Market Participants

by Nikita Yadav

Market Participants refer to those people or companies who invest in the stock market. They are also termed as economic agents which specifically make decisions in a model of some aspect in the economy.

There are two types of market participants. First are retailers (general public), who trade or invest in stocks. The retail investors who invest a huge amount in the market are referred to as HNI (High Net Worth Individual Investors). The second type of market participants is institutional investors. They collect funds and then invest them. Mutual funds, hedge funds, corporations, banks, trusts, charities, all these fall under this category. They may be based in or outside India. They have a very large amount to invest. That’s why in the stock market they have a higher share, and they can cause significant market movements. If we talk about market participation in India, the retail investors have increased at a rate of 11% CAGR in the past 10 years. If we compare, in the financial year 2009, 1.7 million new investors joined the market. While in the financial year 2019, 2.8 million new investors joined the market.

Merchant Bankers, Foreign Portfolio Investors (FPIs), the issuers including companies and Broker and depository participants are also market participants.

Merchant Bankers play a very important role in IPOs, FPOs, Right issues management or any issues done by a company and acts as a mediator between the companies and investors. They are advisors to the entrepreneurs from the initiation of the project to the commencement of the production.

Foreign Portfolio Investors, as the name indicates these are foreign players which hold financial assets from other countries and invest it in Indian stock markets. FPI holdings can include mutual funds, exchange-traded funds, American and Global depository receipts and stocks. It’s a very common way for retail investors to participate in the foreign countries economy.

An Issuer is a legal entity. It can be any corporation, investment trust and domestic and foreign governments that are responsible for the commitments of the issues and for reporting financial conditions and other operational activities as required by the regulations of their jurisdictions.

Share Brokers is a financial mediator between the investor and the stock exchanges and depository participants is an agent which acts as a mediator between investor and depositories.

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