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NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)

An FPI holds equity shares in demat form through its custodian-linked DP. It wishes to hold the same shares in a second demat account with another DP while maintaining the same registration. Which statement reflects the correct position for FPI demat accounts?

FPIs must hold securities in dematerialised form and must appoint a domestic custodian. They are not restricted to physical holding or to a single demat account. Demat holding is mandatory for FPI investments in India's securities market.

  1. AAn FPI may not hold shares in dematerialised form
  2. BAn FPI may open only one demat account across all DPs
  3. CAn FPI must hold securities only in physical form with the custodian
  4. DAn FPI may hold securities only in dematerialised form and may open demat accounts as required, with a custodian appointedCorrect

Explanation

FPIs must hold and deal in securities in dematerialised form, and must appoint a domestic custodian. Physical holding is not permitted, and there is no one-account-only restriction in the FPI framework. The first option is wrong because demat is mandatory.

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