Identify the correct sequence of steps involved in the screen based trading for buying and selling of securities on stock exchange.

A. Open a beneficial owner account with the depository participant.

B. The trade has been executed within 24 hours and a contract note is issued.

C. A registered broker is approached

D. Place an order with the broker

E. The settlement cycle is on T+2 day on rolling settlement basis.

Choose the correct answer from the options given below : 

C, A, D, B, E

The correct answer is option (3)- C, A, D, B, E.

The correct sequence of steps involved in screen-based trading for buying and selling securities on the stock exchange is:

C. A registered broker is approached- If an investor wishes to buy or sell any security he has to first approach a registered broker or sub-broker and enter into an agreement with him. The investor has to sign a broker-client agreement and a client registration form before placing an order to buy or sell securities. He has also to provide certain other details and information.

A. Open a beneficial owner account with the depository participant- 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.

D. 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.

B. The trade has been executed within 24 hours and a contract note is issued- 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.

E. The settlement cycle is on T+2 days on a rolling settlement basis- Rolling Settlement System refers to the method of settling trades in the stock market, where the settlement of a trade takes place a few days after the trade date. The most common system is T+2, meaning that the settlement occurs two days after the trade date (i.e., the buyer must pay and the seller must deliver the securities within two working days after the trade). This system improves liquidity and reduces the risk of defaults.