A sound risk management system is integral to an efficient clearing and settlement system. NSE introduced for the first time in India, risk containment measures that were common internationally but were absent from the Indian securities markets. NSCCL (National Securities Clearing Corporation Ltd.) has put in place a comprehensive risk management system, which is constantly upgraded to pre-empt market failures. It ensures that trading member obligations are commensurate with their networth. Risk containment measures include capital adequacy requirements of members, monitoring of member performance and track record, stringent margin requirements, position limits based on capital, on-line monitoring of member positions and automatic disablement from trading when limits are breached, etc.… Read the rest
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Rolling Settlement System
Rolling Settlement process , also known as Compulsory Rolling Settlement (CRS) where trades on a stock exchange were to be accounted for and settled on T i.e. trade day plus “X” trading days, where “X” could be 1,2,3,4 or 5 days. Thus, in essence, it means that if say a T+n, where n is the number of days system of rolling settlement was to be followed, trades accounted for on the T i.e. trade day were to be settled on the nth working day minus the T day.
The Account period of settling transactions was followed in India for a long time.… Read the rest
Trading Procedure at Stock Exchanges
The trading procedure at stock exchanges can be complex, and the specific procedures can vary depending on the exchange and the types of securities being traded. However, in general, the trading procedure at stock exchanges involves several key steps, including market opening, order placement, order matching, trade confirmation, and trade settlement.
Market Opening: The stock exchange’s market opening is typically announced, and trading begins at the designated time. The exact time of the market opening may vary depending on the exchange, but it is typically during normal business hours. The opening is often signaled by a bell or other announcement, and traders begin placing orders to buy or sell securities.… Read the rest