NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement
Arjun's broker failed to deliver shares bought by Arjun, and the exchange conducted an auction. Under this process, the shortfall in delivery is generally handled by which of the following?
The clearing corporation arranges an auction to buy the short-delivered securities and settles with the buyer. The depository does not cancel accounts, the DP is not automatically liable to pay from its own funds, and the buyer's trade is not ignored.
- AThe clearing corporation arranges for purchase of the short securities through an auction and settles with the buyerCorrect
- BThe depository cancels Arjun's demat account
- CThe DP pays the buyer from its own funds in every case
- DThe buyer's trade is simply ignored
Explanation
When a seller fails to deliver, the exchange or clearing corporation runs an auction to buy the securities for the buyer. The depository does not close accounts for this, nor is the DP automatically liable, and the buyer's trade is not voided.
Did you get it right without looking?
One question tells you little. A timed set on Functions of Depository Participant - Trading and Settlement shows your real accuracy, how long you take and where you lose marks.
More Functions of Depository Participant - Trading and Settlement questions
- In an on-market trade settled through the exchange clearing mechanism, a client who has sold shares wants to deliver them. Which statement a…
- Ms. Kapoor bought shares on Monday under T+1 rolling settlement, with no holidays in the week. In which circumstance would the shares normal…
- Which of the following best describes the role of the DP when a client buys shares in a rolling settlement on the exchange?
- A client wants to transfer shares to a friend's demat account at another DP without any exchange trade, as a gift. Which type of transfer is…
- A client gave a DIS for an off-market sale to a friend. Which statement about processing of this transaction by the DP is correct?
- A client who sold shares through a broker wants to deliver them for settlement. Which instruction does the client give to the DP to move the…