{"id":6122,"date":"2022-11-08T12:39:09","date_gmt":"2022-11-08T12:39:09","guid":{"rendered":"https:\/\/commerceiets.com\/?p=6122"},"modified":"2022-11-08T12:39:09","modified_gmt":"2022-11-08T12:39:09","slug":"functionaries-of-stock-exchange-pdf","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/functionaries-of-stock-exchange-pdf\/","title":{"rendered":"FUNCTIONARIES OF STOCK EXCHANGE PDF"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_69_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/functionaries-of-stock-exchange-pdf\/#Functionaries_of_stock_exchange_pdf_brokers_sub_brokers_and_institutional_investors_kinds_of_functionaries_at_stock_exchanges\" title=\"Functionaries of stock exchange pdf: brokers, sub brokers and institutional investors, kinds of functionaries at stock exchanges\">Functionaries of stock exchange pdf: brokers, sub brokers and institutional investors, kinds of functionaries at stock exchanges<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/functionaries-of-stock-exchange-pdf\/#Question_%E2%80%9CThe_institutional_investors_have_emerged_on_the_most_important_group_of_investors_in_corporate_securities%E2%80%9D_Do_you_agree_Discuss\" title=\"Question: \u201cThe institutional investors have emerged on the most important group of investors in corporate securities.\u201d Do you agree. Discuss?\">Question: \u201cThe institutional investors have emerged on the most important group of investors in corporate securities.\u201d Do you agree. Discuss?<\/a><\/li><\/ul><\/nav><\/div>\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Functionaries_of_stock_exchange_pdf_brokers_sub_brokers_and_institutional_investors_kinds_of_functionaries_at_stock_exchanges\"><\/span>Functionaries of stock exchange pdf: brokers, sub brokers and institutional investors, kinds of functionaries at stock exchanges<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Question_%E2%80%9CThe_institutional_investors_have_emerged_on_the_most_important_group_of_investors_in_corporate_securities%E2%80%9D_Do_you_agree_Discuss\"><\/span><strong>Question: \u201cThe institutional investors have emerged on the most important group of investors in corporate securities.\u201d Do you agree. Discuss?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Answer<strong>: <u>INSTITUTIONAL INVESTORS<\/u><\/strong> : Institutional investors are legal entities that participate in trading in the financial markets .<\/p>\n\n\n\n<p>These constitute a segment of investors who are capable of buying or selling on a large scale in the stock exchange market. They buy and sell through brokers, sub-brokers, portfolio consultants etc.<\/p>\n\n\n\n<p>In India, major institutional investors include life insurance corporation of India, General Insurance Corporation, Unit Trust of India, Building Societies, Charitable Trusts and Religious Organizations.<\/p>\n\n\n\n<p>\u201cThe institutional investors have emerged as the most important group of investors in corporate securities\u201d I agree with this statement.<\/p>\n\n\n\n<p>Institutional investors exert a significant influence on the market in a both positive and negative way.<\/p>\n\n\n\n<p>Often known as market makers, institutional investors exert a large influence on the price dynamics of different financial instruments.<\/p>\n\n\n\n<p>The presence of large financial groups in the market creates a positive effect on overall economic conditions. The institutional investors activism as the shareholders is thought to improve corporate governance because of the monitoring of financial markets benefits all shareholders.<\/p>\n\n\n\n<p><strong>FEATURES OF INSTITUTIONAL INVESTORS:<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\">\n<li>It is always a legal entity and it is important to understand that an institutional investor is an enterprise managing a fund, but not a mutual fund itself.<\/li>\n\n\n\n<li>The basis of institutional investor\u2019s activity is professional, and it manages assets based on the interests and goals of its clients.<\/li>\n\n\n\n<li>An institutional investor always manages a significant number of funds<\/li>\n<\/ol>\n\n\n\n<p><strong>TYPES&nbsp; &nbsp;OF&nbsp; &nbsp;&nbsp;INSTITUTIONAL &nbsp;&nbsp;INVESTORS:<\/strong><\/p>\n\n\n\n<p>There are several types of institutional investors:<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"539\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-10.png\" alt=\"FUNCTIONARIES OF STOCK EXCHANGE PDF\" class=\"wp-image-6123\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-10.png 900w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-10-300x180.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-10-768x460.png 768w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><figcaption class=\"wp-element-caption\">FUNCTIONARIES OF STOCK EXCHANGE PDF<\/figcaption><\/figure>\n\n\n\n<p>Some of them are explained as follows:<\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\">\n<li><strong>MUTUAL FUNDS: <\/strong>It is the most popular institutional investor. Mutual funds are vehicles facilitating investment in a variety of securities with capital commitment from several investors, both individual and otherwise.