Order Handling, Trade Execution, and Settlement
This domain tests the mechanics of getting a trade done: session times, order types, priority rules, lot and tick constraints, and the cost and settlement conventions. Calculation items on total transaction cost are common, as are questions on what a firm owes a client when an order goes wrong.
Sessions and order types
- Opening call auction 9:15–9:25 (orders cannot be cancelled from 9:20), continuous trading 9:30–11:30 and 13:00–15:00, closing call auction 14:57–15:00.
- Limit orders execute at the specified price or better; market orders on SSE and SZSE take forms such as best-five-depth immediate-or-cancel, counterparty-best, or fill-or-kill. Priority is price first, then time.
- Tick size is 0.01 yuan; A-share buys are in 100-share lots, and odd lots may be sold in a single order.
Settlement and cost
- A-shares are T+1 for both the sell restriction and settlement at CSDC, on a delivery-versus-payment basis. Sale proceeds can fund a same-day purchase but are withdrawable only the next trading day.
- Costs: stamp duty 0.05% charged on the seller only (halved in August 2023), transfer fee 0.001% on both sides (cut in 2022), and commission up to 0.3% with a 5 yuan minimum.
Worked example
A client buys 10,000 shares at 10.00 and later sells all at 10.50, with commission 0.03% and the 5 yuan minimum not binding. What is the net profit?
Reasoning: purchase 100,000. Commission 100,000 × 0.03% = 30; transfer fee 100,000 × 0.001% = 1; total outlay 100,031. Sale proceeds 105,000. Commission 31.50, transfer fee 1.05, stamp duty 105,000 × 0.05% = 52.50, so net received 105,000 − 85.05 = 104,914.95. Profit = 104,914.95 − 100,031 = 4,883.95. Note the asymmetry: stamp duty hits only the sell, so round-trip cost is not simply double one side.
Traps that cost marks
- Charging stamp duty on purchases.
- Forgetting the 5 yuan commission floor on small tickets.
- Assuming sale proceeds are withdrawable the same day.
- Believing a market order guarantees a price rather than execution priority.