How the hell IndiaBulls/Sharekhan etc work

#1
I am very confused about our exchange procedures/requirements, for example when we place an order through IndiaBulls (I am using indiaBulls but I mean all similar platforms) whether it goes to exchange without any human interaction in between OR there are dumbos sitting in IndiaBulls office to put our through their terminals. I am asking this because if it goes directly then why can't indiaBulls provide us a library that we can include in our program and perform algorithmic trading (of course we also need data feed), and if it goes through manual entry at their terminal then when it actually hits the market, market may have changed a lot. I am newbie in this field, please correct me if I am missing something.
 
#2
I am very confused about our exchange procedures/requirements, for example when we place an order through IndiaBulls (I am using indiaBulls but I mean all similar platforms) whether it goes to exchange without any human interaction in between OR there are dumbos sitting in IndiaBulls office to put our through their terminals. I am asking this because if it goes directly then why can't indiaBulls provide us a library that we can include in our program and perform algorithmic trading (of course we also need data feed), and if it goes through manual entry at their terminal then when it actually hits the market, market may have changed a lot. I am newbie in this field, please correct me if I am missing something.
it goes to the exchange directly if ur using terminal ....
so no question of human interaction
 
#4
The order is send to Indiabulls/Sharekhan Servers which in turn send the orders to the NSE servers. There is no one sitting and reading the orders and then feeding it to NSE. That is impossible, everything is computerized.

But manipulation can be done even in this as a delay of few seconds may be enough.

About a decade ago , major American Brokerage houses were fined app. $4.6 Billion in total by SEC. It was actually a settlement without admission of guilt rather than a fine. Cause was Frontrunning (google it).
Online brokerage with an intermediary borker server can very easily do frontrunning. Even the few seconds delay is more than enough for them.

That why the entity known as Direct Market Access is prefereed by all professional traders. But we don't have it yet in India.

No info is availaible regarding what happens here, they may be doing it , they may not be. Afterall in this age of such a high computing speed , pending orders create doubts regarding manipulation. If you put market order , it is should be filled immediately , but sometimes we see order pending and when it is filled , we see a slight slippage which may not be of much bother.

Now imagine this scenario:
You are watching a liquid stock , say ICICI , it looks ripe for breakout from the rectangular consolidation pattern, when it breaks out , everyone rushes to grab a piece of it. Most of time you have to put a market order if you want to grab it, other wise it may just keep on shooting by the time you make entries.
Now if your online brokerage firm is routing the orders to a secondary brokerage entity in return of fees( say they charge 50Rs. from you and for Rs.20 they sell this order to a secondary agency). The secondary agency may have tie ups with 3-4 brokerages and it recieves orders from them too.
Now when ICICI bank is shooting up , and everyone puts an order to buy it, lot of orders may be routed to the secondary agency, and say in 3sec it recieves pending pile up of 50000 orders. Now they are going to execute their order of 10000 shares from their personal account first , and then the 50000 share order will be executed. What will happen? The 50K will send the price soaring , and they can immediately sell their 10K chunk or wait. No one has to manually do it , it can be all computerised. Even the brokerage firm may itself do it , or may do it in collaboration with other firms without a need for a secondary agency to route the orders.

This may be one way of manipulation. Even the online trading terminal is not immune to manipulation. There may be other novel ways of manipulation which we may not know or think of.

So , next time you see your order pending and filling with a slight slippage, you may want to scratch your head and ponder on this possibility.....:lol:

Just a food for thought........
 
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