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How Stock Market works

Now that you know the basics of working of stock market.

Those who make up the marketplace:

The Stock Exchanges:
This is the main marketplace where stocks are listed, and traded. In India, the primary stock exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE)

The Brokers:
The broker helps you to buy and sell shares through the exchange

The Registrars:
Each company has a registrar that maintains a record of shareholders and number of shares each owns. Whenever a transaction takes place, they updated these values.

Depository Participants:
These are organizations that hold shares of investors in electronic form. It holds a record of securities on behalf of the account holder, and enables the transfer of shares without the account holder having the risk of safe-keeping physical shares.

SEBI:
The Securities and Exchange Board of India is the regulatory body that oversees, and along with the government, sets the rules that govern the workings of the securities market. 

The current system used to trade shares in the NSE for automated Trading on Neat and BSE on Bolt, that are quicker, efficient and transparent system that have streamlined the entire trading process

 

How system works is:

  • You place an order with the exchange via your broker
  • Buy orders are placed with a 'Bid' price, Sell orders are placed with an 'Ask' price
  • The system looks for matching buy / sell orders
  • When the highest bid price and lowest ask price are matched, a trade is made

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