NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)
A DP is opening a demat account for an FPI. Which statement about the custodian's role is correct?
An FPI must appoint a SEBI-registered custodian and hold its securities in dematerialised form in a demat account with a depository participant, typically the custodian. Physical holdings and operating without a custodian are not permitted for FPIs.
- AThe FPI must open its demat account with a custodian who is also a DP, and the securities are held through that accountCorrect
- BFPIs may hold securities only in physical form
- CFPIs need not have any custodian
- DThe demat account must be opened with the stock exchange
Explanation
FPIs must appoint a custodian of securities registered with SEBI, and holdings are maintained in a demat account with a depository participant, in dematerialised form. Physical holding and no custodian are not permitted.
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