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2. Acknowledgement
My deepest thanks to Shruti mam for guiding us through this project and
for supporting us through out. Mam’s suggestions and recommendations
have been invaluable for this project. Then I would like to thank my
teacher, for guiding me and my friends throughout this project. We had
some difficulties in doing this task, but she taught us patiently until we
knew what to do.
Last but not least, my friends who were doing this project with me and
sharing our ideas. They were helpful that when we combined and discussed
together, we had this task done.
I would also like to thank the college and Mumbai University for providing
me with the opportunity to do this project.

3. Introduction to Trading
Trade is the transfer of ownership of goods and services from one person
or entity to another. Trade is sometimes loosely called commerce or
financial transaction or barter. A network that allows trade is called a
market. The original form of trade was barter, the direct exchange of goods
and services. Later one side of the barter was the metals, precious metals
(poles, coins), bill, and paper money. Modern traders instead generally
negotiate through a medium of exchange, such as money. As a result,
buying can be separated from selling, or earning.
Stock exchange has two elements – Trading and clearing and settlement.
There are basically three tasks performed in process of buying and
selling of securities. They are-
Trading
Clearing
Settlement
Trading basically deals with putting an order and its execution. Clearing
deals with determination of obligations, in terms of funds and securities.
Settlement means that the trade will be completed and NSCCL acts as a
counter party and takes obligation for the same. It has created a faith in the
investors that all trades would be settled and in no case any investor will
have to face any problem of insufficient funds and securities.

4. What Do You Need To Trade In Stock
Exchange
First step is to open a DEMAT account with any nationalized bank or the
bank you already have account in. All the DEMAT accounts function in a
same manner. You should also open a trading account with a reputed stock
broking firm. The stock broking firm you choose can make a huge
difference though. These firms perform extensive research in market and
guide their customers to make a secure and intelligent investment.
How to Trade in Stock Exchange India
For trading in the Indian stock exchange you need to open a stock exchange
account with an NSE/BSE certified stock broker. And to open your stock
exchange trading account, you will require the following documents:
1. PAN Card
2. Proof of residence (Address proof) – You can provide any one of the
following for this:
3. Identity Proof
4. Two passport sized photographs
Please Note – Following work as address proof and identity proof
Driving license
Voter's ID
Passport
Photo ration card

5. Settlement Agencies
The NSCCL, along with other agencies like clearing members, custodians,
clearing banks and depositories settles trades executed on the exchange.
The National Securities Clearing Corporation Ltd. (NSCCL), a wholly
owned subsidiary of NSE, was incorporated in August 1995. It was set up
to bring and sustain confidence in clearing and settlement of securities; to
promote and maintain, short and consistent settlement cycles; to provide
counter-party risk guarantee, and to operate a tight risk containment system.
NSCCL commenced clearing operations in April 1996.
NSCCL carries out the clearing and settlement of the trades executed in the
Equities and Derivatives segments and operates Subsidiary General Ledger
(SGL) for settlement of trades in government securities. It assumes the
counter-party risk of each member and guarantees financial settlement. It
also undertakes settlement of transactions on other stock exchanges like,
the Over the Counter Exchange of India.

6. Custodians
As the name suggests, the custodians perform the task of keeping the
securities in a safe manner/custody. A financial institution that has the legal
responsibility for a customer's securities. This implies management as well
as safekeeping. They hold the documentary proof of securities, keeping the
title of the securities intact in the name of the holder.

7. Clearing Banks
Clearing banks act as a link between the clearing members and the NSCCL
for settlement of funds, i.e. pay-in and pay-out of funds. Every clearing
member gets an account opened with the clearing bank for this purpose
only. A clearing bank works on the instruction of the clearing member. A
clearing member after defining the obligations in terms of funds informs
the clearing bank about the obligations to be fulfilled. The clearing bank
makes available the funds required on the pay-out day to meet the
obligations on time.

