all or none stockmarket

7/31/2019 All or None Stockmarket

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coupons attached. These must be physically removed from the certificate and presented tothe originating company for payment of any dividend or interest to be made.

Bears

These stockmarket animals are pessimists, they expect share prices or any other type of

investment to fall. In a 'bear market' the general sentiment is that prices are going to go

lower and majority of dealers will sell as quickly as possible for fear of holding shares whichdiminish in value.Bears, like 'bulls' drive the market.

Basis Point (BP)

The smallest measure used in quoting yields on fixed income securities. One basis point isone percent of one percent, or 0.01%.

Bear Market

A prolonged period of falling securities prices in a stock market.

BondA debt security, or an IOU, issued by a company or government agency is called a bond. A

bond investor lends money to the issuer and, in exchange, the issuer promises to repay theloan amount on a specified maturity date; the issuer usually pays the bondholder periodicinterest payments over the period of the loan.

BadlaCarrying forward of transaction form one settlement period to the next without effecting

delivery or payment. Badla involves carrying forward of a transaction from one settlement

period to the next. The carry-forward is done at the making up price, which is usually theclosing price of the last day of settlement.

A badla transaction attracts the following payments / charges :

(a) margin money specified by the stock exchange board; and

(b) contango or badla charges (interest charges) determined on the basis of demand andsupply forces.

BargainTransaction between two members of the exchange. The terms "dealings" and "contracts"also have identical meanings.

Blue ChipsBlue Chips are shares of large, well established and financially sound companies with animpressive records of earnings and dividends. Generally, Blue Chip shares provide low to

moderate current yield and moderate to high capital gains yield. The price volatility of suchshares is moderate.

Bonus


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A free allotment of shares made in proportion to existing shares out of accumulated

reserves. A bonus share does not constitute additional wealth to shareholders. It merely

signifies recapitalization of reserves into equity capital. However, the expectation of bonusshares has a bullish impact on market sentiment and causes share prices to go up.

Book ClosureDates between which a company keeps its register of members closed for updating prior topayment of dividends or issue of new shares or debentures.

BullA bull is one who expects a rise in price so that he can later sell at a higher price.

Bull MarketA rising market with abundance of buyers and few sellers.

Base PriceThis is the price of a security at the beginning of the trading day which is used to determinethe Day Minimum/Maximum and the Operational ranges for that day.

BuyerThe trading member who has placed the order for the purchase of the securities

Bid and offerBid is the price at which the market maker buys from the investor and offer is the price atwhich he offers to sell the stock to the investor. The offer is higher than the bid.

BrokerageBrokerage is the commission charged by the broker. The maximum brokerage chargeable isdetermined by SEBI.

Basket TradingBasket trading is a facility by which investors are in a position to buy/sell all 30 scrips ofSensex in the proportion of current weights in the Sensex, in one go.

BetaIt is a standard measure of risk for an individual stock. It is the sensitivity of the movement

of the past share price of a stock to the movement of the market as a whole. The beta of

the market is taken as 1. A benchmark index (the Sensex, for instance) is taken as theproxy for the market.

Stocks with betas greater than 1 tend to amplify the movement of the market. If a stock


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has a beta of 1.20, it means that if the market has moved by 1%, the stock price wouldhave moved by an extra 1.2%.

BidThis is the highest price at which an investor is willing to buy a stock . Practically speaking,

this is the available price at which an investor can sell shares.

Bad delivery

When physical share certificates along with transfer deeds are delivered in the market there

are certain details to be filled in the transfer deed. Any improper execution of these details

result in a bad delivery. A bad delivery may pertain to the transfer deed or the sharecertificate, and maybe because of the transfer deed being torn, mutilated, overwritten,defaced etc.

Buy limit order

An order of buying a security with a condition that order will not be executed above the

specific mentioned price.

Buy on closeAn order of buying a stock, but only at the end of the trading day. Security will be bought inthe closing price range.

Breakout

When the price of a stock surpasses its initial high (resistance level) or falls below the initiallow (support level), it is termed as break out in technical analysis.

Book runnerInstitution that arranges and manages the book building process for the new public issue.

Beneficial ownerThe actual owner of the security, irrespective of who is holding the security.

Best askThe lowest price at which a stock is quoted to be sold.

Best bidThe highest price quoted for a particular stock to be bought.

Bid/Ask spreadThe difference between the ask price and bid price.

Bourse

The floor of a Stock Exchange.

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Cash Settlement
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Payment for transactions on the due date as distinct from carry forward (Badla) from onesettlement period to the next.

Clearing Days or Settlement DaysDates fixed in advance by the exchange for the first and last business days of each

clearance. The intervening period is called settlement period.

Clearing HouseEach Exchange maintains a clearing house to act as the central agency for effecting delivery

and settlement of contracts between all members. The days on which members pay orreceive the amounts due to them are called pay-in or pay-out days respectively.

CornerA situation where by an individual or a group acquires such control on a security that it

cannot be obtained or delivered for performance of existing contracts except at exorbitant

prices. In such situations, the Governing Board may intervene to regulate or even prohibitfurther dealings in that security.

CorrectionTemporary reversal of trend in share prices. This could be a reaction (a decrease following aconsistent rise in prices) or a rally (an increase following a consistent fall in prices).

CrisisReckless heavy short-sales leading to unduly depressed prices. In such a situation, theGoverning Board may prohibit short sales, fix minimum prices below which sells or

purchases are not permitted and limit further dealings only to closing out of existingcontracts.

CumMeans "with". A cum price includes the right to any recently declared dividend (CD) or right

share (CR) or bonus share (CB).

