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

A client gave a DIS for an off-market sale to a friend. Which statement about processing of this transaction by the DP is correct?

The DP must verify the DIS, including signatures against the specimen, and confirm sufficient free balance before executing the off-market transfer. No issuer approval or clearing corporation confirmation is required, and long-standing clients are not exempted from checks.

  1. AThe DP may execute it without checking the DIS signatures if the client is long-standing
  2. BThe DP must verify the DIS, including signatures against the specimen, and check available balance and free status before executing the transferCorrect
  3. CThe DP may execute it only after the issuer approves
  4. DThe DP must wait for the clearing corporation's confirmation

Explanation

Off-market transfers are processed by the DP after verifying the DIS (signatures, completeness, serial number) and confirming sufficient free balance. No issuer or clearing corporation approval is needed for off-market transfers.

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