Page 111 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes In case the user enters an order with a ‘Market’ price, the order takes the last traded price in the
respective market as the market price, provided no passive order exists on the same side or the
counter side in that security and in that market. On the other hand, if suitable orders exist on the
counter side, then the order takes the price of the counter order and a trade is generated. If an
order exists on the same side but no orders exists on the counter side, then the order takes the
price of the best order on that side and is stacked immediately below it. If the security has never
been traded, then the market order takes the value of the base price and sits in the books as a
passive order.
Another option provided to Users in the Pre-open phase of the Normal market is ‘ATO’ or the
‘At Open Price’ concept. ‘Market’ orders entered in the pre-open are termed as ‘ATO’. Based on
the opening algorithm, the system computes a potential opening price. Once the market is open
for trading, the ATO orders take these prices.
In case of stop loss orders, a user has the flexibility of specifying a limit price along with the
trigger price. This limit price can be selected as equal to the trigger price in the price field so as
to leave it with the word ‘Price’. Alternatively, a user can specify a limit price as ‘Market’ price.

Circuit Breakers

The Exchange has implemented index-based market-wide circuit breakers in compulsory rolling
settlement with effect from July 02, 2001. In addition to the circuit breakers, price bands are also
applicable on individual securities.
Index-based Market-wide Circuit Breakers: The index-based market-wide circuit breaker system
applies at three stages of the index movement, either way viz. at 10%, 15% and 20%. These circuit
breakers when triggered bring about a coordinated trading halt in all equity and equity derivative
markets nationwide. The market-wide circuit breakers are triggered by movement of either the
BSE Sensex or the S&P CNX Nifty, whichever is breached earlier.

(a) In case of a 10% movement of either of these indices, there would be a one-hour market
halt if the movement takes place before 1:00 p.m. In case the movement takes place at or
after 1:00 p.m. but before 2:30 p.m. there would be trading halt for 1/2 hour. In case
movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level
and market shall continue trading.
(b) In case of a 15% movement of either index, there would be a two-hour halt if the movement
takes place before 1 p.m. If the 15% trigger is reached on or after 1:00 p.m., but before
2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00 p.m.
the trading shall halt for remainder of the day.

(c) In case of a 20% movement of the index, trading shall be halted for the remainder of the
day.
These percentages are translated into absolute points of index variations on a quarterly basis. At
the end of each quarter, these absolute points of index variations are revised for the applicability
for the next quarter. The absolute points are calculated based on closing level of index on the last
day of the trading in a quarter and rounded off to the nearest 10 points in case of S&P CNX Nifty.

Price Bands

Daily price bands are applicable on securities as below:
(a) Daily price bands of 2% (either way) on securities as specified by the Exchange.
(b) Daily price bands of 5% (either way) on securities as specified by the Exchange.

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