Question

Identify regulations and procedures used in trading securities

Answer 1

Trading of securities are highly regulated as to prevent fraud and the interest of the investors.Some of the following regulations are as follows:

• Security Exchange Act and U.S Securities Act established by Securities and Exchange commission which are responsible for regulating the securities market and protecting investors.
• Several stock exhange like New York stock exchange or Stock exchnage of india also regulate in trading of securities
• Trust Indenture Act of 1939 regulate the debt securities trading
• Security Act 1933 also regulate the distribution of new securities
• SEBI has been incorporated in order to regulate the operations of several stakeholders in trading of securities like investors, credit rating agency etc.It also prohibits inner trading in securities
• Several other government bodies have been established in order to regulate the trading of the securities
• SARFESI, money laundering Act, FEMA, FAMA etc also regulate the trading of securities

Procedure used for trading of securities are as follows:

• trading of securities is done over the electronic demat account through recoznised stock exchange
• trade process is a stochastic process of transaction interspersed with periods of inactivity
• Step one is the seletction of the broker who will buy or sell securities on behalf of investor
• the next step is to open the demat account with our broker through which trading will be done
• next is to place the order to buy or sell
• then the broker will execute the order through contract note which is signed by him
• after that settlement will take place that means actual transfer of securities
• following these steps again and again we made the effective trading in securities.