Datasets:

Maaz911
/

data

Dataset card Viewer Files Files and versions Community

Split (1)

train · 101 rows

Text stringlengths 242 11.7k
[INST] ('Role of Participants in the Financial Markets',) [/INST] 5.5 Role of Participants in the Financial Markets Intermediaries in the financial markets are responsible for coordinating between investors and borrowers, and organizing the transfer of funds between them. Without the services provided by intermediaries, it would be quite difficult for investors and issuers to locate each other and carry out transactions efficiently and cost-effectively. The role and responsibilities of intermediaries are laid down in the acts and regulations governing them. Securities Exchanges provide the infrastructure for trading in securities that have been issued at prices that reflect its current value. The existence of the stock exchange system helps the stakeholders (investors/corporates) in getting a fair valuation on their investment. It also provides liquidity to the investors when they require funds and encourages investors 108 to invest when issuers raise funds. Securities/stock exchanges such as the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are national exchanges which provide nation-wide broker networks. Trading happens on electronic trading terminals through anonymous order matching. Stock exchanges also appoint clearing and settlement agencies and clearing banks that manage the funds and securities settlement that arise out of these trades. Both debt and equity are traded in the respective market segments on the various stock exchanges. In case of commodities the ability to trade in them is done through the commodity exchanges. The structure of the various contracts in each of the commodities is different based on the specific characteristics. It enables investors to take exposure or hedge their position with respect to commodities. Clearing corporations are an important part of the entire stock exchange structure. When an investor transacts through a registered stock exchange, they need the confidence that their money and trades are safe. The clearing corporation has the role to ensure the confirmation, settlement and delivery of transactions on the stock exchange. The clearing corporation has to set up risk management systems so that there is no risk to the overall system in case some investor or member is not able to pay their dues. It also protects the investor and they are assured that their transaction will go through as the clearing house acts as a counter party and guarantee to the transaction. The Clearing Corporation of India Limited is an example of a clearing corporation. Depository participants enable investors to hold and transact in securities in the dematerialised form. Demat securities are held by depositories, where they are admitted for dematerialisation after the issuer applies to the depository and pays a fee. Depository participants (DPs) open investor accounts, in which they hold the securities that they have bought in dematerialised form. Brokers and banks offer DP services to investors. DPs help investors receive and deliver securities when they trade in them. While the investor-level accounts in securities are held and maintained by the DP, the company enters into an agreement with the depository to dematerialize the securities. In other words, DPs act as agents of the Depositories. Custodians typically work with institutional investors. They hold securities and manage bank accounts on behalf of the institutional investors. They manage the transactions pertaining to delivery of securities and money after a trade is made through the broker, and also keeps the accounts of securities and money. They are also responsible for collecting the benefits and rights in respect of the securities held by the client and maintaining records of the services provided. Custodians are usually large banks. Stock brokers are registered trading members of stock exchanges. They sell new issuance of securities to investors. They put through the buy and sell transactions of investors on stock exchanges. All secondary market transactions on stock exchanges have to be 109 conducted through registered brokers. Several brokers provide research, analysis and recommendations about securities to buy and sell, to their investors. Brokers may also enable screen-based electronic trading of securities for their investors, or support investor orders over phone. Brokers earn a commission for their services. Investment Banks are financial entities that provide strategic advice to companies, governments and others on their capital requirements and investment decisions and arrange raising such funds on terms that are most suitable to the company. Their activities include advisory services for business expansions, project financing, mergers and acquisition, investment valuation, among others. They charge a fee for their services. Investment banks also deal with large investors and help them manage their portfolios across asset classes, products and geographies. Insurance Companies provide service of insuring life, property and income against unexpected and large charge. Life insurance companies deal with insuring the life of individuals while general insurance covers health, motor, travel and other areas, where a sudden large expense can derail the financial situation of a household or business. Insurance companies use channels such as individual and corporate