Financial Intermediaries Stock Market

 

 

stock market, Financial Intermediaries, stockbroker, nse and bse
Financial Intermediaries

Table of contents:-

  • Stockbroker
  • Depository and Depository Participant
  • Bank
  • NSCCL and ICCL

After you buy shares in the stock market, the process of getting into your Demat account is called financial intermediaries.

stockbroker

Stockbrokers are the most important intermediary of the stock market, without them, you cannot do shares, they are registered in the stock exchange as trading numbers and they have broking licenses and they do their work according to the rules of SEBI.

To enter the stock market, you will need a stockbroker, you cannot come to the stock market without it, you can choose a stockbroker of your choice and open your account, your trading account will be with the stockbroker so that you can buy your shares. You can place shares in your account by viewing the order.

Stockbrokers give you some essential facilities like:-

  • Facility to buy and sell shares in the market
  • Creating a bank office login so that you can give complete information about your account
  • Margin for trading 
  • Transfer money between trading accounts to your bank account
  • Issuance of contract note for each transaction

Depository and Depository Participant

When you buy shares of a company, you get share certificates to prove your stake, which you have to keep safe because it has all the information written in it, how much and which company's shares you have bought.

Since 1996, share certificates have been issued digitally, before this, share certificates were on paper, the process of converting paper lions into digital is called dematerialization, which we know as Demat.

Trading account opened with a stockbroker and a Demat account opened with a depository are linked to each other for example if you want to know how much Reliance shares, you will go to your trading account and enter your price and place a buy order and share After coming here, the work of today account is over, after which the share of Reliance will automatically go to your Demat account.

Similarly, at the time of selling the shares, the shares will be sold out of your Demat account.

Right now there are two types of depositories in India one is NSDL second is CDSL the work of both is the same.

Bank

The role of banks in the stock market is easy, they transfer money from bank to trading account and trading account to bank, for this it is necessary to have the same name in trading account and bank account.

You can link multiple bank accounts to your trading account You can transfer money to share from any bank account but when sending money will go to your primary bank account only, your primary bank account, your trading account repository, and register and transfer agent is also associated.

Bank accounts and deposit accounts are linked digitally which you can easily buy and sell.

NSCCL and ICCL

National Securities Clearing Corporation Limited is a subsidiary of Indian Clearing Corporation Limited i.e. Mumbai Stock Exchange on behalf of National Stock Exchange, their job is to settle every transaction on the exchange, if you have bought 1 share of Tata at a price of ₹ 256 then someone has I have sold this share to you for ₹ 256. 

The job of the Clearing Corporation is to ensure that the shares go out of the seller's Demat account to the player's Demat account and the money comes out of the buyer's bank and into the seller's bank account. Overall Clearing Corporation does this in any transaction.


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