Role of Intermediaries in a Securities Market

Abstract

Intermediaries occupy an indispensable and pivotal space in today's capital market. While some trade dealings may involve only a single intermediary entity, more complex transactions comprise networks and chains of intermediaries at different levels. These market dynamics are further complicated by proprietary dealings by such intermediaries, where the thin line of distinction between investors and intermediaries as separate market players gets diluted. In the face of such market complexities, market intermediaries often tend to put themselves in conflict of interests situations. Given the sensitive market scenario, it is imperative to keep a vigil on the growth of intermediaries, especially the new categories of intermediaries who may or may not be covered by the existing regulatory framework, particularly in the context of the new, innovative, and hybrid products that are frequently launched. Thus, it is essential to revisit the significance of fair play by intermediaries in the context of their multifaceted operations, the issues related to conflict of interests, and contemporary challenges from a practical standpoint.