NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market
Rahul sells shares through his broker on a recognised stock exchange. In the structure of the Indian securities market, what is the main function of the stock exchange in this trade?
The stock exchange provides a transparent, regulated trading platform where buy and sell orders are matched. It does not hold securities, which is the depository's job, nor guarantee returns, nor issue shares, which is done by the issuer company in the primary market.
- AProviding a transparent platform for matching buy and sell ordersCorrect
- BGuaranteeing the returns on the shares to the seller
- CHolding the shares in dematerialised form for the investor
- DIssuing the shares to the investor on behalf of the company
Explanation
Exchanges provide an organised, transparent trading platform where orders are matched. Holding securities is the depository's role, returns are never guaranteed, and issuing shares is the company's role in the primary market.
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