Market participants
In this chapter: Brokers, sub-brokers, FPIs, AIFs, mutual funds · Roles, registration, and reporting
Stock brokers are SEBI-registered intermediaries between investors and exchanges. Sub-brokers (now Authorised Persons since 2018) operate under a broker. FPIs (Foreign Portfolio Investors) are non-resident investors, regulated under separate FPI Regulations. AIFs (Alternative Investment Funds) are pooled vehicles for HNW investors. Mutual funds, NPS pension funds, ULIP equity funds, and insurance equity holders are other major institutional participants.
Each participant has different reporting and compliance obligations. Brokers: daily client-securities reconciliation, weekly position reports, monthly settlement reports. FPIs: SEBI registration via designated DDP (Designated Depository Participant), specific allocations to equity/debt/derivatives. AIFs: classified into Cat I (venture/SME), Cat II (PE, debt), Cat III (hedge funds with leverage). Mutual funds report daily NAV, monthly portfolio disclosures, half-yearly factsheets. Operations staff handle these reporting workflows and the corresponding documentation.
Subtle angle: client-securities segregation. Broker custody of client securities must be in separate Beneficial Owner accounts at the depository — never commingled with broker's own securities. The 2019 Karvy episode (where brokerage misused pledged client securities) led to SEBI tightening this — now mandatory daily SMS alerts to clients on every securities movement. Operations staff who receive client security movement requests must verify against client demat statements directly with the depository, not via broker records alone.