Q.Explain the meaning of screen-based (online) trading on a stock exchange.

Modern Indian stock exchanges match every buy and sell order electronically, with no physical trading floor involved.

Screen-based (online) trading is the system, now used by every recognised Indian stock exchange, in which the entire process of placing and matching buy and sell orders takes place electronically through computer terminals, rather than on a physical trading floor where brokers once shouted and signalled orders to each other ('open outcry').

Under this system, an investor places an order with a SEBI-registered broker, who enters it into the exchange's electronic trading system from any location connected to the network. The system automatically matches buy and sell orders on the principle of price-time priority: the order offering the best price is matched first, and among orders at the same price, the one placed earliest is matched first — all without any broker or exchange official deciding who trades with whom. Once matched, a contract note is generated confirming the trade. …

Describing screen-based trading only as 'trading on a computer' without explaining the actual matching principle (pri …