NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Settlement Process
A broker's client sells 500 shares at Rs 200 each on Tuesday under T+1. Which statement best describes the client's obligation for the securities?
The client must ensure the shares reach the clearing corporation by the pay-in deadline on the settlement day, through the broker's pool account or early pay-in. Delivery is not delayed for days and does not occur directly between client and buyer.
- AShares must be available for pay-in by the pay-in deadline on settlement day, delivered to the clearing corporation via the broker's pool account or through early pay-inCorrect
- BShares need only be delivered within five days of settlement
- CShares may be delivered only after funds are received from the buyer
- DShares are delivered directly from client to buyer without a clearing corporation
Explanation
The seller's securities must reach the clearing corporation by the pay-in time on the settlement day, via the broker's pool account or early pay-in. Delivery is not postponed until payment, and the clearing corporation acts as counterparty, so direct delivery is not used.
Did you get it right without looking?
One question tells you little. A timed set on Settlement Process shows your real accuracy, how long you take and where you lose marks.
More Settlement Process questions
- Which entity acts as the legal counterparty to every trade through novation after trades are accepted for clearing on an Indian stock exchan…
- In the Indian equity cash market, trades are settled on a T+1 rolling settlement cycle. A trade executed on Monday, with no intervening holi…
- On a settlement day, Member A has to receive 1,000 shares of a company at ₹200 per share from the clearing corporation, and has to deliver 4…
- In the funds settlement process of a stock exchange clearing corporation, which entity actually moves money between the clearing member's ac…
- A broker's client sells shares but the client's shares are not delivered to the clearing corporation by the pay-in deadline, resulting in a …
- If a short-delivered security cannot be purchased in the auction, what is the usual result for the buyer?