How Stock Exchanges Work: The Machinery Behind Every Buy and Sell Order
Behind every ‘buy’ tap on a trading app is an infrastructure of exchanges, depositories, and clearing corporations working together. This guide explains how NSE and BSE match buy and sell orders (market, limit, and stop-loss orders, matched via price-time priority), the role of your broker, Demat accounts held with NSDL or CDSL, and clearing corporations that guarantee every trade. It covers India’s settlement journey — from T+2 to T+1 (January 2023) to the now-expanding optional T+0 same-day settlement (available for a substantial number of stocks by 2026) — how benchmark indices like the Sensex and Nifty 50 are constructed using free-float market capitalisation, the circuit breakers that pause trading during extreme volatility (both stock-specific and market-wide), the structure of the trading day, and SEBI’s role as the regulator tying every part of this system together.