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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository

A depository in India has been registered with SEBI. Which of the following correctly states how a Depository Participant (DP) is linked to the depository and the investor?

A Depository Participant is an agent of the depository that acts as the investor's gateway, opening and servicing demat accounts and processing instructions. It is not an issuer employee, a regulator or a clearing corporation guaranteeing settlement.

  1. AThe DP is an agent of the depository and is the investor's gateway to depository services, with the investor's account maintained by the DPCorrect
  2. BThe DP is an employee of the issuer company handling transfers
  3. CThe DP is a regulator supervising the depository on SEBI's behalf
  4. DThe DP is a clearing corporation guaranteeing settlement

Explanation

Under the Depositories Act, a DP acts as an agent of the depository and provides the interface to investors; the demat account is opened and serviced through the DP. The DP is neither an issuer employee, regulator nor clearing corporation.

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