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

A client's DIS is presented to the DP for an on-market sale. Which check by the DP before executing the instruction is most appropriate?

The DP should verify that the DIS is signed by all holders as per the operating instructions, that the account is not frozen, and that enough free balance exists. Issuer approval and the buyer's PAN are not needed for an on-market sale, and pledged shares would not be free.

  1. AVerify that the DIS is signed by all the holders as per the operating instructions, that the account is not frozen, and that sufficient free balance is availableCorrect
  2. BCheck that the buyer's PAN is quoted on the slip
  3. CWait for the issuer company's approval before processing
  4. DConfirm that the client holds a pledge on the same shares

Explanation

Before executing a DIS the DP checks the signatures against the specimen as per account operating instructions, that the account is active and not frozen, and that free securities are available. The issuer's approval and the buyer's PAN are not required for an on-market sale, and a pledge would actually lock the shares.

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