User talk:Somepalli

Trading Mechanism in the Nse-WDM

Secondary market in the NSE's Wholesale Debt Market (WDM) segment happens through the NEAT(National Exchange for Automated Training) system, which is a fully automated screen based trading system. The WDM segment is meant primarily for banks, institutional and corporate participants and intermediaries to enter into high value transactions in debt securities issued by the central and state governments, public sector units, financial institutions and corporate bodies. Both short – term instruments like treasury bills and commercial papers, and long-term instruments such ass bonds and debentures, are available for trading in the WDM segment of the NSE.

The trades on the WDM segment can be executed in the Continuous or Negotiated market. In the continuous market, orders entered by the trading members are matched by the trading system. For each order entering the trading system, the system scans for a probable match in the order books. On finding a match trade takes place. In case the order does not find a suitable counter order is stored in the order books as a passive order. This could later match with any future order entering the order book and result into a trade. This future order which results in matching of an existing order is called the active order. In the negotiated market deals are negotiated outside the exchange between the two counter parties and are reported on the trading system for approval.

The WDM trading system recognizes three types of users-Trader, Priviliged and Inquiry. Trading Members can have all the three user types whereas Participants are allowed privileged and inquiry users only. The user-id of a trader gives access for entering orders or trades on the trading system. The privileged user has the exclusive right to set up counter party exposure limits. The Inquiry user can only view the market information and set up the market watch screen but cannot enter orders or trade or set up exposure limits.

The WDM supports two kinds of trades: Repo trade (RE), which is reversed after a specific term, allowed only in specified securities and Non-Repo (NR) trades, which are for outright sales and purchase, allowed in all securities. Trading in dent as outright trades or as ‘repo’ transactions can be for varying days of settlement and repo periods. For every security it is necessary to specify the number of settlement days, the trade type and in the event of a Repo trade the Repo term. Order matching is carried out only between securities which carry the same conditions with respect to settlement days, trade type and repo period, if any.

All order matching is ohn the basis of descriptors.All inquirie also require the selection of valid descriptors.