trading activities done by the user
are generated as trade reports. They are downloaded on the workstation of
Corporate/Branch manager. Downloaded reports are stored at the workstation as
well as sent to the printer. This allows the user to reprint any report any time.
Members can request for reports after the reports are generated by the system and
before the market opens for trading on the next trading day. A separate button
.Report. has been provided on the logon screen for requesting report download.
After reports are generated by the Exchange, a message .Interactive reports can be
taken now. is displayed on the message window in the market watch screen. The
member has to then request for the reports from the logon screen by entering the
user id, trading member id and password and by invoking .Report.. A message
53
.Downloading reports in nsecmtdr\reports directory. Please wait.. is then
displayed. In case of incorrect logon details a message .Invalid sign on. is
displayed.
The x25 address check is also performed by the system for report download and
therefore, allotted user ids cannot be used interchangeably from any other location
apart from the specified location. In case a user attempts to request for reports
from a location other than that specified to the user id a message .You are trying to
sign on from a different location. Sign on is not allowed.. is displayed at the logon
screen.
At the exact time of receipt of reports a pop up box stating the report name and its
receipt status appears. Check for the user id and the report receipt status for all the
three reports. A message .Report downloaded successfully. is displayed. The
reports are downloaded in NSECMTDR\REPORTS directory for the given
trading day and user id. Members can also view their reports in MSDOS editor.
The printer must be kept on-line at the time of report request for printing reports.
Reports can also printed later by invoking report requester. If a user attempts to
request for reports during market hours a message .Connection to the system
cannot be established. Report process may not be up on the host. is displayed.
reports are downloaded on request only from corporate manager and branch
manager. Reports are available as a spool file (printable format) and also as a data
file (comma delimited format). The corporate manager receives reports with
extension coo, col, ctd (printable format) and cod, cld, ctt (comma delimited
format). These reports contain branch-wise details of trades and orders of all
branches of the trading member and further, for all dealers of the firm. The branch
manager receives reports with extension boo, bol, btd (printable format) and bod,
bld, btt (comma delimited format). These reports contain dealer-wise details of
trades and orders for all dealers placed under that branch. The dealers are users at
the lower most level of the hierarchy. They do not have access to information on
other dealers, on the same branch or other branches of the same firm and
therefore, do not receive any reports. In case an inquiry user or dealer requests for
report download, a message .Only Corporate and Branch Managers are allowed to
request for reports. is displayed.
To ensure problem free download of reports, do not open any other application
besides NEAT trading system during download. It is also not advisable to change
password during the end of the day operations.
The following reports are available at the trader workstation:
Open Orders today: The purpose of this report is to show the pending orders
that can take part in trading when the market opens on the next trading day. This
report gives details for all dealers belonging to the trading member that are
currently outstanding or unmatched orders. In practice this means only valid,
unexpired GTC and GTD orders.
54
This report is available to the user as a spool file (formatted report) and also as data
file. The spool file nomenclature is given below:
X X X X X X X X . X X X
DD MM User Id C/B OO
DD MM Date and Month
User Id User Id of the User
C Corporate Manager
B Branch Manager
OO Open Orders Today
The Ascii file format is shown below:
Trading Member id
Branch Id
Dealer Id
Market Type
Order Number
Buy/Sell Indicator
Symbol
Series
Order Quantity
Disclosed Quantity
MF/AON Indicator
MF Quantity
Price
Trigger Price
Pro/Cli/Whs Indicator
Client Account Code
Balance Quantity
Terms
GTD Days
Participant Code
Order Time
The report is also available as a data file (comma delimited format) with extension
as cod/bod. The comma delimited file nomenclature is the same as the spool file
with each field being separated by a comma. This file can be viewed in MSDOS
editor.
Order Log: The purpose of this report is to give the activity log of the orders for
the dealers belonging to a trading member. This report shows Orders placed today,
orders modified today, orders cancelled and orders deleted by the system.
This report shows the activity log for the orders of a trading member. It shows the
details of the orders which are entered today, modified today, canceled by the
dealer today, deleted by the system (Expired DAY, GTD/GTC orders). For order
modification, the modified order details are shown for each modification done.
55
This report is available to the user as a spool file (formatted report) and also as data
file. The spool file nomenclature is given below:
X X X X X X X X . X X X
DD MM User Id C/B OL
DD MM Date and Month
User Id User Id of the User
C Corporate Manager
B Branch Manager
OL Order Log
The Ascii file format is shown below:
Trading Member id
Branch Id
Dealer Id
Market Type
Order Number
Buy/Sell Indicator
Symbol
Series
Order Quantity
Disclosed Quantity
MF/AON Indicator
MF Quantity
Price
Trigger Price
Traded Quantity
Pro/Cli/Whs Indicator
Client Account Code
Balance Quantity
Terms
GTD Days
Participant Code
Order Time
Activity Type
Trade Number
Trade Date
Trade Time
The report is also available as a data file (comma delimited format) with extension
as cld/bld. The comma delimited file nomenclature is the same as the spool file
with each field being separated by a comma. This file can be viewed in MSDOS
editor.
56
Trades Done Today: The purpose of this report is to show the details of the
trading activity by the trading member. This report gives details of trades done
today for all dealers belonging to the trading member firm. The report has details
for all the types of trades i.e. normal market trade and auction trade.
This report is available to the user as a spool file (Formatted report) and also as
data file. The spool file nomenclature is given below:
X X X X X X X X . X X X
DD MM User Id C/B TD
DD MM Date and Month
User Id User Id of the User
C Corporate Manager
B Branch Manager
TD Trades Done Today
The Ascii file format is shown below:
Trading Member Id
Branch Id
Dealer Id
Market Type
Trade Number
Order Number
Buy/Sell Indicator
Symbol
Series
Traded Quantity
Trade Price
Trade Value
Client Account Code
Participant Code
Trade Time
Trade Date
Activity
The report is also available as a data file (comma delimited format) with extension
as ctt/btt. The comma delimited file nomenclature is the same as the spool file with
each field being separated by a comma. This file can be viewed in MSDos editor.
The first three reports i.e. Open Orders, Activity Log, Trades Done Today are
downloaded for corporate managers and branch managers only.
Market Statistics Report: The purpose of this report is to show the market
statistics of that trading day. This report gives details related to all the securities
traded on that day. Information regarding the Open, High, Low, Close, Previous
Close and % change over the Previous Close of S&P CNX Nifty index and CNX
Nifty Junior index is also provided.
57
This report is available to the user as a spool file (Formatted report) and also as
data file. The spool file nomenclature is given below:
X X X X X X X X X X
DD MM User Id MS
DD MM Date and Month
User Id User Id of the User
MS Market Statistics report
The Ascii file format is shown below:
Market type
Symbol
Series
Previous Close
Open
High
Low
Close
Ex Indicators
Net Traded Quantity
Net Traded Value
Previous 52 week High
Previous 52 week Low
The Ex indicators against a security indicates that the scrip is going ex benefit on a
given trading day. The ex indicators are as follows:
XD = Ex Dividend
XB = Ex Bonus
XI = Ex Interest
XR = Ex Rights
XO = Ex indicator for other corporate actions like AGM/EGM/Pref.
shares/Mergers and others.
X* = For multiple corporate actions at the same time.
If on a given trading day a security is traded in segment(s) other than the regular
EQ segment, the market statistics report displays Open, High and Low price as
zero. However, the close price is displayed which is computed on account of such
trades in non EQ segments. The security record in such cases is marked with a ' * '
indicator. The explanation for the same appears at the end of the Market Statistics
report.
The details of the trades effected in the depository segment of the Exchange are
provided separately in the Market Statistics report.
The market statistics is also available as a data file (comma delimited format) with
extension as md. The comma delimited file nomenclature is the same as the spool
58
file with each field being separated by a comma. This file can be viewed in MSDOS
editor.
1.15 Internet Broking
SEBI Committee has approved the use of Internet as an Order Routing System
(ORS) for communicating clients' orders to the exchanges through brokers. ORS
enables investors to place orders with his broker and have control over the
information and quotes and to hit the quote on an on-line basis. Once the broker.s
system receives the order, it checks the authenticity of the client electronically and
then routes the order to the appropriate exchange for execution. On execution of
the order, it is confirmed on real time basis. Investor receives reports on margin
requirement, payments and delivery obligations through the system. His ledger and
portfolio account get updated online.
NSE launched internet trading in early February 2000. It is the first stock exchange
in the country to provide web-based access to investors to trade directly on the
exchange. The orders originating from the PCs of the investors are routed through
the Internet to the trading terminals of the designated brokers with whom they are
connected and further to the exchange for trade execution. Soon after these orders
get matched and result into trades, the investors get confirmation about them on
their PCs through the same internet route.
1.16 Wireless Application Protocol (WAP)
SEBI has also approved trading through wireless medium on WAP Platform.
NSE.IT launched the Wireless Application Protocol (WAP) in November 2000.
This provides access to its order book through the hand held devices, which use
WAP technology. This serves primarily retail investors who are mobile and want to
trade from any place when the market prices for stocks at their choice are
attractive.
Model Questions
1. Which of the following activities the user can carry out during Open phase in the
normal market on the NEAT system?
(a) Inquiry of different screens only.
(b) Order Entry, Order Modification and Order Cancellation only.
(c) Both of the above
(d) None of the above
Ans. (c)
2. What is the purpose of 'Market Statistics' report on the NEAT system?
59
(a) To show the trades that was done by the trading member for the current trading
day.
(b) To show the market movement information for the current trading day.
(c) To show the details related to all the securities traded on a specific day.
(d) There is no report as Market Statistics report.
Ans. (c)
3. x.25 address check is performed in the NEAT system when the user ________.
(a) logs in for the first time in the NEAT system only.
(b) logs in to the NEAT system only.
(c) requests for report download only.
(d) logs in to the NEAT system and during report download request.
Ans. (d)
4. Orders, in the 'Outstanding Orders' screen in the NEAT system, are displayed
________.
(a) on the basis of price/time priority in order of Regular Lot orders first and then
Stop Loss orders
(b) on the basis of time priority
(c) in descending order of order numbers
(d) in ascending order of order numbers
Ans. (a)
5. What is an 'Immediate or cancel' order on the NEAT system?
(a) An order which will only be executed if it is filled immediately and in its entirety.
(b) An order which will automatically be cancelled if it is not filled immediately.
(c) An order which is placed, can be cancelled immediately.
(d) None of the above
Ans. (b)
6. Which of the following is true about trade cancellation in the NEAT system?
(a) The user can use trade cancellation screen for cancelling trades done during the
day.
(b) The user can request for trade cancellation from the previous trades screen.
(c) The counterparty to the trade makes similar request on the same trading day.
