NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation
In a pledge of dematerialised securities under the depository system, who is the 'pledgor'?
The pledgor is the beneficial owner who offers his demat securities as collateral to a lender. The lender who accepts them is the pledgee. The DP merely processes the instruction and the issuer is not a party, so the beneficial owner is the pledgor.
- AThe beneficial owner who creates the pledge in favour of the lenderCorrect
- BThe lender who accepts the securities as collateral
- CThe Depository Participant that processes the instruction
- DThe issuer company whose securities are pledged
Explanation
The pledgor is the beneficial owner who offers securities as collateral for a loan. The lender receiving the security is the pledgee. The DP only executes the instruction and the issuer is not a party to the pledge.
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