Saturday, August 2, 2008


Okay guys, I am back again with our basics A2Z. Enjoy reading give me feedback...

Kerb Dealings

Transactions done among members after the closing of the official trading hours.

Long position

A position in which a person's interest in a particular series of options is as a net holder, meaning that the number of contracts bought is more than the number of contracts sold. It is similar for the futures contracts. A bull position in a security.

Listed Company

A public limited company which satisfies certain listings conditions and signs a listing agreement wit the stock exchange for trading in it securities. One important listing condition is that 25% of its issued capital should be offered to the public.

Limit order

Is an order for which the price (limit price) has been specified at the time of making the order entry. A limit order describes the instruction an investor gives to his broker setting out how much he's prepared to pay for shares (or any other asset for that matter).

LIBOR stands for London Inter Bank Offer Rate. It's the rate of interest at which banks offer to lend money to one another in the so-called wholesale money markets in the City of London. Money can be borrowed overnight or for a period of in excess of five years.


Banks also offer to borrow money in the wholesale money markets. The rate is called the London Inter Bank Bid Rate (LIBID).

Market maker
Market makers are players in the stockmarket who trade as principals and may actively try to encourage/discourage trading by changing the prices they quote to tempt buyers and sellers into the market.

Member Firm
A member firm is a trading firm which has membership of the stock exchange.The firm is permitted to deal in shares on behalf of its clients or on behalf of the firm itself.

Market order

Is an order for which no price has been specified at order entry.


When a buy and a sell order satisfy the price - time priority, they can result in a trade. This process is called as matching. The match can be full or partial depending on the order conditions.

Minimum Fill (MF) Order

This is one of the special conditions where a minimum quantity is specified for an order. The quantity of the trade involving an order with a MF attribute should at least be this minimum quantity specified.

Market lot

Market lot is the minimum number of shares of a particular security that must be transacted on the Exchange. Multiples of the market lot may also be transacted.


The membership of the exchange consists of such number of members as the exchange in general meeting may from time to time determine. According to the stock exchange rules, no person shall be a member if he is less than 21 years or is not an Indian citizen or has been adjudged bankrupt or proved an insolvent or has been compounded by this creditors or has been convicted of an offence involving fraud or dishonesty or is engaged as principal or employee in any business other than that of securities.

Moorat Trading

Auspicious trading on Diwali day during specified hours.

Market capitalization

Market capitalisation is the market value of the equity of a company.Simply put, it is the number of outstanding shares multiplied by the market price of the company. The total market value at the current stock exchange list prices of the total number of equity shares issued by company It is also the currency which can be used in case of acquisitions (in terms of stock swaps).


The amount a buyer/seller of a futures contractor an uncovered (naked) option seller (writer) is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intra day price changes.


Minimum Fill (MF) orders allow the user to specify the minimum amount by which an order should be filled. For example, an order of Rs. 1000 lakhs with Minimum Fill Rs. 200 lakhs will require that each trade be for at least Rs. 200 lakhs. This could result in a partial match or a maximum of 5 possible trades of Rs. 200 lakhs each and a minimum of one trade of Rs.1000 lakhs.

Market risk

This arises whenever one invests in a specific market. This is the risk that every business operating in that market must bear - and is thus not avoidable by diversification. The only way to evade market risk is by moving to alternate forms of investment or exiting that specific market.

Nominal Value

The nominal value is the face value of share. If the face value of a share is Rs. 10 then it may also be stated that its nominal value is Rs. 10.

Non-Cleared Securities

Shares traded directly between brokers, and not cleared through the stock exchange clearing house. Also called non-specified Securities, B-group Securities, or Cash Shares.


National Association of Securities Dealers Automatic Quotation SystemAn American stock exchange. It’s also known as the technology heaven for companies in that category.

Negotiated Trade

Two Trading members can negotiate a trade outside the system. However this trade is accepted by the system only if Control approves. Both the parties enter each side of their trade in the system specifying each other's identity.

Normal Market

The orders entered in the system for normal trade matching depends primarily on a price/time priority. These orders can be Regular Lot, Special Terms, Stop Loss orders or Negotiated Trade entries. Each order must be equal to or be a multiple of the regular lot for that security.

No-delivery period

Whenever a book closure or record date is announced by a company, the Exchange sets a no-delivery period for that security. During this period, trading is permitted in that security. However, these trades are settled only after the no-delivery period is over. This is done to ensure that investor’s entitlement for corporate benefits is clearly determined.

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