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

An FPI wishes to transfer securities held in its demat account to another FPI's demat account off-market. Which statement is most appropriate for the DP processing this?

The DP processes it only on a valid delivery instruction from the FPI, and the transfer must be permitted under FPI regulations and FEMA rules. A DP cannot act without client instruction, and board approval is not always needed.

  1. AOff-market transfers are never allowed for FPIs
  2. BIt is processed by a delivery instruction, subject to the transfer being permitted under applicable FPI regulations and FEMA rulesCorrect
  3. CIt requires the company's board approval in every case
  4. DIt can be processed without any instruction from the account holder

Explanation

A DP acts only on a valid delivery instruction from the account holder, and the transfer must comply with applicable FPI and FEMA provisions. It does not need board approval in every case, nor can a DP act without instruction.

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