{"id":11215,"date":"2025-09-08T12:00:31","date_gmt":"2025-09-08T06:30:31","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?post_type=markets&#038;p=11215"},"modified":"2025-09-08T18:36:39","modified_gmt":"2025-09-08T13:06:39","slug":"securities","status":"publish","type":"markets","link":"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/securities\/","title":{"rendered":"Learn What is Securities Market From Stock Market Basics Course"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"11215\" class=\"elementor elementor-11215\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-23ba90b elementor-section-full_width tab_container elementor-section-height-default elementor-section-height-default\" data-id=\"23ba90b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column 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data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\">\t<script>\n\t\tjQuery(document).ready(function(){\n\t\t\tjQuery(\"#post_chapters a[href*='\" + location.pathname + \"']\").addClass(\"current\");\n\t\t})\n\t<\/script>\n\t<div class=\"desktop_chapters\"><div id=\"post_chapters\"><div class=\"post_chapters-heading\">Chapters<\/div><ul><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/investment-basics\/\">Investment Basics<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/securities\/\">What are Securities?<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/market-intermediaries\/\">Market Intermediaries<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/learn-more-about-primary-market-from-stock-market-basic-course\/\">Primary Market<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/ipo-basics\/\">IPO Basics<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/secondary-market\/\">Secondary Market<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/products-in-secondary-market\/\">Products In Secondary Market<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/stock-market-indices\/\">Stock Market Indices<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/who-are-depositories\/\">Commonly Used Jargons<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/learn-trading-terminal-from-stock-market-course\/\">Trading Terminal<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/learn-clearing-and-settlement-process-from-stock-market-course\/\">Clearing and Settlement Process<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/learn-corporate-actions-and-impact-on-stock-prices-from-stock-market-course\/\">Corporate actions and impact on stock prices<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/stock-market-basics-course\/learn-about-market-mood-swings-from-stock-market-course\/\"> Market\u2019s Mood Swings<\/a><\/li><\/ul><\/div><\/div><div class=\"chapters_toggle\" title=\"chapters\"><a title=\"chapters\" href=\"#\" id=\"open_chapters\"><span>View Chapters<\/span>&nbsp;&nbsp;&nbsp;<i class=\"fa fa-chevron-right\"><\/i><\/a><a title=\"chapters\" href=\"#\" id=\"close_chapters\" style=\"display:none;\"><span>Hide Chapters<\/span>&nbsp;&nbsp;&nbsp;<i class=\"fa fa-chevron-right\"><\/i><\/a><\/div>\t<script>\n\t\tjQuery(document).ready(function(){\n\t\t\tjQuery('.chapters_toggle 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class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-90f6d06 market_content_tabs elementor-widget elementor-widget-eael-adv-tabs\" data-id=\"90f6d06\" data-element_type=\"widget\" data-widget_type=\"eael-adv-tabs.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t        <div data-scroll-on-click=\"no\" data-scroll-speed=\"300\" id=\"eael-advance-tabs-90f6d06\" class=\"eael-advance-tabs eael-tabs-horizontal eael-tab-auto-active \" data-tabid=\"90f6d06\">\n            <div class=\"eael-tabs-nav\">\n                <ul class=\"eael-tab-inline-icon\" role=\"tablist\">\n                                            <li id=\"study\" class=\"active-default eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"true\" data-tab=\"1\" role=\"tab\" tabindex=\"0\" aria-controls=\"study-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-edit\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Study<\/span>                            \n                                                    <\/li>\n                                            <li id=\"slides\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"2\" role=\"tab\" tabindex=\"-1\" aria-controls=\"slides-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"fas fa-book-open\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Slides<\/span>                            \n                                                    <\/li>\n                                            <li id=\"videos\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"3\" role=\"tab\" tabindex=\"-1\" aria-controls=\"videos-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-eye\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Videos<\/span>                            \n                                                    <\/li>\n                                    <\/ul>\n            <\/div>\n            \n            <div class=\"eael-tabs-content\">\n\t\t        \n                    <div id=\"study-tab\" class=\"clearfix eael-tab-content-item active-default\" data-title-link=\"study-tab\">\n\t\t\t\t        <p><div class='white' style='background:rgb(255, 255, 255); border:solid 0px rgb(255, 255, 255); border-radius:0px; padding:0px 0px 0px 0px;'>\n<div id='text_slider' class='owl-carousel sa_owl_theme owl-pagination-true' data-slider-id='text_slider' style='visibility: visible;visibility:visible;'>\n<div id='text_slider_slide01' class='sa_hover_container' data-hash='What-are-Securities' style='padding:4.9% 5%; margin:0px 0.7%; background-color:rgb(255, 255, 255); min-height:100px; '><h2 style=\"text-align: left\"><strong>2.1 What Are Securities?<\/strong><\/h2>\r\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-47124 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Are-Securities.png\" alt=\"What Are Securities\" width=\"1012\" height=\"876\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Are-Securities.png 1012w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Are-Securities-300x260.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Are-Securities-768x665.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Are-Securities-50x43.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Are-Securities-100x87.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Are-Securities-150x130.png 150w\" sizes=\"(max-width: 1012px) 100vw, 1012px\" \/><\/p>\r\n<p>Since we have already built up a strong base by stressing that it is important to invest\u00a0rather\u00a0than\u00a0save\u00a0money\u00a0because\u00a0timely\u00a0and\u00a0well\u00a0informed\u00a0investments\u00a0lead to financial security, prosperity, and freedom in the future. This process in a way examines the psychology of investments and investment instruments , as well as the economic and strategic aspects of making investments. Now this naturally builds a transition to the structural backbone of the investment ecosystem-The Securities Market. It connects the \u2018why\u2019 of investing to the \u2018where\u2019 and \u2018how\u2019 by delving into the roles of exchanges, regulatory authorities, and various market participants who facilitate investment activity. So let us first understand what are securities?<\/p>\r\n<p><strong>Remember\u00a0our\u00a0Example\u00a0about\u00a0Nirav\u00a0and\u00a0Vedant?\u00a0<\/strong><\/p>\r\n<p>If\u00a0No\u00a0,\u00a0Then\u00a0this\u00a0will\u00a0help\u00a0you recollect<\/p>\r\n<p><strong><b>Nirav<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>\u2013<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>The<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Saver<\/b><\/strong><\/p>\r\n<p>Nirav\u00a0was\u00a0very\u00a0careful\u00a0about\u00a0savings.\u00a0Each\u00a0month\u00a0he\u00a0would\u00a0save\u00a0some\u00a0money\u00a0from his salary into his savings account. As there was money set aside for emergencies,\u00a0this\u00a0gave\u00a0him\u00a0a\u00a0feeling\u00a0of\u00a0safety.\u00a0He\u00a0was\u00a0very\u00a0pleased\u00a0with\u00a0the\u00a0fact\u00a0that\u00a0his\u00a0account was\u00a0steadily\u00a0growing\u00a0as\u00a0he\u00a0saw\u00a0it\u00a0increase,\u00a0even\u00a0if\u00a0only\u00a0by\u00a0a\u00a0few\u00a0dollars\u00a0at\u00a0a\u00a0time.<\/p>\r\n<p><strong><b>Vedant<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>&#8211;<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>The<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Investor<\/b><\/strong>\u00a0<\/p>\r\n<p>In\u00a0contrast,\u00a0Vedant\u00a0felt\u00a0that\u00a0money\u00a0needed\u00a0to\u00a0generate\u00a0growth.\u00a0Like,\u00a0Vedant\u00a0has\u00a0had\u00a0a\u00a0portion\u00a0of\u00a0his\u00a0income\u00a0put\u00a0aside\u00a0in\u00a0a\u00a0savings\u00a0account\u00a0for emergency purposes; however, Also investing a portion of his income in stocks, mutual\u00a0funds\u00a0and\u00a0real\u00a0estate.\u00a0While\u00a0Vedant\u00a0acknowledged\u00a0the\u00a0potential\u00a0of\u00a0investing to\u00a0be\u00a0a\u00a0risky\u00a0endeavour,\u00a0he\u00a0always\u00a0believed\u00a0and\u00a0had\u00a0faith\u00a0in\u00a0compounding\u00a0and\u00a0how the market would continue to grow.