Equities: The Business Line Priced Off One Company

A friend of yours starts a juice cart outside school. A good one — fresh sugarcane, ₹20,000 to get going: the cart itself, the juicer, the first sack of sugarcane.

Your friend only has ₹2,000. So nine other people, including you, each chip in ₹2,000 too.

The cart isn't only your friend's anymore. It's one-tenth yours. One-tenth each of nine other people's.

If the cart clears ₹4,000 profit this month, you get a tenth of it: ₹400. If your friend sells the whole business next year for ₹1,00,000, you get a tenth of that too. You didn't squeeze a single sugarcane. You own a slice of the cart itself.

Grown-ups have a word for that slice: a share. And a company — a listed Indian bank, Apple, the shop down the road if it ever grew big enough — works exactly the same way. Just cut into millions of slices instead of ten, sold to strangers who've never met the founder, and re-priced every second the market's open.

That whole business — buying, selling and pricing slices of companies — is called Equities, and it's the other half of a bank's trading floor from the one covered in FICC: The Business Line Where Nothing Is Priced Off One Company.

Aditi's quarterly deck has two lines, not one. FICC revenue: up 9% — four desks, all pricing pieces of the macroeconomy. Right below it: Equities revenue: up 14% — a completely different kind of business, on the same deck. If FICC is the half of the trading floor where nothing is about one company, Equities is the half where everything is.

Equities is the business of buying, selling and financing ownership stakes in individual companies — the one part of a bank's markets business priced off company-specific news rather than macro variables.

Think of a company as a pizza

The juice cart already gave away the idea. Here's the same thing in the shape most people picture it.

Imagine a company is a pizza cut into 100 slices. The whole pizza is the company — its factories, its brand, its future profits. Each slice is one share.

Slice the same pizza into 1,000 pieces instead of 100, and each piece is worth a tenth as much — but it's still the exact same pizza. That's what a stock split does. Give away free extra slices to everyone who already holds one — that's a bonus issue, common on Indian markets. Nothing about the pizza changed either time. Only how finely it's cut.

An Indian retail investor buying shares of a listed company through a broker like Zerodha owns a slice of that pizza the same way a US mutual fund manager buying shares of an S&P 500 company does. The mechanism travels. The pizza just has a different name on the box.

Why it's priced off one company

Go back to that dividing line: FICC answers "what should money cost right now," reading interest rates, currencies and commodity supply. Equities answers a completely different question: "what is this specific company worth?"

A bond's price barely notices which company issued it, once creditworthiness is priced in — a rate move hits every similar bond at once. A share's price can jump 8% on one earnings call while the rest of the market doesn't move at all, because the news was about that one company, not the economy underneath it.

That's why equities trades mostly on public, listed exchanges — the National Stock Exchange and Bombay Stock Exchange in India, the New York Stock Exchange and Nasdaq globally — with visible order books, rather than a dealer quoting a private price the way most FICC business works. Company-specific information needs a public, continuous price that updates the instant new information arrives. Macro variables don't move nearly as fast.

Inside Equities: the four pieces

Piece	What it does	Indian example	Global example
Cash equities	Buying and selling actual shares	An Indian mutual fund building a ₹500 crore position in a listed company via the NSE	A US pension fund buying shares across the NYSE and Nasdaq
Equity derivatives	Options and futures on stocks or indices, for hedging or leverage	Nifty and Bank Nifty index options — traded in such volume that NSE is regularly cited as the world's busiest derivatives exchange by number of contracts	S&P 500 (SPX) index options traded on the Chicago Board Options Exchange
Equity capital markets (ECM)	Helping companies raise money by issuing new shares	An Indian company's IPO, priced through SEBI's book-building process and listed on the NSE/BSE	A US tech company's IPO, filed with the SEC and listed on Nasdaq
Program & electronic trading	Executing large orders in small pieces to avoid moving the price, explained in the Execution Algorithms series	An Indian mutual fund's ₹500 crore order, worked by an algorithm over the trading day	A European asset manager doing the same across several markets at once

Prime brokerage — financing and stock lending for hedge funds, covered desk-by-desk in A Bank Trading Floor Is a Marketplace for Risk — usually sits organizationally inside Equities at most banks, not off on its own. Most of the hedge funds that need to borrow shares to short-sell are running equity strategies in the first place.

