NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository
Mr. Arvind Shah wants to know the role of a depository in the Indian securities market. Which function is performed by a depository such as NSDL or CDSL?
A depository holds securities in electronic form and transfers ownership through book entries. It does not execute trades, declare dividends or approve listings; those functions belong to brokers, issuers and stock exchanges respectively.
- AHolding securities in electronic form and enabling transfer through book entriesCorrect
- BExecuting buy and sell orders on the exchange for investors
- CDeciding the dividend payable on the securities held
- DApproving the listing of companies on stock exchanges
Explanation
A depository holds securities in dematerialised form and effects transfers by book entry. Order execution is done by brokers, dividend is declared by the issuer's board, and listing approval is by the exchange.
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