A position in which a person's interest in a particular series of options is as a net seller (writer) meaning that the number of contracts sold exceeds the number of contracts bought. It is similar in case of futures contracts.
A Short sale occurs when a person believing that the prices of shares will fall, sells shares that he does not own with the intention of purchasing the shares at lower price at the time delivery has to be made. This is also known as forward sale.
The bottom of a trade cycle when prices and employment are at their lowest, reflected in the downward movement of share prices, Recovery from a slump is often slow.
Spot purchase or sale implies that the deal is for immediate cash and the shares are to be delivered immediately.
Options and futures transactions involving two or more series of the underlying asset.
A stag is an investor or speculator who subscribes to a new issue with the intention of selling them soon after allotment to realise a quick profit.
also called exercise price. The price for which the underlying stock index or other asset may be purchased (in the case of a call) or sold (in the case of a put) by the option buyer (holder) upon exercise of the option contract.
The market in existing securities provided by the Stock Exchange.The secondary market, by providing a method of buying and selling securities, overcomes the basic mis-match between the needs of
savers/investors who provide new money and the requirements of capital raisers/borrowers.
The payment of cash for securities and, conversely, the delivery of securities against payment - the conclusion of a securities transaction by delivery. Settlement is the payment or receipt of an outstanding due at the end of the settlement period.
The day on which bought securities are due for delivery to the buyer and the appropriate consideration to the seller.
This is a legal document which can be used as proof of ownership of a shareholding. But with 30,000 plus share transactions a day going through the London stockmarket in the early 1990's, a lot of paper was being
generated. A more efficient way of handling share settlements is to do it electronically as happens in many other countries.
A Security is a valid and unique combination of Symbol and Series. Securities are traded in the Capital Market. Shares and Debentures are some examples of securities.
The trading member who has placed the order for selling the security.
The dealer can place an order that carries special conditions and restrictions regarding the way the order value can be matched. These terms are called Special Terms. The typical special terms are Minimum Fill and All or None.
Orders that have spot settlement are entered into the Spot market.
The dealer can enter a regular lot or a special term order with a 'trigger' price. Such orders are called Stop Loss orders. The stop loss orders are not taken for matching unless the trigger price is either reached or if it is surpassed by the last traded price for the security. Once the market price reaches or surpasses the trigger price, the 'stop loss' attribute is removed and the order is taken up for regular matching process.
Settlement guarantee is the guarantee provided by the clearing corporation for settlement of all trades. This implies that the trade will be settled even if one of the parties to the trade viz; the buyer or the seller defaults. This prevents a cascading effect in the market due to the default of one party. The clearing corporation has set up a settlement guarantee fund through contributions from the members which is used for this purpose.
The process of splitting shares that have a high face value into shares of a lower face value is known as splitting. For e.g: A share with a face value of Rs 100/- may be split into ten shares of Rs 10/- each. The reverse process of combining shares that have a low face value into one share of higher value is known as consolidation.
A market in which securities are traded for immediate delivery, as distinct from a forward market. Spot in this context means immediately effective, so that spot price is the price for immediate delivery. The actual delivery of securities takes place either on the same day of the contract or on the next day. Trading by delivery of shares and payment for the same on the date of purchase or on the next day.
The instruction given by a registered holder of shares to the company to stop the transfer of shares as a result of theft, loss etc,. This is done in order that the shares are not unlawfully transferred in the event of loss or theft of the share certificates.
For administrative convenience, the stock exchange divides the year into a number of settlement periods each of generally one week duration. The first and the last day trading of each settlement period are fixed in advance and so are settlement days for delivery and payment.
For the purpose of trading, a security is categorised either as a 'specified' shares or a 'non-specified' shares. This is done by stock exchange authorities.
The ad valorem duty of 1/2 per cent payable by buyers for transfer of shares in their name.
An arrangement by which shares of one company are swapped for another in a specified ratio
An option given to a person to buy stock at a predetermined price at a future date
Screen Based Trading
Screen based trading uses modern telecommunications and computer technology to combine information transmission with trading in financial assets. Trading members are connected to the Exchange from their workstations to the central computer located at the Exchange via satellite using VSATs (Very Small Aperture Terminals). Buy and sell orders from the brokers reach the central computer located at NSE and are matched by the computer.
A Solicitor is the auction participant who is on the opposite side of the Initiator's order. If the Initiator is a buyer then the solicitor will enter sell orders for the same security.
Splits are about as exciting as getting change for a Rs100 note. Depending upon the split ratio one share of a company is split into the decided number. This is done by reducing the face value of the scrip. Stock splits are expected to improve liquidity in a stock.