Electronic Trading: Unlocking New Opportunities
Abstract
When it comes to electronic trading, for most individual investors, taking a long-term buy and hold approach is probably the best strategy. Electronic trading refers to the trading of securities (equities and derivatives) in the stock exchanges, without, or with minimal human intervention. In simple words it means to buy or sell a commodity or a security through a computer or more precisely it is the electronic implementation of financial systems. The paper aims to highlight the growth and future of electronic trading in India. This paper also analyzes type of technology used by major stock exchanges (Sensex and Nifty) and by the Indian customer in E- trading. This paper also reveals the role of intermediaries in trading online and how they differ from traditional stock brokers in terms of investment and money management.
Key words: Electronic trading, E-trading, Sensex, Nifty |
Introduction
Electronic trading, also known as e-trading is a tool for electronically trading of securities (such as stocks and bonds), foreign currency and exchange traded securities. It is an electronic media which uses information technology for bringing together buyers and sellers to create a virtual market place. Each stock exchange has certain listed securities and permitted securities which are traded on it. Traditionally till 1994, trading on the stock market in India was based on the open outcry system. As the nomenclature suggests, under this system, traders and shouted and resorted to signals on the trading floor of the exchange which consisted of several “national” trading posts for different securities. With the establishment of the National Stock Exchange in 1994, India entered the era of the e-trading. Within a short period of time, e-trading has supplanted the open outcry system on all the stock exchanges in the country. The transformation has been at such a pace that
When it comes to electronic trading, for most individual investors, taking a long-term buy and hold approach is probably the best strategy. Electronic trading refers to the trading of securities (equities and derivatives) in the stock exchanges, without, or with minimal human intervention. In simple words it means to buy or sell a commodity or a security through a computer or more precisely it is the electronic implementation of financial systems. The paper aims to highlight the growth and future of electronic trading in India. This paper also analyzes type of technology used by major stock exchanges (Sensex and Nifty) and by the Indian customer in E- trading. This paper also reveals the role of intermediaries in trading online and how they differ from traditional stock brokers in terms of investment and money management.
Key words: Electronic trading, E-trading, Sensex, Nifty |
Introduction
Electronic trading, also known as e-trading is a tool for electronically trading of securities (such as stocks and bonds), foreign currency and exchange traded securities. It is an electronic media which uses information technology for bringing together buyers and sellers to create a virtual market place. Each stock exchange has certain listed securities and permitted securities which are traded on it. Traditionally till 1994, trading on the stock market in India was based on the open outcry system. As the nomenclature suggests, under this system, traders and shouted and resorted to signals on the trading floor of the exchange which consisted of several “national” trading posts for different securities. With the establishment of the National Stock Exchange in 1994, India entered the era of the e-trading. Within a short period of time, e-trading has supplanted the open outcry system on all the stock exchanges in the country. The transformation has been at such a pace that
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