Page 109 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes 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.

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 NEAT system are as detailed below:
Pre-open Book: An order during Preopen session has to be a Preopen (PO) order. All the
Preopen orders are stacked in system till the Preopen phase. At the end of Preopen phase,
the matching of Preopen orders takes place at the Final Opening Price. By default, the
Preopen (PO) book appears in the order entry screen when the Normal Market is in
Preopen and the security is eligible for Preopen Session. Order entry in preopen book
type is allowed only during market status is in preopen.
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 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.
Buyback orders can be placed through the Regular Lot (RL) book in the Normal Market.
The member can place a buyback order by specifying ‘BUYBACKORD’ in the Client Account
field in the order entry screen. Such company buyback orders will be identified in MBP
screen by an ‘*’ (asterisk) indicator against such orders.
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. Currently this facility is
not available in the trading system.
Stop Loss Book: Stop Loss (SL) 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.
Odd Lot Book: The Odd Lot book can be selected in the order entry screen in order to trade
in the Odd Lot market. Order matching in this market takes place between two orders on
the basis of quantity and price. To enter orders in the odd lot market, select the book type
as OL.
RETDEBT Order Book: RETDEBT market orders can be entered into the system by selecting
the RETDEBT Order book. These orders scan only the RETDEBT Order book for potential
matches. If no suitable match can be found, the order is stored in the book as a passive
order. To enter orders in the RETDEBT market, select the book type as ‘D’.

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