TRADING , CLEARING AND SETTLEMENT

8/7/2019 TRADING , CLEARING AND SETTLEMENT

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THE TRADER WORK STATION

The market watch window

Placing orders on the trading system

Inquiry window


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This enables theuser to input two or

three orders

simultaneously into

the market.

Market spread/combination order entry

These orders will have the condition attached to

it that unless and until the whole batch of orders

finds a counter match, they shall not be traded.

This facilitates spread and combination trading

strategies with minimum price risk.


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Basket trading

A

trading

member can

buy or sell a

portfolio

through a

single order,

once he

determines

its size.The system automatically

works out the quantity of

each

security to be bought or sold

in proportion to their weights

in the portfolio.

This enables the generation of portfolio offline order filesin the derivatives trading system and its execution in the

cash segment.


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FUTURES AND OPTIONS MARKET INSTRUMENTS

Index based futures

Index based options

Individual stock options

Individual stock futures


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Contract specifications for index futures

If trading is for a minimum lot size of 100 units. If the index level

is around 2000, then the appropriate value of a single index futures

contract would be Rs.200,000. The minimum tick size for an index future

contract is 0.05 units. Thus a single move in the index value would imply

a resultant gain or loss of Rs.5.00 (i.e. 0.05*100 units) on an open

position of 100 units.

NSE trades Nifty, CNX IT, BANK Nifty, CNX Nifty Junior, CNX100, Nifty Midcap 50 and Mini Nifty 50futurescontractshaving

one-month, two-month and three-month expiry cycles.

All contracts expire on the last Thursday of every month.

Thus a January expiration contract would expire on the last Thursday ofJanuary and a February expiry contract would cease trading on the last

Thursday ofFebruary

Depending on the time period for which you want to take an exposure

in index futures contracts, you can place buy and sell orders in the

respective contracts.

The Instrument type refers to "Futures contract on index" and Contractsymbol - NIFTY denotes a "Futures contract on Nifty index" and the

Expiry date represents the last date on which the contract will be

available for trading.

All passive orders are stacked in the system in terms of price -time

priority and trades take place at the passive order price (similar to the

existing capital market trading system).

The best buy order for a given futures contract will be the order to buy

the index at the highest index level whereas the best sell order will be

the order to sell the index at the lowest index level.


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Generation of strikes

Conversely, if Nifty closes at around 1980 to ensure strike scheme of 4 -1-4,

two new further contracts would be required at 1940 and 1950.

Suppose the Nifty has closed at 2000 and options with strikes 2040,

2030, 2020, 2010, 2000, 1990, 1980, 1970, 1960 are already available.

It is further assumed when the Nifty index level is up to 4000, t he

exchange commits itself to an inter-strike distance of say 10 and the

scheme of strikes of 4-1-4.

If the Nifty closes at around 2020 to ensure strike scheme of 4-1-4, two

new further contracts would be required at 2050 and 2060.

Conversely, if Nifty closes at around 1980 to ensure strike scheme of 4 -

1-4, two new further contracts would be required at 1940 and 1950.


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Contract specifications for stock futures

Trading in stock futures commenced on the NSE from November 2001.These contracts are cash settled on a T+1 basis.The expiration cycle for stock futures is the same as for index

futures, index options and stock options.A new contract is introduced on the trading day following

the expiry of the near month contract.


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Contract specifications for stock options

Trading in stock options commenced on the NSE from July 2001These contracts are American style and are settled in cash.The expiration cycle for stock options is the same as for index futures

and index options.

A new contract is introduced on the trading day following the

expiry of the near month contract. NSE provides a minimum

of seven strike prices for every option type (i.e. call and put)

during the trading month.

There are at least three in-the-money contracts, three out-of-

the-money contracts and one at-the-money contract available

for trading


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TRADING , CLEARING AND SETTLEMENT