KINDS OF DELIVERY Spot Delivery Settlement Hand Delivery Settlement Clearing Settlement Special Delivery Settlement
MECHANISM OF SHARE TRADING The rules and procedures for buying and selling securities are the same in all the recognized stock exchanges in India. The procedures are listed below:
A. Purchase of Shares: (i) Purchase of existing shares from the Market:- Placing the order with the broker Receipt of Contract Note Intimation of delivery Sending shares for transfer
(i) Purchase of shares being issued by a Company:- Receipt of allotment letter/refund order Filling application form with application money Payment of allotment money and call money Endorsement of payment on share certificate
B. Sale of Shares: Placing the order with the broker Receipt of contract note Receipt of payment Delivery of share certificate
TYPE OF TRANSACTIONS Margin trading:- Margin trading is carried on by the clients with borrowed fund from their brokers. It is a popular method of speculative trading. Short selling:- Short selling means selling of securities without owning it.
Carry forward & badla charges:- It refers to postponement of the settlement of a transaction till the next settlement period. It is nothing but facility to carry forward the transaction form one settlement period to another. It involves payment of some charges known as “BADLA CHARGES” by the speculator. Badla charges are fixed based on demand and supply condition in the market.
SETTLEMENT PROCEDURE FOR SPECIFIED LIST Stock Exchanges allow speculative trading in shares listed in the forward list, allowing thereby for short-selling and long-buying of shares. All transactions on the specified list are taken stock on the badla day, once a week, being every Friday which is now on a weekly basis. The mechanics of these badla transactions are quite intricate, though pretty logical.
Two things may happen on the badla day as far as speculative transactions are concerned:
1. They are carried forward from one settlement period to the next by drawing up a fresh set of contract notes to give effect to the carry forward. 2. Either an interest called SeedhaBadla is paid to the seller by the buyer or charges as UndhaBadla is paid by the seller to the buyer depending on the net overbought or oversold position in any scrip.
SETTLEMENT PROCEDURE FOR NON-SPECIFIED LIST All business transacted in any week, between a Monday and Friday of the week, is settled on the next Saturday (riot the one immediately following). The price at which they are actually bought or sold is considered for the settlement. Delivery is made on the following Monday. Settlement and delivery in respect of specified shares take place as between the members and through the caring house. Both delivery of shares and, payment or receipt of money would he through the clearing.
All deliveries of shares/payments arising out of the badla day adjustments have to be settled with respective deliveries and payments before the next badla day. The transactions contracted by the member in respect of specified shares are entered into the "Settlement Register." The transactions executed during the settlement period with the clients/other members are balanced in this register and the outstanding transactions are adjusted at the "Carry Forward" or the "Havala" rates on the badla day.