What Is The Role Of Intermediaries In Capital Markets?


The Securities and Exchanges Board of India (SEBI) governs the trading, clearing, and settlement of transactions on the capital market through its intermediaries. These intermediaries are the stockbroker, the depository and depository participants, the banks, and the clearing corporation. As per SEBI guidelines, only a registered stockbroker has permission to execute a trade on the stock exchange. To enable a stockbroker for the same, the stock exchanges issue licenses to the stockbrokers. Stockbrokers play a crucial role in share markets as individuals cannot buy or sell securities directly on a stock exchange. He must transact through a registered stockbroker. 

The SEBI introduces Depositories to regulate the Demat accounts of individuals. Share-issuing companies must become a member of a depository and keep a record of all the electronic securities issued by them. The depositories have depository participants (DP) that provide the investors with demat accounts. Banks are also crucial intermediaries in the capital market. Investors and traders use a bank savings account to deposit funds they receive from selling securities and to provide for funds needed to buy securities. A clearing corporation makes sure that a trade is successfully closed in the stock market. It facilitates trade by informing the buyer and seller of each other’s offers. 


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