<\/p>\r\n<p>After\u00a0comparing\u00a0both\u00a0Vedant\u00a0had\u00a0earned\u00a0more\u00a0as\u00a0inflation\u00a0had\u00a0eaten\u00a0up\u00a0all\u00a0savings of\u00a0Nirav.\u00a0Now\u00a0after\u00a0realizing\u00a0that\u00a0an\u00a0investor\u00a0earns\u00a0much\u00a0more\u00a0than\u00a0the\u00a0saver,\u00a0Nirav decides to explore the investing opportunities and approached Vedant to know<\/p>\r\n<h3><em><strong>Where Should he invest?<\/strong><\/em><\/h3>\r\n<p><strong><b>Nirav<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>:<\/b><\/strong><strong><b>\u00a0<\/b><\/strong>Hello\u00a0Vedant.\u00a0You\u00a0have\u00a0made\u00a0me\u00a0realise\u00a0that\u00a0Saving\u00a0alone\u00a0will\u00a0not\u00a0help\u00a0me get a better life. I need to Invest and put my money to work . But I am not aware about any investments and where should I Invest. Can you help me ?<\/p>\r\n<p><strong><b>Vedant<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>:<\/b><\/strong>\u00a0Hey\u00a0Nirav.\u00a0I\u00a0will\u00a0help\u00a0you\u00a0for\u00a0sure.\u00a0But\u00a0before\u00a0I\u00a0make\u00a0you\u00a0understand\u00a0where to invest you should be aware about the basic concepts. So let us begin with Securities<\/p>\r\n<p>Vedant explains to Nirav before investing you should Know What is securities market,\u00a0What\u00a0are\u00a0its\u00a0functions\u00a0and\u00a0who\u00a0regulates\u00a0the\u00a0Securities\u00a0Market.\u00a0So\u00a0lets understand each in detail.<\/p>\r\n<h3><b><\/b><em><strong><b>What <\/b><\/strong><b><\/b><strong><b>are<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Securities?<\/b><\/strong><\/em><\/h3>\r\n<p>Securities are the financial instruments through which individuals and institutions invest, lend, and trade to generate returns or hedge risks ranging from shares and\u00a0\u00a0bonds to derivatives and commodities. But these instruments don\u2019t function in isolation; You need to know how the securities market provides the necessary infrastructure for these instruments to circulate efficiently. It transforms the theoretical definition of securities into practical application by explaining how capital is mobilized, prices are discovered, and risk is managed.So as we have understood what securities are lets figure out where and how they operate , making the transition from understanding financial assets to engaging with the broader financial ecosystem.<\/p><\/div>\n<div id='text_slider_slide02' class='sa_hover_container' data-hash='Securities-Market-Functions' style='padding:4.9% 5%; margin:0px 0.7%; background-color:rgb(255, 255, 255); min-height:100px; '><h2 style=\"text-align: left\"><strong>2.2 Securities Market Functions<\/strong><\/h2>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-47126 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market.png\" alt=\"Functions of Securities Market\" width=\"1034\" height=\"972\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market.png 1034w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market-300x282.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market-1024x963.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market-768x722.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market-50x47.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market-100x94.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Functions-of-Securities-Market-150x141.png 150w\" sizes=\"(max-width: 1034px) 100vw, 1034px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>Suppose\u00a0you\u00a0live\u00a0in\u00a0a\u00a0neighborhood\u00a0where\u00a0families\u00a0lend\u00a0and\u00a0borrow\u00a0money\u00a0to\u00a0fund various\u00a0needs.\u00a0One\u00a0day,\u00a0Mr.\u00a0Mehta\u00a0who\u00a0is\u00a0one\u00a0of\u00a0your\u00a0neighbour\u00a0wants\u00a0to\u00a0expand his grocery shop but doesn\u2019t want to rely solely on bank loans. So, he offers part-ownership\u00a0to\u00a0neighbors\u00a0in\u00a0exchange\u00a0for\u00a0money\u00a0kind\u00a0of\u00a0like\u00a0an\u00a0IPO.\u00a0Now,\u00a0others\u00a0can buy or sell their ownership based on how they feel the shop is doing. If business booms, more neighbors want in, and the value of that ownership rises now that&#8217;s price discovery at work.<\/p>\r\n<p>Now\u00a0if\u00a0someone\u00a0suddenly\u00a0needs\u00a0money\u00a0and\u00a0wants\u00a0to\u00a0sell\u00a0their\u00a0share.\u00a0Because\u00a0many neighbors are interested, they find a buyer quickly. That\u2019s liquidity. And since every neighbor has put their money into different ventures\u2014a tea stall, a tailoring unit, they&#8217;re practicing diversification to reduce risk.<\/p>\r\n<p>However to make sure that everything is fair, there is a committee that takes care of the transparent business transactions and also resolves any disputes between the parties\u00a0involved,\u00a0just\u00a0as\u00a0SEBI\u00a0does\u00a0for\u00a0the\u00a0financial\u00a0markets.\u00a0As\u00a0years\u00a0pass,\u00a0a\u00a0new business\u00a0flourish\u00a0and\u00a0job\u00a0openings\u00a0rise,\u00a0the\u00a0whole\u00a0community\u00a0will\u00a0start\u00a0flourishing\u00a0as an efficient securities market leads to economic development.<\/p>\r\n<p><strong><b>Functions<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>of<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Securities<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Market<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>are<\/b><\/strong><\/p>\r\n<ol>\r\n<li><strong><b>Capital <\/b><\/strong><b><\/b><strong><b>Formation<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>and<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Fundraising<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>One of the most important role played by securities market is that it acts as a platform for fund raising and capital formation for companies and the government.Through\u00a0IPOs\u00a0and\u00a0issuance\u00a0of\u00a0securities,\u00a0companies\u00a0can\u00a0get\u00a0the\u00a0money needed to expand and develop themselves, rather than borrowing it from banks.<\/p>\r\n<ol start=\"2\">\r\n<li><strong><b>Liquidity and <\/b><\/strong><b><\/b><strong><b>Marketability<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>of<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Securities<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>It refers to the ability of the securities to be bought or sold freely without altering their prices drastically. NSE and BSE provides liquidity through constant market making of securities.<\/p>\r\n<ol start=\"3\">\r\n<li><strong><b>Price <\/b><\/strong><b><\/b><strong><b>Discovery<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Mechanism<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>The\u00a0securities\u00a0market\u00a0provides\u00a0the\u00a0market\u00a0price\u00a0of\u00a0the\u00a0securities\u00a0based\u00a0on\u00a0economic and\u00a0geopolitical\u00a0factors\u00a0and\u00a0helps\u00a0in\u00a0influencing\u00a0the\u00a0market\u00a0price\u00a0of\u00a0the\u00a0securities\u00a0by different market players such as individuals and institutions.<strong><b>\u00a0<\/b><\/strong><\/p>\r\n<ol start=\"4\">\r\n<li><strong><b>Risk <\/b><\/strong><b><\/b><strong><b>Management<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>through<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Diversification<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Investors\u00a0use\u00a0the\u00a0securities\u00a0market\u00a0to\u00a0diversify\u00a0their\u00a0portfolio\u00a0and\u00a0hedge\u00a0risk\u00a0using different\u00a0asset\u00a0classes,\u00a0including\u00a0stocks\u00a0,\u00a0bonds,\u00a0commodities\u00a0and\u00a0derivatives.\u00a0The availability of hedging instruments such as futures and options allows traders to avoid losses from price fluctuations.<\/p>\r\n<ol start=\"5\">\r\n<li><strong><b>Regulatory <\/b><\/strong><b><\/b><strong><b>Oversight<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>and<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Investor<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Protection<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>The Securities Market Operates under the directions of Regulatory Agencies such as\u00a0SEBI to ensure no one manipulates transactions and Transparency. They ensure interests\u00a0of\u00a0investors\u00a0are\u00a0protected.\u00a0There\u00a0are\u00a0laws\u00a0regarding\u00a0insider\u00a0trading, corporate disclosure and fair business practices.<\/p>\r\n<ol start=\"6\">\r\n<li><strong><b>Economic <\/b><\/strong><b><\/b><strong><b>Growth<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>and<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Financial<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Stability<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>The Securities market plays a significant role in the development of an economy through the allocation of funds in profitable areas, promoting growth , employment and even effecting the growth rates of a nation\u2019s GDP.