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If there needs to be a practical definition of the term u2018busyu2019, it has to be a stock exchange. There is probably nothing as fast-paced and subject to fluctuations as the positions of stocks being traded at the equity market during every minute of the trading hours.
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Introduction If there needs to be a practical definition of the term ‘busy’, it has to be a stock exchange. There is probably nothing as fast-paced and subject to fluctuations as the positions of stocks being traded at the equity market during every minute of the trading hours. Stock exchanges in India (including the National Stock Exchange and Bombay Stock Exchange) as well as all over the world form the backbones of financial markets. So, who are the primary participants at the stock market, and what role does each one play in trading assets and derivatives? Here’s a look:
Companies Offering Shares to the Public: The companies and institutions offering shares and other securities in the public domain play a major role in the stock exchanges. These companies go public by offering schemes such as stocks, corporate bonds, mutual funds, IPO stocks etc., which are then listed on the exchange with their corresponding prices. Investors, stock brokers and other parties then view the prices of each share or security and decide whether and when to buy the same.
Individual Investors and Traders: From very High Net Worth individuals to people from the middle-income group and even those below the poverty line, you can expect to find individual investors and traders from every income group in the stock market. These individuals step into the stock and investment world with varying investment goals and risk tolerance levels as well as purchasing powers and expectations. They may buy and sell shares and other assets and invest in securities based on a careful evaluation of these factors and with the help of share brokers and investment advisors.
Share Brokers: The share brokers, investment advisors and SMEs act as intermediaries linking individual investors and traders to the exchange as well as the companies, institutions and other bodies offering the investment securities. They are the backbones to the many investors and institutions seeking guidance and scaffolding with regard to their investment processes, goals and asset allocation strategies.
Portfolio Managers: Portfolio managers shoulder the responsibility of creating personalized portfolios for investors vis-à-vis their objectives, risk tolerance and expectations from the investment. These portfolios typically include specific proportions of stocks, bonds, NCDs, derivatives and other investment avenues. Portfolio management services also allocate specific denominations of one’s corpus to different investment securities. Typically, portfolio managers have the Power of Attorney to take major portfolio-related decisions on their clients’ behalf.
Investment Bankers: Investment bankers perform a host of functions for their clients, including (but not limited to) underwriting, M&A, research and risk analysis and most importantly, acting as intermediaries between the investors and the companies selling stocks and other securities. Investment banking services view investment and other financial aspects from a long-term perspective and help companies achieve financial stability in the best ways possible.
Conclusion While the above-mentioned individuals and institutions are the primary participants in a stock exchange, some others include issuers, custodians and floor traders. A stock exchange is constantly on the move from one position to another – knowing how to tread this domain is like a toddler trying to learn walking. And as you learn to balance yourself and kickstart your journey, we are here to support you. Click here to know more!
