The following is not an advantage of the Electronic Trading System:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → It ensures confidentiality of prices of securities

In the electronic (screen-based) trading system, buying and selling of securities is done through computer terminals linked to the stock exchange, instead of shouting on a trading floor.

Option (1) It ensures confidentiality of prices of securities — Not an advantage of the system (Correct). The system does the opposite. It ensures transparency: every participant can see the prices of all securities on the screen while trading is going on. Nothing about prices is kept secret.
Option (2) Increases efficiency of information. — An advantage of the system (Incorrect). Prices and market news reach everyone on the screen at once, which helps prices to be fixed correctly.
Option (3) Increases efficiency of operations. — An advantage of the system (Incorrect). Trading by computer cuts the time, the cost and the risk of error.
Option (4) Improves liquidity in the market. — An advantage of the system (Incorrect). People from all over the country, and even abroad, can trade through brokers without knowing each other. With so many buyers and sellers, securities can be bought or sold easily.

Note: Although the chapter ‘Financial Markets’ was dropped from the NCERT textbooks during rationalisation, it has stayed in the NTA syllabus every year since 2022, except for 2025, and it is part of the syllabus again from 2026. This question is therefore based on the pre-rationalised NCERT, an extract from which is given below.

NCERT (Pre-rationalised Edition): “Electronic Trading System … Electronic trading systems or screen-based trading has certain advantages:”

“1. It ensures transparency as it allows participants to see the prices of all securities in the market while business is being transacted. They are able to see the full market during real time.
2. It increases efficiency of information being passed on, thus helping in fixing prices efficiently. The computer screens display information on prices and also capital market developments that influence share prices.
3. It increases the efficiency of operations, since there is reduction in time, cost and risk of error.
4. People from all over the country and even abroad who wish to participate in the stock market can buy or sell securities through brokers or members without knowing each other. That is, they can sit in the broker’s office, log on to the computer at the same time and buy or sell securities. This system has enabled a large number of participants to trade with each other, thereby improving the liquidity of the market.”