People in the Security Market – Retail and Institutional Participants

The security market is the place where securities are issued in raising the funds and traded further between buyers and sellers. There are various people and functionaries which play important roles in the security market. This post discusses the various participants in the security market with their roles.

security market participants

Participants in the Security Market

Participants in the security market are the people or functionaries. These participants may be buyers, sellers or intermediaries between buyers and sellers. There are following key participants which play important roles in the security market:-

  • Market Intermediaries
  • Institutional Participants
  • Retail Participants

Market Intermediaries

Market intermediaries are those participants in the security market which work as facilitate various market operations between buyers and sellers. The following are the important intermediaries in the security market:-

Stock Exchange

 Stock Exchange facilitates the trading between buyers and sellers. It provides a platform for buying and selling of already issued securities. In India, stock exchanges are Bombay Stock Exchange (BSE), National Stock Exchange (NSE).

Depositories: These are the institutions which hold the traded securities of investors such as shares, bonds, mutual funds etc. They hold these securities in the electronic forms. In India, there are two depositories: Central Depository Services Limited (CDSL), and National Securities Depository Limited (NSDL)

Depository Participant

A Depository Participant (DP) is an agent of the depository through which it interfaces with the investors and provides depository services. Depository participants enable investors to hold and transact in securities in the dematerialized form.

Stock Brokers: They are the registered members of the stock exchange. They facilitate buy and sell transactions of investors on stock exchanges. All the secondary market transactions are conducted through these registered stock brokers only.

Sub-Brokers: A sub-broker is an entity who is not a member of Stock Exchange but who acts on behalf of a trading member or Stock Broker as an agent for assisting the investors in buying, selling or dealing in securities through such trading member or Stock Broker with whom he is associated.

Authorised Person

An authorised person is any person, who is appointed by a stock-broker or trading member as an agent to reach out to
the investors. These may be individuals, partnership firms, LLPs or corporates.


It is an entity that has the responsibility of holding funds and securities of large clients. The large clients may be banks, insurance companies, and foreign portfolio investors (FPIs).

Merchant Bankers

These are SEBI registered entities which act as issue managers, investment bankers or lead managers. They help the issuer of securities in accessing the security market with the issuance of securities. They are single point contact for issuers during a new issue of securities.


The underwriters are the entities in the security market who commit to subscribing any portion of a public offer of securities which may not be bought by investors.

Institutional Participants

Institutional participants in the security market are mainly institutional investors. It may be domestic financial institutions, banks, insurance companies, mutual funds or Foreign Portfolio Investors (FPIs). The important institutional participants in the security market are:-

Foreign Portfolio Investors (FPIs)

A Foreign Portfolio Investor (FPI) is an investor which is established or incorporated outside India and proposes to make investments in India.

P-Note Participant

These participants invest in the P-Notes or Participatory Notes. P-Not is an instrument issued by SEBI registered foreign portfolio investors to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator.

Mutual Funds

A mutual fund is a professionally managed collective investment scheme that pools money from many investors to purchase securities on their behalf.

Other Participants:-
  • Insurance Companies
  • Pension Funds
  • Venture Capital Firms
  • Private Equity Firms
  • Hedge Funds
  • Alternative Investment Funds
  • Investment Advisers

Retail Participants

Retail participants are those individuals who buy and sell securities for their personal account, and not for another company or organization. A retail participant may be:-

  • Indian Individuals
  • Non-Resident Indians (NRIs)
  • Person of Indian origin (PIOs)
  • Qualified Foreign Investors (QFIs)


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Disclaimer: This post is meant for educational purpose only and it does not give any advice or recommendation. Investments in securities are subject to market risk.

Tags: #Securities #Security Market #investments #Investors

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