Closing Price

The trade price of a security at the end of a trading day. Based on the closing price of thesecurity, the base price at the beginning of the next trading day is calculated.

CounterpartyWhen a trading member enters an order, any other trading member with an order on theopposite side is referred to as the counterparty.

Carry forward trading


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Trading where the settlement of trades is postponed on the stock exchange until a future

settlement period involving payment of interest on the account. It refers to the trading in

which the settlement is postponed to the next account period on payment of contangocharges (known as vyaj badla) in which the buyer pays interest on borrowed funds or the

backwardation charges (a.k.a unda badla) in which the short seller pays a charge forborrowing securities.

ClearingClearing refers to the process by which mutual indebtedness among members is settled.

The clearing corporation matches the final buyers and sellers through multilateral netting.The members of the clearing corporation also known as clearing members settle their dueswith the clearing house that is operated by the clearing corporation. The clearingcorporation is the legal counter-party to both legs of every trade.

Company objectionAn investor sends the certificate along with the transfer deed to the company for transfer.

In certain cases the registration is rejected if the shares are fake, forged or stolen or if thereis a signature difference etc;. In such cases the company returns the shares along with aletter which is termed as a company objection.

Call OptionThis is the right, but not the obligation, to purchase shares at a specified price at a specified

date in the future. See Options.For this privilege, the buyer pays a premium which would be

a fraction of the price of the underlying security. You are gambling that the share price willrise above the option price. If this happens you can buy the shares and sell themimmediately for a profit.If the share price does not rise above your option price, you do not

exercise the option and it expires - all you have lost is the initial payment made to purchasethe option.

CallThe demand by a company or any other issuer of shares for payment. It may be thedemand for full payment on the due date, such as, for example, with a rights issue. It may,

alternatively, be the demand for a further payment when the total amount is payable byinstalments.The calls are usually made several months apart by call letter and the sharesare said to be paid-up when the final call has been paid. A call by a company should not be

confused with a call option.

Capital Adequacy

The test of a securities business's ability to meet its financial obligation.Capital adequacyrules mean that a bank/financial institution has to have enough money to conduct itsbusiness

Capitalization

The total value of the company in the stockmarket.This value is arrived at by multiplying the

number of shares in issue by the company's share price. This market capitalizationobviously fluctuates as the share price moves up and down.It's an important figure - if yourcompany is worth 2 billion, you'll have more credibility with bankers and other companies

you want to take over than if you're a little minnow with hardly any value.

Capitalization Issue


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Money from a company's reserves is converted into issued capital, which is then distributedto shareholders in place of a cash dividend. This is also known as a Scrip Issue.

Call Risk

The risk that bonds will be redeemed (or "called") before maturity. This possibility increasesduring periods of falling interest rates.

Capital AppreciationAn increase in the value of an investment, measured by the increase in a fund unit's valuefrom the time of purchase to the time of redemption.

Capital GainThe amount by which an investment's selling price exceeds its purchase price.

Capital MarketA market where debt or equity securities are traded.

Commercial Paper

Debt instruments issued by corporations to meet their short-term financing needs. Suchinstruments are unsecured and have maturities ranging from 15 to 365 days.

CommissionA fee charged by a broker or distributor for his/her service in facilitating a transaction.

Coupon

Interest rate on a debt security that the issuer promises to pay to the holder until maturity.

Usually expressed as a percentage of the face value

Consideration

Consideration is the total purchase or sale amount associated with a transaction. The

amount you 'pay' or 'receive'. It may also be the basis for working out the commission,taxes and any other charges you are asked to pay.

Contract

On any securities market this is the agreement between a buyer and a seller buy or sellsecurities. The written agreement between the seller and the buyer to transfer ownership of

the property from the former to the latter.It is a legally binding agreement for sale.In twoidentical parts, one signed by seller and one by purchaser. When the two parts areexchanged (exchange of contracts) both parties are committed to the transaction.

Convertible

Any security is described as convertible when it carries the right or option for the holder to

at some stage convert it in for another form of security at a fixed price. Convertibles areoften bonds or loan stock (but sometimes preference shares) which carry the right to be

converted into ordinary shares at some date in the future at a previously specified price.

Corporate Bonds

A corporate bond is an IOU issued by a public company, such as HLL,ITC, TELCO etc. When

you invest in a corporate bond, you are lending money to the company. In return you willreceive interest at a fixed rate and the promise that your capital will be repaid at a certaindate in the future. The guarantee that our capital will be returned is only as good as the


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company you are lending money to. While HLL, ITC, TELCO are considered 'good risks' by

investment pundits because they are blue chip companies, other smaller companies arelikely to be a less good risk.

Correction

A correction is a term to describe a downward movement in share prices. In other words, a

shake out or even a crash or mini-cash. Stockbrokers and fund managers like the termcorrection, perhaps because

they believe if they use the term crash or 'heavy fall', it'll cause panic. Whatever you decideto call a downward jolt in share prices, if you lose money, it may be described as acorrection, but you'll feel pretty sick all the same!

ClearingClearing refers to the process by which all transactions between members is settled throughmultilateral netting.

Cum-bonusThe share is described as cum-bonus when a potential purchaser is entitled to receive thecurrent bonus.

Cum-rightsThe share is described as cum-rights when a potential purchaser is entitled to receive thecurrent rights.

Carry Over MarginThe amount to be paid by operators to the stock exchange to carry over their transactions

from one settlement period to another.

Cash SettlementPayment for transactions on the due date as distinct from carry-forward (badla) from onesettlement period to the next

Capital lossThe negative difference between the selling price of the stock and purchase price of thestock.

