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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement

After a market trade, a buyer finds that shares have not been credited to his demat account although the broker received them in pay-out. What is the DP's role in the credit?

After pay-out, the clearing corporation credits the clearing member's pool account, and the member then transfers shares to the client's demat account. The DP credits the client only when that transfer is received, not at its discretion, nor by depository or issuer action.

  1. AThe clearing member transfers the pay-out from its pool account to the client's account, and the DP credits only on receiving that transferCorrect
  2. BThe DP credits the shares at its own discretion on the trade date
  3. CThe depository credits the shares directly without the broker
  4. DThe issuer company credits the shares after the record date

Explanation

On pay-out the clearing corporation moves securities to the clearing member's pool account; the member then gives instructions to move them to each client's account. The DP only gives effect to received transfers.

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