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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. On the pay-out day, in which account are the shares first received before they reach the client's beneficial owner account?

Shares bought on the exchange are first credited to the clearing member's pool account on pay-out. From there the clearing member transfers them to the client's beneficial owner account, so the buyer sees them in his demat account.

  1. AThe clearing member's pool accountCorrect
  2. BThe issuer's escrow account
  3. CThe depository's own proprietary account
  4. DThe clearing corporation's bank account

Explanation

Pay-out securities are credited by the clearing corporation to the clearing member's pool account. The clearing member then transfers them to the client's beneficial owner account through a pool-to-BO transfer.

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