Skip to content

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

A depository is dealing with a DP that has repeatedly failed to follow its operating norms. Which feature of the depository framework allows the depository to act against such a DP?

The depository can act because the DP is bound by an agreement to follow the depository's bye-laws and operating instructions. Under this arrangement the depository may inspect the DP and take disciplinary action for non-compliance, which is separate from any exchange or issuer relationship.

  1. AThe business partner arrangement, under which the DP agrees to abide by the depository's bye-laws and operating instructions and is subject to its inspection and disciplinary actionCorrect
  2. BThe DP's status as an issuer of the securities held in the accounts
  3. CThe investor's right to appoint a depository for the DP
  4. DThe stock exchange's power to cancel the DP's trading terminal only

Explanation

A DP enters into an agreement with the depository and must comply with its bye-laws and business rules. The depository can inspect the DP and take disciplinary action for non-compliance. A DP is not an issuer, investors do not appoint depositories for DPs, and exchange terminal powers are unrelated.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Depository shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to DepositoryFree diagnostic mock

More Introduction to Depository questions