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

A DP discovers that a client's instruction slip for transferring securities off-market was signed, but the signature differs slightly from the specimen on record. Under standard DP practice, what should the DP do?

The DP should not execute the instruction until the signature mismatch is resolved, by verifying properly or obtaining client confirmation. Signature verification against the specimen is a key safeguard against unauthorised transfers, and neither the broker's approval nor later regularisation can replace it.

  1. AExecute the instruction since the client's ID and ISIN are correct
  2. BExecute it after telephoning the client's broker for approval
  3. CExecute it and ask the client to submit a new specimen later
  4. DVerify the signature properly and not execute the instruction unless it is satisfactorily matched or confirmed by the clientCorrect

Explanation

A DP must verify the signature on every instruction against the specimen on record. A mismatch means the instruction cannot be accepted until the discrepancy is resolved, as executing it would risk unauthorised transfers. A broker's approval is irrelevant, and regularising afterwards is wrong because the risk has already materialised.

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