Transaction Cycle
A person holding assets (securities/funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange.
The order is converted to a trade as soon as it finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading members to deliver securities/funds as per settlement schedule. Buyer/seller delivers funds/securities and receives securities/ funds and acquires ownership of the securities
A person holding assets (securities/funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange.
The order is converted to a trade as soon as it finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading members to deliver securities/funds as per settlement schedule. Buyer/seller delivers funds/securities and receives securities/ funds and acquires ownership of the securities