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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market

A broker's client wants to complain that a Depository Participant, which is a separate group entity of the broker, delayed a transfer instruction. Which statement best describes the broker and the DP in this case?

The Depository Participant is an agent of the depository and a separately registered intermediary from the stock broker, even when they belong to the same group. Hence the DP's delay is a DP-side matter, not an exchange or clearing corporation issue, and the DP is not a sub-broker.

  1. AThey are one legal entity, so the exchange handles the complaint
  2. BThe DP is an agent of the depository and is a separate registered intermediary from the stock broker role, even if both are in the same groupCorrect
  3. CThe complaint can only go to the clearing corporation
  4. DThe DP is a sub-broker of the broker

Explanation

A DP acts as an agent of the depository and is registered separately with SEBI. A stock broker is registered under different regulations, even if under common ownership, and the roles remain distinct. A DP is not a sub-broker, and the clearing corporation does not handle DP service complaints.

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