NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism
Under the NSE trading system for derivatives, what does the 'market price protection' or price band for orders (operating range) mainly aim to do?
Price bands or operating ranges aim to prevent erroneous orders far from the prevailing market price from entering the system. They act as a safeguard against fat-finger errors. Settlement guarantee, lot size and strike intervals are handled by other mechanisms.
- APrevent erroneous orders far away from the prevailing priceCorrect
- BGuarantee settlement of all trades
- CFix the lot size of contracts
- DDetermine the strike price intervals
Explanation
Price bands and operating ranges reject orders placed far from the last traded or reference price, reducing the impact of fat-finger errors. Settlement guarantee is provided by the clearing corporation, and lot size and strike intervals are set by contract specifications.
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.
More Trading Mechanism questions
- Nifty futures lot size is 75 and the Nifty is at 24,000. If the initial margin is 10% of contract value, what is the margin required to buy …
- Under the NSE trading system for derivatives, what does a 'Market Order' with the 'Immediate or Cancel' (IOC) condition do?
- A trader buys 2 lots of a stock futures contract (lot size 500) at Rs 400 on day 1. The day 1 settlement price is Rs 405 and the day 2 settl…
- Which statement about the price band or operating range for index options and futures on Indian exchanges is most accurate?
- In the NSE derivatives trading system, which type of order is one that gets cancelled automatically at the end of the trading day if it is n…
- Which statement about the price band or circuit filters applicable to index options and index futures on NSE is correct?