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Question

What is Interoperability in connection with trades executed at Stock Exchanges?

A Interoperability refers to a mechanism wherein trades executed on any exchange—BSE, NSE or MSEI —can be settled or cleared through any of the clearing corporations and not necessarily restricted to the clearing corporation of the exchange on which the trade was done. Correct Answer Incorrect Answer
B Interoperability refers to a mechanism wherein trades executed on any exchange—BSE, NSE or MSEI —can be traded any number of times by a single investor. Correct Answer Incorrect Answer
C Interoperability is the process by which a client can get physical certificates converted into electronic balances for any trade executed at BSE or NSE Correct Answer Incorrect Answer
D Interoperability refers to a mechanism wherein trades executed on any exchange—BSE, NSE or MSEI —will be halted if the price of the trade reaches beyond a threshold level Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Interoperability refers to a mechanism wherein trades executed on any exchange—BSE, NSE or MSEI —can be settled or cleared through any of the clearing corporations and not necessarily restricted to the clearing corporation of the exchange on which the trade was done. For instance, a trade executed on NSE can be settled through BSE’s Indian Clearing Corporation and vice versa. The interoperability system, which allows smooth settlement of equity trades done across exchanges, is set for an overhaul after the technical glitch at the National Stock Exchange in February raised questions about its effectiveness. The Securities and Exchange Board of India wants to revamp the existing system to ensure that trades will are executed even if one of the exchanges faces a breakdown during market hours.

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