Stock Exchanges and SEBI as regulator in India - class 3

 Hi Readers, The main purpose of the stock exchange is it will provide you a platform where buyers and sellers meet, it helps you to perform the transactions, We have the Bombay stock exchange BSE and the national stock exchange NSE,  The BSE is one of the oldest stock exchange in Asia. 

For example, if you want to open a bank account, you cant go directly walk-in to the rbi the reserve bank of India, and ask for an account opening, the rbi is the regulatory body that all the banks follow under the rbi instructions, the same way, we have SEBI as the market regulator and you should open a trading account with the registered intermediary called the stockbroker,  the stockbroker works as the middle man between the stock exchange and a trader and helps to perform the transaction, the stockbroker charges you the brokerage fee per transaction based on their brokerage pricing plans.

The stock market participants are the one who trades and invests in the stock market like you and me.

There are different kinds of stock market participants, like retail participants like you and me and NRIs , OCIs like Indians staying and investing from abroad or from outside india, Institutions or companies, Asset management companies shortly called as AMCs the ones which handle the mutual funds etc, and the Foreign institutional investors popularly called FIIs .

The SEBI ensures all the participants and exchanges conduct the stock market business fairly. You would have definetly heard of any of this harshad mehata scam or ketan parek scam or satyam ramalingaraju scam etc., the learning of stock market will be incomplete without knowing these people and their scams, you can read so much information about this over the internet. The SEBI regulates and keeps an eye on any such wrong practices and market manipulations. 

The stockbroker provides you the trading application to the client for performing the transactions of buy or sell at the exchange online via the internet. Now you can open the trading account of any of the brokers in the market from online itself within minutes by doing the KYC online, the online aadhaar system helped a lot for smoother and quick account opening experience.  so the trading account will be linked with your bank account, you can link with one or two bank accounts, which will be treated as primary and secondary bank accounts, this helps to add the funds into your trading account for buying of any stocks or trading purpose this popularly called as payin or paying in,   every broker provides a platform or backoffice for payin or adding of funds or for placing withdrawal request or payout of funds from the trading account to bank account online.

We call the amount in the bank account as the bank balance or available balance .. right...  same way in the trading account the available amount will be called as the available margin. the margin which is required for buying of any stocks is called the margin required.  these are all the wordings or market terms that are used. the leverage is something that a broker provides you for buying or selling the stocks for intraday, called as intraday leverage, lets's assume if a broker is providing the sbi shares 5x times the leverage for buying it in intraday, and the sbi stock is trading at Rs.300 , the margin required for buying one share of sbi in intraday will be Rs.60.  its just 300/5  , this is called leverage and this helps to buy more quantity at a given intraday time. 

Here Squareoff time is which a broker squares off all the intraday trades of a client and it will be few minutes before the market closing time, this ensures no position left the trades using the leverage. a broker may also squareoff at any point of time based on loss-making positions to avoid margin short fall, we will discuss more about this in the later classes.

If someone buys the stock with full margin for long-term investing by the end of the day that transaction will be settled by the clearing corporation they will make the settlement process between seller and buyer and adds the stock in the respective buyer's Demat account and money to the sellers trading accounts. 

Demat account is the online depository for saving all your stocks which you have bought and holding, you can call it as an electronic form of a kind of a locker system where you can keep and save your assets online safer. there will also have facility to add a nominee for the Demat account and one can transfer or gift the shares to others via online e-dis slip from the CDSL offical portal.

For beginners some of these stock market financial terms will be big difficult to remember but, when we keep on learning and practicing it will become so much easier.

We will deep dive into the stock market teachings more in the upcoming posts, you can post your comments and questions below and please do subscribe, happy trading, and happy investing.