Cash markets

The markets where securities (assets) have to be delivered immediately.

Capital Asset Pricing Model (CAPM)

A model describing the relationship between risk and expected return, and serves as a

model for the pricing of risky securities. CAPM says that the expected return of a security ora portfolio equals the rate on a risk-free security plus a risk premium. If this expectedreturn does not meet or beat required return then the investment should not be

undertaken.


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Circuit breaker

When a stock price increases or decreases by a certain percentage in a single day it hits the

circuit breaker. Once the stock hits the circuit breaker, trading in the stock above (or below)that price is not allowed for that particular day.

Custodial fees

The fees charged by the custodian for keeping the securities.

Cumulative preference sharePreference shares whose dividends will get accumulated, if the issuer does not make timely

dividend payments.

Convertible preference sharesPreference shares that can be converted into equity shares at the option of the holder.

Commercial Paper (CP)

CPs are negotiable, short-term, unsecured, promissory notes with fixed maturities, issued

by well rated companies generally sold on discount basis.

Counter-party riskIt is the risk that the other party to a contract may not fulfill the terms of a contract.

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Deep Discount BondIt is loan instrument different from an ordinary debenture which is usually offered at its facevalue and earns periodic interest till redemption and is redeemed with or without premium.

Deep discount bond is offered at a discount and fetches no periodic interest and isredeemed at the face value

Dividend

This is the income you receive as a shareholder from a company. When you buy an ordinaryshare in a company, you become a shareholder (an owner of the business) and to thatextent you will have certain entitlements including the right to receive dividend payments as

set by the board of directors and approved by the shareholders (sometimes calledmembers.)A dividend is a cut of the profits earned by the business for the year. This pay-out is not guaranteed and where it exists at all, the amount you'll receive will vary fromcompany to company and year to year.

Day TradingDay trading is the buying and selling of stocks during the trading day by individuals knownas day traders on their own account. The aim is to make a profit on the day and have noopen positions at the close of the trading session, the day.

Debenture

A loan raised by a company, paying a fixed rate of interest and which is secured on theassets of the company. Debentures are fixed interest securities in return for long-term
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loans, they tend to be dated for redemption between ten and forty years ahead of the date

of issue. They may be secured by a floating charge on the company's assets or they may be

tied to specific, named assets.Debenture interest has to be paid by a company whether itmakes a profit or not - if the debenture holders do not get paid they can legally force the

company into liquidation to realise their claims on the company's assets.

DerivativesInstruments derived from securities or physical markets. The most common types of

derivatives that ordinary investors are likely to come across are futures , options , warrantsand convertible bonds.

Beyond this, the range of derivatives possible is only limited by the imagination of

investment banks. In other words, new derivatives are being created all the time. It is likelynowadays that any person who has funds invested will unwittingly perhaps be indirectlyexposed to derivatives.

DeliveryA transaction may be for "spot delivery" (delivery and payment on the same or next day)

"hand-delivery" (delivery and payment on the date stipulated by the exchange, normallywithin two weeks of the contract date), special delivery (delivery and payment beyond

fourteen days limit subject to the exact date being specified at the time of contract and

authorized by the exchange) or "clearing" (clearance and settlement through the clearinghouse).

Day Minimum/Maximum rangeThe minimum/maximum price range for a security on a trading day. Buy orders outside theMaximum of the range and sell orders outside the Minimum of the range are not allowed tobe entered into the system. It is calculated as a percentage of the Base price.

Day orderA day order, as the name suggests, is an order which is valid for the day on which it isentered. If the order is not matched during the day, at the end of the trading day the order

gets cancelled automatically

DealerA user belonging to a Trading Member. Dealers can participate in the market on behalf ofthe Trading Member.

Disclosed Quantity (DQ)A dealer can enter such an order in the system wherein only a fraction of the order quantity

is disclosed to the market. If an order has an undisclosed quantity, then it trades inquantities of the disclosed quantity.

Demat tradingDemat trading is trading of shares that are in the electronic form or dematerialised shares.

Dematerialisation is the process by which shares in the physical form are cancelled and


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credit in the form of electronic balances are maintained on highly secure systems at thedepository

Date of paymentDate on which dividend cheques are mailed.

Deferred taxesAmount allocated during an accounting period to cover tax liabilities that have not yet beenpaid and also may not have accrued. For instance, a heavy advertisement expenditurecapitalized may give significant tax break.

Delivery price

The price fixed by the clearing house at which deliveries on futures are to take place. Inpractice, at this price contracts are settled by payment or receipt of the difference.

Delivery dateThe date on which forward or futures contract for sale falls due.

Dividend yield

Annual dividend paid on a share of a company divided by current share price of thatcompany.

Diversification-Investing in a basket of shares with different risk-reward profile and correlation so as tominimize unsystematic risk.

Discounted payback periodPeriod in which future discounted cash in- flows equal the initial outflow.

Discount factor :-Expected rate of return by which, future cash flows are deflated. The discount rate is annualrate and deflating future cash flow takes place in a compounded manner.

DowngradeRefers to lowering of ratings for a share by analysts, intermediaries or investors.

DV

Disclosed Value (DV) orders allows the user to disclose only a portion of the order value to

the market. For example, an order of Rs. 1000 lakhs with a disclosed value condition of Rs.200 lakhs will mean that Rs. 200 lakhs is released into the market. After this is traded,

another Rs. 200 lakhs is released and so on till the full order is exhausted. Every time afresh lot of the disclosed value is released it is time-stamped (becomes an active order)again at the time of its release into the market and not the time at which the original DVorder was placed.

