CA FINAL- ADVANCED AUDITING & PROFESSIONAL ETHICS THEORY QUESTIONS AND ANSWERSQ.1) Type of markets under NEATNEAT stands for National Exchange for Automated Trading system. It is afully computerized screen based trading system.It enables members from across the country to trade simultaneously with easeand efficiency by keying their orders into system.1.(i)Normal Market: All orders of regular lot size or multiples thereof aretraded in the normal market. Normal market consists of regular lot orders,special term orders, negotiated trade order and stop loss order depending ontheir order tributes.2.(ii)Odd Lot Market: If the order size is less than the regular lot size suchorders are traded in the odd lot market. In an odd lot market both the priceand quantity of both the orders (buy and sell) should exactly match for thetrade to take place.3.(iii)Spot Market: Spot orders are similar to normal market orders except thatspot orders have different settlement periods vis-a-vis normal market.4.(iv)Auction Market: In the auction market, auctions are initiated by theexchange on behalf of trading members, for completing the settlementprocess.Q.2) Circuit FiltersCircuit filters or Circuit Breakers are the price bands that set the upper andlower limit within which a stock can fluctuate on any particular day. A price band for a day is a function of previous trading day’s closing.SEBI has directed the exchanges to apply circuit filters on scrips traded in rollingsettlement if their prices fluctuates more than 20% of closing price of scrip onprevious day in any direction.However, for scrips forming part of sensex or in which derivatives and futuresare available, the fluctuation is restricted to 10%.RAHUL JAIN
Q.3)Rolling Settlement:A rolling settlement is one in which a transaction outstanding at the end of theday have to be settled within X number of business days from the transactiondate. If a transaction is entered on Monday on T+2 rolling settlement, it will be settledon Wednesday when pay in or payout take place. The pay in and pay out of funds are effected on the same specified date.SEBI has mandated most of the scrips to be settled exclusively on rollingsettlement basis. Q.4) Hit or Take Orders:Hit or take orders occur in screen-based trading in stock exchange. This is avariation of market orders. It enables faster order executionwithout disturbing the limit order book.This method converts the key strokes or mouse clicks of the broker into a limitorder at the touch line price for a particular scrip, without his having to place alimit order. Further all unexecuted orders of this type are automatically killed and aretherefore not stored in the order book.