The steps followed in the screen-based trading for buying and selling…

The steps followed in the screen-based trading for buying and selling of securities are:

(A) The investor has to open a demat account with a depository participant for holding and transferring securities in demat form.

(B) The investor places an order with the broker to buy or sell shares.

(D) The broker issues a contract note within 24 hours after the trade has been executed.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A), (B), (C), (D)

(A) The investor has to open a demat account with a depository participant for holding and transferring securities in demat form. — first. Shares in screen-based trading are held in electronic form. Without a demat account the investor has nowhere to keep the shares he buys, so this comes before any order.

(B) The investor places an order with the broker to buy or sell shares. — second. With the account ready, the investor tells the broker what to buy or sell and at what price.

(C) The broker goes online and connects to the main stock exchange and matches shares and the best price available. — third. The broker enters the order on the exchange’s computer network, and the order is matched with the best price on offer.

(D) The broker issues a contract note within 24 hours after the trade has been executed. — fourth. A contract note records the details of a trade that has already taken place, so it can be issued only after the trade is done.

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): “Steps in the Trading and Settlement Procedure … The following steps are involved in the screen-based trading for buying and selling of securities:”

“2. 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.
3. 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.
4. The broker then will go on-line and connect to the main stock exchange and match the share and best price available.
5. When the shares can be bought or sold at the price mentioned, it will be communicated to the broker’s terminal and the order will be executed electronically. The broker will issue a trade confirmation slip to the investor.
6. After the trade has been executed, within 24 hours the broker issues a Contract Note. …”