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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Clearing Process

A broker has paid pay-in funds and securities for a settlement. When the clearing corporation completes the pay-out, securities are credited to the buyer's broker's designated pool account. What is the broker's next operational step for a client's purchase?

The broker should transfer the shares from its pool account to the client's demat account within the prescribed time after pay-out. Client securities cannot be kept as the broker's own holding, and the settlement is complete only once delivery reaches the client.

  1. ARetain the shares in the pool account indefinitely as the broker's own holding
  2. BTransfer the shares from the pool account to the client's demat account, within the stipulated time after pay-outCorrect
  3. CReturn the shares to the clearing corporation for safekeeping
  4. DTransfer the shares to the seller's demat account

Explanation

After pay-out, securities reach the broker's pool account and must be transferred to the client's demat account within the prescribed time. Brokers cannot retain client shares as their own, and the clearing corporation does not hold them back once pay-out is done.

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