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Stock Market

Participants and regulators in the stock market

Participant in the market

Market participants are necessary for the market’s smooth operation and serve as a channel among producers and consumers of commodities in the securities markets. Market intermediaries are another name for these companies. Stock exchanges, depositories, depository participants (DPs), stock brokers, registrars and transfer agents (RTAs), merchant bankers, clearing corporations, and other market participants can all be registered with SEBI in various capacities. Some of the major participants, as well as their roles and responsibilities, are listed below:.

  • Stock market:- Purchasers (shareholders) use exchanges as a trading platform to perform electronic securities transactions. The ‘open cry’ approach was previously used to do these trades in person on the stock exchange. On the other hand, online trading is now done utilising a standard web browser.
  • Depository:-The term “depository” refers to the entity that is in charge of keeping investors’ securities in digital form In other words, a depository can be compared to a “bank” for securities. In India, there are two such institutions: NSDL and CDSL. A depository is comparable to a bank, with perhaps the exception of that financial institutions deal with funds, whereas a depository deals with the assets of investors. To use a depository’s services, an investor must first create a new account with the depository through an user id.. 
  • Depository participants:-Depository Participant is a trade administrator that provides depository services to investors. DPs could be financial service providers such as financial institutions, dealers, administrators, and investment firms, according to SEBI regulations. (DP) This strategy of utilising an existing distribution channel allows the depository to reach a wide range of investors in a large geographic area at a reasonable cost.
  • Trading member or stockbroker;- A trading user, often known as a stock broker, is a stock exchange member who may offer investors securities trading services. Individuals (single owners), partnership businesses, corporations, and banks are all eligible to become trading and clearing members of recognised stock exchanges if they meet the qualifying conditions. To provide facilities for customers to investors, stock brokers might be coupled with numerous stock exchanges. To trade in the stock market, investors must first open a trading account with a stockbroker. Without brokers, investors cannot trade on stock markets directly.

Regulator

Because there are so many market participants in the securities market, having a regulator to monitor them is essential. Regulators must also safeguard the interests of investors. Regulators for different areas of the market include the Ministry of Finance, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority, and others. The securities market is regulated by the Securities and Exchange Board of India .

Let’s have a look at SEBI’s main responsibilities and functions:

SEBI’s principal goal is to encourage the development of the securities market, regulate it, and protect investors’ interests using whatever means it sees fit.

Apart from all intermediaries and persons affiliated with the securities market, SEBI’s regulatory authority grows to enterprises involved when it comes to capital issuance and securities transfers. Under the SEBI Act, it has the authority to investigate, audit, and inspect all parties involved, as well as adjudicate violations. It also has the authority All market intermediaries must be registered and regulated, as well as to punish them if they violate the Act’s provisions. SEBI has complete autonomy and power over the securities markets it regulates and develops.

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