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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 FPI's holding and account is correct?

An FPI must hold its Indian securities in dematerialised form, with a demat account opened through a DP and a SEBI-registered custodian handling its operations. Physical holding is not permitted, and no separate depository is required for each security.

  1. AThe FPI must open its demat account with a DP and hold securities in dematerialised form with a custodian arrangementCorrect
  2. BThe FPI may hold shares only in physical form
  3. CThe FPI can hold securities only without any demat account
  4. DThe FPI needs a separate depository for each security

Explanation

FPIs must hold and trade securities in dematerialised form and operate through a custodian of securities, who also handles settlement for them. Physical holding or having no demat account is not permitted, and a separate depository per security is not required.

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