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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement

In a market trade settled through the depository, the term 'pay-out' refers to which of the following?

Pay-out is the release of securities by the clearing corporation to the buying clearing member's account, after which they are credited to the buyer's demat account. Delivery of securities by the seller is pay-in, not pay-out.

  1. ADebit of securities from the seller's account to the clearing corporation
  2. BRelease of securities by the clearing corporation to the buying clearing member's account, followed by credit to the buyer's demat account on instructionCorrect
  3. CPayment of dividend to the investor
  4. DTransfer of securities from an investor's account to a pledgee

Explanation

Pay-in is the delivery of securities and funds to the clearing corporation; pay-out is the release of securities and funds back to the receiving members. Securities reach the buyer's demat account after the clearing member's pool account is credited and instructions are given to move them to the client. Option A describes pay-in.

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