Participant on the market
Market participants are essential for the smooth operation of the markets and act as a conduit between producers and consumers on the securities market. These companies are also known as market intermediaries. Stock exchanges can be registered in different capacities with SEBI. This includes depository participants, stock brokers, registrars, transfer agents, merchant banks, clearing corporations and other market players. Below are some of the main participants and their respective roles.
Stock exchange:- Purchasers (shareholders), use exchanges to conduct electronic securities transactions. In the past, these trades were done in person at the stock exchange using an ‘open-cry’ method. Online trading, on the other hand is done using a standard browser.
Depository:- The term depository, refers to an entity which is responsible for keeping digital forms of investors’ securities. In other words, you can compare a depository to a bank. There are two of these institutions in India: NSDL, and CDSL. A depository can be compared to a bank. The main difference is that banks deal with money, while depository’s deal with investors’ assets. Investors must create an account at the depository before they can use its services.
Depository participants:- Depository Participant is a trade administrator that provides depository services to investors. According to SEBI regulations, DPs can be financial service providers like financial institutions, dealers and administrators. The depository can reach investors across a large geographical area by using an existing distribution channel.
Stockbroker or trading member:- An exchange member, also known as a trading user, may provide securities trading services to investors. If they meet certain requirements, individuals, partnerships, corporations and banks can become trading and clearing member of recognised stock exchanges. Stock brokers may be partnered with multiple stock exchanges to provide services for investors. Investors must open an account with a broker before they can trade on the stock exchange. Investors cannot trade directly on the stock market without brokers.
Regulator
A regulator is necessary to oversee the many participants on the securities market. Investors’ interests must be protected by regulators. The Reserve Bank of India and the Securities and Exchange Board of India are among the regulators for the different sectors of the market. Other regulators include the Ministry of Finance and the Insurance Regulatory and Development Authority. Securities and Exchange Board of India regulates the securities market.
Take a look at SEBI’s main functions and responsibilities.
SEBI’s main goal is to regulate the securities market and protect the interests of investors using any means that it deems appropriate.
SEBI’s regulatory power extends to all enterprises and intermediaries involved in capital issuances and securities transfers. SEBI Act gives it the power to audit and inspect all participants, adjudicate violations, as well investigate, audit and inspect. The SEBI Act also gives it the power to register and regulate all market intermediaries, as well punish them for violating the Act. SEBI is a completely autonomous body with full power and autonomy over the securities markets that it develops and regulates.
