How transactions work

2011_NewComer · 1 How transactions work Thu Mar 10, 2011 9:04 pm

2011_NewComer

Senior Manager - Equity Analytics

Posts : 559
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Join date : 2011-03-10
Location : Colombo

Dear experts,

Please tell me how the transactions will happen in the following scenarios.

Let's say I put 2 Buying orders in the morning before trading starts (between 9 - 9.30 am) of a share
-at Rs 35 - 100 shares and
-at Rs 45 - 100 shares

And if there's some one who has put a sell order to sell 200 shares at Rs 35, then does my all 200 shares get filled or only the first 100 @ 35 get filled?

Basically, this is what I want to know. If I put some buying orders for a higher price and if there's some one to sell at a lower price, do they get matched and get filled what ever the difference is?

And if the same above scenario happens during trading time (9.30 am - 2.30pm), is there a difference in how that transaction happen?

Please explain...
Thanks Smile

chamith · 2 Re: How transactions work Thu Mar 10, 2011 10:59 pm

chamith

Assistant Vice President - Equity Analytics

Posts : 827
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Join date : 2011-01-31
Location : England

number of shares is irrelevant,
say u put a order to buy 500 shares at 35. and another person put 400 to sell at 35 then your sell order will get filled with 400 and remain till some one sell at 35. Only limit orders are accepted when the market closed / pre-open. If there are other ppl who has put orders to sell/buy before you then your order will have to wait till the previous same priced orders filled up...

DK · 3 Re: How transactions work Thu Mar 10, 2011 11:57 pm

DK

Manager - Equity Analytics

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Join date : 2011-02-14

Chamith, I think he's asking which one is getting priority.

If you are buying, the higher priced order always gets the priority, even if it came in late. Let's take an example.

Newcomer submits a buy order Rs35 for 100 shares at 10:00:00
DK submits a buy order Rs35 for 100 shares at 10:00:01

Chamith sells 100 shares for Rs25. NewComer gets the sale. Price here is 35 as that was the price that was 'in the book'.

Let's say it was something like this:
Newcomer submits a buy order Rs35 for 100 shares at 10:00:00
DK submits a buy order Rs36 for 100 shares at 10:00:01

Now DK's order gets the priority.

You asked whether there is a difference between submitting those two at the pre-open and after open. Following is the difference.

Pre-Open: An auction runs at 9:30 till 9:35 to determine the 'best price' for trades. Therefore you can get executed at a price better than what you were hoping for (in the example above, NewComer's order might get executed below 35 or Chamiths order to sell would execute above 25 provided there are other orders in the book as well). The algorithm I believe what CSE is using is a common algo called volume maximiser.

After Open: Whatever the order in the book, gets the price they asked.

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How transactions work

1 How transactions work Thu Mar 10, 2011 9:04 pm

2011_NewComer

2 Re: How transactions work Thu Mar 10, 2011 10:59 pm

chamith

3 Re: How transactions work Thu Mar 10, 2011 11:57 pm

DK

4 Re: How transactions work

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