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Through brokers basically. It is mandatory to have a broker while trading stocks
Brokers trade on behalf of their clients and deposit a caution amount to the Exchange. Exchange can use this amount to complete any outstanding trade.
The brokers will have a caution deposit from the traders. The brokers should always ensure whether the traders have deposit before buying shares. In case of any problem the exchange will get the caution deposit from the brokers to resolve the problem . Even after this the traders have problem they can contact SEBI directly to resolve their problem
Brokers are the bridge between exchange and traders. Exchange takes some deposits from the broker for providing broking license. Any dispute in the trade executed, first exchange settle the dispute with broker’s deposit to the counter party and the broker in turn should recover it from his trader.
Traders are connected to stock exchanges through brokers. Brokers will ask for caution deposit from their traders before they start trading, so that if counter party fails, it will be adjusted from their caution deposit.
The stock Exchanges doesn’t deal with Traders directly. The Exchange Empowers the Brokers to buy and sell shares. So, the Risk associated with any counter Party is adjusted against the Broker of such Counter Party.
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