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Funtion of Stock Exchange


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Funtion of Stock Exchange

When shares are listed on a stock exchange it clearly implies that they can be sold as well as bought. An organization that attempts to issue shares via prospectus needs to apply for one or more stock exchanges so as to get the shares listed. The elaborate as well as detailed process to get the shares listed on the stock exchange. Generally speaking, the shares are monitored by SEBI. SEBI issues notifications and guidelines on a frequent basis when it comes to listing securities. After the shares are listed, they are primarily divided into two categories. These are group A shares and group B shares.

Group A shares are known as the specified shares or cleaned securities. These types of shares can be transacted from an account period to another account period. These types of share represent organizations with an increasing number of capitals and at the same time offer a huge scope for speculation. More specifically, these shares are traded on a frequent basis and control maximum price earning.

Next, in the line are the group B shares. These shares are known as non specified shares or non cleaned securities. These groups of shares do not enjoy the carrying forward facility. The market price of a share rises when a group B share is transferred to group A. On the flip side, the market value of a share goes down when a group A share is transferred to group B. There are some guidelines and criteria that have been forwarded by the stock exchange. These guidelines should be adhered to so as to transfer stocks from any non-specified list to the specified list.

There are different kinds of orders which a seller or buyer may place. These are as follows:

  • Market Order:
  • You should execute this order no sooner than you find the best deal in the market.

  • Limit Order:
  • This order type is usually constrained by the price ranges that have been specified by the investor. To be more specific, in most cases you will find the seller specifying a minimum amount which the security should fetch. On the other hand, the buyer too enjoys the right of specifying the maximum amount which he intends to pay.

  • A Day Order:
  • This order is valid for only one day, i.e. the day when the order is placed. In case, the order fails to get executed on that specific day, the validity lapses.

  • A Week Order:
  • This type of order is valid for one day.

  • A Month Order:
  • This type of order is valid for a single month.

  • An Open Order:
  • This order is valid for only one month but stays in effect until it is cancelled or executed.

    Besides the different types of orders mentioned above, you will also come by various kinds of transactions. Some of them include:

  • Transactions for Spot Delivery:
  • The payment as well as delivery is affected on the specified date or time frame within 14 days or while entering into the transaction. Whichever is shorter is considered.

  • Transaction for Hand Delivery:
  • These types of transactions are known as the transaction for the account. These transactions are settled as well as cleared via the clearing house.

  • Transactions for Special Delivery:
  • The delivery as well as payment is affected when exceeding 14 days after the date of the contact.

Related Topics:

  • Stock Exchange

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