NISM Certifications · NISM-Series-VI: Depository Operations

Investor Services (NISM VI): formula sheet

Full chapter guide

Key formulas

Demat flow: Investor → DRF + certificates → DP → DP generates DRN and enters the request in the Depository system, and sends DRF + defaced certificates to Issuer/RTA → RTA accepts and confirms to Depository → Depository credits demat account; Learn the order. Questions often ask who acts next. The RTA's confirmation comes before the credit.
One DRF per ISIN: 1 DRF = 1 ISIN (one security); Certificates of different securities need separate DRFs.
Certificate marking: DP verifies certificates → DP marks them "Surrendered for Dematerialisation" → DP generates DRN and enters the request in the depository system → DP sends the certificates with the DRF to the issuer/RTA; The investor does not mark the certificates. The DP defaces them after verifying them and checking that the holders' names match the account.
Ownership after demat: Depository = registered owner; investor = beneficial owner; Voting and benefits go to the beneficial owner.
Name match rule: Names and order on certificates = names and order in demat account; The DP checks this before forwarding. A mismatch is caught at the DP, or rejected by the RTA if it is missed. Fix it by opening or using an account with the same names in the same order.
Direction of the process: Demat: physical → electronic. Remat: electronic → physical; Exam questions often test whether you know which direction each process runs.
Request channel: Investor → DP (RRF) → Depository → Issuer/RTA → Investor (certificates); The investor submits the RRF only to the DP, never straight to the issuer.
Blocking of balance: Securities in the remat request are blocked until confirmed or rejected; Blocked securities cannot be traded or transferred during processing.
Rejection outcome: Request rejected → blocked balance released to the account; The investor keeps the electronic holding.
Completion outcome: Request confirmed → electronic balance deleted; Balance is removed only after the issuer confirms and certificates are issued.
Transfer vs transmission: Transfer = voluntary, holder alive. Transmission = by operation of law, on the death of a holder.; Most direct questions test this single difference. Legal incapacity is handled separately and is not transmission.
Off-market transfer instrument: Off-market transfer → DIS (or electronic instruction) signed as per the account's mode of operation, normally by all joint holders unless a different authorised mode applies; The DP acts only on a valid, properly signed instruction.
On-market transfer: On-market transfer → exchange trade settled through clearing corporation; The seller's securities move from the seller's BO account to the selling clearing member's pool account, and then to the clearing corporation at pay-in. At pay-out they move to the buying clearing member's pool account, and then to the buyer's BO account.
Transmission to joint holders: Death of one joint holder → surviving holder(s) continue as the BO(s); The name of the deceased is removed after the DP verifies the death proof.
Nomination effect: On the death of the sole holder or all joint holders, the nominee is entitled to the securities and can claim them through the DP; The nominee's claim does not need a succession certificate.
Pledge parties: Pledgor = borrower who gives securities; Pledgee = lender who accepts them; Both must hold demat accounts. The pledgor stays the beneficial owner while the pledge is on.
Pledge life cycle: Create (pledgor initiates) → Confirm (pledgee) → Invoke (pledgee initiates, on default) or Close (pledgor initiates, pledgee confirms, on repayment); Creation is initiated by the pledgor through the DP and confirmed by the pledgee. Invocation moves securities to the pledgee. Closure releases them.
Pledge vs hypothecation: Pledge = pledge marking, pledgee can invoke and take securities on default; Hypothecation = hypothecation marking, hypothecatee can invoke and have securities transferred on default; Possession is a general law distinction. In a demat account the securities stay in the holder's account in both cases, and the title is not transferred at the time of creating the charge.
Debit freeze: Debit freeze = no debits allowed, credits allowed; Holder cannot transfer securities out. Credits such as corporate benefits can still come in.
Total freeze: Total freeze = no debits and no credits; Can apply to a whole account or to a single ISIN.
Escalation order: BO → DP → Depository → SEBI SCORES / arbitration; The DP is the first point of contact. SCORES is SEBI's online system. Arbitration is the route for disputes that remain unresolved.
SCORES: SCORES = SEBI Complaints Redress System (web-based, centralised); The entity complained against uploads an action taken report. The complainant can track the status online.
Transaction statement: Transaction statement: at least monthly if the account had transactions in the period; The BO can ask for it more often. Check the exact interval in the current workbook before the exam.
Holding statement: Holding statement: periodic statement for accounts with balances but no transactions; The interval is longer than for transaction statements. Confirm the exact period (half-yearly, as the workbook states it) in the latest workbook.
Arbitration: Arbitration = binding dispute settlement under depository bye-laws; It is used between the BO and DP when a complaint cannot be resolved. It is not the same as filing a complaint.