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Ex
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Means "without". A price so quoted excludes recently declared dividend right or bonusshares.

Ex-bonusThe share is described as ex-bonus when a potential purchaser is not entitled to receive the

current bonus, the right to which remains with the seller.

Ex-rightsThe share is described as ex-rights when a potential purchaser is not entitled to receive thecurrent rights, the right of which remains with the seller.

Earnings Per Share (EPS)

It is the most important measure of how well (or otherwise) the board of directors are doingfor the shareholders. This measure expresses how much the company is earning for everyshare held. The calculation is 'pre-tax profit dividend by the number of shares in issue'.

Earnings per share is more

important than the overall reported profit figure ! The reason is that EPS provides a morepure measure of profitability.

EurobondA Eurobond is a medium or long-term interest-bearing bond created in the international

capital markets. A Eurobond is denominated in a currency other than that of the place

where it is being issued. Eurobonds are only issued by major borrowers, such asgovernments, other public bodies or large multinational companies.

Ex Dividend

This is a share sold without the right to receive the declared dividend payment which is

marked as due to those shareholders who are on the share register at a pre-announceddate.The stock market authorities usually specify the date on which a share will begin

trading ex div. The share price invariably drops when the share goes ex dividend, taking the

known income of the dividend out of the share price.

Ex Coupon

A stock or bond sold without the right of receipt of the next due interest payment.

ESOPEmployee Stock Option Plan is a trust established by a company to allot some of its paid-up

equity capital to its employees over a period of time. They are used to reward employees.

Exercise price

The pre-determined price at which the underlying future or options contract may be boughtor sold.

Exercising the optionThe act of buying or selling the underlying asset via the option contract.


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Efficient capital market :-

A market in which all the players have all the material information at their disposal at thesame time.

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Final Dividend

This is the dividend paid by a company to its shareholders out of profits at the end of thefinancial year.

A motion to pay a final dividend must be approved at the shareholder's Annual GeneralMeeting (AGM) - where they have the option of accepting the dividend recommended by thedirectors or of reducing it - they cannot vote to increase it!

Flotation

The first occasion on which a public companys shares are offered widely to investors on the

market. Flotations are often referred to as new issues although it is possible for companiesalready in the stockmarket to issue new shares

FuturesA contract for the purchase and sale of a commodity, financial instrument or index at a fixedprice at a fixed date in the future. Futures contracts were originally invented to allow those

who regularly buy and sell goods to protect themselves against future changes in the priceof those goods. In other words, the futures markets evolved to allow producers orconsumers to hedge their risk.

Firm PriceIt is the price quoted by a market-maker at which he is committed to deal with a broker or

other market-maker. The only occasion in which a market-maker may vary from offering afirm price is when theStock Exchange has declared a fast market.

Financial risk

Shareholders risk resulting from the use of debt. Debt causes financial risk by increase ofthe variability of shareholders return and threatening the solvency of the firm.

Forward tradingForward trading refers to trading where contracts traded today are settled at some future

date at prices decided today. Thus a contract to buy dollars at Rs.42 per dollar after 3

months is a forward contract. The price is fixed today but the settlement will be after 3months.

Floating StockThe fraction of the paid-up equity capital of a company which normally participates in day today trading.

Forward Purchase
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A forward purchase is when one agrees to purchase shares at a future period at a certainprice. He does this in the belief that the prices will fall in future.

Foreign Institutional Investor (FII)

An overseas institutional investor permitted under Securities and Exchange Board of India

(SEBI) guidelines to trade in Indian bourses.

Freeze

Orders entered into the system with price outside the Operational range and orders withquantity greater than the Order Quantity Freeze percentage is sent to the Exchange for

approval. Such orders are not reflected in the books and are 'frozen' till the Exchangeapproves them.

Fully Paid Shares

Fully paid shares are those shares which have been fully paid for (the face value).

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Good Till Cancelled (GTC) orders

A Good Till Cancelled (GTC) order remains in the system until it is cancelled by the user. It

will therefore be able to span trading days if it does not get matched. The Exchange mayhowever set an upper limit to the number of working days an order can stay in the tradingsystem. At the end of this period, GTC orders are cancelled automatically from the system.

Good Till Date (GTD) ordersA Good Till Day (GTD) order allows the user to specify the number of days up to which theorder should stay in the trading system. At the end of this period, the order gets flushed outfrom the system if it is not traded or is not cancelled by the trading member.

Governing BoardA stock exchange functions under the direction and supervision of its Governing Board. Itgenerally consists of a specified number of elected members, a whole time ExecutiveDirector and representatives of the Government, SEBI, and public. The size and structure ofthe board varies from exchange to exchange.

Gap

When the market opens above or below the previous day's close the price on a bar chart willshow a "gap". This may then be "closed" if the market trades at prices between the openinglevel and the previous day's close.

GiltsGilts, sometimes referred to as Government bonds are those used by the Government toraise money from large financial institutions like pension funds and from private investors.

Money is needed by the Government because the Treasury so often finds that its expensesexceed its income. Gilts are sometimes referred to as 'gilt edged securities' or 'bonds' or
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'fixed interest securities'. In any event, gilts are issued by the Treasury and in nearly all

cases, the investor hands over his cash and then receives a fixed rate

of interest for the life of the gilt. When the gilt matures, its capital value is repaid at parvalue.

Gilts are bought at their par value or at face value.

Global Depositary Receipt (GDR)These are negotiable certificates which prove ownership of a company's shares.They are

marketed internationally, mainly to financial institutions. GDRs allow purchasers to gainexposure to companies which are listed on foreign markets without having to purchase the

shares directly in the marketin which they are listed.