agents, brokers and banks to sell their products. Given the large resources mobilized by insurance companies by way of premiums, they are an important source of long-term funding for government and businesses. Pension Funds are intermediaries who are authorized to take contributions from eligible individuals and invest these funds according to the directions of the contributors to create a retirement corpus. These funds provide different options for investment of the contribution, such as debt, equity or a combination. Investors select the type of fund depending upon their ability to take risk and their requirement for returns. Asset Management Companies and Portfolio Managers are investment specialists who offer their services in selecting and managing a portfolio of securities (Portfolio is the collective noun for securities. A portfolio holds multiple securities). Asset management companies are permitted to offer securities (called units) that represent participation in a pool of money, which is used to create the portfolio of a mutual fund. Portfolio managers do not offer any security and are not permitted to pool the money collected from investors. They act on behalf of the investor in creating and managing a portfolio. Both asset managers and portfolio managers charge the investor a fee for their services, and may engage other security market intermediaries such as brokers, registrars, and custodians in conducting their functions. Investment Advisers work with investors to help them make a choice of securities that they can buy, based on an assessment of their needs, time horizon return expectation and ability to bear risk. They may also be involved in creating financial plans for investors, where they 110 define the goals for which investors need to save money and propose appropriate investment strategies to meet the defined goals. Credit rating agencies look at the financial situation of the issuing entities and then rank their various instruments in terms of their ability to safely repay the debt and interest. They act as an information bridge between the investors who might not understand the financial details of the issues or might not have access to the required information. The credit ratings provided by these agencies is a simple way to have an idea about the financial position of an entity and how this would affect an investment into it. KYC registration agencies perform a significant task in the securities market. There is a need to ensure that there is a proper verification of the investors who are putting their money into the various investments. This is done through the KYC process and the details of this is maintained by the KYC registration agency. Every time that an investor goes to transact they would not need to submit the same documents and this can be verified through the details maintained by the KYC registration agency. The records of the investors are maintained in a central database on behalf of the various intermediaries which can be fetched when required. For individuals, its called CKYC Registry and for non-individuals its called KRA maintained by various bodies like CVL, CAMS, NDML etc. Registrar and Transfer agencies help in the process of ensuring a smooth experience for investors in their investment. There are various actions like dividend payment or voting for several issues in companies. The registrar and transfer agency has the records of the investor and they carry out the process of paying the dividend into the respective bank accounts or sending emails with the details for e-voting and so on. They carry out the backroom work that helps in the benefits of the investment reaching the investor. In case of mutual funds they also ensure that the investors can transact through them and complete their investment requirements and even update their details like email, phone number or address. Non banking finance companies and housing finance companies are a route for investors to access funds for their needs. The housing finance companies provide housing loans that are long term loans for purchasing property and this ensures that the individual is able to finance their asset building activity. NBFC also provide finance for a wide variety of areas ranging from personal loans to consumer durable loans. They ensure that those who need money for such purchases are able to have access to it. Credit bureaus or Credit Information companies keep the record of the loan servicing behaviour of the borrowers and then assign them a credit score to reflect their overall position. A higher credit score means a better thing for the borrower and they are likely to get a loan as compared to someone with a low credit score. The entire process of collection every transaction record from the banks and other financial institutions and then assigning 111 a credit score based on the matrix developed by them covers the role of these entities. They are a crucial part of the entire system because they highlight the risk faced by lenders and help them to make the right lending decisions. The role of Account Aggregators is to collect the financial information of customers at a single place after taking their permission. This information is then made available to lenders, which would help them to make lending decisions. They ensure that the right and complete information is available which makes lending decisions easier and which would bring additional people into the formal credit system.

