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

An FPI wishes to open a demat account to hold Indian securities. Which account arrangement is correct for holding its Indian securities?

An FPI holds Indian securities in a demat account opened in its own name with a DP, and it works through a custodian that confirms and settles its trades. Holding in the broker's name, in physical form, or in a resident individual's BSDA is not permitted.

  1. AA demat account with a DP, linked to a custodian who confirms the FPI's tradesCorrect
  2. BA demat account opened only in the name of its Indian broker
  3. CA physical certificate holding with the issuer company
  4. DA basic services demat account meant for resident individuals

Explanation

FPIs must appoint a custodian, who settles and confirms their trades, and hold securities in dematerialised form in an account in the FPI's own name. Securities cannot be held in the broker's name, in physical form, or in a BSDA meant for resident individuals.

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