Grey market

Trading in shares outside a recognized market.This has come to mean trading in sharesahead of their issue on the stockmarket.

Growth stock InvestingGrowth stock investing focuses on well-managed companies whose earnings and dividends

are expected to grow faster than both inflation and the overall economy. The real test for agrowth company is its ability to sustain earnings momentum even during economic

slowdowns. Such companies will provide long-term growth of capital, preserving theinvestor's purchasing power against erosion from rising prices.

Good DeliveryA share certificate together with its transfer form which meet all the requirements of

transfer, e.g., unmutilated certificate, the necessary endorsements, signature of thetransferor tallying with what is registered with the company, etc. The buying broker isobliged to accept such a delivery.

Growth FundA mutual funds which invests only in equity shares which offer chances of good capitalgrowth, rather than current income.

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HedgingOffsetting or guarding against investment risk. A perfect hedge is a no-risk-no gain

precaution.A conservative strategy for reduction of risk through futures, options or someother derivative, by opening an opposite position to that already held in the underlyingmarket. Taking positions in securities so that each offsets the other.

Holding Period Return (HPR)The rate of return for the period of holding of an investment.

Holder
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The buyer of an option.

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Initiator

The Initiator is the trading member who starts the auction. The Initiator can be a buyer or aseller.

Insider trading

Trading on information which is not really available to the general public. Trading in a

Company's shares by a connected person having non-public, price sensitive information,such as expansion plans, financial results, takeover bids, etc., by virtue of his associationwith that Company, is called insider trading.

IlliquidAn investment is said to be illiquid if it cannot easily be turned back into cash quickly and ata low cost.

Shares in smaller companies are more likely to be illiquid than those in larger companies;they will be less easy to sell and you are likely to find that the spread or difference betweenthe buying and selling price is much wider.So, in other words blue chip shares are more

liquid than unquoted companies.

Insider

Someone who trades a security on the back of knowledge which is not available to the worldat large and who, thereby, makes a profit.

Issuing house

This is a member of the Issuing Houses Association, responsible for sponsoring the issue ofa new security on the Stock Exchange or an over the counter market.The definition has also

spread to include any merchant bank or dealer in securities which is involved in such anissue.The issuing house will have been closely involved in the process leading up to the

flotation and will have advised the company on its timing, pricing, etc.

Issued Share CapitalThis is the total number of shares a company has made publicly available multiplied by thetotal nominal value of the shares.

Immediate or Cancel (IOC)An Immediate or Cancel (IOC) order allows a user to buy or sell a security as soon as theorder is released into the market, failing which the order is removed from the market. There

could be a partial match for such an order resulting in one or more trades, in which case thebalance order will be removed from the market.

Inactive SharesShares which are seldom bought and sold in the stock exchange, although they are listed. A

share which is transacted less than four times a year may be called inactive or dead. It is
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quite difficult to find a buyer or a seller for such shares. The Spread between buying andselling prices can be large.

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Jumbo certificateA jumbo share certificate is a single composite share certificate formed byconsolidating/aggregating a large number of market lots. This is issued by the company in

favour of the custodian of the shares and is used to reduce the problems of multiple sharecertificates for large trades.

JobbersMember brokers of a stock exchange who specialise in buying and selling of specificsecurities from and to fellow members. Jobbers do not have any direct contact with thepublic, but they render a useful function of imparting liquidity to the market. A jobber

quotes his bid price (the price at which he is willing to buy) and ask price (the price at

which he is willing to sell ).

Jobber's SpreadThe difference between the price at which a jobber is prepared to sell and the price at whichhe is prepared to buy. A large difference reflects an imbalance between supply and demand.

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Kerb DealingsTransactions done among members after the closing of the official trading hours.

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Long positionA 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. Itis similar for the futures contracts. A bull position in a security.

Listed CompanyA public limited company which satisfies certain listings conditions and signs a listingagreement 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 orderIs an order for which the price (limit price) has been specified at the time of making theorder entry. A limit order describes the instruction an investor gives to his broker setting outhow much he's prepared to pay for shares (or any other asset for that matter).
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LIBOR

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 ofLondon. Money can be borrowed overnight or for a period of in excess of five years.

LIBID

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

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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 andsellers into the market.

Member Firm

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

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

MatchingWhen 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 orderconditions.

Minimum Fill (MF) OrderThis 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 minimumquantity specified.

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

MembersThe membership of the exchange consists of such number of members as the exchange ingeneral 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 creditorsor has been convicted of an offence involving fraud or dishonesty or is engaged as principalor employee in any business other than that of securities.
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Moorat TradingAuspicious 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 thenumber of outstanding shares multiplied by the market price of the company. The totalmarket 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 (interms of stock swaps).

MarginThe 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 andreasonably foreseeable intra day price changes.

MF

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 lakhswill 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 ofRs.1000 lakhs.

Market riskThis 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 thatspecific market.

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Nominal ValueThe nominal value is the face value of share. If the face value of a share is Rs. 10 then itmay also be stated that its nominal value is Rs. 10.

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

Nasdaq

National Association of Securities Dealers Automatic Quotation SystemAn American stockexchange. Its also known as the technology heaven for companies in that category.
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Negotiated TradeTwo Trading members can negotiate a trade outside the system. However this trade isaccepted by the system only if Control approves. Both the parties enter each side of theirtrade in the system specifying each other's identity.

Normal MarketThe 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 orNegotiated Trade entries. Each order must be equal to or be a multiple of the regular lot forthat security.

No-delivery periodWhenever a book closure or record date is announced by a company, the Exchange sets ano-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 investors entitlement for corporate benefits is clearly determined.