<\/li>\n<\/ol>\n\n\n\n<p>In other words, numerous entities invest their capital, which is pooled and in turn, invested in a bag of securities called mutual funds. Thus, individuals with understanding of stock market dynamics can rely on this instrument to mobilise their disposable income. MF is designed to minimize the risk of capital loss, wherein the gain from one dilute loss in another security kind.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>HEDGE FUNDS: <\/strong>Hedge funds are investment partnership where money is collected from members is pooled to invest in securities. Fund manager of hedge funds is called General partner and group of investors is called limited partners. These funds are designed to reduce risk and enhance returns via a diverse portfolio.<\/li>\n\n\n\n<li><strong>INSURANCE COMPANIES: <\/strong>Insurance companies are heavy weight institutional investors. These institutions employ the premium they receive from policyholders into securities. Since the aggregate of premiums is considerable, their investments are also sizable. The returns insurance companies receive from trading are deployed to pay for claims.<\/li>\n\n\n\n<li><strong>ENDOWMENT FUNDS:<\/strong> Endowment funds are set up by foundations, where the administrative entity utilizes the funds for its cause. Typically, schools, universities, hospitals, charitable organizations etc. establish these funds. Here, the investment usually acts as a deductible for the investor. These funds are so designed that the principal remains intact, and the controlling organization uses the investment income to finance its activities.<\/li>\n\n\n\n<li><strong>&nbsp;PENSION FUNDS: <\/strong>Here, both employer and an employee can invest in pension funds. The accumulated capital goes toward the purchase of different kinds of securities.<\/li>\n<\/ul>\n\n\n\n<p>There are two kinds of pension funds:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Where pensioner receives a fixed sum irrespective of how the fund fares.<\/li>\n\n\n\n<li>Where pensioner receives returns based on the performance of the fund.<\/li>\n<\/ul>\n\n\n\n<p>The role of institutional investors can be described as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>LARGE PURCHASES:<\/strong> Institutions control large sums of money. Therefore, stocks that attract the attention of institutional investors tend to appreciate quickly and significantly. In fact, some companies will only buy the stock of a particular company if they can accumulate sufficient shares to influence its strategic direction. For any shareholder, accumulating the majority of common shares in a company provides control over the election of a board of directors and therefore the management of the business. Such interest in a stock will give it a large boost.<\/li>\n\n\n\n<li><strong>INITIATES TRENDS: <\/strong>Institutional investors have a long-term outlook. While many individual investors lack a clearly defined target holding period, institutions purchase shares with the intent to hold them for several years. Because their purchases are preceded by a thorough analysis, sometimes lasting years, they cannot jump from one stock to another every month. In most cases, the individuals who entrust their funds to institutions will also not wed immediate withdrawals, allowing the institutions to buy and hold. Therefore, when institutions buy a stock, they initiate long-term trends. Individuals lift the share prices today and drag the same stock down shortly thereafter by selling it. Institutional buys, however, tend to \u2018stick\u2019 and establish solid and lasting trends.<\/li>\n\n\n\n<li><strong>LEADERSHIP:<\/strong> Institutional investors are the leaders in the stock market. When even a single large institution begins to accumulate a specific stock, other institutions as well as individual investors tends to take note and follow. Such interest means that the stock\u2019s issuer passed the stringent test of the institution\u2019s financial analysts and holds long-term promise.<\/li>\n<\/ul>\n\n\n\n<!--nextpage-->\n\n\n\n<h3 class=\"wp-block-heading\">Question: <strong>\u2018What do you mean by institutional investors? What is their role in development and growth of financial market operations in India?<\/strong><\/h3>\n\n\n\n<p><strong>Answer: <u>INSTITUTIONAL INVESTORS<\/u><\/strong> : Institutional investors are legal entities that participate in trading in the financial markets .<\/p>\n\n\n\n<p>These constitute a segment of investors who are capable of buying or selling on a large scale in the stock exchange market. They buy and sell through brokers, sub-brokers, portfolio consultants etc.<\/p>\n\n\n\n<p>In India, major institutional investors include life insurance corporation of India, General Insurance Corporation, Unit Trust of India, Building Societies, Charitable Trusts and Religious Organizations.<\/p>\n\n\n\n<p>\u201cThe institutional investors have emerged as the most important group of investors in corporate securities\u201d I agree with this statement.<\/p>\n\n\n\n<p>Institutional investors exert a significant influence on the market in a both positive and negative way.