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

A client holds Government Securities in a Subsidiary General Ledger (SGL) account with a bank and wants to hold them in demat form. Which description of the process is correct?

G-Secs held in an SGL account can be moved into a demat account. The client instructs the SGL holder bank and DP, and the securities are transferred through the RBI-depository arrangement. No sale and repurchase is needed, and the DP cannot do it alone.

  1. AThe client can convert SGL holdings to demat by submitting a request to the DP, and no other party is involved
  2. BG-Secs held in an SGL account cannot be held in demat form at all
  3. CThe client must first sell the securities and rebuy them in the market
  4. DThe bank holding the SGL transfers the securities to the client's demat account through the depository/RBI arrangement as per the DP's requestCorrect

Explanation

G-Secs in SGL form with an SGL account holder can be moved to a demat account by the client instructing the holder bank/DP, with the transfer of the securities being effected through the arrangement between RBI's system and the depository. Sale and repurchase is not required, and conversion is possible, so the second and third options are wrong. The DP alone cannot do it, as the SGL holder must transfer.

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