How well do you know the roles in the Capital Market?

Roles in the Capital Market: Merchant Bankers, Brokers, Underwriters, Depositories, and Custodians

• Merchant bankers are responsible for issue management and providing corporate consulting services. They perform due diligence and submit offer documents to SEBI. Top merchant bankers in the US are Merrill Lynch, Citigroup, Goldman Sachs, J.P. Morgan, and Morgan Stanley.
• Stock brokers buy and sell shares on behalf of their clients and must be SEBI registered. Most brokers in the US join a self-regulatory organization and register with the SEC. Margin financing is popular worldwide, and stock exchanges monitor brokers' lending activities.
• Underwriters take on risk by promising to purchase the remaining portion of shares in case the public does not fully subscribe to them. They make a profit from the price differential between pre-IPO and post-IPO prices.
• Depositories maintain investors' accounts in electronic form and transfer ownership of shares between investors. NSDL and CDSL are the two types of depositories in India, and they interface with investors through their agents known as Depository Participants (DPs). Depositories worldwide offer similar services.
• Custodians offer custodial services for the safekeeping of securities and provide additional services such as physical transfer of share certificates and collecting dividends and interest warrants. The Stock Holding Corporation of India (SHCIL) and SBI Share Holding Corporation are leading custodians in India.
• Foreign institutional investors (FIIs) are permitted to invest in the Indian Capital Market, and most FII transactions in India are routed through foreign custodians. No US fund is permitted to use a custodian that does not have capital adequacy of USD $200 million under US law. Only foreign banks act as custodians for US-based FIIs, pension funds, and corporates.
• Merchant bankers must be appointed in the event of a public issue.
• Brokers buy and sell shares as directed by their clients.
• Underwriters buy shares before they are listed on a stock exchange and generate a profit from the price differential.
• Depositories transfer ownership of shares between investors and reduce paperwork, speed up transfers, and lessen risks associated with physical shares.
• Custodians offer custodial services for the safekeeping of securities and provide additional services such as physical transfer of share certificates, collecting dividends and interest warrants, and adhering to transfer regulations for a fee.
• Merrill Lynch, Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, Deutsche Bank, Citi Bank, Standard Chartered Bank, and Hong Kong Bank are leading companies in merchant banking, custodial, and related services.

Roles in the Capital Market: Merchant Bankers, Brokers, Underwriters, Depositories, and Custodians

• Merchant bankers are responsible for issue management and providing corporate consulting services. They perform due diligence and submit offer documents to SEBI. Top merchant bankers in the US are Merrill Lynch, Citigroup, Goldman Sachs, J.P. Morgan, and Morgan Stanley.
• Stock brokers buy and sell shares on behalf of their clients and must be SEBI registered. Most brokers in the US join a self-regulatory organization and register with the SEC. Margin financing is popular worldwide, and stock exchanges monitor brokers' lending activities.
• Underwriters take on risk by promising to purchase the remaining portion of shares in case the public does not fully subscribe to them. They make a profit from the price differential between pre-IPO and post-IPO prices.
• Depositories maintain investors' accounts in electronic form and transfer ownership of shares between investors. NSDL and CDSL are the two types of depositories in India, and they interface with investors through their agents known as Depository Participants (DPs). Depositories worldwide offer similar services.
• Custodians offer custodial services for the safekeeping of securities and provide additional services such as physical transfer of share certificates and collecting dividends and interest warrants. The Stock Holding Corporation of India (SHCIL) and SBI Share Holding Corporation are leading custodians in India.
• Foreign institutional investors (FIIs) are permitted to invest in the Indian Capital Market, and most FII transactions in India are routed through foreign custodians. No US fund is permitted to use a custodian that does not have capital adequacy of USD $200 million under US law. Only foreign banks act as custodians for US-based FIIs, pension funds, and corporates.
• Merchant bankers must be appointed in the event of a public issue.
• Brokers buy and sell shares as directed by their clients.
• Underwriters buy shares before they are listed on a stock exchange and generate a profit from the price differential.
• Depositories transfer ownership of shares between investors and reduce paperwork, speed up transfers, and lessen risks associated with physical shares.
• Custodians offer custodial services for the safekeeping of securities and provide additional services such as physical transfer of share certificates, collecting dividends and interest warrants, and adhering to transfer regulations for a fee.
• Merrill Lynch, Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, Deutsche Bank, Citi Bank, Standard Chartered Bank, and Hong Kong Bank are leading companies in merchant banking, custodial, and related services.