DEFINITIONS

1. BULL: A Bull is a speculator on the stock exchange who expects a

rise in the price of the securities and buys those securities in order to
sell them when the price goes up. He is called the Tejiwala.
2. BEAR: A bear is a speculator on the stock exchange and he expects a
fall in the price of the securities. He purchases securities at a lower
price and settles his deal at a higher price and earns profit. He is also
called the Mandiwala.
3. SPECULATION: It is an anti-social activity undertaken for profit
maximization. Excessive speculation leads to gambling and
discourages genuine investors from trading on the exchange.
Speculation needs effective control for healthy growth of stock
exchanges and for the protection of genuine investors.
4. DEMATERIALISATION (DEMAT): It is a process by which an
investor gets its physical share securities converted into electronic
form which is maintained in the demat account.
5. DEPOSITORY: It is like an account wherein the deposits are shares,
debentures, bonds, government securities and other units in the
electronic form. The depository participant is an agent appointed by
the depository with the approval of SEBI. There are 3 kinds of
participants banks, financial institutions and brokers registered with
SEBI.
6. DEALINGS:
a) Spot delivery contract: It is a contract where the payment and
delivery of securities takes place on the same day or the next
day. Generally the transaction is settled on the day of sale.
b) Ready delivery contract: It is a contract where the payment
and the delivery takes place within a fixed period not exceeding
7 days from the date of contract.

c) Forward delivery contract: It is a contract where the payment

and the delivery of securities takes place once at the end of
every fortnight (15 days) through the clearing house only.
7. Trading & Settlement System: The act of buying and selling of
securities on a stock exchange is known as stock exchange trading.
Jobbers and brokers are 2 categories of dealers on the stock exchange.
A Jobber is a dealer of securities and a broker is an agent of securities.
A Jobber gives 2 quotations as a dealer in securities, the lower one for
buying and the higher one for selling the securities.
8. Contract Note: It is a confirmation of trade on a particular day on
behalf of the client by a trading member. It imposes legally
enforceable relationship between the client and the trading member
with respect to purchase or sale and settlement of trades. It also helps
to settle disputes or claims between investors and the trading
members. They are kept in duplicate one copy with the client and the
other copy remains with the broker for record purpose.
9. SPECULATIVE DEALINGS:
a) Option & Future dealings: The rights to buy and sell a certain
security within a certain price range and certain time period is
called an option dealing. An option to buy a security is called a
Call option and an option to sell a security is called a Put
Option. When in an option both the rights to buy and sell a
security is acquired by an investor it is called a Double option.
The right to buy or sell a security at a prescribed price within a
prescribed period but the payment and the delivery will be
made at a future date then such securities are called Futures.
b) Hedging & Margin Trading: A mechanism through which
loss on a transaction is minimized is called hedging.
The term Margin is used with reference to the deposit required
to be maintained by the member brokers with the stock
exchange clearing house. Such an arrangement of margin
enables the broker for buying and selling of securities on behalf
of clients without any difficulty.

c) Rolling Settlement: Trading in Demat shares takes place on

the basis of T + 3 or T + 2. Rolling settlement is introduced by
SEBI. SEBI has several rounds of consultations with all market
participants and has decided to reduce the settlement cycle of
transactions T+2 to T+1 in the equity market. This has widened
the scope of settlement procedure due to the wider use of
electronic fund transfer facility.
10. Record date Book Closure: Record date helps a company to
determine exactly the shareholders of a company on a given date.
Book closure refers to closing of the register of the names of
shareholders in the records of the company. The benefits of
dividends, bonus shares, right shares accrue to the shareholders whose
names appear in the register of shareholders of the company on the
record date.
11. No-delivery period: When a company announces a book closure or
record date, the exchange sets up a no delivery period for those
securities. During this period only trading is permitted in the
securities but the trades are settled only after the no delivery period.
12. Ex- dividend date: The date on which a security begins trading
without dividend included in the price this means the buyer of shares
will not be entitled for dividend declared by the company. Normally,
the first date of the no delivery period is the ex-dividend date.