How Business is transacted in Stock Exchange

Definition Of Business Transaction

Economic activity and event that initiates the accounting process recording it in the forms accounting system.

Definition of stock exchange

A stock exchange is an entity which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. The Stock Exchange (in German: Die Brse) is a book written by Maximilian Weber, a German economist and sociologist in 1896. Note that the original edition was in German and the title can be translated as "The Stock Exchange". The Securities Contracts ( Regulation )Act, 1956, has defined Stock Exchange as on association, organization or body of individuals, heather incorporated or not, established for the purpose of assisting, regulating and controlling business of buying, selling and dealing in Securities.

How business is transacted in stock exchange

There are four stage of typical investment transaction Placing an order with a broker Execution of order Reporting the deal to the client Settlement of transaction

Placing an order with a broker

Order should be placed according to how you are going to trade ie. How you intend to enter and exit the market. Improper order placement can skew your entry and exist points.

Types of order
Market order Stop order Limit order

Execution of order
Often investors and traders alike do not fully understand .what happens when you click the enter button on your online trading account. If you think your order is always filled immediately after you click the button in your account, you are mistaken. In fact, you might be surprised at the Variety of possible ways in which an order can be filled and the associate time delay. How and where you order is executed can affect the cost of your transaction and the price you pay for the stock

Reporting the deal to the client

Settlement of transaction
Settlement cycle is the period for which equities are traded in exchange for Indian stock exchange NSE, the cycle start on Wednesday and ends on the following Tuesday, and for BSE on Monday and ends on Friday. At the end of this sell cycle period the obligations of each broker are calculate and the broker settle their respective obligation . According, to the guid , law and regular institutionalized by the clearing agency. Whole set of money transaction is perform by a bank in stock exchange premises.

Types of transactions in stock exchange

Investment transaction Speculative transaction

Section 43(5) Speculative Transactions

Speculative transaction means a transaction in which a contract for sale and purchase of any commodity, including stocks and shares, is periodically or ultimately settled otherwise by actual delivery or transfer of the commodity.

Types of speculative transaction

Spot transaction Ready delivery transaction Forward transaction

Defects in trading in Indian stock exchange

Lack of integrations Specified and non-specified Shares Margins The system of settlement and carry forward Investors interest

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