Share trading operations involve buying and selling shares of publicly listed companies on stock exchanges. Here's a breakdown of the process:
*Key Participants:*
- *Stock Exchanges*: Platforms like Pakistan Stock Exchange (PSX), Bombay Stock Exchange (BSE), and National Stock Exchange (NSE) facilitate trading.
- *Stockbrokers/Brokerages*: Intermediaries that execute buy and sell orders for investors.
- *Investors/Traders*: Individuals or institutions that buy and sell shares.
- *Regulatory Bodies*: Securities and Exchange Commission of Pakistan (SECP) or Securities Exchange Board of India (SEBI) oversee trading activities.
*Trading Process:*
- *Order Placement*: Investors place buy or sell orders through their brokers.
- *Matching Orders*: The stock exchange matches buy and sell orders based on price and time priority.
- *Trade Execution*: Trades are executed, and details are confirmed to the broker and investor.
- *Settlement Cycle*: Trades are settled within a specified timeframe (e.g., T+2 days).
*Order Types:*
- *Limit Order*: An order to buy or sell at a specified price.
- *Enhanced Limit Order (ELO)*: A limit order that allows matching of up to 10 price queues.
- *Special Limit Order (SLO)*: An order that allows matching at multiple price levels without storing the order in the system.
*Market Mechanisms:*
- *Pre-opening Session*: Orders are accumulated and matched at a specific price.
- *Continuous Trading Session*: Orders are executed in strict price and time priority.
- *Closing Auction Session*: Orders are matched at a final price.