<\/p>\n\n\n\n<p>Often known as market makers, institutional investors exert a large influence on the price dynamics of different financial instruments.<\/p>\n\n\n\n<p>The presence of large financial groups in the market creates a positive effect on overall economic conditions. The institutional investors activism as the shareholders is thought to improve corporate governance because of the monitoring of financial markets benefits all shareholders.<\/p>\n\n\n\n<p><strong>ROLE OF INSTITUTIONAL INVESTORS<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"529\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-11.png\" alt=\"FUNCTIONARIES OF STOCK EXCHANGE PDF\" class=\"wp-image-6124\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-11.png 900w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-11-300x176.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-11-768x451.png 768w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><figcaption class=\"wp-element-caption\">FUNCTIONARIES OF STOCK EXCHANGE PDF<\/figcaption><\/figure>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\">\n<li>INSTITUTIONAL INVESTSORS INFLUENCE CORPORATE GOVERENCE TO INCREASE PROFITABILITY: Institutional investors, with their enormous wealth and ownership of majority of stocks a firm can influence and yield power over corporate governance. There are also institutional investors who seek to influence control in the management of the company to improve profitability and this phenomenon is known as shareholder activism.<\/li>\n\n\n\n<li>PLAY AS KEY FACTOR IN REDUCING INFORMATION ASYMMETRIES: In a financial market, information is of paramount importance. Institutional investors with their large capital usually seek and demand the right information from the firms selling share of stocks. Firms on the other hand in reaction to the demands of the institutional investors, they want to attract to their company, provide organized and comprehensive financial information to the public, usually by employing information intermediaries to perform the specific role. In this way, large, complex and incongruent information that are circulated in the financial world is reconciled, thereby reducing the flow of asymmetrical information and attracting more investors.<\/li>\n\n\n\n<li>AS FINANCIAL INTERMEDIARIES<strong>: <\/strong>Numerous institutional investors act as intermediaries between lenders and borrowers. As such, they have a critical importance in the functioning of the financial markets. Economies of scale imply that they increase returns on investments and diminish the cost of capital for entrepreneurs. Acting as saving pools, they also play a critical role in guaranteeing a sufficient diversification of the investor\u2019s portfolios. Their greater ability to monitor corporate behavior as well to select investor\u2019s profiles implies that they help agency costs.<\/li>\n\n\n\n<li>DOMINATES THE SECURITIES MARKETS:<strong> <\/strong>Institutional investors have led to the emergence of an investment culture wherein investment has become part of life style of many people. One social implication of the growth is the relative importance of institutional investments is the disappearance of difference between workers and owners. In aggregate, the workers own the companies for which they work. It is not the direct ownership of the specific companies for which they work. Each worker through right in pension funds, life assurance policies and other institutional investments owns a slice of the aggregate of firms that have issued shares.<\/li>\n\n\n\n<li>ARE CRITICAL INDICATORS OF STOCK MARKET: In the stock market, institutional investor\u2019s buying and selling behavior is watched critically by individual stock traders, brokers and other institutional investors. Their market behavior is used as an indicator of the health of the market, the firm and the stock price. With the institutional investor\u2019s wealth and knowledge and their considerable number of shares in the firm, their buying and selling behavior have a significant effect on the valuation of the stock. Stocks that are brought by them are considered good and profitable stocks.<\/li>\n\n\n\n<li>AFFECTS THE FIRM\u2019S LIQUIDITY<strong>: <\/strong>Institutional investors affects the firm\u2019s liquidity. Firms with considerable assets that can be easily converted into cash are likely to attract institutional investors in the same way that the ownership of institutional investors of a large amount of shares of a firm implies liquidity of the firm\u2019s assets. Big or small investors are attracted to firms that have more liquidity because it is easier for them to buy and get out of the market quickly.<\/li>\n\n\n\n<li>INSTITUTIONAL INVESTORS AND PRIVATE EQUITY:<strong> <\/strong>Institutional investors can have an importance in providing finance for young business beyond the provisions of collective investments such as venture capital trusts. The main institutional investors are pension funds, insurance companies and mutual funds such as unit trusts, open end investment companies and investment trusts and hedge funds. Institutional investors may own private equity firms, which are firms that buy the shares of new or small businesses even through the shares are not traded on stock exchange. Money invested in such companies are often described as private equity.