{"id":6125,"date":"2019-08-29T15:48:27","date_gmt":"2019-08-29T10:18:27","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=6125"},"modified":"2020-10-07T17:27:00","modified_gmt":"2020-10-07T11:57:00","slug":"procedure-for-registration-of-market-intermediaries-with-sebi","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/","title":{"rendered":"Procedure for Registration of Market Intermediaries with SEBI"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In the era of the closed market, there wasn\u2019t any requirement of the intermediary as buyer &amp; seller transact with one another nearby. However, with the expansion of the financial &amp; capital market, the option for direct transaction became completely infeasible. As a result, the concept of Market Intermediaries evolved. Ever since then, market intermediaries act as a bridge between capital seeker &amp; capital provider. Any person operating in the capital market other than investor &amp; issuer is an intermediary.&nbsp;<\/p>\n\n\n\n<p>Financial intermediaries\n&amp; financial market acts as a substitute for the financial service in India.\nThe financial market provides lower-cost debt or equity finance to a smaller\ngroup while financial intermediaries offer finance with the higher cost\ncovering the expenses of uncovered information &amp; monitoring activities.\nThese intermediaries &amp; markets also provide complementary financial\nservices to its clients.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3086df66926\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3086df66926\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Understanding_the_meaning_of_%E2%80%9CMarket_Intermediaries%E2%80%9D\" title=\"Understanding the meaning of \u201cMarket Intermediaries\u201d\">Understanding the meaning of \u201cMarket Intermediaries\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Regulation_governing_securities_market\" title=\"Regulation governing securities\nmarket\">Regulation governing securities\nmarket<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Role_of_the_Market_Intermediaries\" title=\"Role of the Market Intermediaries\">Role of the Market Intermediaries<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#The_Flow_of_Funds\" title=\"The Flow of Funds\">The Flow of Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Investment_Banker\" title=\"Investment Banker \">Investment Banker <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Security_Analyst\" title=\"Security Analyst\">Security Analyst<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Com_Bubble\" title=\"Com Bubble \">Com Bubble <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Problemsconflict_of_interest\" title=\"Problems\/conflict of interest\">Problems\/conflict of interest<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-for-registration-of-market-intermediaries-with-sebi\/#Online_Registration_Mechanism_for_Security_Market_Intermediaries\" title=\"Online Registration Mechanism for\nSecurity Market Intermediaries\">Online Registration Mechanism for\nSecurity Market Intermediaries<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_the_meaning_of_%E2%80%9CMarket_Intermediaries%E2%80%9D\"><\/span>Understanding the meaning of \u201cMarket Intermediaries\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Market Intermediaries are the link in the supply\nchain or bodies engaged in transacting the product from the producer to the end\nconsumer. These could be either individuals or firms. Generally, these\nintermediaries facilitate the sales process. <\/p>\n\n\n\n<p>Intermediaries are defined as per the <a href=\"https:\/\/www.sebi.gov.in\/sebi_data\/attachdocs\/1456380272563.pdf\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"SEBI Act, 1992 (opens in a new tab)\">SEBI Act, 1992<\/a> &amp; comprise of the following:<\/p>\n\n\n\n<ul><li>Stockbroker&nbsp;and sub-broker<\/li><li>Share transfer agents<\/li><li>Banker to an issue<\/li><li>Trustees<\/li><li>Merchant banker<\/li><li>Registrar to an issue<\/li><li>Underwriters<\/li><li>Portfolio management<\/li><li>Investment advisors<\/li><li>Depositaries  &amp; Depositary participants<\/li><li>Custodian<\/li><li>Credit rating agents<\/li><li>Asset management company<\/li><li>Clearing members<\/li><li>Trading members<\/li><\/ul>\n\n\n\n<p>The intermediary regulations specifically\nprohibit following from the definition of intermediary:<\/p>\n\n\n\n<ul><li>Foreign institutional investors<\/li><li>Foreign venture capital investors<\/li><li>Mutual funds<\/li><li>Collective investment scheme<\/li><li>Venture capital funds<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Regulation_governing_securities_market\"><\/span>Regulation governing securities\nmarket<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI has created a comprehensive regulatory framework covering every intermediary. Intermediaries are governed under specific regulations of each category of intermediary:&nbsp;<\/p>\n\n\n\n<ul><li>SEBI (Stock Brokers &amp; Sub- Brokers) Regulations, 1992;<\/li><li>SEBI (Depositories and Participants) Regulations, 1996;<\/li><li>SEBI (Bankers to an Issue) Regulations, 1994; the SEBI (Merchant Bankers) Regulations, 1992;<\/li><li>SEBI (Portfolio Managers) Regulations, 1993;<\/li><li>SEBI (Share Transfer Agents) Regulations, 1993;<\/li><li>SEBI (Underwriters) Regulations, 1993.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_the_Market_Intermediaries\"><\/span>Role of the Market Intermediaries<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The most important role\nof these intermediaries is that they match the demand &amp; supply forces.\nFollowing is the list of roles performed by intermediaries:&nbsp;<\/p>\n\n\n\n<div class=\"browse\">\n<p>Browse through our articles on services provided at <a href=\"https:\/\/swaritadvisors.com\">Swarit Advisors<\/a>, and just let us know if we can help you with your IPO or Comapny Takeover or SEBI Advisory Services.<\/p>\n<div class=\"browse1\">\n<table class=\"table1\">\n\n<tbody>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\"><span>Mergers and Acquisitions<\/a>&nbsp;<\/span><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/buyback-of-shares\"><span>Buyback of Shares<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/merger-and-amalgamation\"><span>Merger and Amalgamation<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/public-issues\"><span>Public Issues<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/rights-issue\"><span>Rights Issue<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/preferential-allotment\"><span>Preferential Allotment<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/swaritadvisors.com\/company-takeover\"><span>Company Takeover<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/issue-of-debentures\"><span>Issue of Debentures<\/span><\/a><\/td>\n<td><a href=\"https:\/\/swaritadvisors.com\/insurance-broker-license\"><span>Insurance Broker License<\/span><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/table>\n<\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Flow_of_Funds\"><\/span>The Flow of Funds<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Economies that are successful in matching the needs of savings to appropriate investment opportunities can create business opportunities &amp; generation of wealth &amp; progress for an economy.