In screen-based trading, every broker has to have access to a computer terminal that is connected to the ________.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → main stock exchange
Option (1) main stock exchange — Correct. A stock exchange has a main computer system with many terminals spread across the country. Each broker’s terminal is linked to it, so trading has moved from the exchange floor to the broker’s office.
Option (2) depository — Incorrect. A depository keeps securities in electronic form for investors, as a bank keeps money. It holds shares and takes no trading orders.
Option (3) investor’s bank — Incorrect. The investor’s bank account is used for cash transactions in the securities market. Orders do not pass through it.
Option (4) depository participant — Incorrect. The depository participant is the link between the investor and the depository. It keeps the investor’s demat account.
NCERT (Pre-rationalised Edition): “TRADING AND SETTLEMENT PROCEDURE … A stock exchange has its main computer system with many terminals spread across the country. Trading in securities is done through brokers who are members of the stock exchange. Trading has shifted from the stock market floor to the brokers office. 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. …” |