A Presentation On

Stock Market Operations

 INTRODUCTION
Group A Shares Group B Shares Group C Shares

Examples Examples Examples

 EXECUTION OF ORDER
The important function of a broker is to execute his
clients’ orders swiftly and carefully.

The broker must obtain specific instructions as to:

1. The name of the company whose securities have to be
bought or sold.
2. The precise number of share required.
3. The limit / market price condition etc.
 TYPES OF ORDERS
 ABO (At Best Order)  Day Order

 Limit Order  GTC ( A Good Till Cancelled)

 Immediate or Cancel Order  GTD ( A Good Till Days)

 DO (Discretionary Order)  IOC ( Immediate or Cancel

Order)
 Limited Discretionary Order  MKT (Market) Order

 Stop Loss Order  ATO (At The Open)

KINDS OF DELIVERY
1. Spot Delivery Settlement

2. Hand Delivery Settlement

3. Clearing Settlement

4. Special Delivery Settlement

 MECHANISM OF SHARE TRADING
The rules and procedures for buying and selling securities
are the same in all the recognized stock exchanges in
India. The procedures are listed below:
 A. Purchase of Shares:
(i) Purchase of existing shares from the Market:-
Placing the order with the broker Receipt of Contract Note

Sending shares for transfer Intimation of delivery

(i) Purchase of shares being issued by a Company:-
Filling application form Receipt of allotment
with application money letter/refund order

Endorsement of payment Payment of allotment

on share certificate money and call money
 B. Sale of Shares:
Placing the order with the broker Receipt of contract note

Receipt of payment Delivery of share certificate

 TYPE OF TRANSACTIONS
Margin trading:-
Margin trading is carried on by the clients with borrowed
fund from their brokers. It is a popular method of
speculative trading.

Short selling:-
Short selling means selling of securities without owning it.
Carry forward & badla charges:-

It refers to postponement of the settlement of a

transaction till the next settlement period. It is nothing
but facility to carry forward the transaction form one
settlement period to another. It involves payment of
some charges known as “BADLA CHARGES” by the
speculator. Badla charges are fixed based on demand and
supply condition in the market.
 SETTLEMENT PROCEDURE FOR SPECIFIED
LIST
Stock Exchanges allow speculative trading in shares listed
in the forward list, allowing thereby for short-selling and
long-buying of shares.

All transactions on the specified list are taken stock on

the badla day, once a week, being every Friday which is
now on a weekly basis. The mechanics of these badla
transactions are quite intricate, though pretty logical.
 Two things may happen on the badla day as far as
speculative transactions are concerned:

1. They are carried forward from one settlement period to

the next by drawing up a fresh set of contract notes to
give effect to the carry forward.

2. Either an interest called Seedha Badla is paid to the seller

by the buyer or charges as Undha Badla is paid by the
seller to the buyer depending on the net overbought or
oversold position in any scrip.
 SETTLEMENT PROCEDURE FOR NON-
SPECIFIED LIST
All business transacted in any week, between a Monday
and Friday of the week, is settled on the next Saturday
(riot the one immediately following). The price at which
they are actually bought or sold is considered for the
settlement. Delivery is made on the following Monday.

Settlement and delivery in respect of specified shares

take place as between the members and through the
caring house. Both delivery of shares and, payment or
receipt of money would he through the clearing.
 After the Badla Day

All deliveries of shares/payments arising out of the badla

day adjustments have to be settled with respective
deliveries and payments before the next badla day.

The transactions contracted by the member in respect of

specified shares are entered into the "Settlement
Register." The transactions executed during the
settlement period with the clients/other members are
balanced in this register and the outstanding transactions
are adjusted at the "Carry Forward" or the "Havala" rates
on the badla day.
KINDS OF SPECULATORS
 Client Broker  Bulls / Tejiwallas

 Floor Brokers  Bears / Mandiwallas

 Jobbers (Taravaniwallas)  Stags

 Badla Financier / Badliwallas  Wolves

 Arbitragers  Lame ducks

SPECULATIVE TRANSACTIONS
Option Dealing
Wash sales
Arbitrage
Cornering
Rigging the market
Blank transfers
THANK YOU