Page 104 - DCOM507_STOCK_MARKET_OPERATIONS

Unit 5: Trading System in Stock Exchange

At the point of time when the market is opening for trading, the trading member cannot Notes
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.
2. Pre-open: The pre-open session is for duration of 15 minutes i.e. from 9:00 a.m. to 9:15 a.m.
The pre-open session is comprised order collection period and order matching period.
The order collection period of 8* minutes shall be provided for order entry, modification
and cancellation. (* System driven random closure between 7th and 8th minute). During
this period orders can be entered, modified and cancelled.
The information like Indicative equilibrium/opening price of scrip, total buy and sell
quantity of the scrip is disseminated on the NEAT Terminal to the members on real time
basis.

Notes Indicative NIFTY Index value & % change of indicative equilibrium price to previous
close price are computed based on the orders in order book and are disseminated during
pre-open session.
Order matching period starts immediately after completion of order collection period.
Orders are matched at a single (equilibrium) price which will be open price. The order
matching happens in the following sequence:
Eligible limit orders are matched with eligible limit orders

Residual eligible limit orders are matched with market orders
Market orders are matched with market orders
During order matching period order modification, order cancellation, trade modification
and trade cancellation is not allowed. The trade confirmations are disseminated to
respective members on their trading terminals before the start of normal market. After
completion of order matching there is a silent period to facilitate the transition from pre-
open session to the normal market. All outstanding orders are moved to the normal
market retaining the original time stamp. Limit orders are at limit price and market
orders are at the discovered equilibrium price. In a situation where no equilibrium price
is discovered in the pre-open session, all market orders are moved to normal market at
previous day’s close price or adjusted close price/base price following price time priority.
Accordingly, Normal Market/Odd lot Market and Retail Debt Market open for trading
after closure of pre-open session i.e. 9:15 a.m. Block Trading session is available for the
next 35 minutes from the open of Normal Market.
The opening price is determined based on the principle of demand supply mechanism.
The equilibrium price is the price at which the maximum volume is executable. In case
more than one price meets the said criteria, the equilibrium price is the price at which
there is minimum unmatched order quantity. In case more than one price has same
minimum order unmatched quantity, the equilibrium price is the price closest to the
previous day’s closing price. In case the previous day’s closing price is the mid-value of
pair of prices which are closest to it, then the previous day’s closing price itself will be
taken as the equilibrium price. In case of corporate action, previous day’s closing price is
adjusted to the closing price or the base price. Both limit and market orders are reckoned
for computation of equilibrium price. The equilibrium price determined in pre-open
session is considered as open price for the day. In case if only market orders exists both in

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