<\/p>\r\n<p><em><strong><b>Vedant<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>&#8211;<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Now<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Nirav<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>lets<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>understand<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Securities<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Market<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Regulators!<\/b><\/strong><\/em><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide03' class='sa_hover_container' data-hash='The-Securities-Market-Regulators' style='padding:4.9% 5%; margin:0px 0.7%; background-color:rgb(255, 255, 255); min-height:100px; '><h2 style=\"text-align: left\"><span style=\"color: #000000\"><strong>2.3 The Securities Market Regulators<\/strong><\/span><\/h2>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-47127 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Who-Regulates-Securities-Market.png\" alt=\"Who Regulates Securities Market\" width=\"926\" height=\"791\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Who-Regulates-Securities-Market.png 926w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Who-Regulates-Securities-Market-300x256.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Who-Regulates-Securities-Market-768x656.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Who-Regulates-Securities-Market-50x43.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Who-Regulates-Securities-Market-100x85.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Who-Regulates-Securities-Market-150x128.png 150w\" sizes=\"(max-width: 926px) 100vw, 926px\" \/><\/p>\r\n<p>Imagine\u00a0an\u00a0office\u00a0where\u00a0you\u00a0have\u00a0departments\u00a0like\u00a0HR,\u00a0Finance,\u00a0Sales,\u00a0Legal\u00a0etc.\u00a0All operating\u00a0in\u00a0harmony\u00a0with\u00a0each\u00a0other\u00a0under\u00a0the\u00a0umbrella\u00a0of\u00a0a\u00a0CEO\u00a0who\u00a0implements policies and makes sure ethical behaviour is maintained , and conflicts between people\u00a0are\u00a0sorted\u00a0out.\u00a0This\u00a0is\u00a0precisely\u00a0done\u00a0by\u00a0the\u00a0securities\u00a0market\u00a0regulators\u00a0like SEBI for the financial markets in India. As the head of the compliance in the securities\u00a0market.\u00a0SEBI\u00a0monitors\u00a0and\u00a0regulates\u00a0the\u00a0actions\u00a0of\u00a0the\u00a0brokers\u00a0,\u00a0investors and\u00a0the\u00a0listed\u00a0companies.\u00a0In\u00a0any\u00a0case\u00a0of\u00a0frauds\u00a0it\u00a0ensures\u00a0to\u00a0punish\u00a0the\u00a0wrong\u00a0doers to ensure the things are back in their order. The Securities market of India is \u00a0governed by such bodies to ensure that the market runs smoothly and well defined\u00a0guidelines.<\/p>\r\n<p><a href=\"https:\/\/www.5paisa.com\/stock-market-guide\/generic\/what-is-sebi\">A. Securities and Exchange Board of India (SEBI)<\/a><\/p>\r\n<p>The\u00a0Securities\u00a0and\u00a0Exchange\u00a0Board\u00a0of\u00a0India\u00a0also\u00a0known\u00a0as\u00a0SEBI\u00a0is\u00a0very\u00a0important\u00a0for\u00a0India\u2019s security market.\u00a0It helps keep everything safe and fair. SEBI was started in 1992\u00a0to\u00a0help\u00a0people\u00a0who\u00a0invest\u00a0their\u00a0money.\u00a0The\u00a0Securities\u00a0and\u00a0Exchange\u00a0Board\u00a0of India does a lot of things. The main thing it does is watch over India\u2019s securities market. The Securities and Exchange Board of India was set up in 1992 to protect peoples money when they invest. This is a job for the Securities and Exchange \u2018Board\u00a0of\u00a0India.\u00a0The\u00a0Securities\u00a0and\u00a0Exchange\u00a0Board\u00a0of\u00a0India\u00a0has\u00a0a\u00a0goal.\u00a0The\u00a0goal\u00a0of the\u00a0Securities\u00a0and\u00a0Exchange\u00a0Board\u00a0of\u00a0India\u00a0is\u00a0to\u00a0protect\u00a0people\u00a0like\u00a0you\u00a0and\u00a0me\u00a0who invest money and make sure everyone follows the rules. The Securities and Exchange Board of India also wants to make sure the stock markets are fair and honest.<\/p>\r\n<p>The Securities and Exchange Board of India is really working hard to do this. It is\u00a0very\u00a0important\u00a0for\u00a0the\u00a0Securities\u00a0and\u00a0Exchange\u00a0Board\u00a0of\u00a0India\u00a0to\u00a0make\u00a0sure everything\u00a0is\u00a0safe\u00a0and\u00a0fair,\u00a0for\u00a0everyone.<strong><b>\u00a0<\/b><\/strong><\/p>\r\n<p><strong><b>1. Stock <\/b><\/strong><b><\/b><strong><b>Market<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Participants<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Regulation<\/b><\/strong><\/p>\r\n<p>The Securities Exchange Board of India regulates many entities in the stock market (stock\u00a0brokers,\u00a0exchanges,\u00a0portfolio\u00a0managers,\u00a0mutual\u00a0funds,\u00a0and\u00a0listed\u00a0companies) to ensure that they do not engage in fraudulent activities. SEBI makes sure all players will comply with state and federal laws and require brokers to have a license; also it provides examples of appropriate behavior in the conduct of business. Both people and businesses that offer investment counsel or purchase and\/or sell securities on behalf of another person must adhere to several primary regulations. Additionally, investment Advisors must provide transparency and maintain fiduciary responsibilities for their clients. Investment Advisers are\u00a0regulated by the SEBI in terms of the conduct of Investment Advisory Services, the processes\u00a0for\u00a0conducting\u00a0trades\u00a0through\u00a0such\u00a0services,\u00a0the\u00a0processes\u00a0through\u00a0which trades are settled through such services, and the rules governing the integrity of the market\u00a0to\u00a0ensure\u00a0that\u00a0fraud\u00a0is\u00a0not\u00a0perpetrated\u00a0in\u00a0the\u00a0market\u00a0by\u00a0any\u00a0party\u00a0involved in providing or receiving investment advisory services.<\/p>\r\n<p><strong><b>2. Monitoring <\/b><\/strong><b><\/b><strong><b>IPOs<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>and<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Corporate<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Listings<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><\/p>\r\n<p>Before\u00a0a\u00a0company\u00a0can\u00a0launch\u00a0an\u00a0IPO,\u00a0SEBI\u00a0must\u00a0review\u00a0the\u00a0application\u00a0and\u00a0ensure that all guidelines of listing shares to the public have been satisfied by that company, and all required disclosures have been made to investors. When reviewing\u00a0a\u00a0company&#8217;s\u00a0listing\u00a0application,\u00a0SEBI\u00a0will\u00a0also\u00a0verify\u00a0the\u00a0financial\u00a0position of\u00a0the\u00a0company\u00a0through\u00a0the\u00a0evaluation\u00a0of\u00a0financial\u00a0statements\u00a0and\u00a0assess\u00a0the\u00a0risks of investing in the company based on any prospective disclosure; this will include evaluating\u00a0all\u00a0registered\u00a0disclosures\u00a0with\u00a0the\u00a0SEC\u00a0Commission,\u00a0and\u00a0the\u00a0prospectus submitted with the application for listing. In addition, SEBI checks the company&#8217;s financial position, governance structure, and the company&#8217;s viability prior to listing on\u00a0the\u00a0stock\u00a0exchange.\u00a0SEBI\u00a0ensures\u00a0that\u00a0the\u00a0pricing\u00a0and\u00a0subscription\u00a0to\u00a0the\u00a0IPO\u00a0is handled properly and fairly.Following\u00a0the\u00a0listing\u00a0of\u00a0a\u00a0company\u00a0on\u00a0the\u00a0stock\u00a0exchange,\u00a0that\u00a0company\u00a0is\u00a0subject to\u00a0submitting\u00a0its\u00a0quarterly\u00a0earnings\u00a0and\u00a0disclosing\u00a0major\u00a0events\u00a0regarding\u00a0the company, as required by the Securities and Exchange Board of India (SEBI).<strong><b><br \/><\/b><\/strong><\/p>\r\n<p><strong><b>3. Preventing <\/b><\/strong><b><\/b><strong><b>Insider<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Trading\/Market<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Manipulation<\/b><\/strong><strong><b>: <\/b><\/strong><\/p>\r\n<p><strong><b>\u00a0<\/b><\/strong>The\u00a0Securities\u00a0and\u00a0Exchange\u00a0\u00a0Board\u00a0of\u00a0India\u00a0(SEBI)\u00a0has\u00a0enacted\u00a0onerous\u00a0rules\u00a0to\u00a0prevent\u00a0insider\u00a0trading\u00a0through the use of non-publicly available information by corporations&#8217; executives or their large shareholders to purchase publicly traded equity in that company&#8217;s stock.\u00a0SEBI works to identify suspicious price movements and therefore investigates companies\u00a0for\u00a0fraudulent\u00a0conduct.\u00a0SEBI\u00a0Receives\u00a0information\u00a0on\u00a0unethical\u00a0trading practices through the facilitation of reporting suspicious trades. SEBI monitors unusual trading volumes and price fluctuations related to the receipt of insider information.\u00a0SEBI\u00a0imposes\u00a0fines\u00a0or\u00a0takes\u00a0legal\u00a0action\u00a0against\u00a0individuals\u00a0and\u00a0firms found guilty of violating the insider trading laws.<\/p>\r\n<p><strong><b>4. Promoting <\/b><\/strong><b><\/b><strong><b>Market<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Transparency<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>and<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Financial<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Reporting<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Standards<\/b><\/strong><\/p>\r\n<p>Transparency\u00a0is\u00a0very\u00a0important\u00a0for\u00a0investor\u00a0confidence.