&nbsp;<\/li>\n<\/ol>\n\n\n\n<p>Private equity firms become co-owner of the companies in which they invest and take an active managerial role in the companies with the expectations that the share will eventually to be sold to another private equity firm or to another firm that makes a take over bid or through the stock exchange when the shares are accepted for stock exchange listing.<\/p>\n\n\n\n<p><strong>CONCLUSION: <\/strong>Institutional investors are important to financial markets, because they bring a huge amount of investments to the firm which is necessary for capitalization. The presence of institutional investors in the firm has a profound and positive implication on the financial health of the firm whether perceived or real and a positive influence on the price of the stock. In many ways institutional investors affects stock market liquidity and volatility and influence the management and operations of the firm.<\/p>\n\n\n\n<!--nextpage-->\n\n\n\n<h3 class=\"wp-block-heading\"><strong>QUESTION: Who is stock broker? Explain the functions of a broker?<\/strong><\/h3>\n\n\n\n<p><strong>Answer: <a>BROKER: <\/a><\/strong>Stock brokers are the trading experts who buy and sell stocks, shares and securities on behalf of clients over the counter or through a stock exchange.<\/p>\n\n\n\n<p>Such stock brokers are mostly connected with a stock brokerage firm and they charge a commission or fee from the client for stock broking and managing their stocks.<\/p>\n\n\n\n<p>Such stock brokers have a good knowledge of the Indian stock market and keeps tabs on the changeable patterns and trends of the different stocks and shares.<\/p>\n\n\n\n<p><strong>TYPES OF BROKERS:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"530\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-12.png\" alt=\"FUNCTIONARIES OF STOCK EXCHANGE PDF\" class=\"wp-image-6125\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-12.png 900w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-12-300x177.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-12-768x452.png 768w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><figcaption class=\"wp-element-caption\">FUNCTIONARIES OF STOCK EXCHANGE PDF<\/figcaption><\/figure>\n\n\n\n<p><strong>ON THE BASIS OF NATURE:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>FULL-SERVICE BROKER: A full-service broker offers a broad range of stock and share trading services to the clients together with researching on different stocks and shares and presenting recommendation on potential profit-making stocks.<\/li>\n\n\n\n<li>DISCOUNT BROKER: A discount broker focuses only in executing buying and selling orders for their clients. They perform the trade by charging a brokerage fee much less than what is paid for their full -service counter-parts. Discount brokers do not offer any recommendations on the investment nor do they offer any recommendations to their clients.<\/li>\n<\/ul>\n\n\n\n<p><strong>ON THE BASIS OF CLIENTS SERVED:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>INSTITUTIONAL STOCK BROKERS: Institutional stock brokers have large institutions and companies as their clients and trade in securities on behalf of them. They offer services<\/li>\n<\/ul>\n\n\n\n<p>such as investment banking, securities services such as investment banking, securities services, advisory services and brokerage services to institutional investors.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>PERSONAL STOCK BROKERS: These offer investment banking, advisory services and brokerage services to small businesses and individual investors.<\/li>\n<\/ul>\n\n\n\n<p><strong>FUNCTIONS OF BROKER:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"905\" height=\"525\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-13.png\" alt=\"FUNCTIONARIES OF STOCK EXCHANGE PDF\" class=\"wp-image-6126\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-13.png 905w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-13-300x174.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/image-13-768x446.png 768w\" sizes=\"(max-width: 905px) 100vw, 905px\" \/><figcaption class=\"wp-element-caption\">FUNCTIONARIES OF STOCK EXCHANGE PDF<\/figcaption><\/figure>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\">\n<li><strong>BUYING OF SECURITIES: <\/strong>One of the most basic functions of a stock broker is to buy stocks on behalf of his client, he may do this in different ways, depending upon the type of account he has. In a discretionary account, the stock broker buys stock for a client based on some prearranged guidelines. In an advisory account, however, the stock broker only advises a client on what stock to buy, while in an execution account, the stock broker only buys stock that the client has specifically indicated.<\/li>\n\n\n\n<li><strong>SELLING OF SECURITIES:<\/strong> Another function of stock broker is selling stock on behalf of a client. Just as in the case of buying stock, the stock broker can only sell stocks of a client based on the account that a client signed up for. If a client has an execution only account, the stock broker can only sell a client\u2019s stock when asked to do so. If a client has an advisory account, a stockbroker can only advise the clients to sell his stocks and while if a client has a discretionary account, a stock broker has some way on selling the stocks based on pre-arranged guidelines.