NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement
A client wants to transfer shares to a family member without any exchange trade involved, with no change in beneficial ownership interest intended as a sale. Which type of transfer should the DP process?
The DP should process an off-market transfer. These are transfers between demat accounts not linked to settlement of an exchange trade, such as gifts to family members. On-market transfers and early pay-in relate to exchange settlement, and auctions handle shortages in delivery.
- AOff-market transferCorrect
- BOn-market transfer
- CEarly pay-in
- DAuction transfer
Explanation
Transfers that are not connected with settlement of an exchange trade are off-market transfers, and are used for gifts, inter-family transfers and similar purposes. On-market transfers settle trades through the clearing corporation, and early pay-in is for delivering sold shares early. Auction transfers relate to settlement shortages handled by the exchange.
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