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

A client's shares transferred through an off-market DIS to a friend's account in a family arrangement, not linked to any exchange trade. Which statement about such an off-market transfer is correct?

An off-market transfer is executed by the DP on the client's signed DIS, and the reason for the transfer is captured through a reason code. It does not pass through the clearing corporation's pool account and needs no exchange approval, and it is permitted for listed securities.

  1. AThe DP executes it from the client's DIS and the reason code for the transfer is captured in the instructionCorrect
  2. BIt can only be done through the clearing corporation's pool account
  3. CIt requires prior approval from the exchange
  4. DIt is not permitted for any listed securities

Explanation

Off-market transfers are permitted between demat accounts, such as gifts or family transfers, on the client's DIS with a reason code. They do not go via pool accounts or need exchange approval.

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