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TRADINGTRADING SYSTEMThe Chittagong Stock Exchange was the first stock exchange in the country to introduce automated trading system on June 1999. The trading system at CSE known as CHITTRA connected major cities of Bangladesh enabling all members to trade nation wide simultaneously with ease and efficiency. CHITTRA provides a screen based, quote-driven trading facility. Investors are allowed to quote an expected price in their buy/sell orders. CHITTRA automatically matches the best prices. Order Matching Mechanism In terms of the matching process, there are two methods 1. Orders are sorted and matched with opposite orders of the best price. Waiting orders are automatically in the following sequence keeping the system fair and transparent:
The best buy order will match with the best sell order. The best buy order for a seller is the one with highest price and the best sell order for a buyer is the one with lowest price. An order may match partially with another order resulting in multiple trades. 2. Orders are queued for matching at a specified time at a single price. Subsequent to matching, trade confirmations are sent to the respective workstations, which can be printed on-line. The system displays scrip and market-related information required to support traders. [Top] TRADING ORDERSCSE trading system provides immense flexibility to the investors in terms of kinds of orders that can be placed to trade. The system allows the user to modify or cancel an order prior to execution. The most frequently order on the CSE is the "limit order”, which is an order to buy or sell at a specific price. Conditions related to time can be easily made into a limit order, which are as follows Good Till Cancelled (GTC): A GTC order is the order that remains in the system for a period not exceeding one calendar week or the member cancels it. Good For Day (GFD): A GFD is the order, which is valid for the day on which it is entered. If the order is not matched during the day, the order gets cancelled automatically at the end of the trading day. Good Till Date (GTD): A GTD order allows the member to specify the number of days not exceeding one calendar week for which the order shall stay in the stay in the system. At the end of this period the order shall be deleted from the system. In addition to limit order, the Exchange has introduced other following types of orders for the investors 1. Market order: Market Order is an order to buy or sell a certain quantity of particular security at the best price or prices prevailing in the market at that point of time. Volume related conditional market orders are following categories: Full Fill or Kill (FOK): A FOK order is the order that will match for a trade at the Market Price only if the total quantity is available. Partial Fill Rest Kill (PFRK): A PFRK order is the order that will match for a trade at the Market Price for the quantity available in the market. The balance quantity, if any, will be deleted from the system. Partial Fill Rest Convert (PFRC): A PFRC order is the order that will match for a trade at the market price for the quantity available in the market. The balance quantity, if any, will be converted to a Limit Order at the last traded price. Minimum Fill: An order in which the minimum quantity must be filled. 2. Drip Feed Order: A Drip Feed Order is an order in which the member has the option to specify a replenish quantity along with the total order quantity. Only the replenish quantity is revealed to the market. The quantity gets replenished only when the previous quantity has got traded and every time the quantity gets replenished, the visible quantity gets a new time stamp. 3. Stop Loss Order: A Stop Loss Order allows the member to place an order, which gets activated only when the market price of the relevant security reaches or crosses trigger price. A stop loss order can be modified or deleted until it is not converted to a limit order. 4. Match at Closing Price Order: A ‘Match at Closing Price’ Order allows the Member to specify order to be executed at Closing Price. 5. Spot Order: Members shall be allowed to carry out spot order on CSE system arising out of closure of book or closure of the renunciation period of listed Companies. A spot order is traded against another spot order only. 6. Odd Lot Order: Any share quantity, which is not a market lot or multiple of market lots shall be called Odd Lot. While matching the system would match orders only if the quantity (odd) of the order is fully satisfied by one of the opposite order. 7. Bulk lot order: Bulk lot orders are multiple of market lot orders, which contain multiple number of certificates. Each of the Bulk lot order shall match with equal quantity and best price. The minimum amount for a bid of bulk lot for a certain security shall be Tk 0.5 ( point five) million at market price unless otherwise fixed by the Board time to time with the approval of the SEC. 8. Big Lot Order: Big lots are multiple of market lots inscribed in one single certificate. Each of the big lot order shall match with equal quantity and equal or better price. 9. Auction Order: Auction Order shall be an order entered by CSE. The Exchange will specify a rate with price brand for each security when putting the auction order. The auction orders entered by CSE cannot be modified or deleted once the auction session has started. [Top] TRADING HOURSThe trade takes place from Sunday to Thursday except holidays declared in
advance by the Exchange.
