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(Done) Regulators, the guardians of capital markets - Highlights

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Highlights

  • The stock market attracts individuals and corporations from diverse backgrounds. Anyone who transacts in the stock market is called a market participant. The market participant can be classified into various categories –

      1. Domestic Retail Participants – These are people like you and me transacting in markets
    2. NRI’s and OCI – These are people of Indian origin but based outside India
    3. Domestic Institutions – These are corporate entities in India
    4. Domestic Asset Management Companies (AMC) – Mutual fund companies like SBI Mutual Fund, HDFC AMC, Edelweiss, ICICI Pru, etc.
    5. Foreign Institutional Investors – Non-Indian corporate entities. These could be foreign asset management companies, hedge funds, and other investors. (View Highlight)

  • In India, the stock market regulator is called The Securities and Exchange Board of India, often referred to as SEBI. SEBI aims to promote the development of stock exchanges, protect the interest of retail investors, and regulate market participants’ and financial intermediaries’ activities. (View Highlight)

  • Credit Rating Agency (CRA) CRISIL, ICRA, CARE They rate the creditworthiness of corporate and governments If a corporate (or Govt) entity wants to avail loan (debt financing), CRAs check for creditworthiness and assign a rating, the basis on which other entities can decide to extend a loan or not. (View Highlight)

    • Note: Entity defined under SEBI legal framework

  • Debenture Trustees Almost all banks in India Act as a trustee to corporate debenture When companies want to raise a loan, they can issue debentures against which they promise to pay interest. The public can subscribe to these debentures. A Debenture Trustee ensures that the debenture obligation is honored (View Highlight)

    • Note: Entity under legal framework of SEBI

  • Merchant Bankers Karvy, Axis Bank, Edelweiss Capital Help companies raise money in the primary markets If a company plans to raise money by floating an IPO, then merchant bankers are the ones who help companies with the IPO process. (View Highlight)

  • Asset Management Companies (AMC) HDFC AMC Reliance Capital, SBI Capital Offer Mutual Fund Schemes An AMC collects money from the public, puts that money in a single account, and then invests that money in markets intending to make the investments grow and generate wealth. (View Highlight)

  • Portfolio Managers/ Portfolio Management System (PMS) Capitalmind Wealth PMS, Motilal PMS, Parag Parikh PMS Offer PMS schemes They work similarly to a mutual fund except in a PMS; you have to invest a minimum of Rs.50,00,000; however, there is no such cap in a mutual fund. (View Highlight)

  • Stock Brokers Zerodha, Sharekhan, ICICI Direct Act as an intermediary between an investor and the stock exchange Stock brokers Act as a gateway to the stock markets, giving electronic access to stock markets to facilitate transactions. (View Highlight)

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