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Odd Lot marketThe market in which odd lot orders are recorded. Odd Lot orders have a quantity less thanone regular lot. A number of shares that are less than the market lot are known as odd lots.These shares are illiquid in nature, as they cannot be transacted on the Exchange.

OpenA time period in the trading day for the different markets that the exchange deals in. Orderentry, matching, inquiries and other functions at the workstation will be allowed during thisperiod.

Operational rangeThe price range for a security on a trading day such that buy orders outside the Maximumof the range and sell orders outside the Minimum of the range causes a price freeze and aresent to the Exchange for approval. It is calculated as a percentage of the Base price.

OrderA buy or a sell offer/bid for any of the Capital Market securities entered by the dealer in thesystem. The system generates a unique order number for each order entry.

Order Quantity Freeze percentageA percentage of the outstanding quantity of a security is ascertained. An order with quantityexceeding this percentage causes a freeze and is sent to the Exchange for approval.
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One For OneThis is meant to denote that in a bonus issue declared a bonus share has been given forevery share held. In effect the share capital of the company doubles. Other terms

commonly used to denote the proportion of bonus shares issued are two for three, three forfive and the like.

OptionsThe holder of an option contract has the right but not the obligation to buy (call option) orsell (put option) a specific quantity of a given asset at a specified price at or before aspecified date in the future. The purchaser pays a non-refundable, one time fee (option

premium) to the seller (writer) to acquire this right. If the holder chooses to exercise the

right to buy or sell the asset, the writer of the option has to deliver or take delivery of theasset. The potential loss to the option writer is therefore unlimited.

Order Driven Trading

In an order driven system, only different types of orders supply liquidity to the marketwithout the intervention of a market maker or jobber. Order execution follows a strict pricetime, priority unlike a quote driven system, where preference is given to jobber orders atthe expense of public orders. This reduces the problems of high spreads, monopoly power

and market manipulation. Orders which are allowed into the system are conditional uponprice (market and limit orders), time (GTD, GTC, etc.), quantitity (AON, MF, etc.) and otherspecial conditions such as IOC, etc.

Over The Counter (OTC)Trading

A secondary market in which shares are bought and sold to the general public by jobbersand brokers outside an organised market place. Generally, the OTC market consists ofgeographically diffused dealers.

Oversubscribed

A company may offer for sale a certain number of shares. If applications are received forshares in excess of the number offered, the issue is termed as oversubscribed.

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Panic SellingA condition of the stock market in which not only inexperienced investors, but also sturdy

bulls, take fright and start selling. It may be caused by sudden unfavourable news orrumour, or a Random Walk by shares downwards, or simply, in bear market conditions, theabsence of financial institutions from the market.

Pari PassuThis is a Latin term and it means, "having equal rights". When shares (bonus or otherwise)

are issued pari passu with existing shares it means that the new shares would be equal toand have identical rights with the existing shares.
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Passed Dividend

A company is termed to have "passed dividend" if it has not declared its usual annualdividend. P/E Ratio or Price-Earnings Ratio: An indicator of how highly a share is valued inthe market. Arrived at by dividing the price or a share by the earnings per share (EPS).

PremiumThe price of an option (call or put) contract, determined in the competitive market place,

which the buyer (holder) of the option pays to its seller (writer) for the rights granted to theformer by the option contract.

ParticipantAn entity responsible for the settlement of a trade is deemed to be a participant. Everyorder in the trading system has a participant associated with it.

Pre-OpenA time period in the trading day for the Normal market. Trading members are allowed toenter orders during this period. These orders in the system take part in the algorithm forthe calculation of the opening price during this period.

Price Time PriorityAll orders received on the system are sorted with the best priced order getting the first

priority for matching i.e. the best buy order matches the best sell order. Within similarpriced orders, they are sorted on time i.e. the one that came in early gets priority over thelater one.

Pay-inPay-in day is the designated day on which the securities or funds are paid in by themembers to the clearing house of the Exchange.

Pay-outPay-out day is the designated day on which securities and funds are paid out to themembers by the clearing house of the Exchange.

Price bandPrice bands set te upper and lower limit within which a security price can fluctuate on a

given day/settlement. In case of intra-day, the price band is determined over the closing

price of the previous day and in the case of intra-settlement, the price bands aredetermined over the closing price of the last day of the previous settlement cycle. Ordersoutside these price bands will not be executed by the system.


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Price rigging

When persons acting In concert with each other collude to artificially increase or decreasethe prices of a security, that process is called price rigging.

Portfolio

The group name for the entire collection of investments belonging to an investor or held by

a financial organization such as a bank, pension fund or investment trust.The idea of aportfolio is that you should invest in a diversifed selection of investments. Don't have all

your eggs in one basket

Price sensitive information

Price sensitive information is information about a company's trading or other affairs which

would, if generally known, be expected to have an influence on its share price.

Primary market

a place where money is raised by companies to pay for expansion or pay off existinginvestors.In the futures markets, the primary market is the main underlying market for thefinancial instrument on which the futures contract is based.

Print/Report Circuit

This is a virtual circuit through which the system can download report data to allworkstations. In this mode, the system does not await the response from the workstations.

P/E Ratio or Price-Earnings Ratio:

An indicator of how highly a share is valued in the market. Arrived at by dividing the priceor a share by the earnings per share (EPS).

Put OptionThe right to sell stock at an agreed price at or before a stated future time. Contrast this will

call options.

Price risk

It arises from the variability of prices of shares in the market. The share prices can move

either way and are extremely volatile. The risk arising from the fact that your portfolio valuemay decrease or increase is the price risk.

