Module 1. Introduction to Stock Markets

3. Capital Market Facilitators

3.1 – Overview

Market intermediaries are crucial players who work behind the scenes to ensure your trading experience is smooth, safe, and compliant with SEBI rules. From the moment you login to place an order to when shares reach your DEMAT account, these intermediaries coordinate to make it all happen without hiccups
In India, the major intermediaries include:

  • Stock Brokers

  • Depositories and Depository Participants (DPs)

  • Banks

  • Clearing Corporations like NSE Clearing Ltd (NSCCL) and ICCL (Indian Clearing Corporation Ltd.)

3.2 – The Stock Broker

A stock broker acts as your gateway to the stock market. Only SEBI-registered brokers are allowed to execute trades on exchanges like NSE and BSE

Here’s what a broker does:

  • Provides you access to buy/sell equities, mutual funds, ETFs, and more.

  • Offers trading platforms (web/mobile or voice-based).

  • Manages order execution, provides margin, and issues contract notes.

  • Facilitates fund transfers between your bank and trading account.

  • Gives a back-office portal for reports on trades, P&L, taxes, etc.

  • Charges brokerage fees for services used 

You must open two accounts with a broker:

  1. Trading account – to place buy/sell orders.

  2. DEMAT account – to hold your shares in digital form (often through the same broker if they serve as a DP too).

 

3.3 – Depository and Depository Participants (DPs)

Depositories (like NSDL and CDSL) store your securities electronically—no physical certificates involved. These institutions ensure a secure and efficient way to hold and transfer shares digitally 

A Depository Participant (DP) is an SEBI-registered agent of the depository—the intermediary you interact with:

  • Helps open your DEMAT account.

  • Credits and debits securities when you buy or sell.

  • Acts under strict SEBI guidelines to maintain accuracy and security 

Currently, India has two main depositories:

  • NSDL (National Securities Depository Limited)

  • CDSL (Central Depository Services Limited)

3.4 – Banks

Banks play a simple but essential role in your trading journey:

  • They are used to link your bank account with your trading account.

  • Only one bank account (in your name) may be linked per trading account.

  • Any funds moving between your bank and trading account—deposits or withdrawals—must flow through this linked bank account only

3.5 – NSE Clearing Limited (NSCCL) and ICCL

After you place a trade, clearing corporations step in to confirm and settle it ensures both buyer and seller fulfill their obligations.

In India:

  • For NSE trades, NSCCL manages clearing and settlement.

  • For BSE trades, ICCL is responsible

Key functions:

  • Match each buy and sell order.

  • Compute payment and securities obligations via net settlement.

  • Guarantee trade settlement even if one party defaults (acts as central counterparty)

  • Settle trades on T+1 (next working day) for equity transactions, one of the fastest settlement cycles globally

✅ Summary Table

IntermediaryRole
Stock BrokerExecutes trades, provides platform, support, and brokerage
Depository / DPSafely store securities in digital form, manage credit/debit actions
BanksLink funds to trading account
NSCCL / ICCL (Clearing Corporations)Settle all trades, manage risk & provide settlement guarantees

🛠 How Things Flow in a Trade

  1. You place an order via your trading account with your broker.

  2. Broker sends your order to the stock exchange.

  3. NSCCL/ICCL confirms and clears the trade, determining delivery/payment obligations.

  4. On T+1 day, your shares move to your DEMAT account (via your DP), and money moves from your bank to the seller.

  5. Your broker updates your back office with confirmations and trade notes.

Scroll to Top