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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market

A broker's client wants to buy shares of a listed company and hold them in electronic form. Which institution holds the client's securities in dematerialised form and records the transfer of ownership after settlement?

A depository holds securities in dematerialised form and records changes of ownership through book entries, working via depository participants. The clearing corporation computes obligations and guarantees settlement, but it does not maintain investors' demat holdings, which is why it is not the answer.

  1. AClearing corporation
  2. BDepositoryCorrect
  3. CStock exchange
  4. DRegistrar and transfer agent

Explanation

A depository such as NSDL or CDSL holds securities in electronic form in investors' demat accounts through depository participants and records transfers of ownership. The clearing corporation determines obligations and guarantees settlement but does not hold the investors' securities holdings, so it is wrong.

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