How Business is transacted in Stock

Exchange
Definition Of Business Transaction
Economic activity and event that
initiates the accounting process
recording it in the form’s accounting
system.
Definition of stock exchange
 A stock exchange is an entity which provides "trading"
facilities for stock brokers and traders, to trade stocks
and other securities.

 The Stock Exchange (in German: Die Börse) is a book

written by Maximilian Weber, a German economist and
sociologist in 1896. Note that the original edition was in
German and the title can be translated as "The Stock
Exchange".
 The Securities Contracts ( Regulation )Act, 1956, has
defined Stock Exchange as on “association, organization
or body of individuals, heather incorporated or not,
established for the purpose of assisting, regulating and
controlling business of buying, selling and dealing in
Securities”.
How business is transacted in stock
exchange
There are four stage of typical
investment transaction
 Placing an order with a broker

 Execution of order

 Reporting the deal to the client

 Settlement of transaction
Placing an order with a broker
Order should be placed according to
how you are going to trade ie. How
you intend to enter and exit the
market. Improper order placement
can skew your entry and exist points.
Types of order
 Market order
 Stop order
 Limit order
Execution of order
 Often investors and traders alike do not
fully understand .what happens when you
click the “enter button on your online
trading account. If you think your order is
always filled immediately after you click the
button in your account, you are mistaken.
In fact, you might be surprised at the
Variety of possible ways in which an order
can be filled and the associate time delay.
How and where you order is executed can
affect the cost of your transaction and the
price you pay for the stock
Reporting the deal to the client
Settlement of transaction
 Settlement cycle is the period for which
equities are traded in exchange for Indian
stock exchange NSE, the cycle start on
Wednesday and ends on the following
Tuesday, and for BSE on Monday and ends
on Friday. At the end of this sell cycle
period the obligations of each broker are
calculate and the broker settle their
respective obligation . According, to the
guid , law and regular institutionalized by
the clearing agency. Whole set of money
transaction is perform by a bank in stock
exchange premises.
Types of transactions in stock
exchange
 Investment transaction
 Speculative transaction
Section 43(5) – Speculative
Transactions

 Speculative transaction means a

transaction in which a contract for
sale and purchase of any commodity,
including stocks and shares, is
periodically or ultimately settled
otherwise by actual delivery or
transfer of the commodity.
Types of speculative transaction
 Spot transaction
 Ready delivery transaction
 Forward transaction
Defects in trading in Indian stock
exchange
 Lack of integrations
 Specified and non-specified
Shares
 Margins
 The system of settlement and
carry forward
 Investor’s interest
Thank you