NISM Series XV : Research Analyst Certification Exam Notes
Page 16 Of 62
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A stock broker may appoint one or more authorised person(s) after obtaining specific prior approval from the stock exchange concerned for each such person. The approval as well as the appointment of authorized person(s) is for a specific segment of the exchange.
Custodians- is an entity that is charged with the responsibility of holding funds and securities of its large clients (banks, insurance companies, FPI).
It helps in: - Maintaining a client's securities and funds account - Collecting the benefits or rights accruing to the client in respect of securities held - Keeping the client informed of the actions taken or to be taken on their portfolios.
Underwriters are intermediaries in the primary market who undertake to subscribe any portion of a public offer of securities which may not be bought by investors. If the securities being offered to public do not elicit the desired demand from investors, they (underwriters) will step in and buy the securities.
When the underwriters make their commitments at the initial stages of the IPO, it is called hard underwriting. Soft underwriting is the commitment given once the pricing is determined. The shares that devolve are usually placed with other financial institutions, thereby limiting the risk to the underwriter. Soft underwriting also comes with a clause that provides the option to exit from the commitment in the event of certain events occurring. The risk in hard underwriting is much higher than in soft underwriting.
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