<\/li>\n\n\n\n<li><strong>RESEARCH OF MARKET:<\/strong> Competent research accounting, economic and technical analysis of different companies and stocks is done by the stock brokers. The findings of the stock brokers form the base of feedback of the clients. If a stockbroker believes a client\u2019s stock will drop drastically, he will advise him to sell when the price is still high.<\/li>\n<\/ol>\n\n\n\n<p>If, on the other hand, a stock broker believes that the price of a client\u2019s stock will rise significantly, he may advise him to retain the stock.<\/p>\n\n\n\n<p>A stock broker also advises a client about which stocks he should buy to add his financial portfolio and looks for profitable company\u2019s stocks.<\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\">\n<li><strong>MARKETING FUNCTIONS: <\/strong>A stock broker finds prospective clients and builds a customer base. He may do this by writing articles in newspapers and magazines, hosting radio and television shows or taking time to call prospective clients. A stockbroker can also receive new clients through referrals from other individuals and organizations or by attending social events where he can market his services.<\/li>\n\n\n\n<li><strong>LIMITED BANKING SERVICES:<\/strong> Stock market brokers are authorized to provide limited banking services such as interest-bearing accounts, electronic deposits and withdrawals. The clients can avail such banking related services from the stock brokers by paying them a nominal brokerage charge.<\/li>\n\n\n\n<li><strong>ADVISORY SERVICES:<\/strong> stock market brokers possess expertise related to the working of stock market, performance of stocks, market trends and so on. Besides, they have access to the database and research findings of brokerage firms that they are associated with. Hence, they can provide excellent investment advice to their clients.<\/li>\n<\/ol>\n\n\n\n<p><strong>CONCLUSION: <\/strong>A stock broker has to make an application for registration as a member of stock exchange to SEBI along with the requisite fee. The board after satisfying itself that the applicant has the necessary infrastructure to effectively carry out its activities will grant the certificate of registration.<\/p>\n\n\n\n<!--nextpage-->\n\n\n\n<p><strong>QUESTION: Discuss the SEBI guidelines governing the brokers and sub-brokers in India?<\/strong><\/p>\n\n\n\n<p><strong>Answer: BROKER: <\/strong>Stock brokers are the trading experts who buy and sell stocks, shares and securities on behalf of clients over the counter or through a stock exchange.<\/p>\n\n\n\n<p>Such stock brokers are mostly connected with a stock brokerage firm and they charge a commission or fee from the client for stock broking and managing their stocks.<\/p>\n\n\n\n<p>Such stock brokers have a good knowledge of the Indian stock market and keeps tabs on the changeable patterns and trends of the different stocks and shares<\/p>\n\n\n\n<p><strong>SUB-BROKERS: <\/strong>A sub-broker is an agent of the stock broker or a person who helps the investors to deal with a stock broker. A sub-broker is required to submit along with the application for registration, a letter of recommendation from a stock broker of a recognized stock exchange, and two references one of which should be from his banker.<\/p>\n\n\n\n<p>&nbsp;An individual can act as a sub-broker provided:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>He is not less than 21 years of age<\/li>\n\n\n\n<li>He is not convincted of any offence involving fraud or dishonesty.<\/li>\n\n\n\n<li>He has passed 12<sup>th<\/sup> standard from a recognized institute.<\/li>\n\n\n\n<li>He is a fit and proper person.<\/li>\n<\/ul>\n\n\n\n<p><strong>SEBI GUIDELINES:<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\">\n<li>The stockbroker and sub broker shall be bound by all the rules, by laws and regulations of the exchange and circulars or notices issued by SEBI and Government of India from time to time.<\/li>\n\n\n\n<li>The stock broker shall continuously satisfy itself about the genuineness and financial soundness of the client and investment objectives relevant to the services to be provided.<\/li>\n\n\n\n<li>The stock broker shall take steps to make the client aware of the precise nature of the stock broker\u2019s liabilities for the business to be conducted, including the limitations, the liability and the capacity in which the stock broker acts.<\/li>\n\n\n\n<li>The sub-broker shall provide necessary assistance and co-operate with the stock broker in all its dealings with the clients.<\/li>\n\n\n\n<li>The stockbroker and sub broker shall maintain the details of the client as mentioned in the account opening form or any other information pertaining to the client, confidentially and that shall not disclose the same to any person or authority except as required under any legal requirements.