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Quote Driven Trading

This is a trading system where a market maker offers two-way quotes for each security. A

buy quote and a sell quote are provided by the market maker. Thus the price at which atrade will be executed is known at the time of placing the order.

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Regular Lot Order
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The minimum quantity of an order entered into the Normal, Spot and Auction markets. The

order that does not carry any special conditions (Minimum Fill, All or None) is treated as aregular lot order.

Record dateRecord date is the date on which the beneficial ownership of an investor is entered into theregister of members. Such a member is entitled to get all the corporate benefits.

Rights IssuesThe issues of new shares to existing shareholders in a fixed ratio to those already held at a

price which is generally below the market price of the old shares.These are the relativelyrare occasions in a company's life when it will create new shares, the proceeds of which will

go directly into its bank account, instead of giving a profit (or a loss) to an existing

shareholder. The issue of additional equity shares to the existing shareholders on a pre-emptive basis. Typically, the subscription price of a rights issue is significantly below themarket price of the old shares.

Real ReturnThe rate return earned on an investment after adjusting for the rate of inflation.

Rolling SettlementThis is the system by which shares are bought, sold and paid for. Rolling Settlements is amechanism of settling trades. in Rolling Settlements, trades done on a single day are settled

separately from the trades of other day on Trade day + 5 days. As such netting of trades is

done only for the day and not for multiple days. As such, in Rolling Settlement, settlementis carried out on a daily basis.

Real Interest RateCurrent interest rate less the rate of inflation.

ReposShort- term money market instrument; transaction where one party agrees to sell asecurity to another party for cash. The seller agrees to repurchase the security later.

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Short PositionA position in which a person's interest in a particular series of options is as a net seller(writer) meaning that the number of contracts sold exceeds the number of contractsbought. It is similar in case of futures contracts.

Short SaleA Short sale occurs when a person believing that the prices of shares will fall, sells shares

that he does not own with the intention of purchasing the shares at lower price at the timedelivery has to be made. This is also known as forward sale.
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SlumpThe bottom of a trade cycle when prices and employment are at their lowest, reflected inthe downward movement of share prices, Recovery from a slump is often slow.

SpotSpot purchase or sale implies that the deal is for immediate cash and the shares are to bedelivered immediately.

SpreadsOptions and futures transactions involving two or more series of the underlying asset.

StagA stag is an investor or speculator who subscribes to a new issue with the intention ofselling them soon after allotment to realise a quick profit.

Strike Pricealso called exercise price. The price for which the underlying stock index or other asset may

be purchased (in the case of a call) or sold (in the case of a put) by the option buyer(holder) upon exercise of the option contract.

Secondary MarketThe market in existing securities provided by the Stock Exchange.The secondary market, by

providing a method of buying and selling securities, overcomes the basic mis-match

between the needs ofsavers/investors who provide new money and the requirements of capital raisers/borrowers.

SettlementThe payment of cash for securities and, conversely, the delivery of securities against

payment - the conclusion of a securities transaction by delivery. Settlement is the paymentor receipt of an outstanding due at the end of the settlement period.

Settlement DayThe day on which bought securities are due for delivery to the buyer and the appropriateconsideration to the seller.

Share certificate

This is a legal document which can be used as proof of ownership of a shareholding. But

with 30,000 plus share transactions a day going through the London stockmarket in theearly 1990's, a lot of paper was beinggenerated. A more efficient way of handling share settlements is to do it electronically as

happens in many other countries.

SecurityA Security is a valid and unique combination of Symbol and Series. Securities are traded in

the Capital Market. Shares and Debentures are some examples of securities.


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SellerThe trading member who has placed the order for selling the security.

Special TermsThe dealer can place an order that carries special conditions and restrictions regarding theway the order value can be matched. These terms are called Special Terms. The typicalspecial terms are Minimum Fill and All or None.

Spot marketOrders that have spot settlement are entered into the Spot market.

Stop LossThe dealer can enter a regular lot or a special term order with a 'trigger' price. Such ordersare called Stop Loss orders. The stop loss orders are not taken for matching unless the

trigger price is either reached or if it is surpassed by the last traded price for the security.

Once the market price reaches or surpasses the trigger price, the 'stop loss' attribute isremoved and the order is taken up for regular matching process.

Settlement guaranteeSettlement guarantee is the guarantee provided by the clearing corporation for settlement

of all trades. This implies that the trade will be settled even if one of the parties to the trade

viz; the buyer or the seller defaults. This prevents a cascading effect in the market due tothe default of one party. The clearing corporation has set up a settlement guarantee fundthrough contributions from the members which is used for this purpose.

Splitting/ConsolidationThe process of splitting shares that have a high face value into shares of a lower face value

is known as splitting. For e.g: A share with a face value of Rs 100/- may be split into ten

shares of Rs 10/- each. The reverse process of combining shares that have a low face valueinto one share of higher value is known as consolidation.

Spot tradingA market in which securities are traded for immediate delivery, as distinct from a forwardmarket. Spot in this context means immediately effective, so that spot price is the price for

immediate delivery. The actual delivery of securities takes place either on the same day of

the contract or on the next day. Trading by delivery of shares and payment for the same onthe date of purchase or on the next day.

Stop transferThe instruction given by a registered holder of shares to the company to stop the transfer ofshares as a result of theft, loss etc,. This is done in order that the shares are not unlawfullytransferred in the event of loss or theft of the share certificates.


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Settlement PeriodFor administrative convenience, the stock exchange divides the year into a number ofsettlement periods each of generally one week duration. The first and the last day trading of

each settlement period are fixed in advance and so are settlement days for delivery andpayment.

