How SBTS Has Improved Online Stock Trading in India
In earlier times, there were no trading software. The stock exchanges in India were based on open outcry system. Under this system, the brokers gathered at a central point usually at the exchange trading ring and commenced trade with each other. This was considered to be very time consuming, inefficient and bounded the traders with limitations on trading volumes and trading hours.
So, in order to trade efficiency, liquidity and transparency, NSE decided to introduce a nation-wide-on-line, which was a fully automated screen based trading system (also known as SBTS).
Under this system, a trading member can punch the number of securities and prices into a computer system in which he would like to transact. The transaction is executed as soon as it finds a matching selling or a buying order from another counter party.
This system was readily accepted by the market participants and in its very first year of existing operation, NSE became the leading stock exchange in the country.
Technology has been used to carry the trading platform from the trading hall og stock exchanges to the premises of brokers. NSE carried the trading platform further ahead to the computer systems at the residence of the investors via the internet.
This had a huge impact and made a difference in terms of equal access to the investors especially in a geographically and diverse regionally vast country like India.
The SBTS or Screen Based Trading System has more advantages than the earlier used trading outcry platform.
Mentioned below are a few advantages of the SBTS or Screen Based Trading System.
1) The SBTS or Screen Based Trading System matches orders on a stringent price/time priority and hence saves a lot of time, cost and risk of error as well as on fraudulent activities which result in improved operational efficiency.
2) It permits much faster absorption of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets.
3) It allows market participants, irrespective of their geographical locations to trade with each other simultaneously, thus improving the depth and liquidity of the market.
4) It provides full secrecy by accepting orders, however big or small from members without actually revealing their identity, thus providing equal access to everyone.
5) It provides a perfect audit trail, which helps in resolving disputes by logging in the trade execution process in entirety.
Thus the SBTS or Screen Based Trading System has greatly improved the efficiency and output of share trading, which has resulted in quality trading thus increasing India’s GDP and boosting the nation’s economy.