10 Important terms of stock market for beginners - 5

 Important Terms

1. SEBI - The regulator for capital market
2. Depositors
3. Depository Participants
4. FII - Foreign Institutional Investors
5. Credit Rating Agency (CRA)
6. Merchant Bankers
7. Asset Management Companies(AMC)
8. NSCCL and ICCL
9. Market Participants
10. Where to Invest ? (Asset Class)

1. The Security and Exchange board of India (SEBI)

Objective -

• Development of stock exchange
• To protect the interests of retails investors
• To regulate the activities of Market participant and financial intermediaries.

We can think that if there are no rules and regulations in stock market then there will be a big problem like liquidity damages, financial loss, trust loss and many more. Nobody will invest in stock. To regulate and make new rules which can be regulate market, SEBI is established. SEBI is a bridle in share market.

Financial Regulators in India

1. RBI - Reserve Bank of India

   Sector: Banking & Finance, Monetary Policy

2. SEBI - Securities and Exchange Board of India
   Sector: Securities (Stock) & Capital Market & Mutual Funds

3. IRDAI - Insurance Regulatory and Development Authority

   Sector: Insurance

4. PFRDA - Pension Fund Regulatory and Development Authority

5. NHB - National Housing Bank Sector: Financial Housing

2. Market Participants

• Domestic Retail Participants
• NRI's 
• Domestic Institution
• Domestic AMC (asset management Companies)
• FIIS - Foreign Institutional Investors

3. Depositories

Example : NSDL and CDSL

What do they do?   : Safekeeping,  

                                    Reporting and settlement of client securities

In general:    Acts like a vault for the shares that you buy. The depositories hold your shares and facilitate exchange of your securities. When you buy shares these shares sit in your Depository account usually referred to as the DEMAT account. This is maintained electronically by only two companies in India.

4. Depository Participants

Example: Most banks and few stock brokers

What do they do? :  Acts as an agent to the two depositories

In general : You cannot directly interact with NSDL or CDSL. You need DP to open and maintain DEMAT account.

5. Foreign Institutional Investors:

Example: 

a) Foreign Corporate,

b) Funds,

c) Individual

What do they do? : Make investment in India

6. Credit Rating Agency(CRA):

Example: 

a) CRISIL

b) ICRA

c) CARE

What do they do? : They rate the credit worthiness of corporate and governments

7. Merchant Bankers:

What do they do? : Help companies raise money in the primary markets

In general: if a plans to raise money by floating an IPO, then merchant bankers are the one who help companies with the IPO process

8. Asset Management Companies(AMC):

Example: 

a) ICICI AMC

b) Reliance Capital

c) AB Capital

What do they do?: Offer Mutual Funds Schemes

9. NSCCL and ICCL: National Security Clearing Corporation Ltd. (NSCCL) 

                                      Indian Clearing Corporation (ICCL)

10. Where to Invest?:

Asset Class

1. Fixed Income Instruments
2. Equity
3. Real Estate
4. Commodity-Bullion