Procedures for Dealing at Stock Exchange
Following procedures are normally followed for dealing at stock exchange −
No one can directly deal in stock exchange, therefore, any person who wants to sell or buy securities, requires a broker through whom selling or buying of securities can be done.
After finalization of a member or a broker, intending buyer or seller of the securities, places an order according to his choice, mentioning tentative quantity, and price. Thereupon, broker opens a new account for each client and start trading in the best possible way.
After getting an order, broker tries to finalize the deal between seller and buyer. After finalization of deal, seller and buyer of securities send a selling and buying note respectively mentioning the detail of traded securities.
Finally, settlement of account may be done in the following three manners −
When the settlement of account is done as per the fixed and agreed date, it is called as “liquidation in full.”
When only difference of agreed price and ruling price is settled on the fixed date, it is called as “liquidation by payment of difference.”
When a settlement is carried forward to the next settlement period, it is known as “carried over to next settlement period”.
In case, when purchase is delayed and charge debited by the broker to purchaser is known as “contango” (Contango charge is also known as “Badla” Charge) and in case, where sale is delayed by the seller and charge debited by the broker is known as “backwardation.”