(d) All of the above
Ans. (d)
7. Which of the following is false about auctions in the NEAT system?
(a) Auctions are initiated by the Exchange on behalf of trading members for
settlement related reasons.
60
(b) If the Exchange conducts a Buy-In auction, the trading members enter sell
orders as solicitor orders.
(c) If the Exchange conducts a Sell-In auction, the trading members enter buy
orders as solicitor orders.
(d) The trading members can participate in the Exchange initiated auctions by
entering orders as a competitor.
Ans. (d)
8. What is true about internet trades on NSEIL?
(a) NSEIL enables investors to place orders on the NEAT system directly through
the internet.
(b) NSEIL enables investors to use the internet as an order routing system.
(c) NSEIL enables brokers to collect orders through the internet from clients.
(d) NSEIL uses internet in lieu of VSATs for trades in NEAT system.
Ans. (b)
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Chapter .2
Clearing and Settlement
2.1 Introduction
The clearing and settlement mechanism in Indian securities market has witnessed
several innovations during the last decade. These include use of the state-of-art
information technology, compression of settlement cycle, dematerialisation and
electronic transfer of securities, securities lending and borrowing,
professionalisation of trading members, fine-tuned risk management system,
emergence of clearing corporations to assume counterparty risk etc., though many
of these are yet to permeate the whole market.
Till recently, the stock exchanges in India were following a system of account
period settlement for cash market transactions, except for transactions in a few
active securities, which were settled under T+5 rolling settlement. The rolling
settlement has now been introduced for all securities. The stock exchanges were
also offering deferral products to provide leverage to members to postpone their
settlement obligations. The transactions are not settled immediately but after 5 days
after the trade day. The members receive the funds/securities in accordance with
the pay-in/pay-out schedules notified by the respective exchanges. Given the
growing volume of trades and market volatility, the time gap between trading and
settlement gives rise to settlement risk. In recognition of this, the exchanges and
their clearing corporations employ risk management practices to ensure timely
settlement of trades. The regulators have also prescribed elaborate margining and
capital adequacy standards to secure market integrity and protect the interests of
investors. The exchanges not providing counter-party guarantee have been advised
by SEBI to set up trade guarantee funds, which would honour pay-in liabilities in
the event of default by a member. In pursuance to this, 16 out of 23 exchanges
have set up trade/settlement guarantee funds. The trades are settled irrespective of
default by a member and the exchange follows up the defaulting member
subsequently for recovery of his dues to the exchange. The market has full
confidence that settlements will take place in time and will be completed
irrespective of possible default by isolated trading members.
Movement of securities has become almost instantaneous in the dematerialised
environment. Two depositories viz., National Securities Depositories Ltd. (NSDL)
and Central Depositories Services Ltd. (CDSL) provide electronic transfer of
securities and more than 99% of turnover is settled in dematerialised form. All
actively traded scrips are held, traded and settled in demat form. The obligations of
members are downloaded to members/custodians by the clearing agency. The
members/custodians make available the required securities in their pool accounts
62
with depository participants (DPs) by the prescribed pay-in time for securities. The
depository transfers the securities from the pool accounts of members/custodians
to the settlement account of the clearing agency. As per the schedule determined by
the clearing agency, the securities are transferred on the pay-out day by the
depository from the settlement account of the clearing agency to the pool accounts
of members/custodians. The pay-in and pay-out of securities is effected on the
same day for all settlements.
Select banks have been empanelled by clearing agency for electronic transfer of
funds. The members are required to maintain accounts with any of these banks.
The members are informed electronically of their pay-in obligations of funds. The
members make available required funds in their accounts with clearing banks by the
prescribed pay-in day. The clearing agency forwards funds obligations file to
clearing banks which, in turn, debit the accounts of members and credit the
account of the clearing agency. In some cases, the clearing agency runs an
electronic file to debit members. accounts with clearing banks and credit its own
account. As per the schedule of allocation of funds determined by the clearing
agency, the funds are transferred on the pay-out day by the clearing banks from the
account of the clearing agency to the accounts of members. In some cases, the
clearing agency directly credits the members. accounts with clearing banks and
debits its own account. The pay-in and pay-out of funds as well as securities take
place 5 working days after the trade date.
2.1.1 Transaction Cycle
A person holding assets (securities/funds), either to meet his liquidity needs or to
reshuffle his holdings in response to changes in his perception about risk and
return of the assets, decides to buy or sell the securities. He finds out the right
broker and instructs him to place buy/sell order on an exchange. The order is
converted to a trade as soon as it finds a matching sell/buy order. The trades are
cleared to determine the obligations of counterparties to deliver securities/funds as
per settlement schedule. Buyer/seller delivers funds/securities and receives
securities/ funds and acquires ownership over them. A securities transaction cycle
is presented in Figure 2.1.
2.1.2 Settlement Process
While NSE provides a platform for trading to its trading members, the National
Securities Clearing Corporation Ltd. (NSCCL) determines the funds/securities
obligations of the trading members and ensures that trading members meet their
obligations. The clearing banks and depositories provide the necessary interface
between the custodians/clearing members (who clear for the trading members or
63
their own transactions) for settlement of funds/securities obligations of trading
members. The core processes involved in the process are:
Figure 2.1: Transaction cycle
(a) Trade Recording: The key details about the trades are recorded to provide basis
for settlement. These details are automatically recorded in the electronic trading
system of the exchanges.
(b) Trade Confirmation: The counterparties to trade agree upon the terms of trade
like security, quantity, price, and settlement date, but not the counterparty
which is the NSCCL. The electronic system automatically generates
confirmation by direct participants. The ultimate buyers/sellers of securities
also affirm the terms, as the funds/securities would flow from them, although
the direct participants are responsible for settlement of trade.
(c) Determination of Obligation: The next step is determination of what counter-
parties owe, and what counter-parties are due to receive on the settlement date.
The NSCCL interposes itself as a central counterparty between the
counterparties to trades and nets the positions so that a member has security
wise net obligation to receive or deliver a security and has to either pay or
receive funds.
(d) Pay-in of Funds and Securities: The members bring in their funds/securities to the
NSCCL. They make available required securities in designated accounts with
the depositories by the prescribed pay-in time. The depositories move the
securities available in the accounts of members to the account of the NSCCL.
Likewise members with funds obligations make available required funds in the
Clearing of
Trades
Decision to
Trade
Settlement
of Trades
Placing Order
Transaction Cycle
Trade
Execution
Funds/
Securities
64
designated accounts with clearing banks by the prescribed pay-in time. The CC
sends electronic instructions to the clearing banks to debit member.s accounts
to the extent of payment obligations. The banks process these instructions,
debit accounts of members and credit accounts of the NSCCL.
(e) Pay-out of Funds and Securities: After processing for shortages of funds/securities
and arranging for movement of funds from surplus banks to deficit banks
through RBI clearing, the NSCCL sends electronic instructions to the
depositories/clearing banks to release pay-out of securities/funds. The
depositories and clearing banks debit accounts of the NSCCL and credit
accounts of members. Settlement is complete upon release of pay-out of funds
and securities to custodians/members. The settlement process for transactions
in securities in the CM segment of NSE is presented in the Figure 2.2.
(f) Risk Management: A sound risk management system is integral to an efficient
settlement system. The NSCCL ensures that trading members. obligations are
commensurate with their net worth. It has put in place a comprehensive risk
management system, which is constantly monitored and upgraded to pre-empt
market failures. It monitors the track record and performance of members and
their net worth; undertakes on-line monitoring of members. positions and
exposure in the market, collects margins from members and automatically
disables members if the limits are breached.
2.1.3 Settlement Agencies
The NSCCL, with the help of clearing members, custodians, clearing banks and
depositories settles the trades executed on exchanges. The roles of each of these
entities are explained below:
(a) NSCCL: The NSCCL is responsible for post-trade activities of a stock
exchange. Clearing and settlement of trades and risk management are its central
functions. It clears all trades, determines obligations of members, arranges for
pay-in of funds/securities, receives funds/securities, processes for shortages in
funds/securities, arranges for pay-out of funds/securities to members,
guarantees settlement, and collects and maintains margins/collateral/base
capital/other funds.
(b) Clearing Members: They are responsible for settling their obligations as
determined by the NSCCL. They have to make available funds and/or
securities in the designated accounts with clearing bank/depositories, as the
case may be, to meet their obligations on the settlement day.
(c) Custodians: Custodian is a clearing member but not a trading member. He settles
trades assigned to him by trading members. He is required to confirm whether
he is going to settle a particular trade or not. If it is confirmed, the NSCCL
65
Figure 2.2: Settlement Process in CM segment of NSE
Explanations:
(1) Trade details from Exchange to NSCCL (real-time and end of day trade file).
(2) NSCCL notifies the consummated trade details to CMs/custodians who affirm
back. Based on the affirmation, NSCCL applies multilateral netting and
determines obligations.
(3) Download of obligation and pay-in advice of funds/securities.
(4) Instructions to clearing banks to make funds available by pay-in time.
(5) Instructions to depositories to make securities available by pay-in-time.
(6) Pay-in of securities (NSCCL advises depository to debit pool account of
custodians/CMs and credit its account and depository does it).
(7) Pay-in of funds (NSCCL advises Clearing Banks to debit account of
custodians/CMs and credit its account and clearing bank does it).
(8) Pay-out of securities (NSCCL advises depository to credit pool account of
custodians/CMs and debit its account and depository does it).
(9) Pay-out of funds (NSCCL advises Clearing Banks to credit account of
custodians/CMs and debit its account and clearing bank does it).
(10) Depository informs custodians/CMs through DPs.
(11) Clearing Banks inform custodians/CMs.
66
assigns that obligation to that custodian and the custodian is required to
settle it on the settlement day.
(d) Clearing Banks: Clearing banks are a key link between the clearing members
and NSCCL for funds settlement. Every clearing member is required to open
a dedicated clearing account with one of the clearing banks. Based on his
obligation as determined through clearing, the clearing member makes funds
available in the clearing account for the pay-in and receives funds in case of a
pay-out.
(e) Depositories: Depositories help in the settlement of the dematerialised
securities. Each custodian/clearing member is required to maintain a clearing
pool account with the depositories. He is required to make available the
required securities in the designated account on settlement day. The
depository runs an electronic file to transfer the securities from accounts of
the custodians/clearing member to that of NSCCL. As per the schedule of
allocation of securities determined by the NSCCL, the depositories transfer
the securities on the pay-out day from the account of the NSCCL to those of
members/custodians.
(f) Professional Clearing Member: NSCCL admits special category of members
namely, professional clearing members. Professional Clearing Member (PCM)
may clear and settle trades executed for their clients (individuals, institutions
etc.). In such an event, the functions and responsibilities of the PCM would
be similar to Custodians. PCMs may also undertake clearing and settlement
responsibility for trading members. In such a case, the PCM would settle the
trades carried out by the trading members connected to them. The onus for
settling the trade would be thus on the PCM and not the trading member. A
PCM has no trading rights but has only clearing rights, i.e. he just clears the
trades of his associate trading members and institutional clients.
