Explain the trading procedure on a stock exchange.

Trading procedure on a stock exchange is as follows:

(i) Selection of a Broker: A SEBI registered broker, who is a member of a stock exchange, is selected to buy/sell securities on behalf of the investor. The broker can be an individual, partnership firm or corporate.

(ii) Opening a Demat Account: There are two depositories in India – NSDL (National Securities Depositories Ltd.) and CDSL (Central Depository Services Ltd.). A demat account is opened by the investor with depositary participant (bank stock broker) to trade in listed securities in electronic form and maintain the balance of securities with depositories.

(iii) Placing the order: The order to buy or sell specific security is to be communicated to the broker either personally or through telephone, e-mail, etc.

(iv) Executing the order: The broker buys or sells the specified securities as instructed by the investor and they issue a contract note. It contains the name

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