Ranjan K Baruah
We have published about share market and its present scenario. Many readers have emailed and messaged to write more about it as it is yet to be explored in our area. We have published some of the career options in our last edition and this edition we are publishing details about some of the terms. Most of this are available online and I would request our readers to do online research. We must be aware of various terms and processes if we want to be in this sector directly or indirectly. Let us understand some of the term associated with this sector.
Stock Broker: A stockbroker is a regulated professional individual, usually associated with a brokerage firm or broker-dealer, who buys and sells stocks and other securities for both retail and institutional clients through a stock exchange or over the counter in return for a fee or commission. Stockbrokers are known by numerous professional designations, depending on the license they hold, the type of securities they sell, or the services they provide.
Most brokerage firms in India look for at least a bachelor’s degree in a related filed – accounting, finance, business or economics. An applicant with a master’s of business administration can receive higher-level positions and compensation than an applicant with a bachelor’s degree. On-the-job training is provided by the hiring firm. Having natural decision-making skills, math skills and taking initiative are important qualities in a successful candidate.
Merchant Banking: The word merchant bank does not have a fixed definition as this term is used differently in different countries. In United States these are called as “Investment Banks” and in UK they are called as “accepting and issuing houses”. The notification of Ministry Of Finance in India defines Merchant Banker as “any person who is engaged in the business of issue management either by making arrangements regarding selling, buying, or subscribing to the securities as manager, consultant, adviser in relation to such an issue management”. Some of the world famous merchant banks are Goldman Sachs, Credit Suisse & Morgan Stanley etc. In India there are many banks which are into the field of merchant banking some of the banks are ICICI, State Bank Of India, Punjab National Bank etc.
Mutual Fund Distributors: In simple, they advice people on various mutual funds and where one may invest. Usually, when people select a scheme themselves, they do so based on its performance. They don’t judge that past performances may not be sustained. Evaluation of schemes is a function of various attributes of the schemes, e.g. scheme objective, investment universe, the risks that the fund is taking, etc. This requires the investor to put in time and effort. The investor also needs to have the requisite expertise to be able to understand the features and nuances as well as the ability to analyse and compare from among many options. A distributor of mutual funds or an investment advisor would be qualified and trained for such a job.
Mutual Fund Distributor verses Investment Adviser: we might be wondering about this two terms, both are supposed to help with individual’s investment decisions, which may include selection of Mutual Fund schemes. Mutual Fund distributor is more likely to be focused on Mutual Fund products, whereas an investment adviser may have a broader basket of products and services. We shall publish more about this topic in our next edition.
Ranjan K Baruah