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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement

A client buys shares on the exchange and the broker receives them in its pool account on pay-out. What must happen next for the shares to appear in the client's demat account?

After pay-out, the shares sit in the clearing member's pool account. The broker must then give a delivery instruction to its DP to move them from the pool account to the client's beneficial owner account, which is how the client receives the purchased securities.

  1. AThe client must apply to the issuer company for transfer
  2. BThe shares remain in the pool account permanently as the broker's holding
  3. CThe broker must pass a delivery instruction from the pool account to the client's beneficial owner accountCorrect
  4. DThe depository transfers shares only after the client pays a stamp duty on each trade

Explanation

After pay-out, securities lie in the clearing member's pool account. The clearing member then instructs its DP to transfer them to the client's BO account. Direct issuer application is not needed and pool holdings are not the broker's own.

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