Skip to main content

Market Pre-open session - How It works and Its benefits

   With an intention to reduce volatility in various scrips at the opening of the markets, and to arrive at the ideal opening price of a scrip, the exchanges have introduced a call auction process in the pre-open session from October 18.

   The pre-open session is a new innovation to arrive at the ideal opening price of a scrip for the current trading session. The session intends to reduce volatility in the beginning of a day. Under this new arrangement, an exchange will collect orders for the first few minutes of this session. On the basis of orders received, it will arrive at the opening price and match the tradable orders to that price. The remaining orders will be moved to the normal trading session.

   The call auction process will be initially introduced for scrips forming part of Nifty and Sensex, and trading in other scrips and F&O contracts will only begin at 9:15 am when normal market trading begins. Orders not will get traded during the order entry period in the pre-open session.

   The duration of the pre-open session will be 15 minutes - from 9 am to 9.15 am.

   The session will have three phases:

Order entry period    

The order entry period is 9 am to 9.08 am. The buyer can place new orders, modify or delete old orders. The order entry can stop randomly between the 7th and 8th minute.

Order matching and confirmation period (price discovery period)    

This period is from 9.08 am to 9.12 am. The exchange arrives at the opening price and trades the matchable orders at the opening price. The client cannot modify or delete the orders during this period.

Buffer period    

This is from 9.12 am to 9.15 am. This period is used as a transition period between pre-open and continuous trading sessions.

   Then the regular market - 9.15 am to 3:30 pm - hours begin.

Trading    

The orders that have not been traded are carried forwarded to the normal trading session. Limit orders that are not traded during pre-open sessions will be moved to normal trading sessions at the same price. Market orders that are not traded during pre-open sessions will be moved to normal trading sessions at the opening price.

   Orders are traded in the second phase - order matching and confirmation phase - of the pre-open session. You will receive trade confirmations during that phase only - tentatively between 9.08 and 9.12 am.

   If the opening price is not discovered during a pre-open session, the market orders will be shifted to the normal trading session at the previous day's closing price.

   Presently, you can only place orders in scrips that form the Nifty and Sensex indices. This list is subject to change and will be notified by exchanges accordingly. You can place an order in any product (cash, intraday or margin) during a pre-open session. Pre-open session is not available in the F&O segment. You cannot place fresh offline orders or modify existing offline orders during a pre-open session.

   Also, you cannot place an order beyond plus or minus 20 percent of the previous day's closing price. For example, if the closing price of a scrip is Rs 200, you cannot place an order beyond Rs 160-240 price range during a pre-open session.

   You may view the tentative opening price for a scrip in the 'LTP' field during a pre-open session.

Order books    

For pre-open sessions, the order book of a scrip in the NSE and BSE need to be interpreted differently.

In the NSE    

The NSE order book will have four limit order legs and one market order leg on both bid and offer sides. The last leg of the order book on either side will be for market orders. All the market orders placed by you will come under this leg.

   Each limit order leg will show the exact price and quantity available on that price. For market order leg, the order book will display price as '0' and quantity as total quantity of the market orders on that side.

In the BSE    

The BSE order book will have all limit order legs and each leg will display the cumulative tradable quantity at that leg.


   Market orders will not be treated separately in the order book.

 


Popular posts from this blog

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...

Guide to pension plans in the form of Insurance

  Pension plans ensure that you are financially secure during your golden years. Take a look at the important aspects that you must keep in mind while opting for one...      Gone are the days when a leading criterion for choosing an employer was the type of pension plan that came with your salary package. Today, more important issues like matching of skill sets to job requirements, scope for personal and financial growth, etc. have come to the forefront. However, this has left individuals with the responsibility of financially planning for their golden years. And it's all for the best as there are a variety of pension plans available in the market to suit different individuals and their specific needs. WHAT ARE PENSION PLANS?     In a pension plan, you are required to pay premiums for a certain number of years and once you reach the retirement age, the insurer returns a lump sum amount that can be then used to purchase an annuity or stream of income for the rest of your life....

Refinancing Home Loans

With home loan lending rates easing out, many borrowers are considering home refinance as an option to minimise their liability    Home loan borrowers have always been concerned about their financial outflow while repaying debts. With interest rates easing out in the recent past, many borrowers are considering home refinance as an option to reduce this burden. So what is home refinance and how can you capitalise from it? Understanding refinancing.     Refinancing in simple terms means replacing your existing loan, with a new one, under fresh terms and conditions. So when you talk of home loan refinance, you will be repaying your existing home loan before its final tenure, with a new loan possessing different terms.    A home refinance option could prove to be beneficial for many borrowers. However, it is important to understand its procedure and the various costs that are associated with it before considering the option.    Whether it's for personal requirements or chang...

Tax Planning: Income tax and Section 80C

In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:   Provident Fund (PF) & Voluntary Provident Fund (VPF) Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer's contribution. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free. Public Provident Fund (PPF) An account can be opened wi...

Ways to invest in Gold - Which is best option?

Tax Saving Mutual Funds Online Current open Infra Bond Application form In recent years gold has delivered exceptional returns. In a span of about 6 years — from 2006 to 2011 — gold has given an average return of an "incredible" 29% per annum. Therefore, it is but natural to be attracted towards gold. But let's not forget history. In 1980, gold prices jumped from 300 $/oz to 600 $/oz due to Gulf crisis. But soon thereafter fell to about 450 $/oz in 1981 and then NEVER crossed the $450 mark until 2006. In other words, gold gave ZERO returns over a period of nearly 25 years. The question, therefore, arises — are we going to witness something similar once this worldwide financial crisis is over? Is this a bubble that will burst? The answer, unfortunately, will be known in the future only. Therefore, caution is advised, if you intend to invest in gold — especially now when it is trading at historic levels of 1600-1800 $/oz. However, ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now