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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market

A new investor, Karan, wants to understand the relationship between the entities in the depository system. Which describes it correctly?

An investor opens a demat account with a depository participant, which serves as the depository's agent and the link between the investor and the depository. Investors do not deal directly with the depository for account opening.

  1. AThe investor opens a demat account with a DP, which acts as the agent of the depositoryCorrect
  2. BThe investor opens an account directly with the issuer company, which acts as the depository's agent
  3. CThe investor deals only with the clearing corporation to open a demat account
  4. DThe investor opens an account with SEBI, which appoints a DP

Explanation

Depositories deal with investors through DPs, who are their agents and provide the interface for account opening and operations. Investors do not open accounts with the issuer, clearing corporation or SEBI for holding securities.

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