Text

stringlengths

242

11.7k

[INST] ('Role of Participants in the Financial Markets',) [/INST] 5.5 Role of Participants in the Financial Markets Intermediaries in the financial markets are responsible for coordinating between investors and borrowers, and organizing the transfer of funds between them. Without the services provided by intermediaries, it would be quite difficult for investors and issuers to locate each other and carry out transactions efficiently and cost-effectively. The role and responsibilities of intermediaries are laid down in the acts and regulations governing them. Securities Exchanges provide the infrastructure for trading in securities that have been issued at prices that reflect its current value. The existence of the stock exchange system helps the stakeholders (investors/corporates) in getting a fair valuation on their investment. It also provides liquidity to the investors when they require funds and encourages investors 108 to invest when issuers raise funds. Securities/stock exchanges such as the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are national exchanges which provide nation-wide broker networks. Trading happens on electronic trading terminals through anonymous order matching. Stock exchanges also appoint clearing and settlement agencies and clearing banks that manage the funds and securities settlement that arise out of these trades. Both debt and equity are traded in the respective market segments on the various stock exchanges. In case of commodities the ability to trade in them is done through the commodity exchanges. The structure of the various contracts in each of the commodities is different based on the specific characteristics. It enables investors to take exposure or hedge their position with respect to commodities. Clearing corporations are an important part of the entire stock exchange structure. When an investor transacts through a registered stock exchange, they need the confidence that their money and trades are safe. The clearing corporation has the role to ensure the confirmation, settlement and delivery of transactions on the stock exchange. The clearing corporation has to set up risk management systems so that there is no risk to the overall system in case some investor or member is not able to pay their dues. It also protects the investor and they are assured that their transaction will go through as the clearing house acts as a counter party and guarantee to the transaction. The Clearing Corporation of India Limited is an example of a clearing corporation. Depository participants enable investors to hold and transact in securities in the dematerialised form. Demat securities are held by depositories, where they are admitted for dematerialisation after the issuer applies to the depository and pays a fee. Depository participants (DPs) open investor accounts, in which they hold the securities that they have bought in dematerialised form. Brokers and banks offer DP services to investors. DPs help investors receive and deliver securities when they trade in them. While the investor-level accounts in securities are held and maintained by the DP, the company enters into an agreement with the depository to dematerialize the securities. In other words, DPs act as agents of the Depositories. Custodians typically work with institutional investors. They hold securities and manage bank accounts on behalf of the institutional investors. They manage the transactions pertaining to delivery of securities and money after a trade is made through the broker, and also keeps the accounts of securities and money. They are also responsible for collecting the benefits and rights in respect of the securities held by the client and maintaining records of the services provided. Custodians are usually large banks. Stock brokers are registered trading members of stock exchanges. They sell new issuance of securities to investors. They put through the buy and sell transactions of investors on stock exchanges. All secondary market transactions on stock exchanges have to be 109 conducted through registered brokers. Several brokers provide research, analysis and recommendations about securities to buy and sell, to their investors. Brokers may also enable screen-based electronic trading of securities for their investors, or support investor orders over phone. Brokers earn a commission for their services. Investment Banks are financial entities that provide strategic advice to companies, governments and others on their capital requirements and investment decisions and arrange raising such funds on terms that are most suitable to the company. Their activities include advisory services for business expansions, project financing, mergers and acquisition, investment valuation, among others. They charge a fee for their services. Investment banks also deal with large investors and help them manage their portfolios across asset classes, products and geographies. Insurance Companies provide service of insuring life, property and income against unexpected and large charge. Life insurance companies deal with insuring the life of individuals while general insurance covers health, motor, travel and other areas, where a sudden large expense can derail the financial situation of a household or business. Insurance companies use channels such as individual and corporate agents, brokers and banks to sell their products. Given the large resources mobilized by insurance companies by way of premiums, they are an important source of long-term funding for government and businesses. Pension Funds are intermediaries who are authorized to take contributions from eligible individuals and invest these funds according to the directions of the contributors to create a retirement corpus. These funds provide different options for investment of the contribution, such as debt, equity or a combination. Investors select the type of fund depending upon their ability to take risk and their requirement for returns. Asset Management Companies and Portfolio Managers are investment specialists who offer their services in selecting and managing a portfolio of securities (Portfolio is the collective noun for securities. A portfolio holds multiple securities). Asset management companies are permitted to offer securities (called units) that represent participation in a pool of money, which is used to create the portfolio of a mutual fund. Portfolio managers do not offer any security and are not permitted to pool the money collected from investors. They act on behalf of the investor in creating and managing a portfolio. Both asset managers and portfolio managers charge the investor a fee for their services, and may engage other security market intermediaries such as brokers, registrars, and custodians in conducting their functions. Investment Advisers work with investors to help them make a choice of securities that they can buy, based on an assessment of their needs, time horizon return expectation and ability to bear risk. They may also be involved in creating financial plans for investors, where they 110 define the goals for which investors need to save money and propose appropriate investment strategies to meet the defined goals. Credit rating agencies look at the financial situation of the issuing entities and then rank their various instruments in terms of their ability to safely repay the debt and interest. They act as an information bridge between the investors who might not understand the financial details of the issues or might not have access to the required information. The credit ratings provided by these agencies is a simple way to have an idea about the financial position of an entity and how this would affect an investment into it. KYC registration agencies perform a significant task in the securities market. There is a need to ensure that there is a proper verification of the investors who are putting their money into the various investments. This is done through the KYC process and the details of this is maintained by the KYC registration agency. Every time that an investor goes to transact they would not need to submit the same documents and this can be verified through the details maintained by the KYC registration agency. The records of the investors are maintained in a central database on behalf of the various intermediaries which can be fetched when required. For individuals, its called CKYC Registry and for non-individuals its called KRA maintained by various bodies like CVL, CAMS, NDML etc. Registrar and Transfer agencies help in the process of ensuring a smooth experience for investors in their investment. There are various actions like dividend payment or voting for several issues in companies. The registrar and transfer agency has the records of the investor and they carry out the process of paying the dividend into the respective bank accounts or sending emails with the details for e-voting and so on. They carry out the backroom work that helps in the benefits of the investment reaching the investor. In case of mutual funds they also ensure that the investors can transact through them and complete their investment requirements and even update their details like email, phone number or address. Non banking finance companies and housing finance companies are a route for investors to access funds for their needs. The housing finance companies provide housing loans that are long term loans for purchasing property and this ensures that the individual is able to finance their asset building activity. NBFC also provide finance for a wide variety of areas ranging from personal loans to consumer durable loans. They ensure that those who need money for such purchases are able to have access to it. Credit bureaus or Credit Information companies keep the record of the loan servicing behaviour of the borrowers and then assign them a credit score to reflect their overall position. A higher credit score means a better thing for the borrower and they are likely to get a loan as compared to someone with a low credit score. The entire process of collection every transaction record from the banks and other financial institutions and then assigning 111 a credit score based on the matrix developed by them covers the role of these entities. They are a crucial part of the entire system because they highlight the risk faced by lenders and help them to make the right lending decisions. The role of Account Aggregators is to collect the financial information of customers at a single place after taking their permission. This information is then made available to lenders, which would help them to make lending decisions. They ensure that the right and complete information is available which makes lending decisions easier and which would bring additional people into the formal credit system.