STOCK EXCHANGE
This query is : Resolved
06 August 2010
Hello dear experts
can anyone tell me what is the exact and simple meaning of the term scrip used in reference to stock exchanges ???
what is the concept of margin trading in simple and brief ???
what is basket trading facility ???
Thanking you
can anyone tell me what is the exact and simple meaning of the term scrip used in reference to stock exchanges ???
what is the concept of margin trading in simple and brief ???
what is basket trading facility ???
Thanking you
06 August 2010
Basket Trading System
Investors in the cash market had felt a need to limit their risk exposure in the market to the movement in Sensex. With a view to provide investors the facility of creating Sensex-linked portfolios and also to create a linkage of market prices of the underlying securities of Sensex in the Cash Segment and Futures on Sensex, BSE has provided to the investors as well as to its Members a facility of Basket Trading System on BOLT with effect from August 14, 2000. In the Basket Trading System, the investors through the Members are able to buy/ sell all 30 scrips of Sensex in one go in the proportion of their respective weights in the Sensex. The investors need not calculate the quantity of Sensex scrips to be bought or sold for creating Sensex-linked portfolios and this function is performed by the system. The investors can also create their own baskets by deleting certain scrips from 30 scrips in the Sensex. Further, the investors can alter the weights of securities in such profiled baskets and enter their own weights. The investors can also select less than 100% weightage to reduce the value of the basket as per their own requirements.
The Basket Trading System provides the arbitrageurs an opportunity to take advantage of price differences in the underlying Sensex and Futures on the Sensex by simultaneous buying and selling of baskets comprising the Sensex scrips in the Cash Segment and Sensex Futures. This would provide a balancing impact on the prices in both cash and futures markets.
The Basket Trading System thus meets the need of investors and also improves the depth in cash and futures markets.
The trades executed under the Basket Trading System are subject to intra-day trading and gross exposure limits available to the Members. The VaR, MTM margins etc, as are applicable to normal trades in the Cash Segment, are also recovered from the Members.
Investors in the cash market had felt a need to limit their risk exposure in the market to the movement in Sensex. With a view to provide investors the facility of creating Sensex-linked portfolios and also to create a linkage of market prices of the underlying securities of Sensex in the Cash Segment and Futures on Sensex, BSE has provided to the investors as well as to its Members a facility of Basket Trading System on BOLT with effect from August 14, 2000. In the Basket Trading System, the investors through the Members are able to buy/ sell all 30 scrips of Sensex in one go in the proportion of their respective weights in the Sensex. The investors need not calculate the quantity of Sensex scrips to be bought or sold for creating Sensex-linked portfolios and this function is performed by the system. The investors can also create their own baskets by deleting certain scrips from 30 scrips in the Sensex. Further, the investors can alter the weights of securities in such profiled baskets and enter their own weights. The investors can also select less than 100% weightage to reduce the value of the basket as per their own requirements.
The Basket Trading System provides the arbitrageurs an opportunity to take advantage of price differences in the underlying Sensex and Futures on the Sensex by simultaneous buying and selling of baskets comprising the Sensex scrips in the Cash Segment and Sensex Futures. This would provide a balancing impact on the prices in both cash and futures markets.
The Basket Trading System thus meets the need of investors and also improves the depth in cash and futures markets.
The trades executed under the Basket Trading System are subject to intra-day trading and gross exposure limits available to the Members. The VaR, MTM margins etc, as are applicable to normal trades in the Cash Segment, are also recovered from the Members.
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06 August 2010
Margin trading
Margin trading is buying stocks without having the entire money to do it. The exchanges have an institutionalised method of buying stocks without having the capital through the futures market.
For example, if you were to buy 2000 shares of say Company A, which trades at Rs 300, you will need about Rs 6 lakh. But if you buy a future contract of that company, which comprises 2000 shares, you only need to pay a margin of 15 per cent. So by putting Rs 90,000, you can get an exposure of Rs 6 lakh.
The same operation can also be executed through margin trading. Here, the trader will buy 2,000 shares, which are partly funded by the broker, and the rest by the trader.
Margin trading is buying stocks without having the entire money to do it. The exchanges have an institutionalised method of buying stocks without having the capital through the futures market.
For example, if you were to buy 2000 shares of say Company A, which trades at Rs 300, you will need about Rs 6 lakh. But if you buy a future contract of that company, which comprises 2000 shares, you only need to pay a margin of 15 per cent. So by putting Rs 90,000, you can get an exposure of Rs 6 lakh.
The same operation can also be executed through margin trading. Here, the trader will buy 2,000 shares, which are partly funded by the broker, and the rest by the trader.
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06 August 2010
scrip --
receipt, certificate, or other representation of value recognized by both payer and payee. Scrip is not currency, but may be convertible into currency.
Securities: temporary document that is issued by a corporation and that represents a fractional share of stock resulting from a Split, exchange of stock, or Spin-Off. Scrip certificates may be aggregated or applied toward the purchase of full shares. Scrip dividends have historically been paid in lieu of cash dividends by companies short of cash.
receipt, certificate, or other representation of value recognized by both payer and payee. Scrip is not currency, but may be convertible into currency.
Securities: temporary document that is issued by a corporation and that represents a fractional share of stock resulting from a Split, exchange of stock, or Spin-Off. Scrip certificates may be aggregated or applied toward the purchase of full shares. Scrip dividends have historically been paid in lieu of cash dividends by companies short of cash.
06 August 2010
Thanks Ravindra sir for the guidance but can u tell me in brief what basket rading exactly is in brief with example if, any.
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