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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market

A foreign portfolio investor trades through a broker, but securities and funds for its trades are settled by an entity that holds the FPI's securities in safekeeping and confirms trades on its behalf. This entity is best described as a:

The entity is a custodian. Custodians hold institutional clients' securities in safekeeping, confirm trades executed by brokers and handle settlement of funds and securities on behalf of clients such as foreign portfolio investors, which distinguishes them from brokers' agents or merchant bankers.

  1. ACustodianCorrect
  2. BSub-broker
  3. CTrading member's authorised person
  4. DMerchant banker

Explanation

A custodian safekeeps securities, confirms trades and settles them for institutional clients such as FPIs. A sub-broker or authorised person acts for a broker in dealing with retail clients, and a merchant banker manages issues, so these are wrong.

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