Behind every trade is a small chain of institutions that move money and shares safely. Beginners rarely see them, but they are why buying a share does not require trusting the stranger on the other side.
- 1BrokerYour regulated gateway to the exchange. You place orders through the broker.
- 2ExchangeMatches your order with an opposing order and records the trade.
- 3Clearing corporationConfirms the trade, manages risk, and guarantees settlement between the two sides.
- 4DepositoriesNSDL and CDSL hold shares electronically and move them between accounts.
- 5Demat accountYour own account where your shares are recorded in electronic form.
A depository is an institution that holds securities electronically, much like a bank holds money. India has two main depositories: NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited). Your shares are not a paper certificate; a record at a depository shows that you own them.
| Institution | What it does |
|---|---|
| Broker | Lets you place trades on an exchange |
| Exchange | Matches orders and publishes prices |
| Clearing corporation | Confirms trades and guarantees settlement |
| NSDL / CDSL | Hold securities electronically as depositories |
Fictional example: you buy 100 shares of GreenLeaf Foods Ltd. Your money leaves your bank account, the clearing corporation confirms the trade, and 100 shares appear in your demat account — a single connected process.
Who does what in the Indian market
A simple map of the institutions that make trading possible.
SEBI — the regulator
The Securities and Exchange Board of India oversees the whole market: exchanges, brokers, intermediaries and listed companies. It exists chiefly to protect investors and keep markets fair.