Skip to content

NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism

In the NSE derivatives trading system, which of the following best describes how orders are matched?

Orders in exchange-traded equity derivatives are matched on price-time priority in an anonymous, order-driven electronic limit order book. Better prices execute first, and orders at the same price execute in order of entry time. It is not dealer-quoted, telephone-negotiated or a once-a-day call auction.

  1. AOrders are matched on price-time priority through an anonymous, order-driven electronic limit order bookCorrect
  2. BOrders are matched by a market maker who quotes prices to each client individually
  3. COrders are matched by negotiation between brokers over the telephone and then reported
  4. DOrders are matched in a single call auction held once at the end of the day

Explanation

Equity derivatives on the exchange trade on a fully automated, anonymous, order-driven screen where orders are matched by best price and, at the same price, by earlier time of entry. The other options describe dealer, negotiated or call-auction markets, which are not the normal mechanism.

Did you get it right without looking?

One question tells you little. A timed set on Trading Mechanism shows your real accuracy, how long you take and where you lose marks.

Practise Trading MechanismFree diagnostic mock

More Trading Mechanism questions