Players in The Market

Structure of the Securities Market
• The securities market is the market for Equity, Debt

and Derivatives.
• The Debt Market, in turn, may be divided into 3 parts,
viz., The government securities market, the corporate
debt market and the money market.
• The derivatives market, in turn, may be divided into 2
parts, viz., The Options Market and the Futures
Market.
 Except Derivatives market, each of the above markets
has two components, viz., The Primary Market and the
secondary market.
 The market where new securities are issue is called the
primary market and the market where outstanding
securities are traded is called the secondary market.
Players in the Market
1. Merchant Bankers: Their functions &

working are very crucial to the operations
in the primary market. They are the issue
managers, lead managers, co-managers
and are responsible to the company and
SEBI.
2. Registrars:
 They collect the applications for new issues, their cheques,

stock invests, etc., classify and computerized them.
 They also make allotment in consultation with the regional
stock exchange regarding norms in the event of
oversubscription and before a public representative.
 They have to despatch the letters of allotments, refund
orders and share certificates within the time schedules
stipulated under the companies act and observe the
guidelines of SEBI and the government and RBI.
 Besides, they also have to satisfy the listing requirements
and get them listed on one or more of the stock exchanges.
3. Collecting & Co-ordinating Bankers
• Collecting & co-ordinating bankers may be the
same or different.
• While the former collects the subscriptions in
cash, cheques, stock invest, etc., the latter
collects the information on subscription and
coordinates the collection work and monitors
the same to the registrars and merchant
bankers, who in turn keep the company
informed.
4. Underwriters & Brokers
• Underwriters may be financial institutions, banks,
mutual funds, brokers, etc., and undertake to mobilize
the subscriptions upto some limits.
• Failing to secure subscriptions as agreed to, they have
to make good the shortfalls by their own subscriptions.
• Brokers along with their network of sub-brokers
market the new issues by their own circulars, sending
the application form and follow up recommendations.
5. Printers, Advertising Agencies and Mailing Agencies
are the other organizations involved in the new issue
market operations.
Stock Market Intermediaries
1. Client Brokers: Doing simple broking
between buyers and sellers and earning only
brokerage for their services from the clients.
2. Floor Brokers: Authorized clerks and sub-
brokers who enter the trading floor and
execute orders for the clients or for
members.
3. Jobbers & Market Makers:
• Those members who are ready to buy and sell
simultaneously in selected scrips, offering bid
and offer rates for the brokers and sub-
brokers on the trading floor and earning profit
through margin between buying and selling
rates.
• Market makers undertake the work
compulsory for some companies and bank
finance is available to them.
4. Arbitragers
• Those who do inter market deals for a profit through
differences in prices as between markets, say buy in
Kolkata and sell in Mumbai and vice versa.
5. Badla Financiers: Those members who finance carry
forward deals in specified group (A Group) for a return
in the form of interest, called BADLA Rate. They lend
money or shares for the brokers who are over bought
or oversold respectively at the time of settlement.
Badla is a carry forward facility from one settlement to
another without taking a delivery upto a maximum
period of 90 days at a time, now reduced to 7 to 15
days.
Some Others Are:
 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 the
government securities market.
• The SEBI which is responsible for the regulation of the capital
market.
• The Department of Economic Affairs (DEA), an arm of government,
which, inter alia, which concern with the orderly functioning of the
financial markets as a whole.
• The Department of Company Affairs (DCA), an arm of government,
which is responsible for the administration of corporate bodies.
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 above 10,000 securities are listed on
all the stock exchanges in India put together.
Depositories
• A Depository is an institution which
dematerializes physical certificates and effects
transfer of ownership by electronic book
entries.
• Presently there are 2 depositories in India,
viz., The National Securities Depository
Limited (NSDL) and the Central Securities
Depository Limited (CDSL).
• Brokers: They are registered members of the
stock exchanges through whom investor
transacts. There are above 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.
• 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
fund of investors. They are more than 30 mutual
funds in India.
• Custodians: A custodian looks 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
investors related services.
• 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 firms fulfills its contractual
obligations.
• Venture Capital Funds: A venture capital fund is a pool
of capital which is essentially invested in equity shares
or equity-linked instruments of unlisted companies.
• Credit Rating Agencies: A credit rating agency assigns
ratings primarily to debt securities.

Players in The Market

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Players in The Market

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Structure of the Securities Market

• The securities market is the market for Equity, Debt

1. Merchant Bankers: Their functions &

 They collect the applications for new issues, their cheques,

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