The trading in securities is buying and selling of securities listed on the recognized stock exchanges.
The clearing is a process of determination of obligations of member-brokers by the stock exchanges after which the same are discharged by the concerned parties by settlement.
The settlement is a process of settling of transactions in securities between buyers and sellers by exchange of money and securities respectively.
The trading on stock exchanges in India was in open outcry manner till mid 1990s.
In order to provide efficiency, liquidity and transparency, NSE introduced, a nationwide, on-line, fully-automated Screen based trading system (SBTS) in November 1994 known as National Exchange for Automated Trading (NEAT) system.
BSE online trading (BOLT) by BSE started in March 1995
Screen based trading system
NEAT and BOLT are state-of-the-art client-server based applications where at the server end all trading information is stored in in-memory databases to achieve minimum response time and maximum system availability for users.
A member, broker enter orders from the Trader Work Stations (TWSs) installed in their offices.
A client of these broker can place orders through phone/internet for which he should enter Model Agreement with brokers first.
Internet based trading
There are many brokers who provide internet based trading facility to their clients.
Investors can buy/sell securities through Trader Terminals downloaded on their computers, Trading Apps on their mobiles etc.
Both NSE and BSE systems run on ‘Order driven’ systems
What is ‘order-driven’ system?
In an order-driven system, the traders only put their orders for buying or selling of securities whereas, in ‘quote-driven’ system, the jobbers put buy as well as sell quotes in the same scrip with a price difference.
The order-driven system ensures faster processing, matching and execution of orders in a transparent manner.
NSE system, is order driven from the beginning while BSE system turned completely order-driven after 13th August 2001. Till then it was both order and quote driven.
Regular Trading in equities on the NEAT and BOLT systems are conducted from Monday to Friday between 9:15 a.m. to 3:30 p.m. Thus uniform trading hours are followed by both the stock exchanges.