Learning the market language

CUM-BONUS: The share is described as cum-bonus when a purchaser is entitled to receive the current bonus.

Cum-rights: The share is described as cum-rights when a purchaser is entitled to receive the current rights.

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

Dematerialisation: Dematerialisation is the process by which shares in the physical/paper form are cancelled, and credit in the form of electronic balance is maintained on highly secure system at the depository.

Ex-bonus: The share is described as ex-bonus when a purchaser is not entitled to receive the current bonus, the right to which remains with the seller.

Ex-rights: The share is described as ex-rights when a purchaser is not entitled to receive the current rights, the right of which remains with the seller.

Forward trading: This refers to trading where contracts traded, say, today, are settled at some future date, at prices decided today.

Good-bad delivery: A share certificate together with its transfer form which meets all the requirements of title transfer from seller to buyer is called good delivery.

Delivery of a share certificate, together with a deed of transfer, which does not meet requirements of title transfer from seller to buyer is called a bad delivery.

Insider trading: Trading in a company's shares by a connected person having non-public, price-sensitive information, such as expansion plans, financial results and takeover bids, by virtue of his association with that company, is called insider trading.

Jumbo certificate: This is a single composite share certificate issued by consolidating/aggregating a large number of market lots.

Market lot: Market lot is the minimum number of shares of a particular security that must be transacted on the Exchange. Multiples of the market lot may also be transacted. In demat scrips, the market lot is 1 share.

No-delivery period: Whenever a book closure or record date is announced by a company, the exchange sets a no-delivery period for that security. During this period, trading is permitted in that security. However, these trades are settled only after the no-delivery period is over. This is done to ensure that investor's entitlement for corporate benefits is clearly determined.

Odd lot: A number of shares that are less than the market lot are known as odd lots. Under the scrip-based delivery system, these shares are normally traded at a discount to the prevailing price for the marketable lot.

Order-driven trading: It is a trading initiated by buy/sell orders from investors/brokers.

Over-the-counter trading: Trading in those stocks not listed on a stock exchange.

Pay-in: Pay-in day is the designated day on which the securities or funds are delivered/paid in by the members to the clearing house of exchange.

Pay-out: Pay-out is the designated day on which securities and funds are delivered/paid out to the members by the clearing house.

(Edited-extracts from `A Quick Reference Guide For Investors' published by SEBI.)