FUNCTIONING
OF STOCK EXCHANGE LISTING Listing of shares,
on a stock exchange, means, such shares can be bought and sold, in stock exchange. A
Company, which intends to issue shares, through prospectus, shall have to apply
to one or more stock exchanges, for getting its shares listed. The detailed
and elaborate procedure of getting the shares listed on a stock exchange is monitored
by SEBI. The SEBI, issues guidelines and notifications, from time to time, with
regard to listing of securities. Once the shares are listed, the are divided
into two categories: 1. GROUP "A" SHARES
2. GROUP "B"
SHARES GROUP "A" SHARES: are referred to as " Cleaned
Securities " or " specified shares". The facility for carrying
forward a transaction from one account period to another is available for these
shares. Group "A" shares represent companies, with huge amount of capital,
and equally a large scope for investment. These shares are frequently traded and
command higher price earning multiples. GROUP "B" SHARES:
are referred to as, Non cleaned securities or non-specified shares. For these
groups facility of carrying forward is not available. Whenever a share is
moved from Group "B" to Group "A" its market price rises;
likewise, when a share is shifted from Group "A" to Group "B",
its market price declines. There are some criteria and guide lines, laid down
by stock exchange, for shifting stocks from the non-specified list to the specified
list. VARIOUS ORDERS AND TRANSACTIONS:
SETTLEMENT CYCLES There
are various types of orders, which can be placed by the buyer or seller. They
are: Market Order
A market order is to be executed as soon as
possible at the best prevailing price in the market. Limit order
A
limit order is constrained by the price limits specified by the investor. The
seller specifies the minimum price that the security must fetch, and the buyer
specifies the maximum price that he is willing to pay. A Day order
A
day order remains valid only for the day when it is placed. If the order is not
executed on that day, it automatically lapses. A Week order
A
week order is one, which is active for a week A Month order
A
month order is an order, which is valid for one month. An open order
An open order is an order, which is valid for one month. An open order remains
in effect until it is executed or cancelled.
Similarly there are certain
types of transactions, which are allowed on the stock exchanges. They are:
Transactions
for Spot delivery
The delivery and payment is effected within the time
or on the date stipulated when entering into the transaction or within fourteen
days, whichever is shorter.
Transaction for Hand delivery
These
transactions also referred to as the transaction for "the account",
are cleared and settled through the clearing house.
Transactions
for special delivery
The delivery and payment is effected within any time
exceeding fourteen days following the date of the contact as may be stipulated
when entering into the transaction, provided the same is permitted by the governing
board or the president of the exchange.
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