As a broker guide your client the correct sequence of steps involved in the trading procedure on a stock exchange from the following operations stated below.

A. Pay out day
B. Place an order with broker
C. Open demat account
D. Pay in day
E. Execution of order

C, B, E, D, A

The correct answer is Option (2) → C, B, E, D, A.

The correct sequence of steps involved in the trading procedure on a stock exchange.

C. Open demat account- The investor has to open a ‘demat’ account or ‘beneficial owner’ (BO) account with a depository participant (DP) for holding and transferring securities in the demat form. He will also have to open a bank account for cash transactions in the securities market.

B. Place an order with the broker - The investor then places an order with the broker to buy or sell shares. Clear instructions have to be given about the number of shares and the price at which the shares should be bought or sold. The broker will then go ahead with the deal at the above mentioned price or the best price available. An order confirmation slip is issued to the investor by the broker.

E. Execution of order-  The broker then will go on-line and connect to the main stock exchange and match the share and best price available. After the trade has been executed,within 24 hours the broker issues a Contract Note. This note contains details of the number of shares bought or sold, the price, the date and time of deal, and the brokerage charges. This is an important document as it is legally enforceable and helps to settle disputes/claims between the investor and the broker. A Unique Order Code number is assigned to each transaction by the stock exchange and is printed on the contract note.

D. Pay in day- Pay-in day refers to the day when the broker is required to make payment or deliver the shares to the exchange. Essentially, this is the deadline for the broker to transfer either the shares or the cash payment to the exchange, which is part of the settlement process in securities trading.

A. Pay out day- Pay-out day refers to the day when the exchange makes the payment or delivers the shares to the other broker (or party in the transaction). On this day, the exchange settles the transaction by either delivering the shares or making the payment for the transaction. After the pay-in day (where the broker submits shares or payment), the exchange processes the transaction and ensures that the corresponding shares or cash are delivered to the correct party. Pay-out day is essentially the completion of the settlement.