Specified SharesFor the purpose of trading, a security is categorised either as a 'specified' shares or a 'non-specified' shares. This is done by stock exchange authorities.

Stamp DutyThe ad valorem duty of 1/2 per cent payable by buyers for transfer of shares in their name.

share swap

An arrangement by which shares of one company are swapped for another in a specifiedratio

stock option

An option given to a person to buy stock at a predetermined price at a future date

Screen Based Trading

Screen based trading uses modern telecommunications and computer technology to

combine information transmission with trading in financial assets. Trading members areconnected to the Exchange from their workstations to the central computer located at the

Exchange via satellite using VSATs (Very Small Aperture Terminals). Buy and sell ordersfrom the brokers reach the central computer located at NSE and are matched by thecomputer.

Solicitor

A Solicitor is the auction participant who is on the opposite side of the Initiator's order. If

the Initiator is a buyer then the solicitor will enter sell orders for the same security.

Stock split

Splits are about as exciting as getting change for a Rs100 note. Depending upon the split

ratio one share of a company is split into the decided number. This is done by reducing theface value of the scrip. Stock splits are expected to improve liquidity in a stock.

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Trade
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When a buy order matches with a sell order following the price-time priority logic, a tradetakes place. The system generates a unique trade number for each trade.

Turnover LimitThis indicates the aggregate trade value limit on a daily basis set for a trading member. The

Exchange sets the limit for each trading member of the Capital Market. The trade value forboth buy and sell for a day are accumulated and the total is checked against this upper limitafter every potential trade match.

Trade guaranteeTrade guarantee is the guarantee provided by the clearing corporation for all trades that areexecuted on the Exchange. In contrast the settlement guarantee guarantees the settlementof trade after multilateral netting.

Trading for deliveryTrading conducted with an intention to deliver shares as opposed to taking up a position andsquaring off within the settlement.

Transfer deedA transfer deed is a form that is prescribed by the Registar of Companies for effecting share

transfer and is valid for a specified period. This transfer deed is the instrument thataccompanies the share certificate while registering a transfer with a company. The transfer

deed must be duly stamped and signed by or on behalf of the transferor and be complete inall respects.

Time Conditions

1. DAY - A day order, as the name suggests is an order which is valid for the day onwhich it is entered. If the order is not matched during the day, the order getscancelled automatically at the end of the trading day.

2. GTC - A Good Till Cancelled (GTC) order remains in the system until it is cancelled bythe user. It will therefore be able to span trading days if it does not get matched.The Exchange may however set an upper limit to the number of working days an

order can stay in the trading system. At the end of this period, GTC orders arecancelled automatically from the system.

3.GTD - A Good Till Day (GTD) order allows the user to specify the number of days upto which the order should stay in the trading system. At the end of this period, theorder gets flushed out from the system if it is not traded or is not cancelled by thetrading member.

4. IOC - An Immediate or Cancel (IOC) order allows a user to buy or sell a security assoon as the order is released into the market, failing which the order is removedfrom the market. There could be a partial match for such an order resulting in one ormore trades, in which case the balance order will be removed from the market.


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All reference to days in the trading system would refer to working days. Thus, each day is

counted on a working day basis i.e. intervening holidays are not considered. The days

counted are inclusive of the day on which the order is placed. However, for Repo term, daysare counted on a calendar basis.

Trader Workstation

A dealer can participate in the Capital Market only from the trader workstation, where thetrading functions are available.

Trading Member

It refers to a member of the BSE/NSE who is authorised to place orders in the Capital

Market System. The term Broker or Brokerage house is also used to convey the samemeaning.

TransmissionTransmission is the lawful process by which the ownership of securities is transferred to thelegal heir/s of the deceased.

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Unit of TradingThe minimum number of shares of a company which are accepted for normal trading on the

stock exchange. All transactions are generally done in multiple of trading units. Odd lots aregenerally traded at a small discount.

Unquoted Shares

Shares in some companies, often smaller ones, are not traded on any stock exchange.

Companies are not quoted (or listed) because either: they do not wish to be and prefer torun their businesses in relative privacy, orThey do not meet the listing requirements, such

as minimum market capitalisation. In other words they are too small to join astockmarket.For people interested in investing in unquoted shares, there are investmenttrusts which specialise in this area.

User

A person is recognised as a user of the Capital Market system, when he or she possess a

valid user identifier and password, both of which are essential requirements for accessingthe system.

Underwrite

Under writing is effectively a guarantee wherein the underwriter (usually a bank, broker or

financial institution) agrees to purchase a certain number of shares in the event the issue isunder-subscribed for a certain fee.

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A company that has issued shares in excess of the real value of the business is said to havewatered its capital. It is in effect similar to the deficit financing done by some governments.

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Yield

Yield is the annual return you receive from holding a stock, share or unit trust - it isexpressed as a percentage of its price.In the case of shares, the yield is calculated byexpressing the dividend as a percentage of the cost of the investment. To calculate a yieldon a share, take the dividend paid (this will be net of the basic rate of tax), add back the

tax to get the gross yield and then divide by the share price andmultiply by 100

Yield CurveA graph depicting yield vis-a-vis maturity. If short-term rates are lower than long-term

rates, it is a positive yield curve, if short-term rates are higher, it is a negative or inverted

yield curve. If there is isn't muchdifference, it is a flat yield curve.

Yield To Maturity (YTM)The yield earned by a bond if held to maturity.

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Zero Coupon BondA bond issued at a discount which accrues interest that is paid in full at maturity.

Previous Start Again
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all or none stockmarket

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