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CS Executive · Capital Market and Securities Laws · Basics of Capital Market

Meera wants to buy shares of a listed company through the stock exchange but is not a member of the exchange. She approaches a firm that is registered with SEBI, is a member of the exchange, and executes trades on behalf of clients for a commission. Which intermediary is this firm?

The firm is a stock broker. A stock broker is a SEBI-registered member of the exchange who executes purchase and sale orders for clients and earns brokerage. Other intermediaries such as registrars, debenture trustees and rating agencies do not trade on behalf of investors.

  1. AStock brokerCorrect
  2. BRegistrar to an issue
  3. CDebenture trustee
  4. DCredit rating agency

Explanation

A stock broker is a member of the exchange who buys and sells securities for clients and earns brokerage. A registrar to an issue handles application and allotment work in public issues, not trading. A debenture trustee protects debenture holders, and a credit rating agency only assesses credit risk.

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