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

A BO wishes to transfer securities held in her demat account to another BO account of her friend, outside the stock exchange settlement system, without any sale consideration through the exchange. Which type of transaction is this in depository terminology?

This is an off-market transfer. A transfer of securities directly between two beneficial owner accounts, carried out by a delivery instruction and not linked to settlement of an exchange trade through the clearing corporation, is called an off-market transaction in depository operations.

  1. AOff-market transferCorrect
  2. BOn-market transfer
  3. CEarly pay-in
  4. DAuction settlement

Explanation

A transfer made directly between two BO accounts without going through a stock exchange trade settlement is an off-market transaction. On-market transfers relate to exchange trades settled through the clearing corporation. Early pay-in and auction are exchange settlement concepts.

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