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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Opening

Anil Gupta opened a demat account with a DP. Which of the following is correct regarding the agreement between the DP and the client at account opening?

The DP must sign an agreement with the client in the format prescribed by the depository and give the client the rights and obligations document and tariff details. A prior banking relationship does not remove this need, and issuers are not parties.

  1. AThe DP may unilaterally change the tariff without informing the client
  2. BThe DP must enter into a agreement in the format prescribed by the depository and give the client a copy of the rights and obligations document along with the tariff scheduleCorrect
  3. CNo written agreement is needed if the client is an existing bank customer
  4. DThe agreement is between the client and the issuer company

Explanation

The DP must execute the standard agreement with the client in the prescribed form and provide a copy of the rights and obligations document and charges. Written agreement is required regardless of other relationships, and the agreement is with the DP, not the issuer. Charge changes require prior notice to the client.

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