The fault line, restated

	Equities	FICC
Priced off	One company's fundamentals	Macro variables — rates, FX, commodities
Trades mostly	On listed exchanges, public order book	Over the counter, dealer to dealer
Bank's role	Often agency — executes on the client's behalf	Usually principal — the bank takes the other side
Typical client	Retail investors and institutions	Governments, central banks, corporate treasuries

That last row is the real structural break. FICC's clients are almost entirely institutional. Equities is the one business line where a person opening a ₹0 brokerage account and a sovereign wealth fund are trading in the exact same market, on the exact same exchange, at the exact same price.

The Indian angle: one regulator, and a lot of retail

Think of a single referee for one whole game

FICC, remember, was split in India — the Reserve Bank of India covers government debt and currencies, SEBI covers corporate bonds and commodities. Equities doesn't have that problem. One regulator, SEBI, oversees the whole business: the exchanges, the brokers, the IPOs, the derivatives. One referee for the entire game, not two working different halves of the field.

What India does have, that most global equity markets don't have at the same scale, is retail. Tens of millions of Indians now hold demat accounts and trade directly through discount brokers, and a meaningful share of NSE's derivatives volume is individuals trading index options, not institutions. In most developed markets, retail investors mostly show up indirectly — through a mutual fund or pension plan — rather than placing the order themselves. India's equity market is unusually, directly, retail.

Who trades, and how the bank gets paid

Equities' client list runs from an individual with a trading app to the largest pension fund in the world — a different range entirely from FICC's roster.

Banks earn money on that business through:

• Commissions, a flat or percentage fee for executing a trade — the model discount brokers like Zerodha built an entire business around undercutting.
• The bid-ask spread, market-making the tiny gap between what a bank will buy at and sell at, at scale, across thousands of trades a day.
• Underwriting fees, for taking a company public and finding buyers for its shares.
• Financing income, from prime brokerage lending money or stock to hedge funds.

An Indian discount broker's flat ₹20-a-trade model and a full-service US bank's blended commission-plus-advisory fee are answering the same underlying question — how does the desk get paid for standing between a buyer and a seller — with very different price tags attached.

Why this matters for a Business Analyst

Aditi's actual headache with Equities isn't the trade. It's everything a company can do to the pizza after you already own a slice.

A bond pays a fixed coupon until maturity, full stop. A share can trigger a dividend, a bonus issue, a stock split, a rights issue or a buyback — any one of which changes the position a client holds without a trade ever happening. Miss a corporate action in the system, and a client's holding is simply wrong from that date forward, with no trade ticket anywhere to explain why.

Settlement timing tells the same story from a different angle. Indian equity markets settle on a T+1 cycle — trade today, shares and cash change hands the next business day. US equity markets only caught up to T+1 in 2024, having run T+2 for years before that. A cross-border position — an Indian investor holding US shares, or the reverse — can sit with two different settlement clocks ticking on the same portfolio at once, which is exactly the kind of detail that looks trivial until a reconciliation report doesn't match.

None of this shows up in "Equities revenue: up 14%." It shows up in the system that has to know, for every single share, what company action last touched it and which clock its settlement is running on.

Lighthouse Insight

Back to Aditi's two lines.

FICC and Equities aren't competing halves of the same business — they're answering two different questions that happen to both get called "trading." One prices what money itself costs. The other prices what one company, specifically, is worth.

Every acronym and every desk name on a trading floor eventually traces back to one of those two questions. Once you know which question a desk is answering, the rest of the org chart mostly explains itself.