Equity investment is important because it helps to beat inflation and gives returns that are on par or above the inflation rate. To invest in equities you need to buy them on the stock market. The stock market is the place where one can transact in shares. The transaction is basically buying and selling of shares of the publically listed companies.
The role of the stock market is to help you to facilitate the transaction. So if you want to buy a share, the stock market plays a role in finding a seller for you.
You can access this stock market through brokerage form which gives you access to an online platform. The stock market exchange is through which you can transact in the shares.
Why is there is a need to regulate the stock market?
There are individuals and corporations from various backgrounds who trade and invest in the stock market. The market participants could be domestic retail participants, NRI’s, the domestic institutions, AMC or the domestic asset management companies, and the foreign institutional investors.
The main aim of every category of investor is the same which is to make a profitable transaction in the stock market.
When it is money that is involved then there are human emotions. One is an easy prey to these emotions and this makes them get involved in unfair practices. Because of this reason the stock market needs someone to regulate it and have some common rules to make sure that the people comply with them and thus make the stock market a safe place for every market participant.
What is the role of a stock market regulator?
The stock market regulator works to promote the stock exchange development and protects the retail investor’s interest. They also regulate the market participants activities as well as the activities of the financial intermediaries.
The main role of a stock market regulator, this trading software, is to ensure that the:
- The business is being conducted fairly
- The sub-brokers and stockbrokers are adhering to the rules
- There is no use of any unfair practices by the market participants
- The corporates are not doing anything to gain any benefit
- The interest of the retail investor is protected
- The large investors do not manipulate the market
- There is the development of the system
The regulator has to regulate these points because in case of a malpractice it could affect the stock market completely. There is a set of rules and the entity is forced to follow those rules.