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

A trader sells shares on a rolling-settlement cash segment of an Indian exchange. Which statement about the roles of the participants in settling this trade is correct?

The clearing member's pool account is used for delivery, and the clearing corporation settles securities and funds obligations with the clearing member. The depository only moves securities electronically and does not pay money, the issuer is not involved in secondary trades, and SEBI is only a regulator.

  1. AThe clearing member's pool account receives delivery, and the clearing corporation settles funds and securities obligations with itCorrect
  2. BThe depository directly pays the seller's sale proceeds from its own funds
  3. CThe issuer company delivers fresh shares to the buyer on every trade
  4. DSEBI acts as the counterparty and settles the trade

Explanation

In settlement, the clearing corporation determines obligations of clearing members, who deliver securities from their pool accounts and receive or pay funds through clearing banks. The depository only effects transfers of securities on instruction and does not pay funds. The issuer does not deliver new shares on secondary trades, and SEBI is a regulator, not a counterparty.

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