\u00a0SEBI\u00a0requires\u00a0that\u00a0publicly\u00a0listed\u00a0companies\u00a0provide\u00a0financial\u00a0statements\u00a0to\u00a0shareholders\u00a0as\u00a0well\u00a0as\u00a0announce the decisions of management and any material interest of shareholders.<\/p>\r\n<p><strong><b>5. Primary<\/b><\/strong><b><\/b><strong><b>Compliance<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Requirements:<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><\/p>\r\n<p><strong><b>\u00a0<\/b><\/strong>Publicly listed companies must provide public reports of their financial results showing how much money the company made and spent, including all costs, margins of profit, and liabilities. The boards of directors must engage in conduct that is ethical and maintain ethical leadership within the organization through the use of independent directors. SEBI will provide fair treatment to retail investors for mergers, acquisitions, and stock buybacks.<\/p>\r\n<p><strong><b>\u00a0<\/b><\/strong><strong><b>Reserve Bank of India (RBI)<\/b><\/strong><\/p>\r\n<p>The Reserve Bank of India regulates the monetary policy, financial institutions, the rate of interest, liquidity in banking and other operations of banking. Although the Reserve Bank of India is a central bank and therefore has a primary role as a controller of foreign exchange transactions and currency markets to affect the prices of the securities market. The Reserve Bank of India also regulates the availability of investments to be made in this securities market through the development of banking regulations and provides a mechanism for public debt issuance through the management of government bonds and securities. RBI\u2019s policies on repo rates, inflation control, and banking stability indirectly shape stock market movements.<\/p>\r\n<p><strong><b>Financial<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Policies,<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Tax<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Regulations<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>and<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Market<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Impact<\/b><\/strong><\/p>\r\n<p>The\u00a0Ministry\u00a0of\u00a0Finance\u00a0handles\u00a0all\u00a0matters\u00a0related\u00a0to\u00a0the\u00a0overall\u00a0financial\u00a0policy\u00a0of India, including taxation rules, fiscal measures and their impact on investment markets. The Ministry works very closely with both the SEBI and the RBI on the development, regulation and enforcement of tax implications for securities transactions and foreign investment policy for FDI and FPI participation, and to implement and ensure compliance with all global financial regulations that may impact Indian markets. The introduction of new government policies\u00a0in the Union budget, will have a considerable impact on stock market trends and investor confidence.<\/p>\r\n<p><strong><b>\u00a0<\/b><\/strong><\/p>\r\n<p><strong><b>Insurance<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Regulation<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Act<\/b><\/strong><\/p>\r\n<p>The Insurance Regulatory and Development Authority of India (IRDAI) regulates and promotes all investments in insurance, including pension funds and other life insurance related investments to promote fair business practices. The IRDAI regulates all Company and Trustee based investments in equity through:<\/p>\r\n<p>&#8211; Unit Linked Insurance Plans (ULIPs);<\/p>\r\n<p>&#8211; Health Insurance Policies Linked to Investment; and<\/p>\r\n<p>&#8211; All measures of Corporate Governance for companies listed on stock exchanges and the manner in which they manage their equity-based investment in the stock market.\u00a0<\/p>\r\n<p>The\u00a0Insurance\u00a0Regulatory\u00a0and\u00a0Development\u00a0Authority\u00a0of\u00a0India\u00a0also\u00a0has\u00a0the responsibility of protecting the funds of policyholders from market volatility, while also providing for opportunities for policyholders to benefit from market-related growth.<\/p>\r\n<p><strong><b>Pension<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Fund<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Regulatory<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>and<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Development<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Authority<\/b><\/strong><\/p>\r\n<p>The\u00a0NPS\u00a0is\u00a0the\u00a0management\u00a0body\u00a0that\u00a0oversees\u00a0how\u00a0an\u00a0individual&#8217;s\u00a0contributions are\u00a0invested\u00a0in\u00a0NPS\u00a0recognized\u00a0equity\u00a0and\u00a0fixed\u00a0income\u00a0securities.\u00a0The\u00a0NPS\u00a0uses specific guidelines to provide for the management of pension funds within its parameters.<\/p>\r\n<p><strong><em>Vedant:\u00a0Nirav,\u00a0do\u00a0you\u00a0know\u00a0what\u00a0securities\u00a0markets\u00a0are\u00a0all\u00a0about?<\/em><\/strong><\/p>\r\n<p><strong><em>Nirav:\u00a0I\u00a0do\u00a0know\u00a0about\u00a0it.\u00a0However,\u00a0I\u00a0need\u00a0to\u00a0learn\u00a0more\u00a0about\u00a0the\u00a0Securities\u00a0and\u00a0Exchange\u00a0Board\u00a0of\u00a0India\u00a0(SEBI)\u00a0because\u00a0this\u00a0is\u00a0where\u00a0most\u00a0of\u00a0the\u00a0regulations\u00a0\u00a0governing the securities market come from.\u00a0Please tell me more about this.<\/em><\/strong><\/p>\r\n<p><strong><em>Vedant:\u00a0Sure!\u00a0I\u00a0will\u00a0provide\u00a0all\u00a0the\u00a0information\u00a0you\u00a0will\u00a0need\u00a0to\u00a0know\u00a0about\u00a0SEBI\u00a0and the roles it plays in the financial system.<\/em><\/strong><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide04' class='sa_hover_container' data-hash='What-Is-SEBI-And-Its-Role' style='padding:4.9% 5%; margin:0px 0.7%; background-color:rgb(255, 255, 255); min-height:100px; '><h2 style=\"text-align: left\"><strong>2.4 What Is SEBI And Its Role?<\/strong><\/h2>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-47128 size-large\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role-811x1024.png\" alt=\"What Is SEBI &amp; Its Role\" width=\"811\" height=\"1024\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role-811x1024.png 811w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role-238x300.png 238w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role-768x969.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role-40x50.png 40w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role-79x100.png 79w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role-150x189.png 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/What-Is-SEBI-Its-Role.png 1007w\" sizes=\"(max-width: 811px) 100vw, 811px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>The Securities and Exchange Board of India (SEBI) is the main body that regulates the capital market in India. It was created to promote legitimate trading within the capital market and protect the interest of investors. SEBI was constituted in 1988 and given authority to establish itself as statutory or independent via an Act of Parliament (the SEBI Act) passed in 1992. The sole body responsible for governing Financial Instruments including, Stocks, Mutual Funds, Investment Advisors and\/or Investment Companies are regulated by SEBI since then and are to be specifically governed as a financial body by SEBI. In addition to its functions as a regulating body, SEBI plays a key role in promoting\/stabilising Capital Market Conditions and preventing Fraudulent Activity from occurring via\/through its systems regarding Financial Instruments.<\/p>\r\n<ol>\r\n<li><b><\/b><strong><b>SEBI&#8217;s<\/b><\/strong><b><\/b><strong><b>Organizational<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Structure:<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Each\u00a0of\u00a0the\u00a0Participants\u00a0has\u00a0clearly\u00a0defined\u00a0roles\u00a0and\u00a0responsibilities\u00a0in\u00a0order\u00a0to\u00a0run, regulate and monitor all types of Participants of\/from the Capital Markets within India.\u00a0The\u00a0Organizational\u00a0Structure\u00a0of\u00a0SEBI\u00a0comprises\u00a0of:\u00a0Chairman:\u00a0The\u00a0Central Government\u00a0appoints\u00a0the\u00a0Chairman\u00a0of\u00a0SEBI,\u00a0and\u00a0he\/she\u00a0is\u00a0the\u00a0head\u00a0of\u00a0SEBI\u00a0for purposes of implementing policy from\/throughout SEBI and to provide Strategic Direction\u00a0in\u00a0accordance\u00a0with\u00a0all\u00a0functions\u00a0of\u00a0SEBI.\u00a0Board\u00a0of\u00a0Directors:\u00a0To\u00a0manage\u00a0the SEBI\u00a0Board\u00a0effectively,\u00a0the\u00a0Composition\u00a0of\u00a0the\u00a0Board\u00a0of\u00a0Directors\u00a0of\u00a0SEBI\u00a0currently consists\u00a0of\u00a0Representatives\/Board\u00a0Members\u00a0from\u00a0the\u00a0Finance\u00a0Ministry\u00a0of\u00a0the Government of India, Members from the Reserve Bank of India, and Members with Experience\u00a0in\u00a0either\u00a0Financial\u00a0Services\u00a0or\u00a0Business.