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

A pledgor repays the loan in full. Which step correctly releases the pledged securities in the depository system?

The pledgee initiates the closure request after the loan is repaid, and the pledgor confirms it, after which the securities are unfrozen in the pledgor's account. The pledgor cannot release the lien alone, and the issuer or registrar plays no role.

  1. AThe pledgor alone submits a closure request and the DP processes it
  2. BThe pledgee initiates a closure request, which the pledgor must confirm for the securities to be unfrozenCorrect
  3. CThe issuer company issues a no-objection letter to the depository
  4. DThe registrar re-registers the shares in the pledgor's name

Explanation

Pledge closure is initiated by the pledgee, normally after repayment, and confirmed by the pledgor, after which the securities are unfrozen. The pledgor cannot close it alone, as the pledgee holds the lien. The issuer and registrar are not involved.

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