Page 115 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes 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.
An active buy order matches with the best passive sell order if the price of the passive sell order
is less than or equal to the price of the active buy order. Similarly, an active sell order matches
with the best passive buy order if the price of the passive buy order is greater than or equal to the
price of the active sell order.

Regular Lot Matching

The important facts related to regular lot matching are described below:
If the combined quantity of one or more matching orders on the opposite side of the
regular lot book is equal to or more than the quantity of active order, the active order is
completely traded.

If the combined quantity of one or more matching orders on the opposite side of the
regular lot book is equal to or less than the quantity of active order, the active order is
partially traded.

If after trading any quantity is left untraded, the order is added to the regular lot book in
the price/time priority.

The orders with the IOC attribute try to match maximum possible quantity after they are
entered. Any remaining quantity is cancelled.
The orders with DQ attribute disclose only a part of the total order quantity to the market.

An active order with disclosed condition tries to maximise the quantity as possible
regardless of the disclosed quantity i.e. a single trade takes place for a quantity more than
the disclosed quantity.

If an active order with the disclosed quantity cannot trade its total quantity, it is added to the
regular lot book in the price/time priority. The disclosed order quantity is determined as
follows:
(a) If the remaining order quantity is less than or equal to the original disclosed quantity, the
disclosed order quantity is set as equal to remaining order quantity.

(b) If the remaining order quantity is more than the original disclosed quantity, the disclosed
order quantity is set to the original disclosed quantity.
Once an order with the disclosed quantity has become a passive order, it trades only in units of
disclosed quantity or less. However, if there is no other competing order with the same price, a
single trade of as much quantity as possible takes place between the two orders.

When the entire disclosed order quantity is fully traded the disclosed quantity gets replenished
and this continues till the entire order quantity is fully traded. Each time the disclosed quantity
is replenished; the order is stamped with the current trading time and added to the regular order
book as fresh order.

Stop Loss Matching

All stop loss orders entered into the system are stored in the stop loss book. These orders can
contain two prices:
(a) Trigger Price: It is the price at which the order gets triggered from the stop loss book.
(b) Limit Price: It is the price for orders after the orders get triggered from the stop loss book. If

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