What are stock exchange and stock broker?

Stock Exchange:

A stock exchange is an organized and regulated financial market where securities (bonds, derivatives, shares) are bought and sold on behalf of the investors at prices governed by the demand and supply for the specific stock. The Stock exchanges provide clearing house facilities for netting payments and securities delivery. The Clearinghouse guarantees all payments and deliveries. SEBI is the regulator of stock exchanges.

The shares and stocks listed in a stock exchange are traded at a certain price for a specific stock based on demand and supply on a given day.

Stock brokers/Dealers:

Involvement of Brokers and Dealers is required in the Secondary market of treasury bills. (Brokers and dealers both provide useful financial information about investments to their clients but differ in how they operate. Brokers help clients buy and sell securities while overseeing their brokerage accounts, while dealers are individuals or big financial firms that buy and sell securities for their accounts).

A Stockbroker/sub-broker is a broker who buys and sells securities on a stock exchange on behalf of clients for fees/commissions.

The Clearinghouse guarantees all payments and deliveries.

SEBI is the regulator of stock exchanges.

A Depository refers to a place or entity that holds financial securities in a dematerialized form. A bank, organization, or any institution holding and assisting in security trading is referred to as a depository. Depository accounts hold securities in the same way that bank accounts hold funds. Depositories hold securities in Demat form. There are two central depositories in India viz. CDSL (Central Depository Service India Ltd.) & NSDL (National Securities Depositories Ltd.).The depository participants maintain accounts with the above depositories who in turn maintain sub-accounts of their customers. When a trade occurs, a depository transfers the ownership of securities from the account of one investor to another.

Click below to know;

1. Who are Foreign Institutional Investors (FIIs)?
2. What is Universal Banking?
3. What is Bancassurance?
4. What is Depository?
5. What is Merchant Banking?
6. Who is Registrars to an Issue?