Trading Mechanism

The futures and options trading system of NSE. called NEAT F&O trading system, provides a fully automated screen based trading for Nifty futures and options and stock futures and options on a nation wide basis and an online monitoring and surveillance mechanism. It supports an anonymous order driven market which provides complete transparency of trading operations and operates on strict price-time priority. It is similar to that of trading of equities in the cash market segment. The NEAT-F&O trading system is accessed by two types of users. The Trading Members have access to functions such as order entry, order matching, order and trade management. It provides tremendous flexibility to users in terms of kinds of orders that can be placed on the system. Various conditions like Immediate or cancel, Limit/Market price. Stop loss etc., can be built into an order. The Clearing Members use the trader workstation for the purpose of monitoring the Trading Members for whom they clear the trades. Additionally, they can enter and set limits to positions, which a trading member can take.

TURNOVER

The trading volumes on NSE’s derivatives Market has seen a steady increase since the launch of the first derivatives contract i.e.. index futures in June, 2000

The average daily turnover at NSE now exceeds Rs. 10.000 Crore. A total of 77.017.185 contracts w’ith a total turnover of around Rs.2.547.053 crore were traded during the year 2004-2005.

 

QUESTIONS AND ANSWERS ON CHAPTER ONE

Q. Futures Trading commenced first on?

  1. Chicago Board of Trade.
  2. Chicago Mercantile Exchange.
  3. Chicago Board Options Exchange.
  4. London International Exchange                              •

A. The correct answer is NO. 1.

Q. The underlying asset for a derivative contract can be?

  1. Equity
  2. Commodities
  3. Interest rate.
  4. Any of the above.

A. The correct answer is Number 4.         •

Q. Derivatives first emerged as…………………….. products.

  1. Speculative.
  2. Hedging
  3. Volatility
  4. Risky

A. The correct answer is Number 2.

Q. Who are participants in the Derivatives Markets?

  1. Hedgers.
  2. Speculators.
  3. Arbitrageurs
  4. All of the above.

A. The correct answer is Number 4.

Rs.2.547.053 crore were traded during the year 2004-2005.

 

Q. The first Exchange traded financial derivative in India Commenced with the trading of

  1. Index Futures.
  2. Index Options.
  3. Stock Options.
  4. Index rate Futures.

A. The correct Answer is Number 1.

Q. OTC.. derivatives are considered risky because?

  1. There is no formal margining system.
  2. They do not follow ay formal rules or mechanisms.
  3. They are not settled on a clearing house.
  4. All of the above.

A. The correct answer is Number 4.

Q. Which of the following is not an example of a derivative on , security derivative?

  1. Index Futures.
  2. Index Options.                                                          ,
  3. Stock Futures.
  4. Interest rate Futures.

A. The correct answer is Number 4.

 

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