Capital Market and Securities Laws · Securities Market Intermediaries

Securities Market Intermediaries: Overview and Registration

Updated 11 October 2026 · Fact-checked

Securities market intermediaries are registered persons such as stock brokers, merchant bankers, registrars, depositories and credit rating agencies who help investors and issuers deal in securities. Under Section 11 of the SEBI Act, 1992, SEBI registers and regulates them. Answer by stating the provision, the facts, then a conclusion.

Understand Securities Market Intermediaries: Overview and Registration

A securities market has issuers who need money and investors who have money. They rarely meet directly. Intermediaries sit between them and make dealing safe, orderly and efficient. A stock broker executes trades. A merchant banker manages a public issue. A registrar handles applications and allotment. A depository holds securities in electronic form.

Why regulate them? Investors trust these persons with money and securities. If an intermediary is dishonest or unfit, investors lose. So the law does not leave entry open. A person must be registered before acting in the market, and registration can be cancelled or suspended if the person misbehaves.

The source of this power is Section 11 of the SEBI Act, 1992. Section 11(1) makes it SEBI's duty to protect the interests of investors in securities, to promote the development of the securities market and to regulate it, by such measures as it thinks fit. Section 11(2) lists measures without limiting the general duty.

Two clauses matter most here. Section 11(2)(b) covers registering and regulating stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and other intermediaries associated with securities markets. Section 11(2)(ba) covers depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and other intermediaries the Board specifies by notification. Clause (c) covers venture capital funds and collective investment schemes, including mutual funds.

SEBI also has supporting powers. It can call for information, inspect and inquire into intermediaries (Section 11(2)(i)). It has civil court powers for these tasks (Section 11(3)). It can pass interim orders such as suspending trading or restraining persons from the market, after giving a hearing (Section 11(4)). For the common registration procedure, the SEBI (Intermediaries) Regulations, 2008 apply, along with each intermediary's own regulations. Revise the exact conditions from the regulations in your study material.

Key rules to remember

General duty of SEBI: Section 11(1): protect investors + promote development of + regulate the securities market; Three limbs. Use them as the opening line of any answer on SEBI's role.
Registration of core intermediaries: Section 11(2)(b): stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and other intermediaries; The list is not exhaustive. It ends with 'such other intermediaries'.
Registration of market infrastructure and specified intermediaries: Section 11(2)(ba): depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and others specified by notification; Remember that the last category depends on SEBI's notification.
Funds: Section 11(2)(c): venture capital funds and collective investment schemes, including mutual funds; Mutual funds are covered here, not under clause (b).
Inquiry powers: Section 11(2)(i) and 11(3): call for information, inspect, inquire, audit; civil court powers; Civil court powers cover discovery and production of documents, summoning and examining on oath, and issuing commissions.
Interim measures: Section 11(4): by order, with reasons recorded in writing, suspend trading, restrain persons, impound proceeds, attach for up to ninety days, direct not to dispose of assets; A hearing must be given before or after the order. Attachment must be confirmed by the Special Court within ninety days.

How to solve Securities Market Intermediaries: Overview and Registration questions

Use this method for any question on who intermediaries are, how they are registered or how SEBI controls them.

1Define the term: an intermediary is a person registered with SEBI who is associated with the securities market and serves issuers or investors.
2State why regulation is needed: investor protection and orderly market.
3Cite the source of power: Section 11(1) for the duty and Section 11(2)(b), (ba) or (c) for the relevant class.
4Name the specific intermediary in the question and the regulations that govern it, for example SEBI (Intermediaries) Regulations, 2008 plus its own regulations.
5Explain the registration idea: application to SEBI, SEBI checks fitness and eligibility, grants a certificate, and may later suspend or cancel it.
6Add SEBI's control powers under Section 11(2)(i), 11(3) and 11(4) if the question is about regulation or default.
7Finish with a one-line conclusion that answers the exact question asked.

Quickest way: Clause-to-class memory map

When to use it: Use when the question asks which clause of Section 11 covers a given intermediary, or asks you to list intermediaries.

Split intermediaries into three boxes: (b) traditional service providers, (ba) depositories, participants, custodians, FIIs, rating agencies, (c) funds.
Place the named intermediary in a box and quote that clause.
Write 'and such other intermediaries' to show the list is open.
Add one line on registration and one on SEBI's inspection and interim powers.

