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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

A DP's client wants to hold Treasury Bills and Government securities in demat form through the depository (rather than a Constituent SGL account). Which description of the role of the DP in G-Sec holding is most accurate?

The DP records the client's G-Sec holding in the depository's system, where the depository holds the underlying securities through its SGL arrangement with the RBI. The client remains beneficial owner, and no physical certificates are involved.

  1. AThe DP maintains the client's holding in its depository account, and the securities are recorded as G-Secs in the depository's records while the underlying holding is with the RBI's system through the depository's SGL arrangementCorrect
  2. BThe DP physically keeps the SGL certificates in its vault for the client
  3. CThe DP gets the securities registered in its own name as beneficial owner
  4. DThe DP holds G-Secs only for banks, never for retail clients

Explanation

Depositories hold G-Secs for their participants through an SGL arrangement with the RBI, and DPs record client holdings as beneficial owner entries in the depository's books. The DP does not hold physical certificates or become the beneficial owner, and retail clients can hold G-Secs in demat accounts.

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