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

A client sold shares through a broker on the exchange and wants the shares to leave his demat account for settlement. Which instruction does he give to his Depository Participant for an on-market sale?

The client gives a Delivery Instruction Slip to the DP, instructing transfer of the sold shares to the clearing member's pool account for the settlement. Pledge, remat and freeze requests do not deliver shares for settlement of an exchange sale.

  1. ADelivery Instruction Slip (DIS) for transfer to the clearing member's pool account as per the broker's settlement detailsCorrect
  2. BA pledge creation request in favour of the broker
  3. CA remat request to convert shares into physical form
  4. DA freeze request on the whole account

Explanation

For an on-market sale, the seller gives a delivery instruction to move the shares from his account to the clearing member pool account, so that the exchange's clearing corporation can settle the obligation. Pledge, remat and freeze do not deliver shares to settle a sale.

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