ZIP Training - Overview Of Market Trading Flashcards
What two stock exchanges does nabtrade operate on?
- ASX
- Cboe
What is Australia’s largest share market?
ASX
What I’d Cboe and what does it provide trading in?
Cboe is an alternative market to ASX which provides trading in a subset of ASX listed securities
Companies listed on the ASX are divided into 11 sectors, but th3se are commonly split into 2 larger categories. What are these categories and what do they include?
- Resources - includes mineral explorers and producers, and energy companies.
- Industrials - covers all other streams including banking, insurance, telecommunications, IT, media, and transport
What is the ASX 200?
The top 200 stocks in the ASX
How many companies are listed in the ASX?
Almost 2300
What are indices?
Indices measure the movement in the value of the market or (various sectors of the market) and provide a broad outline of market performance.
What are the 3 major ASX indices?
- All Ordinaries - top 500 stocks
- S&P/ASX200 (XJO) - top 200 stocks.
- S&P/ASX200 VIX (A-VIX) - top 200 index option prices
What are key ASX opening times?
7am - 10am: Pre-opening (Match)
10am - 10.09am: Open
10:09am - 4pm: Normal trading
4pm - 4.10pm: Pre-closing Single Price Auction (Match)
4.10pm-4.12pm: Closing Single Price Auction
6:50pm - 6:59pm: ASX Purge Orders
What is Trading - Match?
Match is used by the ASX to calculate an accurate opening price for each company in the morning, and accurate closing price in the afternoon. Orders go in price time priority, i.e., highest buyer gets to top, price first then time.
Match occurs twice a day:
Pre-Open 7am - 10am M-F (limit orders only)
Closing Single Price Auction 4pm - 4.10pm (limit orders only)
What are the two types of trading orders?
- Limit Orders - order to buy/sell a share at a specific price or better. Sets max/min price at which investor is willing to buy/sell.
- Market (to limit) orders - order is submitted as a market order to execute at the current best market price.
What is settlement and when does it occur?
Settlement is the exchange of shares and funds. It occurs 2 days after the trade order is placed (T+2)
What is meant by the phrase “orders are placed on the market by price/time priority”?
Orders are executed in order of best price then earliest time i.e., better priced orders will execute first, but where there are multiple orders at a particular price, orders are ranked by the time placed on the market (earlier placed trades will execute before later placed trades).
Order duration - What are the 3 different expiry types for orders?
- Good For Day (GFD) - cancel same day if not executed.
- Good Til Cancelled (GTC) - remain until purged/cancelled.
- Good Til Date (GTD) - remain until specific date.
What are the two ways that Trading Accounts can be funded?
- Cash Account
- NEL Margin Accuont
What is a minimum marketable parcel?
The minimum order size for the first trade.
ASX have a rule that the first trade must be worth at least $500.
There is no minimum amount for international trades.
What is the brokerage cost over the phone for nabtrade?
$59.95 or 0.55% of trade value (whichever is greater)
What is IRESS?
Software that provides brokers and traders with market data and trading tools.
How can nabtrade orders be placed? (4 ways)
- nabtrade platform
- nabtrade app
- Over the phone with agent
- IRESS ViewPoint (conditional orders)
Are trade confirmation and contract notes the same thing?
Yes
What is a confirmation/contact note?
A receipt of your trading transactions and legal record of trade.
What is Settlement?
Settlement is the final exchange of legal ownership of a financial product (shares) for money.
When does nabtrade conduct settlement?
Between 9am - 10:30am on settlement date (T+2)
What is the settlement period for domestic stock?
T+2 days i.e.:
- If you trade Money - T
- Tuesday + 1
- Wednesday +2 (Settlement day)
What is FAFT?
FAFT = Funds Available For Trade (i.e., funds available to place a buy order at a given moment)
Do we allow customers to to buy shares without the necessary FAFT (including brokerage)?
No - we are a ‘funds upfront’ broker.
What is SAFT?
SAFT = Stock Available For Trade (i.e., the quantity of a stock you have available to sell)
What is a price step?
The increment of values that you can place orders in the market e.g., increments of $1
What is a Missed Market Opportunity (MMO)?
An MMO is when the opportunity to buy or sell at a certain price is missed, usually resulting from a delay in placing a customer’s order.
In this scenario, NAB can offer to place the order and investigate if they are liable for any missed opportunity (and compensate the client for the difference if so). Note - NAB can not investigate first; the order must be placed. If the customer declines, NAB will not be liable for any further movements in the stock price.
