InvestorQ : What does the Trading process of a stock really comprise of?
Priyanka Jain made post

What does the Trading process of a stock really comprise of?

Answer
user profile image
Arusha Ray answered.
2 years ago


There are a few basic things you need to understand the trading process. When you place a trade, you only see a very elegant screen in front of you. But between your placing the order and getting the shares in demat or between your placing a sell order and getting the credit to your bank account; there is a huge process flow that happens in the back end. Once the trades are executed and confirmed then these trades to be cleared by the clearing corporation and the respective brokers to determine the net obligations. Then all brokers need to either pay or receive money from the clearing corporations based on whether there is a net debit or net credit.
Once this process is complete and the obligations are determined, the final settlement process begins where stocks and cash is exchanged based on the net obligation of each of the trading members. Each trading member (broker) is ultimately responsible to the exchange for the payables and receivables of their registered clients. Behind the scenes, there is a massive network of stock exchanges, depository participants, and depositories, clearing corporations, brokers and banks that are at work to ensure that this process goes through smoothly and seamlessly.