Big ticket market players such as brokerage houses, domestic funds and foreign institutional investors are increasingly switching to basket trading for more privacy in a volatile market.

The benefit of this system is that it circumvents the human at the broker's office. Conventionally, if a broker is told to execute an order the word spreads like wildfire in the market and prices react. An automated system bypasses dealers, and it is only when trade confirmations are generated through his systems.

According to rough estimates, more than 40 per cent of volumes on the markets are generated through basket trading. The system is called basket trading because usually the trade orders contain a basket of scrips, with a common trigger.

The simplest ones are programmed to go to the exchanges either at a pre-determined time, a particular level of the index or a sharp movement in any of the leading scrips.

Sanjiv Shah, executive director, Benchmark Asset Management Company said, "The advantage of basket trading is that the broker has no idea until the trade is executed and the leakage of information on trades is reduced drastically."

He also added, "Trade becomes much faster and it is easier to get confirmations, thus giving it an edge over normal trading." Benchmark AMC were one of the earlier users of basket trading on the markets.

Adds a NSE broker, "Programmed-based trade execution of orders is on a rise and the programme is developed which is either of a pre-determined rate or time. Even a NSE terminal provides a Nifty basket option where a basket of stocks can be designed before an order is executed.

Sanjay Sinha, a fund manager with UTI Mutual Fund adds, "On most occasions we rely on basket trading for either buying or selling in index stocks, as it more convenient and faster to execute."