<\/li>\n<\/ol>\n\n\n\n<p>Provided that the sub broker may so disclose information about his client to any person or authority with the express permission of the court.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The stock broker shall inform the client and make him appraised about trading\/settlement cycles, delivery\/payment schedules, any changes therein from time to time, and it shall be the responsibility in turn of the client to comply with such schedules\/procedures of the relevant stock exchange where the trade is executed.<\/li>\n\n\n\n<li>The stock broker shall ensure that the money or securities deposited by the client shall be kept in separate account i.e., distinct from its own accounts and shall not be used by the stock broker or sub broker for himself or any other client.<\/li>\n\n\n\n<li>In case, client becomes incapable of receiving and paying for the delivery of the securities, stock broker may close the transaction and can claim the losses if any.<\/li>\n\n\n\n<li>The stock broker shall bring in to the notice of the relevant exchange the information about default in payment by the client.<\/li>\n<\/ul>\n\n\n\n<p>In case defaulting client is a company or firm, then name of its directors or promoters also be communicated by the stock broker to the relevant exchange.<\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\">\n<li>The stock broker shall provide the client with the relevant contact details of the concerned exchanges and SEBI.<\/li>\n\n\n\n<li>Stock broker shall cooperate in redressing grievances of the client in respect of all transactions routed through it and in removing objections for bad delivery of shares, rectification of bad delivery etc.<\/li>\n\n\n\n<li>The stock broker shall ensure faster settlement of any arbitration proceedings arising out of the transactions entered into between him or behalf of client and he shall be liable to implement the arbitration awards made in such proceedings.<\/li>\n\n\n\n<li>The relationship between the stock broker and client will be terminated, if the stock broker for any reason ceases to be a member of the stock exchange including cessation of membership by any reason of the stock broker\u2019s default, death, resignation or if the certificate is cancelled by the board.<\/li>\n\n\n\n<li>The stock broker or sub broker shall ensure due protection to the client regarding client\u2019s rights to dividends, rights or bonus shares etc. in respect of transactions routed through it and shall not do anything which is likely to harm the interest of the client with whom and for whom they have had transactions in securities.<\/li>\n\n\n\n<li>The stock broker and client shall reconcile and settle their accounts from time to time as per the rules of SEBI.<\/li>\n\n\n\n<li>The stock broker shall issue a contract note to his client for trader executed from time to time containing records of all transactions including details of\n<ul class=\"wp-block-list\">\n<li>Order number<\/li>\n\n\n\n<li>Trade number<\/li>\n\n\n\n<li>Trade time<\/li>\n\n\n\n<li>Trade price<\/li>\n\n\n\n<li>Trade quantity<\/li>\n\n\n\n<li>Details of derivative contracts<\/li>\n\n\n\n<li>Client code,<\/li>\n\n\n\n<li>Brokerage and all charges levied etc.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>ALSO STUDY:<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/depositories-act-1996-notes-for-bcom\/\">Depositories act 1996<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2022\/11\/704f3d73d6294b0eecbe5418aff23a67545b8a36_180-1.jpg\" alt=\"FUNCTIONARIES OF STOCK EXCHANGE PDF\" class=\"wp-image-6127\"\/><figcaption class=\"wp-element-caption\">FUNCTIONARIES OF STOCK EXCHANGE PDF<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Functionaries of stock exchange pdf: brokers, sub brokers and institutional investors, kinds of functionaries at stock exchanges Question: \u201cThe institutional investors have emerged on the most important group of investors in corporate securities.\u201d Do you agree. Discuss? Answer: INSTITUTIONAL INVESTORS : Institutional investors are legal entities that participate in trading in the financial markets &#8230;.<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/functionaries-of-stock-exchange-pdf\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;FUNCTIONARIES OF STOCK EXCHANGE PDF&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":6127,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[253],"tags":[411,412,413,414,415,416,417],"class_list":["post-6122","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-university-student-notes-for-exams","tag-brokers","tag-functions-of-brokers","tag-institutional-investors","tag-role-of-institutional-investors","tag-sebi-guidelines-for-brokers","tag-sebiguidelines-for-sub-brokers","tag-types-of-brokers"],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/6122"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=6122"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/6122\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/6127"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=6122"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=6122"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=6122"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}