2.1.4 Risks in Settlement
The following two kinds of risks are inherent in a settlement system:
(1) Counterparty Risk: This arises if parties do not discharge their obligations fully
when due or at any time thereafter. This has two components, namely
replacement cost risk prior to settlement and principal risk during settlement.
(a) The replacement cost risk arises from the failure of one of the parties to
transaction. While the non-defaulting party tries to replace the original
transaction at current prices, he loses the profit that has accrued on the
transaction between the date of original transaction and date of replacement
transaction. The seller/buyer of the security loses this unrealised profit if the
current price is below/above the transaction price. Both parties encounter
this risk as prices are uncertain. It has been reduced by reducing time gap
between transaction and settlement and by legally binding netting systems.
67
(b) The principal risk arises if a party discharges his obligations but the
counterparty defaults. The seller/buyer of the security suffers this risk when
he delivers/makes payment, but does not receive payment/delivery. This risk
can be eliminated by delivery vs. payment mechanism which ensures delivery
only against payment. This has been reduced by having a central counterparty
which becomes the buyer to every seller and the seller to every buyer.
A variant of counterparty risk is liquidity risk which arises if one of the parties
to transaction does not settle on the settlement date, but later. The
seller/buyer who does not receive payment/delivery when due, may have to
borrow funds/securities to complete his payment/delivery obligations.
Another variant is the third party risk which arises if the parties to trade are
permitted or required to use the services of a third party which fails to
perform. For example, the failure of a clearing bank which helps in payment
can disrupt settlement. This risk is reduced by allowing parties to have
accounts with multiple banks. Similarly, the users of custodial services face
risk if the concerned custodian becomes insolvent, acts negligently or
commits fraud.
(2) System Risk: This comprises of operational, legal and systemic risks. The
operational risk arises from possible operational failures such as errors, fraud,
outages etc. The legal risk arises if the laws or regulations do not support
enforcement of settlement obligations or are uncertain. Systemic risk arises
when failure of one of the parties to discharge his obligations leads to failure
by other parties. The domino effect of successive failures can cause a failure
of the settlement system. These risks have been contained by enforcement of
an elaborate margining and capital adequacy standards to secure market
integrity, settlement guarantee funds to provide counter-party guarantee, legal
backing for settlement activities and business continuity plan, etc.
2.2 Rolling Settlement
2.2.1 Introduction
Under rolling settlement, all trades executed on a trading day are settled X days
later. This is called .T+X. rolling settlement, where .T. is the trade date and .X.
is the number of business days after trade date on which settlement takes place.
The rolling settlement has started on T+5 basis in India, implying that the
outstanding positions at the end of the day .T. are compulsorily settled 5 days after
the trade date.
Rolling settlement was first introduced in India by OTCEI. As dematerialisation
took off, NSE provided an option to settle the trades in demat securities on rolling
basis. In January 2000, SEBI made rolling settlement compulsory for trades in 10
68
scrips selected on the basis of the criteria that they were in the compulsory demat
list and had daily turnover of about Rs.1 crore or more. This list, however, did not
include scrips, which had carried forward trading facility. SEBI reviewed the
progress of rolling settlement in February 2000. Consequent on the review, SEBI
added a total of 156 scrips under rolling settlement. 74 companies, which had
changed names to infotech companies, were included in compulsory rolling
settlement from May 8, 2000. 31 NBFCs, which are listed and traded on the BSE,
but whose applications for certificate of registration were rejected by RBI, were
covered under compulsory rolling settlement from May 8, 2000. 17 scrips, which
exhibited high volatility (i.e., of more than 110% for 7 weeks or more in the last 10
weeks) were also included in compulsory rolling settlement from May 8, 2000. In
addition, 34 companies out of 199 companies, which were already included in
compulsory demat trading for all investors and did not have carry forward facility
in any of the exchanges and had signed agreements with both the depositories were
included for compulsory rolling settlement from March 21, 2000.
Following Finance Minister.s announcement on March 13, 2001 that the rolling
settlement would be extended to 200 category .A. stocks in MCFS, ALBM and
BLESS by July, 2001, SEBI decided that all 263 scrips included in the
ALBM/BLESS or MCFS in any stock exchange or in the BSE-200 list would be
traded only in the compulsory rolling settlement on all the exchanges from July 2,
2001. Further, SEBI mandated rolling settlement for the remaining securities from
December 31, 2001.The settlement cycle would be reduced from T+5 to T+3 from
April 1, 2002.
Rolling settlement offers several advantages over account period settlement:
a) The account period settlement does not discriminate between an investor
transacting on the first day and an investor transacting on the last day of the
trading period, as trades are clubbed together for the purposes of settlement
and all investors realise the securities and/or funds together. Hence some
investors have to wait longer for settlement of their transactions. Under rolling
settlement, the investors trading on a particular day are treated differently
from the investors trading on the preceding or succeeding day. All of them
wait for .X. days from the trade date for settlement. Further, the gap between
the trade date and the settlement date is less under rolling settlement making
both securities and funds easily convertible.
b) The account period settlement combines the features of cash as well as futures
markets and hence distorts price discovery process. In contrast, rolling
settlement, which segregates cash and futures markets and thereby removes
excessive speculation, helps in better price discovery.
c) Account period settlement allows build up of large positions over a trading
period of five days and consequently, there is a pressure to close them out on
69
the last trading day, leading to significant market volatility. This does not
happen under rolling settlement, where positions can be built during a day
only.
d) There is scope for both intra-settlement and intra-day speculation under
account period settlement, which allows large outstanding positions and hence
poses greater settlement risks. In contrast, since all open positions under
rolling settlement at the end of a date .T. are necessarily settled .X. working
days later, it limits the outstanding positions and reduces settlement risk.
e) Till recently, it was possible to shift positions from one exchange to another
under account period as they follow different trading cycles. Rolling settlement
took care of this by making trading cycle uniform.
2.2.2 Settlement Cycle
The NSCCL clears and settles trades as per well-defined settlement cycle. The
settlement cycle for the CM segment of NSE is presented in Table 2.1. NSCCL
notifies the consummated trade details to clearing members/custodians on the
trade day. The custodians affirm back the trades to NSCCL by T+2 day. Based on
the affirmation, NSCCL nets the positions of counterparties to determine their
obligations. A clearing member has to pay-in/pay-out funds and/or securities. A
member has a security-wise net obligation to receive/deliver a security. The
obligations are netted for a member across all securities to determine his fund
obligations and he has to either pay or receive funds. Members. pay-in/pay-out
obligations are determined latest by T+2 day and are forwarded to them on the
same day so that they can settle their obligations on T+5 day. The securities/funds
are paid-in/paid-out on T+5 days and the settlement is complete in 5 days from
the end of the trade day.
2.2.3 Pay-in and Pay-out of Funds
NSCCL offers Clearing Members the facility of settlement of funds obligations
through 9 Clearing Banks, namely Canara Bank, HDFC Bank Ltd., Global Trust
Bank Ltd., IndusInd Bank Ltd., ICICI Bank Ltd., UTI Bank Ltd., Centurion Bank
Ltd., Bank of India and IDBI Bank Ltd. Clearing Members are required to open
clearing account with any one bank for the purpose of settlement of their
transactions. They are also required to authorise their Clearing Bank to access their
clearing account for debiting, crediting, reporting of balances and any other
information in accordance with the advice received from NSCCL. Clearing
accounts are used exclusively for clearing and settlement of transactions, i.e. for
settling funds and other obligations to/ from the NSCCL, including payments of
margins and penal charges. Clearing Banks debit/ credit the clearing account of
clearing members as per instructions received from the NSCCL electronically.
71
Members are informed of their funds obligation for various settlements through
the daily clearing data download. Members are also provided daily funds statement
which gives date-wise details of each debit/ credit transaction in the member.s
clearing account. The summary statement provided to members summarises the
debit/ credit information for a quick reference. Members can refer to these
statements and provide for funds accordingly.
Member's account may be debited for various types of transactions on a daily basis.
A member is required to ensure that adequate funds are available in the clearing
accounts towards all obligations, by the scheduled date and time. It is possible that
the total value of funds pay-in receivable by a bank is different from the value of
funds payout from the bank i.e. the pay-in may be either more than the payout in a
bank, or vice versa. In such cases, funds need to be transferred from the bank
where there is excess pay-in to the bank where there is a shortage in pay-in. Based
on estimated pay-in and pay-out of funds, on the day preceding the payout day,
NSCCL advises the banks having pay-in in excess of pay-out to issue pay orders to
the banks having pay-in less than the pay-out. The deficit banks accordingly get the
funds to facilitate timely payout.
On the scheduled day of pay-in, the clearing banks debit (credit) accounts of
members and credit (debit) NSCCL by pay-in (pay-out) amount at the scheduled
time i.e. 11 AM (2.30 pm). Pay-in and pay-out of funds takes place on the same
day.
The movement of funds for settling securities transactions is shown in Figure 2.3.
Assume that the funds pay-in is Rs. 100 crore of which Rs. 80 crore come into
bank A and Rs. 20 crore into bank B by 11 am. However, the pay-out is such that
Rs. 60 crore is to be paid out in bank A and Rs.40 crore in bank B. Bank A effects
pay-out at 2.30 pm by debiting account of NSCCL for Rs. 60 crore when it has a
balance of Rs. 80 crore. Bank B also effects pay-out at 2.30 pm by debiting
account of NSCCL for Rs. 40 crore when it has a balance of Rs. 20 crore received
as pay-in and Rs. 20 crore against the pay-order received from bank B.
2.2.4 Pay-in and Pay-out of Securities
In order to settle trades in the dematerialised securities, a clearing member needs to
open a clearing account with a depository participant (DP). Each clearing account
consists of three sub-accounts:
a) Pool Account: This is used by the clearing member to interface with his clients.
The clients deliver securities to this account of the clearing member. The
clearing member pools all client deliveries in this account before making a
delivery to NSCCL.
74
b) Delivery Account: This is used by the clearing member to deliver securities to
NSCCL. The clearing member moves net deliverable quantity of shares from
the pool account to the delivery account from where it comes to NSCCL.
c) Receipt Account: NSCCL gives pay-out to the clearing member in the receipt
account from where it is transferred to the pool account of the clearing
member.
Clearing members are informed of their securities obligation for various
settlements through the daily clearing data download. Clearing members are also
provided final delivery statement and delivery details statement.
