14.6 ndian onom
brokers—in India also known as ‘Taravaniwallah’ through a government resolution in an effort
(in the BSE).7 A jobber is located at a particular to give the Indian stock market an organised
trading post on the floor of the stock exchange and structure) with its head office in Mumbai. Its
does buying and selling for small price differences, initial paid-up capital was Rs. 50 crore provided
called the spread. He has no contact with the by the promoters—the IDBI, the IFCI and the
investing public. ICICI.
In the London Stock Exchange he is called The Board of SEBI comprises nine members
a market-maker while in the New York Stock excluding the chairman—one member each from
Exchange he is called a specialist. The Bombay the Ministries of Finance and Law, one member
Stock Exchange has made it mandatory for every from the RBI and two other members appointed
company with a share capital of over Rs. 3 crore by the central government. It has four full-time
to appoint jobbers or market-makers if it seeks members (including the chairman).
enlistment. Such an arrangement enables investors Main functions/powers of the Board as per
to buy and sell shares on the stock exchange and the SEBI Act, 1992 are:
thus liquidity increases.
(i) Registering and stock exchanges,
Market-Maker merchant banks, mutual funds,
underwriters, registrars to the issues,
Functions as an intermediary in the market ready
brokers, sub-brokers, transfer agents and
to buy and sell securities. He simultaneously
quotes two-way rates—like a jobber basically with
the only difference that he quotes two-way rates, (ii) Levying various fees and other charges (as
for buying and selling at the same time.8 1 per cent of the issue amount of every
company issuing shares are kept by it as
On the floor of India’s OTCEI, only market-
a caution money in the concerned stock
makers are allowed to play. In the money market
exchange where the company is enlisted).
of India, the Discount and Finance House of
India (DFHI) is the chief market-maker.9 (iii) Promoting investor education.
Since he quotes the selling price while buying (iv) Inspection and audit of stock exchanges
a particular share, he makes market for that share, and various intermediaries.
hence such a name. (v) Performing other concerned functions as
The NASDAQ of the USA is a market- may be prescribed from time to time.
maker’s stock exchange where they are connected
by the web-enabled trading terminals. commoDity traDing
Commodity trading happens similar to ‘stocks’
SeBi (shares, securities, debentures, bonds) trading in
The regulator of Indian stock market, set up under the stock market. However, commodities are actual
the Security and Exchange Board of India Act, 1992 physical goods such as corn, silver, gold, crude oil,
(as a non-statutory body set on 12 April, 1988 etc. Futures are contracts for commodities that
are traded at a futures exchange like the Chicago
7. Surendra Sundararajan, Book of Financial Terms (New
Delhi: Tata McGraw Hill, 2004), p. 117.
Board of Trade (CBOT). Futures contracts have
8. Tim Hindle, op. cit., p. 129.
expanded beyond just commodities, now there are
9. Surender Sundararajan, Book of Financial Terms, futures contracts on financial markets like foreign
p. 134. currencies, interest rates, etc.