Quick revision

Demat converts physical securities into electronic form held in a demat account with a DP.
Remat converts electronic holdings back into physical certificates. The investor makes a request to the DP, the DP forwards it to the depository and then to the issuer or RTA, which prints and sends the certificates, and the investor's account is debited. It is not an exact mirror image of demat.
Transfer is a change of ownership by a transaction. Transmission is a change by operation of law, such as death.
Nomination lets the holder name a person to receive the holdings on death. On the holder's death the nominee is entitled to have the securities transmitted to them. Learn the nominee's rights in relation to the deceased's legal heirs exactly as the workbook states them.
In a pledge the securities are marked as pledged (blocked) in the pledgor's account, and the pledgee gets a lien and the right to invoke the pledge on default. The pledge must be created and confirmed through the depository system.
Hypothecation is a charge on securities without handing over possession. The securities stay with the borrower, who keeps them under a charge in the lender's favour. Learn how it differs from a pledge.
Freezing restricts debits or all transactions in an account or on specific securities. Know what each type blocks.
Corporate actions such as dividend, bonus, split and rights are decided by the issuer and based on a record date.
Only investors holding on the record date get the benefit, so the holding must be in the account by then.
Grievances go first to the DP. If unresolved, they escalate to the depository and then to SEBI-related channels.
When unsure, pick the option with the exact party and step named in the workbook. Avoid vague options.

Common mistakes

Saying the DP cancels the certificates and updates the company's register. Fix: The issuer or RTA verifies, cancels the certificates and updates the register. The DP verifies the documents, enters the request (DRN) in the depository system and sends the DRF and defaced certificates to the RTA.
Thinking one DRF can cover several different securities. Fix: Use one DRF per ISIN. Different securities need separate DRFs.
Confusing remat with demat direction. Fix: Remat means the securities go back to paper. Think re-materialise: physical form returns.
Saying the investor submits the RRF to the issuer or depository. Fix: The RRF goes only to the DP. The DP then communicates with the depository, which informs the issuer or RTA.
Calling a movement on death a transfer. Fix: Tie transmission to the death of a holder and operation of law. Transfer is always the holder's own act.
Thinking a nominee must prove succession through a court order or succession certificate. Fix: On the death of the sole holder or all joint holders, the nominee is entitled to the securities and claims them through the DP without a succession certificate.
Saying the pledgee becomes the owner when the pledge is created. Fix: Remember that creation only blocks and marks the securities. Ownership moves only on invocation, and even then the pledgee uses them to recover dues.
Treating pledge and hypothecation as the same. Fix: In a demat account, check the marking (pledge or hypothecation) and who gets the right to invoke on default. Possession is the general law contrast, but the securities stay in the holder's account in both cases.
Saying the investor must approach the depository first. Fix: The DP is the BO's service provider. Start there. The depository is the next level.
Treating SCORES as a court or a tribunal. Fix: SCORES is an online complaint and tracking system. It forwards the complaint to the entity, which reports action taken.

Exam tips

Questions test roles. Know that the DP verifies and forwards, and the RTA verifies, cancels and confirms.
Watch for 'one DRF per ISIN' and the 'Surrendered for Dematerialisation' marking as direct-recall options.
Rejection questions usually ask for the next step. The answer is return through the DP and a fresh request.
Do not confuse registered owner with beneficial owner. Expect at least one statement-style question on it.
NISM-Series-VI has negative marking of 25% of the marks assigned to a question. Guess only after you have eliminated options with the flow check. Do not guess blindly.
Read the direction of the conversion before you look at the options.
Remember the chain: investor, DP, depository, issuer/RTA. Questions often ask which party comes next.
Watch for options saying securities stay freely tradable during processing. They are wrong.