Trading System

Issuers on the Emerge platform will have the option of trading their securities either in the normal (continuous) market or the call auction market. The chosen option will be defined by the issuer in the offer document. Issuers may change the market type at a later date, with approval from the exchange, and one month’s notice to the market.

Normal Market (N)

Normal market includes SME securities which trade in continuous market. Matching will take place continuously on the basis of price time priority. Members can place limit orders as well as market orders. Shares will trade in the respective market lots defined by the exchange for each security. Market maker shall be required to provide two way quotes, of minimum depth (one trading lot) during the day in continuous trading session, for atleast 75% of the time.

Call Auction 1 Market (C)

Call Auction 1 market includes SME securities which trade in the call auction sessions. The members can place limit order as well as market order. Shares will trade in the respective market lot defined by the exchange for each security. In call auction market the order flow over a certain time period is pooled, and the equilibrium price is determined based on the principle of demand supply mechanism. Market maker has to provide two way quotes, of minimum depth (one trading lot) in each call auction session. The call auction shall consist of two different phases namely:

During this phase orders can be entered, modified and cancelled. Random closure of the session will take place in last five minute of the session

Order matching period will start immediately after completion of phase I. Orders will be matched at a single (equilibrium) price. Market Maker orders will not match against each other. The order matching will happen in following sequence:

Additionally, both of the following windows will be available to all the investors on Emerge.

1. Phase I: Order Entry, modification and cancellation


2. Phase II: Order Matching
   • Eligible limit orders will match with eligible limit orders
   • Residual eligible limit orders will match with market orders
   • Market orders will match with market orders

Odd Lot Market (O)

All orders less than the Exchange defined market lot size are traded in odd lot market. In an odd-lot market, both the price and quantity of both the orders (buy and sell) should exactly match for the trade to take place. For SME the existing Odd lot market facility of the Capital Market is used for the Odd lot segment.

In the odd lot market, only market makers are allowed to enter buy order. Further market makers are not allowed to entered sell order. Non – market makers are allowed to enter only sell orders. This facility is given for non-market makers to sell off the shares in case number of shares held by them is less than the lot size.

Auction Market (A)

In the Auction Market, auctions are initiated by the Exchange on behalf of trading members for settlement related reasons. There are 3 participants in this market:

• Initiator - the party who initiates the auction process is called an initiator
• Competitor - the party who enters orders on the same side as of the initiator
• Solicitor - the party who enters orders on the opposite side as of the initiator

Normal Market

The matching takes place on price-time priority basis. The best buy order is matched with the best sell order. An order may match partially with another order resulting in multiple trades. For order matching, the best buy order is the one with the highest price and the best sell order is the one with the lowest price. This is because the system views all buy orders available from the point of view of a seller and all sell orders from the point of view of the buyers in the market.

Members can proactively enter orders in the system, which will be displayed in the system till the full quantity is matched by one or more of counter-orders and result into trade(s) or is cancelled by the member. Alternatively, members may be reactive and put in orders that match with existing orders in the system. Orders lying unmatched in the system are 'passive' orders and orders that come in to match the existing orders are called 'active' orders. Orders are always matched at the passive order price. This ensures that the earlier orders get priority over the orders that come in later.

Call Auction 1 Market

Trade in Call Auction 1 market consists of two different phases namely:

During this period orders can be entered, modified and cancelled. Random closure of the session will take place in last five minute of the session.

Order matching period will start immediately after completion of order collection period. Orders will be matched at a single (equilibrium) price. Market Maker orders will not match against each other. The order matching will happen in following sequence:

The order matching will happen in following sequence

1. Phase I: Order Entry, modification & cancellation


2. Phase II: Order Matching
   • Eligible limit orders will be matched with eligible limit orders
   • Residual eligible limit orders will be matched with market orders
   • Market orders to will match with market orders

Unmatched order

All unmatched orders will be cancelled after the end of call auction session.

Determination of Equilibrium price

Both limit and market orders will be reckoned for calculation of Equilibrium Price. Indicative Equilibrium Price shall be displayed during phase I and Final Equilibrium Price (FEP) shall be displayed at the end of phase II.

Following is the rule for determination of equilibrium price:-

• The equilibrium price is determined based on the principle of demand supply mechanism.
• The equilibrium price is the price at which the maximum volume is executable excluding matching between market maker orders.
• In case more than one price meets the said criteria, the equilibrium price will be the price at which there is minimum order imbalance (unmatched order quantity). The absolute value of the minimum order imbalance quantity will be taken into consideration.
• In case more than one price has same minimum order imbalance quantity, the equilibrium price will be the price closest to the last traded price, if traded on that day (LTP), else previous day’s closing price. In case LTP or previous day’s closing price is the mid-value of pair of prices which are closest to it, then the LTP or previous day’s closing price itself will be taken as the equilibrium price. In case of corporate action, previous day’s closing price will be the adjustable closing price or the base price.
• In case of only market orders exists both in the buy and sell side, then order shall be matched at LTP, if traded on that day or previous days close price or adjusted close price / base price.
• In case of no price is discovered in call auction session, all orders will get cancelled.

A Member can enter various types of orders depending upon his/her requirements in the Normal Market. These conditions are broadly classified into three categories: time related conditions, price-related conditions and quantity related conditions.

Time Conditions

DAY - A Day order, as the name suggests, is an order which is valid for the day on which it is entered. If the order is not matched during the day, the order gets cancelled automatically at the end of the trading day.

IOC - An Immediate or Cancel (IOC) order allows a Member to buy or sell a security as soon as the order is released into the market, failing which the order will be removed from the market. Partial match is possible for the order, and the unmatched portion of the order is cancelled immediately.

Price Conditions

Limit Price/Order – An order that allows the price to be specified while entering the order into the system.

Market Price/Order – An order to buy or sell securities at the best price obtainable at the time of entering the order.

Stop Loss (SL) Price/Order – The one that allows the Trading Member to place an order which gets activated only when the market price of the relevant security reaches or crosses a threshold price. Until then the order does not enter the market.

A sell order in the Stop Loss book gets triggered when the last traded price in the normal market reaches or falls below the trigger price of the order. A buy order in the Stop Loss book gets triggered when the last traded price in the normal market reaches or exceeds the trigger price of the order.

E.g. If for stop loss buy order, the trigger is 93.00, the limit price is 95.00 and the market (last traded) price is 90.00, then this order is released into the system once the market price reaches or exceeds 93.00. This order is added to the regular lot book with time of triggering as the time stamp, as a limit order of 95.00

Quantity Conditions

Disclosed Quantity (DQ)- An order with a DQ condition allows the Trading Member to disclose only a part of the order quantity to the market. For example, an order of 1000 with a disclosed quantity condition of 200 will mean that 200 is displayed to the market at a time. After this is traded, another 200 is automatically released and so on till the full order is executed. The Exchange may set a minimum disclosed quantity criteria from time to time.

Members can place orders on time and price conditions given below:

Time Conditions

GTS – A Good Till Session (GTS) order allows the Member to place orders valid only till call auction session in the system. After the call auction session all the unmatched orders are cancelled from by the system.

Price Conditions

Limit Price/Order – An order that allows the price to be specified while entering the order into the system.

Market Price/Order – When member enter buy / sell order, it indicates that member is ready to buy / sell at equilibrium price determined in call auction session.

1. Normal Market

2. Call Auction 1 Market (C)