FUNCTIONARIE

S OF STOCK
EXCHANGE
Submitted by Purvi Dahiya

Guided by Sakshi Ma'am

 FUNCTIONARIES OF
STOCK EXCHANGE
Stock exchange -
A stock exchange is a regulated marketplace where securities, such
as stocks, bonds, and other financial instruments, are bought and
sold.

Functionaries of stock exchange-

Functionaries of SE refers to those persons/ individuals / institutions
who performs the function of Stock exchange & who are the
registered member of the exchange
 FUNCTIONARIES OF
STOCK EXCHANGE
• Jobbers
• Brokers
• Sub broker
• Financial Institutions
• NRIs
• Authorised clerks.
• Market makers
• Portfolio manager or portfolio consultant
 BROKER
• Buy or sale of securities
• Technicalities of stock market
• Expertise of brokers about stock market
• Individual or org. (can be any of them).
• Work on behalf of clients.
• Ensures best price for investor
• Work on mutually agreed agreement.
• SEBI registend.
• Service like research, record maintaining is also done by
them ( with some additional charge)
• Adequately qualified.
 Nature of Broker

1. Securities sales representative (try to find best price for dealing to earn
more profit and commission)
2. Securities traders ( trade in securities)
3. Securities brokers ( specifically deals in securities)
4. Securities analysts ( do analysis of stock and securities before dealing
with price etc)
5. Securities firm ( collect info about dealings, policies & objectives of
firm to deal with securities)

Who can be a
broker?
1) Individuals
2) Partnership firms registered under Partnership Act, 1932
3) Institution like banks & financial institutions
4) corporate body registeredunder Companies Act , 1956.
 Eligibility for
brokers ?
1) An indian citizen with atleast 21 years of age
2) An lndividual who Is not bankrupt.
3) An Individual who is not convicted for any fraudent activity.
4) An individual who is not connected with any co.
5 ) An individual who is minimum 12th standard pass
6) An individual who is not engaged in other business.
7) An individual who passes entrance test & interview conducted by
selection committee (an authorized committee of stock market )
8) An individual who does not have more loans
Ways through which brokers earn money?
→Brokerage commission.
→Margin interest charges
→ Service charges
 Procedure for dealing with
brokers-
1. Select the brokers
2. Broker should be reputed & reliable person
3. Broker will try to find out financial capacity of the client
4. client has to provide details like name, address, address proof to the
stock broker.
5. He has to enter into the broker-client agreement
6. Maintenance charges differ from broker to broker.
Procedure for registration of stock
broker.
1. Stock broker has to apply through a stock exchange In. which he is a
member.
2. The appliation must be forwarded by stock exchanges within 30 days
to SEBI from the date of receipt
3. It is the duty of exchange, they should attack statement there is no
complaint or arbitration case pending against the complaint
 SUB
BROKERS
A sub-broker is an intermediary who works under a
registered stockbroker to assist investors in trading
securities like stocks, bonds, and mutual funds.
They are not direct members of stock exchanges
act as agents of stockbrokers.
Sub-brokers must be registered with SEBI
 Qualificatio
ns
Minimum of 10+2 (higher secondary education) or equivalent.
Must register with the Securities and Exchange Board of India (SEBI)
through the affiliated stockbroker.
Basic understanding of financial markets, trading, and investment
processes
Good communication and networking skills.
Should not have any history of financial or legal misconduct.
Registration
• Should be written on stamp paper of ₹10 with clear terms &
conditions
• Charges
Upto 5 yrs - ₹1000
After 5 yrs - ₹ 500
 Duties towards clients.

1) Maintain high standard of integrity & fair conduct.

2) Make the prompt payment.
3) Not to disclose any confidential info.
4) A sub broker should not make any recommendation to any client
5) Should not encourage the sale & purchase of securities to earn more profit.
Duties towards principal broker

1) Shall cooperate with his principal broken.

2) Protecting int of clients.
3) Shall carry out his transaction with his principal broker.
4) Shall execute an ageement
Duties towards other brokers

1) Shall not advertise his business, unless permitted by stock exchange

2) shall not resort (perform) unfair means.
Duties towards regulatory authorities

