Given below are two statements:
Statement I: In screen-based trading, a transaction is executed when a matching order is found from a counter party.
Statement II: In screen-based trading, orders that are not matched are removed from the screen at once.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Statement I is correct but Statement II is incorrect.
Statement I: In screen-based trading, a transaction is executed when a matching order is found from a counter party. — Correct. The software is designed to execute a deal once a matching order is found.
Statement II: In screen-based trading, orders that are not matched are removed from the screen at once. — Incorrect. Unmatched orders are not removed. They remain on the screen and are open for matching during the day.
NCERT (Pre-rationalised Edition): “TRADING AND SETTLEMENT PROCEDURE … Every broker has to have access to a computer terminal that is connected to the main stock exchange. In this screen-based trading, a member logs on to the site and any information about the shares (company, member, etc.) he wishes to buy or sell and the price is fed into the computer. The software is so designed that the transaction will be executed when a matching order is found from a counter party. The whole transaction is carried on the computer screen with both the parties being able to see the prices of all shares going up and down at all times during the time that business is transacted and during business hours of the stock exchange. The computer in the brokers office is constantly matching the orders at the best bid and offer price. Those that are not matched remain on the screen and are open for future matching during the day. …” |