Page 147 - DCOM510_FINANCIAL_DERIVATIVES

Financial Derivatives

Notes each of the contracts traded on this segment from time to time. When any order enters the
trading system, it is an active order. It tries to find a match on the other side of the book. If it finds
a match, a trade is generated.

!
Caution If it does not find a match, the order becomes passive and goes and sits in the
respective outstanding order book in the system.

Self Assessment

Fill in the blanks:
1. The futures & options trading system of NSE, called …………………………… trading
system.
2. Trading members can trade either on their own account or on behalf of their clients
including ……………………………

3. Clearing members are members of ……………………………
4. A …………………………… clearing member is a clearing member who is not a trading
member.

5. A participant is a client of trading members like it ……………………………
6. …………………………… attempt to buy at the bid price and sell at the ask price, offsetting
their trades within seconds of making the original trade.

7. A …………………………… might make one trading decision and then hold that position
for days, weeks or months.

9.2 Corporate Hierarchy

In the F&O trading software, a trading member has the facility of defining a hierarchy amongst
users of the system. This hierarchy comprises corporate manager, branch manager, dealer and
admin.

 Corporate manager: The term is assigned to a user placed at the highest level in a trading
firm. Such a user can perform all the functions such as order and trade related activities of
all users, view net position of all dealers and at all clients level, can receive end of day
consolidated trade and order reports dealer wise for all branches of the trading member
firm and also all dealers of the firm. Only a corporate manager can sign off any user and
also define exposure limits for the branches of the firm and its dealers.

 Branch manager: This term is assigned to a user who is placed under the corporate manager.
Such a user can perform and view order and trade related activities for all dealers under
that branch.

 Dealer: Dealers are users at the bottom of the hierarchy. A Dealer can perform view order
and trade related activities only for oneself and does not have access to information on
other dealers under either the same branch or other branches.
 Admin: Another user type, ‘Admin’ is provided to every trading member along with the
corporate manager user. This user type facilitates the trading members and the clearing
members to receive and capture on a real-time basis all the trades, exercise requests and give
up requests of all the users under him. The clearing members can receive and capture all the
above information on a real time basis for the members and participants linked to him.

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