Question : Case Study 82

XYZ Enterprises is a startup that aims to trade its shares on a stock exchange. The company's management is reviewing the concept of executing an order.

Question : 

What is the primary purpose of the settlement process in trading?

Option 1: Matching buy and sell orders
 

Option 2: Transferring ownership of shares
 

Option 3: Determining share prices

 

Option 4: Listing on stock exchange


Team Careers360 25th Jan, 2024
Answer (1)
Team Careers360 26th Jan, 2024

Correct Answer: Transferring ownership of shares


Solution : The correct answer is (b) Transferring ownership of shares

The primary purpose of the settlement process in trading is to facilitate the transfer of ownership of shares from the seller to the buyer. Once a trade order is executed, the settlement process ensures that the ownership rights and responsibilities related to the shares are transferred from the selling party to the buying party in a secure and regulated manner. This transfer of ownership is a crucial step in completing the trade and is essential for maintaining transparency and fairness in the securities market.

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