Before pay-in, selling investors instruct DP to transfer security balances from their
beneficiary accounts to clearing member.s pool account. At or before the time and
day specified for pay-in by NSCCL, the clearing member instructs his DP to move
the required balance from his pool account to his delivery account. On the pay-in
day, the depository moves balances from all the clearing members delivery accounts
and sends them to NSCCL at the scheduled time i.e., 11.00 am. The balances in
respective clearing members' delivery accounts are first transferred to NSCCL.s
pool account which is then matched with the obligations generated by NSCCL
system. The quantity and securities matched are accepted and credited to the
Receipt Accounts of the receiving clearing members through depository. The
quantity and securities, not matched for any reason whatsoever, are not accepted
and as such credited back to Delivery Accounts of the delivering clearing members.
On receipt of pay-out instructions from NSCCL, the depository credits the receipt
accounts of the receiving clearing members from which the securities get
transferred to the clearing members' pool accounts. From the pool accounts, the
clearing members distribute the deliveries to the buying clients by issuing
instructions to his DP. The movement of securities for settling securities
transactions is shown in Figure 2.4.
2.3 Risk Containment Measures
There have been umpteen experiments with different risk containment measures in
the recent past. These measures have been repeatedly reviewed and revised. This
section, however, discusses the measures prevailing as in December 2001.
2.3.1 Capital Adequacy Requirements
As compared to the minimum statutory requirements as also those stipulated by
other stock exchanges, the capital adequacy requirements stipulated by the NSE are
higher. The capital adequacy norms to be followed by members are presented in
Table 2.2.
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Out of the total capital provided by the TM (Base Minimum Capital and Additional
Base Capital), BMC can be utilised towards taking exposure/turnover only, whereas
the amount provided as ABC can be utilised towards margin payment if not used
up for taking Exposure/Turnover.
Table 2.2: Capital Adequacy Norms for Membership on NSE
(Rs. In lakh)
2.3.2 Trading and Exposure Limits
NSCCL imposes limits on turnover and exposure in relation to the base minimum
capital of a member, which is the amount of funds and securities that a member
keeps with the Exchange/NSCCL.
The members are subject to limits on trading volumes in a day as well as exposure
at any point of time. Gross intra-day turnover (Buy + Sell) of a member shall not
exceed 33 1/3 times of the capital available with NSCCL. Similarly, gross exposure
(aggregate of cumulative net outstanding positions in each security, at any point of
time) of a member shall not exceed 8.5 times of free base capital up to Rs. 1 crore.
If a member has free capital in excess of Rs. 1 crore, his exposure shall not exceed
Rs. 8.5 crore plus 10 times of the capital in excess of Rs. 1 crore.
Determination of Gross Exposure: The gross exposure of a member is computed
across all securities and across all open settlements in rolling settlement. Open
settlements are all those settlements for which trading has commenced and for
which pay-in is yet to be completed. It is arrived at by adding up the absolute
values of the products of net cumulative values and the specified adjustment factor,
for all securities in which a member has an open position. For this purpose, scrips
have been classified in to four groups, based on market capitalisation, impact cost
and number of trades. Groups I, II, III and IV have been assigned adjustment
76
factors of 1, 2, 3 and 5 respectively. The determination of gross exposure is
illustrated in the Table 2.3.
Table 2.3: Determination of Exposure for Exposure Limits
(Amount in Rs.)
Exposure Limit Violation: Members exceeding the gross exposure limit are not
permitted to trade with immediate effect until the member.s cumulative gross
exposure is reduced to below the gross exposure limits as defined above or any
such lower limits as applicable to the members. Alternatively, a member may bring
in additional base capital resulting in enhanced gross exposure limit.
A penalty of Rs. 5,000/- is levied for each violation of gross exposure limit and
intra-day turnover limit, which is paid by the trading member next day. The penalty
is debited to the clearing account of the member. Non-payment of penalty in time
attracts penal interest of 15 basis points per day till the date of payment. In respect
of violation of gross exposure limit on more than one occasion on the same day,
each violation is treated as a separate instance for the purpose of calculation of
penalty. The penalty is charged to the members irrespective of whether the member
brings in additional capital subsequently.
Early pay-in of funds/securities: If members meet funds obligations prior to the funds
pay-in day, after satisfying the applicable conditions, then the margin payable by the
member is re-computed after considering the funds pay-in. The value of the
advance pay-in made is reduced from the cumulative net outstanding position of
77
the member for the purpose of calculating gross exposure.
If members deliver securities prior to the securities pay-in day, after satisfying the
applicable conditions, then the margin payable by the member is recomputed after
considering the above pay-in of securities. The value of the advance pay-in made is
reduced from the cumulative net outstanding position of the member for the
purpose of calculating gross exposure.
On-line Exposure Monitoring: NSCCL has put in place an on-line monitoring and
surveillance system whereby exposure of the members is monitored on a real time
basis. A system of alerts has been built in so that both the member and NSCCL are
alerted as per pre-set levels (reaching 70%, 85%, 95% and 100%) when the
members approach their allowable limits. The system enables NSSCL to further
check the micro-details of members' positions, if required and take pro-active
action.
The on-line surveillance mechanism also generates various alerts/reports on any
price/volume movement of securities not in line with past trends/patterns. For this
purpose the exchange maintains various databases to generate alerts. Alerts are
scrutinised and if necessary taken up for follow up action. Open positions of
securities are also analysed. Besides this, rumors in the print media are tracked and
where they are price sensitive, companies are contacted for verification. Replies
received are informed to the members and the public.
Off-line Monitoring: Off-line surveillance activity consists of inspections and
investigations. As per regulatory requirement, a minimum of 10% of the active
trading members are to be inspected every year to verify the level of compliance
with various rules, byelaws and regulations of the Exchange. Usually, inspection of
more members than the regulatory requirement is undertaken every year. The
inspection verifies if investor interests are being compromised in the conduct of
business by the members. The investigation is based on various alerts, which
require further analysis. If further analysis reveals any suspicion of irregular activity
which deviates from the past trends/patterns and concentration of trading at NSE
at the member level, then a more detailed investigation is undertaken. If the
detailed investigation establishes any irregular activity, then disciplinary action is
initiated against the member. If the investigation suggests suspicions of possible
irregular activity across exchanges and/or possible involvement of clients, then the
same is informed to SEBI.
2.3.3 Margin Requirements
The daily margin in rolling settlement comprises of Mark to Market Margin (MTM
margin) and Value at Risk-based Margin (VaR-based margin).
78
The margins are computed at client level. A member entering an order, needs to
enter the client code. Based on this information, margin is computed at the client
level, which will be payable by the trading members on T+1 basis.
a. Mark to Market Margin. MTM is the notional loss, which a client would incur, if
the cumulative net outstanding positions in all securities were closed out at the
closing price of the securities at the end of the relevant day. In case a security
has not been traded on the relevant particular day, the latest available closing
price is considered as the closing price. For each security, this is worked out by
multiplying the difference between the close price and the price at which the
trade was executed by the cumulative buy and sell open position (for buy
position the close price being lower than the actual trade price and for sale
position, the close price being higher than the actual trade price). The aggregate
across all securities is the MTM margin payable by a member. MTM profit/loss
across different securities within the same settlement is set off to determine the
MTM loss for a settlement, but set off benefits across the settlements are not
allowed.
b. Value at Risk-based Margin. The VaR rate is applied to gross exposure to
determine VaR-based margin. The computation of the VaR rate as well as the
gross exposure on which VaR rate is applied is explained below:
Computation of VaR Rate
VaR rate is a single number, which encapsulates whole information about the
risk in a portfolio. It measures potential loss from an unlikely adverse event in a
normal market environment. It involves using historical data on market prices
and rates, the current portfolio positions, and models (e.g., option models,
bond models) for pricing those positions. These inputs are then combined in
different ways, depending on the method, to derive an estimate of a particular
percentile of the loss distribution, typically the 99th percentile loss. The step by
step computation of VaR-based margin is explained below.
! Obtain the closing price of the security (for the days on which it was traded
in the exchange) and closing index values for the previous one-year period.
Let these be
# Closing prices of the security $ CP0, CP1, CP2, .... CPn
# Closing values of index $ CV0, CV1, CV2, .... CVn
! Calculate the logarithmic returns with respect to previous day.s closing
price of the security/closing value of index for each day in the reference
79
period. Logarithmic return (Rn) for day .n. can be computed using the
formula:
# For scrip $Rn=LN(CPn/CPn-1)
# For index $ Rn=LN(CVn/CVn-1)
! Compute initial volatility by calculating the standard deviation of returns for
the one year period using the formula:
Standard deviation ó0 = ?�
=
-
n
i
i n R R
1
2 / ) (
where R is the average return for the reference period.
! Calculate daily volatility for subsequent days. For day 1, the volatility will be
2
1
2
1 ) 1 ( ) ( R o ë ó ë ó - + =
Similarly for day 2
2
2
2
1 2 ) 1 ( ) ( R ë ó ë ó - + =
Where, ë=0.94, a parameter which indicates how rapidly volatility estimate
changes. This value has been arrived at on the basis of the empirical study
done by Prof. J R Varma.
! Calculate VaR for the scrip at 3.5ó level and VaR for the index at 3ó level.
A higher ó level is used for the scrip because the scrip is expected to have
higher volatility as compared to the index, which is a portfolio. The
volatility estimate at 3ó level represents 99% VaR.
! Calculate VaR for a security or index for a particular day using the ó for
both long positions and short positions.
# For scrip,
VaR for short positions = Exponential (3.5ó)-1, and
VaR for long positions = 1- Exponential (-3.5ó).
# For index,
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VaR for short positions = Exponential (3ó)-1, and
VaR for long positions = 1- Exponential (-3ó)
To ensure that risk for all possible situations is covered, long VaR or short
VaR, whichever is higher, is considered as the VaR for the scrip or index, as
the case may be.
The VaR calculated for Nifty as above is then compared with the Sensex VaR
for the Day. The higher of the two is considered as Index VaR. However a
Minimum Index VaR of 5% is stipulated by SEBI.
For application of VaR the scrips are divided into two groups and two
different methods are adopted.
1. For the 257 scrips which come under the list specified by SEBI, the VaR is
computed in the following way:
Derive index-based scrip VaR from the index VaR. The VaR Multiplier
(relative volatility of the scrip as compared to that of index) is multiplied
with index VaR to get the index-based scrip VaR. A minimum VaR
multiplier of 1.75 has been stipulated by SEBI for the calculation of index-
based scrip VaR. VaR multiplier for scrips is computed on a monthly basis
by dividing .average standard deviation of the scrip return for last six
months. by .average standard deviation of the index return for last six
months.. Index-based VaR or scrip VaR, whichever is higher, is used as
applicable VaR for the scrip.
