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CS Professional · Strategic Management and Corporate Finance · Role of Intermediaries in Fund Raising

A depository participant (DP) receives a client's request to transfer 500 demat shares to another account. Which of these is a function of the DP in this process?

The DP acts as the link between the client and the depository, processing the delivery instruction to transfer the shares. It does not set market prices, allot shares in public issues or underwrite them, which are other participants' roles.

  1. AActing as the intermediary between the client and the depository to process the delivery instructionCorrect
  2. BDetermining the market price of the shares
  3. CAllotting the shares afresh in a public issue
  4. DUnderwriting the shares transferred

Explanation

A DP acts as the agent of the depository and processes the client's delivery instructions for transfer. Price discovery occurs on the exchange, allotment is done by the issuer with the registrar, and underwriting is a separate issue-related service.

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