&nbsp; Further, issuer &amp; investors are diverse and are not from the same market. So, to connect &amp; manage these diverse groups, matured market middlemen is needed. Investors don&#8217;t have adequate information, knowledge or expertise and issuer don&#8217;t have access to resources to reach individual investors, thus here is the role of an intermediary who plays an essential role in making the market matrix.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investment_Banker\"><\/span>Investment Banker <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Intermediaries perform their role as an investment bank. Following are different functions performed in their capacity as an investment banker:<\/p>\n\n\n\n<ul><li><strong>Financing services:<\/strong> they help the companies &amp; governments to raise capital by issuing equity shares, debt, private placement, commercial notes, and medium-term notes.<\/li><li><strong>Investment services: <\/strong>they make &amp; trade-in markets of equity &amp; fixed income products.&nbsp;<\/li><li><strong>Research:<\/strong> maintenance of large research database on economies, markets, trading, companies, stocks &amp; bonds.<\/li><li><strong>Mergers &amp; Acquisitions: <\/strong>they help &amp; advice on the matters of mergers &amp; amalgamation and Acquisition.&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Security_Analyst\"><\/span>Security Analyst<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As a security analyst, an intermediary analysis examines &amp; evaluate individual securities and the particular market for investment. While examining the security an intermediary seeks out for reliable information. Reliable sources of information can be a financial statement, discussions with the company&#8217;s executives, clients &amp; suppliers. There are sometimes hurdles in the analysis of the market as unavailability of timely &amp; accurate information.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Com_Bubble\"><\/span>Com Bubble <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The relevance of intermediaries in the security market was bought\nby the &#8220;dot-com bubble&#8221; in the US. They claimed that intermediaries\ncan be acknowledged as necessary evils for the capital market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Problemsconflict_of_interest\"><\/span>Problems\/conflict of interest<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li>When an intermediary extends the loan\/credit facility to its clients, they are tending to invest the client&#8217;s funds with the main focus to the recovery of its loan irrespective of the investment objective of the clients.<\/li><li>Sometimes the broker to make his cut &amp; for generating commission is involved in excess trading on a client&#8217;s account regardless of the matter that such trading involves unprofitable investments.&nbsp;<\/li><li>Sometimes an intermediary operates in different capacities such as, as market analyst &amp; investment advisor for the client along with stockbroker taking proprietary trading.&nbsp;<\/li><li>Discriminatory market practices where intermediary involves in favorable practices of allotment of shares who promise to purchase further securities from the secondary market from the same intermediary.&nbsp;<\/li><li>Internal conflicts amongst the group of intermediaries having similar group operations. Sometimes the decision in the favor of the group is not beneficial for a subsidiary. Similarly, when intermediaries under common ownership give diverse services that can be profitable for one service but cannot be that productive for another service.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Online_Registration_Mechanism_for_Security_Market_Intermediaries\"><\/span>Online Registration Mechanism for\nSecurity Market Intermediaries<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>SEBI has created an intermediary portal for all the intermediaries to directly apply online. Applications for registration, processing of the application, grant of final registration, surrender application, suspension application, can be made.&nbsp;<\/li><li>SEBI intermediary portal is also available on the SEBI official website, i.e. www.sebi.gov.in&nbsp;&nbsp;&nbsp;&nbsp;<\/li><li>SEBI intermediary portal is available for the following intermediaries:<ul><li>Stockbrokers<\/li><li>Sub-brokers<\/li><li>Merchant Bankers<\/li><li>Underwriters<\/li><li>Registrar to an issue&nbsp;<\/li><li>Share transfer agents<\/li><li>Debenture trustees<\/li><li>Bankers to an issue<\/li><li>Credit rating agencies<\/li><\/ul><\/li><\/ul>\n\n\n\n<ul><li>All the applications for intermediary shall be made through intermediary portal except an application in respect of stock-broker and sub-broker is continued to be made through stock exchange &amp; depositaries respectively.&nbsp;<\/li><li>In cases of an application to the stock exchange and depositaries, a hard copy of the application has to be preserved and in case of demand, it also needs to be submitted with SEBI.<\/li><\/ul>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/how-to-become-a-portfolio-manager-registered-with-sebi\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to Become a Portfolio Manager Registered with SEBI<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In the era of the closed market, there wasn\u2019t any requirement of the intermediary as buyer &amp; seller transact with one another nearby. However, with the expansion of the financial &amp; capital market, the option for direct transaction became completely infeasible. As a result, the concept of Market Intermediaries evolved. Ever since then, market intermediaries [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":6134,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[546],"tags":[547,551],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6125"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=6125"}],"version-history":[{"count":13,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6125\/revisions"}],"predecessor-version":[{"id":13825,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6125\/revisions\/13825"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/6134"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=6125"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=6125"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=6125"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}