Who are the participants in the securities market?

PARTICIPANTS IN THE SECURITIES MARKET

The Indian securities market comprises of a number of participants as described below:

Regulators : The key agencies that have a significant regulatory influence, direct or indirect, over the securities market are currently as follows:

• § The Company Law Board (CLB) which is responsible for the administration of the Companies Act,1956.
• § The Reserve Bank of India (RBI) which is primarily responsible, inter alia, for the supervision of banks, money market, and government securities market.
• § The Securities and Exchange Board of India (SEBI) which is responsible for the regulation of the capital market.
• § The Department of Economic Affairs (DEA), an arm of the government, which, inter alia, is concerned with the orderly functioning of the financial markets as a whole.
• § The Department of Company Affairs (DCA), an arm of the government, which is responsible for the administration of corporate bodies.
• § The Insurance Development and Regulatory Authority (IRDA)
• § FSDC.

Stock Exchanges : A stock exchange is an institution where securities that have already been issued are bought and sold. Presently there are 23 stock exchanges in India, the most important ones being the NSE and BSE.

Listed Securities : Securities that are listed on various stock exchanges and hence eligible for being traded there are called listed securities. Presently about 10,000 securities are listed on all the stock exchanges in India put together.

Depositories : A depository is an institution which dematerialises physical certificates and effects transfer of ownership by electronic book entries. Presently there are two depositories in India, viz., the National Securities Depository Limited (NSDL) and the Central Securities Depository Limited (CSDL).

Brokers : Brokers are registered members of the stock exchanges through whom investors transact. There are about 10,000 brokers in India.

Foreign Institutional Investors : Institutional investors from abroad who are registered with SEBI to operate in the Indian capital market are called foreign institutional investors. There are about 600 of them and they have emerged as a major force in the Indian market.

Merchant Bankers : Firms that specialise in managing the issue of securities are called merchant bankers. They have to be registered with SEBI.

Primary Dealers : Appointed by the RBI, primary dealers serve as underwriters in the primary market and as market makers in the secondary market for government securities.

Mutual Funds : A mutual fund is a vehicle for collective investment. It pools and manages the funds of investors. There are about 30 mutual funds in India.

Custodians : A custodian look after the investment back office of a mutual fund. It receives and delivers securities, collects income, distributes dividends, and segregates the assets between schemes.

Registrars : Also known as transfer agent, a registrar is employed by a company or a mutual fund to handle all investor – related services.

Underwriters : An underwriter agrees to subscribe to a given number of shares (or any other security) in the event the public subscription is inadequate. The underwriter, in essence, stands guarantee for public subscription.

Bankers to an Issue : The bankers to an issue collect money on behalf of the company from the applicants.

Debenture Trustees : When debentures are issued by a company, a debenture trustee has to be appointed to ensure that the borrowing firm fulfills its contractual obligations.

Venture Capital Funds : A venture capital fund is a pool of a capital which is essentially invested in equity shares or equity – linked instruments are unlisted companies.

Credit Rating Agencies : A credit rating agency assigns ratings primarily to debt securities. (e.g. ICRA, CRISIL, S&P, etc.)

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