8. Depositories
A depository is an organization created under Companies Act 1956 for the
purpose of facilitating electronic transfer of securities in a dematerialized
environment/form. The client/investors do not open an account with the
depository. Instead the job is performed by the agents of depositories in
India, namely NSDL & CDSL.
Depository is an institution or a kind of organization which holds securities
with it, in which trading is done among shares, debentures, mutual funds,
derivatives, F&O and commodities. The intermediatories perform their
actions in variety of securities at Depository on the behalf of their clients.
These intermediatories are known as Depositories Participants.
Fundamentally, there are two sorts of depositories in India. One is the
National Securities Depository Limited (NSDL) and the other is the Central
Depository Service (India) Limited (CDSL).

9. Orders
An order in a market such as a stock market, bond market, commodity market or financial derivative
market is an instruction from customers to brokers to buy or sell on the exchange. These instructions
can be simple or complicated. There are some standard instructions for such orders.
Market order
A market order is a buy or sell order to be executed immediately at current market prices. As long
as there are willing sellers and buyers, market orders are filled. Market orders are therefore used
when certainty of execution is a priority over price of execution.
A market order is the simplest of the order types. This order type does not allow any control over the
price received. The order is filled at the best price available at the relevant time. In fast-moving
markets, the price paid or received may be quite different from the last price quoted before the order
was entered.
A market order may be split across multiple participants on the other side of the transaction, resulting
in different prices for some of the shares.
Limit order
A limit order is an order to buy a security at not more, or sell at not less, than a specific price. This
gives the trader control over the price at which the trade is executed; however, the order may never
be executed ("filled"). Limit orders are used when the trader wishes to control price rather than
certainty of execution.
A buy limit order can only be executed at the limit price or lower. For example, if an investor wants
to buy a stock, but doesn't want to pay more than $20 for it, the investor can place a limit order to
buy the stock at $20 "or better". By entering a limit order rather than a market order, the investor will
not buy the stock at a higher price, but, may get fewer shares than he wants or not get the stock at all.
A sell limit order is analogous; it can only be executed at the limit price or higher.
Both buy and sell orders can be additionally constrained. Two of the most common additional
constraints are Fill or Kill (FOK) and all or None (AON). FOK orders are either filled completely on
the first attempt or canceled outright, while AON orders stipulate that the order must be filled with
the entire number of shares specified, or not filled at all. If it is not filled, it is still held on the order
book for later execution.
Time in force
A day order or good for day order (GFD) (the most common) is a market or limit order that is in
force from the time the order is submitted to the end of the day's trading session. For equity markets,
the closing time is defined by the exchange. For the foreign exchange market, this is until 5pm
EST/EDT for all currencies.

10. A good-till-cancelled (GTC) order requires a specific cancelling order. It can persist indefinitely
(although brokers may set some limits, for example, 90 days).
An immediate-or-cancel order (IOC) will be immediately executed or cancelled by the exchange.
Unlike a fill-or-kill order, IOC orders allow for partial fills.
Fill-or-kill orders
(FOK) are usually limit orders that must be executed or cancelled immediately. Unlike IOC orders,
FOK orders require the full quantity to be executed.
Most markets have single-price auctions at the beginning ("open") and the end ("close") of regular
trading. An order may be specified on the close or on the open, and then it is entered in an auction
but has no effect otherwise. There is often some deadline; for example, orders must be in 20 minutes
before the auction. They are single-price because all orders, if they transact at all, transact at the
same price, the open price and the close price respectively.
Combined with price instructions, this gives market on close (MOC), market on open (MOO),
limit on close (LOC), and limit on open (LOO). For example, a market-on-open order is guaranteed
to get the open price, whatever that may be. A buy limit-on-open order is filled if the open price is
lower, not filled if the open price is higher, and may or may not be filled if the open price is the
same.
Conditional orders
A conditional order is any order other than a limit order which is executed only when a specific
condition is satisfied.
Stop orders
A stop order (also stop loss order) is an order to buy (or sell) a security once the price of the
security has climbed above (or dropped below) a specified stop price. (Note that both bid and ask
prices can trigger a stop order.) When the specified stop price is reached, the stop order is entered as
a market order (no limit). This means the trade will definitely be executed, but not necessarily at or
near the stop price, particularly when the order is placed into a fast-moving market, or if there is
insufficient liquidity available relative to the size of the order.
The use of stop orders is much more frequent for stocks and futures that trade on an exchange than
those that trade in the over-the-counter (OTC) market.
[Broker Dependent] Charles Schwab definition: Stop orders and stop-limit orders are very similar,
the primary difference being what happens once the stop price is triggered. A standard sell-stop order
is triggered when the bid price is equal to or less than the stop price specified or when an execution
occurs at the stop price.
[Editorial point] Key point is "bid/ask" which are cues and do not represent the stock’s value. The
broker above moves the stop order to the market queue based on a BID queue not on a completed
transaction. For instance, on a stock XYZ closing at $20 the day before with a stop-loss order at $19
and which trades on low volume, the bid/ask at the open can be skewed in that at the open all the

