Stock Market- Who are Regulators?
We make a substantial investment in equities in order to create inflation-beating returns. We came to this conclusion in the previous chapter. So, how do we go about investing in shares now that we’ve established that? Clearly, understanding the ecosystem in which equities function is necessary before we go any farther with this discussion.
What exactly is the stock exchange?
We go to the stock market to shop (read: transact) for equity investments in the same way we go to the neighbourhood Kirana store or a supermarket to shop for our everyday needs. Everyone who wants to buy or sell stocks goes to the stock exchange. Simply put, transacting means purchasing and selling.
For all practical purposes, you can’t purchase or sell shares in a public firm like Infosys without going through the stock exchanges. [br] The primary goal of the stock market is to make your transactions easier. So, if you’re looking to buy a stock, the stock market can assist you find a seller, and vice versa. [br] Unlike a supermarket, the stock market does not have a physical location. It is available in electronic format. You use your computer to access the market electronically and conduct your transactions (buying and selling of shares). [br] It’s also worth noting that you can access the stock market through a stockbroker, who is a registered intermediary. We’re going to split up.
The stock markets in India and stock exchanges?
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two stock exchanges in India (NSE).
Aside from these two markets, numerous other regional stock exchanges, such as the Bangalore Stock Exchange and the Madras Stock Exchange, are being phased out and no longer play a significant role.
A market participant is someone who trades on the stock exchange.
The market participant can be divided into several groups.
The following are some examples of market participants:
Retailers in the United States?
These are ordinary people like you and me who trade in markets as NRIs and OCIs.
These are persons with Indian ancestry who live outside of India.
Institutions within the country?
These are Indian-based multinational corporations.
The LIC of India is a classic example.
Asset Management Companies (AMC) in the United States?
Mutual fund companies like SBI Mutual Fund, DSP Black Rock, Fidelity Investments, HDFC AMC, and others are typical participants in this category.
It’s also worth noting that you can access the stock market through a stockbroker, who is a registered intermediary.
At a later time, we’ll go into stockbrokers in further detail.
Participants in the Stock Market and the Need for Regulation
Individuals and companies from many walks of life are drawn to the stock market.
Institutional Investors from Other Countries?
Corporations that are not based in India.
Foreign asset management firms, hedge funds, and other investors could be among them.
Everyone’s agenda now, regardless of market participant categorization, is the same: to make profitable deals.
To put it another way, to make money.
When it comes to money, human emotions such as greed and fear run strong.
It is very easy to succumb to these emotions and engage in unequal actions.
Thanks to Harshad Mehta’s operations and others, India has its fair share of perverted methods.
Given this, the stock markets require someone to determine the game rules (also known as regulation and compliance) and ensure that they are followed.
What is SEBI?
The Regulatory Authority -The Securities and Exchange Board of India, also known as SEBI, is the stock market regulator in India.
SEBI’s mission is to encourage the growth of stock exchanges, protect the interests of retail investors, and regulate the actions of market participants and financial intermediaries.
SEBI assures, in general:
The stock exchanges (BSE and NSE) operate in a transparent manner.
Stockbrokers and sub-brokers operate in an ethical manner. Participants do not engage in unequal practices.
Corporations do not take advantage of the market to get an unfair advantage (Example: Satyam Computer is a example company that makes computers and make retail investors lose money)
SEBI Ensures that the interests of small retail investors are safeguarded.