1) Not to indulge in disgraceful / improper conduct

2) Not to indulge in manipulative & fraud dealings
3) Shall not create a false market
 JOBBERS
( TARAVANIWALAS )
A jobber is a stock market intermediary who buys and sells
securities on their own account to earn profits from price
differences.
Features:
1. Market Maker (continuously buy and sell securities.)
2. Professional speculators
3. Profit Focus
4. No Direct Public Dealings:
5. Trade for themselves
6. Quotes 2 prices
Importance:
7. Acts as a catalyst for smooth market operations.
8. Supports efficient price discovery.
9. Promotes investor confidence.
Types of Speculators in the Stock
Market
• Bull :
1. Definition - expects stock prices to rise.
2. Strategy: Buys shares at a lower price and sells them at a higher price to make a profit.
3. Example: A bull buys shares at ₹100 expecting the price to rise to ₹120.
4. Impact: Contributes to a rising (bullish) market.
• Bear :
5. Definition: A bear is a speculator who expects stock prices to fall.
6. Strategy: Sells shares they don’t own (short selling) and buys them back at a lower price.
7. Example: A bear sells shares at ₹150, expecting the price to drop to ₹130, then buys them back to profit.
8. Impact: Contributes to a falling (bearish) market.
• Stag
9. Definition: A stag is a speculator who applies for new shares in an IPO with the intention to sell them immediately for a quick profit.
10.Strategy: Takes advantage of high demand during IPO listings.
11.Example: A stag subscribes to an IPO at ₹500 and sells the shares at ₹550 on listing day.
12.Impact: Adds liquidity to IPOs.
• Lame Duck :
13.Definition: A lame duck is a speculator who is unable to fulfill their market commitments, often due to heavy losses.
14.Situation: Occurs when the market moves against their predictions.
15.Example: A lame duck expects prices to fall, but prices rise significantly, resulting in loss.
16.Impact: Can cause financial instability for individuals.
 MARKET MAKERS
Market makers are financial intermediaries who
facilitate trading by buying and selling securities in
the market. They ensure liquidity and smooth price
discovery.

Liquidity Provider
Profit Through Spreads
Registered Entities
 Importance:

1. Enhances market efficiency.

2. Builds investor confidence by ensuring trades
can happen anytime.
3. Aids in price discovery for securities.

Compulsary to appoint

1. Co with paid up cap of ₹ 3 crore to ₹5 crore

2. Having commercial production for less than 2 yrs
 AUTHORISED CLERK
Definition:
An authorised clerk is an individual appointed by a registered
stockbroker to assist in trading activities.
They act as representatives of the broker in executing trades and
managing back-office operations
1. Execution of Orders:
2. Communicates with clients to provide updates
3. Documentation and Compliance
4. Operational Support
Importance:
Provides operational efficiency to brokers.
Ensures smooth execution of trades.
Helps brokers manage large volumes of transactions effectively.
 NRI NON RESIDENTS OF
INDIA
Non-Resident Indians (NRIs) are Indian citizens who live abroad for
more than 182 days in a financial year for employment, business, or
other purposes. NRIs can invest in the Indian stock market under certain
regulations.
NRIs must have a PAN card to invest in Indian markets.
They must comply with SEBI regulations and stay updated on changes in
laws for NRIs.
Need for NRI Investment :-
For country
It is needed for increasing the inflow of foreign fund & technology
Promotes innovation qnd tech For nri
Improvement in infrastructure Wealth creation
Job creation and eco growth Higher returns
Tax benefits
Retirement planning
 Methods of Investment by
NRIs.
1) Investment in new share, & debentures.
2) Investment in high priority industries
3) Investment in government securities.
4) Investment in mutual funds & commercial papers
5) Investment in public deposit
6) Investment in housing & real estate.
7) Investment in. air taxi operation.
PORTFOLIO MANAGER OR CONSULTANT

Portfolio Consultant :
Definition: An advisor who provides recommendations and guidance on
investment strategies but does not actively manage the portfolio.
Portfolio Manager :
Definition: A professional responsible for managing an investment
portfolio, making decisions on buying, selling, and holding assets.
Key Difference :
• Portfolio Manager: Actively manages investments.
• Portfolio Consultant: Provides advice, client makes the final decision.
 Consideration of the need of the
investor
1. Regular Income-salary base
2. Capital Appreciation - shares.
3. Market ability of securities (perform this work for that he get cash)
4. safety of securities
5. Tax benefits
6. Speculative gains (extra income)

Registration Fee

The grant of certificate of registration, the applicant has to pay 5 lakh.

This fee is valid for 3 years. For renewal he has to pay ₹ 2.5 lakh for
every 3yrs. Failure to pay renewal charges will lead to suspension of his
certificates
 CONDITIONS FOR GRANT OF GRANT OF
CERTIFICATE CERTIFICATE
1. Infrastructure - own office, sufficient working area, proper Within 50 days of application accepted, he
work & man power should submit 5 lakh for certificate grant in
2. Employees- min 2 , max no limit with experience and case of non-submission of 5 lakh no
knowledge certificate is granted to him.
3. No certificate to a company if registration has already been In case of renewal, within 15 days of
granted to a person connected with it. intimation received , he has to submit 2.5
4. Capital adequacy - min 5 lakh cap. requirement for his lakh, оtherwise nо renewal.
office.
5 No Involvement in litigation. REFUSAL
6. Not guilty for economic offense
7. Professional knowledge of accountancy, law ,business
economics etc In case of no fulfilment of conditions,
8. Fit & proper person (sound minded) within 30 days Intimation of application
9. In the interest of investors (protection of investor's int) rejected received
Thank
You