11. market interest is not represented. The bid queue shows $18.5, the market opens, being the highest
bid the broker triggers the stop-loss and moves the order to the market, for which there has not even
been a trade, an agreed value. The stock trades for $20.50, never even trading at or below the stop-
loss order. Brokers who use the BID queue as a trigger violate the stop-loss definition as per the SEC
who defines it as a trade. The impetus for the broker definition is commissions.
A sell stop order is an instruction to sell at the best available price after the price goes below the
stop price. A sell stop price is always below the current market price. For example, if an investor
holds a stock currently valued at $50 and is worried that the value may drop, he/she can place a sell
stop order at $40. If the share price drops to $40, the broker sells the stock at the next available price.
This can limit the investor's losses (if the stop price is at or above the purchase price) or lock in some
of the investor's profits.
A buy stop order is typically used to limit a loss (or to protect an existing profit) on a short sale. A
buy stop price is always above the current market price. For example, if an investor sells a stock
short—hoping for the stock price to go down so they can return the borrowed shares at a lower price
(Covering)—the investor may use a buy stop order to protect against losses if the price goes too high.
It can also be used to advantage in a declining market when you want to enter a long position close to
the bottom after turn-around.
A stop limit order combines the features of a stop order and a limit order. Once the stop price is
reached, the stop-limit order becomes a limit order to buy (or to sell) at no more (or less) than
another, pre-specified limit price. As with all limit orders, a stop-limit order doesn't get filled if the
security's price never reaches the specified limit price.
A trailing stop order is entered with a stop parameter that creates a moving or trailing activation
price, hence the name. This parameter is entered as a percentage change or actual specific amount of
rise (or fall) in the security price. Trailing stop sell orders are used to maximize and protect profit as
a stock's price rises and limit losses when its price falls. Trailing stop buy orders are used to
maximize profit when a stock's price is falling and limit losses when it is rising.
For example, a trader has bought stock ABC at $10.00 and immediately places a trailing stop sell
order to sell ABC with a $1.00 trailing stop. This sets the stop price to $9.00. After placing the order,
ABC doesn't exceed $10.00 and falls to a low of $9.01. The trailing stop order is not executed
because ABC has not fallen $1.00 from $10.00. Later, the stock rises to a high of $15.00 which
resets the stop price to $14.00. It then falls to $14.00 ($1.00 from its high of $15.00) and the trailing
stop sell order is entered as a market order.
A trailing stop limit order is similar to a trailing stop order. Instead of selling at market price when
triggered, the order becomes a limit order.
A trailing stop trailing limit order is the most flexible possible order.

12. Timing
Trading on the BOLT System is conducted from Monday to Friday
between 9:15 a.m. and 3:30 p.m. normally. Refer Notice No.
20101014-8 for call auction.

