Trading

The Exchange has an on-line screen based order matching system which is hosted on a fully Fault Tolerant (FT) Stratus Server. This Stratus Server has “continuous processing” features, providing continuous availability. Additional features of the Stratus system include lockstep technology, failsafe software, and service architecture. Other components of MSE framework are hosted on a high-end Intel. For redundancy in Network, members can have multiple mediums of connectivity such as Lease line, VSAT, ISDN, and Internet (through SSL VPN). The robust technology infrastructure enables the exchange to operate efficiently and also facilitates fast order routing, immediate trade execution, trade reporting, market data dissemination and risk management.

MSE trading system is an order driven system. The identities of the buyers/sellers are not disclosed as it's an anonymous order matching system. Orders entered into the Trading System are subject to various validation requirements including trading parameters, turnover limits, and/or other restrictions placed, if any. Orders that do not meet the validation checks are not accepted by the Trading System.

The MSE Trader Work Station (TWS) provides normal market session. Normal market consists of two types of books wherein orders are segregated, these are Regular Lot orders and Stop Loss orders depending on their order attributes.

The MSE trading system provides flexibility for placing different types of order. Each order entered in the system is allocated a unique order number, time-stamped and processed for potential match. If no suitable match is found, then the orders are stored as pending orders in the Order Book or till such time the order has been cancelled or at End of Day.

Presently MSE has following types of books:

  • Regular Lot Book - The Regular Lot Book contains all regular lot orders.
  • Stop-Loss Book - Stop Loss orders are stored in this book till the trigger price specified in the order is reached or surpassed. When the trigger price is reached or surpassed, the order is released in the Regular lot book with a time stamp of the trigger time, i.e., when the order is triggered and released in the regular lot book.

    The stop loss condition is met under the following circumstances:

    • Sell order triggered when last traded price = < trigger price
    • Buy order triggered when last traded price > = trigger price

The orders are matched based on a price-time priority in the following sequence:

  • Price priority - Price priority means that if two orders are entered into the system, the order with the best price gets the higher priority.
  • Time priority - Time priority means if two orders with the same price are entered, then the order that is entered first based on time gets the higher priority. The best buy order is matched with the best sell order. An order may match partially with another order resulting into multiple trades. The best buy order is the one with the highest price and the best sell order is the one with the lowest price.

    The orders entered into the system will be displayed till the full quantity is matched by one or more of counter-orders. Orders lying unmatched in the system are 'passive' orders and orders that are entered to match the existing orders are called 'active' orders. Active Orders (new or modified existing order) are always matched at the passive order price. This ensures that the earlier orders get priority over the orders that come in later.

Trading Member can enter various types of orders depending upon his/her requirements. These conditions are broadly classified into three categories: time related conditions, price-related conditions, quantity related conditions and other conditions.

  • Time Conditions
    • DAY - A Day order, as the name suggests, is an order which is valid for the day on which it is entered. If the order is not matched during the day, it gets cancelled automatically at the end of the trading day.
    • IOC - An Immediate or Cancel (IOC) order allows a Trading Members to buy or sell a security as soon as the order is released, failing which the order will be removed from the market. Partial match is possible for the order, and the unmatched portion of the order is cancelled immediately.
  • Price Conditions
    • Market Price Order - An order to buy or sell securities at the best available price obtainable at the time of entering the order.
    • Limit Price Order - An order that allows the price to be specified while entering the same into the system.
    • Stop Loss (SL) Price Order - In a Stop Loss Order, the order gets triggered only when the market price of the relevant security reaches or crosses a threshold price. Until then the order does not enter the regular order book. The stop loss Order price can either be a limit or market.
  • Quantity Conditions
    • Disclosed Quantity (DQ) - An order with a DQ condition allows the Trading Member to disclose only a part of the order quantity to the market. For example, an order of 10000 with a disclosed quantity condition of 2000 will mean that 2000 is displayed to the market at a time. After this is traded, another 2000 is automatically released with new time-stamp and so on till the full order is executed. The Exchange may set a from time to time. The minimum disclosed quantity criteria is set as 20%, presently.
  • Other conditions
    • Proprietary (Pro) - Pro means that the orders are entered on the trading member's own account.
    • Client (Cli) - Cli means that the trading member enters the orders on behalf of a client.
    • Institution (Inst) - For Inst trade, the trading members enter the orders on behalf of the clearing member's participants (CP).