2. VaR for the remaining scrips is directly taken as 3 times Index VaR.
An additional margin of 12% is added to this applicable VaR. This
additional margin is applied in order to safeguard against the remaining 1%
cases. The total VaR margin calculated using the above steps is rounded up
to the higher integer. This percentage so derived is the VaR margin rate,
applicable on the open position. Maximum VaR applicable on a scrip,
however, shall not exceed 100%
VaR margin for Institutional Trades. VaR margin is charged at differential rate on
the Net outstanding sale position of the client. However, such margins are
added up across all clients of the member or custodian and the same are
collected from the Trading Member or Custodian as the case may be.
NSE disseminates VaR margin rates to the members and public at large
through its web-site. VaR margin rate for each security is provided on a daily
basis, at the end of each trading day. These rates are applicable on the positions
at the end of next trading day. A separate file is also provided on a daily basis
for the VaR margin rates applicable for the institutional trades on the net
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outstanding sale positions at the end of next trading day. A file on the
multiplier is provided on a monthly basis, detailing the multiplier to be applied
on each security in the following month.
All margins are payable on trade day plus one. Members are required to
compute their margin obligations and deposit the margin money in cash, bank
guarantee or FDRs, rounded off to the next higher multiple of Rs.10,000/-.
The margins deposited in cash on a given day are released to the member on
the subsequent day after adjustment for margin, ABC and any other funds dues
c. Determination of Exposure
The exposure to be reckoned for the purpose of applying VaR-based margin
rates is determined in the manner illustrated in Table 2.4. It is arrived at by
adding up the absolute values of the net cumulative positions for all securities
in which a member has an open position.
Table 2.4: Determination of Exposure for VaR Margins
(In Rs.)
Net Value
(buy value-sale value)
Cumulative Net Value*
Day
Scrip A Scrip B Scrip C Scrip A Scrip B Scrip C
Exposure
#
Day 1 -31000 -115000 -49900 -31000 -115000 -49900 195900
Day 2 52500 155000 146600 21500 40000 96700 158200
Day 3 -19600 -105000 198000 1900 -65000 294700 361600
Day 4 9900 103000 -750000 11800 38000 -455300 505100
Day 5 -29200 -31000 408500 13600 122000 3100 138700
Day 6 -5000 0 -104800 -43900 -33000 -248300 325200
Day 7 -35000 22000 345600 -59300 94000 -100700 254000
Day 8 36000 54300 320000 -33200 45300 969300 1047800
* It is the cumulative net values of the scrip for last four days ( T to T-3), as margins are
collected on T+1 basis. For example, the exposure at the end of day 6 is cumulative
open position of the scrips for days 3 to 6.
# It is the sum of absolute cumulative net values for all scrips.
2.3.4 Index-based Circuit Filters
An index based market-wide circuit breaker system applies at three stages of the
index movement either way at 10%, 15% and 20%. These circuit breakers bring
about a coordinated trading halt in all equity and equity derivatives markets nation
wide. The breakers are triggered by movement of either S&P CNX Nifty or Sensex,
whichever is breached earlier. As an additional measure of safety, individual scrip-
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wise price bands of 20% either way have been imposed for all scrips including
debentures, warrants etc. Any order above or below 20% over the base price comes
to the Exchange as a .price freeze., NSE may suo moto cancel the orders in the
absence of any immediate confirmation from the members that these orders are
genuine or for any other reason as it may deem fit. The Exchange views entries of
non-genuine orders with utmost seriousness as this has market-wide repercussion.
2.3.5 Settlement Guarantee
After the execution of trade, the clearing corporation becomes the counter-party to
the transaction and ensures that funds and securities obligations are met. The
clearing corporation provides the guarantee and key link between clearing and
settlement activity. At NSE, a large Settlement Guarantee Fund, which stood at
Rs. 1,876 crore at the end of December 2001, provides the cushion for any residual
risk. It operates like a self-insurance mechanism where members contribute to the
Fund. In the event of failure of a trading member to meet settlement obligations or
committing a default, the Fund is utilised to the extent required for successful
completion of the settlement. This has eliminated counter-party risk of trading on
the Exchange. As a consequence, despite the fact that the daily turnover at times
exceeds Rs. 10,000 crore, credit risk no longer poses any threat in the market place.
The market has full confidence that settlement shall take place in time and shall be
completed irrespective of default by isolated trading members.
2.3.6 Direct Pay-out of Securities
NSCCL has put in place a system for giving direct pay-out of securities to
investor.s account. The system is applicable for both the depositories. An investor
who is expecting a pay-out is required to give his/her account details to the trading
member. The trading member in turn passes on this information to NSCCL. In
order to smoothen the back office work of the trading members for providing this
information, NSCCL has provided a front end for creating the file through which
the information is passed on to NSCCL. On the pay-out day, pay-out goes to such
investors' account directly from NSCCL. In case of any wrong information
provided by the trading member, the pay-out goes to the pool account of the
trading member.
2.3.7 Gross Margining
Presently margins are calculated for members security-wise on a net basis across
clients. SEBI has now directed the Exchanges that the members will be subjected
to margins on a gross basis across clients. Thus there will be no offsetting of
positions of different clients in the same security. This is effective from September
3, 2001.
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2.3.8 No-delivery Period
Whenever a book closure or a record date is announced by a company, the
exchange sets up a .no-delivery. period for that security. During this period, trading
is permitted in the security. However, these trades are settled only after the no-
delivery period is over. This is done to ensure that investor.s entitlement for the
corporate benefits is clearly determined. However, there is no no-delivery period
on account of book closures and record dates for corporate actions, such as, issue
of dividend and bonus shares, in respect of the scrips which are traded in the
compulsory dematerialised mode. The time gap between two book closures/record
dates is 30 days.
2.3.9 Penalty Points and Penal Interest
NSCCL has instituted a penalty points system. Non performance in settlement by
way of non-payment of amounts, short delivery or bad delivery attracts penalty
points and a penal interest charge. The penalty interest and points are levied for a
month. The penalty points that are accumulated, and the penalty that would be
imposed for different types of violations, are made transparent to the members.
The strict implementation of this system acts as a strong deterrent for settlement
lapses. In addition, it also helps in identifying potential problem cases entailing
risks.
2.3.10 Indemnity Insurance
The Exchange has arranged a comprehensive insurance scheme to cover risks of
trading members. The Exchange has also taken an insurance cover of Rs. 50 crore
to protect against risks arising from settlement defaults and transit risk arising from
securities movement among its clearing centres.
2.4 International Securities Identification Number
SEBI being the National Numbering Agency for India has permitted NSDL to
allot International Securities Identification Number (ISIN) for demat shares. While
allotting ISINs, NSDL observes that:
� The ISINs allotted by NSDL does not at any point of time breach the
uniqueness of ISIN of physical form for the same security.
� ISIN for a security is allotted only when the security is admitted to NSDL.
� The numbering system is simple.
� The numbering system of ISIN is in compliance with the structure of ISIN
adopted by SEBI.
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Numbering System of ISIN. The numbering structure for securities in NSDL is of 12
digit alpha numeric string. The first two characters represent country code i.e. IN
(in accordance with ISO 3166). The third character represents the Issuer Type as
detailed in Table 2.5.
The list may be expanded as per the needs. Maximum issuer types can be 35 (A to
Z and 0 to 8. The pro-rata dividend shares are identified by 9). The next 4
characters (fourth to seventh character) represent company identity. The first 3
characters are numeric. The fourth character is alpha character. The numbering
begins with .001A. and continues till .999A. and proceeds to .001B.. The next two
characters (the eight and ninth characters) represent security type for a given issuer.
Both the characters are numeric. The security types are planned which may be
expanded as per the need as detailed in Table 2.6.
Table 2.5: Issuers Type
Issuer Type Code
allotted
Central Government A
State Government B
Municipal Corporation C
Union Territories D
Company, Statutory Corporation, Banking Company E
Mutual Funds including UTI F
Table 2.6: Security Types
Security type Code
Equity 01
Non Voting Equity 02
Convertible Preference Shares 03
Non Convertible Preference Shares 04
Mutual Fund Units - Close ended 05
Mutual Fund Units - Open ended 06
Secured Debentures 07
Unsecured Debentures 08
Regular Return Bonds . Promissory Notes 09
Floating Rate Bonds 10
Deep Discount Bonds 11
Step Discount Bonds 12
Warrants 13
The next two characters (the tenth and eleventh characters) are serially issued for
each security of the issuer entering the system. Last digit is double-add-double
check digit.
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2.5 Dematerialisation and Electronic Transfer of Securities
Traditionally, settlement system on Indian stock exchanges gives rise to settlement
risk due to the time that elapses before trades are settled. Trades are settled by
physical movement of certificates. This has two aspects: First relates to settlement
of trade in stock exchanges by delivery of shares by the seller and payment by the
buyer. The stock exchange aggregates trades over a period of time and carries out
net settlement through the physical delivery of securities. The process of physically
moving the securities from the seller to his broker to Clearing Corporation to the
buyer.s broker and finally to the buyer takes time with the risk of delay somewhere
along the chain. The second aspect relates to transfer of shares in favour of the
purchaser by the issuer. This system of transfer of ownership is grossly inefficient
as every transfer involves the physical movement of paper securities to the issuer
for registration, with the change of ownership being evidenced by an endorsement
on the security certificate. In many cases the process of transfer takes much longer
than the two months as stipulated in the Companies Act, and a significant
proportion of transactions end up as bad delivery due to faulty compliance of paper
work. Theft, forgery, mutilation of certificates and other irregularities are rampant,
and in addition the issuer has the right to refuse the transfer of a security. Thus the
buyer does not get good title of the securities after parting with good money. All
this adds to costs and delays in settlement, restricts liquidity and makes investor
grievance redressal time-consuming and at times intractable.
To obviate these problems, the Depositories Act, 1996 was passed to provide for
the establishment of depositories in securities with the objective of ensuring free
transferability of securities with speed, accuracy and security by
(a) making securities of public limited companies freely transferable subject to
certain exceptions;
(b) dematerializing the securities in the depository mode; and
(c) providing for maintenance of ownership records in a book entry form.
In order to streamline both the stages of settlement process, the Depositories Act
envisages transfer ownership of securities electronically by book entry without
making the securities move from person to person. The Act has made the securities
of all public limited companies freely transferable by restricting the company.s right
to use discretion in effecting the transfer of securities, and dispensing with the
transfer deed and other procedural requirements under the Companies Act.
A depository holds securities in dematerialised form. It maintains ownership
records of securities and effects transfer of ownership through book entry. By
fiction of law, it is the registered owner of the securities held with it with the
limited purpose of effecting transfer of ownership at the behest of the owner. The
name of the depository appears in the records of the issuer as registered owner of
securities. The name of actual owner appears in the records of the depository as
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beneficial owner. The beneficial owner has all the rights and liabilities associated
with the securities. The owner of securities intending to avail of depository services
opens an account with a depository through a depository participant (DP). The
securities are transferred from one account to another through book entry only on
the instructions of the beneficial owner.
