Page 118 - DCOM507_STOCK_MARKET_OPERATIONS

Unit 5: Trading System in Stock Exchange

(a) Initiator: The party who initiates the auction process is called an initiator. Notes
(b) Competitor: The party who enters on the same side as of the initiator is called a competitor.
(c) Solicitor: The party who enters on the opposite side as of the initiator is called a solicitor.
The trading members can participate in the Exchange initiated auctions by entering orders as a
solicitor. E.g. If the Exchange conducts a buy-in auction, the trading members entering sell
orders are called solicitors.

When the auction starts, the competitor period for that auction also starts. Competitor period is
the period during which competitor order entries are allowed. Competitor orders are the orders
which compete with the initiator’s order i.e. if the initiator’s order is a buy order, then all the
buy orders for that auction other than the initiator’s order are competitor orders. If the initiator
order is a sell order then all the sell orders for that auction other than the initiators order are
competitor orders. After the competitor period ends, the solicitor period for that auction starts.
Solicitor period is the period during which solicitor order entries are allowed. Solicitor orders
are the orders which are opposite to the initiator order i.e. if the initiator order is a buy order,
then all the sell orders for that auction are solicitor orders and if the initiator order is a sell order,
then all the buy orders for that auction are solicitor orders.
After the solicitor period, order matching takes place. The system calculates trading price for the
auction and all possible trades for the auction are generated at the calculated trading price. After
this the auction is said to be complete. Competitor period and solicitor period for any auction
are set by the Exchange.

5.5.1 Entering Auction Orders

Auction order entry allows the user to enter orders into auctions that are currently running. To
view the information about currently running auctions ‘Auction Inquiry’ screens has to be
invoked. Further one can view one’s own outstanding orders for any auction by invoking
‘Outstanding Order Inquiry’ for auction market. All auction orders are valid for the trading day
only.
The user can do auction order entry by entering ‘AU’ in the book type of the order entry screen.
Symbol and Series that is currently selected in any of the market information windows (i.e. MW)
provides the defaults in the auction order entry screen. If Auction Outstanding Orders is up for
an auction that is either in a competitor or solicitor period, then the auction number has to be
entered. All fields in the auction order entry screen except auction number and settlement days
are same as normal market order entry screen. The screen also displays competitor period and
solicitor period.

The defaults that are provided on the auction inquiry screen are symbol, series, auction number,
settlement days and quantity (available for auction). The user can edit the default values if
required. The fields in the auction order entry screen that has to be entered are PRO/CLI selection,
account number (not mandatory), participant and remarks.
Solicitor period for an auction starts as soon as the auction starts. The duration of the solicitor
period is set by the Exchange. The system accepts the solicitor orders in any currently running
auction only if the solicitor period for that auction is in progress. Currently, the trading members
cannot initiate auctions in any security. They can only participate as solicitors in auctions initiated
by the Exchange. In Exchange initiated auctions, the competitor period is set to zero and therefore
only solicitor period is available.
(i) Entering Solicitor Order: To enter a solicitor order, auction order entry screen has to be
invoked and the auction number or symbol series in AUC No. (auction number) field has
to be entered. The AUC No. and symbol series combination is validated and if an error is

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