Types of order books in trading

Spread the love
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

Trading System

  • The trading system operates on a strict price-time priority.
  • Best priced order gets the first priority for matching.  Orders are matched automatically by the computer.
  • If an order does not find a match, it remains in the system and is displayed to the whole market, till a fresh order comes in or the earlier order is canceled or modified.

Order Management

  • Order Management consists of entering orders, order modification, order cancellation and order matching.
  • The trading member can enter orders in the normal market or auction market
  • When any order enters the trading system, it is an active order. If it finds a match, a trade is generated. If it doesn’t match, the order becomes passive.

Order Book

  • An order book is an electronic list of buy and sell for a specific security or financial instrument, organized by price level.
  • An order book is dynamic and continuously updated in real time throughout the day.
  • There are different types of order books based on the types of orders. 

1) Pre-open book

  • An order during the pre-open session is called pre-open order.
  • Orders in pre-open session are stacked in book called pre-open book in order entry screen.
  • At the end of the pre-open phase, the matching of pre-open orders takes place at the final opening price.

2) Regular lot book

  • An order that has no special condition associated with it is a regular lot order.
  • Computer matches regular lot orders with the passive orders in the system. If it does not find a match, it gets stacked in the Regular Lot book as a passive order.
  • Buyback orders are placed through the Regular Lot (RL) book.

3) Limit Order Book

  • Limit orders are orders to buy or sell shares at stated quantity and stated price.
  • If the price quantity conditions do not match, the limit order will not be executed.
  • Limit order book’ also known as ‘open book’ refers to the fact that only the limit orders are stored in the book and all market orders are crossed against the limit order present in the book.

4) Special Term Book

  • Orders with special term attributes attached to it are knows as ‘special term orders’.
  • Currently this facility is not available in the trading system but it will be introduced soon.
  • A special term order entered in system scans Regular Lot book as well as special term books for matching to find the match

5) Stop loss book

  • Stop loss orders are very popular due to their use in risk management. They get executed only when market prices surpass the trigger price. Till then they are stacked in Stop-Loss book.
  • The SL order is either a market order or a limit price order.

6) Odd lot book

  • The Odd lot book can be selected, by selecting the book type OL, to trade in the Odd Lot Market.
  • Lot size is normally 100 shares. Below 100 shares the lot becomes odd lot.
  • Order matching in this market takes place between two orders on the basis of quantity and price.

7) RETDEBT Order Book

  • RETDEBT market orders can be entered into the system by selecting RETBEDT order book  denoted as ‘D’.
  • These orders scan only the RETDEBT Order Book for potential matches.
  • If no suitable match found, it remains as passive order.

8) Auction Price Book

  • A trading members who participates in the exchange initiated auction places orders in Auction Price book.
  • Auctions orders can be initiator orders, competitor orders and solicitor orders.

Spread the love
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
, , , , , , , , , ,

Leave a Reply