Common mistakes in Securities Market Intermediaries: Overview and Registration

Saying Section 11 lists only stock brokers and merchant bankers.
Students memorise two or three examples.
Fix: Learn the three boxes of clauses (b), (ba) and (c), and mention the residual 'other intermediaries'.
Placing credit rating agencies or depositories under clause (b).
Clauses (b) and (ba) look alike.
Fix: Depositories, participants, custodians, FIIs and credit rating agencies are in clause (ba).
Treating registration as a one-time formality that cannot be withdrawn.
Focus on the entry stage only.
Fix: Add that SEBI regulates the working of registered intermediaries and can act against them through inspection, inquiry and interim orders.
Stating that SEBI can attach property indefinitely.
Ignoring the time limit in Section 11(4)(e).
Fix: Attachment is for a period not exceeding ninety days unless the Special Court confirms it within that period.
Forgetting the hearing requirement for interim orders.
Students remember only the powers.
Fix: Note that SEBI must give an opportunity of hearing before or after passing the order, and must record reasons in writing.
Giving answers without section numbers.
Treating it as a descriptive topic.
Fix: Cite Section 11(1), 11(2)(b), (ba), (c), 11(3) and 11(4) where relevant.

Worked examples

Example 1

Explain the power of SEBI under Section 11 of the SEBI Act, 1992 to register and regulate securities market intermediaries.

Show the solution

Provision: Section 11(1) makes it SEBI's duty to protect the interests of investors in securities and to promote the development of, and regulate, the securities market by such measures as it thinks fit.
Section 11(2)(b) allows SEBI to register and regulate stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and other intermediaries associated with the market.
Section 11(2)(ba) covers depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and other intermediaries SEBI specifies by notification. Section 11(2)(c) covers venture capital funds and collective investment schemes, including mutual funds.
Regulation continues after registration. SEBI may call for information, inspect and inquire (Section 11(2)(i)), using civil court powers (Section 11(3)), and may pass interim orders under Section 11(4) after recording reasons and giving a hearing.

Answer: SEBI has wide statutory power under Section 11 to register intermediaries and regulate how they work, so that investors are protected and the market develops in an orderly way.

Example 2

A registrar to an issue is suspected of misusing investor money. SEBI is investigating. What measures can SEBI take under Section 11 while the investigation is pending?

Show the solution

Provision: Section 11(4) allows SEBI, by an order with reasons recorded in writing and in the interests of investors or the securities market, to take measures pending investigation or inquiry or after it.
Facts: a registrar to an issue is an intermediary under Section 11(2)(b), and the allegation concerns investor funds.
Measures available: restrain the person from accessing the securities market and prohibit it from dealing in securities; impound and retain proceeds or securities of the transaction under investigation; direct it not to dispose of or alienate assets forming part of the transaction; attach bank accounts or property for a period not exceeding ninety days.
Safeguards: for attachment, SEBI must get confirmation from the Special Court within ninety days, and only property related to proceeds actually involved in the violation may be attached. SEBI must also give an opportunity of hearing before or after passing the order.
Investigation powers: SEBI may use civil court powers under Section 11(3) to obtain documents and examine persons on oath.

Answer: SEBI can pass a reasoned interim order under Section 11(4) restraining the registrar, impounding proceeds, restricting disposal of assets and attaching property for up to ninety days, subject to hearing and Special Court confirmation.

Exam tips

Open with Section 11(1), then move to the clause relevant to the named intermediary. Examiners reward the provision-first structure.
Learn the clause split (b), (ba), (c) with two examples each. Questions often test whether you can classify.
In a facts-based question, name the intermediary, the power used, the safeguard (hearing, reasons, ninety days) and the conclusion.
Write the Act as the SEBI Act, 1992 and the 2008 regulations as the SEBI (Intermediaries) Regulations, 2008. Do not invent fee or capital figures; if you are unsure, describe the process in words.

Practice questions from Securities Market Intermediaries

Securities Market Intermediaries: Overview and Registration in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Securities Market Intermediaries: Overview and Registration: frequently asked questions

Who are securities market intermediaries?

They are persons such as stock brokers, merchant bankers, registrars, depositories, custodians and credit rating agencies who work between issuers and investors. They need SEBI registration to operate.

Which section of the SEBI Act deals with registering intermediaries?

Section 11 of the SEBI Act, 1992. Clause (2)(b) and clause (2)(ba) deal with registering and regulating intermediaries, and clause (2)(c) deals with funds including mutual funds.

Are mutual funds covered under Section 11(2)(b)?

No. Mutual funds are mentioned in Section 11(2)(c), along with venture capital funds and collective investment schemes. Clause (b) lists service intermediaries such as brokers and merchant bankers.

Can SEBI act against an intermediary after registering it?

Yes. Section 11 lets SEBI regulate their working, inspect them and inquire into their affairs. It can also pass interim orders under Section 11(4) after recording reasons and giving a hearing.