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

A DP wishes to terminate its agreement with the depository voluntarily because it is closing its depository business. What must the DP do regarding its existing clients?

The DP must give notice and ensure clients' accounts are shifted to another DP or closed with their consent before it exits. Abandoning accounts or moving holdings to its own account would harm investors and is not permitted.

  1. ASimply stop servicing the accounts and inform clients later
  2. BGive notice and ensure clients' accounts are transferred to another DP or closed with clients' consent before exitCorrect
  3. CTransfer all client holdings to its own proprietary account
  4. DHand the accounts to the stock exchange for safekeeping

Explanation

A DP exiting the business must give notice to the depository and provide clients an opportunity to move to another DP or close accounts. Holdings cannot be moved to the DP's own account or abandoned. Client interests must be protected during the transition.

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