Question Details

Identify the correct sequence of trading settlement procedure:


(A) The investor has to sign a broker client agreement.
(B) The investor has to open a ’Demat’ Account.
(C) An order confirmation slip is issued to the investor by the broker.
(D) The broker will then go online and connect to the main stock exchange.
Choose the correct answer from the options given below:

Options

A

(A), (B), (C), (D)

B

(A), (C), (B), (D)

C

(B), (A), (D), (C)

D

(C), (B), (D), (A)

Show Answer

Correct Answer :

Option A

(A), (B), (C), (D)

Solution :

The correct option is (A), (B), (C), (D).

Here is the step-by-step logical sequence of the trading settlement and transaction procedure in a stock market:

1. (A) The investor has to sign a broker-client agreement:
Before initiating any transaction, an investor must select a registered broker and complete the onboarding process. This includes signing the Broker-Client Agreement and filling out the Know Your Customer (KYC) form. This is the primary requirement to establish a legal relationship between the investor and the broker.

2. (B) The investor has to open a 'Demat' Account:
Once the broker-client agreement is executed, the investor must open a Depository Participant (Demat) account (and a trading account) to hold securities in electronic form. Without a Demat account, shares cannot be transferred or settled during trading.

3. (C) An order confirmation slip is issued to the investor by the broker:
After setting up the accounts, when the investor wants to buy or sell securities, they place an order with the broker. The broker enters the order, and upon receiving it, issues an order confirmation slip to the investor, acknowledging the order details.

4. (D) The broker will then go online and connect to the main stock exchange:
Finally, the broker routes the order online to the stock exchange's main computer network to match it with a counterparty order and execute the trade.

Therefore, the correct chronological sequence of these steps is (A), (B), (C), (D).

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