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

A client holds a Government Security (G-Sec) in a Subsidiary General Ledger (SGL) account with a bank and wants to hold it in dematerialised form with a depository. Which arrangement allows the client to hold G-Secs in demat form through a DP?

G-Secs can be held in dematerialised form by opening a Gilt Account or a regular demat account through a DP or custodian, with the depository recording the holding. This differs from a bank SGL arrangement and from physical certificates, which are not demat holdings.

  1. AOpening a constituent SGL account with a bank only, which is not linked to any depository
  2. BHolding the G-Sec in a Gilt Account maintained by a custodian or DP, under which the depository records the client's holdingCorrect
  3. CConverting the G-Sec into physical stock certificates held by the client
  4. DKeeping the G-Sec with the stock exchange clearing corporation as margin

Explanation

Retail investors can hold G-Secs in demat form in a depository account, including a Gilt Account through a DP or custodian. SGL with a bank is a separate arrangement. Physical certificates are not the dematerialised route, and clearing corporation margin is not a holding arrangement.

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