13. Groups
The scripts traded on BSE have been classified into various groups.
BSE has, for the guidance and benefit of the investors, classified the
scripts in the Equity Segment into 'A', 'B', 'T' and 'Z' groups on
certain qualitative and quantitative parameters. Criteria for "A"
Group Companies
The "F" Group represents the Fixed Income Securities.
The "T" Group represents scripts which are settled on a trade-to-
trade basis as a surveillance measure.
Trading in Government Securities by the retail investors is done
under the "G" group.
The 'Z' group was introduced by BSE in July 1999 and includes
companies which have failed to comply with its listing requirements
and/or have failed to resolve investor complaints and/or have not
made the required arrangements with both the depositories, viz.,
Central Depository Services (I) Ltd. (CDSL) and National Securities
Depository Ltd. (NSDL) for dematerialization of their securities.
BSE also provides a facility to the market participants for on-line
trading of odd-lot securities in physical form in 'A', 'B', 'T' and 'Z'
groups and in rights renunciations in all groups of scripts in the
Equity Segment.
With effect from December 31, 2001, trading in all securities listed
in the Equity segment takes place in one market segment, viz.,
Compulsory Rolling Settlement Segment (CRS).
The scripts of companies which are in demat can be traded in market
lot of 1. However, the securities of companies which are still in the
physical form are traded in the market lot of generally either 50 or

14. 100. Investors having quantities of securities less than the market lot
are required to sell them as "Odd Lots". This facility offers an exit
route to investors to dispose of their odd lots of securities, and also
provides them an opportunity to consolidate their securities into
market lots.
This facility of selling physical shares in compulsory demat scripts is
called an Exit Route Scheme. This facility can also be used by small
investors for selling up to 500 shares in physical form in respect of
scripts of companies where trades are required to be compulsorily
settled by all investors in demat mode.

15. Listed Securities
The securities of companies, which have signed the Listing
Agreement with BSE, are traded as "Listed Securities". Almost all
scripts traded in the Equity segment fall in this category.

16. Permitted Securities
To facilitate the market participants to trade in securities of such
companies, which are actively traded at other stock exchanges but
are not listed on BSE, trading in such securities is facilitated as "
Permitted Securities" provided they meet the relevant norms
specified by BSE

17. Tick Size:
Tick size is the minimum difference in rates between two orders on
the same side i.e., buys or sells, entered in the system for particular
scrip. Trading in scripts listed on BSE is done with the tick size of 5
paisa.
However, in order to increase the liquidity and enable the market
participants to put orders at finer rates, BSE has reduced the tick size
from 5 paisa to 1 paisa in case of units of mutual funds, securities
traded in "F" group and equity shares having closing price up to Rs.
15 on the last trading day of the calendar month. Accordingly, the
tick size in various scripts quoting up to Rs.15 is revised to 1 paisa
on the first trading day of month. The tick size so revised on the first
trading day of month remains unchanged during the month even if
the price of scripts undergoes a change.

18. Computation of Closing Price of
Scripts
The closing price of scripts is computed by BSE on the basis of
weighted average price of all trades executed during the last 30
minutes of a continuous trading session. However, if there is no trade
recorded during the last 30 minutes, then the last traded price of scrip
in the continuous trading session is taken as the official closing price.

19. Settlement
Compulsory Rolling Settlement
All transactions in all groups of securities in the Equity segment and
Fixed Income securities listed on BSE are required to be settled on
T+2 basis (w.e.f. from April 1, 2003). The settlement calendar,
which indicates the dates of the various settlement related activities,
is drawn by BSE in advance and is circulated among the market
participants.
Under rolling settlements, the trades done on a particular day are
settled after a given number of business days. A T+2 settlement cycle
means that the final settlement of transactions done on T, i.e., trade
day by exchange of monies and securities between the buyers and
sellers respectively takes place on second business day (excluding
Saturdays, Sundays, bank and Exchange trading holidays) after the
trade day.
The transactions in securities of companies which have made
arrangements for dematerialization of their securities are settled only
in demat mode on T+2 on net basis, i.e., buy and sell positions of a
member-broker in the same scrip are netted and the net quantity and
value is required to be settled. However, transactions in securities of
companies, which are in "Z" group or have been placed under "trade-
to-trade" by BSE as a surveillance measure ("T" group) , are settled
only on a gross basis and the facility of netting of buy and sell
transactions in such scripts is not available.
The transactions in 'F' group securities representing "Fixed Income
Securities" and " G" group representing Government Securities for
retail investors are also settled at BSE on T+2 basis.
In case of Rolling Settlements, pay-in and pay-out of both funds and
securities is completed on the same day.

