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

In an on-market trade settled through the clearing corporation, where do securities received by the clearing member on pay-out first get credited before being passed on to the client's account?

Pay-out securities are first credited to the clearing member's pool account by the clearing corporation. The broker then gives instructions to transfer them from the pool account to the client's demat account, so the client does not receive them directly from the exchange.

  1. ADirectly to the client's beneficial owner account by the exchange
  2. BTo the clearing member's pool account, from which the broker transfers them to the clientCorrect
  3. CTo the issuer company's escrow account
  4. DTo the depository's own settlement fee account

Explanation

On pay-out, the clearing corporation credits securities to the clearing member's pool account. The clearing member then instructs the transfer to the client's demat account. It is not credited directly to the client by the exchange in the standard flow described, nor to the issuer or depository fee accounts.

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