NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement
Mr. Iyer gives a DP an instruction to transfer shares to a friend as a gift, with no exchange trade involved. How is this transaction classified?
A gift of shares to a friend with no exchange trade is an off-market transfer. Off-market transfers are made directly between demat accounts and are not connected to settlement of trades through the clearing corporation, unlike on-market transfers or early pay-in, which relate to exchange trades.
- AOff-market transferCorrect
- BOn-market transfer
- CInter-depository transfer through a pool account
- DEarly pay-in
Explanation
A transfer that is not linked to a trade on a stock exchange, such as a gift or a private sale, is an off-market transfer. On-market transfers relate to exchange trades and settle through the clearing corporation. Early pay-in is also linked to an exchange trade, so it does not fit a gift.
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