Intermediaries play an important role in the primary market by facilitating the process of issuing securities. They help companies raise capital by connecting them with investors, ensuring compliance with regulations, and providing other related services. Here are some of the intermediaries involved in an issue in the primary market:
- Merchant Bankers: Merchant bankers are financial intermediaries that help companies raise capital through the primary market. They provide a range of services, including underwriting, marketing, pricing, and allotment of securities. Merchant bankers also help companies comply with regulatory requirements and manage the issue process from start to finish.
- Underwriters: Underwriters are financial intermediaries that help companies manage the risk of issuing securities. They commit to buying any unsold securities at the offer price, thereby ensuring that the company receives the amount of capital it needs. Underwriters may work alone or as part of a syndicate of underwriters.
- Registrars and Transfer Agents (RTAs): RTAs are intermediaries that help companies manage their securities issuance and maintenance. They maintain the records of investors and handle the transfer of securities between investors. They also provide a range of other services, such as managing dividend payments, managing share buybacks, and managing shareholding patterns.
- Brokers and Dealers: Brokers and dealers are intermediaries that facilitate the buying and selling of securities in the primary market. They help investors place orders for securities and execute those orders on their behalf. They also provide market information and analysis to help investors make informed investment decisions.
- Depositories: Depositories are intermediaries that provide a centralized system for holding and transferring securities in a dematerialized form. They enable investors to hold securities in electronic form, which eliminates the need for physical certificates. Depositories also provide a range of other services, such as facilitating corporate actions and providing voting rights to investors.
In conclusion, intermediaries play a critical role in the primary market by facilitating the issuance of securities. They provide a range of services, including underwriting, marketing, pricing, and allotment of securities. They also help companies comply with regulatory requirements and manage the issue process from start to finish. By connecting companies with investors, intermediaries help companies raise capital for growth and expansion.