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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

A client holds a Government of India dated security in a Constituent SGL account maintained with a bank acting as the custodian. Compared with holding it in a demat account with a depository, which feature distinguishes the demat route as relevant to the NISM Depository syllabus?

In the demat route the investor is recorded as beneficial owner in the depository's records, whereas a CSGL account is maintained by the bank in its own books on the client's behalf. Neither involves physical certificates, and both allow transfers.

  1. AThe demat route records the investor as the beneficial owner in the depository's records, while a CSGL account is held by the bank on the client's behalf in its booksCorrect
  2. BThe demat route requires physical certificates to be held by the DP
  3. CThe CSGL route is available only to foreign nationals
  4. DThe demat route cannot be used for transfers

Explanation

In a depository account, the investor is the beneficial owner in the depository's records and the depository is the registered owner. A CSGL account is maintained by the bank in its books for the client. Physical certificates are not used in either case, and neither route is restricted to foreign nationals.

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