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

Mr. Iyer bought shares on the exchange and the broker has received them in the pool account on settlement day. What must happen next for the shares to reach Mr. Iyer's demat account?

The clearing member must instruct its depository participant to transfer the shares from its pool account to the client's beneficiary account. Pay-out credits the pool account first, so the broker's instruction completes delivery to the buyer.

  1. AMr. Iyer must submit a transfer request to the issuer
  2. BThe clearing member must give instructions to its DP to transfer the shares from the pool account to the client's accountCorrect
  3. CThe clearing corporation must change the investor's PAN details
  4. DThe shares stay in the pool account until Mr. Iyer sells them

Explanation

After pay-out, securities are credited to the clearing member's pool account. The clearing member then instructs its DP to debit the pool account and credit the client's beneficiary account. The client does not apply to the issuer, and shares do not remain in the pool account indefinitely.

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