20. Members are required to make payment for securities sold and/ or
deliver securities purchased to their clients within one working day
(excluding Saturday, Sunday, bank & BSE trading holidays) after the
pay-out of the funds and securities for the concerned settlement is
completed by BSE. This is the timeframe permitted to the Members
to settle their funds/ securities obligations with their clients as per the
Byelaws of BSE.
The following table summarizes the steps in the trading and
settlement cycle for scripts under CRS :
DAY ACTIVITY
T o Trading on BOLT and
daily downloading of
statements showing details
of transactions and
margins at the end of each
trading day.
o Downloading of
provisional securities and
funds obligation statements
by member-brokers.
o 6A/7A* entry by the
member-brokers/
confirmation by the
custodians.
T+1 o Confirmation of 6A/7A
data by the Custodians
upto 1:00 p.m.
Downloading of final

21. securities and funds
obligation statements by
members
T+2 o Pay-in of funds and
securities by 11:00 a.m.
and pay-out of funds and
securities by 1:30 p.m. The
member-brokers are
required to submit the pay-
in instructions for funds
and securities to banks and
depositories respectively
by 10:40 a.m.
T+2 o Auction on BOLT at 2.00
p.m.
T+3 o Auction pay-in and pay-
out of funds and securities
by 09:30 a.m. and 10:15
a.m. respectively.
The pay-in and payout of funds and securities takes places on the
second business day (i.e., excluding Saturday, Sundays and bank and
BSE trading holidays) of the day of the execution of the trade.
The settlement of the trades (money and securities) done by a
Member on his own account or on behalf of his individual, corporate
or institutional clients may be either through the Member himself or
through a SEBI registered custodian appointed by him/client. In case
the delivery/payment in respect of a transaction executed by a
Member is to be given or taken by a registered custodian, the latter

22. has to confirm the trade done by a Member on the BOLT System
through 6A-7A entries. For this purpose, the custodians have been
given connectivity to the BOLT System and have also been admitted
as clearing member of the Clearing House. In case a registered
custodian does not confirm a transaction done by a Member within
the time permitted, the liability for pay-in of funds or securities in
respect of the same devolves on the concerned Member.
The following statements can be downloaded by the Members in
their back offices on a daily basis.
h. Statements giving details of the daily transactions entered
into by the Member.
i. Statements giving details of margins payable by the Member in
respect of the trades executed by him.
j. Statements of securities and fund obligation.
k. Delivery/Receive orders for delivery /receipt of securities.
BSE generates Delivery and Receive Orders for transactions done by
the Members in A, B1, B2 and F and G group scripts after netting
purchase and sale transactions in each scrip whereas Delivery and
Receive Orders for "T", "C" & "Z" group scripts and scripts which
are traded on BSE on "trade-to-trade" basis are generated on a gross
basis, i.e., without netting of purchase and sell transactions in a scrip.
However, the funds obligations for the Members are netted for
transactions across all groups of securities.
The Delivery Order/Receive Order provides information like the
scrip and quantity of securities to be delivered/received by the
Members through the Clearing House. The Money Statement
provides scrip wise/item wise details of payments/receipts of monies
by the Members in the settlement. The Delivery/Receive Orders and
Money Statement can be downloaded by the Members in their back
office

23. Pay-in and Pay-out for 'A', 'B', 'T', 'C',
"F", "G" & 'Z' Group of Securities
The trades done on BOLT by the Members in all securities in CRS
are now settled on BSE by payment of monies and delivery of
securities on T+2 basis. All deliveries of securities are required to be
routed through the Clearing House,
The Pay-in /Pay-out of funds based on the money statement and that
of securities based on Delivery Order/ Receive Order issued by BSE
are settled on T+2 day.