<\/p>\r\n<p>SEBI\u00a0has\u00a0divisions\u00a0that\u00a0have\u00a0specialized\u00a0functions\u00a0including:<\/p>\r\n<ol>\r\n<li><strong>Market Regulation &#8211;\u00a0<\/strong><\/li>\r\n<\/ol>\r\n<p>Responsible\u00a0for\u00a0regulating\u00a0the\u00a0stock\u00a0exchanges,\u00a0brokers,\u00a0and trading on a stock exchange.<\/p>\r\n<p><strong><b>\u00a02. <\/b><\/strong><strong><b>Corporate<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Finance<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Is,in\u00a0charge\u00a0of\u00a0approving\u00a0Initial\u00a0Public\u00a0Offerings\u00a0<\/li>\r\n<li>Going over company papers.<\/li>\r\n<li>Investor Protection and Education<\/li>\r\n<li>Helpsinvestors\u00a0understand\u00a0their\u00a0investments\u00a0and\u00a0makes\u00a0sure\u00a0they\u00a0have\u00a0the\u00a0 Enforcement and Surveillance<\/li>\r\n<li>Keepsan\u00a0eye\u00a0on\u00a0people\u00a0who\u00a0trade\u00a0using\u00a0information\u00a0and\u00a0looks\u00a0into\u00a0companies\u00a0that\u00a0do\u00a0bad\u00a0<\/li>\r\n<\/ul>\r\n<h3><strong><b>Objectives<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>of<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>SEBI<\/b><\/strong><\/h3>\r\n<ul>\r\n<li>It ensures fair trading practices among stock exchanges, brokers, and investment firms.<\/li>\r\n<li>Secondly it mandates financial reporting, IPO approvals, and corporate governance standards.<\/li>\r\n<li>Third objective is it promotes innovation in financial instruments, mutual funds, and investment products. It stops people from manipulating prices doing stock deals and behaving unethically in the market.<\/li>\r\n<li>SEBI uses tools to find out if something suspicious is happening and gives penalties to those who do\u00a0<\/li>\r\n<li>It keeps an eye on brokers, people who help with deposits, portfolio managers and credit rating agencies.<\/li>\r\n<li>Italso\u00a0teaches\u00a0investors\u00a0about\u00a0the\u00a0risks,\u00a0in\u00a0the\u00a0market\u00a0how\u00a0to\u00a0invest\u00a0how\u00a0to\u00a0plan<\/li>\r\n<li>SEBI protects investors from cheaters, people who use information and those who manipulate the market.<\/li>\r\n<li>Ithelps\u00a0investors\u00a0make\u00a0<\/li>\r\n<li>SEBI makes sure everything is fair and\u00a0<\/li>\r\n<\/ul>\r\n<h3><strong><b>Functions<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>of<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>SEBI<\/b><\/strong><\/h3>\r\n<ul>\r\n<li>SEBI\u00a0performs\u00a0several\u00a0critical\u00a0functions\u00a0to\u00a0regulate\u00a0financial\u00a0markets\u00a0and\u00a0foster investor trust. These functions include:<\/li>\r\n<li>SEBI\u00a0monitors\u00a0stock\u00a0exchanges\u00a0(NSE,\u00a0BSE)\u00a0to\u00a0ensure\u00a0fair\u00a0trading\u00a0and\u00a0prevent\u00a0market\u00a0\u00a0manipulation.\u00a0<\/li>\r\n<li>It Implements rules to safeguard retail investors from fraud,\u00a0misrepresentation,\u00a0and\u00a0insider\u00a0trading.\u00a0<\/li>\r\n<li>It\u00a0Promotes\u00a0innovation\u00a0in\u00a0financial\u00a0products,\u00a0including mutual funds, derivatives, and ETFs.\u00a0<\/li>\r\n<li>Also it Reviews corporate filings\u00a0before companies go public to ensure transparency and compliance.\u00a0SEBI Oversees stockbrokers, investment firms, and portfolio managers to maintain ethical practices.<\/li>\r\n<li>Also it tracks suspicious stock movements and penalizes violations to maintain market integrity.It sets guidelines for mutual funds, ensuring fair expense ratios, investor disclosures, and risk transparency.<\/li>\r\n<li>Next function is it mandates financial disclosures and ethical standards for publicly listed companies.<\/li>\r\n<li>Uses\u00a0market surveillance tools to detect fraudulent schemes and prevent stock\u00a0manipulation.\u00a0<\/li>\r\n<li>Conducts investor awareness campaigns to promote informed\u00a0decision-making.<\/li>\r\n<\/ul>\r\n<p>The Securities and Exchange Board of India or SEBI for short is the group that makes \u00a0sure the capital market in India is fair. They do this by being open and honest protecting people who invest their money and making sure the financial market in India is stable. The Securities and Exchange Board of India is, in charge of all the exchanges,\u00a0mutual\u00a0funds,\u00a0companies\u00a0that\u00a0manage\u00a0money,\u00a0brokers\u00a0and\u00a0people\u00a0who give investment advice. The Securities and Exchange Board of India makes rules for\u00a0all of these groups to follow.<\/p>\r\n<p>As\u00a0part\u00a0of\u00a0its\u00a0role\u00a0in\u00a0regulating\u00a0mutual\u00a0funds,\u00a0SEBI\u00a0requires\u00a0mutual\u00a0fund\u00a0companies to\u00a0operate\u00a0transparently\u00a0&#8211;\u00a0including\u00a0disclosing\u00a0the\u00a0risks\u00a0associated\u00a0with\u00a0investing\u00a0in their\u00a0funds\u00a0&#8211;\u00a0in\u00a0accordance\u00a0with\u00a0the\u00a0mutual\u00a0fund\u00a0industry\u00a0standards\u00a0and\u00a0guidelines.<\/p>\r\n<h3><strong><b>\u00a0<\/b><\/strong><strong><b>Examples of what SEBI regulates in the Mutual Fund industry include:<\/b><\/strong><\/h3>\r\n<ul>\r\n<li><strong><b>Fund<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Management<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Practices:<\/b><\/strong>\u00a0Mutual\u00a0funds\u00a0must\u00a0adhere\u00a0to\u00a0the\u00a0asset\u00a0allocation guidelines and provide investors with specific performance measurements.<\/li>\r\n<li><strong><b>Transparency of the Investment Portfolio: <\/b><\/strong>Fund managers must inform investors about\u00a0the\u00a0sectors\u00a0in\u00a0which\u00a0they\u00a0hold\u00a0securities,\u00a0as\u00a0well\u00a0as\u00a0the\u00a0risks\u00a0inherent\u00a0in\u00a0each sector.<\/li>\r\n<li><strong><b>Grievance Resolution Procedures:<\/b><\/strong>\u00a0SEBI has established processes for resolving complaints from mutual fund investors.<\/li>\r\n<li><strong><b>Taxation and Compliance:<\/b><\/strong>\u00a0Mutual funds must comply with SEBI&#8217;s rules related to\u00a0financial reporting and taxation.<\/li>\r\n<\/ul>\r\n<h3><strong><b>\u00a0<\/b><\/strong><strong><b>Mutual<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Fund<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Reclassification<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Rules<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>by<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>SEBI<\/b><\/strong><\/h3>\r\n<p>Mutual\u00a0fund\u00a0reclassification\u00a0was\u00a0introduced\u00a0by\u00a0SEBI\u00a0to\u00a0reduce\u00a0confusion\u00a0and\u00a0provide a uniform approach to investing that is simple for investors to comprehend.<\/p>\r\n<h3><strong><b>The<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>main<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>guidelines<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>issued<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>by<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>SEBI<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>for<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>this<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>purpose<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>are<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>as<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>follows:<\/b><\/strong><\/h3>\r\n<ul>\r\n<li><strong><b>Clarification<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>of<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>categories<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>&#8211;<\/b><\/strong>\u00a0All\u00a0mutual\u00a0funds\u00a0will\u00a0now\u00a0fit\u00a0into\u00a0wider\u00a0classifications\u00a0of investment as defined below: large-cap, mid-cap, small-cap, debt, hybrid and thematic<\/li>\r\n<li><strong><b>Risk<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Profile<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>&#8211;<\/b><\/strong><strong><b>\u00a0<\/b><\/strong>Each\u00a0mutual\u00a0fund\u00a0category\u00a0will\u00a0be\u00a0given\u00a0a\u00a0classification\u00a0on\u00a0the\u00a0basis\u00a0of risk to ease investor decision-making that outlines the level of risk associated with each fund as low, moderate or high<\/li>\r\n<li><strong><b>Preventing<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Misleading<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Naming<\/b><\/strong>\u00a0&#8211;\u00a0No\u00a0mutual\u00a0fund\u00a0company\u00a0can\u00a0name\u00a0a\u00a0mutual\u00a0fund based\u00a0on\u00a0an\u00a0arbitrary\u00a0naming\u00a0process.\u00a0Each\u00a0mutual\u00a0fund\u00a0company\u00a0must\u00a0define\u00a0its investment strategy beforehand before naming a fund<\/li>\r\n<li><strong><b>Limiting<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Duplicate<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Funds<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>&#8211;<\/b><\/strong>\u00a0Each\u00a0mutual\u00a0fund\u00a0company\u00a0must\u00a0have\u00a0a\u00a0distinct\u00a0portfolio strategy for every mutual fund category<\/li>\r\n<\/ul>\r\n<p><strong>Vedant:\u00a0<\/strong>Nirav,\u00a0I\u00a0believe\u00a0you\u00a0now\u00a0have\u00a0an\u00a0understanding\u00a0of\u00a0Regulation\u00a0of\u00a0the Securities Market, correct? However, I believe you have further questions.