In order to promote dematerialisation of securities, NSE joined hands with leading
financial institutions to establish the National Securities Depository Ltd. (NSDL),
the first depository in the country, with the objective of enhancing the efficiency in
settlement systems as also to reduce the menace of fake/forged and stolen
securities. This has ushered in an era of dematerialised trading and settlement.
SEBI has made dematerialised settlement mandatory in an ever-increasing number
of securities in a phased manner, thus bringing about an increase in the proportion
of shares delivered in dematerialised form. The share of demat delivery in total
delivery at NSE increased to 98% in value terms during 2000-2001 and to 99.8% in
December 2001. There is an increasing preference to settle trades, particularly in
high value securities, in demat form. Such high level of demat settlement reassures
success of rolling settlement.
2.6 Investor Protection Fund
Investor Protection Fund (IPF) has been set up as a trust under Bombay Public
Trust Act, 1950 under the name and style of National Stock Exchange Investor
Protection Fund Trust and is administered by the Trustees. The IPF is maintained
by NSE to make good investor claims, which may arise out of non-settlement of
obligations by the trading member, who has been declared defaulter, in respect of
trades executed on the Exchange. The IPF is utilised to settle claims of such
investors where the trading member through whom the investor has dealt has been
declared a defaulter. Payments out of the IPF may include claims arising of non
payment/non receipt of securities by the investor from the trading member who
has been declared a defaulter.
Quantum of Compensation. The maximum amount of claim payable from the
IPF to the investor (where the trading member through whom the investor has
dealt is declared a defaulter) is Rs.5 lakh.
Procedure for filing claims. A notice is published in widely circulated daily
newspapers notifying the trading member who has been declared defaulter. Claims
against the trading member specified in the notice are required to be made, on or
before three months from the date of such published notice. The claimant is
required to submit full details and all relevant facts of the case duly supported by
copies of the relevant documents.
The trustees in disallowing (whether wholly or partly) a claim for compensation
shall serve notice of such disallowance on the claimant. The trustees may at any
87
time and from time to time require any person to produce and deliver any
securities, documents or statements of evidence necessary to support any claim
made or necessary for the purpose of establishing his claims. In default of delivery
of such documents, the trustees may disallow (wholly or partly) any claim made by
him.
The trustees, if satisfied that the default on which the claim is founded was actually
committed, may allow the claim and act accordingly. The trustees have an absolute
discretion as regards the mode and method of assessing the nature of the claim
including their genuineness and at their discretion may accept, reject or partially grant
or allow claims and make payment thereof subject to the limits herein mentioned.
2.7 Clearing Software - Reports
2.7.1 Obligation Reports
1) Daily Obligation Statement. This report contains obligations of a Clearing
Member (computed after segregation of the custodial trades for Trading
Members). This is a daily report which is downloaded at the end of the trading
day to each Clearing Member. This report provides security-wise information
on:
(a) daily purchases and sales and their value.
(b) Cumulative purchases and sales, and their value for the trading period.
(c) Cumulative net purchases or net sales and their value for the trading period.
The Clearing member has to select settlement type, settlement number and trade
date for which the report is needed.
2) Daily Obligation Statement of No-Delivery Securities. This report is for the securities in
No-Delivery. This report provides daily as well as cumulative purchase and sale
position of Clearing Member for securities in no-delivery across the trading
periods. At the end of the No-Delivery period, these securities get added to the
obligation statement of the next settlement. This report also gives information on
No-Delivery period for a security and the settlement number in which it has to
be settled. The clearing member has to select settlement type and trade date for
which the report is needed.
3) Daily Obligation Statement of Custodial Trades. Only for Trading Members. This
report contains information on trades done by members on behalf of custodial
clients which are to be settled by the custodians. The Clearing member has to
specify the Settlement Type, Settlement No and Trade Date for which this report
is required.
4) Daily Obligation Statement of No-Delivery Custodial Trades. Only for Trading
Members. This report contains information on trades done by members for
securities in No-Delivery on behalf of custodial clients which has to be settled by
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the custodians. The clearing member has to select settlement type, settlement
number and trade date for which the report is needed.
5) Final Settlement Obligations Statement. At the end of the trading period, members
receive Settlement Obligation Statement for funds and securities. This report
indicates the net obligation to deliver or receive for each security in which he has
had dealings and net obligation to pay or receive funds. The clearing member has
to select settlement type, settlement number for which the report is needed.
6) Final Settlement Obligations Statement of Custodial Trades. Only for Trading Members.
The Clearing Member also receives Custodian-wise Settlement Obligations
arising through the trades entered by the Trading Member on behalf of the
Custodial Participants. The Clearing Member has to select settlement type and
settlement number for which the report is needed.
2.7.2 Trade Reports
1) Custodial Trade Pending Confirmation. Only for Trading Members. This report
contains information of all Custodial trades which are not confirmed by the
Custodians as of the day of the report (within the Confirmation Window). The
Clearing member has to select settlement type, settlement number and trade
date for which the report is needed.
2) Trades Rejected by Custodian. Only for Trading Members. This report contains all
the trades that have been rejected by the custodian. The Clearing Member has
to select settlement type, settlement number and trade date for which the
report is needed.
3) Trades Change Statement. Only for Trading Members. All the trades reverted to a
Trading Member or vice-versa are displayed in this report. The Clearing
Member has to select settlement type, settlement number for which the report
is needed.
4) Security-wise daily trades statement for CP. This report gives the statement of all the
securities traded by the trading member for the respective Custodial
participants. The Clearing Member has to select settlement type, settlement
number, trade date and a Custodial participant code.
5) Security-wise daily trades statement for CP (No delivery). This report gives the
statement of all the securities which are in no deliveries and traded by the
Clearing Member for the respective Custodial participants. The Clearing
Member has to select settlement type, trade date and a Custodial participant
code.
6) Member-wise daily trades statement for CP. This report gives the statement of all the
securities traded by the trading member for the respective Custodial
participants. This report is sorted by trading members. The Clearing Member
has to select settlement type, trade date and a Custodial participant code.
89
7) Security-wise final trades statement for CP. This report gives the statement of all the
securities traded by the trading member for the respective Custodial
participants and for the given settlement type and settlement number. The
Clearing Member has to select settlement type, settlement number, and a
Custodial participant code.
2.7.3 Deliveries Reports
1) Final Delivery Statement. After allocation, the NSECM Clearing System generates
Trading Member-wise delivery statement. This delivery statement is security-
wise. Each delivery has a unique delivery number generated by the system. The
statement provides information on delivering centre, receiving centre, number
of shares to deliver for each security and also the code of the receiving entity.
The Clearing Member has to select settlement type, settlement number and
delivering centre code for which the report is needed.
2) Delivery Slip. It gives the details of delivering centre, receiving centre, quantity
of shares to be delivered, quantity of shares delivered, quantity short and
number of certificates. Delivery slips can be printed in two different formats.
1. Pre-printed stationary: Report is taken on pre-printed stationary. For this,
the stationary has to be in triplicate (i.e. 1:3). This prints the delivery slips
faster. 2. Plain stationary: Report is taken on plain stationary. Each page
contains 3 copies of the same delivery slip. One copy is for the Clearing
House, one for the member and one for the Exchange. The Clearing Member
has to select settlement type, settlement number, delivery type, delivery range
(start number - end number or all deliveries option) and delivering centre code
for which the delivery slips are needed.
3) Delivery Details Statement. This report gives a facility to list delivering centre,
receiving centre, all Certificate Numbers and DNR Numbers for deliveries of
the delivering Clearing Members. The Clearing Member has to select
settlement type, settlement number, delivery type, delivery range (start number
- end number or all deliveries option) and delivering centre code for which the
report is needed.
4) Security Shortage Statement. The Security Shortage Statement lists down the
shortage in the delivery of the securities as compared to the Clearing Members
obligation of securities pay-in. The details given in the list contain the
delivering centre, receiving centre, delivery number against which securities are
delivered short, the security, the quantity of shares delivered short, the
Valuation price and the amount to be debited to the delivering members
account for the quantity of shares delivered short, the receipt number and the
counter party receiving members name/code. The Clearing Member has to
select the settlement type, settlement number and delivering centre code for
which the Security Shortage Statement has to be printed.
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2.7.4 Receipts Reports
Final Receipt Statement. This statement provides information security-wise on
receiving centre, delivering centre, the number of shares to receive, the code and
the name of the delivering Trading Member. The report gives the break up of
quantity of shares received in electronic form and physical form. The Clearing
Member has to select settlement type, settlement number and receiving centre code
for which the report is needed.
2.7.5 Bad Deliveries Reports
1) Unrectified Bad Delivery Statement. This report contains the list of deliveries
reported as bad against a delivering member and not rectified by the trading
member. The details given in the list contain the delivering centre, receiving
centre, delivery number for which the shares are not rectified, the security, the
quantity of shares not rectified, the Valuation price and the amount to be
debited to the delivering members account for the quantity of shares not
rectified, the receipt number, the counter party receiving members name/code
and the reason code of bad delivery. The Trading Member has to select the
settlement type, settlement number and delivering centre code for which the
Unrectified Bad Delivery Statement has to be printed.
2) Bad Deliveries to be Rectified Statement. This report contains the details of Bad
Deliveries which have to be rectified by the delivering member. The report
outlines the delivering centre, receiving centre, delivery number, the security,
the quantity of shares reported as bad to be rectified, the reason code for bad
delivery, the counter party receiving member name and code and the receipt
number. The Trading Member has to select the settlement type, settlement
number, bad delivery type and delivering centre code for which the Bad
Deliveries to be Rectified Statement has to be printed. The Trading Member
may include Inter-Regional Bad Deliveries in the report. Otherwise only the
Intra-Regional Bad Deliveries will be printed.
3) Rectified Bad Delivery Pay-out Statement. The Rectified Bad Delivery Pay-out
Statement gives the receiving centre, delivering centre, list of the deliveries
reported as bad by the receiving member and whether subsequently they have
been rectified by the delivering member. It gives the status of which bad
deliveries reported by the trading member have been rectified (in electronic
and/or in physical form) and which have not been rectified. The Trading
Member has to select the settlement type, settlement number, bad delivery
type and receiving centre code for which the Rectified Bad Delivery Pay-out
Statement has to be printed. The Trading Member may include Inter-Regional
Bad Deliveries in the report. Otherwise only the Intra-Regional Bad Deliveries
will be printed.
