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

A DP, Sunrise Securities, wishes to know who regulates its day-to-day operations in the depository system and under which framework it functions. Which statement is correct?

A DP is governed by SEBI regulations on depositories and participants and by the bye-laws and operating instructions of its depository. Exchange rules or RBI circulars alone do not govern it, and client agreements cannot replace these obligations.

  1. AIt is governed by SEBI regulations and the bye-laws and operating instructions of the depository it is registered withCorrect
  2. BIt is governed only by the stock exchange rules
  3. CIt is governed only by RBI circulars
  4. DIt has no obligations beyond its agreement with clients

Explanation

DPs are registered with SEBI and must follow the SEBI (Depositories and Participants) Regulations along with the depository's bye-laws and operating instructions. Exchange rules do not govern DP activity. Client agreements add to, not replace, these obligations.

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