Question

Identify the correct sequence of trading settlement procedure:
(A) The investor has to sign a broker client agreement.
(B) The investor has to open a ’Demat’ Account.
(C) An order confirmation slip is issued to the investor by the broker.
(D) The broker will then go online and connect to the main stock exchange.
Choose the correct answer from the options given below:

• A. (A), (B), (C), (D)
• B. (A), (C), (B), (D)
• C. (B), (A), (D), (C)
• D. (C), (B), (D), (A)

Answer 1

The Correct Option is A

The correct sequence for the trading settlement procedure in the context of stock trading typically involves the following steps: 

1. The investor has to sign a broker client agreement. This step ensures that the investor is legally bound and agrees to the terms and conditions set by the brokerage firm. It is necessary to establish a formal relationship between the investor and the broker.
2. The investor has to open a ‘Demat’ Account. A Dematerialized (Demat) account is crucial as it holds the shares in electronic format. It facilitates easy trading by removing the hassles of dealing with physical share certificates.
3. An order confirmation slip is issued to the investor by the broker. Once an order is placed, the broker provides a confirmation slip. This document serves as proof of the trade order initiated by the investor.
4. The broker will then go online and connect to the main stock exchange. Finally, the broker executes the trade by interacting directly with the stock exchange, ensuring the transaction is processed.

Based on these steps, the correct sequence is (A), (B), (C), (D).

Answer 2

To determine the correct sequence of the trading settlement procedure, let's analyze each step and understand its logical order:

Steps in the Trading Settlement Procedure

The investor has to sign a broker-client agreement (A)

First Step: Before starting any trading activities, an investor must sign a broker-client agreement. This agreement outlines the terms and conditions between the investor and the broker, including fees, responsibilities, and other legal aspects.

The investor has to open a 'Demat' Account (B)

Second Step: After signing the broker-client agreement, the investor needs to open a Demat (Dematerialized) account. This account is used to hold and manage securities in electronic form, facilitating easy trading and settlement.

An order confirmation slip is issued to the investor by the broker (C)

Third Step: Once the investor places an order to buy or sell securities, the broker processes the order. After the order is executed, the broker issues an order confirmation slip to the investor. This slip confirms the details of the transaction, including the securities traded, the price, and the transaction date.

The broker will then go online and connect to the main stock exchange (D)

Fourth Step: After receiving the order from the investor, the broker connects to the main stock exchange to execute the trade. This involves matching the buy and sell orders and ensuring the transaction is completed according to the exchange's rules and regulations.

Correct Sequence

Based on the logical order of the trading settlement procedure, the correct sequence is:

The investor has to sign a broker-client agreement (A)

The investor has to open a 'Demat' Account (B)

An order confirmation slip is issued to the investor by the broker (C)

The broker will then go online and connect to the main stock exchange (D)

Conclusion

The correct answer is: (1) (A), (B), (C), (D)

This sequence follows the logical progression of the trading settlement procedure, starting with the broker-client agreement, followed by opening a Demat account, receiving an order confirmation slip, and finally, the broker connecting to the stock exchange to execute the trade.