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2.7.6 Funds Reports
Two Funds Reports are being provided through the clearing software i.e., Daily
Funds Summary Statement and Daily Funds Statement. Daily funds summary
statement will provide details about the transactions effected in the trading
members clearing account at the Clearing Bank. This statement is similar to the
Bank statement provided by the Clearing Bank. The debit appearing in the
summary statement is equal to the withdrawals as per the bank statement and the
credit is equal to the deposits as per the bank statement. Daily funds statement will
provide the break-up for each debit and credit appearing in your Daily funds
summary statement. Both the reports will be downloaded on a daily basis after the
debits/credits have been effected by the clearing bank.
1) Daily Funds Statement. This report gives the detailed break-up of debits/credits
effected to the clearing bank account as appearing in the daily funds summary
statement. The following parameters are to be entered in order to print the
Daily Funds Statement:
(i) From Transaction Date
(ii) To Transaction Date
(iii) Transaction Type
(iv) Segment Indicator
Trading member can print this report -
a) For a particular day by inputting the specified date as both from transaction
date and to transaction date;
b) For a period by inputting the from and to dates in the fields from
transaction date and to transaction date;
c) For a particular type of debit/credit (e.g. normal pay-in debit, squaring debit
etc.) by inputting the from / to dates and the debit/credit type known as
transaction type.
Transaction type is a two digit code representing a particular type of
debit/credit. The trading member can choose All or a specific transaction
type. If the option is All, then all transactions for the range of transaction
dates specified is printed. In case of a specific transaction type, then
transactions for the specific transaction type for the range of transaction
dates specified is printed.
d) For any particular segment, which the member may be operating in.
The report gives the details of the following:
Summary Transaction Number: This number is the transaction number as
appearing in the Daily funds summary statement. This number is the link
between the two statements. Daily funds summary statement would provide
total debit/credit carried out against each summary transaction number. The
debits/credits against each transaction number would be for a particular
transaction type. The Daily funds statement would provide the complete
92
details for the same transaction number and also a sub-total. This sub-total
would be equal to the debit/credit appearing in the Daily funds summary
statement against the transaction number.
Due Date: The date on which the transaction is due to be effected.
Description: The reason for the transaction along with the settlement type and
number will be given. In case of security shortages and bad deliveries valuation
transactions, the delivery number is mentioned. In case of auction trades, the
trade number is mentioned. In case of margin pay-in transactions the position
date for which margin is charged is mentioned.
Dr/Cr: Dr. is mentioned in case of a debit transaction. Cr. is mentioned in
case of a credit transaction.
Original Amount: The amount originally due for a transaction is the original
amount on that due date.
Due Amount: The amount due on a transaction date for a transaction is the due
amount.
2) Daily Funds Summary Statement. Daily funds summary statement will provide
details of debits/credits effected to the trading members clearing bank as on a
particular day. The trading member can print this report either for a particular
day or for a period. The following parameters are to be entered in order to
print the Daily Funds Summary Statement:
(i) From Transaction Date
(ii) To Transaction Date
(iii) Segment Type
The date on which the transaction was effected in the Clearing Bank is the
transaction date. If report for a single day needs to be printed the same date
should be entered for the from transaction date and to transaction date. If
reports for period need to be printed then the relevant dates have to be
entered.
The report gives the following details:
(a) Summary Transaction Number: This is a unique number for a transaction
effected at the Clearing Bank. This number is the link between the Daily funds
summary statement and the Daily funds statement.
(b) Settlement type and number: The settlement type and number for the effected
transaction is mentioned.
(c) Description: The reason for the transaction along with the settlement type
and number will be given.
(d) Debit Summary: The amount debited (withdrawn amount in the Bank
Statement provided by the Clearing Bank) for a summary transaction number.
(e) Credit Summary: The amount credited (credited amount in the Bank
Statement provided by the Clearing Bank) for a summary transaction number.
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Example 10:
Daily funds summary statement
Transaction date: 17 Feb. 1996
______________________________________________________________________
Transaction Settlement type Description Dr. Summary/Cr. Summary
number /number ________________________
19960215000376 N 1996006 Margin Pay-in 150000
_________________________________________________________________________________________________
Daily funds statement
Transaction date: 17 Feb. 1996
___________________________________________________________________
Summary Due date Description Dr./ Original Due Actual Short
transaction no. Cr. amount amount amount amount
16-feb-96 Margin Dr. 100000 50000 50000 0
pay-in 16/02
17-feb-96 Margin Dr. 200000 200000 100000 100000
19960215000376 150000
______________________________________________________________________________________________
In the Daily funds summary statement for 17th February 96, one transaction
number 19960215000376 has been effected for Rs.150000 towards margin pay-in.
To know the details the corresponding daily funds statement for 17th February 96
should be viewed. The daily funds statement provides the break-up for the debit of
Rs.150000, margin amount of Rs.50000 towards 16th February 96 and margin
amount of Rs.100000 towards 17th February 96. While the full margin amount due
towards 16th February 96 has been debited, there is a shortage of Rs.10000 towards
margins for 17th February 96.
2.7.7 Auction Reports
1) Auction Square Up Debit Statement. This report gives details of unauctioned
deliveries that are squared-up by the Exchange. The report is to be printed by
the defaulting member on whose behalf the auction is conducted. In case the
auction is for short or bad deliveries, the delivering member is the defaulting
member and in cases of unrectified company objections, the objection
introducing member is the defaulting member. The report is downloaded at
the end of the auction trading day. This report gives the following details
(security wise):
a) Settlement type and number of the delivery that is auctioned.
b) Delivery type, centre code and number of the delivery that is auctioned.
c) Square up quantity, square up price and the square up amount.
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Funds obligation to pay for all the cases squared up in the auction settlement.
The trading member can print the report by selecting the settlement type
(Auction) and the settlement number.
2) Auction Square Up Credit Statement. This report gives details of unauctioned
deliveries that are squared-up by the Exchange. This report is to be printed
by the receiving member. This report is downloaded at the end of the auction
trading day. This report gives the following details (security wise):
a) Settlement type and number of the delivery that is auctioned.
b) Delivery type, centre code and number of the delivery that is auctioned.
c) Square up quantity, square up price and the square up amount.
Fund obligation to receive, for the member for all the cases squared up in the
auction settlement. The trading member can print the report by selecting the
settlement type (Auction) and the settlement number.
3) Auction Difference Statement. This report gives details of the auctioned deliveries
for which the valuation price exceeds the auction traded price. This report is
to be printed by the defaulting member (a member who has delivered short
or not rectified a bad delivery). This report is downloaded at the end of the
auction trading day. This report gives the following details (security-wise):
a) Settlement type and number of the delivery that is auctioned.
b) Delivery type, centre code and number of the delivery that is auctioned.
c) The auction traded quantity, valuation and the auction amount of the
delivery.
Funds obligation to pay of the member for all the auction difference
amounts. The trading member can print the report by selecting the settlement
type (Auction) and the settlement number.
2.7.8 Objections Reports
1) Objection to be Rectified Statement. The Objection to be Rectified Statement lists
down all the objections that have been reported against or reported by a
trading member in a particular reporting period. The report contains details
such as Objection number, security symbol and series, objection quantity and
face value under objection, the counterparty introducing / reporting member
code, reason for objection and the original stamp amount paid by the buyer at
the time of lodgements with the company.
The trading member has to specify the settlement type and reporting date for
which the report has to be printed. The member also has to specify whether
the report is to be printed for the objection cases reported by him or reported
against him. For printing the details of objection reported against the trading
member, the member has to specify the Member type parameter as
Introducing Member and for printing the details of objection reported by the
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trading member, the member has to specify the Receiving Member in the
Member type parameter.
2) Second Time Objections Statement. This Statement is similar to the Objection to be
rectified statement except that the report is to be printed for second time
objections. All the details contained in the above report are also printed in the
second time objection statement for rectified / replaced objections again
reported as under objections.
The trading member has to specify the settlement type and the objection
reporting period for which the report has to be printed. For printing the
details of objection reported against the trading member, the member has to
specify the Introducing member the Member type parameter and for printing
the details of objection reported by the trading member, the member has to
specify the Receiving Member in the Member type parameter.
3) Rectification Pay-in Date Change Statement. The rectification pay-in date of an
objection can change due to various reasons such as the rectification pay-in /
pay-out date being near the book closure start date / record date. As a result
the objection settlement to which the objection is assigned changes. The
Rectification Pay-in Date change statement contain the details of all the
objections whose rectifications have been changed(added) to the specified
objection settlement and also the details of the objections whose rectifications
have been moved away (deleted) from the specified objection settlement. The
report contains the details of whether the rectification has been changed to the
settlement or away from the settlement, Objection number, delivery number,
original rectification pay-in date and the original objection settlement, revised
rectification pay-in date and the revised objection settlement, security symbol
and series, objection quantity, receiving/introducing member code and name
and the receipt number.
The trading member has to specify the settlement type, settlement number and
the member type (Introducing Member / Receiving Member) for which the
report has to be printed.
4) Objections Withdrawal Statement. Objections can be withdrawn by either the
clearing house or the trading member for various reasons. The objection can
be withdrawn due to wrong reporting in the 6-C format, incomplete company
objection memo, etc. The Objection withdrawal statement gives details of the
objections withdrawn. This report gives detail of the part as well as full
withdrawal of quantity of shares under objections. The Objections
Withdrawal Statement contains details such as objection number, objection
settlement type and number, rectification pay-in date, symbol and series, face
value and the quantity of shares reported under objections, withdrawal
quantity, date of withdrawal, reason code for withdrawal, introducing/
receiving member code and name and the reason code for objection.
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To print the report, the trading member has to select the objection settlement
type and period for objection withdrawal to be printed and the member type
(Introducing Member / Receiving Member).
5) Objections Status Statement. The Objection Status Statement details of the history
of objection from reporting to rectification and further whether the objection
is auctioned / squared off is printed. The details contained in the report
include the objection number, delivery number, security symbol and series,
quantity under objection, quantity replaced or rectified, face value of replaced
quantity, unrectified quantity, auction settlement number in which the
unrectified quantity will be auctioned/ squared off, break up of the shares to
be auctioned and the shares to be squared off. The statement also prints
details of rectified/ replaced quantity reported as bad, the auction number in
which the rectified/ replaced quantity reported as bad will be squared off and
the objection reason code.
The trading member has to specify the settlement type, objection settlement
number, member type (Introducing Member / Receiving Member) and the
objection number for which the report has to be generated.
6) Objections Unrectified Statement. This report is to be printed after the date of
rectification pay-in for the objection settlement. The objections unrectified
statement gives details about the objections unrectified by the trading member
in case of objections where he is the introducing member. The statement also
contains details of the unrectified objections in cases where the trading
member has reported the objections. The report includes details such as
objection number, delivery number, security symbol and series, objection
quantity and reported face value, unrectified quantity and the replacement face
value, receipt number, introducing / receiving member code and name.
