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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation

A pledge has been created and confirmed by the pledgee. The borrower, Ms. Rao, has repaid the loan in full. Which step releases her shares from the pledge?

The pledgee, being the lender holding the security interest, initiates the closure request and it is confirmed through the depository system, after which the shares are unblocked. The pledgor's DP, the issuer or the exchange cannot release the pledge on their own.

  1. AThe pledgee submits a closure request, which is confirmed by the pledgor's DPCorrect
  2. BThe pledgor's DP unilaterally removes the freeze
  3. CThe issuer company passes a board resolution
  4. DThe stock exchange sends a release instruction

Explanation

Pledge closure is initiated by the pledgee, as the lender holds the security interest, and is then confirmed in the depository system so the securities are unblocked. A DP cannot unilaterally release them, and the issuer and exchange have no part in it.

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