NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)
An FPI wants to sell its Indian listed shares held in demat form. Which of the following correctly describes how the FPI's trades are settled?
An FPI's exchange trades are settled through its custodian, with the clearing corporation handling delivery of securities against payment. Direct off-market settlement, physical certificates and trade-by-trade RBI approval are not how normal FPI trades are settled.
- AThrough its custodian, with settlement on a delivery-versus-payment basis via the clearing corporationCorrect
- BDirectly between the FPI and the buyer outside the exchange
- CThrough physical delivery of share certificates
- DOnly after prior RBI approval for each trade
Explanation
FPI trades on exchanges are confirmed by the custodian and settled through the clearing corporation with securities delivered from the custodian's demat account against funds. Off-exchange direct transfers, physical delivery and per-trade RBI approval are not the settlement route.
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