24. Demat pay-in:
The Members can effect pay-in of demat securities to the Clearing
House through either of the Depositories i.e. the National Securities
Depository Ltd. (NSDL) or Central Depository Services (I) Ltd.
(CDSL). The Members are required to give instructions to their
respective Depository Participants (DPs) specifying details such as
settlement no., effective pay-in date, quantity, etc.
Members may also affect pay-in directly from the clients' beneficiary
accounts through CDSL. For this, the clients are required to mention
the settlement details and clearing member ID through whom they
have sold the securities. Thus, in such cases the Clearing Members
are not required to give any delivery instructions from their accounts.
In case a Member fails to deliver the securities, the value of shares
delivered short is recovered from him at the standard/closing rate of
the scripts on the trading day.

25. Auto delivery facility:
Instead of issuing delivery instructions for their securities delivery
obligations in demat mode in various scripts in a settlement /auction,
a facility has been made available to the Members of automatically
generating delivery instructions on their behalf from their CM Pool
accounts maintained with NSDL and CM Principal Accounts
maintained with CDSL. This auto delivery facility is available for
CRS (Normal & Auction) and for trade-to-trade settlements. This
facility is, however, not available for delivery of non-pari passu
shares and shares having multiple ISINs. Members wishing to avail
of this facility have to submit an authority letter to the Clearing
House. This auto delivery facility is currently available for Clearing
Member (CM) Pool accounts and Principal accounts maintained by
the Members with the respective depositories.

26. Pay-in of Securities in Physical Form
In case of delivery of securities in physical form, the Members are
required to deliver the securities to the Clearing House in special
closed pouches along with the relevant details like distinctive
numbers, scrip code, quantity, etc., on a floppy. The data submitted
by the Members on floppies is matched against the master file data
on the Clearing House. If there is no discrepancy, the securities are
accepted.

27. Funds Pay-in
The bank accounts of Members maintained with the clearing banks,
viz., Axis Bank Ltd.,Bank of India, Bank of Baroda, Canara Bank,
Citi Bank, Corporation Bank, Dhanalaxmi Bank, HDFC Bank
Ltd., Hongkong & Shanghai Banking Corporation Ltd., ICICI Bank
Ltd, Indusind Bank Ltd., IDBI Bank, Kotak Mahindra Bank, Oriental
Bank of Commerce., Punjab National Bank, State Bank of
India, Standard Chartered Bank, Union Bank of India, Yes Bank are
directly debited through computerized posting for their funds
settlement obligations.
In case of Members whose funds pay-in obligations are not cleared at
the scheduled time, action such as levy of penalty and/or deactivation
of BOLT TWSs , is initiated as per the prescribed penalty norms.

28. Securities Pay-out
Demat securities are credited by the Clearing House in the
Pool/Principal Accounts of the Members. BSE has also provided a
facility to the Members for transfer of pay-out securities directly to
the clients' beneficiary owner accounts without routing the same
through their Pool/Principal accounts in NSDL/ CDSL. For this, the
concerned Members are required to give a client wise break up file
which is uploaded by the Members from their offices to the Clearing
House. Based on the break up given by the Members, the Clearing
House instructs the depositories, viz., CDSL & NSDL to credit the
securities to the Beneficiary Owners (BO) Accounts of the clients. In
case delivery of securities received from one depository is to be
credited to an account in the other depository, the Clearing House
does an inter-depository transfer to give effect to such transfers.
In case of physical securities, the Receiving Members are required to
collect the same from the Clearing House on the pay-out day.

29. Funds Payout
The bank accounts of the Members having pay-out of funds are
credited by the Clearing House with the Clearing Banks on the pay-
in day itself
In case a Member fails to deliver the securities, the value of shares
delivered short is recovered from him at the standard/closing rate of
the scripts on the trading day.

30. Shortages
The Clearing House arrives at the shortages in delivery of various
scripts by the Members on the basis of their delivery obligations and
actual delivery.
The Members can download the statement of shortages in delivery of
scripts in A, B1, B2, T, Z, F; Odd-lot & G group scripts on T+2 day,
i.e., Pay-in day. After downloading the shortage details, the Members
are expected to verify the same and report discrepancy, if any, to the
Clearing House immediately. If no discrepancy is reported within the
stipulated time, the Clearing House assumes that the shortage of a
Member is in order and proceeds to auction/ close-out the same.
Moreover, the value of shares delivered short is recovered from the
Member at the standard/closing rate of the scripts on the trading day.

