Trading The trading system on the NCDEX provides a fully automated screen based trading for futures on commodities on a nationwide basis as well as online monitoring and surveillance mechanism. It supports an order driven market and provides complete transparency of trading operations. Order matching is essential on the basis of commodity, its price, time and quantity. All quantity fields are in units and price in rupees. The exchange specifies the unit of trading and the delivery unit for futures contracts on various commodities. The exchange notifies the regular lot size and tick size for each of the contracts traded from time to time. When any order enters the trading system, it is an active order. It tries to finds a match on the other side of the book. If it finds a match, a trade is generated. If it does not find a match, the order becomes passive and Continue reading
Indian Financial Market
Rolling Settlement System
Rolling Settlement process , also known as Compulsory Rolling Settlement (CRS) where trades on a stock exchange were to be accounted for and settled on T i.e. trade day plus “X” trading days, where “X” could be 1,2,3,4 or 5 days. Thus, in essence, it means that if say a T+n, where n is the number of days system of rolling settlement was to be followed, trades accounted for on the T i.e. trade day were to be settled on the nth working day minus the T day. The Account period of settling transactions was followed in India for a long time. It worked on the idea that transactions for an entire week were to be settled on a pre-specified date the very next week. However, this process was considered too technical and cumbersome. This settlement risk is lowered in Rolling Settlement as the settlement of debts accounting to different Continue reading
Major Participants and Players in Financial Markets
In the financial markets, there is a flow of funds from one group of parties (funds-surplus units) known as investors to another group (funds-deficit units) which require funds. However, often these groups do not have direct link. The link is provided by market intermediaries such as brokers, mutual funds, leasing and finance companies, etc. In all, there is a very large number of players and participants in the financial market. These can be grouped as follows : The individuals: These are net savers and purchase the securities issued by corporates. Individuals provide funds by subscribing to these security or by making other investments. The Firms or corporates: The corporates are net borrowers. They require funds for different projects from time to time. They offer different types of securities to suit the risk preferences of investors’ Sometimes, the corporates invest excess funds, as individuals do. The funds raised by issue of Continue reading
Gilt-Edged (Government) Securities Market
Government securities refer to the marketable debt issued by the government of semi-government bodies. A government security is a claim on the government. It is a totally securer financial instrument ensuring safety of both capital and income. That is why it is called gilt-edged security or stock. Central Government securities are the safest among all securities. Government securities are issues by: Central Government State Government Semi-Government authorities like local government authorities, e.g., city corporations and municipalities Autonomous institutions, such as metropolitan authorities, port trusts, development trusts, state electricity boards. Public Sector Corporations Other governmental agencies, such as SFCs, NABARD, LDBs, SIDCs, housing boards etc. Characteristics of Gilt-edged Securities Market Gilt-edged securities market is one of the oldest market in India. The market in these securities is a significant part of Indian stock market. Main characteristics of government securities market are as follows: Supply of government securities in the market arises Continue reading
Money Market in India – Development, Features and Instruments
Money market is an important segment of the financial market (system) as it provides avenue for equilibrating the short term (ranging from overnight up to an year) demand for and supply of funds. It also plays an important role in the transmission mechanism of monetary policy, as it acts as a medium through which the central bank can influence the short term liquidity and interest rates in the financial system. As per Reserve Bank of India (RBI) definition, a Money market is “a market for short terms financial assets that are close substitute for money, facilitates the exchange of money in primary and secondary market”. Indian money market was highly regulated and was characterized by limited number of participants. The limited variety and instruments were available. Interest rate on the instruments was under the regulation of Reserve Bank of India. The sincere efforts for developing the money market were made when the Continue reading
Composition and Importance of Money Market
Composition of Money Market The money market is not a single homogeneous market. It consists of a number of sub-markets which collectively constitute the money market. There should be competition within each sub-market as well as between different sub-markets. The following are the main sub-markets of a money market: Call Money Market. Commercial Bills Market or Discount Market. Acceptance Market. Treasury bill Market. Indian money market was highly regulated and was characterized by limited number of participants. The limited variety and instruments were available. Interest rate on the instruments was under the regulation of Reserve Bank of India. The sincere efforts for developing the money market were made when the financial sector reforms were started by the government. Money markets are the markets for short-term, highly liquid debt securities. Examples of these include bankers’ acceptances, repos, negotiable certificates of deposit, and Treasury Bills with maturity of one year or less Continue reading