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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

An investor holds Government securities in a demat account. On the coupon date, the interest is paid on the basis of holdings as at the record date. If the investor sells the securities after the record date but before the coupon date, who is generally entitled to the coupon?

The investor holding the securities on the record date receives the coupon. A sale after the record date does not change entitlement, because the buyer purchases ex-interest and the payment follows record-date holdings.

  1. AThe investor who held the securities on the record dateCorrect
  2. BThe buyer, because the settlement occurred before payment
  3. CThe depository participant of the seller
  4. DThe Government, since the coupon is forfeited on sale

Explanation

Interest is paid to holders whose names appear as at the record date. A sale after the record date means the seller was the holder of record, so the coupon goes to the seller. The buyer buys ex-interest and the price reflects this; the coupon is not forfeited.

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