How are financial instruments bought and sold?
Till the 1990s, buying or selling of financial instruments used to happen in a physical sense. Not only there was a need to verbally express every transaction, but there were also various documents that had to be exchanged between the user (may be a buyer or a seller) and the service provider each time a transaction took place. A user also had to complete formalities (like attaching transfer stamps on the security, putting multiple signatures, writing the postal address etc.) each time there was a transfer of ownership. The user then would inform the issuer of the security (mostly by post with the original documents, stamped & signed) if he wanted to register as the owner of the said security. In the 1990s, NSE introduced screen-based trading, where the buying and selling would take place on the exchange’s electronic system. Subsequently, the BSE too introduced screen-based trading. Over the next few years, only dematerialised shares were allowed to be traded on the stock exchanges, do
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