Let us discuss some important financial intermediaries of stock market now.
Yes YOU, without you, the investors no investment will start. The investor in itself is an important intermediary of a stock market. Some one like you and me want to sell a share and at the same moment someone wants to buy that particular share. However you and me cannot do any transaction directly and you need a stock broker for any business with Stock Exchange like NSE and BSE .
2. Stock Broker
Stock Broker is a corporate entity registered directly as a trading member by stock exchange. Stock brokers provide you trading account and help you with your basic stock market documentation. Initial days retail investor used to call a stock broker on telephone for buying and selling of shares. Obviously this resulted in delay of transaction. These days it is done online instantly. Most stock brokers these days provide online trading platform for instant transaction orders of buy and sell.
3. Depository and depository Participants
In olden days shares used to be transferred in paper format. This paper served as a proof that you held a certain amount of shares of a company. Later this format was changed to digital format or dematerialized format. For holding a dematerialized share you need a demat account. We have detailed about Trading account and Demat account in another post. These demat accounts are provided by Depositories like NSDL and CDSL. When you open a trading account with any stock broker they will ask your preference which depository you want to open account with ?
Technically both CDSL and NSDL operate as per guidelines of SEBI and their charges are also same. Since your stock broker aka depository participants helps you in opening of demat account, they may add their service charge over the charges While NSDL and CDSL charges are same but different brokers charge different demat charges to the customer e.g. Zerodha, even though does not charge any brokerage it does charge Rs 8 per stock (Total Shares of 1 company) over the DP Charge of 5.5 Rs everytime you sell a stock from your Demat account.
SEBI or stock exchange board of India was found in 1992 by the securities and exchange board of India act 1992. SEBI has regulatory authority and sets rules and regulations for various intermediaries in Indian stock market. Their function is defined as
it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.So if you have any grievance against any of the financial intermediary of the stock market and they are not listening to your grievance you can always complain to SEBI through their SCORE or (SEBI COmplaints REdress System)
5. Clearing Corporations
An investor rarely hears about the clearing corporations but it is these organizations which improves the transaction settlement process e.g. match debit and credit process.
National Security Clearing Corporation Ltd (NSSCL) is clearing corporation of NSE and Indian Clearing Corporation Ltd (ICCL) is clearing corporation of BSE. You can check details from below links
6. Your Bank
Obviously most online platform links your bank account not only for transaction charges and cash transfer but also for keeping your holding companies informed for correct dividend payout.
There may be even more financial intermediaries of stock market and you can get the details of most Financial Intermediaries at SEBI Website by following https://www.sebi.gov.in/intermediaries.html .
To keep this stock market course simple, we are not getting into too much technicalities of these intermediaries, so lets understand basics of Demat and Trading Account now.
VALUE INVESTING STOCK INVESTMENT GROWTH INVESTING FINANCIAL PLANNING