Specific Investor Scenario
As a retail investor in India, you might wonder where your money actually goes when you “buy a share” on an app like Zerodha or Groww. Understanding the plumbing of the Indian financial system is the first step toward investor protection.
Quick Answer
The Indian stock market is a centralized, electronic auction system where ownership in companies (shares) is bought and sold.
Official Fact: According to the SEBI (Stock Brokers) Regulations, 1992, only registered intermediaries can provide access to these exchanges, ensuring all trades are recorded and settled transparently.
Regulatory Context
The primary regulator of the securities market in India is the Securities and Exchange Board of India (SEBI). Established under the SEBI Act, 1992, its mandate is to:
- Protect the interests of investors in securities.
- Promote the development of the securities market.
- Regulate the business in stock exchanges.
All stock exchanges in India, including the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and the Metropolitan Stock Exchange (MSE), operate under SEBI’s direct oversight.
Practical Implication
For you, the investor, this means:
- Safety of Capital: Your shares are held in electronic form by NSDL or CDSL (Depositories), not by the broker.
- Transparency: Every trade generates a “Contract Note” with a unique trade ID verified by the exchange.
- Grievance Redressal: If something goes wrong, you can use the SEBI SCORES portal for resolution.
How the Market is Structured
The Indian market operates on a T+1 Settlement Cycle (as of early 2023). This means if you sell shares today, the money and ownership transfer are completed by the next business day.
| Component | Role | Entity Example |
|---|---|---|
| Regulator | Rulemaker | SEBI |
| Exchange | Marketplace | NSE, BSE, MSE |
| Depositories | Digital Vault | NSDL, CDSL |
| Brokers | Access Point | Zerodha, Upstox, Angel One |
Action Items for Investors
- Verify Registration: Always check if your broker is SEBI-registered before depositing funds.
- Check Market Status: Before planning a trade, check if the market is open today or if there is a market holiday.
- Download Apps: Use official depository apps (like m-Bazaar) to track your actual holdings.
Verification Link
Direct link to SEBI’s official investor education portal: investor.sebi.gov.in
Verify current status at nseindia.com or bseindia.com before trading.