Merchant banking plays a crucial role in coordinating the operations of intermediaries in the securities market. It involves a range of activities aimed at facilitating the issuance and trading of securities. The correct answer is option 'C' - merchant banks coordinate activities of various market intermediaries in the issuance of securities. Let's explore this answer in detail:

Coordination of Activities:
Merchant banks act as intermediaries between issuers and investors in the securities market. They play a key role in coordinating the activities of various market intermediaries involved in the issuance of securities. This coordination is essential to ensure smooth and efficient operations in the market.

Key Functions of Merchant Banks:
Merchant banks perform several functions to coordinate the operations of intermediaries in the securities market. Some of these functions include:

1. Underwriting: Merchant banks often underwrite the securities issued by companies. They assess the financial viability of the issuer and guarantee the sale of securities to investors. This helps in coordinating the process of issuing securities and ensures that the issuer is able to raise the required funds.

2. Syndication: Merchant banks also coordinate syndication activities in the securities market. They bring together a group of underwriters to collectively underwrite and distribute a large issue of securities. This helps in spreading the risk and increasing the capacity to underwrite large offerings.

3. Market Making: Merchant banks may also engage in market making activities. They provide liquidity to the market by buying and selling securities on their own account. This helps in coordinating the trading activities and ensuring that there is a continuous market for the securities.

4. Advisory Services: Merchant banks provide advisory services to issuers and investors. They assist in structuring securities offerings, preparing prospectuses, and providing guidance on regulatory compliance. These services help in coordinating the activities of various intermediaries involved in the issuance process.

Benefits of Coordination:
Effective coordination of intermediaries in the securities market has several benefits. It ensures that the issuance process is efficient, transparent, and compliant with regulatory requirements. It also helps in reducing information asymmetry and improving investor confidence. Furthermore, coordination facilitates the smooth functioning of the market, enhances liquidity, and promotes fair trading practices.

In conclusion, merchant banking plays a crucial role in coordinating the operations of intermediaries in the securities market. By coordinating activities such as underwriting, syndication, market making, and advisory services, they ensure the efficient issuance and trading of securities. This coordination is essential for a well-functioning and transparent securities market.