31. Auctions
An Auction Tender Notice is issued by BSE to the Members
informing them about the names of the scripts short or not delivered,
quantity slated for auction and the date and time of the auction
session on the BOLT. The auction for the undelivered quantities is
conducted on T+2 day between 2:00 p.m. and 2.45 p.m. for all the
scripts under Compulsory Rolling Settlements except those in "Z"
group and scripts on "trade to trade" basis which are directly closed-
out. A Member who has failed to deliver the securities of a particular
company on the pay-in day is not allowed to offer the same in
auction. The Members, who participate in the auction session, can
download the Delivery Orders in respect of the auction obligations
on the same day, if their offers are accepted. The Members are
required to deliver the shares in the Clearing House on the auction
Pay-in day, i.e., T+3. Pay-out of auction shares and funds is also
done on the same day, i.e., T+3.

32. Self-Auction
The Delivery and Receive Orders are issued by BSE to the Members
after netting off their purchase and sell transactions in scripts where
netting of purchase and sell positions is permitted. It is likely in some
cases, a selling client has failed to deliver the shares sold in a
settlement to a Member. However, this may not result in failure of
the Member to deliver the shares to the Clearing House as there was
a purchase transaction of his some other buying client in the same
scrip and the same was netted off for the purpose of settlement. In
such a case, the Member would require shares so that he can deliver
the same to his buying client, which otherwise would have taken
place from the delivery of shares by his selling client. To provide
shares to the Members in such cases, they have been given an option
to submit the details of such internal shortages on floppies on pay-in
day for conducting self-auction (i.e., as if they have defaulted in
delivery of shares to the Clearing House). These shortages are
clubbed with the normal shortages in a settlement arrived at by the
Clearing House and the auction is conducted by the Clearing House
for the combined shortages.

33. Close-out
Close-out is affected for cases when no offer for particular scrip is
received in an auction or when Members who offer the scripts in
auction, fail to deliver the same or shortages pertaining to those
groups of securities for which auctions are not conducted. The close-
out rates for different segments are as under
o 'A', 'B' and 'F' group
The close-out rate is higher of the following rates :
a) The highest rate of the scrip from the trading day to the day
on which the auction is conducted for the respective settlement.
b) 20% above the closing rate as on the day of auction/close out
of the respective settlement.
o "Odd Lot", "T" and "Z" group and Patawat objections
The closeout rate is higher of the following rates:
a) The highest rate of the scrip from the day of trading to the
day of auction of the respective settlements;
b) 10% above the closing rate as on the day of auction/ close
out of the respective settlement.
o "G" group
In case of shortages in "G" group, the shortages are closed out
at Zero Coupon Yield Curve (ZCYC) plus a 5% penalty.
The closeout amounts are debited to the bank accounts of those
Members who have failed to deliver the securities against their
sale obligations and credited to the bank accounts of those
Members who had bought the securities but did not receive the
same.

34. Rectification of Bad Deliveries
One of the biggest problems faced by the investors in the secondary
market while dealing in physical securities is that of bad delivery
arising out of various reasons. Based on the reasons, these bad
deliveries are classified into two categories, namely;
o Patawat (Settlement) Objections
o Company Objections

35. Stock Exchange Trading in India Made
Easier
Stock exchange trading in India is carried out in 23 stock exchanges out of
which there are 2 major stock exchanges, namely National Stock Exchange
(NSE) and Bombay Stock Exchange (BSE). Stock exchanges here are
engaged in offering services for the stock traders and brokers to carry out
trading of bonds, stocks, and other securities.
Benefit from Stock Exchange Trading
Better returns from stock exchange market compared to interest on
fixed deposits, savings bank account etc.
Open to even the small investors. Start trading with small amount of
money as no minimum investment threshold is present.
Best way to earn easy money fast, over and above your regular
income.
No prior experience required for NSE trading and BSE trading
Stock Exchange Trading has got better because of:
Presence of transparency due to tighter regulation by SEBI
Many instruments available to suit trader’s financial needs
Access to your returns on an immediate basis
Utility Bill (Telephone, Electricity etc)