<\/p>\r\n<p><strong>Nirav:\u00a0<\/strong>Yes!\u00a0I\u00a0would\u00a0like\u00a0to\u00a0know\u00a0what\u00a0the\u00a0various\u00a0types\u00a0of\u00a0Participants\u00a0of\u00a0the Securities Market are?<\/p>\r\n<p><strong>Vedant:<\/strong>\u00a0Absolutely!\u00a0Let&#8217;s\u00a0talk\u00a0in\u00a0detail\u00a0regarding\u00a0the\u00a0Participants\u00a0of\u00a0the\u00a0Securities Market<\/p>\r\n<p>The different participants of the securities market can be likened to those involved\u00a0in an organized cricket tournament. i.e., players, spectators who buy tickets, and \u00a0sponsors who fund the event for equipment and advertising, which is similar to\u00a0institutional investors supporting major market movements; a commentator making\u00a0comments on the game while giving real-time updates, similar to the market \u00a0analyst\/broker who gives their opinion on the market activity; just as there is an\u00a0umpire who enforces the rules to ensure fair play, there is SEBI, the market\u00a0regulator.<\/p>\r\n<p>The people who take part in the securities market like companies, investors, brokers and regulators are in charge of making sure the market works well and is fair. They have to make sure everything is in order. There is enough money moving around. The securities market has different people who do different jobs when it comes to buying and selling things like stocks, bonds and mutual funds. These people are very important because they help make sure there is money in the system they help figure out how much things are worth and they help keep the whole financial system stable. The securities market needs these people to work properly. The companies, investors, brokers and regulators all play a part, in the securities market. They all help make sure the market is fair and that people can buy and sell things easily.. Let us understand each one of them.<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide05' class='sa_hover_container' data-hash='Participants-In-The-Securities-Market' style='padding:4.9% 5%; margin:0px 0.7%; min-height:100px; '><h2 style=\"text-align: left\"><span style=\"color: #000000\"><strong>2.5 Participants Involved in Securities Market<\/strong><\/span><\/h2>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-47129 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Participants-In-Securties-Market.png\" alt=\"Participants In Securities Market\" width=\"1020\" height=\"777\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Participants-In-Securties-Market.png 1020w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Participants-In-Securties-Market-300x229.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Participants-In-Securties-Market-768x585.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Participants-In-Securties-Market-50x38.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Participants-In-Securties-Market-100x76.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Participants-In-Securties-Market-150x114.png 150w\" sizes=\"(max-width: 1020px) 100vw, 1020px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>The securities market has people and companies that help with buying and selling things\u00a0like\u00a0stocks,\u00a0bonds\u00a0and\u00a0mutual\u00a0funds.\u00a0They\u00a0make\u00a0sure\u00a0there\u00a0is\u00a0money\u00a0moving around prices are fair and the financial system is stable. Lets take a look.<\/p>\r\n<ol>\r\n<li><strong><b>Investors<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Investors are people or companies that buy and sell securities to make money. They are a part of the securities market. There are two types of investors: Retail Investors and Institutional investors. Retail Investors are people who buy and sell things like stocks, bonds and mutual funds. Institutional investors are companies like banks, hedge funds and insurance companies that take care of a lot of money. Foreign Portfolio\u00a0Investors\u00a0are\u00a0people\u00a0or\u00a0companies\u00a0from\u00a0outside\u00a0India\u00a0who\u00a0want\u00a0to\u00a0invest\u00a0in India. Investors play a role.<\/p>\r\n<ol start=\"2\">\r\n<li><strong><b>Stock <\/b><\/strong><b><\/b><strong><b>Exchanges<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Stock\u00a0Exchanges\u00a0are\u00a0places\u00a0where\u00a0people\u00a0can\u00a0buy\u00a0and\u00a0sell\u00a0securities\u00a0in\u00a0a\u00a0way.\u00a0They help\u00a0figure\u00a0out\u00a0the\u00a0price\u00a0of\u00a0each\u00a0security.\u00a0In\u00a0India\u00a0we\u00a0have\u00a0Stock\u00a0Exchanges\u00a0like\u00a0the National\u00a0Stock\u00a0Exchange\u00a0of\u00a0India\u00a0and\u00a0the\u00a0Bombay\u00a0Stock\u00a0Exchange.\u00a0These\u00a0Stock Exchanges\u00a0help\u00a0people\u00a0buy\u00a0and\u00a0sell.\u00a0There\u00a0are\u00a0also\u00a0places\u00a0to\u00a0trade\u00a0commodities\u00a0like the Multi Commodity Exchange of India. Other countries have exchanges like the New\u00a0York\u00a0Stock\u00a0Exchange\u00a0and\u00a0the\u00a0London\u00a0Stock\u00a0Exchange.<\/p>\r\n<ol start=\"3\">\r\n<li><strong><b>Regulators<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Regulators\u00a0make\u00a0sure\u00a0the\u00a0market\u00a0is\u00a0fair.\u00a0They\u00a0stop\u00a0people\u00a0from\u00a0cheating.\u00a0Make\u00a0sure everyone\u00a0follows\u00a0the\u00a0law.\u00a0In\u00a0India\u00a0the\u00a0Securities\u00a0and\u00a0Exchange\u00a0Board\u00a0of\u00a0India\u00a0is\u00a0in charge of the securities market. The Reserve Bank of India looks after the money system\u00a0and\u00a0the\u00a0bond\u00a0market.\u00a0The\u00a0Pension\u00a0Fund\u00a0Regulatory\u00a0and\u00a0Development Authority looks after pension fund programs. Regulators are important in the securities market. The securities market has people who help with buying and selling. Most brokers give people prices for securities and help them buy and sell.\u00a0Brokers\u00a0and\u00a0stockbrokers\u00a0play\u00a0a\u00a0role,\u00a0in\u00a0the\u00a0securities\u00a0market.\u00a0Investors\u00a0use\u00a0Stock Exchanges to buy and sell securities. Regulators keep an eye on the market to ensure everything is fair and transparent. The securities market has players, including investors, Stock Exchanges and regulators.<\/p>\r\n<ol start=\"4\">\r\n<li><strong><b>Issuers<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Issuers\u00a0refer\u00a0to\u00a0organisations\u00a0who\u00a0create\u00a0capital\u00a0from\u00a0selling\u00a0off\u00a0valuable\u00a0&#8216;securities&#8217; to investors in order to obtain funding through these transactions. Corporations issue both shares of stock and bonds in order to finance their business expansion projects.\u00a0Government\u00a0bodies\u00a0issue\u00a0treasury\u00a0bills\u00a0(T-bills)\u00a0and\u00a0sovereign\u00a0bond\u00a0notes to raise money needed to finance their operations at the division and or national level.<\/p>\r\n<p><em><strong>Nirav:\u00a0<\/strong>Hey\u00a0Vedant,\u00a0I\u00a0know\u00a0what\u00a0an\u00a0investor\u00a0is,\u00a0what\u00a0the\u00a0securities\u00a0market\u00a0is,\u00a0how\u00a0the securities markets are regulated and who the participants are that make up the securities markets, but there is still another important topic you have not addressed and that is financial intermediaries.<\/em><\/p>\r\n<p><em><strong>Vedant:<\/strong>\u00a0Yes,\u00a0this\u00a0is\u00a0an\u00a0important\u00a0topic\u00a0you\u00a0have\u00a0highlighted.\u00a0Let\u2019s\u00a0get\u00a0to\u00a0know\u00a0who the financial intermediaries\u00a0are.<\/em><\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide06' class='sa_hover_container' data-hash='Financial-Intermediaries' style='padding:4.9% 5%; margin:0px 0.7%; min-height:100px; '><h2 style=\"text-align: left\"><strong>2.6 Financial Intermediaries<\/strong><\/h2>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-47131 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries.png\" alt=\"Financial Intermediaries\" width=\"1036\" height=\"761\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries.png 1036w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries-300x220.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries-1024x752.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries-768x564.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries-50x37.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries-100x73.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Financial-Intermediaries-150x110.png 150w\" sizes=\"(max-width: 1036px) 100vw, 1036px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>When you need funds for a wedding, you may turn to friends and family for help. However, that may not always be feasible. As such, you may go to a bank to obtain a personal loan. Your neighbour just went to the same bank to deposit \u20b910 lakh into a fixed deposit account and do not know you exist either. The bank will connect your need for money with your neighbour\u2019s desire to earn interest on his account.