The user has to select the settlement type, objection settlement number and
the member type (introducing member / receiving member) for which the
report has to be printed.
7) Objections Returned As Bad Delivery Statement. The objections rectified returned as
bad delivery statement gives details of the objection cases for which the
rectification / replacement of objection is reported as bad delivery. The report
contains details such as objection number, delivery number, security symbol
and series, rectified / replaced quantity, quantity of shares reported as bad
delivery, and Introducing member / receiving member code and name.
The report can be printed for objection cases where the trading member is
the introducing member as well as for cases where the trading member is the
receiving member.
The parameters to be specified to print the report are settlement type,
objection settlement number and the member type (introducing / receiving
member).
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8) Stamp Duty Payable Report. The stamp duty payable report is provided to inform
the trading members about the stamp duty payable/ receivable in case of
objections. The report includes information about the objection number,
delivery / receipt number, security symbol and series, objection quantity,
original stamp amount paid by the investor / trading member reporting the
objection, quantity rectified, quantity unrectified, stamp amount payable /
receivable, stamp amount paid / received, receiving / introducing member
code and name, receipt / delivery number and the status of payment (paid or
pending). The stamp amount payable / receivable includes the differential
amount in case of shares rectified i.e. the stamp amount calculated at the
present consideration rate minus the original amount paid for the
proportionate quantity of shares rectified and in case of remaining shares i.e.
objection quantity minus rectified quantity, the amount of stamp calculated at
the present consideration rate for the remaining shares.
The trading member has to specify the settlement type, objection settlement
number, member type (introducing member / receiving member), and
whether the report has to be printed for cases where stamp amount is pending
payment / receipt, or for cases where the stamp amount has already been paid
/ received or for all the cases irrespective of the status of payment / receipt.
The trading member should also specify whether the report should be printed
for first time or second time objections.
9) Objection Settlement Schedule Statement. The objection settlement schedule
statement gives the dates for the reporting - rectification cycle of the objection
settlements. The report contains the objection settlement number, reporting
date, date of pickup by the introducing member for rectifying the objections,
rectification pay-in date, and the rectification pay-out date.
The trading member has to specify the objection settlement type and the range
of objection settlement numbers i.e. objection settlement number from and
objection settlement number to, to print the report.
2.7.9 Margin Reports
1) Member-wise Daily Margin Payable Statement (New). This report contains daily
margin amount payable by the members. This is a daily report which is
downloaded at the end of the trading day to each trading member. This
report provides information on the calculated margin amount, collateral
amount, amount paid till date and calculated value of cash margin payable
(+)/receivable (-).
The trading member has to select the margin trade date for which the report
is needed.
2) Memberwise Margin Payment Status Report (New). This report contains the margin
payment status of the member. This is a daily report which is downloaded at
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the end of the trading day to each trading member. This report provides
information on the margin due date, cash margin pay-in (+)/pay-out (-),
amount transacted and amount short.
The trading member has to select the From date and To date for which the
report is needed.
3) Member-wise Daily Margin Payable Statement (Old). This report contains daily
margin amount payable by the members. This is a daily report which is
downloaded at the end of the trading day to each trading member. This
report provides information on the margin type namely mark to market loss,
gross exposure or net exposure, exposure amount, margin amount, highest
margin amount, margin payable till date and day margin amount. The trading
member has to select the margin trade date for which the report is needed.
4) Member-wise Margin Payment Status Report (Old). This report contains the margin
payment status of the member. This is a daily report which is downloaded at
the end of the trading day to each trading member. This report provides
information on the margin due date, cash margin payable, cash margin paid
and cash margin short. The trading member has to select the trading date for
which the report is needed.
2.7.10 Securities Reports
1) Securities Delivered Statement. This statement provides information on delivering
centre, total number of shares to deliver for each security, quantity delivered
and quantity of shares delivered short. The trading member has to select
settlement type and settlement number for which the report is needed.
2) Securities Received Statement. This statement provides information on delivering
centre, total number of shares to receive for each security, quantity received
and quantity received short. The trading member has to select settlement type
and settlement number, for which the report is needed.
2.7.11 Miscellaneous Reports
3) No Delivery Securities Statement. This report gives a listing of all the securities in
no delivery for a particular settlement type and settlement number. The
details outlined in this report are the security symbol and series, the no
delivery start date, the no delivery end date and the settlement type and the
settlement number in which the trades during the no delivery period will be
settled.
For printing this report the Trading Member has to choose the settlement
type and the settlement number for which details of the securities in no
delivery is required.
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4) Corporate action statement. This report gives the statement of the corporate
actions falling between the dates entered by the user (i.e. dividend, AGM,
book closure date, record date etc.).
The trading member has to enter From date and To date.
5) Mode of Settlement Report for Securities. This report will display information
regarding Security Settlement Mode for a particular settlement type and
number. The clearing member has to enter settlement type and number.
2.8 File Transfer Protocol
A two way communication service is provided to the trading members based on
File Transfer Protocol (FTP) connections through VSAT, leased line and internet.
FTP may be used for accessing data that is general as well as member specific in
nature. Under this facility, a separate directory for each member has been created in
which member specific data files like trading data, clearing data, along with other
files like bills, trades done report etc. are routinely transferred. Each member has
been given access only to his/her own directory. Along with member specific
directories, there are some files like circulars, NCFM, bhav copy and related
software available in a .common. directory, which is accessible by all trading
members.
Members can access the files through extranet server using VSAT during off
trading hours (between 3:45 p.m. and 9:30 am) and through internet or lease lines
for all 24 hours a day.
For any Extranet connectivity problem, Helpdesk or Extranet team may be
contacted at 022-6598 178 to 188.
Model questions
1. Which one of the following is not an immediate measure taken by NSCCL in
case a member fails to meet any obligations?
(a) Uses trade guarantee fund to discharge his obligations.
(b) Reduces exposure limits.
(c) Squares up open positions.
(d) Disables trading terminal until member's obligations are fully discharged.
Ans. (a)
2. Net settlement obligation (delivery/receipt positions) of members is determined
by ______ netting.
(a) branch-wise
(b) multilateral
(c) unilateral
(d) bilateral
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Ans. (b)
3. Under T+5 rolling settlement, as prevalent in India, pay-in and pay-out take
place on ________.
(a) 5th working day after trade date
(b) 4th and 5th day respectively after the trade date
(c) 5th and 4th day respectively after the trade date
(d) Delivery vs. Payment basis
Ans. (a)
4. The members/custodians make available the required securities in their
____________ with Depository Participants by the prescribed pay-in time for
securities.
(a) Delivery Account
(b) Receipt Account
(c) Pool Account
(d) Client Account
Ans. (c)
5. A trading member is getting a message that he has violated the gross exposure
limit. The gross exposure at that point of time was Rs. 1535 lakh. What is the
existing effective deposit made by the member?
(a) Rs. 157.00 lakh
(b) Rs. 181.00 lakh
(c) Rs. 46.00 lakh
(d) Rs. 168.50 lakh
Ans. (d)
6. Gross intra-day turnover of a member shall not exceed ___ times of the capital
available with NSCCL.
(a) 8.50
(b) 10.00
(c) 33.33
(d) 20.00
Ans. (c)
7. Gross exposure shall not exceed Rs. __ crore if he has free capital of Rs. 2 crore.
(a) 18.5
(b) 8.5
(c) 10.0
(d) 20.0
Ans. (a)
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8. Determine exposure at the end of day 6 under T+5 rolling settlement for
exposure limit of a member having following open positions in a security which
has an adjustment factor of 2:
Day Net Value
(Buy . sale)
1 -115000
2 155000
3 -105000
4 103000
5 -31000
6 0
7 22000
8 54300
(a) 122000
(b) 244000
(c) 0
(d) 7000
Ans. (b)
Computation: Cumulative net values from day 2 to 6 * the adjustment factor
= (155000-105000+103000-31000)*2 = Rs. 244000
9. Determine marginable position at the end of day 7 under T+5 rolling
settlement for VaR margins of a member having following open positions in a
security:
Day Net Value (Buy .
sale)
1 -115000
2 155000
3 -105000
4 103000
5 -31000
6 0
7 22000
8 54300
(a) 188000
(b) 94000
(c) 125000
(d) -31000
Ans. (b)
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Computation: Cumulative net values from day 4 to 7
= (103000-31000+0+22000) = Rs. 94,000
10. The daily margin in T+5 rolling settlement comprises of ___________.
(a) Mark to Market Margin and Gross Exposure Margin
(b) Mark to Market Margin and Value at Risk-based Margin
(c) Gross Exposure Margin and Value at Risk-based Margin
(d) Mark to Market Margin, Gross Exposure Margin and Value at Risk-based
Margin
Ans. (b)
11. Open position of a client for a day 'T' in three scrips A, B and C and the VaR
rate applicable on these positions are given in the following table:
Particulars Scrip A Scrip B Scrip C
Open position
(Buy - Sell) (in Rs.)
(-) 4,000
1,000
(-) 5,000
VaR rate applicable for
day "T"
25%
20%
30%
The following table gives the mark to market position of the client for four
settlements:
Settlement no. Scrip A Scrip B Scrip C
N1 (-) 100 (+) 50 (-) 50
N2 (+) 200 (-) 100 (-) 50
N3 (+) 50 (+) 50 (+) 50
N4 (-) 50 (-) 100 (-) 100
Calculate the margin payable by the trading member on behalf of the client for
day "T"
(a) Rs. 2,850
(b) Rs. 3,050
(c) Rs. 2,700
(d) Rs. 3,250
Ans. (b)
Computation:
VaR based Margin = Open position * VaR rate for each scrip
= (4000*25%) + (1000*20%) + (5000*30%) = Rs. 2,700
Mark to Market Margin = Rs. 350 (calculated in the following table)
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Settlement no. Scrip A Scrip B Scrip C Positions
N1 (-) 100 (+) 50 (-) 50 (-) 100
N2 (+) 200 (-) 100 (-) 50 (+) 50
N3 (+) 50 (+) 50 (+) 50 (+) 150
N4 (-) 50 (-) 100 (-) 100 (-) 250
Net positions for MTM calculation (-) 350
Margin payable = Rs. 2,700 + Rs. 350 = Rs. 3,050
12. Which of the following agencies assigns ISINs to the securities in India?
(a) SEBI
(b) ANNA
(c) NSDL
(d) Stock Exchanges
Ans. (a)
13. The name of the ________appears in the records of the issuer as registered
owner of demat securities.
(a) depository
(b) actual owner
(c) beneficial owner
(d) depository participant
Ans. (a)
14. The final receipt statement generated in clearing software provides _________.
(a) securities received by the member for selected settlement.
(b) funds received by the member for selected settlement.
(c) funds and securities received by the member for selected settlement.
(d) securities delivered by the member for selected particular settlement.
Ans. (a)