The system will also have sessions for Odd Lot, Spot and Auction sessions. These sessions however may take place simultaneously with the normal trading sessions or in a separate session after closing of normal trading session [Top] OPENING & CLOSING PRICE CALCULATIONComputation of opening price of scrips: The opening price of a security shall be the price at which maximum number of securities is matched in opening session. Computation of closing price of scrips: The closing prices of scrips are computed on the basis of weighted average price of all trades in the last 30 minutes of the continuous trading session. However, if there is no trade during the last 30 minutes, the weighted average price of maximum 50 (fifty) number of trades preceding the above 30(thirty) minutes shall be taken for determination of closing price. In case there is no trade in the security during the continuous trading session the opening price of the security shall be treated as the closing price. [Top] PRICE LIMITPrice Limit means a price control mechanism used to minimize the excessive volatility in the market. Since unusual and abnormal price fluctuation of the securities may severely affect investor’s interest CSE , as an additional measure of safety ,imposes price limit on the securities trading of ‘A’,’B’,’G’,’Z’& ‘N’ category companies as per the following guidelines. A Committee named ’’Share Price Movement Regulating Committee’ comprised of CSE Secretariat is responsible to regulate the price limit in the market. GUIDELINES : The following standard upward and downward price limits are applicable for ‘A’,’B’,’G’,’Z’& ‘N’ category companies for each market days:
However the above price limit will not be applicable in the following cases: 1. A newly listed securities is allowed for free trade for first 5(five) consecutive market days. 2. Free trade is also allowed on the subsequent trading day of receiving price sensitive information like rights issue, bonus issue and dividend from the listed company. After the day, the price limit will be applicable as usually. 3. Free trade is allowed on the first trading day subsequent to the record date from 12.00 noon to the rest of the trading hours of the day due to closure of transaction resulting from record date/book closure date. [Top] MARGIN REQUIREMENTS WITH CSEThe CSE put in place a comprehensive risk management system, which is constantly monitored to pre-empt any trading failures. It collect margins from members to address the problems related to the volatile trading activities as well as to settlement failure. CSE imposes margin requirements on the member’s additional trade exposure. Additional trade exposure means the amount of the aggregate (gross) trade exposure exceeding the free limit for each member. Aggregate (gross) trade exposure is computed on the total buys and total sales position of a member at any point of time during a trading day. The free limit on the amount of the gross trade exposure to trade in CSE is taka one crore per trading day. The member shall pay the margins in cash, bank guarantee or FDRs etc. before exceeding the free limit on the amount of the gross trade exposure. As per Chittagong Stock Exchange (Member’s Margin) Regulations,2000 the rate of depositing the member’s margin with the clearing house on the additional trade exposure are as follows:-
Exposure limit violation The trading right of the members who exceeds the free limit without depositing margin to CSE within the prescribed time shall remain suspended. Adjustment or refund of member’s margin :- The Exchange can realises the value of the margin instruments and adjusts the amount so realised if member fails to settle his trade with the clearing house on the settlement day. The member shall be liable to pay the shortfall, if any, including the costs, interest, charges and expenses involved in the realisation process, within three days of the written notice of demand issued to him by the Exchange. [Top] TRANSACTION BY CLIENT ON MARGINA member may provide broker service to its client on cash account and /or margin account basis. Client who pay in full for the cost of the securities purchased uses cash accounts. Margin is buying securities on credit while using those same or other securities as collateral for the loan. A client is authorized to borrow part of an investment’s total purchase cost from their brokerage firm using margin accounts. Brokers have policies and procedures to protect themselves from market risk, as well as credit risk. As per Margin Rules, 1999 the member in no way extends credit facilities to its client until and unless the client maintains margin account with the broker through a written agreement. The client needs to carefully review the margin agreement provided by broker. The client shall deposit margin not later than seven days from the first date of securities transaction in the form of cash, securities issued by the Government or its agencies, marginable securities etc. The amount of the initial margin would result in the equity being not less than 150% of the debit balance in the account. Additional margin is required to be deposited if the account falls below 150% of the debit balance. The failure to do so may cause the broker to force the sale of—or liquidate—the securities in the client’s account in order to bring the account’s equity back up to the required level. The firm must also provide the customer with periodic disclosures informing the customer of transactions in the account and the interest charges to the customer. Your Risks Involved With Trading on Margin As a client you may generally use margin to expand your purchasing power. However it also run the risk There are a number of risks that all investors need to consider in deciding to trade securities on margin. These risks include the following:
Please learn about the risks involved in trading securities on margin, and you should consult your brokers regarding any matters they may have with your margin accounts. [Top] INTERNET TRADING SERVICESCSE is not only the pioneer of establishment of nationwide trading mechanism. It also extended its network to the abroad by introducing Internet Trading System on 30th May 2004. You may have access to our trading network not only from the premises of our brokers but also from personal computers in your home through the Internet. Internet trading is available on CSE. The CSE network allows its user to use internet as an order routing system for communicating clients’ orders to the CHITTRA through brokers. Broker can provide this service to their client after obtaining permission from respective stock exchanges. CSE has stipulated the minimum conditions to be fulfilled by brokers to start Internet based trading services. To know more about Internet based Trading Service please visit www.bangladeshstockmarket.com [Top] PROCEDURE OF INTERNET TRADING SERVICELIST OF MEMBERS WHO HAVE BEEN GRANTED PERMISSION TO PROVIDE INTERNET BASED TRADING SEVRICESPERMITTED SCRIPS |
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