NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market

Other Intermediaries and Market Participants in the Securities Market

Updated 11 October 2026 · Fact-checked

Intermediaries are SEBI-registered entities that connect investors with the securities market. Brokers execute trades. Authorised persons act for a broker and are registered with the exchange. Registrars and transfer agents (RTAs) maintain investor records and handle issue and transfer work for issuers. To answer questions, match each entity to its function.

Understand Other Intermediaries and Market Participants

The securities market needs many players besides the exchange. Investors cannot trade directly on an exchange. They use a stockbroker, who is a trading member of the exchange and is registered with SEBI. The broker executes orders and the clearing and settlement process follows.

Brokers can widen their reach through others. Earlier, sub-brokers were registered with SEBI and worked as agents of a broker. SEBI discontinued fresh registration of sub-brokers in 2018. Existing sub-brokers had to become trading members or move to the authorised person model. An authorised person is appointed by the broker and approved by the stock exchange. Unlike a sub-broker, the authorised person is not registered with SEBI as a sub-broker. The broker stays responsible for the authorised person's acts.

A registrar to an issue and share transfer agent (RTA) is a SEBI-registered intermediary. In a public issue, the registrar to the issue handles applications, finalises allotment with the issuer and merchant banker, and processes refunds and credit of shares. A share transfer agent maintains records of holders for an issuer, and handles transfers and related services. In mutual funds, RTAs maintain unit holder records and process purchases, redemptions and statements.

Other intermediaries support specific work. Merchant bankers manage issues. Bankers to an issue collect application money. Underwriters commit to take up unsubscribed shares. Debenture trustees protect debenture holders. Custodians hold securities for institutions. Depository participants are agents of depositories and open demat accounts. Credit rating agencies rate debt instruments. Portfolio managers, investment advisers and research analysts serve investors directly.

For the exam, think of each intermediary as one job. Read the question for the job being described, then pick the entity that does it. Questions also test who is registered with whom and who is liable for whom.

Key formulas to remember

Broker: Stockbroker = SEBI-registered trading member who executes trades for clients; Trades on the exchange only through a registered broker.
Authorised person: Authorised person = appointed by broker + approved by stock exchange; The broker is responsible for the authorised person's acts. Not a SEBI-registered sub-broker.
Sub-broker status: Sub-broker = agent of broker; fresh registration discontinued by SEBI in 2018; Existing ones had to convert to trading member or authorised person.
Registrar to an issue: Registrar to an issue = application processing + allotment finalisation + refunds + credit of securities; Works for the issuer in public issues, with the merchant banker.
Share transfer agent: STA = maintains holder records + processes transfers for the issuer; Mutual fund RTAs do the same for unit holders, including purchases and redemptions.
Matching rule: Function in question → intermediary; Manage issue: merchant banker. Collect money: banker to issue. Hold for institutions: custodian. Open demat: DP.

How to solve Other Intermediaries and Market Participants questions

Use the same method for every intermediary question. It keeps you away from look-alike options.

1Read the question stem and underline the job: execute, hold, record, collect, rate, trustee, advise.
2Decide whether the question is about function, registration, or responsibility.
3Name the intermediary that performs that job, before looking at the options.
4Check each option against your answer. Eliminate options that name a similar but different entity.
5For broker-linked questions, ask who registers and who is liable: the exchange approves, the broker is responsible.
6For words like 'only', 'always' and 'not', re-read and test the option literally.
7Pick the best match and move on.

Quickest way: Job-to-entity matching

When to use it: Use it for one-line questions such as 'Who does X?' when time is short.

Spot the verb in the question.
Match it: allot and refund = registrar; hold securities = custodian or DP; take unsold shares = underwriter; protect debenture holders = debenture trustee.
For broker agents, remember: sub-broker is old and SEBI-registered; authorised person is current and exchange-approved.
Choose the option that fits and skip the rest.

Common mistakes in Other Intermediaries and Market Participants

Treating an authorised person as a SEBI-registered sub-broker.
Both act for a broker and the terms are used loosely.
Fix: Remember that authorised persons are appointed by the broker and approved by the exchange, and the broker is responsible.
Thinking sub-brokers can still be freshly registered.
Older material still describes the sub-broker route.
Fix: Remember that SEBI discontinued fresh sub-broker registration in 2018.
Confusing a registrar to an issue with a merchant banker.
Both work on public issues.
Fix: The merchant banker manages the issue. The registrar handles applications, allotment records, refunds and credit.
Mixing up a custodian and a depository participant.
Both deal with holding securities.
Fix: Custodians serve institutional clients. DPs are agents of a depository and open demat accounts for investors.
Confusing underwriter with banker to an issue.
Both involve money in an issue.
Fix: The banker collects application money. The underwriter agrees to subscribe to unsold portion.

Worked examples

Example 1

Which of the following best describes an authorised person in the securities market?
A. A person registered with SEBI as a sub-broker
B. A person appointed by a stock broker and approved by the stock exchange
C. A person who allots shares in a public issue
D. A person who holds securities for institutional investors

Show the solution

Identify the topic: broker-linked agent.
Option A describes the old sub-broker, and authorised persons are not registered with SEBI as sub-brokers.
Option C describes the registrar to an issue.
Option D describes a custodian.
Option B matches the authorised person model.

Answer: B

Example 2

After a public issue closes, which intermediary processes applications, finalises the basis of allotment records with the issuer and handles refunds?
A. Underwriter
B. Debenture trustee
C. Registrar to the issue
D. Credit rating agency

Show the solution

The verbs are process applications, allotment and refunds.
Underwriters commit to take up unsubscribed shares, so A is wrong.
Debenture trustees protect debenture holders, so B is wrong.
Credit rating agencies rate instruments, so D is wrong.
The registrar to the issue does the application and allotment work.

Answer: C

Exam tips

Learn a one-line job for every intermediary. Most questions are matching in disguise.
Know the sub-broker versus authorised person difference, as it is a favourite trap.
Series VII has negative marking of 25% of the marks of the question, so eliminate options before guessing.
Watch for options that name a real intermediary doing the wrong job.
Remember that the broker remains responsible for its authorised persons.

Practice questions from Market Participants in the Securities Market

Other Intermediaries and Market Participants in other exams

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

Other Intermediaries and Market Participants: frequently asked questions

What is the role of a registrar and transfer agent in India?

A registrar to an issue handles applications, allotment records, refunds and credit of securities in a public issue. A share transfer agent maintains holder records and processes transfers for the issuer. Mutual fund RTAs keep unit holder records and process purchases and redemptions.

What is the difference between an authorised person and a sub-broker?

A sub-broker was an agent of a broker and registered with SEBI. SEBI stopped fresh sub-broker registrations in 2018. An authorised person is appointed by the broker and approved by the exchange, and the broker is responsible for its acts.

What are the types of SEBI registered intermediaries?

They include stockbrokers, merchant bankers, registrars and transfer agents, bankers to an issue, underwriters, debenture trustees, depository participants, custodians, credit rating agencies, portfolio managers, investment advisers and research analysts. Each performs a distinct function in the market.

How are intermediary questions asked in NISM Series VII?

They are usually multiple choice questions that ask who performs a function or who is responsible for whom. Wrong answers carry negative marking of 25% of the marks of the question, so match the job carefully.