Skip to content

NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Operations

A BO submits a delivery instruction slip (DIS) to his DP for transferring securities. Which of the following is a correct DP practice before executing the instruction?

The DP must verify that the slip is a genuine one issued for that account, that all required signatures match the specimen records, and that adequate free balance is available before executing. Skipping these checks exposes the BO and DP to unauthorised transfers.

  1. AExecute it if the signature is similar in appearance to that of any one joint holder, ignoring the rest
  2. BVerify that the DIS is a genuine slip issued to that account, that signatures match records, and that sufficient free balance existsCorrect
  3. CExecute immediately and verify the balance later during end-of-day reconciliation
  4. DAccept a photocopy of the DIS if the BO is a long-standing client

Explanation

The DP must check that the DIS was issued by it to that BO, that all required signatures match specimen records, and that free balance is available. Executing before checks, ignoring joint holders, or accepting photocopies would break prescribed safeguards and risk unauthorised transfers.

Did you get it right without looking?

One question tells you little. A timed set on Functions of Depository Participant - Account Operations shows your real accuracy, how long you take and where you lose marks.

Practise Functions of Depository Participant - Account OperationsFree diagnostic mock

More Functions of Depository Participant - Account Operations questions