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Intermediaries in Stock Market

(Intermediaries In stock Market) An intermediary helps people to invest their money in stock market. It may be an organisation or a fund manager. It acts as a mediator in the market.

It is various types as given below.

  • (Primary Market Intermediaries)
    • Merchant bankers: – It is a kind of institution, which provides funds to company in terms of share ownership instead of loans and advisory on corporate matters to the firms in which they invest. In United states,
      It is called as “Investment Banks” and UK It is called as “accepting and issuing houses”.
      In India some banks are into this field like ICICI bank, State Bank of India, Punjab National Bank, etc.
    • Underwriter: – Entity who is in the business of managing and taking other people and charges certain amount of fee is called as under writer.
      It may be some insurance company, who is providing insurance based upon some term and condition.
    • Bankers to an Issue: – It is a collection of activity which are performed by banker to an issue such as follows.
      1. Acceptance of application and application monies;
      2. Acceptance of allotment or call monies;
      3. Refund of application monies;
      4. Payment of dividend or interest warrants.
    • Portfolio managers: – A portfolio manager is a person or group of person or an institution, who manage the money to trade in market with his/her team and responsible for the trading in securities also. Can invest money in different avenue like bonds, mutual funds, derivatives, etc.
    • Debenture trustees: – Debenture trustees are registered with SEBI in terms of the SEBI (Debenture Trustees) Rules and Regulations, 1993. Since 1995-96, SEBI has been monitoring the working of debenture trustees by calling for details regarding compliance by issuers of the terms of the debenture trust deed, creation of security, payment of interest, redemption of debentures and redressal of complaints of debenture holders regarding non-receipt of interest/redemption proceeds on due dates.
  • (Secondary market Intermediaries)
    • Stock Broker: – Stoker broker helps trader to buy/sell securities and charge some amount for it in terms of brokerage and any other charges. Trader can’s directly go to exchanges and buy/sell securities. So, it’s act as a mediator between trader and exchanges.
    • Sub Broker: – A ‘Sub-Broker’ is any person who is not a Trading Member of a Stock Exchange but who acts on behalf of a Trading Member as an agent or otherwise for assisting investors in dealing in securities through such Trading Members.
      All Sub-Brokers are required to obtain a Certificate of Registration from SEBI without which they are not permitted to deal in securities. SEBI has directed that no Trading Member shall deal with a person who is acting as a Sub-Broker unless he is registered with SEBI and it shall be the responsibility of the Trading Member to ensure that his clients are not acting in the capacity of a Sub-Broker unless they are registered with SEBI as a Sub-Broker.
      It is mandatory for Trading Members to enter into an agreement with all the Sub-Brokers. The agreement lays down the rights and responsibilities of Trading Members as well as Sub-Brokers.

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