\u00a0<\/p>\r\n<p>The bank acts as a financial intermediary between you and your neighbour by:<\/p>\r\n<ul>\r\n<li>Giving you Loan and making you pay interest on the loan,<\/li>\r\n<li>Payingyour\u00a0neighbour\u00a0interest\u00a0on\u00a0his\u00a0deposit,<\/li>\r\n<li>Earninga\u00a0profit\u00a0by\u00a0managing\u00a0risk\u00a0and\u00a0keeping\u00a0track\u00a0of\u00a0both\u00a0loans,\u00a0and<\/li>\r\n<li>Charging fees for these\u00a0<\/li>\r\n<\/ul>\r\n<p><strong><b>Types of <\/b><\/strong><strong><b>Financial Intermediaries<\/b><\/strong><\/p>\r\n<ol>\r\n<li><strong><b>Banks<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Financial institutions act as a link between individuals and businesses so they can receive loans (funds) from other people (savers\/depositors). Commercial banks including\u00a0SBI,\u00a0HDFC,\u00a0and\u00a0ICICI\u00a0provide\u00a0services\u00a0such\u00a0as\u00a0savings\u00a0accounts\u00a0and\u00a0loan facilities\u00a0that\u00a0help\u00a0facilitate\u00a0financial\u00a0inclusion.\u00a0Financial\u00a0Institutions\u00a0are\u00a0regulated\u00a0by the Reserve Bank of India through monetary policy.<\/p>\r\n<p><strong><b>2. Investment <\/b><\/strong><b><\/b><strong><b>Banks<\/b><\/strong><\/p>\r\n<p>Investment\u00a0Banks\u00a0are\u00a0established\u00a0to\u00a0assist\u00a0firms\u00a0in\u00a0obtaining\u00a0the\u00a0necessary\u00a0capital for\u00a0their\u00a0operations\u00a0through\u00a0investment\u00a0in\u00a0their\u00a0equity\u00a0and\/or\u00a0debt\u00a0(+-50%\u00a0of\u00a0their operations)\u00a0while\u00a0at\u00a0the\u00a0same\u00a0assisting\u00a0clients\u00a0with\u00a0Mergers\/Acquisitions, underwriting\u00a0IPOs\u00a0(Initial\u00a0Public\u00a0Offerings),\u00a0and\u00a0managing\u00a0assets.\u00a0Investment\u00a0Banks\u00a0do NOT provide traditional banking services such as keeping deposits or checking\u00a0accounts,\u00a0they\u00a0provide\u00a0advisory\u00a0services\u00a0related\u00a0to\u00a0large\u00a0capital\u00a0transactions.\u00a0Some\u00a0\u00a0of the most prominent global investment banks include: Goldman Sachs, JP Morgan, \u00a0and Morgan Stanley.<\/p>\r\n<p><strong><b>3. Insurance <\/b><\/strong><b><\/b><strong><b>Companies<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><\/p>\r\n<p>Insurance Companies give protection to people and businesses. They cover people from losses due to death, illness, accidents and damage to property\u00a0They collect premiums. Invest them to earn income. They use this income to pay claims when an insured event happens.\u00a0LIC, HDFC Ergo and ICICI Prudential have programs. These programs help people and businesses prepare for events.\u00a0They offer life, health and property insurance policies as a safety net.<\/p>\r\n<p><strong><b>4. Mutual <\/b><\/strong><b><\/b><strong><b>Funds<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>&amp;<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>AMCs<\/b><\/strong><\/p>\r\n<p>Mutual Funds let people pool their money. They invest in things like stocks, bonds and commodities.\u00a0Asset Management Companies manage these pooled investments.\u00a0Examples include SBI Mutual Fund, HDFC Mutual Fund and Nippon India Asset Management Company.\u00a0They help people diversify their investments. This makes use of their money.\u00a0There are types of mutual funds.\u00a0These include mutual funds, debt mutual funds, hybrid mutual funds and index mutual funds.\u00a0They offer ways for people to invest.\u00a0The investment options depend on how risk a person is willing to take.<\/p>\r\n<p><strong><b>5. Pension <\/b><\/strong><b><\/b><strong><b>funds<\/b><\/strong>:\u00a0<\/p>\r\n<p>Pension funds help people save money for retirement. This way they have money after they stop working. The National Pension System and other funds like the Employees Provident Fund and Public Provident Fund help people save. They invest money while people are working. The Pension Fund Regulatory and Development Authority oversees these funds. They make sure the funds are safe and earn money. They invest in stocks and bonds. This helps keep the value of the money in the funds. They also make sure people who get money from the funds have an income. They protect people from inflation.<\/p>\r\n<p><strong>6. Stock Exchanges<\/strong><\/p>\r\n<p>Stock exchanges like the Bombay Stock Exchange and National Stock Exchange are places to buy and sell stocks. They create a market for buying and selling. They help figure out stock prices. They give companies a way to raise money. When people buy stocks they spread out their investments. This way they do not put all their money in one place. The Securities and Exchange Board of India oversees stock exchanges in India. They make sure stock exchanges are fair and honest. They ensure people who buy and sell stocks get a price. Stock exchanges help keep the countrys economy stable.<\/p>\r\n<p><strong>7. Firms that Deal in Venture Capital and Private Equity<\/strong><\/p>\r\n<p>Venture Capital Firms and Private Equity Firms give money to companies. They also fund companies with growth potential. They offer capital, strategic expertise and access to markets. This helps fuel entrepreneurship and business growth.<\/p>\r\n<p><strong>8. Institutions of Micro-Finance<\/strong><\/p>\r\n<p>Micro-Finance Institutions like S.K.S. M.F.I. (Bharat Financial Inclusion) and Grameen Bank offer loans. They give loans to people and small businesses. Banks often do not serve these individuals and businesses. Micro-Finance Institutions foster growth, from the grassroots level. They support inclusion.<\/p>\r\n<p><strong>Functions\u00a0of\u00a0Financial\u00a0Intermediaries<\/strong><\/p>\r\n<ul>\r\n<li><strong>Allocation of capital:<\/strong>\u00a0Transferring\u00a0funds\u00a0from\u00a0savers\u00a0to\u00a0borrowers\u00a0to\u00a0facilitate\u00a0\u00a0productive investment in the economy<\/li>\r\n<li><strong>Liquidity management:<\/strong> ensuring that financial instruments are available for tradingwithout causing large movements in their price<\/li>\r\n<li><strong>Diversifying risk:<\/strong> helping to reduce risk through diversifying and through the use of structured financial instruments<\/li>\r\n<li><strong>Stabilizing the market:<\/strong> controlling trading of financial securities thus reducing volatility within the economy<\/li>\r\n<li><strong>Creating wealth:<\/strong> creating access to investment opportunities allowing individuals or institutions to build their wealth over time.<\/li>\r\n<\/ul>\r\n<p><em><strong>Nirav:\u00a0Thank\u00a0you\u00a0very\u00a0much\u00a0Vedant!\u00a0You\u00a0explained\u00a0everything\u00a0so\u00a0nicely.\u00a0However,\u00a0I\u00a0have yet one more question I&#8217;d like to ask, please.<\/strong><\/em><\/p>\r\n<p><em><strong>Vedant:\u00a0No\u00a0problem.\u00a0I\u00a0can\u00a0help\u00a0you\u00a0with\u00a0whatever\u00a0you\u00a0need\u00a0to\u00a0get\u00a0a\u00a0good understanding about the securities markets.<\/strong><\/em><\/p>\r\n<p><em><strong>Nirav: We&#8217;ve talked about the definition of Securities in trading as being Financial assets that can be bought\/sold\/traded in the market, thus making a profit for yourself or insuring against losses to a specific asset type. Securities are Stocks, Bonds, Derivatives, Commodities, Foreign exchange (Forex), etc. However, do you know how these financial assets are traded?<\/strong><\/em><\/p>\r\n<p><em><strong>Vedant:\u00a0Wow\u00a0&#8211;\u00a0what\u00a0a\u00a0great\u00a0question!\u00a0The\u00a0financial\u00a0assets\u00a0that\u00a0we&#8217;ve\u00a0talked\u00a0about are all traded in some sort of trading venue, and the trading venues provide different services\/functions for each type of trade.<\/strong><\/em><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide07' class='sa_hover_container' data-hash='Securities-Market-Segments' style='padding:4.9% 5%; margin:0px 0.7%; min-height:100px; '><h2 style=\"text-align: left\"><strong>2.7\u00a0 Securities Market Segment<\/strong><\/h2>\r\n<h2>\u00a0<\/h2>\r\n<h2 style=\"text-align: left\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-47132 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Segments-In-Securities-Market.png\" alt=\"Segments In Securities Market\" width=\"1004\" height=\"652\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Segments-In-Securities-Market.png 1004w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Segments-In-Securities-Market-300x195.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Segments-In-Securities-Market-768x499.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Segments-In-Securities-Market-50x32.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Segments-In-Securities-Market-100x65.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/Segments-In-Securities-Market-150x97.png 150w\" sizes=\"(max-width: 1004px) 100vw, 1004px\" \/><\/h2>\r\n<p>The securities market is divided into various segments, each serving distinct\u00a0functions\u00a0within\u00a0the\u00a0financial\u00a0system.\u00a0These\u00a0segments\u00a0facilitate\u00a0capital\u00a0formation, \u00a0liquidity management, price discovery, and risk allocation for investors and \u00a0institutions.\u00a0Below is a breakdown of key securities market segments in India.<\/p>\r\n<ol>\r\n<li>\r\n<h3><strong><b>Primary <\/b><\/strong><b><\/b><strong><b>Market<\/b><\/strong><\/h3>\r\n<\/li>\r\n<\/ol>\r\n<p>The primary market is where companies issue their shares for the first time. Companies\u00a0and\u00a0governments\u00a0make\u00a0financing\u00a0arrangements\u00a0with\u00a0the\u00a0assistance\u00a0of investors for initial offerings of common stock or bonds.