Let’s go to Basics of Stock Trading

How stock trading take place?
Stock Trading:- Trading of shares in a stock exchange takes place through Registered Stockbrokers, Transfer Agent etc
Broker:- Buyer gets in touch with a Broker, and gives him all the details of shares he wants to buy. Then the broker strikes a requisite deal and receives share certificate, and transfer form. After deducting, documents to the buyers.
As for seller, he also gets in touch with a broker and gives him details along with share certificates and transfer forms. Once the deal is struck, broker receives the payment and deducts his commission
Exchange:- Each stock exchange has certain listed and permitted securities that are traded on its floor
Securities Exchange Board of India (SEBI) was set up with the main purpose of keeping a check on malpractices and protect the interest of investors.
Government:- Government does not have active role in stock marketing, the changes in Govt policies may have direct or indirect impact in the stock market.
How stock exchanges ensure the traders counter party risk?
Retail Buyer agrees to lends funds to farmer up to a certain amount, there is an expectation that Retail Buyer will provide the cash, and farmer will pay those rice back. There is still the counterparty risk assumed by both parties. Farmer might default on the loan and not pay Retail buyer back, or Retail buyer might stop providing the agreed-upon funds.
Varying degrees of counterparty risk exist in all financial transactions. If one party has a higher risk of default, then a premium is usually attached for the other party. In retail and commercial financial transactions, credit reports are often used to determine the counterparty credit risk for lenders to make auto loans, home loans and business loans to customers. If the borrower has low credit, the creditor charges a higher interest rate premium due