Regulators in the stock market

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Regulators 

2.1 - What is a stock market?

Just like the way we go to the neighborhood kirana store or a super market to shop for our daily needs, similarly we go to the stock market to shop (read as transact) for equity investments. 


2.2 - Stock Market Participants and the need to regulate them

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 large corporate entities based in India. Classic example would be the LIC of India.

 4.Domestic Asset Management Companies (AMC) – Typical participants in this category would be the mutual fund companies such as SBI Mutual Fund, DSP Black Rock, Fidelity Investments, HDFC AMC etc.

 5.Foreign Institutional Investors – Non Indian corporate entities. These could be foreign asset management companies, hedge funds and other investors

 Now, irrespective of the category of market participant the agenda for everyone is the same – to make profitable transactions. More bluntly put – to make money.


2.3 - The Regulator

In India the stock market regulator is called The Securities and Exchange board of India often referred to as SEBI

1.The stock exchanges (BSE and NSE) conducts its business fairly 

2.Stock brokers and sub brokers conduct their business fairly

3.Participants don’t get involved in unfair practices 

4.Corporate’s don’t use the markets to unduly benefit themselves (Example – Satyam Computers)

 5.Small retail investors interest are protected

6.Large investors with huge cash pile should not manipulate the markets

7.Overall development of markets


Key takeaways from this chapter

1.Stock market is the place to go to if you want to transact in equities

 2.Stock markets exists electronically and can be accessed through a stock broker 

3.There are many diļ¬€erent kinds of market participants operating in the stock markets

 4.Every entity operating in the market has to be regulated and they can operate only within the framework as prescribed by the regulator

 5.SEBI is the regulator of the securities market in India. They set the legal frame work and regulate all entities interested in operating in the market. 

6.Most importantly you need to remember that SEBI is aware of what you are doing and they can flag you down if you are up to something fishy in the markets! 


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