The stock exchanges have introduced a computerized trading system to provide a fair, transparent, efficient and cost effective market mechanism to facilitate the investors.
The trading system comprises of four distinct segments, which are:
i) T+2 Settlement System
In the T+2 settlement system, purchase and sale of securities is netted and the balance is settled on the second day following the day of trade.
Benefits of T+2 Settlement System
It reduces the time between execution and settlement of trades, which in turn reduces the market risk. It reduces settlement risk, as the settlement cycle is shorter.
ii) Provisionally Listed Counters
The shares of companies, which make a minimum public offering of Rs.100 million, are traded on this segment from the date of publication of offering documents. When the company completes the process of dispatch/credit of allotted shares to subscribers, through CDC it is officially listed and placed on the T+2 counter. Trading on the provisionally listed counter then comes to an end and all the outstanding transactions are transferred to the T+2counter with effect from the date of official listing.
iii) Spot/T+1 Transactions
Spot transactions imply delivery upon payment. Normally in spot transactions the trade is settled within 24 hours.
iv) Futures Contract
A Futures contract involves purchase and sale of a financial or tangible asset at some future date, at a price fixed today |