<\/p>\r\n<p>What is IPO ? Companies can raise funds by issuing shares to the public through an initial public offering (IPO).<\/p>\r\n<p>What\u00a0are\u00a0Bond\u00a0Issues\u00a0&#8211;\u00a0Here\u00a0Governments\u00a0and\u00a0corporations\u00a0can\u00a0generate\u00a0money\u00a0by selling fixed-income securities (bonds) and offering to pay interest periodically.<\/p>\r\n<p>What\u00a0are\u00a0Rights\u00a0Issues\u00a0&amp;\u00a0Private\u00a0Placements?\u00a0&#8211;\u00a0In\u00a0this\u00a0Companies\u00a0provide\u00a0current investors with access to new shares, while also offering new shares to selected institutional investors.<\/p>\r\n<ol start=\"2\">\r\n<li>\r\n<h3><strong><b>Secondary <\/b><\/strong><b><\/b><strong><b>Market<\/b><\/strong><\/h3>\r\n<\/li>\r\n<\/ol>\r\n<p>The\u00a0secondary\u00a0market\u00a0is\u00a0the\u00a0place\u00a0where\u00a0investors\u00a0can\u00a0buy\u00a0and\u00a0sell\u00a0previously issued securities. Which means shares which are already available in the market.\u00a0Stock Trading &#8211; Trading occurs on a stock exchange (i.e. NSE and BSE) in shares of companies. Bonds &amp; Debentures &#8211; Reselling fixed-income securities (bonds) creates\u00a0liquidity for the bond holder.<\/p>\r\n<ol start=\"3\">\r\n<li>\r\n<h3><strong><b>Futures <\/b><\/strong><b><\/b><strong><b>&amp;<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Options<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Market<\/b><\/strong><\/h3>\r\n<\/li>\r\n<\/ol>\r\n<p>In this market, investors are able to invest in financial instruments which derive their value from other securities called &#8220;underlying securities.&#8221; Examples of an underlying security would be a stock, or a commodity such as gold or oil, a stock market index, or a currency. A future is like a deal to buy or sell something on a date for a set price. It is an agreement between two parties.An option is a kind of contract. It gives an investor the choice to buy or sell something at a price on or before a specific date. This certain price is called the strike price.Having an option helps investors.It protects them from changes, in price. They can use it as a kind of insurance. This way they do not lose money if prices change a lot.Commodity Derivatives are traded (through future contracts) example of this are Gold, Crude Oil and agricultural products.<\/p>\r\n<ol start=\"4\">\r\n<li>\r\n<h3><strong><b>Debt <\/b><\/strong><b><\/b><strong><b>Market<\/b><\/strong><\/h3>\r\n<\/li>\r\n<\/ol>\r\n<p>The debt market consists of debt instruments that are fixed income securities\u00a0like bonds, treasury bills, and debentures. Debt instruments give the holder a predictable cash flow since their cash flow is in the form of payments made to the debt holder by the company that issues the debt. Government Securities (G-Secs): These\u00a0are\u00a0issued\u00a0by\u00a0the\u00a0sovereign\u00a0government\u00a0in\u00a0order\u00a0to\u00a0raise\u00a0funds.\u00a0G-Secs\u00a0are very safe investments with fixed returns. Corporate bonds are issued by corporations to raise capital. They pay the investor periodic interest on the investment\u00a0and\u00a0return\u00a0the\u00a0principal\u00a0at\u00a0the\u00a0end\u00a0of\u00a0the\u00a0layoff.\u00a0Municipal\u00a0Bonds:\u00a0These are bonds issued by the local municipality to fund infrastructure projects.<\/p>\r\n<h3><strong><b>5. Commodity<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Market<\/b><\/strong><\/h3>\r\n<p>The commodity market is where people trade things like gold, silver and crude oil. These things can be traded in their form or as a kind of agreement on an exchange. The commodity market is about buying and selling products like:<\/p>\r\n<ul>\r\n<li>Gold<\/li>\r\n<li>Silver<\/li>\r\n<li>Crude oil<\/li>\r\n<li>Agricultural products<\/li>\r\n<li>Other raw materials<\/li>\r\n<\/ul>\r\n<p>There are spot markets too. These are markets where you can buy or sell commodities away, at the current market price. This section outlines some key points related to Forex market. In this case, it covers USD, INR, EUR, GBP, JPY and others. The\u00a0following\u00a0provides\u00a0an\u00a0overview\u00a0of\u00a0Forex\u00a0Trading\u00a0through\u00a0Currency\u00a0Transaction.\u00a0\u2013 <strong>Spot\u00a0Forex\u00a0Trading:\u00a0<\/strong>Buying\/Selling\u00a0of\u00a0Foreign\u00a0Currencies\u00a0on\u00a0the\u00a0spot,\u00a0i.e.,\u00a0right\u00a0at this moment.<\/p>\r\n<p><strong>Futures\u00a0and\u00a0Options\u00a0Forex\u00a0Contracts:\u00a0<\/strong>Contracts\u00a0to\u00a0purchase\u00a0or\u00a0sell\u00a0a\u00a0currency\u00a0on\u00a0a specified date and at a specified price, dependent on an expected change in the exchange rate of that currency.<\/p>\r\n<p><strong>Central\u00a0Bank\u00a0Regulations:<\/strong>\u00a0The\u00a0Reserve\u00a0Bank\u00a0of\u00a0India\u00a0maintains\u00a0regulatory\u00a0oversight of the proper management, or stability, of the country&#8217;s currency and its exchange rate.<\/p>\r\n<p><strong><em>Vedant:\u00a0Nirav,\u00a0I\u00a0hope\u00a0you\u00a0now\u00a0understand\u00a0better\u00a0about\u00a0the\u00a0Securities\u00a0Market\u00a0and how you trade, and here&#8217;s a summary of all that&#8217;s been discussed.<\/em><\/strong><\/p>\r\n<p><strong><em>Nirav : Thank you, Vedant. Next time we come together, I would love to learn from you.\u00a0Vedant:\u00a0Yes,\u00a0I\u00a0look\u00a0forward\u00a0to\u00a0discussing\u00a0the\u00a0role\u00a0that\u00a0various\u00a0Securities\u00a0Market Intermediaries play in the Securities Market<\/em><\/strong><\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide08' class='sa_hover_container' data-hash='Key-Takeaways' style='padding:4.9% 5%; margin:0px 0.7%; min-height:100px; '><h2><strong><b>Key Takeaways<\/b><\/strong><\/h2>\r\n<ul>\r\n<li>Securities are like tickets that can help you make money or reduce your\u00a0\u00a0They can be things like stocks, bonds or other kinds of investments. These tickets are the building blocks of investing.<\/li>\r\n<li>The place where people buy and sell these tickets is called the securities\u00a0\u00a0It is very important for companies to get the money they need to grow and for people to be able to buy and sell things easily. The securities market helps companies get the money they need. It helps the whole economy grow.<\/li>\r\n<li>There is a group called SEBI that makes sure the securities market is fair and honest.They\u00a0make\u00a0rules\u00a0for\u00a0companies\u00a0that\u00a0want\u00a0to\u00a0sell\u00a0these\u00a0\u00a0They\u00a0watch out\u00a0for\u00a0people\u00a0who\u00a0might\u00a0be\u00a0cheating.\u00a0SEBI\u00a0also\u00a0keeps\u00a0an\u00a0eye\u00a0on\u00a0things\u00a0like\u00a0funds and makes sure nobody is trading unfairly.<\/li>\r\n<li>There are groups that help regulate the securities market\u00a0\u00a0Like the Reserve Bank of India which helps control the money supply and the Ministry of Finance which makes rules about taxes. There are also groups that watch over insurance and pension investments.<\/li>\r\n<li>The people who participate in the securities market are investors, big companies that invest money, stock brokers and stock exchanges like the BSE and\u00a0\u00a0There are also places called depositories, like CDSL and NSDL that help keep track of everything.<\/li>\r\n<li>There are also middlemen that help move money from investors to\u00a0 These include banks, mutual funds, insurance companies and pension funds. They help take the money that people save and invest it in companies. They try to reduce the risks.<\/li>\r\n<li>Thereare\u00a0kinds\u00a0of\u00a0securities\u00a0\u00a0Primary,\u00a0secondary\u00a0and\u00a0special\u00a0markets. Investors\u00a0can\u00a0choose\u00a0how\u00a0they\u00a0want\u00a0to\u00a0invest,\u00a0based\u00a0on\u00a0what\u00a0they\u00a0want\u00a0and\u00a0how risk they are willing to take.<\/li>\r\n<li>Some investors like to use debt investments like government bonds or corporate bonds because they are relatively safe and can provide an income.<\/li>\r\n<li>SEBI is responsible for regulating all mutual funds in India. As such, it should develop rules and regulations governing the risk profiles of mutual funds, create clearand\u00a0concise\u00a0rules\u00a0regarding\u00a0the\u00a0disclosure\u00a0of\u00a0mutual\u00a0fund\u00a0assets,\u00a0develop\u00a0low expense ratios and establish a fair and equitable process for reimbursement of investors in mutual funds.<\/li>\r\n<li>SEBI&#8217;s mission is to create financial literacy, promote good corporate governance through the establishment of sound business practices, enforce compliance with lawsand\u00a0regulations,\u00a0control\u00a0market\u00a0intermediaries,\u00a0promote\u00a0financial\u00a0awareness\u00a0to investors and work to establish a fair and efficient capital market system.<\/li>\r\n<\/ul><\/div>\n<\/div>\n<\/div>\n<script type='text\/javascript'>\n\tjQuery(document).ready(function() {\n\t\tjQuery('#text_slider').owlCarousel({\n\t\t\titems : 1,\n\t\t\tsmartSpeed : 400,\n\t\t\tautoplay : false,\n\t\t\tautoplayHoverPause : false,\n\t\t\tsmartSpeed 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