NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement
A client sold shares through a broker on the exchange. To settle the pay-in obligation, which instruction does the client give to the Depository Participant (DP) so that the shares move to the clearing member's pool account?
The client gives an on-market delivery instruction, using a DIS or its electronic equivalent, to move sold shares to the clearing member's pool account for pay-in. Off-market instructions are for transfers outside exchange settlement, while pledge and remat requests do not settle a market sale.
- ADelivery Instruction Slip (DIS) or equivalent electronic instruction for an off-market transfer
- BDelivery Instruction Slip (DIS) or equivalent instruction for an on-market transferCorrect
- CPledge creation request in favour of the broker
- DRemat request to the issuer's registrar
Explanation
For shares sold on the exchange, the client gives an on-market delivery instruction (DIS or electronic equivalent) to transfer them from the client's demat account to the clearing member pool account for pay-in. An off-market instruction is used for transfers not settled through the exchange clearing system, so it is wrong here. Pledge and remat do not settle a trade.
Did you get it right without looking?
One question tells you little. A timed set on Functions of Depository Participant - Trading and Settlement shows your real accuracy, how long you take and where you lose marks.
More Functions of Depository Participant - Trading and Settlement questions
- A client sold shares through a broker and wants the demat account debited for the settlement. Which instruction is normally used to move the…
- Which statement about an off-market transfer instruction given by a client to a DP is correct?
- In an on-market trade settled through the exchange clearing mechanism, a client who has sold shares wants to deliver them. Which statement a…
- Ms. Kapoor bought shares on Monday under T+1 rolling settlement, with no holidays in the week. In which circumstance would the shares normal…
- A client bought shares on the exchange and the clearing corporation has credited them on the pay-out day. Into which account of the client a…
- A clearing member has to deliver securities for pay-in of a trade on the exchange. Which account is typically credited with the securities b…