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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market

Meera holds shares in demat form with a DP of NSDL. She sells them on the exchange but the settlement is on a T+1 rolling basis. Which statement about the capital market structure is most accurate regarding the roles in this chain?

The exchange matches the trades, the clearing corporation determines and guarantees settlement obligations, and the depository transfers securities between demat accounts through book entries. DPs only act as the depository's agents and do not guarantee settlement.

  1. AThe clearing corporation delivers shares directly from the company's registrar to the buyer
  2. BThe stock exchange matches trades, the clearing corporation settles obligations, and the depository effects the transfer of securities between accountsCorrect
  3. CThe depository matches trades, and the exchange effects the transfer of securities
  4. DThe DP guarantees the settlement of trades to the exchange

Explanation

Exchanges provide the trading platform and match orders. The clearing corporation determines obligations and guarantees settlement, while depositories move securities between demat accounts via book entries. DPs act as agents of the depository and do not guarantee settlement.

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