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NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners

A DP receives a request from a client Mr. Iyer to open a demat account. Which statement correctly describes the DP's responsibility regarding the agreement and client details?

A DP must sign a client agreement in the form prescribed by the depository before opening a demat account, and it cannot modify the terms to the client's disadvantage. No exemption exists for existing bank customers, and the agreement is between the DP and the client.

  1. AThe DP may open the account without a written agreement if the client is an existing bank customer
  2. BThe DP must enter into an agreement with the client in the prescribed form and may not alter its terms to the client's disadvantageCorrect
  3. CThe DP must obtain the agreement only from non-resident clients
  4. DThe depository signs the agreement directly with the client and the DP only forwards it

Explanation

Every DP must execute a standard agreement with each client in the form prescribed by the depository and carry out KYC. The terms cannot be changed to reduce the rights of the client. Being a bank customer does not waive the agreement. The agreement is between DP and client.

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