Page 117 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes 5.4 Trade Management

A trade is an activity in which a buy and a sell order match with each other. Matching of two
orders is done automatically by the system. Whenever a trade takes place, the system sends a
trade confirmation message to each of the users involved in the trade. The trade confirmation
slip gets printed at the trader workstation of the user with a unique trade number. The system
also broadcasts a message to the entire market through the ticker window displaying the details
of the trade.

This section describes trade-related activities like viewing the trades, trade cancellation, etc.
Before the trade is affected, the system performs checks with respect to the following parameters:
(a) The security in which the trade is to be affected is not suspended from operations.

(b) Trading members involved in the potential trade are not suspended from operations.
Once the trade for an order entered is confirmed by the system, a message is sent to the trader
workstation. The system generates a Trade Confirmation Slip that is printed on the printer of
the trader workstation.

5.4.1 Trade Cancellation

The user can use trade cancellation screen for cancelling trades done during the day. If the user
is a corporate manager of a trading member firm, he can request for trade cancellation for the
trades of any dealer of the trading members firm and if he is a branch manager of a branch, then
he can request for trade cancellation for the trades for any dealer of the branch of the trading
member firm.
The user can request for trade cancellation either from the previous trades screen or by using the
function key provided in the workstation. The trade cancellation request is sent to the Exchange
for approval and message to that effect is displayed in the message window. The counterparty to
the trade also receives the message. The counterparty then has to make similar request on the
same trading day. Once both the parties to trade send the trade cancellation request, the Exchange
either approves or rejects it. The message to that effect is displayed in the message window.
When a request for the trade cancellation is approved by the Exchange, the parties to trade
receive a system message confirming the trade cancellation and the trade cancellation slip is
printed at their respective trader workstations. If the Exchange rejects the trade cancellation
request, the trade cancellation rejection slip is printed at their respective trader workstations. If
counter party to the trade does not enter a trade cancellation request the Exchange rejects the
trade cancellation request.
Self Assessment

Fill in the blanks:
11. For auction market the price bands of ..................................... % are applicable.
12. An order with a ..................................... allows the user to disclose only a portion of the
order quantity to the market.

5.5 Auction

Auctions are initiated by the Exchange on behalf of trading members for settlement related
reasons. The main reasons are shortages, bad deliveries and objections. There are three types of
participants in the auction market:

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