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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Settlement Process

In the funds settlement process of a stock exchange clearing corporation, which entity actually moves money between the clearing member's account and the clearing corporation on the pay-in and pay-out day?

Clearing banks move the money. Each clearing member keeps a designated settlement account with a clearing bank, and the clearing corporation debits or credits these accounts for funds pay-in and pay-out, while securities movement is handled separately through depositories.

  1. AThe investor's depository participant
  2. BThe clearing banks with which members maintain designated settlement accountsCorrect
  3. CThe SEBI regional office
  4. DThe stock exchange trading terminal vendor

Explanation

Clearing members hold designated accounts with clearing banks. Pay-in and pay-out of funds are effected through these accounts as per the clearing corporation's instructions. Depository participants handle securities, not funds, and SEBI or software vendors do not move settlement money.

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