Podcast
Questions and Answers
What primary technology has replaced floor trading in stock exchanges?
What primary technology has replaced floor trading in stock exchanges?
- Postal trading
- Electronic trading (correct)
- Telephone trading
- Television trading
What advantage does screen-based trading provide to brokers?
What advantage does screen-based trading provide to brokers?
- It reduces the number of participants in the market.
- It facilitates price negotiations in private.
- It eliminates the need for brokers altogether.
- It ensures transparency to all participants. (correct)
What happens to unmatched orders during electronic trading?
What happens to unmatched orders during electronic trading?
- They are sent to the stock market floor.
- They are combined into a single order.
- They are immediately canceled.
- They remain on the screen for future matching. (correct)
What must a broker have in order to participate in electronic trading?
What must a broker have in order to participate in electronic trading?
How does the software in electronic trading systems execute transactions?
How does the software in electronic trading systems execute transactions?
In what manner do prices get determined in electronic trading systems?
In what manner do prices get determined in electronic trading systems?
What role does the main computer system play in a stock exchange?
What role does the main computer system play in a stock exchange?
What is a significant characteristic of screen-based trading?
What is a significant characteristic of screen-based trading?
What is the process of converting physical securities into electronic form called?
What is the process of converting physical securities into electronic form called?
Which of the following is required to open a demat account?
Which of the following is required to open a demat account?
Which is the first and largest depository operational in India?
Which is the first and largest depository operational in India?
What must an investor provide if shares are to be sold through a broker?
What must an investor provide if shares are to be sold through a broker?
How are payments for shares generally received by the broker?
How are payments for shares generally received by the broker?
What is the role of depository participants in the trading process?
What is the role of depository participants in the trading process?
What happens to shares allotted in a public offer when an investor has provided their demat account details?
What happens to shares allotted in a public offer when an investor has provided their demat account details?
Which organization promoted CDSL?
Which organization promoted CDSL?
What is primarily traded in the primary market?
What is primarily traded in the primary market?
Which of the following best describes the main purpose of stock exchanges?
Which of the following best describes the main purpose of stock exchanges?
What was the primary reason for the establishment of the Securities and Exchange Board of India (SEBI)?
What was the primary reason for the establishment of the Securities and Exchange Board of India (SEBI)?
Which functions are not typically associated with stock exchanges?
Which functions are not typically associated with stock exchanges?
In what year was the Securities and Exchange Board of India (SEBI) granted statutory status?
In what year was the Securities and Exchange Board of India (SEBI) granted statutory status?
What are the segments of the National Stock Exchange (NSE) primarily focused on?
What are the segments of the National Stock Exchange (NSE) primarily focused on?
What crucial role does the secondary market play in the capital market?
What crucial role does the secondary market play in the capital market?
What is the common name for the account that investors must open for trading in securities?
What is the common name for the account that investors must open for trading in securities?
What is the primary benefit of holding shares in demat form?
What is the primary benefit of holding shares in demat form?
How long does a broker have to make payment to the investor after the pay-out day?
How long does a broker have to make payment to the investor after the pay-out day?
What process allows physical shares to be converted into electronic form?
What process allows physical shares to be converted into electronic form?
What is one risk that is effectively eliminated by using a demat system?
What is one risk that is effectively eliminated by using a demat system?
What can demat securities be pledged or hypothecated for?
What can demat securities be pledged or hypothecated for?
Which entity is responsible for ensuring the investor's account is credited with the correct number of shares?
Which entity is responsible for ensuring the investor's account is credited with the correct number of shares?
What kind of systems are used for the trading of securities in a demat setup?
What kind of systems are used for the trading of securities in a demat setup?
What does the demat system mainly aim to eliminate within securities transactions?
What does the demat system mainly aim to eliminate within securities transactions?
What is the primary purpose of a stock market index?
What is the primary purpose of a stock market index?
Which index is often treated as a proxy for the US stock market?
Which index is often treated as a proxy for the US stock market?
Which of the following statements is true about the FTSE 100?
Which of the following statements is true about the FTSE 100?
What type of trading does the capital market segment of NSE facilitate?
What type of trading does the capital market segment of NSE facilitate?
What ensures that investors have equal access to trading on the NSE?
What ensures that investors have equal access to trading on the NSE?
Which of the following indices is the oldest quoted stock market index in the US?
Which of the following indices is the oldest quoted stock market index in the US?
Which aspect is NOT necessary for an ideal stock market index?
Which aspect is NOT necessary for an ideal stock market index?
What is the main characteristic of the NASDAQ Composite Index?
What is the main characteristic of the NASDAQ Composite Index?
Study Notes
Stock Exchange Trading
- All exchanges use electronic trading systems, which allows for transparency and efficiency in transactions
- Buyers and sellers can connect through computers and trading is carried out in brokers' offices
- The computer system matches orders based on the "best bid and offer price"
- Transactions are settled electronically within a 24-hour timeframe
Dematerialisation System
- The physical certificates represent shares, investors use dematerialisation to convert physical shares into electronic holdings
- This makes trading easier and less prone to fraud
- Depository Participants (DPs) are intermediaries between investors and Depositories (NSDL and CDSL) for demat services
- DPs can be banks, brokers or financial institutions
Indices
- Stock market indices represent the overall performance of the market
- Some important global stock market indices are:
- Dow Jones Industrial Average (US)
- NASDAQ Composite Index (US)
- S and P 500 Index (US)
- FTSE 100 (Europe)
National Stock Exchange (NSE)
- NSE offers a platform for efficient and transparent trading of equities, bonds, and other securities
- It has two segments:
- Capital Market Segment: For long-term investments
- Wholesale Debt Market Segment: For short-term debt financing
Bombay Stock Exchange (BSE)
- It is one of the oldest stock exchanges in Asia
- It plays a crucial role in the Indian capital market
- It provides a platform for trading in equities, bonds, and other securities
Securities and Exchange Board of India (SEBI)
- Established in 1988 to regulate the Indian Securities Market
- Aims to protect investors, promote investor education, and ensure fair and efficient trading practices
- Responsible for overseeing the activities of stock exchanges and other market intermediaries
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Description
Explore the fundamentals of stock exchange trading, including the use of electronic trading systems for efficient transactions. Learn about the dematerialisation system that converts physical shares into electronic holdings, making trading more secure. Additionally, understand the significance of stock market indices in evaluating overall market performance.
