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

A client gave an on-market delivery instruction with a wrong settlement number, and the securities have not been delivered to the clearing corporation. What is the most likely consequence?

The instruction will likely fail to execute because the settlement details do not match, so the securities are not delivered and the client may face short delivery for that settlement. The depository does not auto-correct client-entered details.

  1. AThe depository will automatically correct the settlement number
  2. BThe instruction will fail or remain unexecuted, and the client may face a short delivery for that settlementCorrect
  3. CThe shares will be auctioned immediately by the DP
  4. DThe client's demat account will be closed

Explanation

Delivery instructions must carry correct details such as market type and settlement number. Incorrect details lead to the instruction not matching, so the delivery is not made, risking a short delivery. The depository does not correct such details itself, and account closure or DP-led auction is not the result.

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