NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement
A client bought shares on the exchange and the clearing corporation has credited them on the pay-out day. Into which account of the client are the shares normally credited by the clearing member's pay-out instruction?
The shares are credited to the client's beneficial owner account with the DP as free balance. The pool account of the clearing member is only a temporary transit account for settlement. There is no general one-year lock-in on ordinary market purchases.
- AThe client's beneficial owner account with the DP, in the free balanceCorrect
- BThe clearing member's pool account permanently
- CThe clearing corporation's escrow account
- DThe client's account, but in locked-in status for one year
Explanation
On pay-out, securities move from the clearing member's pool account to the client's beneficial owner account, where they appear as free balance unless a lock-in applies by nature of the security. Pool accounts are only transit accounts, and the clearing corporation's account is not the final holding. A blanket one-year lock-in does not apply to ordinary market purchases.
Did you get it right without looking?
One question tells you little. A timed set on Functions of Depository Participant - Trading and Settlement shows your real accuracy, how long you take and where you lose marks.
More Functions of Depository Participant - Trading and Settlement questions
- Mr. Rao sold shares through his broker on the T+1 rolling settlement cycle. To ensure the shares are delivered to the clearing corporation f…
- Under the eDIS facility for selling shares, which of the following is correct?
- Mr. Iyer sold shares through his broker on a T+1 rolling settlement basis. To deliver the shares to the clearing corporation, which instruct…
- A client's DIS is presented to the DP for an on-market sale. Which check by the DP before executing the instruction is most appropriate?
- A client sold shares through a broker and wants to deliver them from the demat account to settle the obligation. Which instruction is the st…
- Meena bought shares and the broker received them in the clearing member's pool account on pay-out day. What must happen for the shares to re…